DCIT, CC-1, VADODARA vs. RAJESH MOHANLAL NIMKAR, VADODARA

PDF · subscribers
ITSSA 18/AHD/2024Status: DisposedITAT Ahmedabad02 September 2025AY 2013-146 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the deletion of the addition of Rs. 7,81,00,000/- by the Ld. CIT(A) was correct. The Tribunal noted that the registered sale deed dated 13.05.2013 clearly indicated M/s Mayfair Spaces Ltd. (now M/s Northway Spaces Ltd.) as the purchaser of the land. The assessee, Rajesh Mohanlal Nimkar, had merely signed the registered deed in his capacity as a director of the said company. Consequently, the ownership of the property vested in the company, not in the individual. Therefore, if any 'on-money' was paid over and above the sale consideration, it was assessable in the hands of the purchaser company and not in the hands of the assessee in his individual capacity. The Tribunal found no infirmity in the Ld. CIT(A)'s detailed examination and direction to delete the addition from the assessee's hands. The ratio decidendi is that when a transaction is clearly undertaken by a company, and an individual signs merely as a director, any related financial implications, including 'on-money' payments, are attributable to the company, not the individual director, unless specific evidence proves otherwise.

What were the facts?

The Revenue (Deputy Commissioner of Income Tax) has appealed against an order dated 02.02.2004 by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, for Assessment Year 2013-14. The Assessing Officer (AO) added Rs. 7,81,00,000/- to the income of the assessee, Rajesh Mohanlal Nimkar, under Section 69A of the Income Tax Act, treating it as unexplained investment in land. This addition was based on incriminating documents recovered during search proceedings, which indicated payments of Rs. 7,80,00,000/- for land at 1769, Bhayli, Vadodara, with Rs. 2,30,00,000/- by cheque and Rs. 5,50,00,000/- in cash. The assessee contended that the land was purchased by M/s Northway Spaces Ltd. (formerly Mayfair Spaces Ltd.), where he was an executive director, and he had only signed the registered deed in that capacity. The AO rejected this, citing references to 'Rajeshbhai' and 'Raj N' in seized documents and the assessee's alleged payment of cash over and above the sale consideration.

What were the issues?

1. Whether the deletion of the addition of Rs. 7,81,00,000/- made by the AO under Section 69A of the Income Tax Act, towards investment by the assessee to purchase land at 1769, Bhayli, Vadodara, was correct, despite the addition being based on incriminating details recovered during search proceedings? (Question of law and fact) 2. Whether the deletion of the addition of Rs. 7,81,00,000/- was justified, considering that the payment over and above the sale consideration was allegedly made by Rajesh Mohanlal Nimkar, director of M/s. Northway Space Ltd.? (Question of law and fact) Assessee's Contentions: The assessee argued that the land was purchased by M/s Mayfair Spaces Ltd. (now M/s Northway Spaces Ltd.) and he had signed the registered deed solely in his fiduciary capacity as an executive director of the purchasing company. He contended that companies are artificial juridical persons requiring authorized signatories, which he fulfilled. Therefore, any 'on-money' paid was assessable in the hands of the purchasing company, not him individually. The assessee relied on the registered sale deed dated 13.05.2013, which clearly identified M/s Mayfair Spaces Ltd. as the purchaser, with the assessee signing as its director. Revenue's Contentions: The Revenue contended that the addition was made on the basis of incriminating details and documents recovered during search proceedings. They argued that the deletion by the CIT(A) was erroneous because the payment over and above the sale consideration was made by the assessee in his individual capacity, as indicated by references to 'Rajeshbhai' and 'Raj N' in the seized material, and the assessee's alleged cash payments.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri RP Rastogi, CIT. DR
For Respondent: Shri Manish J Shah with Shri Rushin Patel, ARs
Hearing: 12.08.2025Pronounced: 02.09.2025

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

-

This appeal is filed by the Revenue against the appellate order dated 02.02.2004 passed by the Learned Commissioner of Income Tax (Appeals)-12, Ahmedabad relating to the Assessment Year 2013-14. 2. The Revenue has raised the following grounds of appeals:

1) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.7,81,00,000 made by the AO u/s 69A of the I.T. Act towards investment by the assessee to purchase a Land at 1769, Bhayli, Vadodara despite the fact that addition has been made on the - 2– basis of incriminating details/document recovered during the search proceedings. 2) In addition to the ground no. 1 above, on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.7,81,00,000 made by the AO u/s 69A of the I.T. Act towards investment by the assessee to purchase a Land at 1769, Bhayli, Vadodara without appreciating the fact that the payment over and above the sale consideration is done by the Rajesh Mohanlal Nimkar director of M/s. Northway space Ltd. (earlier known as Mayfair Space Ltd.). 3) On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 4) It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that the AO may be restored to the above extent. 5) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.

3.

The brief facts of the case are that in response to the notice u/s 153C return of income was filed on 25.03.2022 showing total income of Rs.22,19,580/- Earlier the appellant had filed his regular ITR u/s 139(4) of the Act declaring total income of Rs. 22,19,580/-on 31.03.2014. From the seized incriminating material (Annexure A- 34/AB-7, Annexure-1/AB-7 and digital data including email data of Harsh D. Shah) the AO noted that the appellant has paid Rs 7,80,00,000/- to Avani Group in respect of purchase of land at 1769, Bhayli, Vadodara. The AO also found that out of the said amount Rs. 2,30,00,000/- was paid by cheque and Rs.5,50,00,000/- was paid in cash. The appellant was directed to explain the source of said purchase of land. Before the AO the appellant responded by stating that the said piece of land i.e. RS No.2566, 2567 & 2568 at Block No.1769 at Bhayli.

