GOVIND VARSHNEY,ALIGARH vs. ITO WARD 4(1)(3), ALIGARH, ALIGARH

The appeal in ITA No. 226/AGR/2026 for AY 2020-21, arises out of the order of the ld National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 15.01.2026 against the order of assessment passed u/s 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.02.2025 by the Assessing Officer, ITO, Ward-4(1)(3), Aligarh (hereinafter referred to as ‘ld. AO’).

Though the assessee has raised several grounds of appeal, the only issue to be decided in this appeal is as to whether a sum of Rs. 8,85,800 could be treated as unexplained expenditure under section 69C of the Act in the facts and circumstances of the instant case.

I have heard the rival submissions and perused the materials available on record. The return of income for the assessment year 2020-21 was furnished by the assessee on 21-08-2020 declaring total income of Rs 3,56,180. As per the information available with the income tax department, it was found Page | 1 that assessee had made cash payment of Rs 8,85,800 to Omaxe limited from unaccounted sources for purchase of property. Accordingly, the case of the assessee was reopened under section 147 of the Act and the notice under section 148 of the Act stood issued to the assessee on 28-03-2024. In response, the assessee filed his return declaring the same total income of Rs 3,56,180 as was originally filed. The Learned AO noted in the reassessment order that a search and seizure operation was conducted under section 132 of the Act on Omaxe group on 28-02-2024. In the said search, certain documents in the form of excel sheet were found wherein it revealed that assessee herein had made unaccounted payment of Rs 8,85,800 to Omaxe group during the year under consideration. During the course of reassessment proceedings, the payments made to Omaxe group was sought to be examined by the Learned AO. The assessee vide reply dated 3-02-2025 submitted that he had paid Rs 11,48,461 to Omaxe Connaught, IV Greater Noida as per statement of demand dated 21-05-2016 and further informed that Rs 2,00,014 was being paid on 06-04-2019 towards alteration / slash renovation of captioned/ existing property purchased in financial year 2016-17 . It was categorically stated that no cash payment of Rs 8,85,800 was paid to Omaxe Connaught, IV Greater Noida as alleged in the notice of the Learned AO.

The Learned AO however noted that excel sheet was found in the search of Omaxe group wherein figure was mentioned under the head ‘amount’ 8858.00 and under the head ‘nature of receipt’ it was written adjustment. This sum of Rs 8,85,800 was sought to be treated as unexplained expenditure under section 69C of the Act in the reassessment completed under section 147 of the Act on 28-02-2025 by the Learned AO.

During the course of assessment proceedings, the assessee asked for certified copy of the seized documents from the premises of Omaxe Limited and the relevant statement recorded during the that search operation, wherein adverse information was given against the assessee. The said request letter could not reach the Learned AO as the TAPAL counter (ASK) refused to receive the request application of the assessee and assessee could not upload the said letter to get the certified copies of the seized documents and the statement recorded against him. In the meanwhile, the assessment stood completed by making an addition of Rs. 8,85,800 as unexplained expenditure. It was pleaded before the ld CIT(A)A that assessee was never provided with the copy of the seized documents , where the amount mentioned in the form of credit note was considered by the Learned AO as cash payment made by the assessee to Omaxe Limited. It was also pleaded that the statement recorded by the search party from the employee of Omaxe Limited was also not furnished to the assessee. The assessee again categorically denied the fact that no cash payment of Rs. 8,85,800 was paid to Omaxe Limited towards the property. It was submitted that only a part of the excel sheet was furnished to the assessee on 21-01-2025 by the Learned AO, which is reproduced in pages 11 and 12 of the order of Learned CIT(A)A along with the submissions of the assessee. It was pleaded that from the said excel sheet, there is absolutely no mention at all that assessee had paid cash of Rs. 8,85,800 to Omaxe Group. The Learned CIT(A)A, however, did not heed to these contentions and reiterated the observations made in the assessment order and confirmed the addition.

It is pertinent to note that assessee was given part of the excel sheet during the course of reassessment proceedings. The assessee had given proper explanation for the said excel sheet that no payment has been made in cash to Omaxe Group for the purchase of property. Further some statements were stated to be recorded from the employees of Omaxe Group on oath, wherein it was alleged that the assessee had made cash payment to Omaxe Limited. But that such statement was sought by the assessee both before the ld AO as well as before the Learned CIT(A)A and the same was never produced to the assessee. Hence a statement taken behind the back of the assessee was sought to be used against the assessee herein by drawing adverse inference and conclusion that there was cash payment of Rs 8,85,800 made by the assessee to Omaxe Group, without even providing that statement to the assessee. It is trite law that any statement that is sought to be used against the assessee need to be first furnished to the assessee for his rebuttal. Thereafter if the assessee so desires, the said party who had originally given the statement should be made available for cross examination by the assessee and it would be the department's duty to produce that person as the said party becomes department's witness. Further the excel sheet was admittedly seized from the premises of Omaxe Limited. Hence the presumption in terms of section 292C of the Act would be on Omaxe Group that the said document belongs to them. Merely because some employee of Omaxe Limited stated that the entries mentioned in the excel sheet pertains to assessee herein, proceedings cannot be directly initiated on the assessee without making preliminary enquiry both from Omaxe Limited as well as from the assessee herein. I find that the revenue had never brought on record with cogent evidence that assessee herein had indeed made cash payment of Rs 8,85,800/- to Omaxe Limited. It is only an inference drawn by the revenue based on the excel sheet found in the search of Omaxe Limited and supplemented by statement on oath by employee of Omaxe Limited, which statement was not even put to assessee for his rebuttal. Hence it could be safely concluded that the assessment framed on the assessee herein by making an addition of Rs 8,85,800/- as unexplained expenditure under section 69C of the Act suffers from various factual and legal infirmities. Hence we have no hesitation to delete the said addition of Rs 8,85,800 made in the hands of the assessee herein. Accordingly, the grounds raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed.