Rajesh Narayanrao Pawar Vs DCIT (ITAT Pune)
Summary: The Income Tax Appellate Tribunal (ITAT), Pune Bench, in Rajesh Narayanrao Pawar Vs DCIT, ITA No. 2041/PUN/2026, dated 23/07/2026, for Assessment Year 2019-20, deleted an addition of ₹15,00,000 made under Section 69 of the Income Tax Act, 1961, holding that the Assessing Officer failed to establish the alleged cash payment through any specific documentary evidence. The reassessment proceedings originated from information available on the Income Tax Department’s INSIGHT Portal following a search conducted under Section 132 on M/s City Corporation Limited and related entities on 15.02.2023. The Assessing Officer alleged that the assessee had paid ₹15 lakh in cash on 25.07.2018 towards the purchase of a flat in Amanora Park Town and subsequently received a refund on 08.08.2018. However, the assessee consistently denied making any such payment and explained that he and his son had purchased a flat on 29.12.2015 using a housing loan obtained from Axis Bank. Despite the explanation and supporting bank statements, the Assessing Officer treated the alleged payment as an unexplained investment.
Examining the assessment proceedings, the Tribunal observed that the Assessing Officer had neither identified nor referred to any specific seized document, impounded material or recorded statement establishing the alleged cash payment. Merely stating that documents were recovered during a search conducted on a third party could not establish that the assessee had actually made the disputed payment. The Tribunal emphasised that once the assessee categorically denied the transaction and furnished bank statements from Axis Bank, UCO Bank and HDFC Bank, the burden rested upon the Assessing Officer to substantiate the allegation with reliable evidence. Furthermore, if the Assessing Officer intended to rely upon seized documents, copies of those documents were required to be supplied to the assessee. The absence of any identifiable supporting material rendered the addition unsustainable.
The Tribunal also strongly criticised the CIT(A), NFAC, for dismissing the appeal on the ground of non-compliance without properly examining the statement of facts and supporting documents already furnished by the assessee. It noted that the assessee had clearly explained the earlier property purchase, the bank financing and the absence of any immovable property purchase from City Corporation Limited during Assessment Year 2019-20. The CIT(A) had neither addressed these submissions on merits nor identified what additional documents were necessary to decide the dispute. Holding that the assessment lacked documentary support and that the first appellate authority had failed to adjudicate the matter properly, the Tribunal directed deletion of the entire ₹15,00,000 addition under Section 69 and allowed the assessee’s appeal.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 („the Act‟) for AY 2019-20 on 28.02.2026, emanating from the Assessment Order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 28.02.2025.
Findings and Analysis:
2. We have heard both the parties and perused the records. In this case, the assessee is an individual. The assessee filed return of income for AY 2019-20 u/s 139(4) of the Act. The Assessing Officer (AO) had received certain information based on which the AO issued notice u/s 148A(b) of the Act on 28.03.2023 for AY 2019-20. In the notice u/s 148A(b) of the Act, it was alleged that as per “INSIGHT Portal” of the Income Tax Department, the assessee had paid cash of Rs.15,00,000/- to M/s. City Corporation Limited. In response to the notice u/s 148A(b) of the Act, the assessee has denied any cash payment to M/s. City Corporation Limited. This fact is mentioned in para 1.2 of the assessment order. Then the AO issued notice u/s 148 of the Act dated 10.04.2023. During the reassessment proceedings, the assessee filed return of income in response to the notice u/s 148 of the Act declaring total income at Rs.17,25,970/-. This fact is mentioned in para 4.1 of the assessment order. During the assessment proceedings, the assessee filed various details which have been reproduced in the assessment order. The assessee categorically denied any cash payment to M/s. City Corporation Limited. It was submitted by the assessee that the assessee along with his son had purchased a flat on 29.12.2015 for which the assessee had obtained loan from Axis Bank. However, after considering the submission of the assessee, the AO made addition u/s 69 of the Act of Rs.15,00,000/-. The relevant paragraphs of the assessment order are reproduced here as under:s
“5.2 Certain documents were seized during the Search and Seizure Action u/s 132 of the Act conducted in the cases of M/s City Corporation Limited, its directors and its related entities on 15.02.2023. The assessee’s name appeared in the documents seized. From the excel sheet extracted from the seized hard drive, it is found that this excel sheet has information about the purchaser who has made payments in cash which was unaccounted in the books of the company. Various persons connected to said transactions have accepted that City Corporation Limited has received cash from various assessee against purchase of Flat. As per information collected during the search action, the assessee has made payment in cash amounting to Rs. 15,00,000/- on 25.07.2018 to M/s City Corporation Limited for purchasing of flat in the project of Amanora Park Town. Further the amount was refunded to Shri Rajesh Narayana Pawar by the M/s City Corporation Ltd. on 08.08.2018. Further, even though the said cash payment was refunded to the assessee by the M/s City Corporation Limited immediately on the above mentioned dates, the source of such cash payment made by the assessee remains unexplained. It is clear that the assessee had made cash payment of Rs. 15,00,000/- from his unaccounted sources which needs to be taxed in his hands.
