ACIT., CIRCLE-5(1), HYDERABAD vs. SIKANDER DAREDIA, HYDERABAD

आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘B’ Bench, Hyderabad

BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT
AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER

आ.अपी.सं /ITA No.604/Hyd./2025
िनधाŊरण वषŊ/Assessment Year 2018-2019

The Asst. Commissioner of Income Tax, Circle-5(1),
Hyderabad – 500 004. vs.
Sikander Daredia,
Hyderabad – 500 014. PAN AGTPD5466A
(Appellant)

(Respondent)

राज̾ वȪारा/Revenue by :
Dr. Narendra Kumar Naik, CIT-DR
िनधाŊįरतीȪारा /Assessee by :
Sri S. Rama Rao, Advocate

सुनवाईकीतारीख/Date of hearing: 03.11.2025
घोषणाकीतारीख/Pronouncement: 12.11.2025

आदेश/ORDER

PER VIJAY PAL RAO, VICE PRESIDENT :

This appeal by the Revenue is directed against the order dated 19.02.2025 of the learned CIT(A)-National
Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2018-2019. 2. The Revenue has raised the following grounds in the instant appeal :

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i.
The learned CIT(A) erred in deleting the addition of Rs.14.34 crores u/s 69 as the assessee did not produce any books of account before the AO nor the sources for the transactions were explained.

ii.
The learned CIT(A) failed to appreciate that deletion of addition made by him is self-contradictory as it was observed by him at para-7.3.1 that there was no infirmity in the actions of the AD while making the addition u/s 69 in the asst. order passed.

iii.
The learned CIT(A) ought to have appreciated the fact that the assessee has furnished inconsistent data of the parties from whom purchases were claimed to be made as is evident from mis-match in the names and amounts vis-à-vis the data contained in the asst. order.

iv.
The learned CIT(A) failed to appreciate the fact that the AO has brought on record that he could not examine the applicability of provisions of sec.56(2)(x) in the assessee's case in view of non-submission of data by the assessee.

v.
The learned CIT(A) failed to observe that the AO in his remand report has narrated that the sources were out of "unsecured loans" and assessee did not furnish the basic details
Le.
identity, creditworthiness and genuineness of such unsecured loan creditors.

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vi.
The learned CIT(A) failed to observe that the case laws relied upon by the assessee are distinguishable from the facts of the assessee's case as the assessee never produced any books of account before the AO.

vii.
The CIT(A) ought to have set-aside the ex-parte assessment to the file of the AO as the remand report did not certify the maintenance of books of account, accountability of the transactions therein and also the genuineness of the unsecured loans which were narrated as sources for the purchase of immovable properties.

viii.
The CIT(A) ought to have appreciated that there cannot be any single cheque No.125962 for making different payments of Rs.11,00,000 and Rs.34,00,000 to Mehdi
Md. Meghjanini from SB A/c No.006001100047468 on different dates i.e. on 22.11.2017 & 05.12.2017. ix.
Any other ground(s) that may be urged at the time of appeal hearing.”

consideration on 30.10.2018 declaring total income of Rs.1,55,34,610/-. The case was selected for complete scrutiny under CASS. During the scrutiny assessment, the Assessing Officer issued notice u/sec.142(1) of the Act dated
15.11.2020 along with detailed questionnaire to the assessee. When there was no reply filed by the assessee, the Assessing Officer again issued reminders on 17.12.2020
and 01.01.2021. There was no reply/compliance on behalf of the assesse to the notices issued by the Assessing Officer.
Accordingly, the Assessing Officer issued show cause notice giving one more opportunity vide notice u/sec.142(1) dated
05.04.2021, but, there was no response on behalf of the assessee. Accordingly, he proposed to frame the assessment on best Judgment basis u/sec.144 vide show cause notice dated 19.04.2021. Since there was no response on behalf of the assessee, the Assessing Officer framed the assessment u/sec.144 whereby an addition of Rs.14,34,50,000/- was made by the Assessing Officer on account of unexplained investment in immovable properties.

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evidences cannot be deleted. The Learned DR has submitted that the Assessing Officer in his remand report has stated that the assessee explained the source of purchases as out of unsecured loans. However, the basic details were not furnished by the assessee regarding the identity, creditworthiness and genuineness of such unsecured loan creditors. Thus, the Learned DR has submitted that when the assessee has not responded to any of the notices issued by the Assessing Officer and there is a complete failure on the part of the assessee to explain the source of the purchases to the tune of Rs.14,34,50,000/-, then, the said addition ought not to have been deleted based on the remand report without complete details and extensive examination of the relevant facts on record. The Learned DR has submitted that even the applicability of sec.56(2)(x) of the Act has not been examined in the appellate proceedings either by the learned CIT(A) or in the remand proceedings which were only for limited purpose. Thus, when the assessee has not participated in the assessment proceedings and not furnished any record before the 7
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Assessing Officer, then, it is not feasible to verify and examine the entire record in the remand proceedings due to the time constraint and limited purpose proceedings. Thus, he has pleaded that when the assessment order was passed ex-parte due to non-participation of the assessee and non- furnishing of any record, then, the learned CIT(A) ought to have remanded the matter to the record of the Assessing
Officer for proper verification and examination of the record instead of deleting the addition.

