The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition of Rs. 37,35,000/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, 1961 on the ground of unexplained investment.
The Tribunal held that the AO had failed to follow the procedures prescribed under Section 148 of the Act in issuing the notice for reopening the assessment.
The assessee, Smt. Simple Singh, acquired a property during the financial year 2010-11. The AO reopened the assessment for the Assessment Year 2011-12 on the basis of unexplained property investment. The assessee said she had enough money to make the transaction, citing her agricultural income and previous savings. The AO didn’t verify the assessee’s claims and added Rs. 37,35,000/- under Section 69 of the Income Tax Act. The assessee challenged the AO’s decision.
The assessee argued that the notice under Section 148 of the Income Tax Act was not received by her and the investment in the property has been duly disclosed in the balance sheet filed along with the return and she also has sufficient funds to make the investment, as evidenced by her agricultural income and past savings.
Further, the AO argued that the notice under Section 148 of the Income Tax Act was duly served on the assessee and the assessee has not been able to provide any evidence to support her claims of sufficient funds.
The Tribunal observed that the assessee had been a regular taxpayer for more than ten years and that her return income had always been accepted in the past which shows that there is no unexplained investments.
A Single Member of Kul Bharat (Judicial Member), held that the AO has failed to follow the procedures prescribed under Section 148 of the Act in issuing the notice for reopening the assessment. Specifically, the AO has not provided the assessee with a copy of the information on which the reopening of the assessment was based.
As a result, we hold that the addition made by the AO is invalid and Appeal is allowed for statistical purposes.
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