ASHOKBHAI GORDHANBHAI KANKOTIYA,SURAT vs. INCOME TAX OFFICER, WARD- 3(2)(1), SURAT

The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the NFAC has erred in confirming the action of A.O. in reopening assessment by issuing notice u/s 148 of the I.T Act. 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in making addition of Rs. 11,75,000/- as unexplained money being on- money payment made for purchase of flat.

Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

There is a delay of 53 days in filing the present appeal for which the assessee has given the detailed reasoning in the affidavit along with condonation of delay application. The reason appears to be genuine. Hence, the delay is condoned.

As regards ground No.1, the Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the assessment order is passed u/s 147 of the Act but in fact the reopening was in respect of the search and seizure action conducted on Shailesh Dhirubhai Thummar, partner of M/s. K. Star Enterprise. Therefore, the Ld. AR submitted that the AO should have passed the order u/s 153A of the Act and not u/s 147 of the Act. The Ld. AR pointed out the reasons recorded. The Ld. AR relied upon the decision of Paras Chandreshbhai Koticha (2026) 182 taxmann.com 204 (Gujarat) decided by the Hon’ble Gujarat High Court.

The Ld. Departmental Representative (in short “Ld. DR”) relied upon the assessment order and submitted that the assessment order u/s 147 of the Act is related to the information received from the search and is not solely dependent upon the search and seizure action in case of K. Star Enterprise. Therefore, the AO has rightly invoked section 148 of the Act and passed the assessment order u/s 147 of the Act.

We have heard both the parties and perused all the relevant materials available on record. From the perusal of records it appears that the AO has done independent enquiry. In fact, after receiving the information not only the AO considered details of search and seizure action in respect of K. Star Enterprise, but has also taken the cognizance of the assessee’s transactions related to his job work contract activity while making addition of Rs.11,75,000/- as on-money payment. Thus, the AO has rightly reopened the assessee’s case and decided as per section 147 and not as per section 153A of the Act. More pertinently it is relevant that the decision of Hon’ble Gujarat High Court in case of Paras Chandreshbhai Koticha (supra) will not be applicable in assessee’s case as the information received was a crucial information taken into account by the AO while passing the assessment order u/s 147 of the Act and not solely on the search and seizure action of K. Star Enterprise. Thus ground No.1 is dismissed.

As regards ground No.2, the Ld. AR submitted that the assessee was not given the opportunity of cross examination of the person who has given the statement against the assessee. In fact there was no relevant document supplied to the assessee related to annexure-B-203/A-361. So there is no direct nexus with accommodation entry related to on-money transaction.

The Ld. DR submitted that the AO is not required to give the cross examination as the AO is not solely relying on the statement of the builder. The Ld. DR relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the material found and the information given to the AO directly lacks the direct nexus of the accommodation entry related to on-money transactions. The assessee has given all the details related to his transactions with the other parties. Besides this, the assessee was not given any opportunity of cross examination when the statement of Shri Shailesh Dhirubhai Thummar was also taken into account while deciding the addition. In the present case, the AO should have given the cross examination and in fact should have confronted the annexure- B and 203/A-361 to the assessee for which the AO as well as the CIT(A) has totally overlooked. Thus, on merit which is ground No.2, the addition made by the AO does not sustain in respect of the observations made hereinabove. Ground No.2 is allowed.

In result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 03.09.2026