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Facts
During a search and seizure operation, the AO made additions of Rs. 8,82,62,700/- and Rs. 1,00,00,000/- to the assessee's income, citing lack of evidence for land development work and failure to explain the source of advance payments. The CIT(A) deleted these additions, accepting the assessee's contentions that the amounts were contract advances and that income was already offered after claiming expenses.
Held
The Tribunal held that the CIT(A) deleted the additions without proper examination of evidence or discussion of the transaction's nature. The Tribunal noted that the AO's invocation of a wrong section does not preclude confirming the addition under a correct one and decided to remit the matter to the CIT(A) for de novo disposal after affording a reasonable opportunity of hearing.
Key Issues
Whether the CIT(A) was justified in deleting the additions made by the AO without proper examination of evidence and whether the matter should be remitted for de novo disposal.
Sections Cited
153A, 56(2)(vii)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM
2 ITA. 628 & 629/C/2025 & CO 6&7/C/2025 Ansa Thomas O R D E R Per: Inturi Rama Rao, AM These appeals filed by the Revenue are directed against the orders of the Commissioner of Income Tax (Appeals)-3, Kochi dated 26.06.2025 & 25.06.2025 for Assessment Years (AY) 2016-17 & 2020-21, respectively. The assessee also filed cross objections.
Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order.
For the sake of convenience and clarity the facts relevant to the appeal bearing for AY 2016-17 are stated herein.
Brief facts of the case are that the respondent assessee is an individual. No regular return of income for AY 2016-17 was filed by the assessee. Search and Seizure operations were conducted in the business premises of the assessee. During the course of search and seizure operations certain incriminating documents were found and seized. Based on these incriminating materials, a notice u/s. 153A of the Income Tax Act, 1961 (the Act) was issued on 17.11.2021. In response to the notice u/s. 153A, return of income was filed on 01.02.2022 offering income of Rs. 1,00,13,980/-. Against the said return of income, the assessment was completed by the DCIT, Central Circle-2, Kochi (hereinafter called "the AO") vide order dated 30.09.2022 passed u/s. 153A of the Act at a total income
3 ITA. 628 & 629/C/2025 & CO 6&7/C/2025 Ansa Thomas of Rs. 10,98,27,137/-. While doing so, the AO made addition of Rs. 8,82,62,700/- received from trustee of Believers Church group in the absence of any evidence of land development work. The AO also made addition of Rs. 1,00,00,000/- being amount paid towards advance for purchase of land for failure of the assessee to explain the source of the said payment.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order deleted the addition by accepting the contentions of the appellant that the amount received from the trustees of Believers Church group represents advance amount received towards contract amount. Further, the CIT(A) also deleted the addition of Rs. 1,00,00,000/- by accepting the contention of the appellant that the income of Rs. 1,00,00,000/- was offered to tax after claiming expenditure of Rs. 15,00,000/- in the regular return as well as, the return filed in response to notice u/s. 153A of the Act.
Being aggrieved, the Revenue is in appeal before this Tribunal in the present appeal.
The learned CIT-DR contends that the CIT(A) ought not have deleted the additions without granting and opportunity to the AO to rebut the submissions of the respondent assessee. There is no evidence to show that the assessee had received money for land development from the trustees of Believers Church group. Therefore, the AO rightly made the addition. He further submits that the powers of the CIT(A) is co-terminus with that of the AO, the 4 ITA. 628 & 629/C/2025 & CO 6&7/C/2025 Ansa Thomas CIT(A) ought to have confirmed the addition by invoking the correct provisions of law, i.e. section 56(2)(vii) of the Act.
On the other hand, the learned counsel for the assessee submits the CIT(A) rightly deleted the additions made by the AO as the amounts received from the trustees of Believers Church group were only liability in the hands of the respondent assessee, as no work was executed by the assessee. Mere receipt of money does not result in income. Therefore, no interference is called for.
We have heard the rival contentions and perused the material available on record. The only issue that arises for our consideration is whether the CIT(A) is justified in deleting the additions of Rs. 8,82,62,700/- and Rs. 1,00,00,000/- made by the AO. On mere perusal of the assessment order, it would reveal that the AO made additions of the amounts of Rs. 8,82,62,700/- and Rs. 1,00,00,000/- received from the trustees of Believers Church group on the ground that the said amounts were credited in the books of account of the respondent assessee and the respondent assessee failed to offer any satisfactory explanation in support of the credits. The CIT(A) deleted the additions by merely accepting the contentions that the amounts were received towards contract awarded to the respondent assessee for development of land, etc. The CIT(A), without examining any material, evidence, had merely accepted the contentions of the appellant. Moreover, mere invoking of wrong section by the AO does not call for deletion of addition. It is always open to the appellate
5 ITA. 628 & 629/C/2025 & CO 6&7/C/2025 Ansa Thomas authority to confirm the addition under a different section. Thus, the order of the CIT(A) is bereft of discussion on the nature of the transaction as well as does not refer to any material evidence. Therefore, in the interest of justice we remit the matter to the file of the CIT(A) for de novo disposal in accordance with law after affording reasonable opportunity of hearing to the appellant. Appeal stands partly allowed of statistical purposes.
The cross objections filed the assessee are dismissed as the additions were made by the AO based on the incriminating materials found and seized during the course of search and seizure operations.
The issue relating to quoting of DIN was not pressed during the course of hearing.
In the result, the appeals filed by the Revenue stand partly allowed for statistical purposes and the cross objections of the assessee stand dismissed.
Order pronounced in the open court on 6th November, 2025.