5.3 The assessee has filed ITR u/s 139(4) for AY 2019-20 but prima facie, he has not considered the financial transactions of Rs. 15,00,000/- made during the FY 2018-19 relevant to AY 2019-20, in the said ITR. Further, assessee has filed ITR u/s 148 declaring total income of Rs. 17,25,970/-. Similarly, once again assessee has not mentioned anything about this transaction.”
3. Aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(A). However, there was non-compliance as claimed by the Ld. CIT(A) but on reading the statement of facts reproduced by the Ld. CIT(A) at page Nos. 1 & 2 of the Ld. CIT(A)‟s order, the assessee has specifically mentioned that the assessee has not paid any cash amount to M/s. City Corporation Limited. The assessee also mentioned that the assessee along with his son purchased a flat on 29.12.2015 for which the assessee had obtained bank loan. The assessee filed basic details before the Ld. CIT(A). The assessee also submitted that during AY 2019-20, the assessee had not purchased any immovable property from M/s. City Corporation Limited. Thus, all the facts related to the impugned issue were narrated by the assessee in the statement of facts filed before the Ld. CIT(A).
4. Ridiculously, the Ld. CIT(A) has not bothered to read the statement of facts and merely stated that the assessee had not complied to the notices issued. We failed to understand once the assessee has narrated all the facts, filed necessary details what other compliance the Ld. CIT(A) wanted? The Ld. CIT(A) in the order has not mentioned about the documents which according to him was essential to decide the impugned issue of addition of Rs.15,00,000/-. Thus, this shows carelessness, callous and negligent attitude of the so called Senior Officer of the Income Tax Department.
5. Now, coming to the addition of Rs.15,00,000/- made by the AO in the assessment order. Again this is a classical case of callous attitude of Officers of the Income Tax Department. In the entire assessment order, the AO merely states that certain documents were seized during the search and seizure action u/s 132 of the Act in the case of M/s. City Corporation Limited conducted on 15.02.2023. Nowhere, in the assessment order there is any specific mention of any of the seized documents which established payment of Rs.15,00,000/- by the assessee to M/s. City Corporation Limited. Merely, stating that there were seized documents will not prove that the assessee had made cash payment of Rs.15,00,000/-. The assessee had categorically denied cash payment. The assessee had filed copies of Axis Bank, UCO Bank and HDFC Bank Account and other documents during the assessment proceedings. Once, the assessee had denied cash payment to M/s. City Corporation Limited, the onus was on a AO to establish it by referring to the documents which shows cash payment. However, we have already mentioned in the above paragraphs that in the assessment order the AO has not referred any seized documents or impounded documents. The AO has not referred to any of the statements in the assessment order. Even, otherwise, if the AO was relying on any seized documents, it was mandatory for the AO to provide copies of those documents to the assessee. In the assessment order, we are repeating again that nowhere there is any reference of any seized documents or any other documents wherein alleged cash payment is mentioned.
6. In these facts and circumstances of the case, the addition made by the AO is not based on any documents. Accordingly, we direct the AO to delete the addition of Rs.15,00,000/- made u/s 69 of the Act. Accordingly, ground No. 3 raised by the assessee is allowed.
7. Ground No. 4 is general in nature, hence, do not need any adjudication.
8. Ground No. 1 is regarding non-compliance before the Ld. CIT(A). However, in the earlier paragraph, we have specifically mentioned that basic facts to determine the issue was before the Ld. CIT(A), therefore, the Ld. CIT(A) has erred in not deciding the appeal on merits.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 23rd July, 2026
