Shagun Gupta vs Income Tax Officer, Ward 5(2)(4)

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as ‘the CIT(A)’) dated 18.11.2025, for AY 2020-21.

The facts of the case in brief as emanating from records are: A search action u/s.132 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was carried out at the premises of Omaxe Group on 14.03.2022. On the basis of post search investigation, it is alleged that the assessee has made cash payments to the tune of Rs.5,14,000/- to Omaxe Ltd. for purchase of immovable property. Accordingly, the aforesaid amount was added in the hands of the assessee as unexplained investment u/s.69 of the Act.

Ms. Swati Arora, appearing on behalf of the assessee submits that the assessee had originally purchased immovable property i.e. OCPG/Atrium Floor/GF-28/UD/200/35 in project Omaxe Connaught Place- III for a total consideration of Rs.15,97,586/- during FY 2011-12. The entire consideration was paid by the assessee to Omaxe Ltd. through banking channel. Thereafter, the said property was exchanged with Unit No. OCPK/THIRTEENTH/1328 in project Omaxe Connaught Place IV. No additional payment was made by the assessee against said exchange. The assessee had categorically denied before the CIT(A) and the AO that no cash payments were made by the assessee to Omaxe Ltd. for purchase of said immovable property. The ld. AR submits that on the basis of some seized documents during search at the premises of third party (Omaxe Ltd.) addition of Rs.5,14,000/- was made in the hands of assessee holding it to be undisclosed cash payment. The seized material on the basis of which addition has been made in the hands of the assessee was never confronted to the assessee. It is a well settled law, that no addition can be made on the basis of material collected at the back of the assessee and without confronting the same to the assessee. The ld. AR thus, prayed for deleting the addition and allowing appeal of the assessee.

Per contra, Shri Manoj Kumar representing the department vehemently defending the impugned order prayed for dismissing appeal of the assessee. The ld. DR submits that the assessee has paid ‘On money’ in cash to the Omaxe Group for purchase of immovable property. The data seized during search and decoded later on clearly establishes that the assessee paid cash of Rs.5,14,000/- for purchase of immovable property from the Omaxe Group. Further, Shri Manish Kumar, President of Omaxe Group in his statement recorded on Oath during search accepted that the cash has been received from the customer in lieu of purchase of property.

Both sides heard, orders of the authorities below examined. The solitary issue for consideration in the present appeal is with regard to addition of Rs.5,14,000/- made by the AO u/s.69 of the Act, in hands of the assessee on account of on money cash payment for purchase of immovable property from Omaxe Group. Admittedly, the assessee has purchased an immovable property i.e. Unit No. OCPK/THIRTEENTH/1328 from Omaxe Group for a consideration of Rs.15,97,586/-. The assessee has consistently denied payment of any cash component to Omaxe Group for purchase of immovable property over and above agreed value. The AO has made addition in hands of the assessee based on post search enquiries made in the case of Omaxe Group. It emerges from the documents on record that neither the seized document nor the statement of Shri Manish Kumar was provided to the assessee for cross examination. I find that the assessee in his submissions before the CIT(A) had raised a specific objection with respect to violation of principles of natural justice and omission in providing opportunity to examine seized material and statement used against the assessee for making addition. It is no more res integra that any addition made on the basis of any material collected at the back of the assessee without affording opportunity of cross examination/rebutting is against the principles of natural justice, hence, unsustainable in the eye of law. [Re: Andaman Timber Industries vs. CCE, 281 CTR 241 (SC)].

In the instant case, neither the relevant seized material on the basis of which addition is made in the hands of assessee was confronted to the assessee, nor the statement of Shri Manish Kumar was provided to the assessee for cross examination. Thus, there is clear violation of principles of natural justice. Ergo, the addition is unsustainable.

In the result, impugned order is set aside and appeal of the assessee is allowed.

Order pronounced in the open court on Wednesday the 08^th day of April 2026.