AI Structured Summary
Not yet generated for this judgment
Judgment
PER AMITABH SHUKLA, AM,
This appeal by the assessee is directed against the order of National Faceless Appeal Centre/Ld. Commissioner of Income Tax(Appeals), Noida, [hereinafter referred to as ‘ld. CIT(A)] dated 16.10.2025 arising out of assessment order dated 08.03.2024 passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961, for the Assessment Year 2022-23. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal:-
1.That on the facts and in the circumstances of the case and in law, the learned commissioner of income tax appeals erred in confirming the addition of Rs. 18,00,000 made by the assessing officer u/s 69A of the income tax act, 1961, treating the same as unexplained money, which is arbitrary, illegal and unsustainable.
2.That the learned NFAC erred in law and on facts in upholding the assessment framed solely on the basis of an alleged statement recorded u/s 131, without providing a copy of such statement to the assessee and without affording an opportunity of cross examination, thereby violating the principles of natural justice.
3.That the learned NFAC failed to appreciate that no documentary evidence whatsoever such as rent agreement, rent receipts, bank entries, cash trail, property ownership proof or confirmation from the alleged tenant was brought on record to substantiate the allegation of receipt of cash rent.
4.That the learned NFAC erred in confirming the addition despite the categorical affidavit filed by the assessee stating that he does not own any immovable property and has not received any rent, which affidavit has neither been rebutted nor disproved by the department.
5.That the learned NFAC erred in law in holding that a self-serving statement allegedly recorded on oath, without any independent corroborative evidence, is sufficient to sustain an addition, contrary to settled judicial precedents laid down by the Honble Supreme Court and various high courts.
6.That the learned NFAC erred in upholding the action of the assessing officer in not supplying copies of the seized material, appraisal report or third-party statements relied upon, despite specific requests made by the assessee, thereby rendering the assessment null and void.
7.That the learned NFAC erred in ignoring the fact that no TDS was deducted by the alleged tenant on the alleged rent, no proceedings were initiated against the payer and no verification was carried out from the excise department or any other statutory authority to establish existence of tenancy.
8.That the learned NFAC erred in confirming the addition under section 69A when the essential ingredients of section 69A were not satisfied and no evidence was brought ‘on record to show possession or ownership of any unexplained money by the assessee.
9.That the learned NFAC erred in law in confirming taxation of the alleged income under section 115BBE, which is consequential and unsustainable once the primary addition itself is invalid.
10.That the learned NFAC erred in sustaining penalty initiation u/s 271(1)(c) and other consequential proceedings, which are premature, illegal and liable to be quashed.
11.That the assessment order as well as the appellate order are bad in law, perverse, based on conjectures and surmises, and liable to be quashed.”
The only issue arising from the above grounds of appeal is regarding an addition of Rs.18,00,000/- made by the ld. AO under section 69A in the hands of the assessee on account of undisclosed rental income.
Heard both the parties. Case filed perused.
The Ld. Counsel for the assessee, Shri Rakesh Gupta, took us through the brief factual matrix of the case. It was stated that as per the Investigation Report dated 17.03.2023, the assessee had received cash payment on account of rent from one Lakeforest Wine Group having PAN No.AABCH6288H. The ld. Counsel drew our attention to the following factual matrix of the case available in the order of the ld. AO on pages-3 and 6 of the assessment order:-
“3.1 Complete description of issue:
As per information available on record, assessee has received a rent income of Rs. 18,00,000/- in cash during the F.Y. 2021-22, relevant to A.Y. 2022-23. However, the assessee has not offered the same in his return of income for the year under consideration, hence, the above rental income remains unexplained and therefore same has not been offered for tax and due tax has not been paid. Further, above financial transactions has not been assessed.
3.2 Synopsis of all submissions of the assessee relating to the issue and indicating the dates of submission:
The assessee has filed return of income ITR-1 SAHAJ on 30.07.2022 declaring total income of Rs.4,30,000/-. As the case was selected for Scrutiny, notice u/s.143(2) of the Act was sent on 01.06.2023 and further notice u/s.142(1) of the Act was issued on 28.07.2023, with detailed questionnaire, and sent through e-mail/e-filing portal on the above-mentioned issue which was duly served upon the assessee. The assessee has failed to furnish requisite details.
3.3 Summary of information/evidence collected which proposed to be used against it (attached document if required):
As per information available on record, has received a rent income of Rs. 18,00,000/-in cash during the F.Y. 2021-22, relevant to A.Y. 2022-23 from the Lakeforest wines Group in the year under consideration. However, the assessee has not offered the same in his return of income for the year under consideration, hence, the above rental income remains unexplained and therefore same has not been offered for tax and due tax has not been paid. Further ample opportunities have been given to the assessee to furnish the reply. However, the assessee is non compliant throughout during the course of assessment. In this case AO does not have any option to finalize the case with the record available with the department.
According an SCN was issued to the assessee by stating that why the above cash rental income of Rs.18,00,000/- should not be considered as unexplained……………………………………………………………………… ……………………………………………………………………………………… ………………………………………………………………………….
