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Facts
The assessee, a salaried employee, purchased a residential unit jointly with his mother. The assessment was reopened based on a search action where cash payments for property purchases were detected. The Assessing Officer alleged that the assessee made an unaccounted cash payment for the property.
Held
The Tribunal held that the reopening of assessment was valid as it was based on material seized during a search and the exception under proviso (c) to Section 148A of the Act was applicable. However, on merits, considering the joint purchase, the assessee is liable only for 50% of the on-money payment.
Key Issues
Whether the reopening of assessment was validly done without issuing a notice under Section 148A, and if the addition for on-money payment is sustainable when the property was jointly purchased.
Sections Cited
148A, 148, 132, 132A
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 28.08.2025, for Assessment Year 2020-21.
Shri Avan Kumar Singh, appearing on behalf of the assessee submitted that the assessee is a salaried employee. The assessment in the case of the assessee was reopened on the basis of search action carried out at the premises of M/s. Bhutani Infra Group & Association. The assessee jointly purchased one residential unit no. BLKH FC 04 FF in Grandthum Project of M/s. Bhutani Infra Group & Associates. The payment for purchase of said residential unit was made by account payee cheque and no cash payment was made. The Assessing Officer (AO) on the basis of third- party statement alleged that the assessee had paid on money of Rs.14,35,250/- during the FY 2019-20 i.e. relevant to AY 2020-21 in cash to M/s. Bhutani Infra Group & Association for the purchase of unit in Grandthum Project. The ld. AR of the assessee assailing validity of reopening of assessment submitted that the AO issued notice u/s.148 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) directly without issuing any notice u/s.148A of the Act. After insertion of provisions of section 148A of the Act by the Finance Act, 2021, the AO was mandatorily required to follow the procedure prescribe under the new provisions of section 148A of the Act and issue notice u/s.148A(b) of the Act. Since in the instant case notice u/s.148 of the Act was directly issued without compliance of section 148A of the Act, the reopening is bad in law.
On merits of the addition, the ld. AR of the assessee submits that the property was purchased in joint names, whereas, the reassessment proceedings have been initiated only in the name of assessee. No notice or reassessment proceedings have been initiated in the name of joint holder. Hence, the assessment proceedings initiated solely in the name of the assessee are liable to be quashed.
Per contra, Shri Manoj Kumar representing the department vehemently supported the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submits that during search proceedings on M/s. Bhutani Infra Group & Associates statement of Shri Ashish Bhutani and Shri Sanchit Bhutani, Managing Directors (MDs) of the group were recorded they admitted receiving unaccounted cash on sale of real estate project. The statements of Shri Gajendra and Shri Vikrant, Accountant and Associate Sales Manager, respectively were also recorded. They
admitted that cash was received over and above the sales consideration reflected in the books of account. As per the information received, the assessee had made unaccounted investment of Rs.14,35,250/- in Grandthum Project in the form of cash on-money payment.
Both sides heard, orders of the authorities below examined. The first contention of the ld. AR of the assessee is that the assessment order is bad in law as the Assessing Officer has failed to comply with the provisions of section 148A of the Act. As per section 148A of the Act, the AO is required to issue notice u/s.148A(b) of the Act providing an opportunity of hearing to the assessee by serving upon him a notice to show cause before issuing any notice u/s.148 of the Act. There are certain exceptions to the provisions of section 148A of the Act. The provisions of section 148A(b) of the Act shall not apply where the Assessing Officer is satisfied that any books of account or document seized in a search u/s.132 of the Act or requisition u/s.132A of the Act in the case of searched person pertains or pertain to, any information contained therein, relate to the assessee. In the case of assessee the assessment has been re-opened on the basis of material found and seized during search u/s.132 of the Act in the case of Bhutani Infra Group & Association. A document was seized which inter alia contained information pertaining to assessee. Thus, the case of assessee clearly falls under proviso (c) to section 148A of the Act. Hence, there is no infirmity in the instant case in directly issuing notice u/s.148 of the Act by the Assessing Officer. I find no merit in the legal ground no. 1 to 3 of the appeal, the same are dismissed.
On merits of the addition the short issue raised by the assessee is that the property has been jointly purchased by the assessee with his mother Smt. Vidhya Wati Yadav. To substantiate joint purchase of property, the assessee has placed on record copy of letter dated 21.01.2020 and copy of the receipts, whereby amounts were deposited in respect of unit no. BLKH FC 04 FF First Floor, Block H in Grandthum Project developed by M/s. Bhutani Infra Group & Association. A perusal of the same reveals that along with the name of assessee name of Mrs. Vidhyawati Yadav is also mentioned. Though complete builder buyer agreement is not placed on record, only first page of said agreement has been annexed as annexure 4, the same also bears the signature of Mrs. Vidhyawati Yadav as allottee alongwith the assessee. This clearly indicates that the assessee is not the sole buyer of the property and property has been jointly purchased by the assessee with Mrs. Vidhyawati Yadav. In so far as payment of cash on money is concerned, no submission were advanced by the ld. Counsel for the assessee to controvert the findings of the authorities below. Considering entire facts of the case, I am of the view that entire payment of cash on money cannot be added in the hands of the assessee. Since, property has been purchased in joint name, the assessee can be held liable only to the extent 50% of the on-money payment. Ergo, ground no. 5 of assessee’s appeal is allowed protanto.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on Friday the 02nd day of January, 2026.