Case Law Details
Kedar Ramakant Kulkarni Vs ACIT (ITAT Pune)
Survey in Builder’s Case Not Enough: Onus on AO, Not on Assessee: ITAT Pune Rejects Unexplained Investment Theory-Third-Party Survey Material Without Proof Can’t Sustain s.69 Addition
The Pune Bench (SMC) of the ITAT, vide order dated 31.12.2025 in Kedar Ramakant Kulkarni v. ACIT, Circle-8, Pune (ITA No. 2614/PUN/2025, AY 2020-21), allowed the assessee’s appeal and deleted the addition of ₹17,50,000 made u/s 69 on account of alleged unexplained cash investment in purchase of office premises.
The assessee had purchased office premises from M/s Swadik Trade Pvt. Ltd. (STPL). Based on a survey u/s 133A conducted in the case of STPL, the AO alleged that apart from the registered consideration of ₹15 lakh, the assessee had paid cash of ₹17.50 lakh during FY 2019-20. The addition was made solely on the basis of information received from the Investigation Wing and a ledger extract found in the builder’s books.
The Tribunal noted that no specific document evidencing cash payment was referred to or confronted to the assessee. While the AO relied on a ledger for FY 2020-21, the alleged cash payment was attributed to FY 2019-20, creating an inherent inconsistency. The assessee had categorically denied any cash payment, and no opportunity of cross-examination of the builder or survey officials was provided.
Interpreting Section 69, the ITAT held that the primary onus lies on the AO to first establish, through cogent material, that an unrecorded investment was actually made. In the absence of any incriminating document or corroborative evidence, the AO failed to discharge this burden. Mere third-party survey information or assumptions could not justify a deeming addition.
Accordingly, the ITAT directed deletion of the entire addition of ₹17.50 lakh and allowed the appeal in full, reiterating that unexplained investment additions cannot rest on suspicion or unverified third-party material.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the Assessee against the order of ld. Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2020-21dated 08.09.2025 emanating from the Assessment Order passed under section 143(3) read with section 144B of the Act, dated 20.09.2022. The Assessee has raised the following grounds of appeal :
“1) The authorities below erred in the facts and circumstances of the case, and as per the law, in making and confirming an addition of Rs.1750000/- to the returned income of the assessee. Just and proper relief be granted to the assessee in this respect.
2) The authorities below erred in the facts and circumstances of the case, and as per the law, in making and confirming an addition under section 69 of the Income Tax Act as an unexplained investment on the basis of information received from ADT without appreciating the fact that assessee has not paid any consideration in cash and hence addition made of Rs. 1750000 be directed to be deleted. Just and proper relief be granted to the assessee in this respect.
3) The authorities below erred in the facts and circumstances of the case, and as per the law, in making and confirming an addition under section 69 of the Income Tax Act as an unexplained investment when there is no difference in the agreement value and no consideration in cash was paid. Hence, the addition so made only on the basis of information received from ADT and also when there is no other corroborative evidence of cash paid to builder by the assessee, deserves to be deleted. Just and proper relief be granted to the assessee in this respect.
4) The Appellant prays to be allowed to add, amend, modify, rectify, delete, or raise any ground of appeal before or at the time of hearing.”
