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Facts
The assessee, a salaried employee, purchased an immovable property and an addition of Rs. 7,50,000/- was made for alleged on-money payment. The Assessing Officer relied on information from DDIT (Inv.) and statements from the seller's group, citing receipts for cash received from the assessee.
Held
The Tribunal noted that the assessee accepted the on-money payment but could not provide sufficient details to explain its source before the Assessing Officer. The matter was remanded to the Assessing Officer to verify the source of cash withdrawals from the assessee's bank accounts for making the alleged payment.
Key Issues
Validity of notice under Section 148 (withdrawn), and sustainability of addition for on-money payment without proper explanation of the source of funds.
Sections Cited
147, 148, 143(3), 69
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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI MANISH BORAD
ORDER
PER MANISH BORAD, AM:
This appeal filed at the instance of assessee is directed against the order of Ld. CIT(A)/NFAC dated 27.08.2025 which is arising out of the assessment order u/s 147 of the Act for Assessment Year 2020-21 framed on 17.03.2013 by the ITO, Ward-1(5), Aurangabad.
The assessee has raised following grounds of appeal :-
1. I, Vishal Ramesh Fegade, am a salaried employee, and my primary source of income is derived solely from my employment. I would like to explicitly state that I have not made any cash payments in relation to the purchase of the property in question. All payments made towards the acquisition of the property have been conducted through formal banking channels, ensuring full transparency and compliance with legal requirements. The details of these payments are clearly outlined in the purchase deed.
The addition made under Section 69 of the Income Tax Act, 1961, is neither factually nor legally sustainable in the present case. Section 69 applies only when an assessee has made investments that are not recorded in the books of account and fails to offer a satisfactory explanation regarding the nature and source of such investments. However, as I am a salaried individual who is neither required by law nor customarily expected to maintain books of account. Therefore, the primary condition for invoking Section 69 namely, the existence and non-recording of investments in books of account is not satisfied.
Learned Jurisdictional Assessing Officer assumed the jurisdiction by issuance of a notice under section 148 of the Income-tax Act, 1961 which was not in accordance with the provisions of section 151A of the Income tax Act, 1961. Further, as per the CBDT notification the notice under section 148 of the Income tax Act, 1961 ought to have been issued by the National Faceless Assessment Centre (NFAC) and not by the AO. Thus, the notice issued under section 148 of the Income tax Act, 1961 seems to be viod ab initio.
I pray to reserve the rights to alter, omit, change, add or delete any grounds or grounds of appeal
before or at the time of hearing.”
3. At the outset, Ld. counsel for the assessee requested for not pressing ground of appeal no.3 raising legal issue challenging the validity of the notice issued u/s 148 of the Act, therefore, I dismiss ground of appeal no.3 as not pressed.
4. So far as remaining grounds are concerned, the grievance of the assessee are against the addition of Rs.7,50,000/- made by the Assessing Officer for on-money payment made for purchase of immovable property.
5. Brief facts of the case are that the assessee is an individual. Ld. Assessing Officer based on the information received from DDIT (Inv.), Aurangabad issued notice u/s 148 of the Act. In response, the assessee furnished the return declaring income of Rs.4,27,850/-.
Statutory notices u/s 143(2) and 142(1) served upon the assessee. Ld. Assessing Officer in the course of re-assessment proceedings giving reference to the search conducted u/s 132 of the Act on 30.11.2023 in the case of Manjeet Pride Group, Gadiya Group and others referred to the statement given by the Sales and Marketing Employee of Gadiya Group and also referred to certain incriminating material in the form of receipts for the cash received from the assessee towards on-money amounting to Rs.7,50,000/-. Since the assessee was unable to explain the source of alleged cash payment, Ld. Assessing Officer concluded the proceedings making the addition of Rs.7,50,000/- and assessed the income at Rs.11,77,850/-. Aggrieved the assessee preferred appeal before Ld. CIT(A)/NFAC but failed to succeed. Now, the assessee is in appeal before this Tribunal.
Ld. counsel for the assessee referring to the paper book running into 58 pages submitted that the assessee only source of income is from salary and that the alleged payment of Rs.7,50,000/- has been made out of the cash withdrawal from the declared bank account held with HDFC Bank and ICICI Bank. Specific reference was also made to the ICICI Bank entry dated 13.09.2019 that the assessee has withdrawn cash of Rs.4,50,000/- which was utilized for making payment towards on-money for the purchase of immovable property. Ld. AR submitted that if an opportunity is granted then all these details of cash withdrawals can be placed before the Assessing Officer.
Ld. DR did not raise any objection to the request of Ld. AR.
I have heard rival contentions and perused the records placed before me. Undisputedly the assessee has accepted to have paid on-money of Rs.7,50,000/- in cash for purchase of immovable property from Gadiya Group located at Aurangabad. In the assessment order, the Assessing Officer has referred to three receipts dated 05.11.2019, 13.09.2019 and 03.01.2020 through which the seller has received of Rs.1,00,000/-, Rs.4,50,000/- and Rs.2,00,000/- from the assessee. Admittedly, the assessee could not place necessary details to explain the source of alleged on-money payment before him. Ld. counsel for the assessee has made reference to the bank accounts held with HDFC Bank and ICICI Bank through which the assessee has withdrawn the cash for making the payment. Though specific reference has been made for the cash withdrawal of Rs.4,50,000/- on 13.09.2019 from ICICI Bank but for the remaining details and cash flow statements depicting the availability of cash with the assessee for making