₹7.58 Lakh Omaxe Cash Addition Deleted Due to AY Mismatch: ITAT Agra

Naresh Chandra Khattar Vs ITO (ITAT Agra)

The Income Tax Appellate Tribunal, Agra, deleted an addition of ₹7,58,600 under section 69 read with section 115BBE because the Revenue failed to establish that the alleged cash payment related to the assessment year under consideration. The seized document relied upon by the Assessing Officer carried the date 27 June 2008, whereas the addition was made for assessment year 2019-20.

The Tribunal found that neither the reasons supporting reopening nor the assessment order explained how the alleged payment belonged to the relevant year. It therefore allowed the assessee’s appeal on this ground, leaving the other jurisdictional and procedural objections open.

Facts of the Case

The assessee, Naresh Chandra Khattar, filed his return for assessment year 2019-20 on 3 August 2019, declaring total income of ₹8,70,780.

A search under section 132 was conducted in the Omaxe Group on 14 March 2022. During the search, a hard disk was seized from the group’s office at Kalkaji, New Delhi.

According to the Assessing Officer, the hard disk contained “MAIN REPORT” Excel files recording unaccounted cash transactions of Omaxe Group entities. The officer also noted that amounts appearing in those files had been suppressed by a factor of 100 and required multiplication by 100 to arrive at the actual figures.

An entry bearing the assessee’s name was treated as indicating a cash payment of ₹7,58,600 for the India Trade Centre project at Greater Noida.

Based on this information, a notice under section 148 was issued on 31 March 2023.

Assessee Denies Cash Payment

In response to the assessment proceedings, the assessee denied having made the alleged cash payment during financial year 2018-19, relevant to assessment year 2019-20.

He explained that the builder’s statement of account reflected adjustments of amounts paid towards an earlier allotment, rather than a fresh payment during the relevant year.

The assessee maintained that neither he nor his wife had paid cash towards on-money during that year. Instead, they subsequently received a refund of excess amounts paid in earlier years.

The Assessing Officer rejected the explanation and added ₹7,58,600 under section 69, applying section 115BBE. The CIT(A), National Faceless Appeal Centre, Delhi, upheld the addition through an order dated 15 May 2026.

Grounds Raised Before the Tribunal

The assessee challenged both the reassessment proceedings and the substantive addition.

His grounds questioned the approvals obtained under the reassessment provisions, the absence of complete third-party material and the denial of an opportunity to cross-examine the relevant witness.

He also argued that no investment had been established during the previous year relevant to assessment year 2019-20, which was essential to sustaining the disputed addition under section 69.

According to the grounds, the original commercial property had been booked jointly with his wife, and the consideration had been paid through banking instruments in earlier financial years. The subsequent substitution of the unit represented an internal adjustment of that consideration.

These contentions provided the background to the assessee’s denial of any fresh cash outflow.

Discrepancy in Reopening Approval Documents

At the hearing, the assessee’s representative highlighted that the approval proforma under section 151 recorded the quantum of escaped income as “0”, which did not match the amount referred to in its annexure.

He further submitted that the recorded reasons did not specify the relevant assessment year of escapement or the nature of the alleged payment.

The Revenue supported the orders of the lower authorities. However, the Tribunal ultimately granted relief on the absence of a connection between the alleged payment and the assessment year, rather than separately deciding the approval challenge.

Seized Document Related to June 2008

The Bench, comprising Judicial Member Sunil Kumar Singh and Accountant Member Brajesh Kumar Singh, examined the seized document reproduced in the assessment order.

It found that the document mentioned 27 June 2008.

The Tribunal also examined the annexure supporting the reopening approval. It noted that the Assessing Officer had not identified the assessment year to which the alleged escapement related.

This omission was material because the addition concerned an alleged payment during financial year 2018-19, substantially later than the date appearing on the relied-upon document.

No Evidence Connecting Payment to Relevant Year

The Tribunal noted the assessee’s explanation that the builder had adjusted earlier payments and that no payment was made during the year under consideration.

The Assessing Officer had not contradicted that explanation through material establishing payment during the relevant year.

Neither the reopening annexure nor the assessment order supplied a basis for attributing ₹7,58,600 to assessment year 2019-20. Consequently, the addition could not be sustained for that year.

Conclusion

The Tribunal deleted the ₹7,58,600 addition and allowed the appeal. The remaining grounds became academic and were left open.

The ruling rests on the Revenue’s failure to establish the year-specific nexus of the alleged investment. It does not constitute a separate adjudication invalidating the reassessment approvals or deciding every objection concerning the seized electronic material.

