2026 (2) TMI 210 - AT - Income Tax

Reopening of assessment for unexplained funds and stamp duty/consideration difference restored to AO for fresh adjudication and source verification

Reopening of assessment addressed alleged unexplained funds and an addition under the valuation provisions for the gap between stamp duty value and ... Reopening of assessment u/s 147 - Assessee is a non-filer - unexplained funds - addition u/s. 56(2)(vii)(b) difference between the stamp duty value of the transaction as well as the amount of consideration paid. HELD THAT:- Evidence either in the Assessment Order or in the order of the Ld. CIT(A) that Assessee was either questioned about the difference between the stamp duty value and the transaction value. No doubt, the Assessee did not prefer any objection before the Ld. Dispute Resolution Panel but in the statement of facts, the Assessee has mentioned that the sum of Rs. 7,00,000/- is 10 years old transaction and therefore the Assessee being a non-resident could not obtain the information. Even before the CIT(A), the Assessee was granted 4 opportunities. CIT(A) categorically mentions that she has perused the statement of facts and therefore disposes of the Appeal in paragraph no. 4.4 for non-prosecution. CIT(A) has to decide the Appeal on the merits of the case as per information available on record. She has neither applied the facts stated in the Assessment Order not the facts stated in the statement of facts. Undoubtedly, the Assessee has failed to submit the information about Rs. 7,00,000/- paid to the builder. The Ld. Assessing Officer, also despite having the sale deed in his possession, did not record the date on which the Assessee has paid Rs. 7,00,000/-. He also did not call for the bank statement from HDFC bank wherein the Assessee claims to have paid money for obtaining bank draft of Rs. 3,24,240/-. Thus admittedly, the Assessee being a non-resident deserves one more opportunity of hearing for the addition and further as the Assessee has not at all been questioned with respect to the addition u/s. 56(2)(vii)(b) in the interest of justice,restore the whole issue back to the file of the Ld. Assessing Officer with a direction to the Assessee to substantiate the sources of payment and also explain before the Ld. Assessing Officer with respect to the difference between stamp duty value and the registration value. Also find that the difference between the stamp duty value and the transaction value is less than 10%. Appeal filed by the Assessee is allowed for statistical purposes. Issues: Whether the Appellate Tribunal should set aside the CIT(A)'s dismissal for non-prosecution and restore the additions made by the Assessing Officer (including addition of Rs. 10,81,240/- as unexplained funds and Rs. 2,90,000/- under section 56(2)(vii)(b)) for fresh adjudication.Analysis: The Tribunal examined (i) the circumstances of issuance of notice under section 148 when the assessee was a non-filer and the initial escapement recorded by the Assessing Officer; (ii) the factual record regarding payments (balance consideration, stamp duty and registration charges) and absence of documentary evidence on the date and source of the Rs. 7,00,000/- payment and related entries; (iii) the fact that the CIT(A) dismissed the appeal for non-prosecution without adjudicating the merits or applying the facts on record despite multiple opportunities; and (iv) whether the difference between stamp duty value and transaction value merited enquiry under section 56(2)(vii)(b). The Tribunal found that material issues of source and valuation were not examined by the CIT(A) and that the Assessing Officer had not fully investigated available records (such as bank drafts and dates of payment). In the interest of justice and given the assessee's non-resident status and claimed difficulty in procuring older records, the Tribunal considered it appropriate to afford the assessee an opportunity to substantiate sources and explanations before the Assessing Officer.Conclusion: The CIT(A)'s dismissal for non-prosecution is set aside to the extent that the merits were not adjudicated; the matter is restored to the file of the Assessing Officer for fresh consideration limited to verification of sources for Rs. 10,81,240/- and enquiry regarding the difference between stamp duty value and transaction value (addition under section 56(2)(vii)(b)). The appeal is allowed for statistical purposes.