The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter concerning the addition made without considering the assessee being a Non-Resident Indian (NRI) had only 50% ownership in the property.
Minal Prashant Vakil, the assessee is an individual and a Non-Resident Indian (NRI) with income from capital gains and other sources. The main issue related to the reassessment order passed under Section 143(3) r.w.s. 144C of the Income Tax Act for the Assessment Year 2015-16.
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The Income Tax Department reopened the assessment due to the assessee’s non-filing of an income tax return despite a TDS payment of Rs. 1,41,95,033 for the purchase of immovable property under Section 194A of the Income Tax Act, 1961.
A show cause notice under Section 148A(b) of the Income Tax Act was issued and the assessee did not respond to the notices issued several times. Afterward, the assessee filed the income tax return on 03-03-2023 declaring a total income of Rs. 3,71,710.
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The assessee submitted that he purchased property along with two co-owners in Shantigram Township for Rs. 1,36,87,500 from Adani Township and Real Estate Company Pvt. Ltd., for a total consideration of Rs. 1,67,09,016.
The assessee explained the source for Rs. 1,19,33,524 before the AO but could not explain Rs. 47,75,492 including Rs. 22,61,509 received from relatives. The AO treated the amount as an unexplained investment under Section 69 of the Income Tax Act.
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On appeal, the Commissioner of Income Tax (Appeals) dismissed the assessee’s matter after granting three hearing opportunities within 15 days citing no response or material submission from the assessee.
The two-member bench comprising BRR Kumar (Vice President) and TR Senthil Kumar (Judicial Member) observed that the addition of Rs. 47,75,492 as unexplained investment was unjustified as the assessee’s share in the property was only 50% and the source of the investment was explained.
The tribunal observed that the hearings provided were insufficient for the assessee to present a case. So, the tribunal set aside CIT(A)’s order and directed a fresh hearing with a proper opportunity for the appellant to present evidence and additional grounds.
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