DHIRAJ PERMJIBHAI PATEL ,MUMBAI vs. ITO WARD ,27 (1)(1) MUMBAI , MUMBAI

ITA 2708/MUM/2026Status: DisposedITAT Mumbai29 September 2026AY 2007-088 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the case of the assessee is identical to the case of Shri Rajesh Ravjibhai Patel vs. Asst. CIT Cir 26(2), decided by the same bench (ITA No.328/Mum/2023 for AY 2007-08). In that identical case, the Tribunal observed that the AO's premise was based on information from a pen drive seized during a search and a statement from Shri Ranjan Hiranandani, which merely confirmed receipt of 'on-money' without naming specific individuals. The assessee had submitted details of flat purchases and denied any cash payment, attributing advance payments to a home loan. The Tribunal noted that the AO did not conduct further inquiries from the builder or cross-examine Shri Ranjan Hiranandani. It was held that an addition cannot be made solely based on uncorroborated information from third-party books without further inquiry or corroboration. The burden of proof was considered discharged by the assessee, and the AO failed to bring material on record to disprove the assessee's explanation. Therefore, the addition under section 69B (or section 69 as stated in the AO's order) was deleted on merits. Since the substantive addition was deleted, the legal contentions regarding the validity of the notice under section 148 were rendered academic and infructuous and were not adjudicated. The AO was directed to delete the addition.

What were the facts?

The assessee, Shri Dhiraj P. Patel, filed an appeal against the order of the Commissioner of Income Tax Appeals – 51, Mumbai, dated 23.02.2026, for Assessment Year 2007-08. The appeal arose from an assessment order under section 143(3) r.w.s 147 of the Income Tax Act, 1961, passed by ITO – 27(1)(1) on 03.07.2015. The Revenue is the respondent. The case was re-opened based on information from DGIT (Inv.), Mumbai, suggesting the assessee was involved in cash payments for a flat purchase from the Hiranandani Group. The Assessing Officer (AO) noted documents found during a search in the Hiranandani Group indicated cash payments by various flat purchasers, including the assessee. The AO proposed an addition of Rs. 76,92,500/- as undisclosed income. The assessee denied making any such payment and challenged the validity of the notice under section 148. The CIT(A) upheld the addition and the validity of the re-opening.

What were the issues?

1. Whether the notice issued under section 148 of the Income Tax Act, 1961, is invalid due to jurisdictional failure, specifically on the grounds that the reasons to believe were borrowed information without independent satisfaction and that the notice was meant for unearthing escaped income rather than undisclosed income under section 153C. - Assessee's contention: The notice under section 148 is invalid as it was based on borrowed information from the DGIT (Inv.) report without the AO's independent satisfaction and application of mind. The notice was issued for unearthing escaped income, not for undisclosed income as per section 153C, making it technically flawed. - Revenue's contention: The Revenue's contention is not explicitly recorded, but the Ld. DR vehemently supported the orders of the Ld. CIT(A) and requested to sustain the addition. 2. Whether the addition of Rs. 76,92,500/- under section 68 (or section 69 as mentioned in the AO's order) as alleged unaccounted cash given to the builder is justified on merits. - Assessee's contention: The addition is uncalled for as no cash was paid by the appellant. The assessee had a low net worth and had taken a bank loan to purchase the flat, making a huge cash payment improbable. Section 68 is not applicable, and the addition loses sanctity when equity fails. The assessee denies making any on-money payment and claims to have discharged the burden of proof. - Revenue's contention: The Revenue's contention is not explicitly recorded, but the Ld. DR vehemently supported the orders of the Ld. CIT(A) and requested to sustain the addition. The CIT(A) held that the addition arose from incriminating materials found during search proceedings and was supported by documentary evidence.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 153C,Section 68,Section 69,Section 69B,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SIDDHARTHA NAUTIYAL, JM & SHRI ARUN KHODPIA, AM

For Appellant: Shri Pramod Kumar Parida, Shri Ashutosh Singh, Sr. DR
Hearing: 29.09.2026

Per Arun Khodpia, AM: The captioned appeal is filed by the assessee, against the order of the Commissioner of Income Tax Appeals – 51, Mumbai [in short, “the Ld. CIT(A)”], dated 23.02.2026 for the Assessment Year (AY) 2007-08, arises from the assessment order under section 143(3) r.w.s 147 of the Income Tax Act, 1961 [in short, “the Act”] dated 03.07.2015, passed by ITO – 27(1)(1) [in short, “the Ld. AO”]. The grounds of appeal raised by the assessee are as under: Dhiraj Premjibhai Patel “Technical

1.

Notice U/s. 148-Juri ictional failure - Borrowed information without self sati

The order continues below.

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