RITESH AGGARWAL,MUMBAI vs. ITO - 16(3)(3), MUMBAI

2.1 Based on such information, the Assessing Officer recorded his Based on such information, the Assessing Officer recorded his Based on such information, the Assessing Officer recorded his satisfaction that income chargeable to tax had esc satisfaction that income chargeable to tax had escaped assessment aped assessment and accordingly initiated proceedings under Section 147 of the and accordingly initiated proceedings under Section 147 of the and accordingly initiated proceedings under Section 147 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), by tax Act, 1961 (hereinafter referred to as "the Act"), by tax Act, 1961 (hereinafter referred to as "the Act"), by issuance of notice under Section 148 of the Act on 20th March, issuance of notice under Section 148 of the Act on 20th March, issuance of notice under Section 148 of the Act on 20th March, 2019. In response thereto, the assessee filed a re 2019. In response thereto, the assessee filed a return of income on turn of income on 1st October, 2019 declaring the same income as was disclosed in 1st October, 2019 declaring the same income as was disclosed in 1st October, 2019 declaring the same income as was disclosed in the original return of income filed on 27th October, 2016. the original return of income filed on 27th October, 2016. the original return of income filed on 27th October, 2016.

2.2 The Assessing Officer thereafter followed the statutory The Assessing Officer thereafter followed the statutory The Assessing Officer thereafter followed the statutory procedure prescribed for reassessment and ultimately framed the procedure prescribed for reassessment and ultimately fr procedure prescribed for reassessment and ultimately fr reassessment order on 2nd December, 2019, determining the total reassessment order on 2nd December, 2019, determining the total reassessment order on 2nd December, 2019, determining the total income of the assessee at income of the assessee at ₹31,43,820/-. In doing so, the Assessing . In doing so, the Assessing Officer made the following additions: Officer made the following additions:

(i) Unexplained investment in purchase of flat – ₹8,88,776/- (i) Unexplained investment in purchase of flat (i) Unexplained investment in purchase of flat (ii) (ii) Unexplained Unexplained receipt of gift – ₹3,95,000/- (iii) Deemed rental income from house property – ₹7,73,500/- (iii) Deemed rental income from house property (iii) Deemed rental income from house property (iv) (iv) Unverified Unverified and and non-genuine non genuine expenses expenses – ₹62,505/- (v) (v) (v) Interest Interest Interest on on on refund refund refund not not not offered offered offered – ₹1,461/- (vi) Disallowance of deduction under Chapter VI (vi) Disallowance of deduction under Chapter VI-A – ₹10,000/- 2.3 In appeal, the learned Commissioner of Income Tax (Appeals) In appeal, the learned Commissioner of Income Tax (Appeals) In appeal, the learned Commissioner of Income Tax (Appeals) [CIT(A)] granted part relief to the assessee. Being aggrieved by the [CIT(A)] granted part relief to the assessee. Being aggrieved by the [CIT(A)] granted part relief to the assessee. Being aggrieved by the additions sustained by the learned CIT(A), the assessee has additions sustained by the learned CIT(A), the assessee has additions sustained by the learned CIT(A), the assessee has preferred the present appeal before the Tribunal, raising the preferred the present appeal before the Tribunal, raising the preferred the present appeal before the Tribunal, raising the grounds as reproduced hereinabove. ds as reproduced hereinabove.

4. The ground No. The ground No. 1(one) of the appeal relates to alleged violation of the appeal relates to alleged violation of the principle of natural justice. This ground of appeal was not of the principle of natural justice. This ground of appeal was of the principle of natural justice. This ground of appeal was pressed and therefore sa pressed and therefore same is dismissed as infructuous dismissed as infructuous.

5. In Ground No. 2, the assessee has assailed the validity of the In Ground No. 2, the assessee has assailed the validity of the In Ground No. 2, the assessee has assailed the validity of the reassessment reassessment reassessment proceedings proceedings proceedings on on on the the the plea plea plea that that that the the the statutory statutory statutory preconditions for initiation and completion of reassessment were preconditions for initiation and completion of reassessment were preconditions for initiation and completion of reassessment were not duly satisfied. It has been urged by learned counsel for the satisfied. It has been urged by learned counsel for the satisfied. It has been urged by learned counsel for the assessee that the entire edifice of the reassessment rests upon what assessee that the entire edifice of the reassessment rests upon what assessee that the entire edifice of the reassessment rests upon what he termed as "mere hearsay". According to him, there is no tangible he termed as "mere hearsay". According to him, there is no tangible he termed as "mere hearsay". According to him, there is no tangible evidence on record to establish that the assessee had in fact made evidence on record to establish that the assessee had in fact evidence on record to establish that the assessee had in fact payment in cash, nor is there even any statement of the alleged payment in cash, nor is there even any statement of the alleged payment in cash, nor is there even any statement of the alleged recipient affirming the receipt of such cash from the assessee. It recipient affirming the receipt of such cash from the assessee. It recipient affirming the receipt of such cash from the assessee. It was therefore contended that the very initiation of reassessment was therefore contended that the very initiation of reassessment was therefore contended that the very initiation of reassessment was unsustainable in law, being founded on non-existent and was unsustainable in law, being founded on non was unsustainable in law, being founded on non unsubstantiated facts. unsubstantiated facts.

