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Judgment
PER AMITABH SHUKLA, AM,
This appeal filed by the assessee is against order dated 09.12.2025 of the Learned Commissioner of Income Tax(Appeals)/National Faceless Appeal Centre, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 15.02.2025 passed u/s 147 r.w.s.144B of the Income Tax Act, 1961 pertaining to Assessment Year 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal:-
1.That the order of the Hon'ble Commissioner of Income Tax (Appeal) ["CIT(A)] is bad in law and on the facts of the case.
2)That Hon'ble CIT(A) erred in ignoring that the notice u/s 250 scheduled for 24.11.2025 was adjourned to 09.12.2025 and an acknowledgement to this effect was issued in favor of the appellant. The appellant made the due compliance and filed a detailed paper book containing 443 pages on the scheduled date i.e. 09.12.2025.
2.1) That Hon'ble CIT(A) erred in passing the impugned order dated 09.12.2025 ignoring the detailed submission filed by the appellant. Therefore, the same was in violation of the principles of natural justice.
3)That the Learned assessing officer has erred in law and on the facts of the case by not considering/disregarding the documentary evidence furnished by the appellant in support of the genuineness of the transactions, without giving any cogent reasons, thereby violating the principles of natural justice.
4)That the Learned assessing officer failed to consider confirmations, bank statements, and other supporting evidence submitted during assessment proceedings, which were crucial for determining the credit worthiness of the lender, i.e. Mr. Radhe Mohan Kapur ("RK"), thereby leading to an unjustified addition.
5)That the Learned assessing officer has erred in law and on the facts of the case by laying emphasis only on the net income of RK for the relevant previous year, disregarding the fact that RMK had sold an immoveable property for Rs. 35,00,00,000/- during the period under consideration which ensured adequate availability of funds for introducing unsecured loans in the appellant company.
6)That the allegation of the Learned assessing officer that the lender had no credit worthiness is based on assumption and not on the facts of the case.
7)That the Learned assessing officer failed to record satisfaction as per section 145(3) of the Income Tax Act 1961 before making an assessment u/s 144 of the Income Tax Act 1961. As such the assessment proceedings were not proper and according to provision of the Act.
8)That the addition of Rs. 62,99,63,760/- on account of unexplained cash credit u/s 68 of the Income Tax Act is unjust and arbitrary.
9)That the immoveable property bearing no. 27, Golf Links, New Delhi-110003 (50% share) was purchased vide Sale Deed Dated 03.05.2019 and therefore the period under consideration was the first year of acquisition, contrary to "more than 5 years ago" alleged by the learned Assessing Officer in the impugned assessment order.
10)That the Learned assessing officer has erred in disregarding the bank statement furnished by the appellant for the entire year wherein it is evident that no rental income was received.
11)That the Learned assessing officer has erred in law and on the facts of the case by disregarding that Income Tax can be imposed only on "profits one actually receives and not on the profits one might have but has not received". The courts have uniformly supported the stance that taxation of notional income is impermissible.
12)That the addition of Rs. 67,20,000/- on account of notional rent is unjust and arbitrary.
Brief facts of the case as available from records indicate that the appellant company was involved in the business of purchase, sale and construction of immovable property and had not filed its ROI for A.Y. 2020-21. The Ld. AO was in possession of information that the appellant had entered into a transaction of purchase of immovable property of Rs. 60,00,00,000/-. Hence, after following the due process u/s 148A, a notice u/s 148 was issued on 14.03.2024. However, no ROI was filed in response thereto. Subsequently, various notices were issued from time to time, but no response was received, except in response to notice dated 01.11.2024. Not satisfied with the reply submitted by the appellant, the Ld. AO made an addition of Rs. 62,99,63,760/- as unexplained cash credit u/s 68, being unexplained unsecured loan from the company’s principal officer Shri. Radhe Mohan Kapoor (which was claimed by the appellant as being the source of purchase of the property) and Rs. 67,20,200/- as undisclosed rent income received from the impugned property during the year under consideration. The total income was assessed at Rs. 63,66,83,790/- vide order passed u/s 147 r.w.s 144B on 15.02.2025. The assessee approached ld. CIT(A), who confirmed the order of the ld. AO after recording non-compliance of the assessee to the appellate proceedings.
The ld. Counsel for the assessee argued that this is the first year of the operation of the company and that the then main promoter had introduced unsecured loan in the company. The ld. AO had issued a show-cause dated 07.01.2025 for the same which could not be complied on account of untimely death of the promoter in October, 2024. It was submitted that the appellant had submitted detailed evidences before the ld. CIT(A) who also did not consider while dismissing its appeal. Request was accordingly made to remit the matter to the ld. Assessing Officer for re-adjudication. Ld. Counsel assured that full compliance shall now be made to the statutory notices.
The ld. DR placing reliance upon the order of the lower authorities submitted that the assessee is a habitual defaulter.
We have heard rival submissions in the light of material placed on record. We have that the assessee has not been adequately heard by the lower authorities before drawing of adverse conclusions. Right to defend once case is a natural right and is inviolable. We are conscious of the fact that no appellant benefits by non-prosecution of its case. Be that as it may be, we are of the view that the matter deserves to be remitted back to the ld. AO for re-adjudication de novo. Accordingly, we set-aside the order of the lower authorities and remit the matter back to the file of the ld. AO for assessment de novo in accordance with law and by way of passing a speaking order. The Ld. AO shall give opportunities of being heard to the assessee and it shall be bounden upon the assessee to comply with the notices issued by the Ld. AO Any non-compliance on the part of the assessee can be adversely viewed. The decision to remit it back to the Ld. AO is taken in view of the fact that an Assessing Officer is the fulcrum of assessment proceedings. He possess the first right and responsibilities to examine facts of a case before arriving at his decision qua determination of taxable income in a particular case. We have noted with respectful deference the decision of Hon’ble Apex Court in the case of TIN box 249 ITR 216 on the subject matter. Accordingly, the appeal of the assessee is allowed for statistical purposes
In the result, the appeal of the assessee is allowed for statistical purposes.