Case Law Details
ITO Vs Gagnish Arora (ITAT Delhi)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting an addition of ₹2,71,27,420 made under Section 69 of the Income-tax Act, 1961. The assessment arose from proceedings initiated under Section 147 read with Section 144B for AY 2014-15 following a notice issued under Section 148. The Assessing Officer (AO) reopened the assessment after a search conducted under Section 132 in the Alchemist Group allegedly revealed documents recording cash payments made by the assessee for the purchase of land in Jaipur and Tonk districts of Rajasthan. Based on documents contained in a folder titled “Data from Gagnish,” the AO concluded that the assessee had made cash payments aggregating to ₹2,71,27,420 and treated the amount as unexplained investment under Section 69.
Before the CIT(A), the assessee contended that he was only a salaried employee of Alchemist Infra Realty Limited and had acted solely as a representative of the company in relation to the land transactions. He denied having purchased any property in his individual capacity or having made any personal cash payments. The assessee also pointed out that the broker’s name had been incorrectly recorded by the AO and submitted that the transactions related to the employer company. The CIT(A) observed that the AO had relied only on information received from the Investigation Wing and had neither supplied the relevant documents to the assessee nor identified the properties allegedly purchased. The appellate authority further noted that the assessment order did not establish that the entire amount pertained to the relevant assessment year and held that the AO had failed to produce concrete evidence linking the alleged investments to the assessee. Since the ownership of the alleged properties remained unsubstantiated and the AO had failed to discharge the burden of proving unexplained investment, the addition under Section 69 was deleted.
Before the ITAT, the assessee produced additional documents, including his appointment letter showing that he had been appointed as Vice President of Alchemist Infra Realty Limited and copies of the sale deeds relating to the disputed land transactions. The Tribunal found that these documents established that the land purchases had been undertaken by Alchemist Infra Realty Limited and that the assessee had executed the transactions only in his capacity as the company’s authorised representative.
The ITAT agreed with the findings of the CIT(A) that the impugned cash transactions had been carried out on behalf of the employer company and not in the assessee’s personal capacity. It held that any addition relating to such transactions, if warranted, ought to have been considered in the hands of the company rather than the employee. Finding the order of the CIT(A) to be well reasoned and requiring no interference, the Tribunal upheld the deletion of the ₹2,71,27,420 addition under Section 69 and dismissed the Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the Revenue is directed against the order dated 12.12.2024 of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the Assessment Order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) by the National Faceless Assessment Centre, Delhi, (hereinafter referred to as the ‘AO’) pertaining to Assessment Years (A.Y.) 2014-15.
2. Grounds of appeal filed by the Revenue are reproduced as under:
“1. The Ld. CIT(A), NFAC has erred in law and on facts by deleting the addition of Rs.2,71,27,420/- made by the AO on account of unexplained investments u/s 69 of the I.T. Act, 1961, without appreciating the facts that the matter under reference had been investigated in depth by the AO during the assessment proceedings.
2. That the order of CIT(Appeals) being erroneous in law and on facts deserves to be set aside/cancelled and the order of the AO to be restored.
3. That the above grounds are without prejudice to each other and appellant craves leave to add or amend any other more ground of appeal as stated above as and when needs for doing so may arise..”
3. Brief facts of the case are that a notice u/s 148 of the Act was issued to the assessee for A.Y. 2014-15 on 30.03.2021, for the reason that during search action conducted u/s 132 of the Act, in the Alchemist Group of cases on 20.06.2014, certain documents relating to cash payments allegedly made by the assessee were found and seized. In response to the said notice, the assessee filed his return on 28.08.2021 declaring total income of Rs. 15,18,300. The Assessing Officer (AO) observed that during the search proceedings, details of land purchased and sold by M/s Alchemist Group were found maintained in a folder named “Data from Gagnish”. A document therein contained details of land purchased in Jaipur and Tonk Districts of Rajasthan, wherein the details of cash payments by Mr. Gagnish Arora to Shri Anand Khannna (Broker) were found. As per the details, Shri Gagnish Arora had paid cash of Rs. 1,36,38,800 to Shri Anand Khanna, and the total cash payments recorded therein amounted to Rs. 2,71,27,420. After considering the submissions of the assessee, the AO completed the assessment by making an addition of ₹2,71,27,420 under Section 69 of the Act, treating the entire amount as unexplained investment.