5.1 Per contra, learned Departmental Representative submitted Per contra, learned Departmental Representative submitted Per contra, learned Departmental Representative submitted that the reopening was not premised upon conjectures but was that the reopening was not premised upon conjectures but was that the reopening was not premised upon conjectures but was founded upon specific and tangible information received from a founded upon specific and tangible information received from a founded upon specific and tangible information received from a credible official source, namely, the Inco credible official source, namely, the Income-tax Officer, Mumbai. He tax Officer, Mumbai. He contended that the information was not general in nature but contended that the information was not general in nature but contended that the information was not general in nature but directly relatable to the assessee, and that on such material, the directly relatable to the assessee, and that on such material, the directly relatable to the assessee, and that on such material, the Assessing Officer, acting as a prudent and reasonable person, was Assessing Officer, acting as a prudent and reasonable person, was Assessing Officer, acting as a prudent and reasonable person, was justified in forming the requisite justified in forming the requisite belief of escapement of income. In belief of escapement of income. In support of his submission, reliance was placed upon the decision of support of his submission, reliance was placed upon the decision of support of his submission, reliance was placed upon the decision of Hon’ble Supreme Court in Court in Assistant Commissioner of Income Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [(2007) 291 ITR 500 (SC)], [(2007) 291 ITR 500 (SC)], Rajesh Jhaveri Stock Brokers Pvt. Ltd. wherein it was held that at the stage of initiation of reassessment wherein it was held that at the stage of initiation of reassessment wherein it was held that at the stage of initiation of reassessment proceedings, what is required is a bona fide belief based on relevant proceedings, what is required is a bona fide belief based on relevant proceedings, what is required is a bona fide belief based on relevant material and not conclusive proof of escapement of income. material and not conclusive proof of escapement of income. material and not conclusive proof of escapement of income.

5.2 We have carefully considere We have carefully considered the rival submissions and d the rival submissions and perused the record. It is pertinent to note that the assessee had not perused the record. It is pertinent to note that the assessee had not perused the record. It is pertinent to note that the assessee had not challenged the validity of reassessment proceedings before the challenged the validity of reassessment proceedings before the challenged the validity of reassessment proceedings before the learned CIT(A). The ground, therefore, could be urged only as an learned CIT(A). The ground, therefore, could be urged only as an learned CIT(A). The ground, therefore, could be urged only as an additional ground before this additional ground before this Tribunal. However, having regard to Tribunal. However, having regard to the fact that the ground is purely legal in nature and does not the fact that the ground is purely legal in nature and does not the fact that the ground is purely legal in nature and does not necessitate investigation into fresh facts, and in view of the absence necessitate investigation into fresh facts, and in view of the absence necessitate investigation into fresh facts, and in view of the absence of objection from the Departmental Representative, the same was of objection from the Departmental Representative, the same was of objection from the Departmental Representative, the same was admitted by way of or admitted by way of oral plea.

5.3 The foundation of the reassessment proceedings lies in the The foundation of the reassessment proceedings lies in the The foundation of the reassessment proceedings lies in the reasons recorded by the Assessing Officer under Section 147 of the reasons recorded by the Assessing Officer under Section reasons recorded by the Assessing Officer under Section Act. Since the assessee has challenged the very validity of such Act. Since the assessee has challenged the very validity of such Act. Since the assessee has challenged the very validity of such reasons on the ground that they rest upon non reasons on the ground that they rest upon non-existe existent facts, it becomes necessary to reproduce them becomes necessary to reproduce them as under:

