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Facts
The assessee, Rajendra Sahu, was found to have purchased an immovable property for Rs. 1,18,95,000/- in the name of his employee, Sh. Amarnath Pyasi, who earned a meager salary. An investigation concluded Pyasi was a benamidar, and the Assessing Officer added Rs. 88,52,740/- as unexplained investment under section 69 to the assessee's income, treating him as the beneficial owner. The assessee contested this, arguing the income was already assessed in the benamidar's hands and natural justice was violated.
Held
The Tribunal noted that the same investment was already assessed in the hands of Sh. Amarnath Pyasi for both AY 2012-13 and AY 2013-14, and an appeal against this was pending. It ruled that the investment could not be assessed in both the benamidar's and the alleged beneficial owner's hands simultaneously. The matter was restored to the CIT(A) to consider both assessment orders together and make a final decision, thus allowing the assessee's appeal for statistical purposes.
Key Issues
Whether the reassessment proceedings were valid; whether the addition for unexplained investment under section 69 was sustainable when the same income was also assessed in the benamidar's hands; and whether principles of natural justice were violated.
Sections Cited
section 147, section 144B, section 148, section 69, section 131, section 115 BBE, Prevention of Benami Properties Transaction Act, 1988, section 143(3)
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Income Tax Appellate Tribunal, JABALPUR BENCH, JABALPUR
Before: SH. KUL BHARAT & SH. NIKHIL CHOUDHARY
A.Y. 2013-14 Rajendra Sahu, vs. Income Tax Officer-1, Ram Manohar Lohiya Ward No. 4, Behind Katni Durga Hospital, Adarsh Colony, Katni PAN: AUVPS4330A (Appellant) (Respondent) Assessee by: Sh. Rahul Bardia, C.A. Revenue by: Sh. N.M. Prasad, Sr. DR 1 Date of hearing: 17.09.2025 Date of pronouncement: 28.11.2025 O R D E R PER NIKHIL CHOUDHARY, A.M. This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC dated 20.10.2023 wherein the ld. CIT(A) has dismissed the appeal of the assessee against the orders passed by the Assessing Officer under section 147 r.w.s. 144B of the Income Tax Act on 27.03.2022. The grounds of appeal are as under:- “(1) The order passed by the Ld CIT (A) is bad in law and facts, void ab initio and without jurisdiction. (2) The Ld CIT (A) erred in law and facts of the case in sustaining the order, when notice issued u/s 148 is defective. There is no application of mind of Ld AO and also of sanctioning authority. (3) The Ld CIT (A) erred in law and facts of the case in sustaining the order, when assessee made specific request to share copies of all the statement recorded by the Investigation wing regarding the sale of properties. These copies were not given inspite of using them against the assessee. (4) The Ld CIT (A) erred in law and facts of the case in sustaining the order, when the hon'ble Tribunal for Benami transactions has released the property and given relief to alleged benamidar and alleged beneficial owner. Copy of order was filed on record. (5) The Ld CIT (A) erred in law and facts of the case in sustaining the addition of Rs 88,52,740/-u/s 69.
It is observed that the appeal is delayed by 7 days. A condonation application has been filed by the assessee in which it has been submitted that since the wife of the assessee was suffering from various medical problems for which she had been admitted to a Hospital at Jabalpur, the assessee was unable to meet his counsel for filing of the appeal on time. A copy of the discharge summary in respect of the assessee’s wife dated 10.11.2023 showing that the assessee’s wife had admitted to Baharani Health Care with dengue fever since 6.11.2023 was filed. After considering the circumstances and the documents submitted the delay in the filing of the appeal was condoned and the appeal is admitted for hearing.
