NEEPABEN SUNNYBHAI MOTWANI,RAJKOT vs. INCOME TAX OFFICER, RAJKOT

ITA 875/RJT/2026Status: DisposedITAT Rajkot19 October 2026AY 2021-229 pages
AI SummaryAllowed

What were the facts?

The assessee, Neepaben Sunnybhai Motwani, filed appeals against the orders of the National Faceless Appeal Centre (NFAC)/CIT(A) for Assessment Years (AY) 2020-21 and 2021-22. These appeals arose from assessment orders passed by the Assessing Officer (AO) under Section 147 of the Income-tax Act, 1961. The AO initiated proceedings based on information regarding alleged on-money transactions in the purchase of an office in the R. K. Prime project for Rs. 20,12,000. The assessee had declared this purchase consideration in her return. The AO relied on an excel sheet/ledger copy found from the residential premises of an accountant, which the assessee claimed had no evidential value, was unsigned, and did not relate to her. The assessee also requested cross-examination of the concerned persons. The AO made an addition of Rs. 22,21,070 on account of alleged on-money payment, taxing it under Section 69A read with Section 115BBE of the Act. The CIT(A) upheld the AO's order, leading to the present appeals.

What did the Tribunal hold?

The Tribunal held that the addition made by the Assessing Officer was not sustainable. The primary reasoning was that the addition was based on an excel sheet/ledger copy found from the premises of a third party, which was neither signed by the assessee nor by the seller, and did not bear the assessee's name. The Tribunal noted that the assessee had strongly objected to the use of such material without an opportunity for cross-examination. Citing the principles of natural justice, the Tribunal referred to decisions of the Supreme Court in Krishnachand Chelaram and Andaman Timber Industries, which held that additions made without providing an opportunity for cross-examination are unsustainable. The Tribunal also relied on the coordinate bench decision in M/s. RC Buildcon/M/s. RC Heights Pvt. Ltd. and the jurisdictional Gujarat High Court's decision in PCIT vs. Kaushik Nanubhai Majithia. The High Court in the latter case had held that proceedings initiated based on an excel sheet found from a third party, without signature, corroborative material, or explanation from the AO, and without providing the assessee with statements recorded during the search, were vitiated. Consequently, the Tribunal deleted the addition and allowed both appeals of the assessee.

What were the issues?

1. Whether the initiation of proceedings under Section 147 of the Income-tax Act, 1961, was valid, and if the CIT(A) erred in dismissing the grounds challenging its validity, particularly by relying on irrelevant judicial precedents. (Assessee's contention: The proceedings were invalid. Revenue's contention: Not recorded, but implicitly supported the AO's action.) 2. Whether the CIT(A) erred in law and facts by placing reliance on an unsigned and unauthenticated ledger and statement of the accountant, which lacked evidential value. (Assessee's contention: The excel sheet/ledger was unsigned, unauthenticated, and found from a third party, thus possessing no evidential value. The assessee also argued that the denial of cross-examination of the accountant and key persons, who did not name the appellant in on-money transactions, was erroneous. Revenue's contention: Not recorded, but implicitly supported the AO's action.) 3. Whether the addition of Rs. 22,21,070 was justified, considering the reliance placed on the unsigned excel sheet/ledger and the denial of cross-examination. (Assessee's contention: The addition was based on 'dump documents' without corroborative evidence and without providing an opportunity for cross-examination. Revenue's contention: Not recorded, but implicitly supported the AO's action.)

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 69A,Section 115BBE,Section 250,Section 153C,Section 132(4A)

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: 30/09/2026Pronounced: 19/10/2026

Per, Dr. Arjun Lal Saini, AM: Captioned two appeals filed by the same assessee, pertaining to assessment years (AY) 2020-21 & 2021-22, are directed against the separate orders under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated, which in turn arise out of separate assessment order passed by the Assessing Officer u/s 147 of the Act.

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The order continues below.

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