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Facts
The assessee purchased a residential flat for ₹21,96,825/-, paying ₹19,00,000/- through banking channels and ₹2,96,825/- in cash. The Assessing Officer initiated re-assessment proceedings under Section 148A and treated the entire investment as unexplained under Section 69 read with Section 115BBE, as the assessee failed to explain the source. The CIT(A) upheld the addition due to the assessee's non-appearance and lack of evidence.
Held
The Tribunal found that the ₹19,00,000/- paid through banking channels was identifiable and verifiable, with no material to suggest unexplained funds. For the cash component of ₹2,96,825/-, the assessee had declared income of ₹3,14,560/-, indicating sufficient cash availability. Therefore, the entire addition of ₹21,96,825/- made under Section 69 read with Section 115BBE was deemed unjustified and ordered to be deleted.
Key Issues
Whether the addition of investment in property, partly through banking channels and partly in cash, as unexplained income under Section 69 read with Section 115BBE was justified, and if the assessment proceedings were valid considering alleged procedural irregularities related to Section 147 and principles of natural justice.
Sections Cited
139, 143(1), 148A, 69, 115BBE, 250, 147, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2017-18) Dharmishthaben Nareshkumar Vs. Income Tax Officer, Soni, Ward-4(2)(1), G-505, Ratna Jyot Complex, Ahmedabad Nr. Shankheshwar Mahadev, Nr. Nirnay Nagar, Ahmedabad-382481 [PAN No.BMRPS1106B] (Appellant) .. (Respondent) Appellant by : Shri Vivek Chavda, AR Respondent by: Shri Rajenkumar M Vasavda, Sr. DR 13.08.2025 Date of Hearing Date of Pronouncement 02.09.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 05.06.2024 passed for A.Y. 2017-18.
The assessee has raised the following grounds of appeal:
“1.1 The order passed u/s 250 on 05.06.2024 for A.Y. 2017-18 by CIT(A)-NFAC, Delhi upholding the addition of Rs.21,96,825/- made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned addition. Therefore, the appellant shall be granted opportunity to produce additional evidences.
Dharmishthaben Nareshkumar Soni vs. ITO Asst. Year –2017-18 - 2– 2.1 The Ld. CIT(A) has erred in upholding the addition without appreciating the fact that the assessment order goes past without pursuing the legal proceedings of provisions of section 147 which makes the assessment proceedings invalid. 2.2 The Ld. CIT(A) has erred in upholding the addition without appreciating that the assessment was concluded without providing the copy of reasons recorded to the appellant which is a precondition under section 147. 2.3 The Ld. CIT(A) has erred in upholding the addition without appreciating that the information possessed by the AO is totally irrelevant to the facts of the case as it pertains to a survey conducted on M/s Ornet Intermediates Pvt Ltd whereas the appellant purchased the property from M/s RJD Buildcone Ltd. 2.4 The Ld. CIT(A) has erred in law and on facts in upholding the addition made merely on the basis of information received from the investigation wing without any independent verification of facts and without providing the appellant an opportunity to rebut the same. 3.1 The Ld. CIT(A) has erred in law and/or on facts in upholding the addition of Rs.21,96,825 without appreciating that the appellant had not made any unaccounted cash payment to the builder except as enumerated in the sale deed. 3.2 The Ld. CIT(A) has failed to appreciate that the appellant was not provided with the material relied upon by the AO and no opportunity for cross-examination was given, which violates the principles of natural justice. 3.3 The Ld. CIT(A) has grievously erred in law and on facts in not considering that the AO did not carry out proper inquiry by issuing notices u/s 133(6) or procuring bank statements to verify the alleged unaccounted cash payment. 3.4 The Ld. CIT(A) has failed to appreciate that the appellant has made payment for purchase of property through proper banking channels which can be verified from bank statements. 4.1 The Ld. CIT(A) has erred in law and on facts in initiating the provision of Section 115BBE by levying higher rate of tax without passing a speaking order. 4.2 The Ld. CIT(A) ought not to have upheld initiation of the provision of Section 115BBE without passing a speaking order.”
The brief facts of the case are that the assessee filed a return of income under section 139 of the Income Tax Act, 1961 (Act) declaring total income of ₹3,14,560/-, which was processed under section 143(1) of the Act at the same figure. Subsequently, the Assessing Officer received Dharmishthaben Nareshkumar Soni vs. ITO Asst. Year –2017-18 - 3– information that the assessee had purchased a residential flat (Flat No. H- 701 in the Sanidhya Flora project of M/s Millennium Infrastructure, Ahmedabad). Accordingly, the Assessing Officer imitated re-assessment proceedings against the assessee under section 148A of the Act. During the re-assessment proceedings, the Assessing Officer noted that the assessee had made a total investment of ₹21,96,825/- in the aforesaid flat, consisting of ₹19,00,000/- paid through banking channels and ₹2,96,825/- paid in cash. As the assessee failed to offer any explanation or submit documentary evidence regarding the source of this investment, despite repeated opportunities, the Assessing Officer treated the entire investment as unexplained under section 69 read with section 115BBE of the Act.
In appeal, CIT(Appeals) dismissed the appeal of the assessee on account of non-appearance, with the following observations:
“6.2 During the current proceedings, the appellant has made no written submission in response to several notices issued. Since the appellant has not produced even an iota of evidence to explain the source of investment in property, I see no reason to interfere with the order of the Assessing officer. The onus squarely lies on the appellant to explain the source of investment satisfactorily, once the provisions of section 69of the Act have been triggered. In light of the above discussion, I hereby confirm the addition of Rs.21,96,825/- and all the grounds are accordingly dismissed. In the result, the appeal is dismissed.”
The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee submitted that the sum of Rs. 19,00,000/- had been paid by the assessee from his bank account. Therefore, there was no occasion for the Assessing Officer to make additions on this account since Dharmishthaben Nareshkumar Soni vs. ITO Asst. Year –2017-18 - 4– the aforesaid sum stood fully explained. Regarding the balance sum of investment of ₹2,96,825 paid in cash for purchase of flat by the assessee, the assessee had sufficient cash balance to make the investment. The ld. counsel for the assessee submitted that even for the impugned assessment year, the assessee had filed return of income declaring total income of ₹3,14,560/-. Accordingly, in the instant facts, no addition is called for.
In response, Ld. DR placed reliance on the observations made by the Assessing Officer in the assessment order.
We have heard the rival contentions and perused the material on record. In view of the facts and circumstances of the case and upon perusal of the assessment order and the submissions made by the ld. counsel for the assessee, we find merit in the contentions advanced on behalf of the assessee. It is an admitted position that out of the total investment of ₹21,96,825/- in the residential flat, a sum of ₹19,00,000/- was paid through banking channels from the assessee’s own bank account, the source of which is duly identifiable and verifiable. There is no material brought on record by the Assessing Officer to suggest that the said amount was sourced from unexplained funds. Accordingly, the addition of ₹19,00,000/- cannot be sustained under section 69 of the Act. With regard to the remaining cash component of ₹2,96,825/-, we note that the assessee had filed a return of income for the relevant assessment year declaring income of ₹3,14,560/- and there is nothing on record to dispute the availability of sufficient cash to cover the said amount. In the absence of any contrary evidence or finding by the Assessing Officer to show that the assessee was not in possession of such cash, we are inclined to accept the explanation furnished. Accordingly, the addition of ₹21,96,825/- made under section 69 read with section 115BBE of the Act is not justified on the facts of the case and deserves to be deleted.
In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 02/09/2025