VIDHI KALPESH MADLANI,AHMEDABAD vs. INCOME TAX OFFICER - WARD 1(1)(3), AHMEDABAD

The brief facts of the case are that the assessee is an individual who filed her return of income for A.Y. 2019–20 declaring total income of ₹2,79,880/-. Subsequently, based on information received by the Assessing Officer, the case was reopened under section 147 of the Income- tax Act (“the Act”). The basis for reopening was that during search and survey proceedings conducted in the case of the builder, namely M/s Rajyash Infracon, certain incriminating material was found showing that the assessee had purchased an immovable property during the relevant financial year and had allegedly paid on-money of ₹2,00,000/- in cash over and above the consideration.

During the course of reassessment proceedings, the Assessing Officer observed that the assessee failed to comply with various notices and did not furnish the required details. In view of such non-compliance, the Assessing Officer proceeded to issue a show-cause notice under section 144 of the Act. Even at this stage, the assessee did not respond or provide any explanation. The Assessing Officer thus proceeded to complete the assessment under section 147 read with section 144 and section 144B of the Act (best judgment assessment), and primarily relied on the information received from the search proceedings in the case of the builder. The Assessing Officer held that the assessee had made unexplained cash payment of ₹2,00,000/- towards purchase of property, which was not recorded in the books nor had been explained by the Vidhi Kalpesh Madlani vs. ITO - 3– assessee, and accordingly the Assessing Officer treated the same as unexplained money under section 69A of the Act. The said amount was added to the returned income and the total income was assessed at ₹4,79,880/-.

Aggrieved by the order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). Before the CIT(Appeals), the assessee submitted that the total cost of the property was ₹18,50,000/- and the source of the same was duly explained through a combination of personal savings, financial support from parents and a bank loan obtained from ICICI Bank. The assessee contended that no on-money payment in cash was made to the builder and that the amount of ₹2,00,000/- referred to by the Assessing Officer were the genuine charges such as AMC, AUDA clearance and maintenance expenses, which were paid out of loan funds. The assessee also submitted the detailed of source of funds by stating that a sum of ₹7,50,000/- was received from parents as a gift, a sum of ₹50,000/- was from personal savings, and the balance amount was financed by the assessee through a bank loan, the EMIs of which were being paid from her salary income. Also, the assessee submitted that due to medical reasons, specifically advanced stage of pregnancy, she was unable to respond to notices during assessment proceedings and therefore requested that the matter be considered sympathetically.

The CIT(Appeals), however, did not accept the submissions of the assessee. The CIT(Appeals) placed reliance on the evidentiary value of information obtained from search and survey proceedings conducted in the case of the builder. The CIT(Appeals) observed that such information carries substantial probative value, especially when it specifically identifies on-money transactions linked to particular buyers. The Vidhi Kalpesh Madlani vs. ITO - 4– CIT(Appeals) held that the assessee had merely made general denials without producing any cogent documentary evidence to rebut the specific finding of cash payment of ₹2,00,000/- reflected in the builder’s records. The explanation regarding source of funds, parental gift and bank loan was considered insufficient as it did not directly address or disprove the allegation of on-money payment.

Further, the CIT(Appeals) held that the assessee had failed to comply with statutory notices during assessment proceedings and had also not produced any corroborative evidence even during appellate proceedings to substantiate her claims. The explanation regarding medical condition was noted but was not considered sufficient to override the lack of evidence on merits. The CIT(Appeals) held that in absence of any rebuttal evidence, the information obtained from search proceedings remained uncontroverted and therefore had to be accepted. The CIT(Appeals) also observed that a mere claim that payments were made through banking channels cannot negate specific incriminating material unless supported by documentary proof.

Accordingly, the CIT(Appeals) held that the Assessing Officer was justified in invoking section 69A and treating the amount of ₹2,00,000/- as unexplained money. The addition made by the Assessing Officer was therefore confirmed by CIT(Appeals) and the appeal of the assessee was dismissed.

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

We have heard the rival contentions and perused the material on record. On careful consideration of the facts and circumstances of the case, Vidhi Kalpesh Madlani vs. ITO - 5– we find that the addition made by the Assessing Officer is primarily based on information received from search and survey proceedings conducted in the case of a third party, namely the builder, wherein it was alleged that the assessee had paid on-money of ₹2,00,000/- in cash. However, from the record, it is evident that the specific material relied upon by the Assessing Officer for drawing such adverse inference was not confronted to the assessee during the course of assessment proceedings. In absence of such confrontation, the assessee was deprived of an opportunity to rebut the same.

We further note that the assessment in the present case has been completed under section 144 read with section 147 of the Act due to non- compliance on the part of the assessee. However, the explanation furnished before the appellate authorities indicates that such non- compliance was not deliberate but was attributable to genuine and unavoidable circumstances, namely the advanced stage of pregnancy of the assessee. This fact, in our considered view, constitutes a reasonable cause which ought to have been given due consideration by the lower authorities while evaluating the conduct of the assessee.

We also find merit in the contention of the assessee that adequate opportunity was not granted at the appellate stage. The record shows that the Learned CIT(Appeals) disposed of the appeal without affording sufficient and effective opportunity of hearing and without properly considering the submissions and evidences sought to be placed on record. The assessee has also raised a specific plea before us for admission of additional evidences which, according to her, could not be produced earlier due to circumstances beyond her control. In our view, such a plea deserves to be examined judiciously, particularly when the addition has Vidhi Kalpesh Madlani vs. ITO - 6– been made on the basis of third-party information and the assessee claims to have supporting material explaining the source and nature of the transactions.

Considering the entirety of facts, we are of the view that the matter requires fresh adjudication so as to ensure that the assessee is granted a fair and reasonable opportunity to present her case and to rebut the material relied upon by the Assessing Officer. In the interest of substantial justice, we therefore set aside the order passed by the Learned CIT(Appeals) and restore the matter to his file for de novo consideration. The Learned CIT(Appeals) shall admit and examine the additional evidences filed by the assessee in accordance with law, confront the assessee with all material relied upon by the Revenue, and thereafter decide the issue afresh on merits after providing adequate opportunity of being heard to the assessee.

The assessee is also directed to cooperate in the proceedings and furnish all necessary details and evidences as may be required by the Learned CIT(Appeals) for proper adjudication of the issue.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 22/04/2026 (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad; Dated 22/04/2026 TANMAY, Sr. PSITA No. 355/Ahd/2026 Vidhi Kalpesh Madlani vs. ITO - 7–

""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,