2024 (8) TMI 863 - AT - Income Tax

Reopening of assessment u/s 147 - Admission of additional evidences denied - assessee did not disclosed the income from other sources and no detail has been furnished in this regard - sum treated as undisclosed income of the assessee and taxed as per provision of 115BBE - also assessee has claimed deduction u/s 54F in the return under section 148 while in the original return no such claim was there - HELD THAT - The bench noted that the appeal of the assessee dismissed without affording the opportunity of being heard to the assessee. The bench also noted that wife of the assessee expired and the assessee was passing through the tremor. Therefore could not submit the required documents before the ld. AO moreover looking to the fact of the case that the assessment is made in these year on account of the fact that income wife after her death partly to be assessee in her name and partly in his name for the year under consideration as well as for the subsequent year. On account of the death of wife of the assessee he could not produce the details as it was not found properly at the time of proceeding before the lower authority. Even the status of mind of the assessee was under tremor. This resulted the non compliance before the ld. AO but at the first appeal stage before the ld. CIT(A) the assessee filed the additional evidence and prayed that the same be considered in light of the facts stated herein above. He further based on these facts submitted that the ld. CIT(A) should have considered the applications under rule 46A as the assessee being a village man not technically equipped and unaware of such notice uploaded on the portal for which no intimation was received through mail or SMS skipped to check the portal and by time she assessed her e-portal she left heavenly abode. The assessment was completed. Therefore we admit this evidence. Since these additional evidence is also required to be tested on its merits in order to bring the correct fact on record and in order to charge the correct tax on the income of the assessee. As the ld. AR prayed that these facts are not examined by the CIT(A) and if given a chance the assessee would like to plead these contentions before the CIT(A) and based on these arguments he prayed to set aside the issue to the file of the ld. CIT(A). On the other hand we found that the DR raise any general objection but there is no specific objection as to why the prayer of the assessee should not be accepted based on the factual aspect of the matter. These facts is not disputed by the revenue. Therefore we are of the considered view that the assessee is deprived of justice. Assessee relied upon the judgement in the case of CIT vs. Virgin Securities and Credits (P) Ltd. 2011 (2) TMI 207 - DELHI HIGH COURT wherein the court held that CIT(A) should admit the additional evidence if he finds that the same is crucial for disposal of the appeal of the assessee. Here we note that the additional evidence filed by the assessee is required to be seen to verify the nature of the income and under whose name it is to be taxed ergo we admit the additional evidence and set a side the matter to the file of the ld. AO to decide the issue based on the additional evidence and pass the order in accordance with the law. Our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute which shall be adjudicated by the ld. AO independently in accordance with law. Appeals of the assessee are allowed for statistical purposes.

Summary

Issues Involved:
1. Validity of proceedings initiated under Section 148 of the Income Tax Act.
2. Rejection of additional evidence under Rule 46A.
3. Addition of Rs. 29,20,028/- as unexplained income.
4. Disallowance of deduction under Section 54F.
5. Treatment of income from the deceased spouse.

Detailed Analysis:

1. Validity of Proceedings Initiated Under Section 148:
The assessee challenged the initiation of proceedings under Section 148, arguing that it was "bad in law and bad on facts" and contrary to the principles of natural justice. The return of income for A.Y. 2014-15 was e-filed on 31.03.2015. The case was reopened for scrutiny after approval from the Joint Commissioner of Income Tax, Range-Nagaur, and a notice under Section 148 was issued on 28.03.2019. The assessee filed a return of income on 26.04.2019 in response to this notice. The tribunal noted that the reopening of the case was based on valid information regarding the income of the deceased spouse, which was not clubbed with the assessee's income as required by law.

2. Rejection of Additional Evidence Under Rule 46A:
The assessee argued that the CIT(A) erred in not accepting additional evidence presented under Rule 46A. The CIT(A) dismissed the appeal, stating that the assessee failed to demonstrate sufficient cause for non-compliance during the assessment proceedings. The assessee claimed that the non-compliance was due to the death of his wife and the subsequent mental state. The tribunal found this argument reasonable and noted that the assessee being a village man and not technically equipped missed the notices uploaded on the portal. The tribunal admitted the additional evidence and set aside the matter to the AO for reconsideration.

3. Addition of Rs. 29,20,028/- as Unexplained Income:
The AO added Rs. 29,20,028/- as unexplained income under Section 69A, citing the assessee's failure to furnish supporting documents for agricultural income. The assessee did not provide ownership documents, Girdawari, Mandi Bills, or other relevant documents. The tribunal noted that the assessee could not submit the required documents due to the death of his wife and his mental state. The tribunal admitted the additional evidence and remanded the issue back to the AO for verification.

4. Disallowance of Deduction Under Section 54F:
The AO disallowed the deduction under Section 54F amounting to Rs. 2,52,039/- and added it back to the income of the assessee. The AO noted discrepancies in the cost of acquisition reported in the original return and the return filed under Section 148. The tribunal observed that the assessee failed to provide necessary documents due to his mental state and admitted the additional evidence. The tribunal remanded the issue back to the AO for reconsideration based on the additional evidence.

5. Treatment of Income from the Deceased Spouse:
The AO noted that the income of the deceased spouse should have been clubbed with the assessee's income. The assessee failed to do so and filed a separate ITR for his deceased wife. The tribunal observed that the assessee admitted to bearing all responsibilities related to tax/penalty/prosecution in his deceased wife's case. The tribunal admitted additional evidence to verify the nature of the income and under whose name it should be taxed, remanding the issue back to the AO.

Conclusion:
The tribunal allowed the appeals for statistical purposes, admitting additional evidence and remanding the issues back to the AO for reconsideration. The tribunal emphasized that the decision to restore the matter back to the AO should not be construed as having any reflection on the merits of the dispute, which shall be adjudicated independently in accordance with the law. The same decision applies mutatis mutandis to the related appeals for the assessment years 2016-17 and 2017-18.