GOPAL SHASHIDHARA,BENGALURU vs. DCIT, CENTRAL CIRCLE-1(4), BANGALORE

On appeal, the ld. CIT(A) confirmed the addition. He observed that the assessee himself admitted to a higher rental income in the statement recorded and failed to furnish rent agreements or receipts. Hence, the AO’s reliance on the statement and estimation of income was justified.

Being aggrieved by the order of learned CIT-A, the assessee is in appeal before us.

The learned AR submitted that the addition was made without any incriminating material. Apart from the cash seizure, no documents were found in the search to prove that the assessee had undisclosed income. The AO relied only on the assessee’s statement u/s 131 of the Act, which cannot by itself be treated as incriminating evidence. The ld. AR placed reliance on: • CIT v. IBC Knowledge Park (P) Ltd (2016) 385 ITR 346 (Kar.) • CIT v. Veerprabhu Marketing Ltd (2016) 388 ITR 574 (Cal.)

We have carefully considered the rival submissions of both the parties and perused the materials available on record. It is an admitted fact that except for the assessee’s statement, no incriminating documents were found during search to establish undisclosed rental income.

1 The Hon’ble Supreme Court in PCIT v. Abhisar Buildwell (P) Ltd (2023) 454 ITR 212 (SC) has categorically held that in respect of completed/unabated assessments, no addition can be made in the proceedings u/s 153A unless based on incriminating material found

2 In the present case, the assessment year under appeal was completed, and no incriminating material was found. Therefore, the addition made by the AO and confirmed by the CIT(A) only on the basis of the assessee’s statement cannot be sustained. We, therefore, direct the AO to delete the addition of ₹2,67,400/- made by him. Hence, ground of appeal of the assessee is allowed.

3 Regarding the issues raised by the assessee on merit, we do not find any reason to adjudicate the same for the simple reason that the appeal of the assessee has been allowed on technical count itself. Hence, the other grounds raised by the assessee are dismissed as infructuous.

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

For the remaining grounds of appeal with respect to the addition made by the AO under the head of house property and business income,

1 Regarding the issues raised by the assessee on merit, we do not find any reason to adjudicate the same for the simple reason that the appeal of the assessee has been allowed on technical count itself. Hence, the other grounds raised by the assessee are dismissed as infructuous.

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

1 Regarding the issues raised by the assessee on merit, we do not find any reason to adjudicate the same for the simple reason that the appeal of the assessee has been allowed on technical count itself. Hence, the other grounds raised by the assessee are dismissed as infructuous.

In the result, all the appeal of the assessee are partly allowed.

At the outset, we note that the year under consideration is an abated assessment year. As per the settled law, in the case of an abated year, the AO has full juri iction to examine the return of income and frame assessment u/s 143(3) r.w.s. 153A even without reference to incriminating material. The concept of “no addition without incriminating material” is applicable only in respect of completed or unabated assessments, as clarified by the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell (P) Ltd (2023) 454 ITR 212 (SC).

1 In an abated assessment year, the entire assessment is open before the AO. Therefore, even in the absence of incriminating material, the AO is empowered to verify the returned income and make additions based on discrepancies noticed during assessment proceedings. In the present case, since the year in dispute is abated, the assessee’s argument that no incriminating material was found has no merit. We, therefore, dismiss this ground of appeal.

The second issue raised by the assessee relates to the confirmation by the ld. CIT(A) of the addition of ₹89,840/- under the head “Income from House Property.”

During the course of assessment, the AO noticed that the rental income declared by the assessee under the head “House Property” was ITA No.748 - 754/Bang/2025

On appeal, the ld. CIT(A) upheld the action of the AO. He observed that the assessee had failed to bring any evidence or explanation to reconcile the rental income declared in the return with that reflected in the rent agreement. Hence, the addition was confirmed. Being aggrieved by the order of learned CIT-A, the assessee is in appeal before us.

