Vijay Baburao Patil Gurav Vs ITO (ITAT Pune)
Section 69A Addition for Alleged Extra Property Payment Cannot Rest on Unsupported Departmental Information: ITAT Pune
The controversy
The Pune Bench of the Income Tax Appellate Tribunal deleted an addition of ₹2,24,300 under Section 69A, made on the allegation that the assessee had paid more for a plot than the amount disclosed in the registered sale deed.
The Assessing Officer relied upon information allegedly received from another income-tax authority. However, the assessment order identified neither a document nor a statement establishing the alleged excess payment.
The Tribunal held that the addition lacked documentary support and was baseless. It consequently directed its deletion without deciding the assessee’s separate jurisdictional objections to the reassessment.
Registered purchase cost differed from departmental information
The assessee held a 50% share in an open plot situated at Kasaba Sangaon, Taluka Kagal, District Kolhapur.
According to his explanation, the total purchase consideration was ₹1,80,000, with stamp duty and other expenses of ₹5,400. His half-share of the aggregate cost therefore amounted to ₹92,700.
The assessee furnished the registered sale deed and explained that this was the amount paid by him.
The Assessing Officer, however, referred to information received from the ACIT, Central Circle, Kolhapur, according to which the property had been purchased jointly for ₹6,34,000.
On that basis, the Assessing Officer attributed ₹3,17,000 to the assessee. After reducing the admitted cost of ₹92,700, he treated the difference of ₹2,24,300 as unexplained income under Section 69A.
Assessee challenged the undisclosed basis of the addition
In the written submissions before the Tribunal, the assessee contended that the information relied upon had never been shared with him.
He maintained that he had not been informed of its source, the nature of the inquiry undertaken or the material supporting the allegation of additional consideration.
The assessee also complained that he had not been afforded an opportunity to cross-examine the seller or other persons whose alleged statements were said to support the addition.
His principal factual submission was that the registered sale deed supported the disclosed consideration, while no contrary evidence had been identified.
Relying upon Dhakeswari Cotton Mills Ltd. v. CIT, 26 ITR 775 (SC), he argued that undisclosed material could not fairly be used against him without an opportunity to address it.
Registered deed could not be displaced by an unsupported allegation
The assessee further argued that the consideration recorded in a registered instrument could not be substituted by a higher figure merely on the strength of unverified oral information.
He relied upon CIT v. Motors & General Stores (P.) Ltd., 66 ITR 692 (SC) and submitted that the Revenue could reject a document on valid and substantial grounds, but could not rewrite the transaction without legally sustainable material.
These arguments formed part of the written submissions reproduced in the order. The Tribunal’s actual finding was narrower and evidence-based: the assessment order disclosed no document or statement supporting payment beyond the registered amount.
Tribunal found no evidence of excess payment
Although the assessee was not represented at the final hearing, the Tribunal considered the written submissions, paper book and assessment record, and heard the Departmental Representative.
It noted that the addition rested on information allegedly received from the Central Circle.
Crucially, the Assessing Officer had not referred to any document showing payment exceeding the consideration recorded in the registered sale deed. Nor had he referred to any person’s statement evidencing such payment.
The Tribunal therefore concluded that the addition was “without any documentary evidences and baseless” and directed the Assessing Officer to delete ₹2,24,300.
The grounds challenging the addition on merits were allowed.
Reassessment and appellate-power objections remained undecided
The assessee had separately challenged the reassessment on several legal grounds.
These included an allegation that the Section 148 notice, though dated 30 March 2021, was dispatched after 1 April 2021 without following Section 148A, and an objection concerning non-issuance of notice under Section 143(2) after filing the return.
He also disputed the Commissioner (Appeals)’s exercise of set-aside powers under Section 251(1)(a).
Since the addition had been deleted on merits, the Tribunal treated these grounds as academic and left them unadjudicated. The order therefore contains no ruling validating or invalidating the reassessment on those grounds.
The appeal was partly allowed.
Author’s comments
The decision underlines the distinction between information suggesting an inquiry and evidence sustaining an addition.
A communication from another departmental office may prompt verification. However, an allegation of extra property consideration must be supported by material connecting the assessee with the alleged payment. Merely reproducing a higher figure does not establish that payment.
Equally, the ruling should not be read as making registered consideration immune from challenge. Its significance is that the Revenue identified no evidence contradicting the disclosed transaction. The addition failed for want of an evidentiary foundation, while the jurisdictional questions remained open.
Cases Discussed
1. Dhakeswari Cotton Mills Ltd. v. CIT, (1954) 26 ITR 775 (Supreme Court): Cited by the assessee in the written submissions concerning the requirement of a fair opportunity to address adverse material and the objection to relying on undisclosed information without an opportunity of cross-examination.
2. CIT v. Motors & General Stores (P.) Ltd., (1967) 66 ITR 692 (Supreme Court): Cited by the assessee concerning the evidentiary significance of written transaction documents and the limits on substituting an alleged oral understanding for the consideration recorded in a registered instrument.
