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Facts
The assessee, Golden Realty, filed an appeal against the order confirming additions made by the AO for cash deposits, outstanding liabilities, and unsecured loans. The additions were made because the assessee failed to provide sufficient evidence regarding the nature and source of these amounts.
Held
The Tribunal admitted additional evidence filed by the assessee and decided to remit the case back to the AO for a fresh inquiry into the issues. The appellate order was set aside.
Key Issues
Whether the additions made by the AO and confirmed by the CIT(A) were justified due to the assessee's failure to provide adequate evidence for cash credits, outstanding liabilities, and unsecured loans, and whether additional evidence should be admitted at the appellate stage.
Sections Cited
68, 143(3)
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Before: JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR
Date of Hearing 13.11.2025 Date of Pronouncement 03.12.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 27.02.2024 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 30.12.2019 for the Assessment Year [A.Y.] 2017-18. P a g e | 2 A.Y. 2017-18 Golden Realty, Mumbai 2. The grounds of appeal are as under:
1. Disallowance of Outstanding liability Rs. 1,37,10,000/-.
2. Addition u/s 68, Rs. 97,83,949/- for cash deposit Rs., 1,20,17,850 being unsecured loan.
3. Briefly stated facts of the case are that the return of income was filed by the assessee declaring total income of Rs. 19,650/-. The assessment order u/s 143(3) of the Act was finalized by making addition of Rs. 97,83,949/- u/s 68 of the Act in respect of cash deposits in bank account, disallowance of Outstanding liability of Rs. 1,37,10,000/- and also addition of Unsecured loans u/s 68 of Rs. 1,20,17,850/- of the Act. Aggrieved with these additions, the assessee preferred appeal before the ld.CIT(A) who upheld all the additions placing reliance on the findings and observation of the AO. We find that all the additions were made by the AO on the ground that the assessee failed to bring on record any cogent evidence.
3.1 In respect of the addition of Rs. 97,83,949/- u/s 68 of the Act, the assessee was required to explain the source of cash deposits in its bank accounts with HDFC Bank with documentary evidences. The assessee merely stated that the source of the cash was amount received from tenants for payment of property tax and other Govt. dues whose project was undertaken for redevelopment by the assessee. However, it failed to furnish the confirmation and the cash accepted receipts duly P a g e | 3 A.Y. 2017-18 Golden Realty, Mumbai signed by the tenants to prove the source of the cash. Before the ld.CIT(A) also the assessee could not improve upon its case as noticed by him that the appellant had squarely failed to even furnish the confirmations from the tenants, about their nature, source, purpose/context, for which the amounts were paid to the appellant, with credible documentary evidences such as confirmations, bank statements of the tenants, source of such cash etc. The assessee has failed to furnish the documentary evidences with regards to cash receipts and has not proved the nexus of the same with cash deposit in the bank accounts. Considering the facts as stated above the nature/source of cash deposit in the bank account remained unexplained and the addition made excepting a minor relief in quantum the addition made was upheld.
3.2 In respect of Outstanding Liabilities, the AO noticed that the assessee had shown huge amount under this head, claimed to have been received from tenants against cost of construction. The assessee could not furnish the required documents therefore, the AO had treated the liabilities to the extent of Rs. 1,37,10,000/- as unexplained liabilities and added to the total income of the assessee. The ld.CIT(A) observed that the assessee squarely failed to even furnish the confirmations from these tenants, about their nature, source, purpose/context, for which the amounts were paid to the appellant, with credible documentary P a g e | 4 A.Y. 2017-18 Golden Realty, Mumbai evidences such as confirmations, bank statements of the tenants, source of such cash and so on. The onus was on the assessee to explain and prove the nature of the liability which he failed to do so. Considering the facts entirety the addition made was sustained.
3.3 During the course of assessment proceedings, the AO noticed that the assessee had borrowed huge unsecured cash loans from various creditors. In order to ascertain the genuineness of these loans the AO required the assessee to explain the same by furnishing the credible documents, confirmations, bank statements, etc., regarding the source, nature, purpose, context, veracity thereof. In compliance, the assessee could not furnish the required documents, in the prescribed manner, therefore, the AO had treated the unsecured cash loans from various creditors to the extent of Rs. 1,20,17,850/- as unexplained and added to the total income of the assessee. The ld.CIT(A) upheld the addition by observing that the AO had made detailed investigation and brought out relevant material on record to held that the unsecured cash loans introduced in the name of various creditors remained unverifiable/unexplained in the absence of proper confirmations, complete mailing addresses, copy of bank statements reflecting the source and capacity to advance such unsecured cash loans, nature/purpose of transactions etc. Considering these facts the P a g e | 5 A.Y. 2017-18 Golden Realty, Mumbai nature/source of unsecured cash credits remained unexplained, therefore, the addition was sustained by him.
