The Income Tax Appellate Tribunal Delhi has clarified that the Revenue cannot impose tax liability based solely on TDS portal data when the assessee categorically denies the underlying transaction. The judgment establishes a critical principle: denial of a transaction shifts the burden to the tax department to prove its existence with cogent evidence.
Background & Facts
The Dispute
The appellant, Maheepal, did not file an Income Tax Return for Assessment Year 2016-17 under Section 139 of the Income-tax Act, 1961, claiming his income was below the taxable limit. The Income Tax Officer (AO) initiated reassessment proceedings under Section 147 read with Section 148 based on information received from the TDS portal, which showed a transaction of Rs. 75,00,000 as sale consideration for immovable property at Kanchan Nagar, with the appellant listed as the seller.
Key Facts
- The TDS statement filed by the purchaser (deductor) reported a sale of immovable property to the appellant for Rs. 75,00,000 during A.Y. 2016-17
- The appellant submitted his bank passbook from Punjab National Bank, Account No. 3659000100042538, showing no receipt of Rs. 75,00,000
- The appellant consistently denied ever entering into any sale transaction of immovable property
- The appellant had no income chargeable to tax and therefore did not file a return
- The appellant had no legal authority to correct or delete the TDS information filed by the purchaser
- The Revenue did not disclose the address, description, or registration details of the alleged property
- The Revenue did not issue notices under Section 133(6) or Section 131 to the purchaser or the Sub-Registrar’s office
Procedural History
- 21.03.2024: AO passed assessment order under Section 147 read with Sections 144 and 144B, adding Rs. 75,00,000 as short term capital gain
- 22.03.2023: Notice under Section 148 issued; no return filed by appellant
- 2024: Notices under Section 142(1) and Show Cause Notice issued; appellant participated in proceedings
- 17.11.2025: CIT(A) dismissed appeal, relying solely on TDS portal data
- 05.06.2026: Appeal filed before ITAT Delhi
Relief Sought
The appellant sought deletion of the addition of Rs. 75,00,000 as short term capital gain, arguing that the Revenue failed to discharge its burden of proof and that he could not be penalized for erroneous TDS filings by a third party.
The Legal Issue
The central question was whether the Revenue can sustain a tax addition under Section 147 based exclusively on TDS portal data when the assessee denies the transaction and provides bank records showing no receipt of consideration, and whether the burden of proving the transaction lies with the Revenue.
Arguments Presented
For the Appellant
The appellant’s counsel argued that the mere appearance of a transaction in the TDS portal does not establish the reality of the sale. The appellant produced his bank statement showing no receipt of Rs. 75,00,000 and denied any involvement in the transaction. He submitted that he had no control over the TDS filing by the purchaser and could not rectify the portal data. The appellant emphasized that the Revenue failed to produce any documentary evidence of the property, such as sale deed, registration details, or title documents. He cited the principle that an assessee cannot be asked to prove a negative and that the burden of proving income escaped assessment rests squarely on the Revenue.
For the Respondent
The Revenue contended that the TDS portal data, filed by the purchaser under Section 194IA, was a reliable source of information and that the appellant’s failure to file a return despite this information warranted the addition. The Revenue argued that the appellant’s silence and non-filing of return indicated concealment, and that the burden of proof shifted to the appellant once the portal data was available.
The Court's Analysis
The Tribunal examined the nature of reassessment proceedings under Section 147 and the evidentiary standards required to reopen an assessment. It held that while TDS portal data may serve as a trigger for inquiry, it cannot by itself constitute conclusive proof of income. The Tribunal emphasized that the Revenue must establish the existence of the transaction with independent, corroborative evidence.
"Once the assessee has denied to have made transaction, the onus has shifted to the Revenue to bring on record cogent and conclusively evidence/information to prove that the assessee has sold property during the year and/or received sale consideration for the sale of property during the year under consideration to fasten the liability to tax in the hands of the assessee."
The Tribunal noted that the Revenue had not conducted any inquiry with the purchaser, the Sub-Registrar’s office, or any other third party who could verify the transaction. No sale deed, property description, or payment trail was produced. The Tribunal observed that the Revenue had access to the purchaser’s details through the TDS return and could have invoked Section 133(6) or Section 131 to obtain evidence but chose not to.
The Tribunal distinguished this case from those where the assessee has received consideration and failed to disclose it. Here, the appellant had no receipt, no documentation, and no control over the erroneous TDS filing. The Tribunal held that the additions made by the AO and sustained by the CIT(A) were unsustainable in law.
The Verdict
The appeal was allowed. The Tribunal deleted the addition of Rs. 75,00,000 as short term capital gain. The Tribunal granted liberty to the Revenue to file a recall petition if it obtains conclusive evidence proving the sale transaction occurred, provided such evidence was not available at the time of the original order. No penalty or interest was imposed on the appellant.
What This Means For Similar Cases
Burden of Proof Rests with the Revenue
- Practitioners must argue that TDS portal data alone is insufficient to sustain an addition under Section 147
- The Revenue must produce independent evidence: sale deed, registration records, bank statements of the purchaser, or witness testimony
- Denial by the assessee, coupled with bank records showing no receipt, triggers a duty on the Revenue to investigate further
Procedural Due Process in Reassessment
- Authorities must issue notices under Section 133(6) or Section 131 to third parties (purchasers, registrars) when portal data is contested
- Failure to investigate corroborative sources renders reassessment proceedings legally defective
- Courts and Tribunals will not uphold additions based on unverified, uncorroborated data from third-party filings
Limitations on Assessee’s Obligations
- Assessees are not obligated to correct erroneous TDS filings made by others
- Non-filing of return due to lack of income cannot be treated as concealment if the income source is disputed and unverified
- Assessees may rely on bank records to rebut presumptive income claims based on third-party data
