TaxTMI 
TaxTMI 
2025 (9) TMI 151
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....otice dated 20/04/2021, without notice for fresh hearing the assessment order be quashed. 3. That Hon'ble ITAT had remitted matter back to learned AO to verify gift and as while completing the assessment addition have been made u/s. 69 of the Act. It is prayed that the learned AO has exceeded his jurisdiction and therefore Assessment Order be quashed. 4. That while making assessment u/s. 144 of the Act the learned AO is to be taken into account all relevant material in his records. As in appellants' case it is not done by the learned AO while making addition of Rs. 3,00,000/- it is therefore prayed that the addition of Rs. 3,00,000/- be deleted. 5. That was all papers/documents in relation to gift of Rs. 3,00,000/- from Smt. Inderjeet Kaur Sahni Bhabhi of the appellant were filed before the learned AO during original assessment proceedings and as gift was not disputed by the learned AO during original assessment proceedings the same be accepted and addition of Rs. 3,00,000/- be deleted. 6. That the appellant craves leave to add, alter, amend, modifies and/or otherwise substitute any of the foregoing grounds as and when required. In ITA....
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....s. 3 Lacs on account of unexplained investment in plot and disallowance of deduction u/s. 80C of the Act amounting to Rs. 51,960/-. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT(A)-2, Udaipur, who in turn confirmed the order of the AO vide order dated: 28.06.2019. The assessee being further aggrieved with this order of the Ld. CIT(A)-2, Udaipur preferred an appeal before the coordinate bench, Jaipur. 3. The coordinate bench vide its order dated: 23.12.2019 (Para 5 of the Order) "set aside the matter to the record of the AO for proper verification and examination of the claim of the assessee being source of investment and particularly the gift from the family member", i.e. the limited question before the AO is to verify the source of the investment in the light of the explanation put forward by the assessee. In compliance with the directions of the coordinate bench, the AO issued notice to the assessee u/s. 142(1) of the Act on 28.09.2020 and hearing was fixed on 16.10.2020. Thereafter, notices were further issued vide dated: 15.12.2020, 17.022021 and 20.042021. As the case was getting time barred on 30.06.2021, the case of the assessee was ult....
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....of assessee on 16.10.2020. The assessee has not submitted any response to this notice. Thereafter, notices u/s. 142(1) of the I.T. Act, 1961 were issued to the assessee on 15.12.2020, 17.02.2021 and 20.04.2021 but the assessee had failed to produce the reply in support of his claim. During the hearing the assessee filed an application to inspect the assessment records for A.Y. 2014-15 on 05.06.2020. The assessee was allowed for inspection of records on 08.01.2021 vide this office letter dated 01.01.2021. No one appeared on this date for inspection. The AO passed order u/s. 144 r.w.s. 254 of the I.T. Act, 1961 on 22.06.2021 at an assessed income of Rs. 5,08,110/- The arguments of the appellant are discussed and decided as under- 5.10.1 The Order is passed by the AO within prescribed Time Limit It is argued that as order is passed beyond time limit prescribed under the Act same being time barred needs annulment. The reply of the appellant was sent to the AO for verification and the AO stated that the Hon'ble ITAT, Rajasthan, Jaipur had passed combined order vide for the A.Y. 2014-15 & Α.Υ. 2016-17 vide their Appeal order ....
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....3 of the said Act further extended time limit upto 30th June 2021. In this notification it is stated that the completion of any action, referred to in clause (a) of subsection (1) of section 3 of the said Act, relates to passing of any order for assessment or reassessment under the Income-tax Act. and the time limit for completion of such action under section 153 or section 153B thereof, expires on the 30th day of April, 2021 due to its extension by the said notifications, such time limit shall further stand extended to the 30th day of June, 2021. In view of the Notification S.O. 1703 (E) (NO. 38/2021/ F. NO. 370142/35/2020- TPL], DATED 27-4-2021, the order passed by the AO is found to be passed within the prescribed time limit. The arguments of the appellant in this regard are not found to be acceptable. 5.10.2 Reasonable Opportunity of being heard was provided to the assessee The appellant argued that proper opportunity of being heard was not provided by the AO. The AO reported that notice u/s. 142(1) of the IT. Act, 1961 was issued to the assessee on 28.09.2020 fixing the case of assessee on 16.10.2020. The assessee has not submitted any respo....