In the course of hearing before us, the assessee through the ld.AR has filed various additional evidences in terms of Rule 29 of ITAT Rules with a request to admit the same. These evidences comprise of tenant wise cash collected with PAN, Unsecured loans confirmations and bank statements, Tenant receipts against old building tenancy with agreements etc. The ld.DR did not object to their admission.
We have given our anxious consideration to the submissions made and we are of the view that no prejudice is likely to be caused to the Revenue if the additional evidences now produced before us by the assessee are admitted as per the provisions of Rule 29 of the ITAT Rules. This Tribunal, under the scheme of the Act is a final fact-finding authority and in order to enable it to decide disputes brought before it by way of second appeal in a lawful, fair and judicious manner, it has necessarily to look into and consider such evidence and other material having a nexus and bearing on the subject-matter of the appeal viz. the dispute involved. The Hon'ble Supreme Court in the case of K. Venkata Ramaiah v. A. Sitarama Reddy AIR 1963 SC 1526 has laid down that an appellate court has power to allow additional evidence not only if P a g e | 6 A.Y. 2017-18 Golden Realty, Mumbai it requires such evidence to enable it to pronounce judgment but also for any other "substantial cause". The hon’ble Calcutta High Court in the case of Kali Charan Ram Chander v. CIT [1978] 112 ITR 405 at 409 have held as under: “Ordinarily, an appeal should be decided by the Tribunal on the materials before it. This rule is, however, subject to a further rule, namely, that if the Tribunal is unable to decide the appeal on the materials before it or if the relevant facts for deciding the appeal are not before it, it may adopt anyone of the three alternative courses which are open to it in order to do substantial justice between the parties. It may admit further evidence and decide the appeal. Or it may keep the appeal pending before it and direct anyone of the authorities below to ascertain further facts which are essential for the purpose of determination of the appeal and then on the basis of the remand report may decide the appeal. The third alternative course is the course which has been adopted by the Tribunal in the instant case before us. In the absence of the relevant and essential facts, the Tribunal was unable to decide whether Bindawalla Trading Co. was a branch of the assessee-firm which was the only subject-matter of the appeals before it. Merely because the parties did not ask for an opportunity of adducing further evidence, it cannot be said the Tribunal was debarred from directing the Appellate Asstt. Commissioner to take additional evidence on lines indicated in its order and on the basis of such additional evidence to decide those appeals. 5.1 Hon’ble Madras High Court in the case of R. S. S. Shanmugam Pillai & Sons v. CIT [1974] 95 ITR 109 examining the scope of the powers of the Tribunal under Rule 29 of the ITAT Rules held that the Tribunal has got a wide discretion to admit or reject documents at the stage of appeal but such discretion cannot be exercised in an arbitrary manner and that if the Tribunal found that the documents filed are quite relevant for the purpose of deciding the issue P a g e | 7 A.Y. 2017-18 Golden Realty, Mumbai before it would be well within its powers to admit the evidence, consider the same or remit it to the lower authorities for fresh consideration..
5.2 Thus, from the judicial analysis of various decisions, it is amply settled and clear that this Tribunal can admit additional evidence in terms of Rule 29 of ITAT Rules if the receipt or admission of additional evidence is vital and essential for the purpose of consideration of the subject-matter of the appeal and arrive at a final and ultimate decision. The Tribunal, therefore, has also power to admit additional evidence in the interest of justice or if there exists substantial cause.
The main disputes and subject-matter of this appeal are whether the ld.CIT(A) was justified in confirming the impugned additions made by the AO under Section 68 of the Act as unexplained cash credits, the cash receipts from tenants appearing in assessee's account books as also the Outstanding Liabilities. The assessee having lost in first appeal and in order to get a fair deal and substantial justice from this Tribunal for deletion of the additions made by the AO has mustered relevant additional evidences and compiled it into paper books filed before us as recorded above. We have examined the said evidence and are satisfied that in order to do substantial justice to the assessee P a g e | 8 A.Y. 2017-18 Golden Realty, Mumbai the additional evidence as filed before us has to be admitted in terms of Rule 29 of the ITAT Rules and we therefore, admit the same.
6.1 After pondering over the matter, we deem it fit and proper to remit the case to the file of the AO with a direction to receive the said additional evidences which have now been filed before us by the assessee in the shape of confirmation letters, bank statement etc. We further direct him to process the same by conducting a valid, proper and thorough enquiry into all the issues in the instant appeal as per law, affording a fair and reasonable opportunity of hearing to the assessee. We therefore, set aside the appellate order allowing the grounds of appeal for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.