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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals) – 30, New Delhi [‘CIT(A)’ in short] dated 24.10.2025 arising from the assessment order dated 19.03.2024, passed by the Assessing Officer, DCIT, Central Circle – 31, New Delhi under Section 144 r.w.s 153C of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2020-21.
The grounds raised by the assessee are as under :
“1.On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeal) (hereinafter referred to as CIT(A)] is bad both in the eye of law and on facts.
2.On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that assessment order under section 144 r.w.s 153C of the Income Tax Act, 1961 ("the Act") passed by the Deputy Commissioner of Income Tax, Central Circle-31, New Delhi ("AO") is bad both in the eyes of law and on facts.
3.On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under section 153C of the Act and consequent assessment order passed by the learned AO are illegal, invalid and the same has been passed without having the valid jurisdiction upon the assessee.
4.On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the reassessment order has been passed in clear violation of the statutory procedure and conditions prescribed under section 153C read with section 153A of the Act and as such the same is bad in the eye of law and liable to be quashed.
5.On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search of third person.
6.On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and the assessment framed under the said section is bad and liable to be quashed in the absence of any valid satisfaction being recorded by the assessing officer of the searched person as well as the assessing officer of the
7.On the facts and circumstances of the case, the assumption of jurisdiction under section 153C and the consequential reassessment order passed under section 153C read with section 144 are invalid, illegal, unsustainable and liable to be quashed, as the satisfaction note has been recorded by the Assessing Officer of the searched person and that of the assessee collectively for Assessment Years 2015-16 to 2021-22, without identifying or linking alleged material to any specific Assessment Year
8.(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under section 153C of the Act and consequent assessment order passed by the learned AO is illegal and liable to be quashed, as the satisfaction note recorded by the AD does not contain valid Document Identification Number (DIN) and accordingly such notes are invalid and non-est
(ii)That the above action of the AO is in violation of the instructions issued by the CBDT Circular No.19/2019.
9.(i) On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in confirming the order of the AD despite the fact that the proceedings initiated against the assessee and the assessment framed under section 153C of the Act are in violation of mandatory provisions of Section 153C of the Act and as such the same is bad in eyes of law.
(ii)The purported approval u/s 153D of the Act is illegal, bad in law and also without any application of mind.
10.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the abovesaid addition despite the fact that the addition has been made by the AO using the data extracted from the digital devices without following the procedure prescribed under section 65B of the Indian Evidence Act.
11.(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 40,00,000/- made by the AO holding that the assessee has given cash payment for purchase of property under section 69 read with section 115BBE of the Income Tax Act.
(iii)That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations alongwith the evidences brought on record by the assessee to justify that no such cash payment has been made by the assessee and no such property is purchased by the assessee.
(iii)That the abovesaid addition has been confirmed despite the same has been made by the AO without-there being any corroborative evidence against the assessee available with the AO that such cash payment has been made by the assessee.
(iv)That the abovesaid addition has been confirmed despite the fact that the document relied upon by the AO is a dumb document and shall not be relied upon.
12.(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition ignoring the contention of the assessee that the payment was made through banking channel which are duly recorded in the books of accounts of the assessee and therefore provisions of section 69 are not applicable.
(ii)That the learned CIT(A) has erred in ignoring the contention of the assessee that payment made by the assessee through banking channels were refunded back in the same year to the assessee through banking channels since deal entered into by the assessee could not materialized due to lapses found in the due diligence of the property.
13.On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that Assessing officer himself in the remand report has made the observation that payment has been made through banking channel and no such immovable property was registered under the name of the
14.On the facts and circumstances of the case learned CIT(A) has erred both on facts and in law in confirming the abovesaid addition despite the fact that the same have been made by the AO on the basis of material collected at the back of the assessee without providing opportunity to cross examine the same in violation of principle of natural justice.
15.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the abovesaid addition despite the fact that same have been made by the AO by indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumptions and assumptions.
16.The appellant craves leave to add, amend or alter any of the grounds of appeal.”
Brief facts of the case are that the assessee is an individual and derived income from business and profession as a partner in M/s Happy Electricals, and from house property. The assessee filed its original return on 04.01.2021 declaring income of Rs.7,01,030/- for the year under consideration.
A search and seizure operation under section 132 of the Act was conducted on 06.01.2021 in the case of Hans Group of cases and various papers/documents/digital data and incriminating material were found and seized from the business and residential premises of the individuals and business entities of Hans Group. On perusal of seized documents/data, it was found by the AO of the searched person, that information contained in certain seized documents/data relates to Jitender Parmar, hence he drew a satisfaction note 30.06.2022. The relevant seized document was handed over to the AO of the assessee to initiate proceedings under section 153C r.w.s 153A of the Act. The Assessing Officer of the assessee, recorded his satisfaction note under section 153C of the Act on 30.06.2022. Accordingly, notice under section 153C of the Act was issued on 30.06.2022 requiring the assessee to furnish return of income for the year under consideration. Thereafter, the AO made an addition of Rs. 40,00,000/- treating the cash investment in the property situated at 78, Shankar Vihar, Delhi-110092 to be unexplained investment u/s 69 of the Act.
On appeal before the CIT(A), the addition was confirmed. The aggrieved assessee is before us.
On the issue of addition of Rs. 40,00,000/- on account of cash payment made for purchase of property u/s 69 r.w.s. 115BBE of the Act, the ld counsel of the assessee stated that during the course of search, an agreement to sell was found from the mobile phone of a third-party Sh. Vaibhav Jain purportedly relating to the said property. The ld AR stated that no cash payment was ever made by assessee in respect of the said property. It is submitted that the sum of Rs. 40,00,000/- was merely an advance as a security deposit through proper banking channels to a custodian. It was further explained that the proposed purchase did not materialize because of the due diligence of the property, and consequently, the entire amount so advanced was duly refunded to the assessee through the same banking channels as follows which demonstrate that the payments made by the assessee and the refunds received are from the same parties, namely Mr. Ravinder Pal Singh and Ms. Vandana Sidhu (wife of Mr. Ravinder Pal Singh):
| Date | Name | Amount (Rs.) | Nature |
| Transaction related to payments | |||
| 18.10.2019 | Ravinder Pal Singh | 13,00,000 | Payment |
| 18.10.2019 | Ravinder Pal Singh | 14,00,000 | Payment |
| 18.10.2019 | Vandana Sidhu | 13,00,000 | Payment |
| Total payment | 40,00,000 | ||
| Transactions related to refund of security deposit | |||
| 04.11.2019 | Ravinder Pal Singh | 14,00,000 | Refund |
| 04.11.2019 | Vandana Sidhu | 10,00,000 | Refund |
| 17.12.2019 | Ravinder Pal Singh | 13,00,000 | Refund |
| 17.12.2019 | Vandana Sidhu | 3,00,000 | Refund |
| Total Refund | 40,00,000 | ||
The ld AR submitted that the assessee filed additional evidences u/r 46A before the CIT(A) such as Cheque book counterfoils; Affidavit of assessee confirming payment of security and refund security amount after cancellation of property deal done through banking channels; Affidavit of Custodian confirming receipt of security and refund security amount after cancellation of property deal done through banking for which remand report was called by the CIT(A).
The ld AR submitted that the Ld. Assessing Officer, in the remand report dated 20.08.2025, after duly examining the additional evidences, recorded categorical findings in favour of the assessee, including independent verification from the Sub-Registrar confirming that no Immovable property was registered in the assessee's name during the relevant year, and acknowledging that the payments made through banking channels could plausibly be in the nature of guarantee transactions which were subsequently returned upon cancellation of the deal. However, despite having a favourable report from the AO, the CIT(A) confirmed the addition.
Per contra, the ld DR relied on the orders of the AO/CIT(A).
We have heard the rival submissions and have perused the materials on record. We find that in the present case, the AO himself, during the remand proceedings, has verified from the office of the Sub-Registrar that no immovable property was registered in the name of the assessee during the relevant year and has further observed that the payments were made through banking channels and could be in the nature of a security or guarantee, which were subsequently refunded upon cancellation of the deal. We note that despite the favourable observations from the AO, the Ld. CIT(A) disregarded the remand report without bringing any contrary material on record.
We also find that assessee has consistently explained that no cash payment was ever made to the seller and that the amount of Rs. 40,00,000/- was paid through banking channels as a security deposit to a custodian/mediator in connection with a proposed property transaction. We also note that the assessee furnished documentary evidences for the payment made through banking channel and the AO or the CIT(A) could not bring out any corroborative material or evidence to show that any payment were made in cash. In such factual matrix of the instant case, we are of the considered view that once these facts stand admitted, the very foundation for invoking section 69 of the Act ceases to exist, as there is neither any investment nor any unexplained source of funds. The entire transaction is duly recorded, explained and supported by documentary evidences, thereby taking the case outside the ambit of section 69 of the Act.
We further note that the AO made no independent enquiry or verification from the seller or custodian of the property and no adverse material were collected from the concerned parties to rebut the assessee’s claim. We are therefore of the view that the addition has been made without bringing any cogent evidence on record. Accordingly, the impugned addition is unsustainable in law and directed to be deleted. Ground 11 to 15 are allowed.
In the result, the appeal of the assessee ITA No. 7140/DEL/2025 is allowed.