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Facts
The assessee made a cash payment of ₹ 94,50,000 for the purchase of agricultural land. The AO confirmed this addition as unexplained cash payment. The CIT(A) also confirmed the AO's order, citing previous instances of unaccounted income accepted by the assessee.
Held
The Tribunal held that for unabated assessment years, additions under section 153A can only be made if there is incriminating material found during the search. Since no such material was found to link the cash payment to unaccounted income, the addition was deleted.
Key Issues
Whether addition under section 153A is justified in an unabated assessment year without incriminating material found during search.
Sections Cited
132, 153A, 143(3)
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Income Tax Appellate Tribunal, ‘A’ BENCH, BANGALORE
Before: SHRI NARENDER KUMAR CHODHRY & SHRI WASEEM AHMED
PER WASEEM AHMED, ACCOUNTANT MEMBER:
These appeals are filed by the assessee against the order passed by the CIT(A) -15, Bangalore vide order dated 28/02/2025 for the assessment years 2015-16 and 2016-17.
The assessee has raised several grounds of appeal. The main issue is that the learned CIT(A) confirmed the addition made by the AO of ₹ 94,50,000 on account of unexplained cash payment for the purchase of property/ agricultural land.
A search and seizure operation under section 132 of the Act was carried out on 3 January 2019. As a result of the search, the AO found that the assessee had made a cash payment for the purchase of agricultural land bearing Survey No. 93/1 MC, Halli Village, Sarjapura Hobli, Anekal Taluk, Bangalore. The cash payment was ₹ 94,50,000 in the year under consideration. On being asked about the source of cash payment, the assessee submitted that it was made out of withdrawals from the bank on various dates and from the sale proceeds of agricultural land. In support, the assessee submitted copies of the ledgers, cash book, bank statement, and the fixed asset schedule. The assessee also submitted that the cash payments were duly reflected in the books of accounts.
However, the AO was not satisfied with the reply of the assessee for the following reasons: i. The assessee did not establish any link between the cash withdrawals and the cash payment for the purchase of agricultural land. ii. There was no justification for making the payment in cash when it could have been paid through banking channels.
In view of the above, the AO treated the cash payment of ₹ 94,50,000 as unaccounted payment outside the books of accounts and added it to the total income of the assessee.
The assessee appealed before the learned CIT(A). The learned CIT(A) confirmed the AO’s order, observing that the addition was based . on seized documents found during the search. The ld. CIT(A) also noted that the AO’s finding that there was no correlation between the cash withdrawals from the bank and the cash payment for the purchase of agricultural land was not rebutted by the assessee. The ld. CIT(A) further observed that in the same assessment year, in proceedings under section 153A read with section 143(3) of the Act vide order dated 29 December 2017, related to an earlier search, the assessee had accepted certain cash payments of ₹ 43,75,000 against land purchases and expenses of ₹ 4.23 crores for film production as unaccounted income. Therefore, the ld. CIT(A) concluded that the assessee had no cash available for the disputed agricultural land purchase. Accordingly, the ld. CIT(A) confirmed the AO’s order.
Being aggrieved by the order of the ld. CIT-A, the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 157 and submitted that the cash payment was duly reflected in the books of accounts, which can be verified from the cash book placed on pages 105 to 107. The investment in agricultural land was recorded in the financial statements. According to the learned AR, no incriminating documents were found during the search, and therefore, since the year under consideration is an unabated assessment year, the addition cannot be made in the absence of incriminating material.
On the other hand, the learned DR supported the orders of the lower authorities but prayed that the matter be set aside to the AO for fresh verification as per law.
We have heard the rival submissions of both the parties and perused the materials available on record. The issue is whether any incriminating material relating to the year under consideration (AY 2015– 16) was found during the search to justify the addition under section 153A of the Act, in light of the Hon’ble Supreme Court judgment in PCIT v. Abhisar Buildwell Pvt. Ltd. [2023] 149 taxmann.com 399 (SC). The Hon’ble Supreme Court has held that in respect of unabated/completed assessments, no addition can be made under section 153A unless incriminating material pertaining to that year is found during the search.
10.1 In the present case, it is undisputed that the year under consideration is an unabated assessment year. Therefore, addition can be made only if it is based on incriminating documents. We note from the assessment order that the AO mentioned that, based on seized documents, there was a cash payment not recorded in the books. However, there is no specific reference to any seized document made in the order. Further, the AO recorded that the assessee furnished copies of ledgers, cash book, bank statements, and fixed asset schedule. From this, it is clear that the impugned cash transaction was recorded in the books of accounts. Here it is pertinent to refer the observation of the AO which is extracted as under: “6.5 During the course of assessment proceedings, the assessee was asked to explain the issue. Herein, another opportunity was provided to the assessee to explain the source of cash for investments in the above- mentioned agricultural lands. The assessee submitted a detailed reply furnishing copies of ledgers, cash books, bank statements and fixed asset schedule.”
10.2 In the absence of any incriminating seized document, we are of the view that no addition is warranted, applying the law laid down in .
Abhisar Buildwell Pvt. Ltd. Accordingly, we hold that the assessment under section 153A for the year under consideration, being a completed/unabated assessment on the date of search, could not have been disturbed without incriminating material. Thus, the additions made are unsustainable in law and are deleted. The assessee’s ground of appeal is allowed.
In the result appeal of the assessee is hereby allowed.
The facts of the case on hand are identical to the facts of the case discussed above, therefore, respectfully following the same, the assessee’s ground of appeal is allowed.
In the result appeal of the assessee is hereby allowed.
In the combined result, both the appeals of the assessee are hereby allowed.
Order pronounced in court on 14th day of September, 2025