2023 (5) TMI 1361 - AT - Income Tax

Validity of assessment u/s 147 r.w.s. 144 - assessee is a non-resident and has been deriving income in respect of the services rendered outside India - assessee did not submit any relevant verifiable sources for the investment made towards the acquisition of property - DRP sustained the addition holding that there was no evidence to establish the date on which the loan amount was credited or the date of payment to the Lodha Group with reference to the bank statement - as submitted documents could not be secured by the assessee In view of the insolvency proceedings against the financier and because he is a non-resident in India HELD THAT - Though DR opposed the prayer of the assessee, there is no material to contradict the fact that there were insolvency proceedings against DHFL and ultimately PHFL took over the DHFL company and also that Bank of Baroda entered the shoes of DHFL in respect of this particular loan. Assessee procured the documents from PHFL and Bank of Baroda and submitted now in the shape of additional evidence. The case of the assessee is that if these documents are considered in the light of the contentions raised by the assessee, assessee has got a fair chance of winning the matter. We are of the considered opinion that a meritorious case cannot be thrown out at the threshold, without giving an opportunity to the assessee that too when the assessee produced the documents from proper custody. We find it just and proper to receive the additional evidence and to direct the AO to verify and to take a plausible view, after affording an opportunity to the assessee. Accordingly, we set aside the impugned orders and restore the matter to the file of AO to verify the additional evidence and to take a view according to law by giving an opportunity to the assessee. Appeal of assessee is treated as allowed for statistical purposes.

Summary

Issues:
1. Final assessment order passed under section 147 r.w.s. 144 of the Income Tax Act, 1961.
2. Non-resident individual deriving income from services outside India.
3. Purchase of immovable property and investment in Fixed Deposit without filing income tax return.
4. Addition of unexplained income by Assessing Officer.
5. Objections filed before the Dispute Resolution Panel.
6. Consideration of additional evidence by the Appellate Tribunal.

Analysis:
The Appellate Tribunal, Hyderabad, addressed the appeal filed by an individual, a non-resident deriving income from services outside India, against the final assessment order for the assessment year 2015-16. The individual did not file an income tax return as the income was not taxable in India under section 5 of the Income Tax Act, 1961. However, the Assessing Officer noticed property purchase and investments, leading to a proposed addition of unexplained income. The Dispute Resolution Panel sustained the addition due to lack of evidence establishing the source of funds for property acquisition. The individual contended that necessary documents were not readily available during assessments by lower authorities.

The individual sought to admit additional evidence, including housing loan statements and bank account statements, to clarify the payment schedule and source of funds for property purchase. The Appellate Tribunal considered the insolvency proceedings against the financier and the subsequent takeover by another entity, which delayed the procurement of necessary documents. Despite opposition from the Revenue, the Tribunal allowed the additional evidence submission, emphasizing the importance of providing a fair opportunity to the individual to substantiate their case.

Ultimately, the Appellate Tribunal set aside the previous orders, directing the Assessing Officer to verify the additional evidence and make a decision in accordance with the law after affording the individual a proper opportunity. The appeal was treated as allowed for statistical purposes, ensuring a fair and just consideration of the case. The decision was pronounced in open court on May 11, 2023, highlighting the importance of due process and the right to present relevant evidence in tax assessment proceedings.