Loading judgment…
Facts
The assessee, a builder, faced additions for unexplained investment of Rs. 36.93 crores under Section 69, based on a DVO report, and unexplained cash deposits of Rs. 66.29 lakhs under Section 68 during demonetization. The NFAC confirmed these additions, which the assessee challenged, citing DVO report inaccuracies and lack of proper consideration for submitted evidence.
Held
The Tribunal noted that the DVO report was not confronted to the assessee and their books were not rejected for the unexplained investment. For cash deposits, while prior evidence was insufficient, a fresh opportunity was warranted. Consequently, both matters were remanded to the Assessing Officer for re-adjudication, ensuring the assessee receives a full opportunity to present evidence and arguments, adhering to natural justice.
Key Issues
Whether additions for unexplained investment based on DVO's report and unexplained cash deposits during demonetization were valid, given procedural lapses and claims of non-consideration of evidence.
Sections Cited
69, 68, 145, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
These two appeals are filed against the order dated 30- 07-2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment years 2017-18 & 2018-19.
The grounds of appeals are as under:-
A.Y. 2017-18 “(1) That on facts, and in law, and on evidence on record, the learned NFAC has grievously erred in confirming the additions made by AO by a non speaking order, without considering the detailed submissions filed by the appellant. (2) That on facts, in law, and on evidence on record, the learned NFAC has grievously erred in confirming the 36,93,08,062/- made u/s of addition 69 of & 1812/Ahd/2025 Corner Point Infrastructure Pvt. Ltd., A.Y. 2017-18 & 2018-19 the of Act in respect alleged unexplained investment, without rejecting books of accounts u/s 145 of the Act, and only on the basis of report of DVO, which is not tenable in law. (3) That on facts, in law, and on evidence on record, the learned NFAC has grievously erred in confirming the addition of Rs. 66,29,500/- made u/s 68 of the Act in respect of cash deposited in bank accounts of appellant. (4) That on facts, record, both the additions ought to have been deleted, as prayed for. (5) The appellant craves leave to add, alter, amend any ground of appeal.”
A.Y. 2018-19 “(1) That on facts, and in law, and on evidence on record, the learned NFAC has grievously erred in confirming the addition made by AO by a non speaking order, without considering the detailed submissions filed by the appellant, and by erroneously holding that the appeal is infructuous. (2) That on facts, in law, and on evidence on record, the learned NFAC has grievously erred in confirming the addition of 36,93,08,062/- made u/s 69 respect of the Act in alleged unexplained investment, without rejecting books of accounts u/s 145 of the Act, and only on the basis of report of DVO, which is not tenable in law. (3) That on facts, in law and on evidence on record, the addition ought to have been deleted, as prayed for. (4) The appellant craves leave to add, alter, amend any ground of appeal.”
3. The assessee is a builder and developer. The assessee’s case was selected for scrutiny on the issue of unsecured loans, income from real estate business and sales turnover/receipts. The assessee filed return of income on 07-11-2017 declaring total income of Rs. 39,81,884/- for assessment year 2017-18. The assessee’s case was selected for complete scrutiny and notice u/s. 143(2) of the Act was issued on 08-09-2018 and served upon the assessee. Notice u/s. 142(1) of the Act along with questionnaire was issued on various dates and the assessee filed the submissions along with details. The Assessing Officer observed that the assessee has shown gross receipts from revenue operation to Rs. 10,18,48,290/- and other income of Rs. 1,94,20,460/-. The assessee further after claiming & 1812/Ahd/2025 Corner Point Infrastructure Pvt. Ltd., A.Y. 2017-18 & 2018-19 expenses of Rs. 11,92,38,122/-, profit was shown at Rs. 20,30,628/- and after adjusting the return of income declared at Rs. 39,81,884/-. To ascertain the investment in projects, the reference was made to DAO dated 14-11-2019 and the DAO has submitted the valuation report considering the various aspects of the construction with expenses/investment. On going the valuation report, the Assessing Officer observed that the valuation of the total project is Rs. 103,20,80,956/- whereas the assessee has shown total investment in profits to Rs. 66,27,72,894/-. Thus, there was a difference of Rs. 36,93,08,062/-. The Assessing Officer held that since the assessee made unexplained investment in the projects to the tune of Rs. 36,93,08,062/- as per the DVO’s report which is not recorded in a regular books of account and has not been offered any explanation by the assessee. On discrepancy, the same remained as unexplained investment u/s. 69 of the Act and made addition to that effect. The Assessing Officer further observed that the assessee has deposited cash of Rs. 66,29,500/- in various banks during the demonetization period i.e. 09-11-2018 to 30-11-2020. After taking cognizance of the assessee’s details, the Assessing Officer held that the source of these deposits were not supported with any evidences and has not been explained by the assessee therefore added the said amount as unexplained cash deposits u/s. 68 amounting to Rs. 66,29,500/-.
