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Facts
The Revenue appealed against an order by the CIT(A) which deleted an addition made by the AO. The AO had treated money received by the assessee from Believers Church Group as unexplained income, as the assessee failed to prove the identity, genuineness, and creditworthiness of the lenders.
Held
The Tribunal held that the CIT(A) erred in accepting additional evidence without giving the AO an opportunity for rebuttal, violating principles of natural justice. The CIT(A) also did not sufficiently discuss the evidence produced before him.
Key Issues
Whether the CIT(A) was justified in deleting the addition without affording the AO an opportunity to rebut the evidence submitted by the assessee, and whether the assessee had adequately discharged the onus of proving the genuineness, identity, and creditworthiness of the lenders.
Sections Cited
139(1), 144, 153A, 46A
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-3, Kochi dated 20.06.2025 for Assessment Year (AY) 2020-21.
Brief facts of the case are that the respondent assessee is a company incorporated under the provisions of Companies Act, 1956. It is engaged in the business of dealing in properties. No regular return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act) was filed for AY 2020-21.
Samaira Properties Pvt. Ltd Search and seizure operations were conducted in the business premised of the assessee on 05.11.2020. During the course of search and seizure operations it is found that the assessee company had received money from Believers Church Group for acting as agent for procurement of land. The details of the amount received are extracted by the AO vide para 2 of the assessment order. For the failure of the appellant to discharge the onus of proving that the said amounts were for land development works, the AO had brought to tax the same as unexplained money of the appellant vide assessment order dated 25.08.2022 passed u/s. 144 r.w.s. 153A of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order deleted the addition by holding that the assessee had discharged the onus of proving the three ingredients, i.e. identity, genuineness and creditworthiness of the parties who lent the money to the appellant. Therefore, the question of addition does not arise. Thus, the learned CIT(A) deleted the addition made by the AO.
Being aggrieved, the Revenue is in appeal before this Tribunal in the present appeal.
The learned CIT-DR submits that before the AO the respondent assessee had not filed any evidence proving the genuineness, creditworthiness and identity of the lenders. The assessee had not produced any evidence before the AO. The addition Samaira Properties Pvt. Ltd was made based on the statement recorded during the course of search and seizure operations. Thus, it is submitted that the CIT(A) without giving an opportunity to the AO, simply accepted the submissions of the assessee.
On the other hand, the learned counsel for the assessee opposed the above submissions and submits that the CIT(A) granted relief only on being satisfied that the assessee had discharged the onus of proving the genuineness, creditworthiness and identity of the persons from whom the assessee had received money. Therefore, no interference is called for.
We have heard the rival contentions and perused the material available on record. On a mere perusal of the assessment order passed by the AO, it would reveal that the AO had brought to tax the sum of money received from the Trust belonging to Believers Church for the failure of the respondent assessee to adduce any evidence in support of the sum received. The additions were made in the best judgement assessment. The CIT(A), without discussing the material and evidence produced before him, discharged the onus of proving the three ingredients, i.e. identity, creditworthiness and genuineness of the transaction, merely jumped to one conclusion that the respondent assessee had discharged the onus of proving these three ingredients. However, the very fact that the best judgement assessment was passed indicates that the appellant had not produced any material to prove these three ingredients. The Samaira Properties Pvt. Ltd CIT(A) ought not have accepted the additional evidence without giving an opportunity of rebuttal to the AO. This approach adopted by the CIT(A) violates the principles of natural justice incorporated in the provisions of Rule 46A of the Income Tax Rules, 1962. Therefore, the order of the CIT(A) is set aside and remanded back to the file of the CIT(A) for de novo adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant.
In the result, the appeal filed by the Revenue stands partly allowed for statistical purposes.
Order pronounced in the open court on 6th November, 2025.