DEPUTY COMMISSIONER OF INCOME -TAX CENTRAL CIRCLE-1(1), AHMEDABAD, , AHMEDABAD vs. DHAVAL PATEL, AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: DR. BRR Kumar, Vice President And Shri T. R. Senthil Kumar, Judicial Member IT(SS)A Nos.61 & 62/Ahd/2024 Asst. years 2016-17 & 2017-18 Dhaval Patel ACIT, A-301,Shalin Solitude, Central Circle-1(4), Vs. Near Karmajyot Bunglow Ahmedabad Shilaj Cross Road, Shilaj, B.O. Ahmedabad-380009 PAN: AIDPP2356F Appellant Respondent IT(SS)A Nos.76/Ahd/2024 Asst. year 2017-18 DCIT, Dhaval Patel Central Circle-1(1), A-301, Shalin Solitude, Vs. Ahmedabad Near Karmajyot Bunglow Shilaj Cross Road, Shilaj, B.O. Ahmedabad-380009 PAN: AIDPP2356F Appellant Respondent Assessee Represented by: Shri Vijay Mehta, A.R. Revenue Represented by: Shri Alpesh Parmar, CIT-DR Date of Hearing 25-02-2026 Date of Pronouncement 06-05-2026 आदेश/ORDER PER T.R.SENTHIL KUMAR, JUDICIAL MEMBER :- These cross appeals are filed by the Assessee and Revenue as against the common appellate order dated 19-07-2024 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad, arising out of separate assessment orders passed under section 153A

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rws 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the respective Assessment Years 2016-17 and 2017-18. Since common issues of disallowances are involved in all these appeals, for the sake convenience the same are disposed of by this common order.

2.1. Apart from the above facts, the importance of the assessee to Riddhi Siddhi Group can also be gauged from the fact that the impugned unaccounted cash of Rs.4,44,96,000/- found and

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seized from the corporate office of Riddhi Siddhi Group was found in the possession of the assessee, who had come to the corporate office and was carrying such unaccounted cash with him which belonged to the Group. Considering the above facts, notice u/s. 153A was issued on 15.11.2019. In response, the assessee filed his return of income on 13.12.2019 declaring total income at Rs. 9,55,580/-. Assessments were completed for the asst years 2016-17 to 2019-20 by making following disallowances:

Asst. Year Date Nature of disallowance Amount 2016-17 28-07-2021 Unexplained and Unaccounted loan 1,00,00,000 u/s.69 of the Act Interest income 11,78,000 2017-18 28-07-2021 Brokerage Income 1,87,60,000 Brokerage Income 20,80,936 Unexplained transaction 15,78,600

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3.1. Based on the above cell phone image the AO made addition of Rs.1 crore as unexplained advance and interest of Rs.11,78,000/=. 4. Aggrieved the additions, assessee filed appeal before Ld CIT[A], who has deleted addition of Rs.1 Crore and confirmed the interest of Rs.11,78,000/= by observing as follows: “… 17.4 I have considered the order passed by the AO and the arguments given by the appellant. On perusal of the image, it can be seen that the said transactions are loan transactions and interest is calculated on such loans. Further, the image is found from the mobile of the appellant so the onus is on appellant to provide details with documentary evidence. The appellant has failed to discharge the primary onus of submitting confirmation from parties that the transactions related to them. 17.5 I have also perused the ledger account which is written as per Gujarati system of accounting wherein debit side represents receipts and credit side represents payments. The amount of Rs.1 crores is written on the debit side representing loan received by the appellant. The AO has considered the amount of Rs.1 crore as a loan transaction and the same cannot be treated as income of the appellant since the appellant is the recipient of the loan. However, the appellant has not provided source for the interest payment of Rs.11,78,000/- and therefore the same is required to be added to the income of the appellant. 17.6 In view of the above, the addition of Rs.1,00,00,000/- made by the AO is hereby deleted and the addition on account of interest of Rs.11,78,000/- is hereby confirmed. Thus, the grounds of appeal no. 2.1 to 2.3 & 3.1 to 3.2 are partly allowed.

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“1. The learned CIT(A) has erred in not holding that the notice issued u/s. 153A of the Act is bad in law, illegal and void-ab- initio. The learned CIT (A) has erred in not holding that the assessment order passed by AO u/s. 1534 r.w.s. 143(3) of the Act is bad in law, illegal and null and void. 2. The learned CIT(A) has erred in confirming the additions made by AO in the Appellant's case and rejecting the submissions that the noting in the Image do not pertain to/belong to the Appellant. 3. The learned CIT(A) has erred in confirming the addition of Rs. 11,78,000/-made by AO on account of Interest based on noting in the image. 4 The Appellant states that the search proceedings carried out in his case are bevond jurisdiction, illegal and void. The consequential assessment order passed is bad-in-law, illegal and void-ab-initio. 5. The Ld. CIT(A) has erred in not holding that the assessment order passed by A.O. is in gross violation of principles of natural justice.”

5.1. Ld AR Shri Vijay Mehta appearing for the assessee submitted that the assessee is NOT Pressing Ground Nos.1, 2, 4 & 5 on the jurisdiction of assessment, recording the same Ground Nos. 1, 2, 4 & 5 are dismissed.

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computed thereon, then the burden lies on the assessee to explain. Whether such interest was actually paid and the source for such payment.

6.1. In the present case perusal of records shows that no supporting evidence such as bank statements or confirmations has been produced and the assessee has failed to establish that the interest entry is merely notional. Thus, the explanation of the assessee remains unsubstantiated. Accordingly, the addition of ₹11,78,000/- is rightly sustained by the Ld. CIT(A) which does not require any interference and the Ground No.3 is liable to be dismissed.

Asst. Year 2017-18 8. The AO made additions on account of Brokerage incomes and unexplained transaction the same are dealt herein as follows:

8.1. Brokerage income of Rs.1,87,60,000/- based on a copy of MoU found during search at the business premises of M/s Ridhi Sidhi Gluco Biols Ltd. The MoU was entered between M/s. Inductotherm (India) Private Limited and Riddhi Siddhi Gluco Biols Limited. The MoU contained a clause for brokerage at the rate of 0.7% of the sale price/consideration payable by the Vendor to the assessee on finalization of the sale transactions and execution and registration of Sale Deed of the said property. Therefore. the AO concluded that as the Sale Deed was already

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registered as document No. 4187 and executed on 16-06-2016 for an amount of Rs.268 crores, made addition of brokerage income of Rs.1,87,60,000/- of the assessee. On appeal, Ld CIT[A] deleted the addition by observing as follows:

“… I have considered the submissions made by the appellant and the contentions of the AO. The main contention of the AO is that the appellant's name is mentioned as a broker in the MoU and that the appellant has signed the registered agreement as a witness. The AO has not referred to any other document or material evidencing that the appellant had actually received brokerage from Inductotherm. On the other hand, the appellant has submitted copy of bill issued and ledger account from the books of account of the other broker viz. Snehal Ajitbhai Patel. On perusal of the ledger account and bill it is seen that the commission of Rs.1,87,60,000/- has been paid to Snehal Ajitbhai Patel through cheque and TDS has also been deducted on the same. In view of the evidences submitted by the appellant before the AO, it is clear that the commission of Rs.1,87,60,000/- has in fact been paid by Inductotherm to Mr. Snehal Ajitbhai Patel and therefore the addition of Rs. 1,87,60,000/- made in the appellant's case is hereby deleted. Thus, the grounds of appeal no. 2 to 4 are allowed.”

8.2. Next addition of Rs.20,80,936/- as unaccounted brokerage received in respect of land deal at Paldi, Kankrej. The AO has made addition of Rs.20,80,936/- by considering brokerage @ 2% on the deal value of Rs.10,40,46,975/-. The MoU is between the seller Shantibhai Ramjibhai and purchaser Atishbhai Parikh for a total consideration of Rs.10,40,46,975/-. Ld CIT[A] confirmed the above addition by observing as follows:

“… … 24.2 I have carefully considered the AO's contentions and the submissions made by the appellant. On perusal of the image, it can be observed that the deal value is Rs. 10,40,46,975/- and it is accepted by the appellant that the deal had taken place. The appellant has not provided any

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documentary evidence in support of his submissions that the brokerage on the said deal was only 1%. Similarly, the appellant has not provided any documentary evidence to prove that the joint broker viz. Asitbhai had offered 50% brokerage. Thus, it is seen that the appellant has failed to discharge the primary responsibility of providing documentary evidence in support of his submissions. Similarly, the appellant has not provided any supporting evidence to establish that the brokerage was received by him in F.Y.2018- 19 relevant to A.Y.2019-20 wherein he has offered the brokerage for taxation. 24.3 In view of the above discussion, the addition of Rs.20,80,936/- made by the AO towards brokerage income is upheld and hence confirmed. Thus, the grounds of appeal no. 5 to 7 are dismissed.”

8.3. Next addition is in respect of image found from assessee's mobile for cash deposit of 90,000 AEDs in the account of Ms. Sabnam Kapadia in Dubai. The AO has contended that the assessee has failed to establish the identity of Ms. Sabnam Kapadia and explain the reasons as to why the image was sent to him by his sister-in-law. The AO has also contended that the assessee has not clarified the nature of such deposit and the source thereof. The AO has thereafter referred to the provisions of section 132(4A) of the Act and contended that since the image was found in assessee's mobile the same is presumed to be pertaining to him and the contents thereof are presumed to be true.

