BHIKHABHAI MATHURBHAI PATEL,AHMEDABAD vs. THE ITO, WARD-2(1)(1), AHMEDABAD

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ITA 1523/AHD/2025Status: DisposedITAT Ahmedabad13 May 2026AY 2017-1810 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition was based on presumption and not concrete evidence. The developer's admission of receiving on-money was general and not specifically linked to the assessee, and no evidence of cash payment by the assessee was found.

What were the facts?

The assessee did not file an income tax return for AY 2017-18. The case was reopened based on information that the assessee paid on-money in cash for a property purchase. The Assessing Officer made an addition of Rs. 1.22 crores based on information from a developer who admitted to receiving on-money.

What were the issues?

Whether an addition can be made solely on the basis of a third party's admission of receiving on-money without specific evidence linking the assessee to such payment. Whether the assessee was denied natural justice by not being provided with the statement of the third party for cross-examination.

Which sections of the Income-tax Act were involved?

Section 147,Section 132,Section 234A,Section 234B,Section 234C,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI TR SETHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Bandish Soparkar, AR
For Respondent: Shri Rameshwar P Meena, SR-DR
Hearing: 16.04.2026Pronounced: 13.05.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 05.06.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 147 of the Income Tax Act.

2.

The brief facts of the case are that the assessee did not file his return of income for A.Y. 2017-18. The case of the assessee was reopened on the basis of information that certain on-money was paid in cash for the purchase transaction made by the assessee and his wife, in respect of

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 2 purchase of a property from Navratna Group. A search action u/s. 132 of the Act was conducted in Navratna Group on 11.04.2017 wherein receipt of on-money by the group was admitted and Navratna Organisers and Developers Pvt. Ltd. (hereinafter referred to as “NODPL”) had filed a settlement application disclosing the on-money receipts. In the course of assessment proceeding, the assessee had submitted that he was a citizen of USA, having business there and he had no tax liability to file income tax return in India. It was submitted that the property was purchased by him jointly along with his wife by making cheque payment of Rs.85,00,000/- only. The assessee denied having made any on-money payment for purchase of property in cash. The Assessing Officer, however, had made addition of Rs.1.22 crores on account of on-money payment in cash towards purchase of property in accordance with the data as provided by NODPL. The assessment was completed u/s. 147 of the Act, on 27.03.2022 at total income of Rs. 1,23,28,780/-.

3.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

4.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

Ld. CIT (A) (NFAC) erred in law and on facts in confirming addition of Rs. 1,22,00,000/- made by AO on account of unexplained investment simply on the basis of information received from investigation wing neither forming independent opinion of escapement of income nor any application of mind.

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 3

2.

Ld. CIT (A) (NFAC) erred in law and on facts in confirming addition made by AO of Rs. 1, 22, 00, 000/- as unexplained investment relying upon the statement of the third party taken behind the back of the appellant. 3. Ld. CIT (A) (NFAC) erred in law and on facts in not adjudicating ground No challenging validity of the assessment order passed u/s 147 at the fag end of the limitation period without granting sufficient opportunity to the appellant. 4. Ld. CIT (A) (NBAC) erred in law and on facts not appreciating submission that appellant running successful business in USA & filing return of income there purchased the impugned property from NRI bank account. 5. Ld. CIT (A) (NBAC) erred in law and on facts holding that since Navratana group admitted receipt of on money before Hon'ble Settlement Commission on booking of units at Kalhar Blue & Greens the appellant cannot deny payment of on money in cash for purchase of the impugned property. 6. Ld. CIT (A) (NBAC) erred in law and on facts in dismissing ground of AO not granting opportunity of cross examination of person on whose statement addition is made holding that there was no question of cross examination since builder admitted receipt of on-money before Settlement Commission. 7. Levy of interest u/s 234A/234B & 234C of the Act is unjustified. 8. Initiation of penalty proceedings u/s 271AAC of the Act is unjustified. 5. Shri Bandish Soparkar, the Ld. AR of the assessee submitted that the assessee is a non-resident Indian residing in USA. He is having business in USA and filing return as per USA law. The assessee along with his wife had booked a property being unit No. 743 at Kalhar Blues & Greens at Sanand, Dist. Ahmedabad, for a consideration of Rs. 85,00,000/-. The Ld. AR explained that the entire payment for purchase of property was made through banking channel and the assessee did not make any payment over and above the amount as mentioned in the sale deed. The Ld. AR pointed that the AO had made addition only on the basis

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 4 of general statement of one Shri Murlidhar M. Trivedi and the admission of NODPL before the settlement commission that it had received on- money in certain transactions. In the course of search no evidence for any cash payments made by the assessee was found. The Ld. AR submitted that the Co-ordinate bench of this Tribunal has considered the admission of NODPL and held that no addition was called for on that basis in the hand of the beneficiaries. Further, the Hon’ble Gujarat High Court has also held that no addition could have been made only on the basis of excel sheet found from NODPL. In this regard, the Ld. AR placed reliance on the following decisions.