2. At the outset of hearing, no one attended the hearing on behalf of the assessee.
3. Ld. Departmental Representative(ld.DR) for the Revenue relied on the order of the Assessing Officer and ld.CIT(A).
Findings & Analysis :
4. We have heard ld.DR for the Revenue and perused the records. In this case, Assessee had filed return of income for A.Y.2020-21 declaring total income of Rs.4,50,370/-. The Return of Income was processed u/s.143(1) by CPC. The Assessee’s case was selected for scrutiny, accordingly various notices were issued by Assessing Officer. The, Assessing Officer passed assessment order. The relevant paragraphs of the Assessment Order dated 20.09.2022 for A.Y.2020-21 i.e. para 3.3 to 3.6 are reproduced here as under :
“3.3 Summary of information/evidence collected which is proposed to be used against assessee: Survey action u/s 133A of the Income-tax Act, 1961 was carried out by the Assistant Director of Income Tax (Investigation)-II, Nashik in the case of Swadik Trade Private Limited (STPL). As per the reports dated 30-07-2020 and 03-03-2021 of the ADIT, during the course of survey, a registered agreement dated 20-07-2019 executed between STPL and assessee was found. According to the agreement, assessee have agreed to purchase Office No 405 in Bhoomi Allium, Pune from STPL for Rs 15,00,000. Apart from this, evidence was found that over & above the registered price of Rs 15,00,000, assessee have paid cash of Rs 17,50,000 during FY 2019-20. The information received in this office also includes your ledger extract in the books of STPL for FY 2020-21 in which the entry made on 18-12 2020 shows that agreement to sale for Office No 405 for Rs 15,00,000 was cancelled and new agreement was executed for Office No 410 for Rs 21,38,000. This happened on 18-12-2020 ie FY 2020-21. Nevertheless, the fact remains that assessee has paid cash of Rs 17,50,000 during FY 2019-20.
3.4 Variation proposed on the basis of inference drawn:
3.5 Synopsis of reply of the assessee to SCN:
Notices were issued to the assessee to furnish the explanations regarding the cash payment of Rs.17,50,000 made to Swadik Trade Private Limited (STPL). In response, the assessee has furnished his replies. On perusal of assessee’s reply, it is noted that the assessee has not furnished any relevant documents nor sources of income regarding the the cash payment of Rs.17,50,000 made to Swadik Trade Private Limited (STPL). Assessee denies of having entered into any cash transaction with STPL for purchase of office no.405 in the Bhoomi Allium, Pune and he says he does not have any know how or knowledge about it. Instead the assessee has submitted details of payment made for purchase of Office no.410 for Rs.21,38,000/-.
3.6 Summary of information evidence collected after SCN & Point-wise rebuttal of reply of the assessee and conclusion drawn: The assessee has not furnished any submissions nor the sources of income in respect of cash payment of Rs.17,50,000/- made to Swadik Trade Pvt. Ltd.(STPL) towards Office No 405 and only denies the same. The reply of the assessee is not tenable. It is conclusively proved that assessee has made the cash payment to M/s Swadik Trade private Limited (STPL) as discussed vide para 3.3 given above. Therefore, the cash payment of Rs.17,50,000/- is added to the total income of the assessee and brought to tax under section 69 of the IT Act, 1961.”
4.1 Thus, it can be noted that Assessing Officer has made addition of Rs.17,50,000/- to the Returned Income of the Assessee based on some document found during survey in the case of Swadik Trade Private Limited(STPL). We have already reproduced the relevant paragraphs of the assessment order. It can be observed from the said paragraph that a Ledger Account of Assessee in the books of STPL for F.Y.2020-21 was found. However, Assessing Officer has alleged that assessee had paid cash of Rs.17,50,000/- in F.Y.2019-20. No specific document has been referred by Assessing Officer, for alleging the cash payment of Rs.17,50,000/- in F.Y.2019-20. The Assessing Officer has accepted that the Ledger Extract for F.Y.2020-21 was found. Thus, the addition is not based on any document. From the Assessment Order, it is clear that no document was shown to the Assessee regarding impugned cash payments, rather Assessing Officer asked assessee to prove the source of cash payments and Assessee has specifically denied any cash payments. No opportunity of cross-examination was provided to the Assessee. In this case, as we have observed that Assessing Officer has not made addition based on any document. The onus is always on the Assessing Officer, when Assessing Officer wants to add a particular amount as income of the assessee. In this case, Assessing Officer has failed to discharge the said onus. The Assessing Officer has made an addition u/s.69 of the Act. The relevant Section 69 of the Act is reproduced as under :
“Unexplained investments.
69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.”
4.2 Thus, as per Section 69 of the Act, if the assessee has made any investment which are not recorded in the books of accounts and assessed fails to offer explanation for the same, then Assessing Officer can make addition. In this case, there is no document on record to prove any alleged investment made by Assessee of Rs.17,50,000/-. Therefore, the Assessing Officer has erred in making addition of Rs.17,50,000/-. Accordingly, we direct the Assessing Officer to delete the addition of Rs.17,50,000/-. Accordingly, grounds of appeal raised by the assessee are allowed.
5. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 31 December, 2025.
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