The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition for unexplained source of income as the assessee had sufficient source of income beyond the doubt for investment in immovable property.
The assessee, Sujata Banerjee was a non-resident individual and a tax resident of the United States of America (USA). The Assessing Officer received information that in the financial year 2014-15 relevant to assessment year 2015-16, the assessee had purchased immovable properties and had incurred additional cost towards transfer charges. Since, the assessee had not filed any return of income, the Assessing Officer reopened the assessment under Section 147 of the Income Tax Act.
In the course of assessment proceedings, the Assessing Officer called upon the assessee to explain the source of the investment made in purchase of property. In reply, the assessee submitted that the property in dispute was purchased jointly with her husband for total consideration from available funds. The Assessing Officer, however, did not accept the explanation of the assessee and proceeded to frame the draft assessment order by treating the amount as unexplained income and added to the income of the assessee.
Challenging the draft assessment order, the assessee raised objections before DRP. Based on the submissions made and evidence furnished, DRP issued directions to the Assessing Officer. However, in the final assessment order, the Assessing Officer again repeated the addition made in the draft assessment order.
Porus Kaka, appeared on behalf of the assessee and Vizay B. Vasanta, appeared on behalf of the revenue.
The two-member Bench of Saktijit Dey, (Vice-President) and B.R.R. Kumar, (Accountant Member) observed that the assessee has left India long back in the year 1988 and has become a citizen of USA. Her husband is also a non-resident Indian and a citizen of the USA. The facts on record further reveal that the subject property, as referred to by the Assessing Officer, was jointly purchased by the assessee and her husband. It is observed, in the course of proceeding before DRP, the assessee has explained in detail the source of investments along with supporting evidence, such as, bank statements, source of income in USA, return of income filed in USA etc.
It was observed that the assessee is a salaried employee, being employed with Hewlett-Packard (‘HP’). It was also evident; she regularly filed her return of income in the USA. Thus, the fact that the assessee had a sufficient source of income, was beyond doubt. The Bench allowed the appeal filed by the assessee holding that the source of each and every payment made towards purchase of immovable property had been explained by the assessee through supporting evidence. Though all these materials were available before the Assessing Officer, he had preferred to turn a blind eye to them in spite of the specific directions of DRP to pass a speaking and reasoned order and not to conduct any fresh inquiry.
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