“ORDERSHEET Reasons Reasons recorded u/s 148(2) of the Act, 1961for or reopening the assessment in the case of the assessment in the case of Ritesh Agarwal Ritesh Agarwal (PAN : AAPPA6828R) for A.Y. 2016-17 (PAN The assessee has filed return of income for The assessee has filed return of income for A.Y. 2016-17 on 27.10. 17 on 27.10.2016 declaring Rs.8,89,570/- total income. total income. The information has been received from Office of the Income The information has been received from Office of the Income The information has been received from Office of the Income-tax Officer 25(1)(4), Mumbai. The Income tax Officer 25(1)(4), Mumbai has given a finding that M/s. V.K. The Income tax Officer 25(1)(4), Mumbai has given a finding that M/s. V.K. The Income tax Officer 25(1)(4), Mumbai has given a finding that M/s. V.K. Realtors (PAN:AAJFV9968R) Realtors (PAN:AAJFV9968R) is a partnership firm and engaged in real estate is a partnership firm and engaged in real estate business as builders and developers and developed a project namely “Green business as builders and developers and developed a project namely “Green business as builders and developers and developed a project namely “Green Acres” in Bicholim, Goa. Acres” in Bicholim, Goa. A survey action u/s,133A of the act was conducted at business premises of M/s. A survey action u/s,133A of the act was conducted at business premises of M/s. A survey action u/s,133A of the act was conducted at business premises of M/s. V.K.Realtors by the ITO V.K.Realtors by the ITO-WD-2(3), Panaji on 03/09/2015. During the course of 3), Panaji on 03/09/2015. During the course of survey, the survey team impounded certain incriminating documents. The contents survey, the survey team impounded certain incriminating documents. The contents survey, the survey team impounded certain incriminating documents. The contents of the said documents revealed that the same pertained to sale of flats by M/s. of the said documents revealed that the same pertained to sale of flats by M/s. of the said documents revealed that the same pertained to sale of flats by M/s. V.K.Realtors for the project “Green Acres”. Based V.K.Realtors for the project “Green Acres”. Based on the impounded documents, on the impounded documents, the statement of Sh. Kunal Naren Kuwandekar(Partner of the assessee) was the statement of Sh. Kunal Naren Kuwandekar(Partner of the assessee) was the statement of Sh. Kunal Naren Kuwandekar(Partner of the assessee) was recorded which established that M/s. V.K.Realtors has received on money in cash recorded which established that M/s. V.K.Realtors has received on money in cash recorded which established that M/s. V.K.Realtors has received on money in cash which is over and above the agreement value/booking value shown against th which is over and above the agreement value/booking value shown against th which is over and above the agreement value/booking value shown against the sale of flats in this project. sale of flats in this project. The assessee has paid part consideration in cash for purchase of flat to M/s. The assessee has paid part consideration in cash for purchase of flat to M/s. The assessee has paid part consideration in cash for purchase of flat to M/s. V.K.Realtors, the details of which are as under: V.K.Realtors, the details of which are as under:

Flat PAN Name of the Name of the Cash given appearing in Cash given appearing in No. Beneficiaiy Beneficiaiy impounded material impounded material

1 Ritesh Agarwal Agarwal AADPA6828R 8,88,776/-

The assessee, Ritesh Agarwal, is one the beneficiary. Therefore, I have reason to The assessee, Ritesh Agarwal, is one the beneficiary. Therefore, I have reason to The assessee, Ritesh Agarwal, is one the beneficiary. Therefore, I have reason to believe that amount of Rs.8,88,776/ believe that amount of Rs.8,88,776/- has escaped assessment for A.Y 2016 has escaped assessment for A.Y 2016-17 in the case of the assessee. Thus, 1 am satisfied that this is a the case of the assessee. Thus, 1 am satisfied that this is a the case of the assessee. Thus, 1 am satisfied that this is a fit case to issue notice u/s 148 r.w.s.147 of the I.T Act, for A.Y. 2016 u/s 148 r.w.s.147 of the I.T Act, for A.Y. 2016-17. Approval u/s 151(1) of the 1. T. Act is solicited in this case for A.Y. 2016 Approval u/s 151(1) of the 1. T. Act is solicited in this case for A.Y. 2016 Approval u/s 151(1) of the 1. T. Act is solicited in this case for A.Y. 2016-17.”

5.4 A careful perusal of the reasons recorded reveals that during A careful perusal of the reasons recorded reveals that during A careful perusal of the reasons recorded reveals that during the course of a survey conducte the course of a survey conducted under Section 133A of the Act at d under Section 133A of the Act at the business premises of M/s V.K. Realtors, Panaji, incriminating the business premises of M/s V.K. Realtors, Panaji, incriminating the business premises of M/s V.K. Realtors, Panaji, incriminating documents were impounded indicating receipt of “on-money” in documents were impounded indicating receipt of “on documents were impounded indicating receipt of “on cash from customers in respect of flats sold in its project “Green cash from customers in respect of flats sold in its project “Green cash from customers in respect of flats sold in its project “Green Acres”. The statement of Sh Acres”. The statement of Shri Kunal Naren Kuwandekar, partner of ri Kunal Naren Kuwandekar, partner of the said firm, was recorded, in which he admitted the practice of the said firm, was recorded, in which he admitted the practice of the said firm, was recorded, in which he admitted the practice of receiving cash over and above the recorded value and undertook to receiving cash over and above the recorded value and undertook to receiving cash over and above the recorded value and undertook to disclose such receipts to tax. He also furnished a list of customers disclose such receipts to tax. He also furnished a list of customers disclose such receipts to tax. He also furnished a list of customers along with details of cash received, in which the assessee’s name s of cash received, in which the assessee’s name s of cash received, in which the assessee’s name specifically figured with respect to flat No. A specifically figured with respect to flat No. A-302, reflecting cash 302, reflecting cash payment of ₹8,88,776/ 8,88,776/-.