the balance-sheet of the assessee under the Head
“Inventories”. The assessee furnished entire details of payments for purchase of the properties in question which were not disputed by the Assessing Officer during the remand proceedings and accepted the claim of the assessee in the remand report. Based on the remand report, the learned CIT(A) has deleted the addition and, therefore, the Assessing Officer cannot question the findings of the learned CIT(A), once the claim of the assessee was accepted in the remand proceedings. He has referred to the Assessing
Officer’s observations as reproduced by the learned CIT(A) in the impugned order and submitted that on verification of the assessee’s reply and information, the Assessing Officer observed that the payments made to the sellers in respect of the investments made through bank account out of the sale receipts and unsecured loans. The Assessing Officer has also given the details of the properties which are recorded under two Heads in the audited accounts viz., Fixed Assets of Rs.47,74,600/- and Other Current Assets amounting to Rs.14,72,87,600/-. All the records comprising of ledger

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extracts, purchase documents, bank account, payment summary were verified and found consistent. The Assessing
Officer further noted that the assessee’s investments are properly accounted. He has also filed copy of the bank account statement reflecting all the payments made during the year for purchase of the properties which are stock-in- trade and, therefore, the provisions of sec.56(2)(x) of the Act are not applicable. The learned Authorised Representative of the Assessee submitted that when the purchases of immovable properties are made in the nature of stock-in- trade of the assessee, then, no addition can be made u/sec.56(2)(x) of the Act as it would amount to double addition when all the transactions are already part of the profit and loss account of the assessee. He has, supported the impugned order of the learned CIT(A).

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cause notice u/sec.144
of the Act.
Therefore, the assessment was framed by the Assessing Officer on the basis of best Judgment whereby the entire purchases made by the assessee during the year was treated as unexplained investment u/sec.69 of the Income Tax Act, 1961. Before the learned CIT(A), the assessee filed it’s reply and explained the reasons for non-appearance before the Assessing Officer and also filed additional evidences under Rule 46A of I.T.
Rules, 1962. The learned CIT(A) forwarded the additional evidences filed by the assessee to the Assessing Officer and called for a remand report. The learned CIT(A) has discussed remand report in the impugned order and the observations of the Assessing Officer are reproduced as under :

“4. AO's observation: On verification of the assessee's reply and the information, it is observed (i) On perusal of the sale deed. Audit report and Bank account, it is observed that the payment made to the seller in respect of the investment made are through the bank account out of the sale receipt and unsecured loans.

(ii) The properties are recorded under two heads in the audited accounts:

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Fixed
Assets:
Includes a flat purchased for Rs.47,74,600/-.

Other Current Assets: Includes the remaining properties totalling Rs.14,72,87,600/-

(iii) Each property purchase is detailed, with purchase deeds and supporting documents provided. The flat purchase is recorded under "Fixed Assets" as Flat No.
22, while other properties are accounted for under "Other Current Assets."

(iv) The ledger extracts, purchase documents, bank statements, and payment summaries were verified and found consistent. and assessee's investments are appropriately accounted."

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examined and verified all these documents and details in the remand proceedings and finally found all the documents and transactions including payment summaries as consistent and purchases of the assessee are appropriately accounted in the books of accounts. Based on the remand report, the learned CIT(A) has deleted the addition in Paras-
7.3 to 7.3.3. as under :

“7.3. In Ground Numbers 3, 4, 5 and 6 the appellant has filed objections on the addition made by the AQ and claimed that the Assessing Officer erred in holding that no sources were available for investment of Rs.14,34,50,000/- made in the immovable properties and the Assessing Officer ought to have seen that the provisions of Sec.69 or Sec. 115BBE of the Act are not applicable to the facts of the case as none of the investments are unexplained and the said Immovable
Property is work in progress for the appellant and was recorded in the books of account. The appellant has also claimed that Assessing Officer ought to have considered the fact that the appellant had substantial sources for investment in acquisition of the land and, therefore, the Assessing Officer ought not to have made any addition.

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are also explained. The Remand Report received is detailed in para 6 of this order.

considered by the Assessing Officer as investment, however, the profit and loss account as well as balance-sheet of the assessee placed at page nos.29 and 31 of the paper book clearly manifest that the transaction of purchases are debited in the profit and loss account and sale of the properties during the year is credited in the profit and loss account including the closing stock/inventories. Further in the balance-sheet also the assessee has shown all the unsold stock under the Head “Inventories”. Therefore, it is clear that the transaction of purchases were not in the nature of investment in the immovable properties, but, these are purchases of trade-in-stock of the immovable property and hence, as per the definition of “Property” given in Explanation to Clause-(x) of Sec.56(2) read with Explanation to Clause (vii) of Sec.56(2) only the capital asset in the nature of inter alia, land and building or both is treated as the property for the purpose of sec.56(2)(vii) and (x) of the Act. Thus, when the purchases were made for acquiring the stock-in-trade, then, the provisions of sec.56(2)(x) would not be applicable in the case of the 16
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assessee. Even otherwise, neither the Assessing Officer nor the learned CIT(A) has applied the provisions of sec.56(2)(x) of the Act. Therefore, when this issue was not the subject matter of the assessment order or even the remand proceedings during the first appellate proceedings, then, the Revenue cannot be permitted to raise this issue in the appeal before the Tribunal.

Order pronounced in the open Court on 12.11.2025. [MANJUNATHA G.]

[VIJAY PAL RAO]
ACCOUNTANT MEMBER VICE PRESIDENT

Hyderabad, Dated 12th November, 2025

VBP

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Copy to :

BY ORDER,
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