A woman named Renu Jagdishwar Sood received an IT Notice as she purchased a property but not filed her Income Tax Return for the Assessment Year 2018-19.
The IT Officer reopened her case u/s 148 because she had bought property worth Rs. 51.92 Lakh.
The case was heard by the Income Tax Appellate Tribunal (ITAT), Ahmedabad.
What was the Department's Action
Income Tax Officer added this Rs. 51.92 Lakh to Renu Sood's income u/s 69, assuming it was undisclosed income.
They also charged a heavy tax rate for unexplained under section 15BBE.
Even a small amount of bank interest Rs 8751 was added to her taxable income.
The order was passed without properly hearing the taxpayer or verifying her supporting documents.
What Taxpayer do?
Renu Sood argued that:
- She never received any hearing notices from the department by email.
- The property was jointly purchased by her and her husband.
- The entire payment Rs 51.92 Lakh was made by her husband, through bank cheques in 2016 not in AY 18-19.
- The sale deed was available with the department and it clearly mentioned that her husband had made all the payment.
- Only the registration of the property happened in 2018-19, while the actual payment was made in 2016.
Tribunal's Observations
The ITAT criticized the tax officer, noting:
The AO ignored the evidence that was already available and said the addition of Rs. 51.92 Lakh is wrong.
The AO should have verified the facts instead of making arbitrary assumptions.
If the taxpayer didn't reply to notices, it's department's duty to examine the records before making an addition.
Final Judgment
The ITAT ordered to delete the entire addition under section 69.
The tribunal accepted Renu Sood's appeal and held that there was no unexplained investment because the payment source was proven.
CAclubindia
