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Facts
The assessee, a civil lawyer, faced an income addition of Rs. 56,80,060 under Section 69 for an alleged cash payment for a flat, based on information from a search conducted on Runwal Homes Pvt. Ltd. The Assessing Officer initiated reassessment proceedings under Section 147, and the addition was upheld ex-parte by the CIT(A). The assessee denied making the cash payment and sought an opportunity to cross-examine the person whose statement was relied upon by the AO.
Held
The Tribunal condoned a 377-day delay in filing the appeal. It noted that the assessee was denied a copy of the statement recorded under Section 132 from Mr. Subodh Runwal (relied upon by the AO) and was not given an opportunity for cross-examination, which violates principles of natural justice. Citing precedent, the Tribunal remanded both the quantum addition under Section 69 and the consequential penalty issue back to the Jurisdictional Assessing Officer for fresh adjudication, directing the AO to provide the relevant statement and cross-examination opportunity.
Key Issues
1. Condonation of delay in appeal filing. 2. Validity of addition under Section 69 without providing cross-examination of adverse material and related statements recorded under Section 132. 3. Violation of natural justice principles due to denial of cross-examination.
Sections Cited
250, 143(3), 147, 271(1)(c), 143(1)(a), 148, 69, 131, 132, 132(4), 4(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
PER DR. MANISH BOARD, ACCOUNTANT MEMBER :
The captioned appeals at the instance of appellant pertaining to A.Y. 2015-16 are directed against the separate orders dated 06.09.2023 and dated 30.06.2025 framed by National Faceless Appeal Centre, Delhi passed u/s.250 of Income Tax Act, 1961 (in short ‘the Act’) arising out Assessment order dated 15.11.2019 passed u/s.143(3) r.w.s.147 of the Act and Penalty order dated 10.02.2025 passed u/s.271(1)(c) of the Act.
Registry has informed that there is delay of 377 days in filing of Tribunal. Main reason stated for the delay is on account of the professional who was looking after the Taxation and Appellate work could not file the appeal within the time limit and affidavit of Mr. Jagdish Sharma, Tax Consultant working with Mr.Ashok T. Upadhye, Chartered Accountant is placed on record. It is also stated that e-mail id of the CA atupadhye@yahoo.co.in was registered on the Income Tax portal and the assessee was not aware about the passing of the impugned order. Affidavit has also been filed by the assessee mentioning the facts and reasons which gave rise to the said delay.
Having gone through the reasons giving rise to the delay in filing of appeal, we are satisfied that ‘reasonable cause’ prevented the assessee to file the appeal within the stipulated time. We note that the delay is not intentional and assessee would not have gained from filing the appeal with a delay. We therefore in light of judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 377 days in filing of the instant appeal before this Tribunal and admit the appeal for adjudication.
"1. The learned CIT(A) erred on facts and in law in upholding the addition of Rs.56,80,060 made by the learned AO u/s 69 of the Act by passing an ex-parte order without considering the matter on its merits, thereby making the said order invalid and bad-in-law.
2. The learned CIT(A) erred on facts and in law in upholding the action of the learned AO in initiating the reassessment proceedings on the assessee by merely relying on the information received from the DDIT (Inv.), Unit-4(1), Mumbai without cross-verifying the subject information and if the same are correct for the purpose of initiating the reassessment proceedings u/s 147 of the Act. He failed to appreciate the detailed explanations provided by the assessee in response to the summons u/s 131 of the Act that was issued before initiating the reassessment proceedings. The learned CIT(A) also failed to appreciate the fact that there is no cogent and conclusive evidence against the assessee which clearly shows the escapement of income in case of the assessee.
3. The learned CIT(A) as well as the learned AO erred on facts and in law in not providing the opportunity for cross-examination of the individual who's statement was relied upon for the purpose of the subject reassessment proceedings even after specific request from the assessee in this regard. He failed to appreciate the settled position in law that any adverse material collected at the back of the assessee when not confronted and that if any statement is recorded by the AO at the back of the assessee and if such statement is not allowed for cross-examination on behalf of the assessee, such material cannot be considered against the assessee and such material/statement cannot be read in as an evidence against the assessee.
The assessee craves leave to add, alter or remove all or any of the ground."
Brief facts of the case are that the assessee is a Civil Lawyer and income of Rs.38,02,270/- declared in the return of income for A.Y. 2015-16 e-filed on 16.10.2015. Return has been processed u/s.143(1)(a) of the Act on 16.04.2017. Subsequently, based on the information received from Deputy Director (Investigation) Wing-4, Mumbai regarding the alleged escapement of income towards the cash of Rs.56,80,060/- paid by the assessee to Runwal Homes Pvt. Ltd. for purchase of Flat No.3501, Tower 8 of Runwal Greens, notice u/s.148 of the Act was issued. In response, the assessee filed the return of income on 06.11.2019 declaring same income, i.e. Rs.38,02,270/-. During the course of re-assessment proceedings, assessee was asked to explain the source of cash of Rs.56,80,060/- for which ld. AO has referred to an entry in the seized material found during the course of search of Runwal Homes Pvt. Ltd. and in this entry there is reference of Flat No.3501, Tower 8, Area 1740, mentioning three figures Rs.1,90,19,940/-, Rs.24,70,000/- and Rs.56,80,060/-. Ld. AO has alleged that since the amount of Rs.1,90,19,940/- has been paid by the assessee through cheque therefore the balance amount of Rs.56,80,060/- must have been paid by the assessee in cash. However, assessee during the course of proceedings denied to have made any such cash payment/on- money of Rs.56,80,060/-. Assessee has also submitted that he has never met Mr. Subodh Runwal and for carrying out all the transactions of purchase of flat her only negotiated with Sales Team and not directly with the Director. However, ld. AO was not satisfied with the same and concluded the proceedings and made addition u/s.69 of the Act at Rs.56,80,060/- and assessed income at Rs.94,82,330/-.
