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Facts
The assessee filed a return of income for AY 2017-2018. The assessment was reopened under Section 147 of the Income Tax Act due to alleged escaped income from the purchase of an immovable property. The Assessing Officer made an addition of Rs. 1,33,93,200/- as unexplained money. The CIT(A) deleted this addition.
Held
The Tribunal held that the CIT(A) deleted the addition by admitting additional evidence without providing the Assessing Officer an opportunity to examine it, violating principles of natural justice and Rule 46A(3) of IT Rules. Therefore, the order of the CIT(A) was set aside.
Key Issues
Whether the CIT(A) erred in deleting the addition by admitting additional evidence without affording natural justice to the Assessing Officer.
Sections Cited
147, 148, 142(1), 144, 69A, 250, 46A(3), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.454/Hyd./2025 Assessment Year 2017-2018 The Income Tax Officer, Sri Sudheer Raavi, Ward-6(1), Hyderabad. vs. Hyderabad – 500 018. PIN – 500 004. Telangana. PAN AOVPR7003R (Appellant) (Respondent) For Revenue : Shri Gurpreet Singh, Sr. AR For Assessee : Sri T Chaitanyakumar, Advocate Date of Hearing : 06.08.2025 Date of Pronouncement : 13.08.2025 ORDER PER MANJUNATHA G. :
The above appeal has been filed by the assessee against the order dated 13.11.2024 of the learned Commissioner of Income Tax-(Appeals)-National Faceless Appeal Centre [in short “NFAC], Delhi, relating to the assessment year 2017-2018.
At the very outset, there is a delay of 41 days in filing the appeal before the Tribunal. The Revenue has filed affidavit explaining the reasons for not filing the appeal
2 ITA.No.454/Hyd./2025 within the prescribed time limit before the Tribunal. It was the submission of the Revenue that, the appeal could not be filed before the Tribunal within the prescribed time limit due to work pressure and administrative approval from the Competent Authority and thus, there was a ‘sufficient and reasonable cause’ in not filing the appeal within the time prescribed time limit and pleaded that, the delay of 41 days in filing the appeal before the Tribunal may please be condoned in the interest of justice.
Sri T. Chaitanya Kumar, Advocate-Learned Counsel for the Assessee, on the other hand, strongly opposed for condonation of delay in filing the appeal by the Revenue within the prescribed time limit and submitted that, there is no ‘reasonable and sufficient cause’ to condone the delay. He accordingly submitted that, the Revenue could not explain the day-to-day delay in filing the appeal before the Tribunal within the prescribed time limit and, therefore, pleaded that the delay should not be condoned and appeal be not admitted for adjudication.
3 ITA.No.454/Hyd./2025 4. We have heard both the parties and perused the affidavit filed by the Revenue seeking for condonation of 41 days in filing the appeal before the Tribunal. We are satisfied with the reasons explained by the Revenue and, therefore, condone the delay of 41 days in filing the appeal before the Tribunal and admit the appeal for adjudication.
Brief facts of the case are that, the assessee is an individual, derived income from business, house property and other sources. The assessee filed his return of income for the assessment year 2017-2018 on 09.11.2017 admitting total income of Rs.4,02,660/-. The assessment has been subsequently reopened under section 147 of the Income Tax Act, 1961 [in short "the Act"], for the reasons recorded, as per which, the income chargeable to tax had been escaped assessment on account of purchase of immovable property for a consideration of Rs.1,33,93,200/-. Therefore, a notice under section 148 of the Act dated 26.11.2019 was issued and duly served on the assessee. In response, to the notice issued under section 148 of the Act, the assessee has filed his return of income of 05.12.2019
4 ITA.No.454/Hyd./2025 admitting total income of Rs.4,02,660/-. The case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer issued notice under section 142(1) of the Act on various dates and called-upon the assessee to file relevant evidences to prove the source for purchase of immovable property. The assessee neither filed any details nor explained the source for purchase of property. Therefore, the Assessing Officer passed the ex- parte assessment order under section 144 of the Income Tax Act, 1961 and determined the total income of the assessee at Rs.1,37,95,860/- by making addition of Rs.1,33,93,200/- under section 69A of the Income Tax Act, 1961 as unexplained money towards purchase of immovable property.
Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the CIT(A), the assessee has filed detailed written submissions on the issue and claimed that ,the source for purchase of property is, out of loan taken from assessee’s father viz., Sri RVD Prasad for Rs.1,00,05,000/-and loan taken from Meenavalli
5 ITA.No.454/Hyd./2025 and Associates for Rs.14,00,000/- and loan taken from MSK Infra for Rs.25,00,000/-. The assessee had also submitted details and also amount paid to Indiabulls Housing Finance Ltd., for purchase of property. The learned CIT(A) after considering the relevant submissions of the assessee, requested the assessee vide notice issued under section 250 of the Act dated 04.11.2024 to furnish clear and authentic documents to verify the loan taken from Sri RVD Prasad and sources for the acquisition of property. In response to the above notice, the assessee has filed complete details of loan taken from Sri RVD Prasad along with his PAN and Aadhar no.; details of sources for the acquisition of the property. The learned CIT(A) after considering the relevant submissions of the assessee and also taken note of details submitted by the assessee including date and amount paid to Indiabulls Housing Finance Ltd., deleted the addition made by the Assessing Officer towards unexplained money under section 69A of the Income Tax Act, 1961 on the ground that, as can be seen from the submissions of the assessee, the assessee has submitted sufficient satisfactory
6 ITA.No.454/Hyd./2025 explanation towards source for investment in purchase of immovable property. Further, from the evidences submitted by the assessee, it is crystal clear that, the contention of the assessee about the receipt of loan of Rs.1.05 crore taken from his father Sri RVD Prasad appears bonafide and the evidences submitted by him are in the form of copy of bank statement of his father, consent letter of Indiabulls Housing Finance Ltd., as well as copy of bank statement of the assessee, which are of legal and evidentiary value and based on the same, they have treated as tectonic evidences in favour of the assessee’s contention. In view of the above the learned CIT(A) observed that, the assessee has sufficiently explained the source of fund of Rs.1,37,93,200/- towards purchase of property. Therefore, deleted the addition made by the Assessing Officer towards unexplained money under section 69A of the Income Tax Act, 1961 towards purchase of property.
Aggrieved by the order of the learned CIT(A), the Revenue is now, in appeal before the Tribunal.
7 ITA.No.454/Hyd./2025 8. Sri Gurpreet Singh, learned Sr. AR for the Revenue, submitted that, the learned CIT(A) was erred in deleting the addition made by the Assessing Officer towards unexplained money under section 69A of the Income Tax Act, 1961 by admitting the additional evidences during the course of appellate proceedings, without calling for the remand report from the Assessing Officer. The learned Sr. AR for the Revenue referring to Rule-46A(3) of I.T. Rules,1962 submitted that, the learned CIT(A) shall not take into account any evidence produced, unless the Assessing Officer has been allowed a reasonable opportunity to examine the evidence or document or cross-examine the witness produced by the assessee or to produce any evidence or document or any witness in-rebuttal to the additional evidences produced by the assessee. The learned CIT(A) without giving an opportunity to the Assessing Officer, deleted the addition made by the Assessing Officer by admitting additional evidences submitted by the assessee, contrary to Rule-46A(3) of the Act. Therefore, he submitted that, the matter may be remanded back to the file
8 ITA.No.454/Hyd./2025 of Assessing Officer to verify the evidences submitted by the assessee to explain the source for purchase of property.