The learned AR submitted that the addition made by the AO and confirmed by the CIT(A) was only on a notional basis, without any cogent evidence, and therefore not sustainable.

On the other hand, the learned DR relied on the orders of the lower authorities and contended that once the assessee’s own rent agreement showed higher rent, the AO was justified in making the addition.

We have heard both the parties and perused the record. We note that the AO’s finding of understatement of rental income was based on the assessee’s own rent agreement vis-à-vis the income declared in the return. The assessee did not reconcile this mismatch either during assessment, before the CIT(A), or even before us. At the time of ITA No.748 - 754/Bang/2025

1 We also observe that unlike in earlier assessment years, where the question of incriminating material was relevant, the present year is an abated assessment year. In such cases, the AO has full juri iction to verify the correctness of income and make appropriate additions even without reference to incriminating material.

2 In these facts, we find no infirmity in the orders of the AO and ld. CIT(A). Hence, the addition of ₹89,840/- under the head “Income from House Property” is accordingly sustained. Thus, the ground of appeal of the assessee is hereby dismissed.

The next issue raised by the assessee is that the learned CIT-A erred in confirming the addition of ₹ 11,06,200.00 as unexplained cash under section 69A of the Act.

The AO noted that during the election period on 07.05.2018, cash of ₹16,95,100/- was seized from the possession of the assessee. Out of this, ₹11,06,200/- was treated as unexplained u/s 69A of the Act which was added to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the addition.

Before us, the learned AR submitted that the cash was found in the financial year 2018-19 relevant to assessment year 2019-20. ITA No.748 - 754/Bang/2025

The learned DR, however, supported the orders of AO and ld. CIT(A) and argued that the assessee failed to explain the source of cash.

We have considered the rival submissions and examined the record. There is no dispute on the fact that cash was found from the possession of the assessee during the search and that the assessee could not satisfactorily explain its source. In principle, therefore, such cash is liable to be brought to tax under section 69A of the Act.

The only question which arises is the correct year of taxability. Section 69A specifically provides that where an assessee is found to be the owner of any money, bullion or valuable article and fails to explain the source, the same shall be deemed to be the income of the assessee for the financial year in which such money is found in his possession.

In the present case, the seizure took place on 07.05.2018, which falls in financial year 2018-19 relevant to assessment year 2019-20. Therefore, as per the mandate of section 69A of the Act, the cash, if unexplained, is assessable in AY 2019-20 and not in the assessment year presently under appeal.

The addition made by the AO and sustained by the CIT(A) in the impugned year is thus not in accordance with law. At the same time, our finding will not prevent the Revenue from initiating action in the correct

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

At the outset, the learned counsel for the assessee submitted that the assessment framed by the AO for the year under consideration is not sustainable in law because the assessment order passed by the AO is not duly signed. It was further pointed out that even the notice of demand issued under section 156 of the Act and the computation sheet raising the demand on the assessee have not been signed by the AO. taxmann.com 705, wherein it was held that an unsigned order cannot be treated as a valid order under the Income-tax Act.

We have considered the rival submissions and carefully examined the record. The assessee’s contention is that the assessment order passed by the AO, the notice of demand issued under section 156, and the computation sheet are not signed by the AO, and therefore, they do not constitute valid orders in the eyes of law.

1 It is a settled principle that an assessment order must be authenticated by the signature of the Assessing Officer who has passed it. In the absence of such authentication, the order cannot be regarded as a valid order under the Income-tax Act. The Hon’ble Tribunal in the case Reuters Asia Pacific Ltd. Vs. DCIT cited above has held that an unsigned order is invalid and unenforceable. The rationale is that the act of signing is what confers authenticity and evidences that the order has, in fact, been passed by the competent authority.

2 In the present case, the assessee has placed on record the copy of the assessment order, the notice of demand, and the computation sheet, all of which are unsigned. The Department has not disputed this factual position. The learned DR also could not produce a signed copy or otherwise controvert the assessee’s claim.

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

In the combined results, all the appeals of the assessee are partly allowed.

The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file