5.5 The law laid down by this Court in The law laid down by this Court in Rajesh Jhaveri Stock Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) makes it clear that at the stage of issuance (supra) makes it clear that at the stage of issuance (supra) makes it clear that at the stage of issuance of notice under Section 148, the sufficiency or correctness of the of notice under Section 148, the sufficiency or correctness of the of notice under Section 148, the sufficiency or correctness of the material is not to be examined, but only its relevance to the material is not to be examined, but only its relevance to the material is not to be examined, but only its relevance to the formation of a prima facie belief of escapement of income. The test formation of a prima facie belief of escapement of income. The test formation of a prima facie belief of escapement of income. The test is whether a reasonable person, in possession of the said ether a reasonable person, in possession of the said ether a reasonable person, in possession of the said information, could form such belief. In the present case, the information, could form such belief. In the present case, the information, could form such belief. In the present case, the information emanated from a lawful survey action conducted by the information emanated from a lawful survey action conducted by the information emanated from a lawful survey action conducted by the Income-tax Department itself, in the regular discharge of its tax Department itself, in the regular discharge of its tax Department itself, in the regular discharge of its statutory duties. The information was specific, directly related to ies. The information was specific, directly related to ies. The information was specific, directly related to the assessee, and clearly indicated payment of cash over and above the assessee, and clearly indicated payment of cash over and above the assessee, and clearly indicated payment of cash over and above the recorded consideration. the recorded consideration.

5.6 In these circumstances, the contention of the assessee that In these circumstances, the contention of the assessee that In these circumstances, the contention of the assessee that the reassessment proceedings were based on the reassessment proceedings were based on hearsay or non hearsay or non- existent material cannot be sustained. We are satisfied that the existent material cannot be sustained. We are satisfied that the existent material cannot be sustained. We are satisfied that the Assessing Officer had before him relevant and credible material Assessing Officer had before him relevant and credible material Assessing Officer had before him relevant and credible material upon which he could reasonably entertain the belief that income upon which he could reasonably entertain the belief that income upon which he could reasonably entertain the belief that income chargeable to tax had escaped assessment. The reassessment chargeable to tax had escaped assessment. The r chargeable to tax had escaped assessment. The r proceedings are, therefore, held to have been validly initiated. The proceedings are, therefore, held to have been validly initiated. proceedings are, therefore, held to have been validly initiated. ground no. 2 of the appeal is accordingly dismissed. ground no. 2 of the appeal is accordingly dismissed. ground no. 2 of the appeal is accordingly dismissed. of the appeal relates to addition of ₹ 8, 6. The ground No. ground No. 3(three) of the appeal relates to addition of 88,776/-made by the Assessing Officer in relation to made by the Assessing Officer in relation to made by the Assessing Officer in relation to cash payment for purchase of flat in purchase of flat in ‘Green Acres’ real estate project at Panaji, real estate project at Panaji, Goa.

6.1 The facts, briefly stated, are that during reassessment The facts, briefly stated, are that during reassessment The facts, briefly stated, are that during reassessment proceedings, the Assessing Officer issued a show-cause notice proceedings, the Assessing Officer issued a show proceedings, the Assessing Officer issued a show requiring the assessee to explain the source requiring the assessee to explain the source of cash payment of of cash payment of ₹8,88,776/- allegedly made to M/s. V.K. Realtors, over and above allegedly made to M/s. V.K. Realtors, over and above allegedly made to M/s. V.K. Realtors, over and above the agreement value of the property. The assessee was further the agreement value of the property. The assessee was further the agreement value of the property. The assessee was further called upon to show cause as to why the said amount should not be called upon to show cause as to why the said amount should not be called upon to show cause as to why the said amount should not be treated as unexplained investment within the treated as unexplained investment within the meaning of Section meaning of Section 69B of the Income-tax Act, 1961. tax Act, 1961.

6.2 In response, the assessee categorically denied having made In response, the assessee categorically denied having made In response, the assessee categorically denied having made any such cash payment. It was submitted that an allotment letter any such cash payment. It was submitted that an allotment letter any such cash payment. It was submitted that an allotment letter had been issued by the builder on 22nd November, 2012 and that had been issued by the builder on 22nd November, 2012 and that had been issued by the builder on 22nd November, 2012 and that no registered sale agreement had yet been executed, since the no registered sale agreement had yet been executed, since the no registered sale agreement had yet been executed, since the assessee intended to dispose of the property. It was further e intended to dispose of the property. It was further e intended to dispose of the property. It was further contended that the total cost of the flat, as per the allotment letter, contended that the total cost of the flat, as per the allotment letter, contended that the total cost of the flat, as per the allotment letter, was ₹29,43,296/-, out of which a sum of , out of which a sum of ₹25,79,106/ 25,79,106/-, being approximately 88% of the cost, had already been discharged by approximately 88% of the cost, had already been discharged by approximately 88% of the cost, had already been discharged by cheque by 25th January, 2014. A copy of the allotment letter dated y 25th January, 2014. A copy of the allotment letter dated y 25th January, 2014. A copy of the allotment letter dated 20th November, 2012 was also placed on record. 20th November, 2012 was also placed on record.