8.4. The assessee submitted that he had duly explained during the course of search that the above image was sent to him by his sister-in-law and the above deposit was made by his sister-in- law in the account of Ms.Sabnam Kapadia. The AO has not brought any corroborative evidence or material to establish that

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the above deposit was made by the assessee and that the above explanation was false. The AO has simply disregarded the submissions without any cogent reasons whatsoever. Ld CIT[A] considered the above submission and deleted the above addition by observing as follows:

“… .. 25.3. I have considered the submissions made by the appellant and the contentions of the AO. Though the appellant has provided explanation that the image was sent to him by his sister-in law, he has not provided any confirmation from the party nor explained the reason as to why the image was sent to him. The AO has also made the addition merely on presumption basis without any corroborative material or evidence. Thus, if the AO's contention is upheld and it is believed that the appellant is required to provide source of deposit, the same would be in the nature of application of funds. The appellant has at the end of his appellate submissions made a general prayer to grant benefit of telescoping and has requested that if any addition is sustained on account of income representing source of funds, set-off for the same should be towards additions made on account of application of funds. I have confirmed the addition of Rs.20,80,936/-herein above on account of brokerage on land deal. In view of the same, set-off of the same would be available against the addition of Rs.15,78,600/- being made on account of application of funds. 25.4 In view of the above discussion, the addition of Rs. 15,78,600/- made by the AO is hereby deleted. Thus, the grounds of appeal no. 8 & 9 are allowed.”

“ 1. The learned CIT(A) has erred in not holding that the notice issued u/s. 153A of the Act is bad in law, illegal and void-ab- initio. The learned CIT (A) has erred in not holding that the assessment order passed by AO u/s. 153A r.w.s. 143(3) of the Act is bad in law, illegal and null and void.

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9.1. Ld AR Shri Vijay Mehta appearing for the assessee submitted that the assessee is NOT Pressing Ground Nos.1, 2, 4 & 5 on the jurisdiction of assessment, recording the same Ground Nos. 1, 2, 4 & 5 are dismissed.

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(iii) the entire brokerage accrued to the assessee during the Year under consideration. 10.1. The MoU merely evidences the transaction between the buyer and seller; it does not, by itself, establish the terms of brokerage payable, the persons entitled to such brokerage, or the timing of accrual. In brokerage transactions, especially in real estate deals, the rate of commission and its sharing between intermediaries is a matter of specific agreement and cannot be presumed in the absence of corroborative evidence. Further, the assessee has contended that (a) the brokerage rate was only 1%, (b) the deal involved a co-broker, and (c) the income was offered in a subsequent assessment year. While the assessee has not fully substantiated these claims with documentary evidence, the burden equally lies on the Revenue to establish, with some cogent material, that brokerage @ 2% accrued to the assessee during the relevant previous year.

10.2. It is a settled principle that additions cannot be made on mere presumptions, conjectures, or generalized market practices without supporting evidence. In the present case, neither the AO nor the Ld. CIT(A) has brought any independent material on record such as confirmation from parties to the transaction, statement of the co-broker, or evidence of actual receipt to justify adoption of 2% brokerage and its full taxation in the hands of the assessee. Accordingly, in the absence of any concrete evidence to support the estimation of brokerage income at Rs.20,80,936/-, the addition cannot be sustained merely on the basis of assumptions drawn from the MoU. Therefore, the

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addition of Rs.20,80,936/- is directed to be deleted. Ground No.3 on this issue is allowed.

1) "In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.1,87,60,000/- on account of undisclosed & unaccounted brokerage income as per provisions of section 115BBE of the Income Tax Act, by accepting the assessee's contention that brokerage had been paid to a new broker appointed for the land deal, ignoring MOU dated 07/05/2016 wherein it was stated that the assessee was to receive commission @0.7% on finalization of sale." 2) "The Ld.CIT(A) has erred in admitting additional evidence in the form of documents related to new broker Shri Snehal Ajitbhai Patel submitted by the assessee to substantiate that the brokerage was received by new broker Shri Snehal Ajitbhai Patel for the said land deal, without providing opportunity of being heard to the AO in contravention of Rule 46A of Income- Tax Rule, 1962." 3) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 15,78,600/- on account of deposit of 90000 AEDs by giving benefit of telescoping against brokerage income, without appreciating the facts as mentioned in the assessment order and that no such link with regard to deposit in UAE Dirhams had been established by the assessee." 4) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal. 12.1. During the course of hearing the assessee filed application for Admission of Additional Evidence as follow:

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were not available at the time of the assessment or proceedings before learned CIT(A). The aforementioned documents, enclosed herewith as additional evidences, are respectfully submitted for consideration. 6. It is humbly submitted that the admission of this additional evidence will not, in any way, prejudice the revenue. On the contrary, it will assist this Hon'ble Tribunal in disposing of the matter in accordance with the law. I, therefore, pray that the Hon'ble Tribunal may kindly admit the additional evidence under Rule 29 of the Appellate Tribunal Rules, 1963.

