Loading judgment…
Facts
The assessee's case was reopened under Section 147 based on survey information regarding 'on money' payment for a property purchase. The Assessing Officer (AO) added Rs. 7,30,066/- as unexplained investment. The CIT(A) confirmed this addition.
Held
The Tribunal held that the payments made via bearer cheques, though some were encashed later, pertained to AY 2013-14 and not AY 2012-13 as alleged. Therefore, the addition made by the AO and confirmed by the CIT(A) was not sustainable for the current assessment year.
Key Issues
Whether the addition of 'on money' payment for property purchase is sustainable for AY 2012-13 when the payments were made via cheques issued for AY 2013-14 and whether the reassessment proceedings were valid.
Sections Cited
143(3), 147, 148, 133A, 69
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by the assessee is directed against the order passed by the National Face less Appeal Centre New Delhi, hereinafter called learned CIT(A) dated 30.11.2024 for A.Y. 2012-13. The assessee has raised the following grounds of appeal:
ON NATURAL JUSTICE: 1.1 In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre ["the CIT(A)" for short] erred in confirming the action of the Learned Assistant Commissioner of Income Tax Central Circle-2 (3), Mumbai ["the AO" for short), in passing the assessment order u/s 143 (3) r.w.s. 147 of the Income Tax Act, 1961 ["the Act" for short] in gross violation of the principles of Natural Justice and without appreciating that the said assessment order was passed without affording a fair, reasonable and sufficient opportunity of being heard to the Appellant.
ON JURISDICTION AND REASSESSMENT:
2.1 In the facts and circumstances of the case and in law, the impugned re- assessment proceedings and the consequential assessment order are bad in law and void for want of jurisdiction since the necessary pre-conditions for initiating and completing a re-assessment u/s 147/148 are not fulfilled in the present case.
2.2 In the facts and circumstances of the case and in law, the impugned assessment order is bad in law and void for want of jurisdiction since the same does not comply with Circular 19 dated 14.08.2019.
ON MERITS:
3.1 In the facts and circumstances of the case and in law, the Ld. CIT(A), erred in confirming the addition of Rs.7,30,066/- made by the Ld. AO on the allegation of payment in cash for the purchase of property at Goa.
3.2 While doing so, the Ld. CIT(A) as well as the Ld. AO failed to appreciate that (i) The payment was in fact made through bearer cheques and no such alleged cash payment was made by the appellant,
(ii) The addition made by the Ld. AO is based on unconfronted statement of some third party and is purely based on hearsay and nothing more and in any case based on the Appellant's failure to prove the negative which cannot at all be the basis for making the addition;
(iii) Even otherwise the addition is contrary to the provisions of the Act and therefore unsustainable;
(iv) In any case and without prejudice to the above, even as per the Ld. CIT(A) the payments through bearer cheques were made in AY 2013-14 (FY 2012-13) and therefore no addition could have been made in the hands of the Assessee in AY 2012-13 i.e., the relevant assessment year under appeal.
3.3 In the facts and circumstances of the case and in law, the addition made by the Ld. AO and as affirmed by the Ld. CIT(A) deserves to be deleted.
4. The Appellant craves leave to add, amend, alter, delete or modify all or any the above grounds at the time of hearing. 2. Brief facts of the case are that assessee was reopened under section 147.
Notice under section 148 dated 27.03.2019 was served upon the assessee after recording the reasons. The case of assessee was reopened on the basis of information received from ITO-25(1)(4), Mumbai that a survey action under section 133A was carried out at the office premises of V.K. Realtors, 110, Village Carapur, Bicholim, Goa on 03.09.2015. During the course of survey, certain incriminating documents were found and impounded which revealed that V.K. Realtors sold a flat to assessee in project “Green Acres” and received ‘on money’ over and above the agreement value shown against the sale of flats. Such fact was accepted by partners of said firms in the statement recorded recorded during survey action. The assessing officer was of the view that Rs. 7,30,066/- was paid ‘on money’ in cash which escaped assessment for A.Y. 2012-13 within meaning of clause (c) of Explanation 2 of section 147. On the basis of such reasons recorded, the assessing officer issued notice under section 148. In response to notice under section 148, the assessee filed his return of income on 03.05.2019 declaring income of Rs. 37.89 lacs. The assessing officer after serving notice under section 143(2) and 142(1) proceeded for reassessment. The assessing officer recorded that in response to a show cause notice, the assessee furnished details that is purchase agreement, payment receipt to builder and detail of loan from HDFC Bank with schedule of payment. But details of ‘on money’ were not furnished.