FULL TEXT OF THE ORDER OF ITAT PUNE
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 2014-15 on 19.01.2026, emanating from the Assessment Order dated 21.03.2022.
2. Basic Facts :
- On 05.05.2026, none appeared on behalf of the assessee, hence, case was adjourned to 19.05.2026.
- On 10.05.2026, none appeared on behalf of the assessee, hence, case was adjourned to 17.06.2026.
- On 11.08.2026, Shri Vaibhav Ruikar, Ld. AR of the assessee appeared virtually and requested for adjournment. Hence, case was adjourned to 07.10.2026.
- On 07.10.2026, none appeared on behalf of the assessee.
2.1 In these backgrounds, we heard the case on 07.10.2026 ex-parte qua the assessee. We heard Ld. DR and perused the records.
3. The assessee has raised the following grounds of appeal :
“GROUND NO. 1
Failure to Adjudicate Jurisdictional and Legal Grounds
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have decided the preliminary and jurisdictional issues relating to (a) validity of reassessment proceedings initiated after 01.04.2021 without following the procedure prescribed u/s 148A, and (b) non issuance of mandatory notice u/s 143(2), before exercising any power of set-aside
GROUND NO. 2
Wrong Application of Proviso to Section 251(1)(a) – Order Not Made u/s 144
2. Whether on the facts and circumstances of the case and in law, since the assessment order is made u/s 147 and not u/s 144, the Ld. CIT(A) was duty bound to decide the appeal on merits by adjudicating all the grounds raised by the appellant, and the exercise of set aside power was beyond jurisdiction and bad in law
GROUND NO. 3
Reassessment Proceedings Initiated After 01.04.2021 Without Following Procedure u/s 148A
3. Whether on the facts and circumstances of the case and in law, the notice u/s 148 dated 30.03.2021 which was actually issued/dispatched after 01.04.2021 (sent through speed post on 01.04.2021) is governed by the new regime provisions under sections 148 to 1484 inserted by the Finance Act, 2021 with effect from 01.04.2021, and the entire reassessment proceedings are void ab initio for non compliance with the mandatory procedure prescribed u/s 148A
GROUND NO. 4
Non-issuance of Notice u/s 143(2)
4. Whether on the facts and circumstances of the case and in law, where the appellant had filed return of income in response to notice u/s 148 dated 22.02.2022 with acknowledgement No. 244853490220222, which return was considered by the AO while framing the assessment, the issuance of notice u/s 143(2) is mandatory before proceeding to frame any assessment, and failure to issue such notice renders the assessment order void ab initio
GROUND NO. 5 & 6
Addition u/s 69A Without Evidence and Without Cross-Examination
5. Whether on the facts and circumstances of the case and in law, the AO erred in making the addition of Rs. 2,24,300 u/s 69A based solely on unverified information allegedly received from ACIT, Central Circle, Kolhapur, without sharing such information or evidence with the appellant and without providing any opportunity of cross examination to the appellant
6. Whether on the facts and circumstances of the case and in law, the AO erred in disregarding the registered sale deed produced by the appellant showing purchase consideration of Rs. 1,80,000 (appellants 50 percent share being Rs. 92,700), and instead relying on oral/unverified information, contrary to the settled legal position that a registered document cannot be challenged by oral evidence?
GROUND NO. 7
General Ground
7. That the appellant craves leave to add, alter, amend, modify or withdraw any of the above grounds of appeal at or before the time of hearing of the appeal.
PRAYER
In light of the above facts and legal submissions, it is humbly prayed that the Hon’ble Income Tax Appellate Tribunal may be pleased to:
a) Set aside the impugned order dated 19.01.2026 passed by the Commissioner of Income- tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi;
b) Annul and quash the assessment order dated 21.03.2022 passed u/s 147 by the ITO, Ward 1(5), Kolhapur, as being void ab initio and without jurisdiction;
c) In the alternative, if the Hon’ble Tribunal deems it appropriate to decide the appeal on merits, delete the addition of Rs. 2,24,300 made u/s 69A of the Act;
d) Grant such other and further relief as the Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case and in the interest of justice.”
Findings and Analysis :
4. In this case, the Ld. AR filed written submissions and paper book. The relevant paragraphs of the written submissions are reproduced here as under :
“2. The Addition Is Based on Unverified Information – Never Shared with the Appellant
The basis for the addition is information allegedly received from ACIT, Central Circle, Kolhapur that the Appellant paid Rs. 3,17,000/- for the plot, against the registered consideration of Rs. 1,80,000/-. This information was never shared with the Appellant at any stage of the assessment proceedings. The Appellant was never confronted with the source of this information, the nature of the inquiry conducted, or the material on which the ACIT, Central Circle, Kolhapur based this allegation. The assessment is, therefore, founded on undisclosed material. The Appellant demonstrated, by producing the Registered Sale Deed and detailed submissions, that the purchase consideration was Rs. 1,80,000/- with stamp duty and other expenses of Rs. 5,400/-, and the Appellant’s 50 per cent share was Rs. 92,700/-. There is no other document or evidence on record to contradict the registered deed.