The facts of the case are that as per the information available on the insight portal, the assessee had purchased an immovable property during the relevant period for Rs. 1,18,95,000/- from Sh. Sanjeev Prabhakar in the name of Sh. Amarnath Pyasi. The information was passed on to the Assessing Officer from the office of the ADIT, (Investigation)-I, Jabalpur after proceedings under the provisions of the Prevention of Benami Properties Transaction Act, 1988. It was informed that Sh. Amarnath Pyasi was an employee of Sh. Rajendra Sahu (the assessee) proprietor of Maa Bhagwati Traders, Katni who earned a salary of Rs. 8,000/- per month. He had purchased an immovable property at Gram Khirhani, N.B. 407 PHN 41/44, Khasra No.554/4, Rakba 2.029 hec. for Rs. 1,18,95,000/- from Sh. Sanjeev Prabhakar of Katni. After conducting detailed investigation, the DCIT (BPU), Bhopal had concluded that Sh. Amarnath Pyasi was a benamidar of the property under reference. The statement of Sh. Amarnath Pyasi had been recorded under section 131 on 29.03.2019 and on 4.10.2019 wherein he had denied to have purchased the land under consideration and stated that he was taken to the registry office by his employer sh. Rajendra Sahu (the assessee) who had asked him to sign some registry papers around six years ago. Sh. Amarnath Pyasi had submitted that he was neither aware of the seller nor other details of the transaction. He admitted that he had not paid any sum for the land transaction that was carried out. He also A.Y. 2013-14 Rajendra Sahu refused to acknowledge the signature done in his name on the registry document and submitted that his IDBI bank A/c No. 2251040000017736 used to be handled by his employer Sh. Rajendra Sahu for the purposes of transactions of Maa Bhagwati Traders, which deals in the supply of building materials including cement. The copy of the bank statement of the said bank account was obtained and from the same, the ADIT concluded that the submission of Sh. Amarnath Pyasi was correct. Subsequently, the assessee Sh. Rajendra Sahu was also issued summons by the benami property unit where he gave details of immovable properties that stood in his name and the name of his family members. But this did not include the property considered as benami in the reference by the DCIT (BPU). From this investigation made by the DCIT (BPU), Bhopal and the AO, the AO recorded his satisfaction that Sh. Rajendra Sahu was the actual person who had invested in the property under consideration and therefore, proceedings under section 147 were initiated in the hands of the assessee. The AO concluded that the transactions in the bank account was carried out by the assessee and established the fact that there was a link between Sh. Amarnath Pyasi and Sh. Rajendra Sahu in the matter of financial transactions for the purchase of property and the property that had been purchased had actually been purchased by the assessee through his employee Sh. Amarnath Pyasi. Thereafter, the AO confronted the assessee in this regard. However, the assessee denied the said investment. The AO did not give any credence to the denial furnished by the assessee and held that the payment of Rs. 88,52,740/- in the F.Y. 2012-13, relevant to the A.Y. 2013-14 was an unexplained investment made by the assessee under section 69 of the Act since the assessee had been found to be the owner of the investment, since the investment had not been recorded in his books of accounts and since the nature and source of the investment had not been explained. He, therefore, added the same back to the income of the assessee and brought the same to tax under the provisions of section 69 r.w.s. 115 BBE of the Act.
Aggrieved with the said addition, the assessee went in appeal to the National Faceless Appeal Centre. Before the ld. CIT(A), it was submitted that Sh.
A.Y. 2013-14 Rajendra Sahu Amarnath Pyasi with the help of a railway employee called Sh. Mukesh Agarwal had purchased a property for plotting purposes. The purchase cost of this property was Rs. 1,18,95,000/- and as per the registered deed of purchase, consideration of Rs. 38 Lac was paid through account payee cheques by Smt. Parul Agarwal W/o Sh. Mukesh Agarwal. The rest of the amount had been paid in cash. This property was registered on 18.02.213. The assessee submitted that Sh. Mukesh Agarwal had been working in the name of his wife since he himself was a railway employee and he constructed an apartment scheme at Katni, Madhya Pradesh. At the time of enquiry, by the Investigation Wing, Sh. Amarnath Pyasi began to deny the investment because Sh. Mukesh Agarwal had died in 2019 before the notice was issued under section 131(1A). Since, Sh. Amarnath Pyasi had never done any sizable business and was not in a position to present himself, therefore, he started denying the transaction. The matter was referred to the benami property unit and on the basis of their enquiries, the benami unit had concluded that the assessee was the purchaser of the properties. However, it was submitted that during the course of assessment proceedings, the assessee had made several requests for issue of various documents to enable him to defend his case. Among them were copies of statement of buyers of the plots so that the assessee could rely upon them. These have been recorded by the Investigation Wing at Jabalpur. He had also asked for copies of the statement of witnesses of property and other concerned persons which had been recorded by the Investigation Wing and IO (BPU) and he had also requested for an opportunity to cross examine all persons whose statements had been relied upon against him. However, the documents that were requested for were never supplied to the assessee and assessment was made under section 144. It was submitted that the AO had not conducted any enquiry or cross verification and had simply made the addition in the hands of two persons i.e. Sh. Amarnath Pyasi and Sh. Rajendra Sahu. Therefore, there was violation of principles of natural justice in this case. The assessee placed reliance on various case laws as under:- i. SRS Mining vs. Union of India