SIVASANKAR REAL ASSETS PVT. LTD.,CHENNAI vs. PCIT, CENTRAL,, CHENNAI

The Assessee raised the following grounds of appeal : “1) What the Assessee was given in the reply to the AO, confirmed by the books of accounts seized from the assessee during the search cannot be treated as unexplained / unaccounted. Further, the assessee was unable to get confirmation from the clients within the short time given by the AO.

Briefly, the facts of the case are that the appellant is an Individual deriving income from business. The Search and Seizure Operations u/s.132 of the Income Tax Act, 1961 were conducted in the business premises of the appellant on 21.09.2017. During the course of Search and Seizure operations, certain incrimination material was stated to have been found and seized. The Assessing Officer had issued a notice u/s.153A of the Act for the Assessment Year 2017-18 on 25.09.2019. In response to notice u/s.153A of the Act, the appellant filed Return of Income on 10.12.2019 declaring income of Rs.50,01,760/-. Against the said Return of Income, assessment was completed by ACIT, Central Circle-2, Coimbatore (hereinafter called ‘AO’) vide order dated 29.12.2019 passed u/s.153A r.w.s 143(3) of the Act at a total income of Rs.78,01,920/-. While doing so, the Assessing Officer made addition of Rs.5,19,810/- by holding that the appellant had shown excess agricultural income. The Assessing Officer also made addition on unsecured loans of Rs.22,80,350/- for the failure of the appellant to discharge the onus of proving the identity, genuineness and creditworthiness of unsecured loans.

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A) contending that no addition can be made in the assessment made pursuant to the notice u/s.153A of the Income Tax Act in the absence of incriminating material found as a result of Search and Seizure Action. It was further contended that the appellant had submitted proof of holding agricultural land to the extent of 4.5 Acres and on which coconut trees were grown. Therefore, the Assessing Officer without giving sufficient opportunity to prove the genuineness of the credit loans received made addition. However, the ld.CIT(A) rejected the above contention by holding that the assessment is abated assessment as it relates to year of search, the Assessing Officer was entitled to complete the assessment based on the incriminating material found as a result of Search and Seizure Operation and other material available with the Assessing Officer placing reliance on the Hon’ble Apex Court decision in the case of PCIT Vs. Abhisar Buildwell P. Ltd [2023] 454 ITR 212 (SC). The ld.CIT(A) also confirmed the addition on account of agricultural income of Rs.5,19,810/- by holding that the appellant could not furnish Bills, Receipts, Adangal to corroborate the same. The ld.CIT(A) enhanced the addition on account of loan creditors by taking into consideration the fact that the appellant had received loans the extent of Rs.36,59,350/- during the previous year relevant to assessment year under consideration. The ld.CIT(A) has confirmed the addition on account of loan creditors by holding that the appellant could not furnish necessary details with documentary evidence to prove genuineness of creditors to the satisfaction of the Assessing Officer.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. It is contended before us that the Assessing Officer as well as ld.CIT(A) without giving sufficient and reasonable opportunity to the appellant to furnish the information as called for confirmed the additions. It is further submitted that in the absence of any incriminating material found as a result of Search and Seizure Operations, the additions cannot made in the assessment pursuant to the Return of Income filed in response to notice u/s.153A of the Act. Finally, it is submitted that the loans received by the appellant during the previous year relevant to assessment year under consideration are duly accounted in the books of accounts. Therefore, no addition can be made on account of unsecured loans as regards to the addition made on account of agricultural income. He submits that the appellant had filed details of agricultural land holdings held by the appellant. The ld.CIT(A) without considering the evidence brought on record merely confirmed the action of the Assessing Officer.

On the other hand, Learned CIT-DR vehemently opposed the above submissions and submits that it is an abated assessment and therefore in view of the decision of Hon’ble Apex Court in the case of Abhisar Buildwell P. Ltd(supra), the Assessing Officer framed the assessment based on the information available with the Assessing Officer, assessment need not be confined to the incriminating material found as a result of Search and Seizure Action. She further submits that before the Assessing Officer as well as ld.CIT(A), the appellant had not filed details of unsecured loans received and also failed to prove the genuineness of the loans received. Similarly, the appellant had failed to prove the earning of agricultural income. Therefore, the ld.CIT(A) rightly confirmed the addition by passing the speaking order.

At the outset, we find that there is a delay of 121 days in presenting appeal before this Tribunal. The appellant filed an Affidavit seeking the condonation of delay on the ground that the delay had occurred on account of the fact that the Accountant who was looking after the filing of Income Tax Returns, who is working with him had left suddenly and the new Accountant took time to understand the case, as a result, the appellant was not able to file the appeal within the stipulated time.

We have perused the Affidavit and the averments made in the Affidavit. The averments made in the affidavit remain uncontroverted by Learned CIT-DR. The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, held that an uncontroverted affidavit shall be taken as an affidavit on fact. In the light of this legal position, we are of the considered opinion that the delay had occurred in filing the appeal on account of Bonafide reasons and the explanation cannot be brushed aside. Therefore, we are of considered opinion that there is a reasonable and sufficient cause for the delay, hence, the delay is condoned. Accordingly, we admit the appeal for adjudication on merits.

We heard rival submissions and perused the material available on record. The Ground of Appeal No.1 and 2 are general in nature. Ground No.3 and 4 do not require any adjudication challenged the addition on sundry creditors for loans. During the course of assessment proceedings, the Assessing Officer found that the appellant has received unsecured loans of Rs.22,80,350/-. The Assessing Officer made addition of the same for the failure of the appellant to discharge the onus of proving the genuineness of the loans received.

Before the ld.CIT(A), the appellant had filed details of loans received of Rs.36,59,350/-. On going through the details filed before the ld.CIT(A), the ld.CIT(A) was of the opinion that the appellant had received unsecured loans of Rs.36,59,350/- during the previous year relevant to assessment year under consideration. Since the appellant had failed to discharge the onus of proving genuineness of loans issued, enhancement notice to increase the addition to the extent of Rs.13,79,000/- was issued, the appellant had not responded to the enhancement notice. In the circumstances, the ld.CIT(A) confirmed the addition of Rs.36,59,350/-. We had carefully perused the orders passed by the Lower Authorities. We find on perusal of the assessment order that the notice u/s.143(2) of the Act was issued on 12.02.2019 and the assessment was completed on 29.12.2019. Thus, it is clear that the Assessing Officer had not given reasonable opportunity to represent the matter before the Assessing Officer. Similarly, on perusal of the order passed by the ld.CIT(A) also, it is apparent that the ld.CIT(A) issued show cause notice to enhance addition on 04.02.2025 and the ld.CIT(A) had passed the order on 14.02.2025. Thus, it is clear that the appellant was given only single opportunity to represent the matter before him and there was no proof that show cause notice dated 04.02.2025 was served on the appellant. In these circumstances, we are of the considered opinion that in order to meet the ends of justice, matter requires remand to the file of Assessing Officer for denovo addition. Thus, all the contentions raised by the appellant are left open before the Assessing Officer. The matter is set-aside to the file of Assessing Officer for denovo assessment in accordance with law after affording an opportunity of hearing to the appellant.

In the result, appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 22nd July, 2026.