3. No Cross-Examination Fundamental Violation of Natural Justice
The Ld. AO made the addition relying on the alleged statement of the seller/other persons. The Appellant was never provided an opportunity to cross-examine these persons. The entire addition is founded on evidence that the Appellant never had an opportunity to challenge, examine, or rebut.
Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax [1954] 26 ITR 775 (SC)
The Supreme Court laid down the foundational principle that an Assessing Officer is not entitled to make an assessment without affording the assessee a proper opportunity to address the material relied upon. Material that has not been disclosed to the assessee and in respect of which no opportunity of cross-examination has been provided cannot form the basis of an addition. The present case squarely violates this settled principle.
4. Registered Sale Deed Conclusive Evidence of Consideration
The Appellant produced the Registered Sale Deed before the Ld. AO. A registered document executed before the Sub-Registrar is a public document within the meaning of the Registration Act, 1908. It is not open to the Revenue to discard the consideration disclosed in a registered deed and substitute a higher amount based on oral, unverified information from an informant who was never cross-examined. The settled legal position is that a registered document cannot be displaced by oral evidence.
This view is supported by the Hon’ble Supreme Court, in the case of CIT v. Motors & General Stores (P.) Ltd. [1967] 66 ITR 692 by holding that, where statutorily the parties have to reduce a certain transaction into writing, it is not open to Court or any authority to permit oral evidence to be adduced by the parties or to entitle them to go behind the statements made in the document. Income Tax Authorities are under the ordinary law. No greater power or authority is vested in them, except that which the law confers. A bare perusal of Section 91 to 94 of the Evidence Act limits the power, subject of course to the exceptions stated in Section 91 and 92 of the Evidence Act. It is settled proposition that the Revenue could either accept the documents as representing genuine transactions or reject it on valid and substantial grounds which are tenable in law, but they cannot, while accepting that it is a genuine transaction, rewrite the document, contrary to what the parties have in-fact effected, or gave a construction by reference inadmissible in evidence.”
5. As per the assessment order, the assessee had not filed return of income for AY 2014-15. Notice u/s 148 of the Act was issued on 30.03.2021 by post and served on the assessee on 03.04.2021. It is mentioned in the assessment order that the assessee had not responded to any of the notices. The relevant paragraphs of the assessment order are reproduced here as under :
“4.1. With response to the questionnaire cum-final show cause notice the assessee has filed submission along with copy of return and questionnaire related documents and explanation through registered e-mail id. In his submission the assessee has stated that he earning the income from retail trading of bakery products and confectionery during the year under consideration. He also says that he had purchased open plot at R.S.No.374 plot no.352, Saptgiri Park, Kasaba Sangaon, Tal- Kagal, Dist- Kolhapur. Area of the land is 161.40 Sq.Mtr. his ownership in that plot is 50%. Total cost for that land was Rs.1,80,000/- and stamp duty and other expenses were Rs.5400/-, his ownership in this plot is to the extent of 50% the total are of the plot is owned by he is 80.70 Sq.Mtr and the total cost attributed to him was Rs.92,700/-. This amount was paid by him.
4.2 I have gone through the above submission. The assessee has purchased the plot Rs.92,700/-. However, the information received by this office by ACIT Central Circle, Kolhapur is that the plot was purchased by assessee and other one person i.e. shri Subhash Ramchandra Gurav is Rs.6,34,000/-. The 50% of the assessee’s share is comes to Rs.3,17,000/- and the assessee has agreed that he has paid Rs.92,700/-. Therefore, the excess payment made by the assessee of Rs. 2,24,300/- is treated as the assessee’s income for AY 2014-15. Since, excess payment of Rs 2,24,300/- are brought to tax u/s 69A of the Act. Further, penalty proceedings u/s 271(1)(c) of the I.T. Act 1961 are also proposed to be initiated in respect of unexplained income of Rs 2,24,300/-. Since the assessee failed to file his Return of Income u/s 139, however, the same is filed after issue of notice u/s 148 therefore, separate penalty proceeding u/s 271F are initiated for not filling the return of income within the due date.”
5.1 Thus, the AO has made addition based on some information allegedly received from the ACIT Central Circle, Kolhapur. Nowhere in the assessment order, the AO has referred to the document which shows payment more than the amount mentioned in the Registered Sale Deed for the purchase of plot. Nowhere in the assessment order, the AO has referred to any statement of any person evidencing the excess payment. Therefore, the addition made by the AO is without any documentary evidences and baseless. Accordingly, we direct the AO to delete the addition of Rs.2,24,300/-. Accordingly, ground Nos. 5 and 6 raised by the assessee are allowed.
6. The assessee has raised legal ground from Ground Nos. 1 to 4. Since, we have adjudicated the Ground Nos. 5 and 6 and allowed it, the other grounds becomes academic in nature. Accordingly, Ground Nos. 1 to 4 raised by the assessee are dismissed as un-adjudicated.
7. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on 13th October, 2026