and Ors 328 CTR (Mad) 510 A.Y. 2013-14 Rajendra Sahu ii. Harjinder Singh vs. Income Tax Officer 124 TTJ (ASR) 252. iii. Andaman Timber Industries vs. Commissioner of Central Excise 281 CTR (SC) 241 The assessee also submitted that the AO had erred in law in issuing the notice under section 148 without proper application of mind. The assessee invited attention to the appeal filed by Sh. Amarnath Pyasi for the A.Y. 2012-13 and A.Y. 2013-14 which had been passed by the same AO who had recorded the reasons for issue of notice under section 148 in the case of the assessee. It was submitted that the same AO had assessed the entire income from investment in the purchase of the property of Rs. 1,18,95,000/- in the hands of Sh. Amarnath Pyasi in the assessment years under question and that the addition had not been done on protective basis. Therefore, there could no occasion for the said AO to record reasons that income had escaped assessment in the hands of the assessee for the same transaction. This clearly showed that there was no application of mind on the part of the AO and he was acting at the behest of the IO (BPU) to reopen the case of the assessee. The assessee submitted that since the income had already been assessed in the hands of Sh. Amarnath Pyasi, it could not be assessed in his hands. For this proposition, the assessee placed reliance on several case laws which were quoted in the order of the ld. CIT(A). The assessee further submitted that the ld. IO had recorded a statement of the seller of the property i.e. Sh. Sanjeev Varvandikar who had pointed out that some other person had come for the purchase of the property and requested for registration of the property in the name of Sh. Amarnath Pyasi. But the ld. IO (BPU) had failed to extract the name of the person who had come to make the transaction. The assessee had also made request for independent enquiries to be made from Smt. Parul Agarwal W/o Sh. Mukesh Agarwal, Sh. Nirmal Sethia, (who had deposited the money in the account of Smt. Parul Agarwal). Sh. Sanjeev Varvandikar (the seller) and the witnesses to the purchase and sale deeds, but no such enquiry had been done. Finally, it was submitted that the assessee had submitted proof during the course of assessment in the form of an affidavit from Sh.
A.Y. 2013-14 Rajendra Sahu Amarnath Pyasi dated 15.11.2021 accepting the fact of investment of money through late Sh. Mukesh Agarwal. A copy of the submission made by Sh. Amarnath Pyasi before the adjudicating authority under the PBPT Act, statement of Sh. Parul Agarwal before the Investigation Officer under section 131(1A) and before the IO (BPU), statement of Sh. Sanjeev Varvandikar before the IO (BPU) and the assessment orders in the case of Sh. Amarnath Pyasi where the entire investment value had been added back in his hands had been filed. But the ld. IO had not taken any cognizance of these and had made the addition in the hands of the assessee. Therefore, it was prayed that the assessee deserved relief and the addition was required to be deleted.
The ld. CIT(A) considered the submissions made by the assessee. He recounted the facts as narrated in the assessment order and as emerging from the report from the investigation wing and BPU, Jabalpur and came to the conclusion that in the present case, the reopening was done on the basis of information received from the Investigation Wing, Jabalpur of huge investments in immovable properties which were not commensurate with the return of income. The reopening had been done after forming a belief that the investment had been made out of the income of the assessee from unexplained sources and the same had not been offered to tax. Since the assessee had not brought any cogent material on record to show that the various notices were not issued within the stipulated time and not served as per law therefore, he held that there was no infirmity on this account and he accordingly upheld the re-initiation of the assessment proceedings. Coming to the merits of the case, the ld. CIT(A) held that the onus was upon the assessee, prove the genuineness of the money credited in his bank account and that the addition under section 69 could be made in any case where any investment was found for any previous year and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered is not found to be satisfactory. He held that it was not in dispute that Sh. Amarnath Pyasi was a salaried employee of the assessee having a meagre income. Sh. Amarnath Pyasi had A.Y. 2013-14 Rajendra Sahu recorded two statements under oath on 29.03.2019 and on 4.10.2019 and in both he had categorically stated that he had been taken through the registry office by the assessee and acted on his instruction there. The assessee had denied having any knowledge of any person by the name of Sh. Mukesh Agarwal. He had admitted to having taken Sh. Amarnath Pyasi to the office of the Registrar on the date of registration of the impugned properties. The ld. CIT(A) also concluded that the assessee was fully conversant with the details of payments made for the property. He also noted that the seller had given evasive replies to all questions. Furthermore, Smt. Parul Agarwal, who was a house wife had no independent sources of income and it was her late husband Sh. Mukesh Agarwal, who handled all her transactions including bank transactions but had expired on 8.03.2019. But the ld. CIT(A) observed that cash had been deposited into the account of Smt. Parul Agarwal before payment for the property from the said account. Sh. Amarnath Pyasi had also confirmed that the bank account standing in his name at IDBI bank was handled by the assessee and perusal of the said statement had revealed transfers from the said bank account to M/s Maa Bhagwati Traders, the proprietary firm of the assessee. Therefore, taking all these circumstances together, the ld. CIT(A) held that as per the preponderance of probability, the assessee was the benamidar investor in the said property and AO had rightly made the addition in his hands under section 69 of the Act. He, therefore, dismissed the appeal of the assessee.
