The CIT(A) cannot recharacterize an addition from one Section of the Income Tax Act to another without providing the assessee with prior notice and an opportunity to present their case, as doing so violates the principles of natural justice and procedural fairness.

आदे श / ORDER

PER. RAVISH SOOD, J.M:

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals)-11, Hyderabad, dated 02/02/2004, which in turn arises from the order passed by the Assessing Officer under Section 144 r.w.s 153A of the Income Tax Act, 1961 (for short, “Act”), dated 12/12/2019 for the Assessment Year 2014-15.

The assessee has assailed the impugned order on the following grounds of appeal before us:

1. “The order passed by the Ld. CIT(A) u/s 250 of the Act dated 02.02.2024 is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.

2. The Ld. CIT(A) erred in partly allowing the appeal filed by the assessee without considering the facts and circumstances of the case.

3. The Ld. CIT(A) erred in confirming the addition of Rs. 80,53,411/- as unexplained money u/s 69A of the Income Tax Act, 1961.

4. The Ld. CIT(A) erred in holding that if the appellant substantiates later, saying that the amount of Rs. 20,00,000/- out of the total amount of Rs. 80,53,411/- is part of books, then the sum of Rs. 20,00,000/-will fall u/s 68 of the Act.

5. The Ld. CIT(A) ought to have appreciated that the appellant has already admitted its gross receipts to the extent of Rs. 20,00,000/- on which income @ 8% has been admitted.

6. The Ld. CIT(A) ought to have appreciated that taking the amount of Rs. 20,00,000/- once again u/s 69A or u/s 68 of the Act leads to double taxation in the hands of the appellant for the year under consideration.

7. The Ld. CIT(A) erred in holding that the entire cash credits of Rs. 80,53,411/-stand unexplained as the appellant has failed to furnish any cogent evidence substantiating the sources of the said cash deposits.

8. The Ld. CIT(A) erred in holding that mere claiming of the cash credits as the turnover cannot be accepted unless the bonafides of the turnover are proved with necessary evidences without appreciating the fact that the assessee has provided all the necessary information to substantiate his claim.

9. On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have appreciated that while completing the assessment u/s 153A of the Act, no addition can be made in the absence of any incriminating material.

10. The Ld. CIT(A) erred in holding that the AO rightfully made the additions based on incriminating material and other material on record without appreciating the fact that the so called incriminating material consists of dumb, unauthenticated documents and that the additions made are based on surmises, assumptions and on estimate basis.

11. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not giving telescoping effect towards the unexplained investments/ expenditure, against the unexplained credits in the group related concerns of the earlier or current years.

12. The assessee may add, alter, or modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”

Succinctly stated, the assessee, who is engaged in the real estate business, had not filed his return of income for the Asst. Year 2014-15.

Search and seizure proceedings were conducted on the assessee under Section 132 of the Act on 20/09/2017. Thereafter, the assessee, in compliance to the notice issued under Section 153A of the Act, dated 03/04/2018, e-filed his return of income for the subject year, i.e., AY 2014-15 on 13/11/2018, wherein he had failed to disclose the income that was admitted by him in his statement recorded under Section 132(4) of the Act, dated 20/09/2017, 25/09/2017 and 17/11/2017, and also in the affidavit dated 26/10/2017.

The AO, vide his order passed under Section 144 r.w.s 153A of the Act, dated 12/12/2019, determined the income of the assessee at Rs. 36,14,47,165/-, i.e., after making three additions viz., (i) unexplained investment U/s. 69 of the Act (as admitted in the course of the search proce