Sri T. Chaitanya Kumar, Advocate-Learned Counsel for the Assessee, on the other hand, supporting the Order of the learned CIT(A) submitted that, the CIT(A) has deleted the addition made by the Assessing Officer towards unexplained money under section 69A of the Act by considering the additional evidences submitted by the assessee. However, the fact remains that, such additional evidences submitted by the assessee is not by the assessee on his own, but, as per the directions of the learned CIT(A). Since the additional evidences submitted by the assessee is, as per the directions of the learned CIT(A), the provisions of Rule 46A(3) does not apply to the present case. Further, the CIT(A) is having co-terminus powers of the Assessing Officer and he can decide the appeal on the basis of evidences submitted by the assessee and, therefore, he submitted that, there is no merit in the arguments of the Counsel for the Revenue for remanding the issue to the file of Assessing Officer. He further submitted that, the assessee has filed all
9 ITA.No.454/Hyd./2025 evidences and proved that, source for purchase of property is, out of loan received from his father, Meenavalli and Associaties and from MSK Infra, for which, the assessee has filed relevant Bank account statement of his father. From the details submitted by the assessee, it is very clear that, all payments are made to Indiabulls Housing Finance Ltd., for purchase of property is through proper banking channel. The learned CIT(A) after considering the relevant submissions of the assessee, has rightly deleted the addition made by the Assessing Officer. Therefore, he submitted that, the Order of the CIT(A) should be upheld.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that, the assessment proceedings before the Assessing Officer are ex-parte where the Assessing Officer has passed best Judgment assessment order under section 147 r.w.s.144 of the Income Tax Act, 1961. It is also an admitted fact that, the learned CIT(A) deleted the addition made by the Assessing Officer towards unexplained money under 10 ITA.No.454/Hyd./2025 section 69A of the Income Tax Act, 1961 by admitting additional evidences filed by the assessee in the form of loans claimed to have been received from father of the assessee along with his confirmation letter and bank statement. It was the argument of the learned Sr. AR for the Revenue that, although, the assessee has furnished certain evidences to prove the source for purchase of property out of loan received from various persons including his father and said payment has been made through proper banking channel, but, the learned CIT(A) deleted the addition contrary to Rule 46A(3) of I.T. Rules, 1962 by admitting the additional evidences submitted by the assessee, without calling for remand report from the Assessing Officer. It was the argument of Counsel for the Assessee that, the assessee has not submitted additional evidences on his own, but, submitted the additional evidences as per the directions of the CIT(A) and, therefore, the question of violation of Rule 46A(3) does not arise.
We have gone through the relevant arguments of both sides in light of reasons given by the learned CIT(A) to 11 ITA.No.454/Hyd./2025 delete the addition made towards unexplained money under section 69A of the Income Tax Act, 1961 and we find that, the assessee, for the first time, filed certain additional evidences including the details of loan taken from his father Sri RPD Prasad along with his bank statement and loan taken from Mennavalli and Associates and MSK Infra and claimed that, source for purchase of property is out of loan from above persons. The learned CIT(A) had recorded a categorical finding that, the additional evidences submitted by the assessee including copy of bank statement of his father, consent letter from M/s. Indiabulls Finance Limited as well as copy of bank statement of the assessee are tectonic evidences in favour of the assessee’s contentions. Although, the learned CIT(A) had given a categorical finding that, the evidences submitted by the assessee are in favour of the assessee, but, the fact remains that, the learned CIT(A) had given this finding by admitting additional evidences submitted by the assessee, without providing an opportunity to the Assessing Officer to comment on the said additional evidences and to submit his report as required
12 ITA.No.454/Hyd./2025 under section 46A of I.T. Rules, 1962. In our considered view, the findings recorded by the learned CIT(A) are contrary to the principals of natural justice going by the mandate of Rule 46A of I.T. Rules. 1962. Although, the Learned Counsel for the Assessee argued that, the additional evidences submitted by the assessee are not on his own and as per the directions of the learned CIT(A), but, in our considered view, there is no substance in the arguments of the Learned Counsel for the Assessee because, unless the assessee files the relevant evidences in support of his submissions to prove source for purchase of property, in our considered view, the learned CIT(A) cannot give a finding that, evidences submitted by the assessee are tectonic in favour of assessee’s contentions. Since, the learned CIT(A) has deleted the addition made by the Assessing Officer by accepting the additional evidences, without providing opportunity to the Assessing Officer as required under section 46A(3) of I.T. Rules, 1962, in our considered view, the findings given by the learned CIT(A) to delete the addition made by the Assessing Officer cannot be 13 ITA.No.454/Hyd./2025 upheld. Thus, we set-aside the Order of the learned CIT(A) and restore the issue back to the file of Assessing Officer. We direct the Assessing Officer to consider the issue de novo, after providing reasonable opportunity to the assessee to explain his case and also justify the source for cash deposit along with any other evidence that may be filled by the assessee before the Assessing Officer.
In the result, appeal of the Revenue is allowed for statistical purposes.
Order pronounced in the open Court on 13.08.2025.