i. Shri Jayprakash A Keshwani [IT(SS)A No. 91/Ahd/2021], ITAT Ahmedabad. ii. Shri Kaushik Nanubhai Majithia [IT(SS)A No. 21/Ahd/2021], ITAT Ahmedabad iii. Shri Kaushik Nanubhai Majithia [Tax Appeal No. 20 of 2024], Gujarat HC iv. Munjal Mrugesh Jaykrishna [ITA No. 1793/Ahd/2024], ITAT Ahmedabad v. Ashokkumar Prahladbhai Patel [ITA No. 1300/Ahd/2025], ITAT Ahmedabad

6.

Per Contra Shri Rameshwar P Meena, the Ld. SR-DR, relied upon the orders of the lower authorities.

7.

We have considered the rival submissions. Ground No. 1 & 2 pertain to addition of Rs.1.22 crore on account of on-money payment. It is found that the case of the assessee was reopened on the basis of the information gathered in the search conducted at NODPL regarding receipt of on-money by the said party. In the course of search, one Shri Murlidhar Marubhai Trivedi, had admitted receipt of on-money by NODPL. Further,

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 5 NODPL had filed an application before the Hon’ble ITSC admitting receipt of on-money out of books, on sale of units/villa at Kalhar Blues & Greens. NODPL had also submitted a list of purchasers, wherein unit no., name of purchaser, date of acquisition, cost of land, cost of construction etc. was mentioned. From the extract of the excel sheet as reproduced in the assessment order it is found that the assessee had made payment of Rs. 85,00,000/- only. In the excel sheet no payment of any on-money by the assessee was recorded. Merely because NODPL has admitted in its settlement application that on-money was received by it, it does not establish that the assessee had paid on-money in respect of acquisition of property made by him. In the course of search no evidence of payment of any on-money by the assessee was found. The addition made by the AO thus found to be based on mere presumption and not on any concrete evidence.

8.

The evidences found from NODPL on the basis of which the addition has been made, was examined by the Co-ordinate Bench of this Tribunal in the case of Munjal Mrugesh Jaykrishna in ITA No.1793/Ahd/2024 dated 19.03.2025. The finding given in the said order is found to be as under:

“7. The most important facts observed by us pertains to para No.9.1 to 9.4 of the assessment order.

For the sake of ready reference and completeness, the said paragraphs are reproduced hereunder: -

9.1 As per assessee, the decoded is done by the Department is its own decoded is done by the Department is its own decoded is done by the Department is its own decoded is done by the Department is its own and the and the search party has not given any authenticity for it. and the and the search party has not given any authenticity for it. search party has not given any authenticity for it. However the search party has not given any authenticity for it.

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 6 amount stated in the above discussion is tallied with the un-coded figures, which are tallied each other.

And as per assessee it is as under: -

In the pink color, the figure of amount is quoted at 37500 on 20.04.2013, it has been seen from the submission of the assessee that the amount of Rs.37,50,000/- has been paid on 25.11.2011. Hence, the plea of the assessee is cleared herewith. The amount paid by the assessee 37,50,000/- is quoted in computer entry is 37500. Thus, it is clear that the decoding has been made perfectly. The date of payment and related entries again and again are reproduced above with the payment of the assessee. 9.2 The statement asked by Shri Murlidhar Marutbhai Trivedi, the The statement asked by Shri Murlidhar Marutb hai Trivedi, the The statement asked by Shri Murlidhar Marutb The statement asked by Shri Murlidhar Marutb hai Trivedi, the hai Trivedi, the accountant of the said NODPL could not be provided as the statement is accountant of the said NODPL could not be provided as the statement is accountant of the said NODPL could not be provided as the statement is accountant of the said NODPL could not be provided as the statement is based on not only the information regarding the assessee only but based on not only the information regarding the assessee only but based on not only the information regarding the assessee only but based on not only the information regarding the assessee only but another person’s only and it is confidential lies with Investigation wing another person’s only and it is confidential lies with Investigation wing another person’s only and it is confidential lies with Investigation wing another person’s only and it is confidential lies with Investigation wing hence, it has not been provided to the assessee. hence, it has not been provi ded to the assessee. However, the hence, it has not been provi hence, it has not been provi ded to the assessee. ded to the assessee.