The assessing officer (AO) finally issued show cause notice dated 12.10.2019 as to why on money payment of Rs. 7,30,066/- may not be added to the income of the assessee. The AO recorded that no compliance was made thus, the assessing officer made the addition of ‘on money’ paid to builder and treated the same as unexplained investment, while passing assessment order under section 143(3) r.w.s. 147 on 24.10.2019.
Aggrieved by the addition in assessment order, the assessee filed appeal before CIT(A). Before CIT(A), the assessee challenged the addition of alleged on money. The assessee filed his detail written submission. The submission of assessee is recorded in para 5 of impugned order. The assessee in his submission submitted that during assessment, evidence of cash withdrawal was furnished before the assessing officer. The assessee handed over the bearers cheque to the builder. Such cheques were handed over for payment of statutory payment like stamp duty, registration fees against the agreement value. Such payment cannot be treated as unexplained investment. The assessing officer erred in making addition without giving reasonable opportunity of cross examination of builder. The ld. CIT(A) on considering the submission of assessee has given finding in para 7.4 of his order. The ld. CIT(A) recorded that assessee furnished copies of seven (7) bearer cheques amounting to Rs. 1.00 lac each. The assessee claimed that all bearers cheques were handed over to V.K. Realtors as cash payment was made for statutory tax payment such as stamp duty registration charges which cannot be treated as unexplained investment. The ld. CIT(A) further recorded that from the record, it is found that a survey was carried out in Goa at the premises of V.K. Realtors wherein certain incriminating material was found and impounded. The said incriminating material reveals that assessee paid cash to V.K. Realtors against purchase of flat. Such fact was accepted by such firm. On perusal of seven (7) bearer cheques it was found that cheques were issued on 11.09.2012, 18.09.2012 and 25.09.2012, the said payments pertain to A.Y. 2013-14. The assessee has not furnished any document or receipt related to stamp duty etc. Thus, assessing officer has rightly made addition of Rs. 7,30,066/- as unexplained investment, thereby confirm the addition made by assessing officer. Further aggrieved the assessee has filed present appeal before Tribunal.
We have heard the submission of ld. Authorised Representative (AR) of the assessee and the ld. Sr. Departmental Representative (DR) of the Revenue.
The ld AR of the assessee submits that he has challenged the validity of reopening as well as addition on merit. The ld. AR of the assessee submits that he has good case on merit as well as validity of reopening. The ld. AR of the assessee submits that he has good case on legal issue as well as on merit. He invited our attention at para 7.5 of order of ld. CIT(A) wherein he has categorically recorded that assessee issued all the cheques on 11.092012, 18.09.2012 and 25.09.2012. The ld. AR of the assessee also shown as the copy of various receipts acknowledged by builder against the consideration of flat wherein a receipt of Rs. 3,03,425/- of cheque no. 211437 dated 07.09.2012 drawn on Citi Bank, cheque no. 227708 dated 25.09.2012 of Rs. 3,03,425/- and cheque no. 603278 dated 24.06.2013 of Rs. 1,07,000/-.
For remaining cheques which was paid as bearer’s cheque, the ld. AR explained that all cheques were paid as bearers’ cheque and were issued on 11.09.2012, 18.09.212. Admittedly such cheques were encashed subsequent to date mentioned on the cheques. Thus, such payment is of Financial Year (FY) 2012-13 relevant to AY 2013-14 cannot considered for A.Y. 2012-13 rather of such payment, even if it is considered as unexplained money relates to A.Y. 2013-14 and no addition can be made in A.Y. 2012-13. The ld. CIT(A) despite accepting such fact confirmed addition made by assessing officer.
On the other hand, learned senior departmental representative (Sr. DR) supported the order of lower authorities on their action in making addition of alleged ‘on money’.
We have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. The facts leading to addition of Rs. 7,30,066/- has already been recorded by us in preceding paras. Suh addition is made purely on the basis of information of survey action on the builder. The AO has no where mentioned the relevant part of statement of partner of builder who was surveyed. No such material is supplied to the assessee. There is no finding of AO as to how he has arrived on the figure of addition of ‘on money’. We find that ld. CIT(A) despite recording the fact that impugned payment through cheque after 11.09.2012, despite recording such fact, ld. CIT(A) confirming the action of assessing officer. We find that once such fact is accepted by ld. CIT(A) that transaction does not related to A.Y. 2012-13, the addition was liable to be deleted instantly. Thus, we find merit in the submission of ld. AR of the assessee that transaction does not relate to A.Y. 2012-13 therefore we direct the assessing officer to deleted the addition u/s 69 of Rs. 7,30,066/-. Considering the fact that we have directed the assessing officer to delete the addition on merit, therefore, consideration of validity of reopening has become academic. In the result, Ground No. 3 of the appeal is allowed.
In the result, the grounds of appeal raised by the assessee are allowed.
Order pronounced in the open Court on 08/04/2025.