Appraisal Report Alone Insufficient for Section 69 On-Money Addition: Ahmedabad ITAT

ITO Vs Aash Satish Joshi (ITAT Ahmedabad)

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, decided the Revenue’s appeals and the corresponding cross objections filed by the assessee against separate orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), for Assessment Years 2014-15 and 2015-16. The dispute arose from additions made under Section 69 of the Income Tax Act on the allegation that the assessee had paid unaccounted on-money for the purchase of land.

For Assessment Year 2014-15, the Assessing Officer (AO) reopened the assessment under Section 147 after receiving information from the Investigation Wing following a search under Section 132 in the case of the Kushal Group. According to the Investigation Wing, seized digital data, loose papers, and other material indicated that the assessee had paid on-money of ₹2,19,17,017 for the purchase of land. During the reassessment proceedings, the AO issued a show cause notice, but recorded that no reply had been received and completed the assessment under Section 144, treating the amount as unexplained investment under Section 69.

Before the Commissioner (Appeals), the assessee challenged both the validity of the reassessment and the addition on merits. The assessee submitted that replies, ledger accounts, bank statements, and objections to reopening had in fact been filed before the AO. Since the reasons for reopening and the show cause notice were both supplied on 15.03.2022 and the assessment was completed on 26.03.2022, the Commissioner (Appeals) admitted additional evidence under Rule 46A in the interest of justice after obtaining a remand report from the AO. While rejecting the legal challenge to reopening, the Commissioner (Appeals) examined the merits of the addition.