Section 69 addition for alleged cash investment deleted; RTGS evidence accepted, CIT(A) faulted for non-speaking order under s.250

The ITAT Raipur allowed the assessee's appeal and deleted the addition made u/s 69 for alleged unexplained investment in immovable property. The Tribunal held that the Revenue had not produced any direct or corroborative evidence of cash payment by the assessee, nor demonstrated any benefit derived from such alleged cash transaction. Information obtained from a third-party search was found unlinked to the assessee. The assessee had furnished bank statements showing RTGS payments and vendor confirmation that consideration was received only through banking channels. The AO's mistaken assumption of cash payment and the CIT(A)/NFAC's affirmation without proper enquiry or reasoned order under s.250(4) and (6) rendered the addition perverse and unsustainable.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the addition under section 69 of the Income-tax Act, 1961, towards alleged unexplained investment of Rs. 5,07,690/-, based solely on an excel sheet seized from a third party during search, was justified in the facts of the case.

1.2 Whether, in light of the assessee's documentary evidence (bank statements and vendor confirmation), the burden of proof under section 69 stood discharged and the presumption of cash payment could be sustained.

1.3 Whether the first appellate authority erred in upholding the addition without proper enquiry or independent application of mind, contrary to section 250(4) and (6) of the Act.

1.4 Incidentally, whether, where incriminating material relating to the assessee is found in search on a third party, the correct assessment provision is section 153C rather than section 147, and whether it was necessary to adjudicate this legal issue in the present appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Justification of addition under section 69 based on third-party excel sheet vis-à-vis assessee's evidence

Legal framework (as discussed):

2.1 The Tribunal noted the application of section 69 of the Income-tax Act, 1961, which permits treating an investment as deemed income where (i) such investment is not recorded in the books of account, and (ii) the assessee either offers no explanation about the nature and source of the investment, or the explanation is not satisfactory to the Assessing Officer. The first appellate authority reproduced and relied upon this provision.

Interpretation and reasoning:

2.2 The assessment and the first appellate order were based on an excel sheet (WH 2020 NOT REG.xlsx) seized during a search in the case of a third-party group, indicating alleged cash components in sale consideration for flats, along with a statement under section 132(4) of a director of that group admitting receipt of 10-15% sale consideration in cash.

2.3 The Tribunal observed that the alleged cash figure of Rs. 5,07,690/- attributed to the assessee in the excel sheet exactly matched an RTGS transaction of Rs. 5,07,690/- (plus RTGS charges, totaling Rs. 5,07,748.42) made by the assessee on 22.07.2019 from her UCO Bank account to the vendor, Chhattisgarh Project (India) Pvt. Ltd., as evidenced by the bank statement.

2.4 The Tribunal found that the total transaction amount of Rs. 80,22,190/- mentioned in the excel sheet tallied exactly with the amount paid by the assessee through banking channels and reflected in the registered sale deed, establishing that the entire consideration was through accounted, non-cash modes.

2.5 The Tribunal relied on a written confirmation from the vendor company stating that it had received Rs. 5,07,690/- from the assessee in its bank account and had not received any cash from the assessee in respect of this transaction. The Tribunal held that this confirmation, coupled with the bank statement, clearly disproved the allegation of cash payment.

2.6 The Tribunal noted that no direct evidence had been brought on record by the Revenue to show that the assessee had in fact paid any cash to the vendor, or that the assessee derived any benefit from such alleged cash payment. The addition was based solely on the excel sheet found in third-party premises and on general disclosures of the searched group, without any specific, corroborative material against the assessee.

2.7 The Tribunal emphasised that all evidence produced by the assessee (registered sale deed, agreement, bank statements, and vendor confirmation) demonstrated that the relevant amount was paid through banking channels and duly recorded in the books, thereby negating the foundational factual premise for invoking section 69.

Conclusions:

2.8 The Tribunal held that, in the presence of clear documentary evidence establishing RTGS payment and absence of any contrary, cogent evidence of cash payment by the assessee, the conditions of section 69 were not satisfied.

2.9 The belief that there was an unexplained cash investment of Rs. 5,07,690/- was held to be erroneous, as the amount was in fact paid through bank and recorded; therefore, the addition under section 69 was unsustainable in law and on facts.

2.10 The Tribunal directed deletion of the addition of Rs. 5,07,690/- made under section 69.

Issue 3: Propriety of the first appellate authority's approach under section 250(4) and (6)

Legal framework (as discussed):

3.1 The Tribunal referred to section 250(4) and (6) of the Act, which mandate the first appellate authority to make or cause to be made further enquiry, where necessary, and to pass a speaking order containing points for determination, the decision thereon, and reasons.

Interpretation and reasoning:

3.2 The Tribunal observed that the assessee had furnished before the first appellate authority all material including bank statements and the vendor's confirmation categorically stating that no cash was received, yet the authority upheld the addition without undertaking any independent enquiry or verification.

3.3 It was held that the first appellate authority merely carried forward the error of the Assessing Officer, resting solely on the excel sheet and general disclosure of the searched group, without addressing or rebutting the specific evidences filed by the assessee.

3.4 The Tribunal characterised the order of the first appellate authority as summary, arbitrary, and lacking independent application of mind, contrary to the statutory duty under section 250(4) and (6) to conduct proper enquiry and render a reasoned, speaking order, particularly when the assessee had placed on record prima facie exculpatory evidence.

Conclusions:

3.5 The Tribunal set aside the order of the first appellate authority on the ground that it was perverse and bad in law, having upheld an addition without enquiry and without dealing with the assessee's documentary evidence.

Issue 4: Correct assessment provision (section 153C vs. section 147) in search-related third-party information

Legal framework and observation (as discussed):

4.1 The Tribunal observed that the search in which the incriminating excel sheet was found was conducted in the premises of a third party (Wallfort Group), and that the information regarding the assessee emerged from that search.

4.2 The Tribunal noted that, in such a situation, the issue of applicability of the correct provision-section 153C (assessment of income of any other person) rather than section 147 (reassessment)-was "no more res integra", implying that the proper course, in principle, would be to proceed under section 153C when incriminating material relating to a non-searched person is found in search on another person.

Reasoning and conclusion:

4.3 The Tribunal recorded that, in the present case, the assessment had been framed under section 147, but since the appeal was being allowed on merits and the addition itself was being deleted, it found no justification to "travel further" on this legal issue.

4.4 The Tribunal thus treated the issue of applicability of section 153C versus section 147 as an academic or incidental point in the context of this appeal and expressly refrained from adjudicating upon it, resting its decision entirely on the merits of the addition.

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