2022 (7) TMI 1562 - HC - Income Tax

Addition u/s 69 - unexplained investment - HELD THAT - Prima facie, it appears that the petitioner has not transferred the aforesaid balance amount of Rs. 2,40,00,000/- to the buyer through normal banking channel. The petitioner appears to have furnished the details of the seller pursuant to communication dated 28.03.2022. The petitioner had also uploaded copy of the sale deed dated 14.08.2014, copy of the plaint filed before the District Munsif Court, Chengalpattu against various persons. The respondent has however passed the impugned order without considering the same. Thus, the impugned order is set aside. The respondent is directed to pass a fresh order within a period of six months from the date of receipt of copy of this order.

Summary

Issues:
Challenge to assessment order for Assessment Year 2015-16, Allegations of tax evasion, Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961, Failure to furnish complete details by the assessee, Dispute over property purchase, Non-cooperation with income tax department, Set aside of impugned order, Directions for fresh order and cooperation.

Analysis:
The petitioner challenged the assessment order dated 30.03.2022 for the Assessment Year 2015-16, alleging inaccuracies in the assessment process. The impugned order raised concerns regarding the source of funds for property purchase, specifically questioning the authenticity of the transaction and the completeness of details provided by the assessee. The order invoked section 69 of the Income Tax Act, 1961, treating a portion of the transaction as unexplained investment due to lack of documentation and clarity on the source of funds.

The petitioner contended that the property purchase involved a disputed transaction, with a portion of the payment being made to ensure clear title post-litigation. The petitioner claimed to have provided necessary information and documents to support the transaction, including details of ongoing legal proceedings related to the property purchase. However, the respondent proceeded with the assessment without duly considering these submissions, leading to the challenge by the petitioner.

On the other hand, the respondent argued that the petitioner failed to cooperate with the income tax department, delaying the filing of returns and providing incomplete details regarding the source of funds for the property purchase. The respondent issued a notice under Section 148 of the Income Tax Act, alleging non-compliance by the petitioner and justifying the assessment order based on the lack of cooperation and failure to provide essential information.

Upon review, the Court set aside the impugned order and directed the respondent to conduct a fresh assessment within six months, emphasizing the need for the petitioner's full cooperation. The Court instructed the petitioner to furnish comprehensive details regarding the sale transaction and the status of the legal dispute over the property purchase. The judgment aimed to ensure a fair assessment process based on complete information and cooperation between the petitioner and the tax authorities.

In conclusion, the Court disposed of the Writ Petition, closing connected miscellaneous petitions without imposing costs. The judgment highlighted the importance of transparency, cooperation, and thorough documentation in tax assessment procedures, emphasizing the need for both parties to actively participate and provide all relevant details for a fair and accurate determination of tax liabilities.