2021 (4) TMI 380 - AT - Income Tax

Unexplained investment - HELD THAT - Assessee has duly discharged the obligation by furnishing the necessary evidence about the source of fund used in making the investment in the securities. In this connection, the learned AR has filed the bank statement, copy of the ITR, Identity proof. The assessee was not under the obligation to justify the source of source in the given facts and circumstances. Had the revenue any doubt on the source of funds in the hands of the husband, the revenue could have proceeded against the husband of the assessee. In other words, the assessee was not answerable based on the documentary evidence about the source of money in the hands of the husband. From the above, the assessee was to justify the source of investments made in the securities which has been duly explained. Therefore, the question about the source of fund in the hands of the husband cannot raised from the assessee at the stage. We hold that the assessee has discharged her duty by disclosing the source of fund in the investment of securities. Accordingly, there cannot be any addition to the total income of the assessee. Hence, we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Thus the ground and additional ground of appeal of the assessee is allowed.

Summary

Issues involved:
1. Addition of ?90,000 confirmed by the CIT(A)
2. Jurisdiction of the Tribunal to consider additional grounds raised by the assessee

Analysis:

Issue 1: Addition of ?90,000 confirmed by the CIT(A)

The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) concerning an assessment order under section 144 of the Income Tax Act, 1961 for the Assessment Year 2016-2017. The primary contention raised by the Assessee was the confirmation of the addition of ?90,000 on account of unexplained investment by the CIT(A). The Assessee argued that the amount in question was paid to a broker through the bank account of her husband, who is employed with a specific company. The CIT(A) confirmed the addition of ?90,000, stating that this amount credited to the husband's bank account remained unexplained by the Assessee. The Assessee, dissatisfied with this decision, appealed to the Tribunal.

Upon review, the Tribunal found that the Assessee had adequately explained the source of the investment in securities, providing relevant evidence such as bank statements, husband's ITR, and identity proof. The Tribunal noted that the Assessee was not obligated to justify the source of the source of funds, particularly since the revenue could have pursued the husband if there were doubts regarding his funds. Additionally, it was highlighted that the assessment was limited in scope to verifying the disclosure of investments and income related to securities transactions, which the Assessee had satisfactorily addressed. The Tribunal also considered a remand report from the AO, acknowledging that the investments were made using funds from the husband. Consequently, the Tribunal ruled in favor of the Assessee, directing the AO to delete the addition of ?90,000 made earlier. The ground and additional ground of appeal raised by the Assessee were both allowed.

Issue 2: Jurisdiction of the Tribunal to consider additional grounds

The Assessee raised an additional ground of appeal during the proceedings, invoking a judgment of the Supreme Court to support the admissibility of the new ground. The Assessee argued that the additional ground, which pertained to the underlying addition made without converting the limited scrutiny into complete scrutiny, was crucial to the case. The Assessee contended that the Tribunal had the authority to consider such legal issues, even if they did not directly arise from the Commissioner (Appeals)'s order. The Tribunal, after considering the arguments from both sides, admitted the additional ground of appeal, emphasizing that legal issues could be raised at any stage, as per the Supreme Court's ruling.

In conclusion, the Tribunal recognized its broad powers to address legal questions that impact the tax liability of an assessee, even if not explicitly raised earlier. The Tribunal exercised its discretion to allow the additional ground raised by the Assessee, in line with the principles outlined in the Supreme Court judgment. This decision underscored the Tribunal's authority to consider relevant legal issues beyond the scope of the initial appeal, ensuring a comprehensive assessment of the tax liability in question.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision, providing a comprehensive understanding of the legal nuances involved in the case.