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 7 information received and as available with the assessee is incorporated in the assessment order above. 9.3 NODPL before ITSC has confessed that they have taken on-money NODPL before ITSC has confessed that they have taken on NODPL before ITSC has confessed that they have taken on NODPL before ITSC has confessed that they have taken on money money money out of sale of land and building thereon out of sale of land and building thereon. It is confessed relevant to all out of sale of land and building thereon out of sale of land and building thereon the purchasers of the scheme whatever developed by it. The name of the assessee also inclusive thereon. It is not proper query from the assessee, for his individual, he has confessed before ITSC. 9.4 As regard the payment made in various years hence, the amount involved for this year is only for under question. However, it is brought to kind notice of the assessee that the purchase deed is executed in the the purchase deed is executed in the the purchase deed is executed in the the purchase deed is executed in the year under consideration hence, the all transaction are covered under year under consideration hence, the all transaction are covered under year under consideration hence, the all transaction are covered under year under consideration hence, the all transaction are covered under this year only.” this ye ar only.” this ye this ye ar only.” ar only.”

7.1 A detailed analysis of the relevant paragraphs from the assessment order reveals multiple inconsistencies and procedural lapses that render the addition unjustified. 7.2 Firstly, the decoding of figures has been done solely by the department without any independent verification, and the search party has not provided any authenticity for the same. This statement recorded on decoding has not been part of the assessment proceedings. The Revenue has relied on unverified and coded figures, which have been tallied against the un-coded figures without proper corroboration. Any statement recorded of the Directors or the employees relating to the material found in codes has not been brought on record. This raises serious doubts about the reliability of the figures used to make the addition. Since the authenticity of the decoded amounts is questionable, any conclusions drawn from them cannot be sustained. 7.3 Secondly, the records indicate that the payment details align with the submissions made by the assessee. It has been established that the amount of ₹37,50,000 was paid on 25.11.2011, as per the assessee's records, which match the decoded figures quoted in the assessment order. The repeated mention of these figures in the department's findings confirms that there is no discrepancy in the assessee's declaration of the payments. Hence, the plea of the assessee stands corroborated, and there is no ground for any addition on this account.

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 8 7.4 Thirdly, the statement made by Shri Murlidhar Maruthbhai Trivedi, the accountant of NODPL, has not been made available to the assessee. The assessment order itself acknowledges that this statement is based not only on information regarding the assessee but also on another person's details, which are confidential and lie within the Investigation Wing. Since this statement has not been shared with the assessee, reliance on it violates the principles of natural justice. Without providing the assessee an opportunity to cross-examine the statement or verify its contents, the department cannot use it as the basis for making an addition. 7.5 Furthermore, NODPL has confessed before ITSC that it collected on- money from the sale of land and buildings. However, the admission was made in a general context regarding all purchasers of the scheme developed by NODPL. There is no specific mention or direct evidence linking the assessee to this alleged on-money transaction. In the absence of any concrete evidence that the assessee was involved in undisclosed transactions, making an addition solely on presumptions is unsustainable. Any such addition must be backed by clear, conclusive proof rather than general confessions made by third parties.”

9.

On the basis of the above findings, the Co-ordinate Bench had held that no addition was called for on the basis of the evidences provided by NODPL. The Hon’ble Gujarat High Court in the case of Kaushik Nanubhai Majithia (supra) had observed on the evidences found from NODPL as under: -

“3. We find inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 9 and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated.”

10.

In the present case also the addition was made on general admission of NODPL before ITSC that it had collected on-money from the sale of land and buildings. There was no specific mention of the assessee or any other direct evidence linking the assessee to the alleged on-money transaction. The excel sheet relied upon by the AO recorded only cheque transactions and there was no reference of any cash payment by the assessee in the said excel sheet. There was no other corroborative material in respect of alleged on-money payment by the assessee. In the absence of any concrete evidence that the assessee was involved in undisclosed transactions, the addition made by the AO was based solely on presumption and such addition can’t be sustained.

11.

In view of the facts as discussed above and also following the decisions of Co-ordinate bench of this Tribunal referred above, we do not find any merit in addition of Rs. 1.22 crores in the hand of the assessee, on account on-money payment for purchase of property. There was no evidence found in the course of search that the assessee had made any on-money payment for purchase of property and the addition was made solely on the basis of presumption. Accordingly, the addition of Rs. 1.22 crores made in the hands of the assessee on account of on-money payment is deleted. The grounds taken by the assessee are allowed.

12.

Ground no. 3 is taken by the assessee pertains to reopening of the case and this ground was not pressed by the Ld. AR in the course of hearing. Hence, this ground is dismissed.

ITA No.1523/Ahd/2025 Bhikhabhai Mathurbhai Patel. Vs ITO, AY- 2017-18 10

13.

Ground nos. 4, 5 and 6 taken by the assessee only support the main grounds and do not require separate adjudication.

14.

Ground no 7 and 8 being consequential grounds, are dismissed.

15.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the Court on 13/05/2026 at Ahmedabad.

Sd/- Sd/- (TR SETHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 13th May, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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