- 3– was purchased by M/s Northway Spaces Ltd (earlier known as Mayfair Spaces Ltd) in which he was an executive director till 2016. In his such capacity he had signed the registered deed through which the sale was registered. The land was purchased from Kamlesh Shah and Harsh Dipak Shah for a consideration of Rs. 7.51 crore. Copy of the registered deed was enclosed. Since the deed was between M/s Northway Spaces Ltd and the sellers the seized material does not pertain to him in his individual capacity. He denied any amount having been paid beyond the amount mentioned in the registered deed either by him or by the company for which he was representing

4.

However, the AO rejected this contention by the appellant stating that in the seized documents there is clear mention of "Rajeshbhai" and "Raj N'. He stated that the jottings in the incriminating material at Page no 14 and 16 of Annexure A34/AB-7 is summarized in the excel file Harsh.xls whose heading is Rajeshbhai A/c of 1769. He pointed out that number of entries in the said material match with those of the payments as per the registered deed. He rejected the contention of the appellant that the transaction was actually made by M/s Mayfair Spaces Lid and not him as an individual by stating that the payment over above the sale consideration in cash has been made by the appellant. He therefore, added back Rs. 7,81,00,000/- in the hands of the appellant as unexplained investment u/s 69A of the Act.

5.

The aggrieved assessee preferred an appeal before the Ld.CIT(A), who after considering the material available on record, deleted the addition by observing as follows:

- 4–

“…7.2 During the appeal proceedings also the main argument placed by the appellant is that the said land was purchased by Mayfair Spaces Ltd. (now M/s Northway Spaces Ltd) from the Avani Group members and he had signed the registered deed only in the fiduciary capacity of the executive director of the purchaser company. He also raised several other issues which are part of the records

7.

3 I have perused the copy of the registered deed dated 13/05/2013 filed by the appellant during the appeal proceedings. It clearly mentions the first party as "M/s MAYFAIR SPACES LTD through its DIRECTOR Mr RAJESH MOHAN NIMKAR". The plain reading confirms the contention of the appellant that he had signed the registered sale deed only in his capacity as director of M/s Mayfair Spaces Ltd. It was the company which was the actual purchaser. The property was sold by Kamlesh Manilal Shah as Second Party (Land lord) and Shri Harsh Dipak Shah is the Confirming Party (Second Pary made Agreement to Sale in his name). Hence, if any material was found and seized during the search regarding payment of on- money By the purchaser to the seller/confirming party of this land (Total area 11736 sq m RS No 2566,2567 & 2568, Block No. 1769, Mouje Village Bhayli of Vibhag-3 (Akota), Vadodara), then the same is assessable in the hands of the purchaser, i. e. M/s Mayfair Spaces Ltd (now M/s Northway Spaces Ltd) to whom the ownership of the purchased property shall be transferred and not the signatory of the deed. The appellant has rightly argued that the companies are artificial juridical persons and required an authorized signatory to confirm the deed of sale which he fulfilled. Hence, any on-money paid as is arrived at after examination of the said seized material is assessable to tax in the hands of the purchaser company ie. M/s Mayfair Spaces Ltd. (now Northway Spaces Ltd.) and not the appellant in his individual capacity. I am informed that the AO has after completion of assessment in this case-initiated re-assessment proceedings in the case of M/s Northway Spaces Ltd., with respect to the same seized material related to the same property. Action as per law should be taken in the case of In view of the above, I direct the AO to delete the addition of Rs.7,81,00,000/- in the hands of the appellant as the aforesaid land purchase is made by a company vis M/s. May fair Spaces Ltd. (now Northway Spaces Ltd.) and the appellant has merely signed the registered deed in his capacity as director of the company and not in hi individual capacity. The ground of appeal 2 on merits of the case is allowed…”

- 5–

6.

Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before us.

7.

We have heard the rival contentions of both the parties. On perusal of the registered sale deed dated 13.05.2013, it is clear that the purchaser of the land was M/s Mayfair Spaces Ltd. (now known as M/s Northway Spaces Ltd.). The assessee had merely signed the registered deed in his capacity as a director of the said company. The ownership of the property has vested in the company and not in the individual. Hence, if any on-money was paid over and above the sale consideration, the same is assessable in the hands of the purchaser company and not in the hands of the assessee in his individual capacity. The Ld. CIT(A), after detailed examination, has rightly directed the AO to delete the addition from the hands of the assessee. In these circumstances, we find no infirmity in the order of the Ld. CIT(A). Accordingly, the appeal of the Revenue deserves to be dismissed.

8.

In the result, the appeal filed by the Revenue is dismissed.

The order is pronounced in the open Court on 02.09.2025. (SIDDHARTHA NAUTIYAL) VICE-PRESIDENT () Ahmedabad; Dated 02.09.2025 MV - 6–

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,सहायक पंजीकार (Dy./Asstt.

More judgments on Section 69A

All 15,297 judgments and leading authorities on Section 69A →

Recent GST High Court judgments

Search GST case law →