Aggrieved assessee preferred appeal before ld.CIT(A). However, assessee failed to make any submission to the notices fixing the dates of hearing on 08.01.2021, 06.07.2023 and 23.08.2023 and therefore ld.CIT(A) affirmed the action of the Assessing Officer and also referred to the decision of Coordinate Bench, Delhi in the case of Roger Enterprises (P) Ltd. Vs. DCIT 88 ITD 96 stating that any statement of a person who is one of the parties of the transactions/transactions has evidentiary value and cannot be ignored.
Aggrieved assessee is now in appeal before this Tribunal.
Ld. Counsel for the assessee firstly submitted that the assessee has not made the alleged payment to Mr. Subodh Runwal. He submitted that assessee has never met Mr. Subodh Runwal and has always dealt with the Sales team. He further stated that assessee has not been provided the copy of statement of Mr. Subodh Runwal recorded u/s.132 of the Act nor any opportunity of cross examination has been provided and therefore the impugned addition deserves to be deleted. He further submitted that even the entry referred by ld. AO (which is part of the seized material) does not mention that assessee has made any cash payment for the difference amount mentioned therein. He submitted that assessee has made various other payments also towards the purchase of the flat for various other facilities and he referred to page 33 of the paper book where all the payments have been made through banking channel and total amount of Rs.2,16,64,981/- has been paid which includes the sale consideration appearing in the Registered Sale Agreement of Rs.1,90,19,540/-.
On the other hand, ld. DR stated that assessee has never asked for copy of statement of Mr. Subodh Runwal recorded u/s.132(4) of the Act nor the assessee has filed any application for providing opportunity of cross examination and therefore at this stage such plea could not be taken. On merits, he placed reliance on the finding of both the lower authorities.
We have heard the rival contentions and perused the record placed before us. Assessee has purchased a Flat at Panvel in Project Runwal Greens bearing Flat No.3501, Tower 8 constructed by Runwal Homes Pvt. Ltd. Sale consideration value as per the Registered deed Rs.1,90,19,540/-. Ld. AO based on the entry found in the seized material during the course of search carried out in the case of Runwal Homes Pvt. Ltd. u/s.132 of the Act observed that the agreed consideration is Rs.2.47 crore and the difference amount which is appearing in this entry of the Excel Sheet at Rs.56,80,060/- is the on- money which the assessee has paid through cash.
Before going into merits of the case, ld. Counsel for the assessee has raised the legal issue stating that the AO prior to making the addition in the hands of assessee based on third party statement ought to have given a copy of statement of Mr. Subodh Runwal recorded u/s.132 of the Act and also should have provided the opportunity of cross examination. In support of this contention, he placed reliance on the decision of Hon’ble Apex Court in the case of M/s.Andaman Timber Industries Vs. CCE (2015) 62 taxmann.com 3, CIT Vs. Sunita Dhadda in Income Tax Appeal No.197/2012 dated 31.07.2017 and also the decision of Coordinate Bench, Ahmedabad in the case of Ratnadeep Infrastructure Private Limited Vs. ITO – and 1491/Ahd/2025 dated 06.11.2025.
We on going through the decision of Coordinate Bench in the case Ratnadeep Infrastructure Private Limited Vs. ITO (supra) find that the reference made to the judicial precedents including that of Hon’ble Apex Court in the case of M/s.Andaman Timber Industries Vs. CCE (supra) and while adjudicating similar issue of the alleged on-money towards the purchase of immovable property has observed as under :
“Insofar as the plea of the appellant that it was not allowed to cross- examine the dealers whose statements were relied upon by the Adjudicating Authority in passing the orders, the Tribunal rejected its plea in the following manner: - “6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders.” Challenging the aforesaid order, the present appeal is preferred by the appellant-assessee.
We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue.
According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them.
As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross- examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross- examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.
In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.”
In light of the above decision, we note that in the above case of Ratnadeep Infrastructure Private Limited Vs. ITO (supra), assessee had requested for the opportunity of cross examination and also the copy of statement recorded u/s.132 of the Act but the same were not provided which resulted into quashing of the assessment order. However, in the instant case, there is no evidence which can prove that the assessee has requested for such opportunity of cross examination or has made any application for providing the statement of Mr. Subodh Runwal which was given u/s.132 of the Act during the course of search and has been relied on by ld. AO.
During the course of hearing before this Tribunal, ld. Counsel for the assessee was asked as to whether any opportunity of cross examination was requested to which he fairly submitted that assessee has not made any request but an opportunity may be granted to assessee and necessary direction may be given to the ld.JAO for giving the copies of statement recorded and provide opportunity of cross examination of Mr. Subodh Runwal so that the assessee can substantiate the case on merits. Ld. DR has not objected to this contention made by ld. Counsel for the assessee.
We therefore deem it appropriate to restore the issue to the file of ld. Jurisdictional Assessing Officer for afresh adjudication of the issue in light of our observations made hereinabove and also to provide the assessee with the statement of Mr. Subodh Runwal recorded u/s.132 of the Act and also opportunity of cross examination since the assessee has been pleading that he has not made any payment of on- money and whatever payments have been made for purchase of the immovable property in question have been made through Account Payee cheques. Needless to mention that ld. JAO shall afford reasonable opportunity to the assessee. Impugned order is set aside and the grounds of appeal raised by the assessee are allowed for statistical purposes.
(supra) to the file of ld. JAO the penalty being consequential is also restored back to the file of Ld. JAO who shall first decide the quantum issue and if any addition is made, then decide the penalty in accordance with law. Impugned order is set aside and the grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on this 16th day of December, 2025.