FULL TEXT OF THE ORDER OF ITAT AGRA

This appeal is directed against the impugned order dated 15.05.2026 passed in appeal No. NFAC/2018-19/10341677 by the ld. Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2019-20, wherein ld. CIT(A) has dismissed assessee’s appeal.

2. In this case, the assessee filed his return of income for the year under consideration on 03.08.2019, declaring total income at Rs.8,70,780/-. A Search & Seizure action u/s 132 of the Act in the case of Omaxe Group along with various office and residential premises was conducted on 14.03.2022 by the Directorate of Investigation of the Income Tax Department. During the search & seizure action in the case of Omaxe Group, the AO noted that a Hard Disk was seized from 14, Local Shopping Centre, Kalkaji, New Delhi (Office of Omaxe Limited) wherein data of the unaccounted transaction undertaken by the Omaxe Group entities were found to be recorded in the MAIN REPORT Excel Files which contained- (A) the Main Report Files containing only the unaccounted Cash Transactions pertaining to various companies of Omaxe Group and (B) the amounts mentioned in the MAIN REPORT Excel Files were suppressed by a factor of 100 i.e. to arrive at the actual amount, the value given in the sheet is to be multiplied by 100. In the said report, the AO noted that name of the assessee appeared and the assessee had provided the following to the Omaxe Group in form of Unaccounted Cash:

a. Rs. 7,58,600/- in Unaccounted Cash for project ‘India Trade Centre’ at Greater Noida.

2.1 On the basis of the above information, notice u/s. 148 of the Act dated 31.03.2023 was issued to the assessee. The AO issued notice u/s. 142(1) of the Act and the assessee in response to the said notice denied having made cash payment of Rs.7,58,600/- during the year. The reply of the assessee as extracted in the assessment order is reproduced as under :

“Your honour in the impugned notice alleged that the assessee has paid cash amounting to Rs. 7,58,600 as on-money to Omaxe Group during the year under consideration. In this regard, it is respectfully submitted that the perusal of the statement of account in the books of M/s Omaxe Ltd. (filed before the Assessment Unit Page 35 of the submission dated 25.01.2023) will reveal that adjustment of the amounts paid by the allotees made towards earlier allotment has been made by the Company and no payment was made by the allottees during the year under consideration. It is respectfully submitted that the allotees. assessee and his wife, have not paid any cash towards on-money to Omaxe Group during the year under consideration i.e. F.Y. 2018-19 relevant to the A.Y. 2019-20, but in fact subsequently received refund of the excess payment made to them in the earlier years.”

2.2 However, the AO did not accept the same and added the sum of Rs.7,58,600/- u/s. 69 read with section 115BBE of the Act.

3. Aggrieved with the said order, the assessee filed an appeal before the learned CIT(A), who dismissed the appeal of the assessee.

4. Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal :

1. “Because on the facts and in law, the satisfaction purportedly recorded by the ld. Assessing Officer under clause (iv) of Explanation 2 to Section 148 of the Act was not preceded by the prior approval of the ld. PCIT. The reassessment proceedings are void ab initio and liable to be quashed.

2. Because on the facts and in law, the approval granted by the ld. PCIT under Section 151 of the Act is vitiated with non-application of mind, inasmuch as (a) there is a material discrepancy between the quantum of escaped income recorded in the Approval form and that mentioned in the annexure attached thereto; and (b) the reasons recorded by the ld. AO do not specify either the relevant assessment year of escapement or the nature of alleged payment. The notice issued under Section 148 and the consequent reassessment are therefore without jurisdiction and liable to be quashed.

3. Because the approval under Section 148B of the Act granted by ld. Addl. CIT, Range-1(1), Agra vide letter F. No. 3767 dated 27.03.2024 is a single composite sanction issued in respect of multiple assessees, accorded mechanically without any independent application of mind to the Appellants case. The impugned assessment order passed is void ab initio and liable to be quashed.

4. Because neither (a) a complete and unredacted copy of the Main Report Excel file, (b) any statement of any official, director or employee of the Omaxe Group recorded under section 132(4) or section 131 of the Act, nor (c) the certificate under section 65B(4) of the Indian Evidence Act, 1872 was at any stage been furnished to the Appellant rendering the proceedings violative of principles of natural justice.

5. Because an electronic record extracted from the possession of a third party requires authentication by a competent witness, and the right to cross-examine such witness on the genesis, custody, authorship and contents of the seized record is integral to the principles of natural justice, a right denied to the Appellant throughout the proceedings.

6. Because the Learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 7,58,600/- made by the Learned Assessing Officer under section 69 read with section 115BBE of the I.T.Act,1961 (the Act) ignoring that the very jurisdictional pre-condition for the application of section 69 of the Act that, that the assessee must have been found to have made investments in the previous year relevant to the Assessment Year in question is patently absent in the facts of the present case.