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.... notice when the AO already issued notices issued on 28.09.2020, 15.12.2020, 17.02.2021 and 20.04.2021. Even after non compliance by the assessee on 23.04.2021, the AO waited for two months and when there was no compliance, order is passed. Providing 4 opportunities of being heard is considered reasonable. The appellant could not explain reasons for non compliance before the AO. On these facts, it can be said that proper opportunity of being heard was provided by the AO. In view of above discussion, the arguments of the appellant in support of ground no. 1 and ground no. 2 are found to be without any merit. The ground no. 1 and ground no. 2 are treated as dismissed. 6. Ground Nos. 3 and 4 of appeal are inter-related with the addition of Rs. 3,00,000/- u/s. 69 of the Act on account of unexplained investment. 6.1 At the time of passing of assessment order u/s. 144 r.w.s. 254 of the Income tax Act, 1961 the AO has briefly stated relevant facts and some of excerpts are reproduced as under- "Unexplained investment: A search & seizure operation u/s. 132(1) of the Act was carried out on 30.06.2016 at the premises of the assessee. During the sea....
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....of the Act with the same AO In her Capital A/c gift of Rs. 3,00,000/- to Tejender Pal Singh is appearing (Annexure-B). (iii) The ld. AO did not disputed gift however he made addition of Rs. 3,00,000/- u/s. 69 of the Act for plot at Kanha Kunj. Being aggrieved we filed appeal which was dismissed and addition u/s. 69 of the Act sustained. We challenged it before Hon'ble ITAT Jaipur where our stress was that as plot at Kanha Kunj is appearing in our books which were reflecting in Balance Sheet appended with ROI filed u/s. 153A of the Act also addition u/s. 69 of the Act is uncalled for. The Hon'ble ITAT though convinced for our explanation on the plea that whether the lower authorities have examined or not examined gift of Rs. 3,00,000/- sustain the addition and remitted matter back to the Id. AO for examination of gift. The relevant part of the order of Hon'ble ITAT is reproduced as under- 5. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the original assessment was pending on the date of search dated 30.06. 2016 and Consequently the original assessment got abated Once the assessment was pend....
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....ained addition u/s. 69 of the Act On 06.12.2021. We filed an application u/s. 154 of the Act (Annexure-D) to him wherein we submitted to him that though because of lockdown in City/State on 23.04 2021 we could not produce papers in relation to gift before him on appointed date but as both Donor and Donee are assessed to tax with him only and as in their files all papers relating to gifts are lying there is no reason to make addition u/s. 69 of the Act. The said application as per provisions of the Income Tax Act was expected to be decided within reasonable time and at the most within 6 months from 31.12.2021, i.e. before 30th June 2022 (see Section 154(8), however it is yet pending (v) We have taken certified copies of following papers from Income Tax Files of both Donor and Donee from Department to which we are enclosing (a) Copy of Capital Account and Balance Sheet of Tejender Pal Singh Sahni (Annexure-A1 above) in Capital Account gift of Rs. 3,00,000/- from Smt. Inderjeet Kaur is shown. In Balance Sheet plot Rs. 3,00,000/- is appearing (b) Copy of gift deed (Annexure-D1) for gift of Rs. 3,00,000/- from Smt. Inderjeet Kaur (Bhabhi) (c) Copy of ....
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....t was called from the AO on 06.09.2023 on following point- (i) Please go through the reply of the appellant with regard to the various grounds and furnish your comments on each issue. 6.4. A Remand report submitted by the Addl. Commissioner of Income Tax, Central Range, Udaipur on 16.04.2024. The remand report of AO vide letter No. 948 dated 07.02.2024 is reproduced as under.- "4. Ground of appeal 3 and 4: G-3: That under the facts and circumstances of the case the Ld. A. O. erred in ignoring gift of Rs. 3,00,000/- from Smt. Inderjeet Kaur ignoring all evidences available on records. Addition therefore needs deletion G-4 That under the facts and circumstances of the case cost of plot of Rs. 3,00,000/- was appearing in Balance Sheet attached with ROI and therefore it being explained investment the Ld. AO erred in treating it a unexplained investment and making addition of Rs. 3,00,000/- u/s. 69 of the Act. It therefore needs deletion. On the aforesaid ground of appeal, the assessee had submitted evidences before the appellate proceedings and on this issue, a remand report has been called-for from this office and during the course....
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.... 6.5 Copy of the remand report was provided to the appellant for rejoinder to the remand report vide letter dated 17.04.2024. The appellant furnished reply vide letter dated 01.05.2024. The same is reproduced as under. "That vide our letters dated 01.09 2023, 09.10.2023 and 16.10.2023 as well as Ld. AO's Remand Report dated 07.02.2024 which has been forwarded to us by your office on 17.04 2024 the matter has become quite confusing We are therefore summarizing all together and submit as under GOA 3 and 4 are inter-connected and therefore they are taken together. These grounds of appeal read as under "6 (i) "That under the facts and circumstances of the case the Ld AO erred in ignoring gift of Rs. 3,00,000/- from Smt. Inderjeet Kaur ignoring all evidences available on records. Addition therefore needs deletion" (ii) "That under the facts and circumstances of the case cost of plot Rs. 3,00,000/- was appearing in Balance Sheet attached with ROI and therefore it being explained investment the learned AO erred in treating as unexplained investment and making addition of Rs. 3,00,000/- u/s. 69 of the Act, it therefore needs deletion." ....
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....n (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) Fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [or fails to comply with a direction issued under sub-section (2-A) of that section, or (c) Having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143 The [Assessing] Officer, after taking into account all relevant material which the (Assessing Officer) has gathered shall, after giving the assessee an opportunity of being heard, make the assessment) of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment [Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has....
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....uest your honour to delete addition of Rs. 3,00,000/- (4) (1) that GOA 4 reads as under- 4 That under the facts and circumstances of the case cost of plot Rs. 3,00,000/- was appearing in Balance Sheet attached with Rol and therefore it being explained investment the Ld. AO erred in treating it as unexplained investment and making addition of Rs. 3,00,000/- u/s. 69 of the Act. It therefore needs deletion." (ii) That as additions have been made u/s. 69 of the Act we reproduce section 69 which reads as under- 69. Unexplained investments Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not in the opinion of the (Assessing Officer) satisfactory, the value of the investments may be deemed to be the Income of the assessee of such financial year (iii) As appears from title of the section it applies in case of unexplained investments which are not recorded in Books....
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....ITAT our stress was that when investment was appearing in Balance Sheet which is not disbelieved by the learned AO addition u/s. 69 of the Act cannot be made. However, the submission of learned D/R was that investment is out of fund received in gift and it is not clear from Assessment Order that gift was verified by the learned AO. (4) The Hon'ble ITAT decided issue holding as under: There is no dispute that the assessee has disclosed the investment of Rs. 3,00,000/- in the balance sheet as on 31st March, 2014. However, merely showing this investment in the Balance Sheet would not ipso facto explain the source of such investment The ones is on the assessee to explain the source of investment and therefore, the issue can be decided only on the merits of the source of investment without any technical hurdle of incriminating material found or seized during the course of search. We find that the assessee in his statement of affairs has shown the gift received from the sister-in-law (wife of his brother) of Rs. 3,00,000/- The assessee has filed a declaration of gift in support of such claim. The said gift is between the family members and cannot be verified indepen....
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....ment. Even otherwise, we find that the source of fund as claimed by the assessee is gift from wife of the brother has not been verified by the authorities below and accordingly the said claim of the assessee is required to be verified and examined by the AO. Hence the issue is set aside to the record of the AO for proper verification and examination of claim of the assessee being source of investment and particularly the gift from the family member." In the assessment order in compliance to the order of the Hon'ble ITAT the AO noted that during the search action, incriminating documents page no. 114 to 131 of Exhibit 31 were found which related to investment of Rs. 3,00,000/- made for purchase of plot at Kanhakunj, Balita, Kota during the F.Y. 2013-14 During the assessment proceeding u/s. 143(3) r.w.s 153A of the Act, the assessee had produced balance sheet for the F.Y. 2013-14 and claimed that this investment was already shown in the Balance sheet. But the assessee had not submitted any supporting documents to sustain his claim. Therefore, the amount of Rs. 3,00,000/- was added to the total income of the assessee as per provision of section 69 of IT Act and the assess....
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....pso facto explain the source of such investment. The onus is on the assessee to explain the source of investment and therefore, the issue can be decided only on the merits of the source of investment without any technical hurdle of incriminating material found or seized during the course of search. Considering these observations of Hon'ble ITAT, the AO was required to verify source of investment. The appellant remained non compliant before the AO. No reasonable explanation furnished for not making compliance. In the appellate proceedings also, the appellant has not furnished any new evidence which was not available before the AO in the original assessment proceedings completed u/s 153A of the Act. Hence, in the absence of independent evidences, the source of investment remains unexplained. The appellant argued that the evidences furnished during original assessment proceedings were sufficient evidences to prove the source of investment. It is observed that Hon'ble ITAT has examined the evidences and observed that these evidences are self serving documents. The observations of the Hon'ble ITAT are as under- "We find that the assessee in his sta....
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....et of Smt. Inderjeet Kaur Sahni for AY 2014-15 furnished before the AO. The appellant has not explained source of funds in the balance sheet of Smt. Inderjeet Kaur Sahni for A.Y. 2014-15. Even the balance sheet is obtained by the assessee from the AO which was furnished during original assessment proceedings. On perusal of balance sheet it is seen that the capital account and balance sheet are revised. The original capital account and original balance sheet were not furnished. Hence, the revision made is not explained with evidences. Even the original capital account and balance sheet could have been manipulated easily as these are not audited. The balance sheet is not verifiable independently. In the absence of authenticity of figures in the balance sheet, the balance sheet and capital accounts are not reliable. In these facts, the balance sheet and capital account are not found to be sufficient to explain the source of funds. Hence, the claim of the assessee that source of investment is gift from wife of the brother could not be verified by the AO in the absence of verifiable evidences. The transaction of cash in the form of gift is also not found to be verifiable from independen....
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....os. 1, 2 and 3 raised by the assessee are dismissed. 6. As far as ground nos. 4 and 5 are concerned, it is observed that during the original assessment proceedings, the assessee submitted before the AO that he received a gift of Rs. 3 Lacs from his Bhabhi, Smt. Inderjeet Kaur Sahni (Wife of the assessee's elder brother) and copy of the Gift Deed was duly enclosed that time itself. We have gone through the copy of P&L account, Interest account, and revised capital account cum balance-sheet filed along with the return filed in response to section 153A of the Act, wherein the assessee duly disclosed the receipt of gift and investment thereon in the property under consideration. We have taken note of the financials of the donor, i.e. his Bhabhi, Smt. Inderjeet Kaur Sahni (Wife of the assessee's elder brother), wherein the vice versa position of gift was reflected in the revised capital account of the donor. 7. The income of the Bhabhi, i.e. Smt. Inderjeet Kaur Sahni (Wife of the assessee's elder brother) is also found to be substantial in contrast to the amount of gift involved. The total income of donors was found to be Rs. 35,47,963/- in addition to the opening balance of Rs. 1....