13.1. Per contra Ld AR appearing for the assessee supported the order passed by Ld CIT[A] and requested to confirm the deletion made by him.

(i) the assessee’s name was mentioned as a broker in the MoU executed between M/s Inductotherm (India) Pvt. Ltd. and M/s Riddhi Siddhi Gluco Biols Ltd., and (ii) the assessee had signed the registered sale deed as a witness. On this basis, and considering that the MoU

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provided for brokerage @ 0.7% on the total consideration of Rs.268 crores, the AO inferred that brokerage income of Rs.1,87,60,000/- had accrued to the assessee. However, we find that the addition so made is not supported by any cogent evidence establishing that the said brokerage was either received by or accrued to the assessee. Mere mention of the assessee’s name in the MoU as a broker, or his signature as a witness in the sale deed, cannot in isolation, lead to the conclusion that the entire brokerage amount was payable to or received by him.

14.1. On the contrary, the assessee has placed on record documentary evidences in the form of (i) bill raised by another broker, namely Mr. Snehal Ajitbhai Patel; (ii) ledger account from the books of the payer and (iii) details evidencing payment of brokerage through banking channels along with deduction of tax at source. These evidences clearly demonstrate that the brokerage of Rs.1,87,60,000/- has been paid by M/s Inductotherm (India) Pvt. Ltd. to Mr. Snehal Ajitbhai Patel and not to the present assessee. The Revenue has not brought any material on record to rebut these evidences or to show that the assessee had, in fact, received the said amount or that the payment made to the other broker was merely a colourable device. In the absence of such contrary material, the addition cannot be sustained merely on presumptions arising from the contents of the MoU.

14.2. The assessee now filed before us additional documents namely letters from the buyer M/s.Riddhi Siddhi Infra LLP and the seller M/s. Inductotherm (India) Pvt. Ltd., and the broker Mr.

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Snehal Ajitbhai Patel. These letters confirm that Mr. Snehal Ajitbhai Patel acted as the broker in the said transaction and the assessee had no role as a broker in this land deal. These new documents support the case of the assessee.

14.3. It is a settled position of law that income can be brought to tax only in the hands of the person who has actually earned or received it, or in whose hands it has legally accrued. In the present case, the evidences on record clearly establish that the brokerage income in question has accrued to and been received by another person. In view of the above facts and circumstances, we find no infirmity in the order passed by Ld. CIT(A) and deleting the addition of Rs.1,87,60,000/-. Accordingly, the order of the Ld. CIT(A) on this issue is upheld and the Ground nos.1 & 2 raised by the Revenue are devoid of merits and hereby dismissed.

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source of funds and the circumstances under which such image was received.

15.1. On the other hand, the assessee has consistently contended that the said image was merely forwarded to him by his sister-in-law and that the deposit in question was made by her in the account of Ms. Sabnam Kapadia. It is an admitted position that no material has been brought on record by the AO to demonstrate that the impugned cash deposit was in fact, made by the assessee or that the funds belonged to him. At this juncture, it is pertinent to note that the presumption under section 132(4A) (and similarly under section 292C) is a rebuttable presumption and cannot be applied in a mechanical manner to fasten tax liability in the absence of corroborative evidence. The mere presence of an image in the mobile phone of the assessee does not, ipso facto, establish that the underlying transaction was carried out by him or that the funds emanated from him.

15.2. In the present case, except for the said image, there is no supporting material such as bank trail, statement of the alleged recipient, confirmation or any other evidence linking the assessee with the impugned deposit. The AO has not conducted any independent enquiry to verify the claim of the assessee or to establish that the explanation offered was false. In such circumstances, the addition made purely on the basis of presumption cannot be sustained.

15.3. We also find merit in the observation of the Ld. CIT(A) that even if, for the sake of argument, the impugned amount is

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to be treated as application of funds, the same would be eligible for telescoping against income additions sustained elsewhere. However, since we find that the very basis of the addition is not supported by cogent evidence, the question of telescoping becomes academic. In view of the above facts and circumstances, we find no infirmity in the order of the Ld. CIT(A) in deleting the addition of Rs.15,78,600/-. Accordingly, the same is upheld and the Ground no.3 raised by the Revenue is devoid of merits and is dismissed.

Order pronounced in the open court on 06-05-2026

Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER (True Copy) Ahmedabad : Dated 06/05/2026 आदेश क� �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद