SUVARNABEN SURESHBHAI SHAH,AHMEDABAD vs. THE ITO, WARD-2(1)(2), AHMEDABAD

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ITA 2040/AHD/2025Status: DisposedITAT Ahmedabad26 May 2026AY 2019-209 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO's reassessment proceedings were initiated in violation of Section 151A and CBDT Notification No. 18/2022. The approval for reassessment was also found to be mechanical.

What were the facts?

The assessee did not file a return of income for AY 2019-20. Following a search action, the AO alleged that the assessee paid Rs. 27,00,000/- in cash as on-money for a property purchase, leading to an addition under Section 69B.

What were the issues?

The primary issues were the validity of reassessment proceedings initiated under Section 147 and the propriety of the addition made under Section 69B based on seized material.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151,Section 151A,Section 149,Section 69B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Biren Shah, CA & Shri Gulab Thakor, ARs
For Respondent: Shri Rameshwar P Meena, Sr. DR
Pronounced: 26.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.2040/Ahd/2025 (Assessment Year: 2019-20) Suvarnaben Sureshbhai Shah, Vs. The Income Tax Officer, 23, Kalpatary Soc., Naranpura, Ward-2(1)(2), Ahmedabad-380013 Ahmedabad [PAN No.AMKPS2856G] (Appellant) .. (Respondent) Appellant by : Shri Biren Shah, CA & Shri Gulab Thakor, ARs Respondent by: Shri Rameshwar P Meena, Sr. DR 06.05.2026 Date of Hearing Date of Pronouncement 26.05.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 19.08.2025 passed for A.Y. 2019-20.

2.

The assessee has raised the following grounds of appeal:

“1. In law and on the facts and in the circumstances in the case of the appellant, the order u/s 147 of the Act passed by the Ld. AO as confirmed by Ld. CIT(A) is arbitrary, erroneous, contrary to the provisions of law and on facts. 2. In law and on the facts and in the circumstances in the case of the appellant, Assessment Order passed under section 147 r.w.s. 144B of the Act is bad in law as Notice issued u/s 148 by Jurisdictional Assessing Officer is in violated of Section 151A of the Act and CBDT Notification No. 18/2022 dated 29.03.2022. 3. In law and in the facts and circumstances in the case of the Appellant, approval under section 151 of the Act was granted is in mechanical manner without cross verifying the applicability of section 149(1)(b).

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 2– 4. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has grossly erred in sustaining the addition of alleged unexplained investment u/s 69B of the act of Rs. 6649,400/- when no such addition is called for. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of appeal.” 3. The brief facts of the case are that the assessee had not originally filed the return of income under section 139(1) of the Act for A.Y. 2019-20. Subsequently, pursuant to a search and seizure action carried out on 10.02.2022 in the case of Shivalik, Shilp and Shraddha Group, certain incriminating material was allegedly found from the premises connected with one Shri Manish Madhusudan Brahmbhatt, who was stated to be a real estate broker engaged in facilitating sale and purchase transactions of immovable properties. During the course of such search proceedings, the Department found physical diaries, loose papers and digital data containing details of transactions relating to various real estate projects, including details of alleged cash components received in respect of sale of units in different projects.

4.

Based on the information available on the Insight Portal and the material allegedly seized from Shri Manish Brahmbhatt, the Assessing Officer observed that the assessee along with her son and co-owner, Shri Pranav Shah, had purchased Unit No. 55 in the project “Sky City Floris” developed by M/s Safal Goyal Realty LLP. As per the seized material, the total consideration of the property was Rs.1,37,00,000/- whereas the registered value reflected in the sale deed was Rs.1,10,00,000/-. According to the Assessing Officer, the differential amount of Rs.27,00,000/- represented on-money paid in cash over and above the registered

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 3– consideration. The seized digital record as per the Assessing Officer contained details such as the project name, unit number, buyer details, PAN numbers, document value as per Sub-Registrar records and cash component. Relying upon such seized material, the Assessing Officer formed a belief that the assessee had made unexplained investment in the property and accordingly proceedings under section 147 of the Act were initiated.

5.

In response, the assessee filed return of income on 22.07.2024 declaring total income of Rs. 1,540/-. During the course of reassessment proceedings, the Assessing Officer called upon the assessee to explain the source of investment made in the property and also to explain the allegation regarding payment of on-money. The assessee denied having made any cash payment of Rs.27,00,000/- and disputed the correctness and evidentiary value of the seized material. The assessee also contended that the property in question was jointly purchased with her son Shri Pranav Shah and that, without prejudice to the denial of any on-money payment, the entire amount of alleged on-money had already been added in the hands of Shri Pranav Shah in his assessment proceedings for A.Y. 2019-20. It was therefore argued that making addition again in the hands of the assessee would amount to impermissible double taxation of the same amount.

6.

The Assessing Officer, however, observed that no adverse inference was being drawn on the issue of the alleged cash component of Rs.27,00,000/- in view of the submission regarding addition already made in the hands of the co-owner. Nevertheless, during examination of the source of investment, the Assessing Officer noticed that the assessee had contributed Rs.60,00,000/- towards purchase of the property from sale proceeds of an

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 4– earlier residential property. The assessee submitted detailed chart showing payments made towards purchase of the flat along with dates, cheque numbers and details of payments made by the assessee and co-owner. The assessee submitted that the investment pertained to F.Y. 2017-18 relevant to A.Y. 2018-19 and not the year under consideration. The assessee further submitted that the amount of Rs.60,00,000/- was the sale proceeds of old residential property and accumulated past savings, while stamp duty of Rs.5,39,000/- and registration and side copy charges of Rs.1,10,400/- were paid out of personal savings which were accumulated over a period of time, considering that the assessee was a super senior citizen.

7.

The Assessing Officer was not satisfied with the explanation furnished by the assessee. According to the Assessing Officer, the assessee had failed to substantiate the claim regarding receipt of Rs.60,00,000/- from sale of residential property by furnishing supporting documentary evidence. The Assessing Officer further held that no documentary evidence had been furnished regarding source of payment of stamp duty and registration expenses. Consequently, the Assessing Officer treated an aggregate amount of Rs.66,49,400/- comprising Rs.60,00,000/- allegedly invested from unexplained sale proceeds together with stamp duty and registration charges of Rs.6,49,400/- as unexplained investment under section 69B of the Act.

8.

Aggrieved by the reassessment order, the assessee preferred appeal before the Ld. CIT(A). Before the CIT(Appeals), the assessee challenged the validity of reassessment proceedings. The assessee contended that the reassessment order was invalid in law and liable to be quashed. On merits, the assessee contended that the reassessment itself lacked validity because the

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 5– Assessing Officer did not make any addition on the very issue for which proceedings were initiated, namely alleged on-money payment of Rs.27,00,000/-. It was argued that once no addition was made on the issue forming the basis of reopening, the reassessment proceedings could not survive for making additions on altogether different issues. The assessee further challenged the addition of Rs.66,49,400/- under section 69B by contending that complete details regarding source of investment had been furnished along with bank statements and other supporting details and therefore no unexplained investment could be alleged.

9.

However, during the course of appellate proceedings, notices fixing the matter for hearing were issued by the Ld. CIT(A) on several occasions, i.e. on 08.04.2025, 24.04.2025 and 13.06.2025 fixing hearings on 23.04.2025, 09.05.2025 and 20.06.2025 respectively. The CIT(Appeals) observed that no compliance was made on behalf of the assessee on the said dates. In view of repeated non-compliance, the Ld. CIT(A) proceeded to dispose of the appeal ex parte on the basis of material available on record.

10.

While dismissing the appeal, the Ld. CIT(A) observed that sufficient opportunities of being heard had been granted to the assessee but the assessee failed to pursue the appeal diligently. The CIT(Appeals) held that since the assessee failed to furnish any substantial evidence to controvert the findings recorded by the Assessing Officer and also failed to pursue the appeal proceedings despite repeated opportunities, it was to be construed that the assessee was not interested in prosecuting the appeal. Accordingly, the Ld. CIT(A), without adjudicating the various legal and factual grounds raised by

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 6– the assessee on merits, dismissed the appeal primarily for non-prosecution and upheld the reassessment order passed by the Assessing Officer.

11.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

12.

We have heard the rival contentions and perused the material available on record. The primary basis for reopening of assessment under section 147 of the Act was the allegation that the assessee along with co-owner Shri Pranav Shah had made on-money payment of Rs.27,00,000/- in cash in connection with purchase of Unit No.55 in “Sky City Floris” project. The entire reopening proceedings were thus founded upon the alleged seized material comprising diary entries and digital data found from the premises of Shri Manish Brahmbhatt during the course of search proceedings conducted in the case of Shivalik, Shilp and Shraddha Group.

13.

However, on careful perusal of the assessment order, we find that no addition was made by the Assessing Officer on account of the on-money payment of Rs.27,00,000/-. On the other hand, the Assessing Officer himself recorded in the assessment order that considering the submissions of the assessee that the alleged amount had already been added in the hands of co- owner Shri Pranav Shah, “no adverse inference is being drawn on the above mentioned issue” Therefore, the very issue on the basis of which reassessment proceedings were initiated admittedly did not survive in the final assessment order.

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 7– 14. Instead of making addition on the issue forming the basis of reopening, the Assessing Officer proceeded to make altogether different addition of Rs.66,49,400/- under section 69B of the Act on account of alleged unexplained investment in purchase of property and stamp duty expenses. In our considered view, once no addition had been made in respect of the very ground on the basis of which jurisdiction under section 147 was assumed, the reassessment proceedings themselves could not survive for making additions on unrelated issues. In this regard, we derive support from the decision of the Hon’ble Bombay High Court in the case of CIT v. Jet Airways (I) Ltd. [(2011) 331 ITR 236 (Bom)] wherein it was held that if upon reopening no addition is made on the ground on which reasons were recorded, then the Assessing Officer cannot independently assess other income. Similar view has been taken by the Hon’ble Delhi High Court in Ranbaxy Laboratories Ltd. v. CIT [(2011) 336 ITR 136 (Del)] wherein it was held that reassessment proceedings fail where no addition is made in respect of the issue forming the basis of reopening. The Hon’ble Gujarat High Court in Mohmed Juned Dadani v. ITO [(2013) 355 ITR 172 (Guj)] has also held that where the Assessing Officer accepts the contention of the assessee on the issue for which assessment was reopened, it would not be open to him to assess some other escaped income independently. In the case of Principal Commissioner of Income-tax, Central vs. Naveen Infradevelopers & Engineers (P.) Ltd. [2025] 181 taxmann.com 315 (Delhi)[16-10-2024], the High Court held that where reassessment was initiated on ground of discrepancy between reported turnover and bank credits, but additions were ultimately made on issues unrelated to recorded reasons for reopening, and no addition was made on very ground for which assessment was reopened,

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 8– such additions could not be sustained and, therefore, Tribunal’s order deleting addition called for no interference. Therefore, respectfully following the aforesaid judicial precedents, we hold that the reassessment proceedings in the present case are unsustainable in law.

15.

Even otherwise, on merits also, we find force in the submissions advanced on behalf of the assessee. The assessee had consistently explained before the Assessing Officer that the investment made towards purchase of the property was sourced out of sale proceeds received from earlier property transactions coupled with personal savings accumulated over a period of time. During the course of hearing before us, the Ld. AR drew our attention to the bank statements placed in the paper book demonstrating direct receipt of sale consideration aggregating to Rs.58,41,000/- during August 2017. The details of such receipts have been specifically tabulated by the assessee showing receipt of Rs.18,00,000/-, Rs.12,00,000/-, Rs.15,00,000/-, Rs.4,41,000/- and Rs.9,00,000/- between 29.08.2017 to 31.08.2017. The said receipts were immediately followed by investment of Rs.60,00,000/- towards purchase of the impugned property on 30.10.2017 through banking channel. Thus, the assessee had established a direct nexus between the sale proceeds received and the subsequent investment made in the property. We further notice that the payments towards acquisition of the property as reflected in the sale deed were substantially routed through normal banking channels. The Assessing Officer has not brought any material on record to disprove the documentary evidences furnished by the assessee regarding source of investment. Except making general observations regarding absence of

ITA No. 2040/Ahd/2025 Suvarnaben Sureshbhai Shah vs. ITO Asst.Year –2019-20 - 9– supporting evidence, no enquiry appears to have been conducted by the Assessing Officer to rebut the explanation furnished by the assessee.

16.

Considering the totality of facts and circumstances of the case, we are of the considered view that the reassessment proceedings initiated under section 147 of the Act are unsustainable in law since no addition was made on the very issue for which the case was reopened. Further, even on merits, the assessee had satisfactorily explained the source of investment by demonstrating direct linkage between sale proceeds received from sale of property and subsequent investment made in the property. Accordingly, the addition of Rs.66,49,400/- made under section 69B read with section 115BBE of the Act is directed to be deleted.

17.

In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 26/05/2026

Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 26/05/2026 TANMAY, Sr. PS TRUE COPY 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, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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