7. Because the entire consideration in respect of the original commercial space at “Omaxe Connaught Place”, Beta-II, Greater Noida (Unit No. 9, First Floor, admeasuring 633.42 sq. ft.) aggregating to Rs. 34,49,203/- was paid by the Appellant jointly with his wife Smt. Achla Khattar (PAN : ABRPK3480C) entirely through account-payee banking instruments during Financial Years 2010-11 and 2014-15. The learned Authorities below have erred in not appreciating that no fresh outflow whatsoever, whether by way of cash or otherwise, took place during F.Y. 2018-19.

8. Because the cancellation of the original booking and the substitution thereof by Unit No. ITC/Fifteenth/Premier Suite/1550 (551.25 sq. ft.) in the India Trade Centre project at joint allottees request vide letter dated 23.03.2018 was a mere internal contractual re-adjustment of consideration already paid in earlier years, which culminated in a net refund of Rs. 4,34,664/- to the Appellant and his wife by through six account-payee cheques aggregating to the said sum during F.Y. 2019-20, a transaction yielding a net refund cannot on any construction, constitute an investment within the meaning of section 69 of the Act.

9. Because the seized “Main Report” Excel file is, qua the Appellant, in the nature of a “dumb document”, and no addition can be sustained upon such an entry in the absence of independent corroborative material.

10. Because the Learned Authorities below failed to demonstrate, through any cogent independent enquiry that (a) the entry in question in fact pertains to the Appellant and not to some person of similar name, (b) the entry represents an actual receipt of cash by the Omaxe Group and not a mere internal projection, target or speculative working, and (c) the alleged receipt is referable to F.Y. 2018-19.

11.Because the entire addition of Rs. 7,58,600/- under section 69 of the Act has been impermissible fastened in the hands of the Appellant despite joint booking by the Smt. Achla Khattar (PAN : ABRPK3480C), wife of the Appellant and an independent assessee, who had contributed Rs. 16,90,000/- (approximately 49%) of the recorded consideration of Rs. 34,49,203/- through her own banking instruments.

12.The Appellant craves leave to add, alter, amend, modify, delete and/or substitute all or any of the foregoing Grounds of Appeal at or before the hearing of the present appeal.”

5. At the outset, the learned AR referring to ground no. 2 of the appeal submitted that in the proforma seeking approval u/s 151 of the Act, in column no. 7 – the quantum of income which has escaped assessment is mentioned – 0, (placed at page no 69 of the paper book) which does not match with the quantum of this escapement mentioned in the annexure thereto (placed at page no. 71-72 of the paper book). Further, it was submitted that the reasons recorded by the AO do not specify either the relevant assessment year of escapement or the nature of the alleged payment. In view these facts the Ld. AR submitted that the approval given by the Ld. PCIT was not proper and therefore the notice u/s 148 of the Act was without jurisdiction and was liable to be quashed.

6. On the other hand, learned Sr. DR supported the orders of the authorities below.

7. We have heard both the parties and perused the material on record. The extract of the seized document relied upon by the AO in the assessment order for making the addition of Rs. 7,58,600/- which is also referred in the annexure to the proforma for the approval in respect of the reasons recorded for the reopening of the assessment is reproduced as under:

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7.1 On perusal of the above seized document we notice that the date mentioned there in the seized document is 27.06.2008 relating to month of June 2008. We also notice that in the annexure to the proforma for the approval in respect of the reasons recorded for the reopening of the assessment (placed at page no. 71-72 of the paper book), the AO has not given any finding as to which assessment year the above escapement relates to. Further, as noted above, the assessee had submitted during the assessment proceedings that the perusal of the statement of account in the books of M/s Omaxe Ltd. (filed before the Assessment Unit Page 35 of the submission dated 25.01.2023) revealed that adjustment of the amounts paid by the allotees made towards earlier allotment was made by the Company and no payment was made by the allottees during the year under consideration. This fact has not been contradicted by the AO by any material on record to indicate that the cash payment of Rs. 7,58,600/- based on the above seized document was paid during the year. Therefore, neither in the annexure to the proforma for the approval in respect of the reasons recorded for the reopening of the assessment, the basis for the escapement of Rs. 7,58,600/- to this assessment year is spelt out nor any such basis has been given in the assessment order. In absence of the same the addition of Rs. 7,58,600/- in this case is not sustainable for the present assessment year and accordingly, we delete the addition of Rs.7,58,600/-. Ground No. 6 of the appeal is allowed. In view of ground No. 6 of appeal, being allowed, the other grounds of appeal become academic and are left open in this case.

8. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 16/10/2026.