& 1812/Ahd/2025 Corner Point Infrastructure Pvt. Ltd., A.Y. 2017-18 & 2018-19 4. Being Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The ld. A.R. submitted that the assessee has pointed out to the Assessing Officer that the DVO has mis-understood the facts of the case of the assessee and has applied inaccurate parameters in his external valuation report which was not comparable. The ld. A.R. submitted that the assessee has requested the Assessing Officer for review of the said DVO’s report but the Assessing Officer Assessing Officer has not allowed the same and made addition of Rs. 36,93,08,062/- as unexplained investment. The assessee is engaged in the business of development of real estate and construction of complexes. The ld. A.R. submitted that the DVO should have taken the assessee’s investment and its valuation which the DVO as well as Assessing Officer has not taken into account. As regards the cash deposited during the demonetization, the assessee has maintained various bank accounts and has given the details of the bills through cheque to the Assessing Officer but that the same was ignored by the Assessing Officer,.
The ld. A.R. submitted that the evidence given in respect of cash deposits were not sufficient at the time of assessment proceedings and at this juncture the assessee is having the details of each builder and requested that the same should be taken on record and verified. Thus, the A.R. prayed that the matter may be referred back to the Assessing Officer for proper adjudication of the issues and including that of the assessee’s contention that the DVO has taken the valuation more than the sale price of the units and the cash withdrawals and deposits & 1812/Ahd/2025 Corner Point Infrastructure Pvt. Ltd., A.Y. 2017-18 & 2018-19 was not able to co-relate with the documents as the evidences was insufficient at the time of assessment order.
The ld. D.R. relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note as regards ground no. 1, the projection of the valuation officer and the price/value mentioned of the properties were not confronted to the assessee. The assessee’s books of accounts were not rejected by the Assessing Officer at any point of time and therefore the difference in the amount of investment that of the DVO’s valuation should have looked into after confronting the DVO’s report to the assessee. Therefore, on this ground it will be appropriate to remand back this matter to the file of the Assessing Officer for proper adjudication of the issues after taking cognizance of the assessee’s valuation along with the DVO’s valuation of the project-wise considerations and the investments. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. As regards ground no. 2, since the assessee has not filed the proper evidences either before the Assessing Officer as well as before the CIT(A), it will be appropriate to remand back to the file of the Assessing Officer for proper verification of the evidences and adjudication of the issues thereafter. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, ITA & 1812/Ahd/2025 Corner Point Infrastructure Pvt. Ltd., A.Y. 2017-18 & 2018-19 1811/Ahd/2025 filed by the assessee is partly allowed for statistical purpose.
As regards ITA 1812/Ahd/2025, grounds are identical and hence the same is also remanded back to the file of the Assessing Officer. Thus, ITA 1812/Ahd/2025 filed by the assessee is partly allowed for statistical purpose.
In the result, both the appeals filed by the assessee are partly allowed for statistical purpose.