NITINBHAI NANALAL BADANI,RAJKOT vs. CIT (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI

ITA 658/RJT/2025Status: DisposedITAT Rajkot19 October 2026AY 2020-217 pages
AI SummaryAllowed

What were the facts?

The assessee, Nitinbhai Nanlal Badani, filed appeals against orders passed by the National Faceless Appeal Centre (NFAC), Delhi, for assessment years 2020-21 and 2022-23. These appeals arose from assessment orders passed by the Assessing Officer (AO) under Section 147 of the Income-tax Act, 1961. The AO reopened the assessee's case based on information that the assessee had made a cash payment of Rs. 10,51,000/-. The AO alleged this was an 'on-money' transaction for the purchase of an office in the World Tower project. The assessee contended that no property was purchased by them, and the sale deed was executed in favour of another person. Despite the assessee's submissions, including an affidavit and sale deed, the AO made an addition of Rs. 10,51,000/- under Section 69A read with Section 115BBE of the Act. The Commissioner of Income-tax (Appeals) upheld the AO's order.

What did the Tribunal hold?

The Tribunal found merit in the assessee's submissions. It noted that the assessee had not purchased any office in R.K. World Tower, as evidenced by the sale deed which showed the property was executed in favour of a person other than the assessee. Therefore, the alleged on-money payment accepted by the developer from another purchaser could not be attributed to the assessee as an unexplained investment. The Tribunal held that the Assessing Officer failed to bring on record cogent and corroborative material establishing that the assessee had actually purchased the property and paid the alleged on-money. Citing Gujarat High Court decisions in CIT v. Maulikkumar K. Shah and PCIT v. Vivek Prahladbhai Patel, the Tribunal stated that suspicion cannot replace evidence, and an addition cannot be sustained on uncorroborated material. Consequently, the Tribunal deleted the additions made by the AO for both assessment years, as the revenue failed to establish the alleged undisclosed investment. The issue of violation of principles of natural justice and jurisdictional grounds were not explicitly decided as the primary issue of the addition was decided in favour of the assessee.

What were the issues?

1. Whether the addition of Rs. 10,51,000/- under Section 69A of the Income-tax Act, 1961, as alleged on-money transaction, is sustainable in law and on facts? - Assessee's contention: The assessee argued that they had not purchased any office in R.K. World Tower, and the sale deed was executed in favour of another person. Therefore, the question of alleged on-money payment did not arise. They also contended that the assessment was made in violation of principles of natural justice, as they were denied cross-examination of the key person whose statement formed the basis of the addition, and mandatory provisions of Section 148A were not followed. The notice under Section 148 was issued by the jurisdictional officer contrary to Section 151A. - Revenue's contention: The Revenue, through the Ld. Sr. DR, primarily reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 151A,Section 69A,Section 115BBE,Section 139(1),Section 143(2),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Hiren Shah, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 15/10/2026Pronounced: 19/10/2026

Per, Dr. Arjun Lal Saini, AM: Captioned two appeals filed by the same assessee, pertaining to assessment years (AY) 2020-21 & 2022-23, are directed against the separate orders passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arise out of separate assessment orders passed by the Assessing Officer (in short ‘AO’) u/s. 147 of the Act.

2.

Since, the issue involved in both t

The order continues below.

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