CHHABIL PREMJIBHAI PATEL,MUMBAI vs. ITO WARD, 27(1)(3), MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM I.T.A. No. 5087/Mum/2025 (Assessment Year: 2007-08) Shri Chhabil Premjibhai Patel ITO Ward 27(1)(3), Mumbai Room No.419, 4th floor, Tower No.6, 910, Krushal Commercial Vs. Building, M.G. Road, Vashi Station Complex, Vashi-400703 Chembur(W), Mumbai-400089 PAN: AAAPP5168J Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Pramod Revenue by : Shri Ajay Soneji, Sr. DR : 02.07.2026 Date of Hearing : 23.09.2026 Date of Pronouncement

O R D E R Per Arun Khodpia, AM: This appeal is preferred by the assessee, directed against the order of the Commissioner of Income Tax Appeals – 52, Mumbai [in short, “the Ld. CIT(A)”], dated 30.07.2025 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 01.07.2015, passed by Income Tax Officer – 27(1)(3), Mumbai [in short, “the Ld. AO”].

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel 2. The grounds of appeal raised by the assessee are as under: “Technical 1. Notice u/s.148-Jurisdictional failures- Notice served beyond limitation- Borrowed information [DIT(Inv.-II) Report]-Reasons to belief not out of own volition- Absence of individual satisfaction -Notice may be treated as invalid Order may be vacated. The Id CIT(A) erred in not treating the issue of notice u/s. 148 as invalid which was seized with jurisdictional failures on account of followings: Notice u/s. 148 dated 29.03.2014 was issued and served beyond the limitation period in terms of fat proviso to Sec. 147 such as four years from the end of relevant Assessment year which ends on 31.03.2012 date of issue of notice u/s.148 dated 29.03.2014 was served beyond 31.03.2014. ➤ Borrowed information not out of own volition-Report of DIT(Inv.- II) Wing, Mumbai. ➤ Satisfaction lacking without due application of own mind and reasons to believe on external evidences without further exercise, ➤ Wrong notice -Sec. 148 notice meant to unearth escaped income as against the alleged undisclosed income within the meaning of Sec. 153C. Notice u/s.148 can't substitute notice u/s.158BD or 153C. therefore, on the very technical lacunae, the issue of notice u/s. 148 may be treated as invalid as cannot be curable u/s. 292BB and the Order impugned as void-ab- intio. 2. MERITS Addition u/s. 69B- alleged undisclosed investment Rs.- 76,78,700/- i) The Id CIT(A) erred in confirming the addition without appreciating that nothing was paid by the Appellant as alleged unexplained on-money in cash and further failed to appreciate that with the low networth of the Appellant, no payment of huge cash as alleged on-money could have been made where the Appellant had taken bank loan to purchase flat; therefore, the deemed addition u/s. 69B may be deleted. ii) Without prejudice to above, when equity fails in a proceeding, deemed addition u/s. 69B loses its sanctity; therefore, the addition may be deleted. 3. Levy of penal interest u/s. 234B & 234C. The Appellant, on merits, denies his liability to penal interest. 4. The Appellant craves leave to add, amend or alter all or any of the above Grounds of Appeal.” 3. The assessee, an individual and proprietor of M/s Mavani Enterprise, engaged in the business of civil labour contracting, filed his return of income for 2

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel A.Y. 2007-08 declaring total income of Rs. 14,58,740/-. The return was subsequently subjected to scrutiny and assessment under section 143(3) of the Income-tax Act, 1961 was completed on 29.12.2009. The assessment proceedings had, inter alia, considered the payments made by the assessee towards purchase of a residential flat from the Hiranandani Group.

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel thereafter challenged the reassessment proceedings before the Hon’ble High Court, but subsequently withdrew the writ petition pursuant to the order dated 07.05.2015.

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel 9. Being aggrieved with the aforesaid order of Ld. CIT(A), the assessee preferred the present appeal before us.

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel and had not paid any on money in cash to the builder. Besides the statement, the Ld. AO had no materials to prove with evidence that cash was paid. It is argued that the net worth of the assessee does not suggest that he can generate cash worth Rs. 76,78,700/-. The matter was carried before the Ld. CIT(A), who was not convinced with the contentions of the assessee and, therefore, had dismissed the appeal of assessee.