6.3 The Assessing Officer, however, was not satisfied with the The Assessing Officer, however, was not satisfied with the The Assessing Officer, however, was not satisfied with the explanation of the assessee. Relying upon the material unearthed explanation of the assessee. Relying upon the material unearthed explanation of the assessee. Relying upon the material unearthed during the course of s during the course of survey in the case of M/s. V.K. Realtors, urvey in the case of M/s. V.K. Realtors, including the written statement dated 21st September, 2015 of its including the written statement dated 21st September, 2015 of its including the written statement dated 21st September, 2015 of its partner, Shri Kunal Kuwadekar, wherein a unit-wise list of partner, Shri Kunal Kuwadekar, wherein a unit partner, Shri Kunal Kuwadekar, wherein a unit customers and cash received had been furnished, the Assessing customers and cash received had been furnished, the Assessing customers and cash received had been furnished, the Assessing Officer noted that the asses Officer noted that the assessee was specifically shown as purchaser see was specifically shown as purchaser of flat A-302, against which cash of 302, against which cash of ₹8,88,776/- was recorded. was recorded.

6.4 To further corroborate, the Assessing Officer issued notice .4 To further corroborate, the Assessing Officer issued notice .4 To further corroborate, the Assessing Officer issued notice under Section 133(6) of the Act to Shri Kunal Kuwadekar, who, vide under Section 133(6) of the Act to Shri Kunal Kuwadekar, who, vide under Section 133(6) of the Act to Shri Kunal Kuwadekar, who, vide ovember, 2019, confirmed the assessee’s his reply dated 19th N his reply dated 19th November, 2019, confirmed the a booking of flat A-302.

"2. Yes we agree that Mr. Ritesh Aggarwal has booked flat inour we agree that Mr. Ritesh Aggarwal has booked flat inour we agree that Mr. Ritesh Aggarwal has booked flat inour Green Acres Project in Goa. As far as copy of sale agreement Green Acres Project in Goa. As far as copy of sale agreement Green Acres Project in Goa. As far as copy of sale agreement concerned we have to state that till that we have not executed Sale concerned we have to state that till that we have not executed Sale concerned we have to state that till that we have not executed Sale Agreement with Mr. Ritesh Aggarwal. The Agreement value of Flat Agreement with Mr. Ritesh Aggarwal. The Agreement value of Flat Agreement with Mr. Ritesh Aggarwal. The Agreement value of Flat of Rs.29,43,296/ 9,43,296/- and he has paid all this amount till date. and he has paid all this amount till date. The difference between the payment received and the The difference between the payment received and the The difference between the payment received and the agreement value of Flat is because of VAT & Service Tax and agreement value of Flat is because of VAT & Service Tax and agreement value of Flat is because of VAT & Service Tax and deposit towards Society Maintenance, Electricity & Water deposit towards Society Maintenance, Electricity & Water deposit towards Society Maintenance, Electricity & Water which is payable over and above t which is payable over and above the sale price. Besides above . Besides above cheque payment, we had been committed a cash payment of we had been committed a cash payment of cheque payment, Rs.8,88,776/ Rs.8,88,776/- by Mr. Aggarwal.

“6.4 In support of the aforesaid submission, Shri Kunal Kuwadekar 6.4 In support of the aforesaid submission, Shri Kunal Kuwadekar 6.4 In support of the aforesaid submission, Shri Kunal Kuwadekar has enclosed copy of revised return of income and revised financial has enclosed copy of revised return of income and revised financial has enclosed copy of revised return of income and revised financial statements of M/s. V. K. Realt statements of M/s. V. K. Realtors for A.Y:2016-17. On perusal of the 17. On perusal of the same, it is seen that in the Notes to Accounts at Clause 8(II)(iii), the same, it is seen that in the Notes to Accounts at Clause 8(II)(iii), the same, it is seen that in the Notes to Accounts at Clause 8(II)(iii), the effect of declaration of additional income on account cash collected effect of declaration of additional income on account cash collected effect of declaration of additional income on account cash collected from customers on sale of flat which was over and above the from customers on sale of flat which was over and above the from customers on sale of flat which was over and above the agreement value agreement value for sale has been given by inflating the advances for sale has been given by inflating the advances received from customers. This clearly settles the fact that M/s. V. K. received from customers. This clearly settles the fact that M/s. V. K. received from customers. This clearly settles the fact that M/s. V. K. Realtors have declared cash payments received from its customers Realtors have declared cash payments received from its customers Realtors have declared cash payments received from its customers on sale of flat in Green Acres, Goa in its return of income for on sale of flat in Green Acres, Goa in its return of income for on sale of flat in Green Acres, Goa in its return of income for A.Y:2016-17 and as per the submissions made during the survey 17 and as per the submissions made during the survey 17 and as per the submissions made during the survey proceedings by its partner Shri Kunal Kuwadekar, cash of proceedings by its partner Shri Kunal Kuwadekar, cash of proceedings by its partner Shri Kunal Kuwadekar, cash of Rs.8,88,776/ was received by M/s. V. K. Realtors from the Rs.8,88,776/ was received by M/s. V. K. Realtors from the Rs.8,88,776/ was received by M/s. V. K. Realtors from the assessee i.e. Shri Ritesh Aggarwal on sale of flat A assessee i.e. Shri Ritesh Aggarwal on sale of flat A-302 to him. The 302 to him. The said fact was f said fact was further confirmed by Shri Kunal Kuwadekar in his urther confirmed by Shri Kunal Kuwadekar in his response to this office notice u/s.133(6) of the 1.T.Act, 1961 response to this office notice u/s.133(6) of the 1.T.Act, 1961 response to this office notice u/s.133(6) of the 1.T.Act, 1961 wherein he has submitted the revised return of income and revised wherein he has submitted the revised return of income and revised wherein he has submitted the revised return of income and revised financials evidencing the declaration additional receipts by way of financials evidencing the declaration additional receipts by way of financials evidencing the declaration additional receipts by way of cash received on sale of flats therein for ed on sale of flats therein for A.Y:2016- 17.” ” 6.6 On this basis, the Assessing Officer concluded that the On this basis, the Assessing Officer concluded that the On this basis, the Assessing Officer concluded that the assessee had in fact made the said cash payment, which was not assessee had in fact made the said cash payment, which was not assessee had in fact made the said cash payment, which was not reflected in his books of account, and accordingly treated it as reflected in his books of account, and accordingly treated it as reflected in his books of account, and accordingly treated it as unexplained investmen unexplained investment under Section 69B of the Act. t under Section 69B of the Act.

6.3.2 The appellant has submitted 6.3.2 The appellant has submitted in this regard vide his wri in this regard vide his written submission, dt.29/01/2021 submission, dt.29/01/2021 and reiterated that there was no and reiterated that there was no cash transactions taken place between him and M/s-V.K. cash transactions taken place between him and M/s cash transactions taken place between him and M/s Realtors. It was also contended that the appellant was just an Realtors. It was also contended that the appellant was just an Realtors. It was also contended that the appellant was just an investor in the project and invested for the p investor in the project and invested for the purpose of capital gain. urpose of capital gain. The agreement was still pending and as he was not interested to The agreement was still pending and as he was not interested to The agreement was still pending and as he was not interested to invest more on that flat, stamp duty for same was not paid. It was invest more on that flat, stamp duty for same was not paid. It was invest more on that flat, stamp duty for same was not paid. It was also contended in the Statement of Facts that regarding Cash also contended in the Statement of Facts that regarding Cash also contended in the Statement of Facts that regarding Cash Payment the assessee/appellant Strongly Payment the assessee/appellant Strongly protested that the same protested that the same was not paid by him and he was not allowed to cross question the was not paid by him and he was not allowed to cross question the was not paid by him and he was not allowed to cross question the VK Realtors which is against the natural justice, oath without VK Realtors which is against the natural justice, oath without VK Realtors which is against the natural justice, oath without cross verification and without documentary evidence is bad in cross verification and without documentary evidence is bad in cross verification and without documentary evidence is bad in law. 6.3.2 Allotment letter, payment sched 6.3.2 Allotment letter, payment schedule stated to be received ule stated to be received from M/s. V.R. Realtors in this regard are attached along-with from M/s. V.R. Realtors in this regard are attached along from M/s. V.R. Realtors in this regard are attached along payment schedule to M/s. V.K. Realtors. The appellant's payment schedule to M/s. V.K. Realtors. The appellant's payment schedule to M/s. V.K. Realtors. The appellant's submission and its attachments were perused. Mere submission submission and its attachments were perused. Mere submission submission and its attachments were perused. Mere submission and furnishing of copy of allotment letter, ledger and furnishing of copy of allotment letter, ledger extract payment extract payment was not made by the assessee/appellant. The appellant even was not made by the assessee/appellant. The appellant even was not made by the assessee/appellant. The appellant even failed to furnish any evidence to the effect that he was not failed to furnish any evidence to the effect that he was not failed to furnish any evidence to the effect that he was not allowed to cross examine the entity M/s. V.K. Realtors by the A.O. allowed to cross examine the entity M/s. V.K. Realtors by the A.O. allowed to cross examine the entity M/s. V.K. Realtors by the A.O. The assessee/appellant was supposed to prove that cash The assessee/appellant was supposed to prove that ca The assessee/appellant was supposed to prove that ca payment was not made by him or to furnish sources for the said payment was not made by him or to furnish sources for the said payment was not made by him or to furnish sources for the said cash payments made before the A.O, But, the assessee failed to cash payments made before the A.O, But, the assessee failed to cash payments made before the A.O, But, the assessee failed to do so both before the Assessing Officer and subsequently before do so both before the Assessing Officer and subsequently before do so both before the Assessing Officer and subsequently before the First Appellate Authority, whereas the AO had made the the First Appellate Authority, whereas the AO had made the the First Appellate Authority, whereas the AO had made the above addition u/s.69B of the Act on the basis of concrete e addition u/s.69B of the Act on the basis of concrete e addition u/s.69B of the Act on the basis of concrete evidence collected evidence collected by him u/s 133(6) of the Act. Thus, the y him u/s 133(6) of the Act. Thus, the appellant's contention in the form of Ground No.4 is not acceptable appellant's contention in the form of Ground No.4 is not acceptable appellant's contention in the form of Ground No.4 is not acceptable and dismissed. and dismissed.

8.1 Further, we note that relevant part of the submission of Mr. we note that relevant part of the submission of Mr. we note that relevant part of the submission of Mr. Kunal Kuwadekar reproduced by the assessing officer in para 6.3 of Kunal Kuwadekar reproduced by the assessing officer in para 6.3 of Kunal Kuwadekar reproduced by the assessing officer in para 6.3 of the impugned order which the impugned order which we have already extracted above, Mr. we have already extracted above, Mr. Kunal Kuwadekar is referring that the ca Kunal Kuwadekar is referring that the cash payment was with sh payment was with regard to VAT and service tax and deposit towards society T and service tax and deposit towards society T and service tax and deposit towards society maintenance, electricity and water which maintenance, electricity and water which was committed by the was committed by the assessee as cash payment. Therefore as cash payment. Therefore, the issue arise as to e issue arise as to whether this amount of the cash payment though might be related to society this amount of the cash payment though might be related to society this amount of the cash payment though might be related to society maintenance or VAT or any other purpose was paid in cash by the maintenance or VAT or any other purpose was paid in cash by the maintenance or VAT or any other purpose was paid in cash by the assessee and whether it reflects in books of accounts or return of assessee and whether it reflects in books of accounts or return of assessee and whether it reflects in books of accounts or return of income and whether they consti and whether they constitute unexplained investment within tute unexplained investment within the meaning of Section 69B, are matters which require factual the meaning of Section 69B, are matters which require factual the meaning of Section 69B, are matters which require factual verification. We also note the submission of the assessee that the We also note the submission of the assessee that the We also note the submission of the assessee that the investment in the said flat was not made singly, but along with investment in the said flat was not made singly, but along with investment in the said flat was not made singly, but along with other friends. This aspect other friends. This aspect also warrants proper enquiry by the also warrants proper enquiry by the Assessing Officer from the assessee rom the assessee about the name of the other the name of the other friends who had invested in the same project and the action taken friends who had invested in the same project and the action taken friends who had invested in the same project and the action taken by the department in those cases in those cases.

8.2 In the totality of circumstances, therefore, we dee In the totality of circumstances, therefore, we dee In the totality of circumstances, therefore, we deem it appropriate, in the interest of justice, to set aside the orders of the appropriate, in the interest of justice, to set aside the orders of the appropriate, in the interest of justice, to set aside the orders of the lower authorities on this issue and restore the matter to the file of lower authorities on this issue and restore the matter to the file of lower authorities on this issue and restore the matter to the file of the Assessing Officer for de novo adjudication. The Assessing Officer the Assessing Officer for de novo adjudication. The Assessing Officer the Assessing Officer for de novo adjudication. The Assessing Officer shall, while doing so, confront the ass shall, while doing so, confront the assessee with all material sought essee with all material sought to be relied upon, including statements recorded during survey, and to be relied upon, including statements recorded during survey, and to be relied upon, including statements recorded during survey, and shall afford the assessee due opportunity of cross shall afford the assessee due opportunity of cross-examination. The examination. The assessee, in turn, shall cooperate in the proceedings and place all assessee, in turn, shall cooperate in the proceedings and place all assessee, in turn, shall cooperate in the proceedings and place all relevant material in relevant material in support of his defence. With these directions, support of his defence. With these directions, Ground No. 3 is allowed for statistical purposes Ground No. 3 is allowed for statistical purposes.

9.1 The Assessing Officer, upon noting that these properties were The Assessing Officer, upon noting that these properties were The Assessing Officer, upon noting that these properties were not shown as self-occupied or let out in the return of income, occupied or let out in the return of income, occupied or let out in the return of income, proceeded to compute deemed rental income under Section 23 of oceeded to compute deemed rental income under Section 23 of oceeded to compute deemed rental income under Section 23 of the Act. The assessee, however, failed to place on record any cogent the Act. The assessee, however, failed to place on record any cogent the Act. The assessee, however, failed to place on record any cogent material before the Assessing Officer to substantiate the plea that material before the Assessing Officer to substantiate the plea that material before the Assessing Officer to substantiate the plea that the Panchkula property was still under construction and had not the Panchkula property was still under construction and had the Panchkula property was still under construction and had been put to use, or that the shop at Knox Plaza was in fact yielding been put to use, or that the shop at Knox Plaza was in fact yielding been put to use, or that the shop at Knox Plaza was in fact yielding rent taxable in the hands of his spouse. Consequently, the rent taxable in the hands of his spouse. Consequently, the rent taxable in the hands of his spouse. Consequently, the Assessing Officer assessed notional rent on both properties. Assessing Officer assessed notional rent on both properties. Assessing Officer assessed notional rent on both properties.

9.2 In appeal, the assessee produced additional evidence in th In appeal, the assessee produced additional evidence in th In appeal, the assessee produced additional evidence in the form of a payment schedule and certain documents to contend that form of a payment schedule and certain documents to contend that form of a payment schedule and certain documents to contend that the Panchkula flat was under construction, that registration had the Panchkula flat was under construction, that registration had the Panchkula flat was under construction, that registration had not been executed, and that possession had not been handed over. not been executed, and that possession had not been handed over. not been executed, and that possession had not been handed over. In relation to the Knox Plaza property, it was argued that rent had In relation to the Knox Plaza property, it was argued that In relation to the Knox Plaza property, it was argued that been received by the assessee’s wife, who was the beneficial owner been received by the assessee’s wife, who was the beneficial owner been received by the assessee’s wife, who was the beneficial owner of the property, and that the rental income had been duly offered in of the property, and that the rental income had been duly offered in of the property, and that the rental income had been duly offered in her return of income. The learned CIT(A), however, declined to her return of income. The learned CIT(A), however, declined to her return of income. The learned CIT(A), however, declined to admit or consider such additional evidence, holding that no admit or consider such additional evidence, hold admit or consider such additional evidence, hold satisfactory explanation had been furnished for its non-production satisfactory explanation had been furnished for its non satisfactory explanation had been furnished for its non before the Assessing Officer. He therefore sustained the additions. before the Assessing Officer. He therefore sustained the additions. before the Assessing Officer. He therefore sustained the additions.

9.3 We have carefully perused the record and considered the We have carefully perused the record and considered the We have carefully perused the record and considered the submissions of both sides. It is evident that the assessee’s submissions of both sides. It is evident that th submissions of both sides. It is evident that th explanation regarding the Panchkula property being under explanation regarding the Panchkula property being under explanation regarding the Panchkula property being under construction, as well as his plea regarding beneficial ownership of construction, as well as his plea regarding beneficial ownership of construction, as well as his plea regarding beneficial ownership of the Knox Plaza property, rest on additional evidence which was the Knox Plaza property, rest on additional evidence which was the Knox Plaza property, rest on additional evidence which was admittedly tendered before the learned CIT(A) but not considered in admittedly tendered before the learned CIT(A) but not c admittedly tendered before the learned CIT(A) but not c accordance with the procedure mandated by Rule 46A of the accordance with the procedure mandated by Rule 46A of the accordance with the procedure mandated by Rule 46A of the Income-tax Rules, 1962. The rejection of the assessee’s defence tax Rules, 1962. The rejection of the assessee’s defence tax Rules, 1962. The rejection of the assessee’s defence without following such procedure, in our considered view, has without following such procedure, in our considered view, has without following such procedure, in our considered view, has resulted in denial of a fair and effective opportunity. resulted in denial of a fair and effective opportunity.

9.4 Having regard to the facts, and in the interest of justice, we Having regard to the facts, and in the interest of justice, we Having regard to the facts, and in the interest of justice, we deem it appropriate to remit this issue to the file of the Assessing deem it appropriate to remit this issue to the file of the Assessing deem it appropriate to remit this issue to the file of the Assessing Officer for de novo adjudication. The Assessing Officer shall Officer for de novo adjudication. The Assessing Officer shall Officer for de novo adjudication. The Assessing Officer shall consider the additional evidences furnished by the assessee, and consider the additional evidences furnished by the assessee, consider the additional evidences furnished by the assessee, any further evidence the assessee may choose to place on record, any further evidence the assessee may choose to place on record, any further evidence the assessee may choose to place on record, and decide the issue afresh after granting adequate opportunity of and decide the issue afresh after granting adequate opportunity of and decide the issue afresh after granting adequate opportunity of hearing.

9.5 Accordingly, Ground No. 4 is allowed for statistical purposes. .5 Accordingly, Ground No. 4 is allowed for statistical purposes. .5 Accordingly, Ground No. 4 is allowed for statistical purposes.