In this case, a search operation was conducted on Lakeforest group and various discriminating material seized from the search premises and the same was confronted by recording the statement of the employees and directors of the Lakeforest group. After the deep analysis information was passed on wherein clearly mentioned that assessee has accepted cash rent of Rs. 18,00,000/- during the year under consideration. Relevant part of the information is pasted here :-
Sh. Sunil Yaday (PAN: :CKLPS9941R) has let out his immovable property at Chakarpur, Gurgaon to Lakeforest Wines Group. Accordingly. Sh. Sunil Yadav was summoned u/s 131(1A) of the Act and statement of assessee was recorded on oath and assessee has recorded in his statement that rent in cash was received by him from Lakeforest Wines group from F.Y. 2019-20 to F.Y. 2021-22. Details of cash rent received by Sh. Sunil Yadav in different F.Y.s which is undisclosed income of the assessee and proposed to be added u/s 69A of the Act is as below :-
F.Y. Name of Tenant Cast rent received (per month) Total cash rent received during F.Y. 2019-20 Lakeforest Wines Group 1,75,000/- 21,00,000/- 2020-21 Lakeforest Wines Group 1,30,000/- 15,60,000/- 2021-22 Lakeforest Wines Group 1,50,000/ 18,00,000/- The relevant part of the appraisal report containing detailed findings regarding cash rent payments by Lakeforest Group to different individuals is enclosed as Annexure -1 and statement of the assessee recorded oath on 28-09-2022 is also shared with you for your kind consideration and taking necessary action as per the provisions of Income Tax Act, 1961.
Accordingly, there is possibility that provisions of Income Tax Act have been violated by the assessee and evasion of tax may be involved in this case. Thus, the information in the case has been passed on the concerned AO's through VRU facility on INSIGHT portal to take remedial measures u/s 148 of the Income Tax Act, 1961. In case, the jurisdiction over the assessee does not lie with you, given the paucity of time, the same may please be transferred directly to the jurisdictional AO under intimation to this office.
Further, assessee has himself accepted the same on oath by giving the statement u/s 131(1) of the IT, Act. Therefore, no point arise that assessee has not received cash rental income. Further, it is submitted that reply of the assessee has been entertained however not found fully truly.
4 Conclusion drawn:
4.1In view of the facts and discussions, it is concluded that cash rental income of Rs. 18,00,000/- received from the Lakeforest wines Group in the year under consideration is added as Unexplained Money u/s 69A to be taxed as per provisions of 115BBE of the I.T. Act, 1961. The penalty proceedings u/s 271AAC for certain income is initiated separately...”
The Ld. CIT(A) confirmed the order of the Ld. AO. Pertinently, he had requisitioned a remand report from the ld. AO and after waiting for response from the Ld. AO, proceeded to confirm the order on merits of the case. It was concluded that the addition made by the ld. AO is on account of sworn statement of the appellant assessee u/s 131 of having received rent in cash and therefore there is no scope of any further intervention.
The ld. Counsel for the assessee vehemently argued opposing the addition of the AO. It was stated that fact of the matter is that Assessee did not earn any rental income, as the assessee does not have any property wherefrom he could have earned any rental income. It was argued that this allegation of having earned any rental income was consistently denied by the assessee and so much so, an affidavit was also filed by the assessee to this effect, but Ld. AO held that the assessee gave his statement that he has earned rental income of Rs. 18,00,000/- from M/s Lake-forest Wines Group and that is enough to fasten tax liability on him. The ld. Counsel argued that Ld. AO has not brought any evidence from the alleged tenant that any rental payment was made by such alleged tenant and received by the assessee. Thus, it was stated that there is no lease/rent agreement/rent receipts in respect of such non-existent rent and in case there were one, no such incriminating statement was provided to the assessee, though demanded by the assessee several times, and this pleading has been brushed aside by Ld. CIT(A), saying that such a request should have been made to the Faceless Assessment Unit, and not to the Jurisdictional Assessing Officer.
We have noted that the ld. AO and ld. First Appellate Authority have drew their conclusions by relying upon reports of the Investigation directed. There is nothing on records to suggest that the information and evidences upon which the addition was resting, was provided to the assessee. There is no information as to the true contents of the said statement of assessee recorded u/s 131 of the Act. It is trite law that adequate opportunity of being heard is to provided to an assessee before drawing adverse conclusion. It is also settled principle of law that the phrase ‘adequate opportunity of being heard’ would include confronting all material which is being used against a litigant. The Court cannot consider evidences which have not been provided to a litigant. We have noted that the order of ld. CIT(A) is also not based upon true appreciation of facts. It appears that he had confronted the AO to have submitted a remand report but somewhere during the appellate proceedings exhausted his energies and proceeded to conclude without waiting for the remand report from the AO. As a superior appellate authority, it was well within his right to have commanded remand report from the ld. AO, if required through intervention of ld. AO’s supervisory authority.
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 ld. AO is specifically directed to provide all the evidence in its possession including the alleged statement of the appellant assessee recorded u/s 131 where he has admitted to have received rent in cash from the party named M/s Lake-Wines Forest. 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.