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Facts
Search and seizure operations were conducted at the premises of the assessee's father, leading to the discovery of incriminating material. This material indicated cash transfers received by the assessee from the trustee of Believers Church Group. Based on this, a notice under Section 153C was issued, and the assessee filed a return declaring income, which was later assessed at a higher amount by the AO due to additions.
Held
The CIT(A) had deleted the additions made by the AO, considering the amount received from Last Hour Ministry was offered to tax. However, the CIT(A) failed to address the AO's reasoning that there was no nexus between the receipts and the income offered to tax, and the assessee failed to provide evidence for the same.
Key Issues
Whether the CIT(A) properly addressed the AO's reasoning regarding the lack of nexus between the received amounts and the income offered to tax, and whether the assessee provided sufficient evidence for the same.
Sections Cited
153C, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM
2 ITA 649/Coch/2025 & CO 8/C/2025 Reshma Susan Thomas 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 15.07.2025 for Assessment Year (AY) 2020-21 and the cross objection is filed by the assessee.
Brief facts of the case are that the respondent assessee is an individual. No regular return of income was filed by the appellant. Search and Seizure operations were conducted in the business premises of one Shri Shibu Thomas, i.e. father of the respondent assessee. During the course of search and seizure operations certain incriminating material in the form of loose sheets pertaining to the assessee were found and seized. The loose sheets indicated that the assessee had received certain cash transfers from the trustee of Believers Church Group. Based on this incriminating material, a notice u/s. 153C of the Income Tax Act, 1961 (the Act) was issued on 15.03.2023. In response to the notice u/s. 153C, the assessee filed return of income on 13.04.2023 declaring income of Rs. 8,13,342/-. Against the said return of income, the assessment was completed by the ACIT, Central Circle, Thiruvananthapuram vide order dated 23.03.2024 passed u/s. 153C of the Act at a total income of Rs. 1,59,52,490/-. While doing so, the AO made addition of Rs. 1,30,14,186/- being the amount received from Last Hour Ministry for the failure of the assessee to discharge the onus of proving the 3 ITA 649/Coch/2025 & CO 8/C/2025 Reshma Susan Thomas nature of the transaction. However, rejected the contentions of the assessee that the amount received from Last Hour Ministry was offered to tax in AYs 2019-20 and 2020-21 u/s. 44AD of the Act. The AO also made addition of Rs. 19,55,742/- as unexplained expenditure for the failure of the assessee to explain the source of expenditure indicated in the vouchers seized during the search and seizure operations.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order allowed the appeal by deleting the additions.
Being aggrieved, the Revenue is in appeal before this Tribunal in the present appeal.
We have heard the rival contentions and perused the material available on record. The CIT(A) had deleted the addition taking into consideration that the amount received from Last Hour Ministry was offered to tax during AYs 2019-20 and 2020-21. However, the CIT(A) had failed to address the reasoning of the AO, which is extracted in the assessment order, which is extracted as under: -
“From the bills it can be seen that the hills were raised during the financial year 2019-20 relevant to assessment year 2020-21. Screen shot of the sample bill is pasted as under: The assessee's contention that they had received advance payments during the financial year 2018-19 is not 4 ITA 649/Coch/2025 & CO 8/C/2025 Reshma Susan Thomas acceptable since in the bills, it is nowhere mentioned that advance payment has been received by the assessee. There is no documentary evidence to substantiate that the income offered by the assessee in the assessment year 2019-20 pertains to the amount received from Last Hour Ministry. Assessee should have provided documentary evidence to establish that the receipts offered to tax in assessment year 2019-20 was received from Last Hour Ministry only. Most importantly, the assessee failed to establish the fact that the receipts received in financial year 2018-19 were connected with the bills raised during the financial year 2019-20. The onus was on the assessee to prove the correlation between the receipts offered in assessment year 2019-20 and bills raised in assessment year 2020-21. The assessee failed to prove the same.”
In other words, the gist of the reasoning of the AO was that there was no nexus between the receipts from the Last Hour Ministry and the receipts shown in the Profit & Loss A/c., which are offered to tax. However, the CIT(A) had failed to meet the reasoning of the AO. Therefore, the matter is restored to the file of the CIT(A) for fresh adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant. Appeal partly allowed.
The cross objection filed by the assessee is dismissed as the contention of the assessee that there were no seized material relating to the assessee found in the course of search and seizure operations
5 ITA 649/Coch/2025 & CO 8/C/2025 Reshma Susan Thomas conducted in the case of Shri Shibu Thomas was not accepted. The AO had referred to seized material found during the search and seizure operations in the case of Shri Shibu Thomas. The cross objection is rejected.
In the result, the appeal filed by the Revenue stands partly allowed and the cross objection of the assessee is dismissed.
Order pronounced in the open court on 6th November, 2025.