Anupama Gupta vs ITO Ward 1(1), Ghaziabad: Appeal on Unexplained Investment for AY 2009-10 – ITA 6093/DEL/2019

Case Overview: Anupama Gupta vs ITO Ward 1(1), Ghaziabad

Case Number: ITA 6093/DEL/2019

Appellant: Anupama Gupta, New Delhi

Respondent: ITO, Ward- 1(1), Ghaziabad

Assessment Year: 2009-10

Case Filed On: 2019-07-17

Order Type: Final Tribunal Order

Date of Order: 2021-07-09

Pronounced On: 2021-07-09

Introduction

The case of Anupama Gupta vs. ITO Ward 1(1), Ghaziabad pertains to the assessment year 2009-10. The appellant, Anupama Gupta, a resident of New Delhi, challenged the reassessment order passed by the Income Tax Officer (ITO) under Section 147 read with Section 144 of the Income Tax Act, 1961. The reassessment was based on alleged unexplained investment in an immovable property, leading to an addition to her income. The appellant disputed the legality of the reassessment proceedings and the addition made by the Assessing Officer (AO).

Background: Why the Case Was Filed

Anupama Gupta was served a notice under Section 148 of the Income Tax Act, 1961, on March 10, 2016, for the assessment year 2009-10, following the receipt of information from the Annual Information Return (AIR) regarding her purchase of an immovable property for a consideration of ₹39 lakh. The Assessing Officer initiated reassessment proceedings under Section 147 of the Act, suspecting that the investment in the property constituted undisclosed income.

The appellant did not comply with the notices issued during the reassessment proceedings, which led the AO to complete the reassessment under Section 144 (best judgment assessment) on November 15, 2016. An addition of ₹11,10,000/- was made to her income on the grounds of unexplained investment. Aggrieved by this, Anupama Gupta appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], Ghaziabad.

During the appeal, the appellant provided additional evidence under Rule 46A of the Income Tax Rules, 1962, which was forwarded to the AO for a remand report. Despite this, the CIT(A) enhanced the addition to ₹16,58,525/-, leading to further dissatisfaction and the subsequent appeal to the Income Tax Appellate Tribunal (ITAT).

Legal Proceedings and Arguments

The case was presented before the ITAT Delhi Bench ‘SMC-2’ through video conferencing on June 30, 2021. The bench comprised Judicial Member Shri Kul Bharat and Accountant Member Shri O.P. Kant. The appellant was represented by Shri Vinesh Kumar Maheshwari, FCA, while the Revenue was represented by Shri R.K. Gupta, Sr. DR.

The grounds of appeal raised by Anupama Gupta included the following key points:

• The assessment order passed under Section 147 read with Section 144 was alleged to be invalid, illegal, and void ab-initio due to the lack of jurisdiction and non-fulfillment of the preconditions for invoking Section 148.
• The appellant contended that no proper opportunity was provided to present her case, which violated the principles of natural justice.
• The reassessment proceedings were challenged on the grounds that they were based on mere suspicion rather than any tangible evidence of undisclosed income.
• The appellant argued that the CIT(A) erred in sustaining and enhancing the addition without considering the bank statements and other documentary evidence that could substantiate the source of the investment.

Tribunal’s Findings and Order

After hearing the submissions from both sides, the ITAT considered the appeal. The tribunal observed that the addition made by the AO was based on unexplained investment in a property, which was further enhanced by the CIT(A). The appellant had argued that the property was purchased jointly with her husband for ₹30,43,000/-, funded through a housing loan of ₹25,48,300/- from Axis Bank Ltd. However, the AO and CIT(A) did not accept this explanation due to the lack of supporting evidence.

The tribunal noted that the remand report submitted by the AO highlighted the absence of crucial documents, such as bank statements, to verify the source of the investment. The appellant, through her counsel, expressed willingness to submit the necessary evidence to substantiate her claim regarding the source of funds used for the property purchase.

Considering the circumstances and in the interest of justice, the ITAT decided to provide the appellant with another opportunity to present the relevant documentary evidence. The tribunal set aside the order of the CIT(A) and restored the matter to the file of the Assessing Officer for a fresh adjudication. The AO was directed to examine the new evidence submitted by the appellant and determine the case accordingly.

The ITAT allowed the appeal for statistical purposes, emphasizing that the case should be re-evaluated based on the additional evidence that the appellant intended to provide. Other grounds raised in the appeal were rendered infructuous as the matter was being remanded back to the AO for a fresh decision.

Case Conclusion and Final Judgment

The final judgment in the case of Anupama Gupta vs ITO Ward 1(1), Ghaziabad, was to remand the matter back to the Assessing Officer. The tribunal’s decision reflected its commitment to ensuring that justice is served by allowing the appellant another opportunity to submit relevant evidence. This decision underscores the importance of providing taxpayers with a fair chance to explain their financial transactions, especially in cases involving significant additions based on unexplained investments.

The outcome of this case serves as a reminder to taxpayers about the necessity of maintaining proper documentation and promptly responding to notices from tax authorities. It also highlights the role of appellate bodies like the ITAT in ensuring that tax assessments are conducted fairly and in accordance with the principles of natural justice.

Implications of the Tribunal’s Decision

The tribunal’s decision to restore the case to the AO for a fresh examination of evidence has several implications:

• Ensuring Fairness: The decision ensures that the taxpayer is given a fair chance to present their case, particularly when critical evidence was not initially considered.
• Principle of Natural Justice: The case emphasizes the importance of adhering to the principles of natural justice, especially in reassessment proceedings where significant additions are made based on alleged undisclosed income.
• Documentation and Compliance: The case highlights the need for taxpayers to maintain thorough documentation and ensure compliance with tax notices to avoid adverse assessments.
• Judicial Oversight: The ITAT’s role in providing judicial oversight ensures that tax assessments are not only legally sound but also equitable and just.

Conclusion

The case of Anupama Gupta vs ITO Ward 1(1), Ghaziabad, is a significant example of the appellate process in the Indian tax system, demonstrating the ITAT’s role in safeguarding taxpayer rights. The tribunal’s decision to remand the case back to the AO for further verification of evidence reflects its commitment to ensuring that tax assessments are based on accurate and complete information.

For taxpayers, this case serves as a cautionary tale about the importance of timely compliance with tax authorities and the necessity of maintaining adequate documentation to support financial transactions. The decision also illustrates the appellate mechanisms available to taxpayers who believe that an assessment has been conducted unfairly or without proper consideration of the facts.

As the case returns to the AO for a fresh decision, it remains a reminder of the ongoing efforts to balance the interests of the Revenue with the rights of taxpayers, ensuring that the Indian tax system functions effectively and fairly for all parties involved.

Anupama Gupta vs ITO Ward 1(1), Ghaziabad: Appeal on Unexplained Investment for AY 2009-10 – ITA 6093/DEL/2019