RANCHHODBHAI KURJIBHAI KAKADIYA,RAJKOT vs. INCOME TAX OFFICER, WARD-1(1)(1), RAJKOT, RAJKOT

ITA 553/RJT/2025Status: DisposedITAT Rajkot16 October 2026AY 2019-205 pages
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What were the facts?

The assessee, Ranchhodbhai Kurjibhai Kakadiya, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, against the order of the Commissioner of Income Tax (Appeal) - National Faceless Appeal Centre (NFAC), Delhi. The appeal pertains to Assessment Year 2019-20. The original assessment order was passed under Section 147 read with Section 144 of the Income Tax Act, 1961. The assessee's grievance is the confirmation of an addition of Rs. 2,36,650/- by the CIT(A), alleging that the assessee paid this amount as 'on-money' in cash for property purchase. The appeal was filed with a delay of 275 days, which the Tribunal condoned. The addition arose from a search and seizure operation ('Operation Blue Diamond') on real estate builders in Rajkot, where the assessee was identified as a purchaser who paid cash 'on-money' for a unit in 'RK Industrial Zone 9'. The Assessing Officer treated the Rs. 2,36,560/- as unexplained investment under Section 69 read with Section 115BBE.

What did the Tribunal hold?

The Tribunal acknowledged that the assessee failed to submit complete documents and that some submitted documents were self-serving. However, considering the smallness of the amount and the inconsistencies in the evidence, the Tribunal found merit in the assessee's contention for some relief. It held that the entire 'on-money' should not be taxed, and only the embedded profit element should be considered. To meet the ends of justice, the Tribunal directed the Assessing Officer to make an addition of Rs. 23,656/-, representing a 10% net profit rate on Rs. 2,36,560/-. This addition was to be made at the normal rate of income tax, not under Section 115BBE. The Tribunal explicitly stated that this adjudication would not serve as a precedent for any other assessment year. The issue of whether the assessee had an opportunity for cross-examination was not expressly decided, but the relief granted suggests a consideration of procedural fairness and evidentiary issues.

What were the issues?

1. Whether the addition of Rs. 2,36,650/- made on account of alleged cash payment of 'on-money' for property purchase is justified, and if not, what relief is to be granted to the assessee? (Question of law and fact, concerning Sections 69 and 115BBE of the Income Tax Act, 1961). Assessee's contentions: - The Assessing Officer did not provide an opportunity for cross-examination during assessment proceedings. - The assessee submitted bank statements and property documents and denied paying 'on-money'. - The addition made by the Assessing Officer should be deleted. Revenue's contentions: - The Learned Senior Departmental Representative (DR) reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 143(1),Section 132,Section 133A,Section 148,Section 69,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Digant Kiyada, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 15/10/2026

Per, Dr. Arjun Lal Saini, AM: The present appeal has been filed by the assessee, against the order passed by the Learned Commissioner of Income Tax (Appeal), National Faceless Appeal, Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 02.09.2024 arising in the matter of assessment order passed u/s. 147 r.w.s. 144 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2019-20. 2. The solitary grievance of the assessee in this appeal is that Ld. CIT(A) erred on facts as also in law in confirming t

The order continues below.

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