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel issue has been dealt with by ITAT Mumbai in the case of Shri Rajesh Ravjibhai Patel (supra), the findings on merits of the case are reproduced as under:

“9. After hearing both the parties on the legal ground, we find that first of all, in so far as reasons recorded are concerned, there was a categorical information found during the course of search proceedings that payment of On-money was made by cash by various persons and this information was based on incriminating material in the form of pen drive found from the search in Hiranandani group; and that pen drive also contained the details of the assessee wherein during the F.Y.2006-07, it was shown that assessee had paid cash of Rs.1,11,89,600/- for purchase of certain flats from Crescendo Associates. Once there is tangible material like this, then prima facie any prudent mind will entertain reasons to believe that this amount of On-money which is shown by the assessee for the purchase of flats in the return of income amounts to escapement of assessment when same has not been declared in the return of income. Therefore, to this extent, it cannot be held that reasons recorded are vague or there is no application of mind by the ld. AO. What is required to be seen is that, is there any prima facie material and such material can lead to formation of belief or not. At this stage AO doesn't have to establish the factum of escapement which he can only after calling for assessee's explanation and conduct inquiry. 10. In so far as the argument of the Id. Counsel that jurisdiction should have been acquired u/s.153C, however, at a threshold such a plea cannot be entertained for the reason that here the search has taken place on 11/03/2014 and the clause 'previous six assessment years' start from A.Y.2008-09 and this assessment year 2007-08 falls beyond the period of six years and as mentioned in Section 153A. Moreover, the amendment brought by way of fourth proviso in Section 153A extending the abatement till 10 years, has come w.e.f. 01/04/2017 which is applicable on searches conducted after 01/04/2017. Therefore, the Id. AO could not have acquired the jurisdiction u/s.153C. Thus, this plea taken by the Id. Counsel is rejected. 11. Now coming to the merits of the case, we find that the entire premise of the ld. AO is based on pen drive seized from the search carried out on Hiranandani group and the statement of Shri Ranjan Hiranandani taken on 14/03/2014, wherein he has just simply stated that he is confirming having taken On-money. This information of material can be sufficient for acquiring the jurisdiction u/s.147 and formation of reason to believe that prima facie income chargeable to tax for escaped assessment. But that alone is not sufficient while making the addition in the assessment order. The assessee before the Id. AO had submitted the details of purchases and source of purchase of flats and has categorically denied that he has made any payment of cash as On-money. It was submitted that he has made certain advances to the builder in the A.Y.2007-08 and possession was received in the F.Y.2011-12. All the advance payments were out of borrowed home loan from ICICI bank for sum of Rs. 1,31,81,250/ which was paid in installment to the builder. Once assessee has submitted the documents for the payment and has denied the payment of any cash, then it was incumbent upon Assessing Officer to carry out some enquiry from the builder (Crescendo Associates, part of Hiranandani group) to get further details as to when and how the cash payment was made by the assessee. If the ld. AO is relying heavily on the statement of Shri Ranjan Hiranandani, then he should have been put to cross examination if his statement was the sole basis 7

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel for drawing adverse inference because his statement merely states that he has received On-money in cash and nowhere has he given any specific name of any person or name of the assessee. Ld. Counsel has also pointed out that it is a matter of record that even Shri Ranjan Hirandani had retracted from the statement and nowhere has it been stated in their proceedings that they have taken any unaccounted On-money cash specifically from the assessee. Nor anywhere there is any finding that assessee has paid any on-money and veracity of the pen-drive has been established. 12. Be that as may be, whether statement has been retracted or not, however, the ld. AO simply based on an information found from the possession of a third party cannot make an addition and draw adverse inference without carrying out further enquiry and rejecting the assessee's explanation. In so far as the burden cast upon the assessee, the same has been duly discharged and then it was upon the Id. AO to bring material on record after some enquiry that assessee's explanation is incorrect and there was any material found that other party has given details for the payment of cash paid by the assessee. If any entry by a third party of cash received has been recorded then presumption is it his unaccounted money and burden is upon that person to explain that this money has come from the other person and has to substantiate that. It is then the burden shifts. upon the other person, i.e., assessee here to prove that he has not given any money. Thus, uncorroborated information cannot lead to addition in the hands of the assessee, specifically when nothing has been brought on record as to what was the fate of that information or material found and what inference in the case of the searched person has been made; and whether that person has accepted as his own undisclosed income or as stated that all these on-money have come from respective persons specifying the details. Unless something is brought on record or AO conducts inquiry that the said person in whose possession it was found has given the details or has confirmed or AO founds some other information or material, addition cannot be made simply relying on uncorroborated data or entry in third party books. Thus, on merits, we do not find any justification for making an addition u/s.69B for alleged payment of On-money in cash without any material evidence brought on record by the ld. AO during the course of assessment proceedings. Accordingly, on merits additions are deleted. 13. In the result, appeal of the assessee is partly allowed.”

ITA No. 5087/Mum/2025 Chhabil Premjibhai Patel following the same, the issue on merits is decided in favour of the assessee and the appeal of the assessee is allowed on merits.

Order pronounced in the open court on 23-09-2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 23-09-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai