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Facts
The assessee acquired a parcel of land and paid a significant portion in cash. During assessment, the assessee failed to produce the cash book. The AO made an addition under section 69 for unexplained investment. The CIT(A) deleted the addition, partly based on additional evidence and the AO's failure to provide a remand report.
Held
The Tribunal held that the issue was not properly examined during assessment or appellate proceedings. The CIT(A) did not independently examine the additional evidence before granting relief. Therefore, the matter was restored to the Assessing Officer for fresh consideration.
Key Issues
Whether the CIT(A) was justified in deleting the addition under section 69 without proper examination of evidence and the AO's remand report, and whether the issue needs to be re-examined by the AO.
Sections Cited
69, 143(3), 250
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Before: MS. KAVITA RAJAGOPAL & SMT. RENU JAUHRI
Appellant by : Smt. Ritika Agarwal Respondent by : Shri Hemanshu Joshi, Sr. DR Date of Hearing 17.09.2025 Date of Pronouncement 18.09.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the Revenue against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 20.05.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2012-13.
The revenue has raised following grounds of appeal:
1. Whether on the facts and circumstances of case and in law, the Ld. Appeal Unit has erred in deleting the addition of Unexplained Investment u/s. 69 of the Act, when in fact the assessee did not prove and establish the creditworthiness of sources from where the amounts used for making the investment were received?
2. Whether on the facts and circumstances of case and in law, the Ld Appeal Unit has erred in deleting the addition of Unexplained Investment u/s. 69 of A.Y. 2012-13 the Act, when in fact the assessee during the course of assessment proceeding did not furnish the details of sources of investment nor proved and established the genuineness of transactions and creditworthiness of sources from where amounts used for making the Investment were received?”
3. The brief facts of the case are that the assessee filed return declaring income of Rs. 19,45,950/- for A.Y. 2012-13 on 06.02.20213. The case was selected for scrutiny. During the course of assessment, the assessee company was seen to have acquired a parcel of land at a cost of Rs. 10,28,23,717/-. Ld. AO noticed that out of the total consideration, a sum of Rs. 2,57,00,000/- was paid in cash to various sellers and, therefore, the assessee was directed to produce copy of the cash book from the period 01.04.2011 to 31.03.2012 for examination. Since the cash book was not produced, Ld. AO held the payment to the extent of Rs. 2,05,45,362/- was out of unexplained cash, after giving benefit of cash withdrawal from the bank etc. to the extent of Rs. 51,54,638/-. Accordingly, addition of Rs. 2,05,45,362/- was made u/s. 69 of the Act and assessment was finalized at a total income of Rs. 2,06,91,314/- vide order u/s. 143(3) dated 26.03.2015. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). During the course of appellate proceedings, it was contended by the assessee that the source of cash payment was receipt of share application money in cash from one of the directors, Shri. Vijay Gajra and furnished certain documents in support of its claim. also furnished additional evidence on which a remand report was sought from the Ld. AO by the Ld. CIT(A). However, despite several reminders, the remand report from the ld. AO was not received and, therefore, Ld. CIT(A) allowed the assessee’s appeal with the following observations:
A.Y. 2012-13 “In view of above, I find infirmity in the order of the AO and resultantly, I have no hesitation in holding that the impugned order of the AO dated 26-03-2015 is not based on apropos consideration of facts and law and hence the same warrant interference. Therefore I am of opinion that AO's decision of determining total income after additions of Rs.. 2,05,45,362/-invoking section 69 of the Act for unexplained investment is not justified and not in accordance with law. Accordingly impugned addition stand deleted. The grounds in this regard are allowed. In the result, the appeal of the appellant is allowed.”
Aggrieved with the order of Ld. CIT(A), the revenue has filed an appeal before the Tribunal on the ground that the assessee did not prove and establish the creditworthiness of the source from which the impugned amount in cash was received and, therefore, Ld. CIT(A) was not justified in granting relief to the assessee.
Before us, Ld. DR has argued that since the assessee did not furnish the cash book despite specific directions, Ld. AO had no option but to make the addition with regard to cash payment of consideration made for purchase of land u/s. 69 of the Act. During the appellate proceedings, Ld. CIT(A) admitted the additional evidence filed the assessee. However, the same was not examined by the Ld. CIT(A) and simply because no remand report was received from the ld. AO, relief was allowed to the assessee.
On the other hand, Ld. AR has argued that all the requisite documents had been furnished before Ld. CIT(A), who had sought a remand report from the Ld. AO. Since no compliance was made by the Ld. AO during the appellate proceedings, Ld. CIT(A) after duly considering the assessee’s submission and
We have heard the rival submissions and perused the material available on record. Admittedly, the assessee did not furnish the cash book before ld. AO for verification of the receipt of cash and its source, despite specific direction to do so. The additional evidences filed during the course of appellate proceedings also do not contain any explanation regarding the source of share capital money stated to have been received in cash from one of the directors, Shri Vijay Gajra. In all fairness, Ld. CIT(A) ought to have examined the additional evidences independently before deciding the issue on merits even if no remand report was submitted by the AO. Instead he simply accepted the assessee’s explanation and allowed relief only because no remand report was received from the Ld. AO, while granting relief, Ld. CIT(A) did not discuss the merits of the issue even though he had co-terminus jurisdiction and could have examined the requisite evidences independently.
7.1 In view of the above facts and circumstances, we are of the considered opinion that the issue has not been properly examined during the assessment proceedings or during the appellate proceedings. In the interest of justice, we deem it appropriate to restore the issue to the Jurisdictional Assessing Officer for fresh consideration on merits after examining the additional evidences filed by the assessee during the appellate proceedings. Needless to add, the assessee
In the result, the appeal of the Revenue is allowed for statistical purposes.
Order Pronounced in Open Court on 18.09.2025