Property Buyer Missed Multiple Notices, Faced Rs. 1.26 Crore Addition; ITAT Restores Case for Re-examination

The ITAT Bangalore has set aside an order confirming an addition of Rs 1.26 crore as an unexplained investment under Section 69 of the Income Tax Act and remanded the matter to the Assessing Officer (AO) for fresh adjudication.

The assessee was carrying on wholesale business of waste, scrap and recycling materials. A search was conducted on a third party u/s 132 of the Income Tax Act, in which incriminating documents relating to him were seized.

During assessment proceedings, the assessee did not respond to various notices issued u/s 143(2), 142(1) and 144 of the Act despite being given various opportunities to furnish documents and explain his case. In view of the statements found during the course of search, the AO treated the entire Rs 1.26 crore as unexplained investment u/s 69 and added it to the total income of the assessee.

During the appellate proceedings, the assessee was granted multiple opportunities to support its claim. However, he failed to provide any supporting documents. On the basis of this, the CIT(A) upheld the addition and dismissed the appeal. Aggrieved by this decision, the assessee approached the Income Tax Appellate Tribunal (ITAT).

Before the Tribunal, the learned authorised representative submitted that the assessee, along with his wife, purchased two portions of the property with the consideration for each portion paid through their individual bank accounts. The learned AR submitted that the AO considered both the portions being purchased by the assessee and added the entire consideration in the hands of the assessee as an unexplained investment under Section 69 of the Act. To support this claim, the assessee produced copies of the sale deeds executed by both purchasers and the relevant bank statements evidencing the payments.

On the other hand, the departmental representative opposed the assessee’s plea, arguing that the documents and explanations now being relied upon were never furnished before the assessing officer or the CIT(A), despite several opportunities being granted.

After considering the submissions from both sides, the documents now relied upon had never been examined by the lower authorities. Considering the need for proper verification, the ITAT restored the matter to the Assessing Officer for fresh adjudication and directed the assessee to furnish all relevant documents supporting his claim.

However, noting the assessee’s repeated non-appearance before the tax authorities, the Tribunal imposed a cost of Rs 1,000 to be deposited with the prime minister’s national relief fund. In the result, the appeal by the assessee is allowed for statistical purposes.