DEEPAK SHANKARLAL PATEL,AHMEDABAD vs. THE ITO, WARD-5(3)(1), AHMEDABAD

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ITA 1055/AHD/2026Status: DisposedITAT Ahmedabad09 July 2026AY 2014-155 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that once documentary evidence establishes the actual contribution of each co-owner, any addition must be apportioned accordingly. The addition in the assessee's hands cannot exceed his documented share of 17%.

What were the facts?

The assessee purchased an industrial shed jointly with his father and brother. The Assessing Officer made an addition on account of alleged unaccounted cash payment, which the CIT(A) restricted to one-third of the amount. The assessee argued that the addition was based on third-party material without verification and that Section 68 was wrongly invoked.

What were the issues?

Whether addition based on third-party material without independent verification is valid, and if Section 68 is correctly invoked for joint property purchase. Whether the addition should be proportionate to the assessee's share in the jointly owned property.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SMC” BENCH, AHMEDABAD

For Appellant: Shri Rupesh Shah, AR
For Respondent: Smt. Mamta Singh, Sr. DR
Hearing: 23.06.2026Pronounced: 09.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT & SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.1055/Ahd/2026 (Assessment Year: 2014-15) Deepak Shankarlal Patel, Income Tax Officer, Vs. A/26 Radhe Residency, Ward-5(3)(1), B/H Sent Mary School, Ahmedabad. Nava Naroda, Ahmedabad-382330.

[PAN :ABNPP1992 N] (Appellant) .. (Respondent) Appellant by : Shri Rupesh Shah, AR Respondent by: Smt. Mamta Singh, Sr. DR Date of Hearing 23.06.2026 Date of Pronouncement 09.07.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal is filed by the Assessee against the appellate order dated 16.03.2026 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, relating to the Assessment Year 2014-15.

2.

The assessee has raised the following grounds of appeal:

The appellant prefers the present appeal on the following grounds, which are without prejudice to each other: 1. Addition based on third-party material - bad in law

ITA No. 667/Ahd/2026 Asst. Year : 2015-16 - 2– The Ld. CIT(A) has erred in confirming addition based on alleged material found from third party (Kushal Group) without any independent verification or corroborative evidence linking the appellant. 2. Violation of principles of natural justice The authorities below erred in law in making addition without: Providing copies of seized material, and Granting opportunity of cross-examination This renders the entire addition void and liable to be deleted in view of judicial precedents including Andaman Timber Industries (SC). 3. No evidence of actual cash payment The authorities failed to bring on record any direct evidence proving that the appellant has actually paid cash of Rs 26,57,000/- Mere entries in third-party records cannot be treated as conclusive evidence. 4. Incorrect invocation of Section 68 The addition u/s 68 is legally untenable as: There is no credit entry in the books of appellant, The alleged transaction pertains to investment in property, Hence Section 68 is wrongly invoked. 5. Joint ownership ignored The authorities failed to appreciate that: The property was jointly owned by three persons, The registered document clearly establishes shared ownership. Thus, entire addition cannot be made in the hands of the appellant. 6. Without prejudice addition must be proportionate

ITA No. 667/Ahd/2026 Asst. Year : 2015-16 - 3– Without prejudice, even if any addition is to be sustained: CIT(A) erred in restricting addition to 1/3rd (Rs. 8,85,667/-) The correct proportion as per registered deed is 17% Therefore, addition should be restricted to: Rs. 26,57,000 17% Rs 4,51,690 Thus, further relief of Rs 4,33,977 should be granted. 7. Arbitrary and excessive addition The addition sustained by CIT(A) is excessive, arbitrary and not supported by evidence or law 8. Right to add, amend grounds The appellant craves leave to add, alter or amend any grounds of appeal at the time of hearing. 3. The undisputed facts emerging from the record are that Industrial Shed No. 55 situated at Kushal Industrial Park, Survey No. 441, Paiki Khata No. 1729, Moraiya, Taluka Sanand, was purchased vide registered sale deed dated 06.05.2013 for a total consideration of ₹13,75,000/- in the joint names of Shri Shankarlal Dahyabhai Patel (father), Shri Deepak Shankarlal Patel (the assessee) and Shri Mitul Patel (brother). The Assessing Officer made an addition of ₹26,57,000/- on account of alleged unaccounted cash payment in connection with the said purchase. The learned CIT(A), while granting partial relief, restricted the addition to one-third thereof, i.e., ₹8,85,667/-, on the premise that the property was jointly owned by three persons.

4.

On perusal of the documentary evidence available on record, we find that the registered sale deed as well as the bank statements and

ITA No. 667/Ahd/2026 Asst. Year : 2015-16 - 4– payment details furnished before the lower authorities clearly establish the actual contribution made by each of the co-owners towards the recorded purchase consideration. The details are as under:

Name Amount Paid (₹) Share Deepak Shankarlal Patel (Assessee) 2,34,000 17% Shankarlal Dahyabhai Patel 8,00,000 58% Mitul Patel 3,41,000 25% Total 13,75,000 100%

5.

In our considered view, once the documentary evidence on record establishes the actual contribution made by each co-owner towards acquisition of the property, any addition relating to the investment in such property, if otherwise sustainable, has necessarily to be apportioned in the same ratio. In the absence of any material brought on record by the Revenue to establish that the alleged cash payment was made equally by all the co-owners or that the assessee contributed beyond his documented share, there is no justification for adopting an arbitrary one-third allocation merely because the property stands jointly registered. We hold that, even assuming the alleged cash component of ₹26,57,000/- to be attributable to the purchasers, the addition in the hands of the assessee cannot exceed his actual share of 17%. Therefore, the addition is directed to be restricted to ₹4,51,690/- , being 17% of ₹26,57,000/-, as against ₹8,85,667/- sustained by the learned CIT(A). The Assessing Officer is directed to grant consequential relief of ₹4,33,977/- to the assessee.

ITA No. 667/Ahd/2026 Asst. Year : 2015-16 - 5– 6. In the result, the appeal of the assessee is partly allowed.

The order is pronounced in the open Court on 09.07.2026.

Sd/- Sd/- (RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 09.07.2026 MV आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy

सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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