3.1 Aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A). It was submitted by the assessee during appellate proceedings, that he was just an employee of an Alchemist group company i.e. Alchemist Infra Realty Limited. All the transactions mentioned by the AO were not made on his own account but as a representative of the company on its behalf. After considering the submissions of the assessee, the CIT(A) deleted the addition made by the AO with the following observations:
“6.1 Decision:
I have carefully considered the relevant and material facts on record, in respect of this ground of appeal, as brought out in the assessment order. A notice u/s 148 was issued on 30.03.2021 and duly served upon the assessee. The return of income was filed dated 28.08.2021 in response of the said notice. As per the reason recorded by the A.O for reopening the case it was found that a search was conducted by the investigation wing, Chandigharh in Alchemist Group of cases. During the search it was found that land was purchased in Jaipur and Tonk District of Rajasthan and other places by M/s Alchemist group. A folder named “data from Gagnish” revealed that cash payments were made for purchase of land by Sh. Gagnish Arora to Shri Anand Khanna and Vikramaditya including payments of Rs. 1,36,38,800/- made on 03.07.2013 and total cash payments of Rs. 2,71,27,420/-. The said payments were made for purchase of land in Jaipur region. The A.O had reasons to believe that the income of Rs. 2,71,27,420/- chargeable to tax has escaped assessment and therefore, in view of the above, the assessment was completed under section 147 r.w.s 144B on 30.03.2022 assessing the total income at Rs. 2,86,45,720/-.
6.2 The assessee was a salaried employee at Alchemist Infra in the F.Y 2013-14 and derived income from salary, capital gain, loss and interest and the assessee did not purchase any property as alleged by the Assessing Officer and the assessee did not pay any cash amount to Shri Anand Khanna and Vikramaditya. The assessee pointed out during the assessment proceedings that the name mentioned in notice of Sh. Anand Khanna was wrong and as the name of the broker was not Anand Khanna but it was Sh. Anil Khanna who was the broker appointed by Alchemist Infra and Sh. Vikramaditya Singh was himself a director in Alchemist Group.
6.3 The above discussion reflects that the assessee did not purchase any land as alleged by the A.O through cash payment to Mr. Anil Khanna (wrongly named as Sh. Anand Khanna) who was the broker appointed by Alchemist Infra. The Assessing Officer made the assessment order by only relying on the information provided by the investigation wing.
6.4 During the assessment proceedings the relevant documents were also not provided to the assessee for him to prepare a proper rebuttal. In the V.C also the assessee categorically denied of having any such property purchased by him as alleged by the Assessing Officer. Moreover, in the assessment order the A.O did not mention the details of the property which was purchased by the assessee in lieu of Rs. 2,71,27,420/-. Another issue that needs to be mentioned is that the A.O only mentioned one cash payment of Rs. 1,36,38,800/- on 03.07.2013 which is related to financial year 2013-14 but he did not provide any information regarding the rest 1,34,88,620/- which would confirm the said payment falls within the relevant assessment year i.e 2013-14.
6.5 I agree with the contention of the assessee that the A.O could not provide any concrete evidence and bring any details of the property purchase and cash payments. Since the ownership of the alleged property is in dispute and not supported by any valid evidence, there would be no question about source of investment in alleged purchase property. So that the addition could not be made u/s 69 of the Income tax Act, 1961. The onus lies on the A.O to provide the relevant evidences on which the additions would be made but in this case the A.O did not discharge its onus. Since, the assessee categorically denied of having purchase of any such property, the onus shifted to the A.O by providing the relevant evidences to the assessee for confrontation. Hence the addition of Rs. 2,71,27,420/- u/s 69 of the Act is deleted.”
3.2 Aggrieved with the order of the Ld. CIT(A) the revenue is in appeal before the Tribunal.
4. We have heard the rival submissions and perused the material available on record. Before us, the assessee has filed requisite documents in support of his contentions in the form of a paper book, including a copy of the appointment letter issued by M/s Alchemist Infra Realty Ltd. on 01.01.2010, appointing Shri Gagnish Arora as Vice President of the company. Copies of the sale deeds relating to the impugned land have also been placed on record. From these documents, it is evident that the transactions for the purchase of land were undertaken by M/s Alchemist Infra Realty Limited and that the same were executed by the assessee in his capacity as an authorized representative of the company.
5. Under these circumstances, we are of the considered view that the Ld. CIT(A) was justified in accepting the contention of the assessee that the cash transactions in question were carried out on behalf of his employer company, therefore, addition if any on this account ought to have been considered in the hands of the company. Accordingly, we hold that the CIT(A) has rightly deleted the addition made by the AO, by passing a well-reasoned and speaking order, which does not call for any interference on our part.
6. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 22.06.2026.
Author Bio
