Assessment Without Inquiry on Co-owner's Source of Payment on Property Purchase: ITAT Orders Fresh Enquiry [Read Order]
Noting that the lower authorities failed to inquire about the source of payment and share of profits from the co-owner of the property, the Tribunal restored the matter for fresh adjudication.
Property - purchase - Taxscan
Property - purchase - Taxscan
The Jabalpur Bench of the Income Tax Appellate Tribunal (ITAT) restored the appeal to the Assessing Officer (AO) for fresh consideration by holding that the source of payment for property purchase made by the Co-owner to be enquired.
Gomesh Dwivedi (assessee) for A.Y. 2012-13, the AO initiated proceedings after coming into possession of information that the assessee had purchased agricultural lands but had not shown the transaction in his Income Tax Return (ITR).
The AO noted that the total sale consideration for the two agricultural lands purchased by seven persons, including the assessee, was Rs. 1,64,00,000. The AO held 1/7th of the total consideration, i.e., Rs. 23,42,857 as unexplained investment made by the assessee.
Want a deeper insight into the Income Tax Bill, 2025? Click here
For A.Y. 2013-14, the same properties were sold by the assessee and his associates for a total of Rs. 6,40,43,000. The AO computed the assessee's 1/7th share of the sale proceeds to be Rs. 91,49,000 and observed that the assessee had not disclosed capital gain on the sale.
Aggrieved by the orders, the assessee filed appeals to the Commissioner of Income Tax (Appeals) [CIT(A)].
The assessee submitted that a co-owner Dileep Kumar Rajwani, had paid Rs. 1,50,00,000 through account payee cheques and the remaining Rs. 14,00,000 was paid in cash by the other co-owners. The assessee claimed he only paid Rs. 2,33,333/- in cash, resulting in only 1.42% ownership.
The assessee filed evidence, including copies of the purchase deeds and the bank account of Dileep Kumar Rajwani, which the CIT(A) forwarded to the AO for a remand report. The AO, in the remand report, argued that all seven purchasers had equal shares as per the documents.
The AO asserted that Dileep Kumar Rajwani had never filed a return of income. The CIT(A) dismissed the appeals confirming the additions. Aggrieved by the CIT(A)’s orders, the assessee filed appeals before the ITAT.
The two-member bench comprising Kul Bharat (Vice President) and Nikhil Choudhary (Accountant Member), observed that the payment of Rs. 1.5 Crores through Dileep Kumar Rajwani's account was not disputed.
How to Audit Public Charitable Trusts under the Income Tax Act Click Here
The tribunal noted that the AO and CIT(A) had assumed that this account was used as a benami account because the sale deed indicated equal shares and Dileep Kumar Rajwani was not a regular taxpayer.
The Tribunal found that the authorities had proceeded against the assessee without first confronting Dileep Kumar Rajwani. The bench observed that Dileep Kumar Rajwani was the one who must explain the source of the payments and his share of the profits.
Therefore, the tribunal restored the matters to the AO for further enquiries. The appeals of the assessee were allowed for statistical purposes.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
