2016 (9) TMI 1207 - AT - Income Tax

Assessment of income - allegation of tax evasion - income from undisclosed sources - nature of amount of loan given earlier years and adjusted with property - Held that - We find nothing has been brought on record to show how the entire amount can be added in the year under consideration. Accordingly, after hearing both the sides and finding that the prayer for remand was justified it was considered appropriate to set aside the impugned order and restore the issue back to the AO directing him to address the issues de-novo and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Correctness of assessing the income of the appellant at a total income of ?18,67,850 as against the returned income of ?67,850.
2. Validity of sustaining the addition of ?18,00,000 to the total income of the appellant.
3. Legality of the order of the Commissioner of Income Tax (Appeals) being against the facts of the case and illegal.

Issue 1:
The appellant challenged the assessment of their income at ?18,67,850 instead of the returned ?67,850. A Tax Evasion Petition alleged a payment of ?14 lakhs for a property purchase, which the appellant explained as an advance against the property due to unpaid loans. The appellant provided details of payments made over the years by themselves and family members, supported by documents. The Income Tax Officer failed to consider the gradual payments made over eight years, resulting in an inaccurate assessment. The Tribunal found no justification for adding the entire amount in the assessment year, leading to setting aside the order for reassessment.

Issue 2:
The dispute centered on treating ?18,00,000 as income from undisclosed sources. The appellant argued that the sum represented loans given over eight years, not undisclosed income. Detailed payment records were submitted, including cash and cheque transactions involving family members. The appellant's profession and earnings history were highlighted to support the legitimacy of the payments. The Tribunal noted the failure of the Income Tax Officer to appreciate the gradual nature of the payments and the involvement of family members. Consequently, the order was set aside for a fresh assessment by the Assessing Officer.

Issue 3:
Regarding the legality of the Commissioner of Income Tax (Appeals) order, the Tribunal found it necessary to reexamine the facts and address the issues afresh. The appellant's plea for a remand was accepted due to the lack of evidence supporting the full addition of the amount in the assessment year. The Tribunal directed the Assessing Officer to reconsider the case, pass a speaking order, and provide the appellant with a fair opportunity to present their case. Ultimately, the appeal of the appellant was allowed for statistical purposes, emphasizing the need for a thorough reassessment based on the actual facts presented.