The assessee is aggrieved at these additions and has accordingly come before us. Sh. Rahul Bardia, C.A. appearing on behalf of the assessee recounted the fact that the property had been purchased by Sh. Amarnath Pyasi. A portion of the funds in the purchase of the property had been met out of cheques issued by Smt. Parul Agarwal W/o Late Sh. Mukesh Agarwal. The seller of the property had been examined and while he stated that some other persons had negotiated the deal, the assessee had not been identified by him as the negotiator. The only inferences on the basis of which the ld. AO had come to the conclusion that the property was that of the assessee was because the assessee had accompanied Sh. Amarnath Pyasi to A.Y. 2013-14 Rajendra Sahu the registry office and because it was alleged that the assessee was the controller of the bank account standing at IDBI in the name of Sh. Amarnath Pyasi. It was submitted that the same was not sufficient to charge the assessee as the benami owner of the property. Attention was invited to the affidavit of Sh. Amarnath Pyasi, which had been submitted by the assessee before the Assessing Officer and which had been ignored by the Assessing Officer. It was submitted that in the said affidavit, the owner Sh. Amarnath Pyasi had accepted the fact of investment of money through late Sh. Mukesh Agarwal. Furthermore, Sh. Amarnath Pyasi had also made a submission before the adjudicating authority under the prohibition of PBPT Act which have been submitted to the Assessing Officer which had not been considered. The ld. AR submitted a paper book in which the registered sale deed was contained and the statements of Smt. Parul Agarwal, Sh. Sanjeev Varvandikar (the seller), Sh. Amarnath Pyasi’s various statement and the affidavit sworn by Sh. Amarnath Pyasi were included. Also included was the assessment order passed in the case of Sh. Amarnath Pyasi for the said assessment year 2012-13 and the copy of the reasons recorded in the case of Sh. Amarnath Pyasi. It was further informed that additions had been made in respect of the same investment into the same land in the hands of Sh. Amarnath Pyasi in the A.Y. 2012-13 and the said appeal against the additions was still pending before the ld. CIT(A). The ld. AR submitted that the addition that were made in the hands of Sh. Amarnath Pyasi was not a protective addition but a substantive one and therefore, the orders passed by the AO were at variance with the orders passed in the case of Sh. Amarnath Pyasi. It was, therefore, prayed that there was no basis to sustain the addition in the hands of the assessee and it should be deleted.
On the other hand, Sh. N.M. Prasad, Sr. DR-1 submitted that there were enough evidences that had been collected to show that the assessee was the benami holder of the said property. Sh. Amarnath Pyasi was his employee and was a man of meagre means who was dependent upon the employee. Therefore, the assessee could obtain any affidavit / statement from Sh. Amarnath Pyasi. However, the fact A.Y. 2013-14 Rajendra Sahu remains that an investment had been made by Sh. Amarnath Pyasi and into the purchase of the land and Sh. Amarnath Pyasi, knew nothing about the said investment. Rather he had submitted that he had been taken to the Registrar’s office by the assessee and made to sign some papers and furthermore, the bank account operated by him at IDBI was handled by his employer thereby demonstrating that the assessee was indulging in financial transactions in the name of Sh. Amarnath Pyasi. He further submitted that the statement of Smt. Parul Agarwal had revealed that she was a person of no means in her own right and all transactions used to be done through her husband who would manage her accounts. Therefore, she could not be called an investor in the said properties and it was evident that the assessee was acting in tandem with Sh. Mukesh Agarwal, who purchased the property in the name of his employee Sh. Amarnath Pyasi. Accordingly, it was submitted that the addition may be upheld.
We have duly considered the facts and circumstances of the case. We noticed that in respect of investment in the very same property and addition of Rs. 40 Lacs has been made in the hands of Sh. Amarnath Pyasi in the assessment year 2012-13 and in the assessment year 2013-14, a further sum of Rs. 88,52,740/- has been assessed in the hands of Sh. Amarnath Pyasi under section 143(3) of the Income Tax Act on account of payment towards purchase of property and registration charges. We have also been informed that an appeal is filed against the same and is currently pending before the ld. CIT(A). In the circumstances, it is quite clear that the investment into the purchase of the property cannot be assessed both in the hands of Sh. Amarnath Pyasi and the assessee as the benami property owner. Therefore, we deem it appropriate in the given facts and circumstances of the case to restore this matter also back to the file of the ld. CIT(A), who handling the appeal in the case of Sh. Amarnath Pyasi, so that the ld. CIT(A) may consider both assessment orders together and thereafter take a final decision after considering the merits of the respective appeals. These directions may also be brought to the notice of the ld. Pr. CCIT, NFAC so that the restored appeal of the assessee is