CHANDRESH VISHANJI PANDIT,RAJKOT vs. DCIT/ACIT-2(1), RAJKOT.

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ITA 925/RJT/2026Status: DisposedITAT Raipur07 October 2026AY 2021-225 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while the assessee's case merited some relief, complete relief could not be granted. The Tribunal noted that some documents and evidence relied upon were self-serving and not entirely trustworthy. Considering the smallness of the disputed amount and to protect the revenue's interest, the Tribunal directed an ad hoc, estimated addition. It held that a net profit rate of 10% on Rs. 1,00,000/-, amounting to Rs. 10,000/-, would address inconsistencies in the evidence. The AO was directed to make an addition of Rs. 10,000/- at the normal rate of income tax, not under section 115BBE. The Tribunal clarified that this adjudication, due to the small amount, should not be treated as a precedent. The issue regarding the initiation of action under section 148 was not explicitly decided, but the appeal was allowed partly based on the quantum addition.

What were the facts?

The assessee, Chandresh Vishanji Pandit, filed an appeal against the order of the National Faceless Appeal Centre (NFAC) Delhi/CIT(A) for Assessment Year 2021-22. The NFAC/CIT(A) had upheld an addition of Rs. 1,00,000/- made by the Assessing Officer (AO) under section 147 of the Income-tax Act, 1961. The AO's action stemmed from information obtained during 'Operation Blue Diamond', a search and seizure operation on real estate builders in Rajkot. Documents seized from an associate of the RK Group indicated alleged cash payment ('on-money') by the assessee for purchasing a unit in the RK Empire project. The AO issued a notice under section 148, and after assessment proceedings, added Rs. 1,00,000/- as unexplained money under section 69A read with section 115BBE.

What were the issues?

1. Whether the initiation of action under section 148 of the Income-tax Act, 1961, was valid? (Question of law and fact). The assessee contended that the AO did not provide an opportunity for cross-examination during assessment proceedings. The revenue primarily reiterated the AO's stand. 2. Whether the addition of Rs. 1,00,000/- for alleged 'on-money' payment in cash for the purchase of a property in the RK Empire project, confirmed by the Ld. CIT(A), is sustainable, and if the addition under section 69A of the Act should be deleted? (Question of law and fact). The assessee argued that he submitted bank statements and property documents and denied paying 'on-money', requesting deletion of the addition. The revenue reiterated the AO's stand.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 69A,Section 115BBE,Section 139,Section 132,Section 143(2),Section 142(1),Section 250

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 Shishir Kumar, Ld. Sr. DR
Hearing: 30/07/2026Pronounced: 07/10/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट । In The Income Tax Appellate Tribunal, “SMC” Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member आयकर अपील सं./ITA No. 925/Rjt/2026 [ �नधा�रण वष�/Assessment Year: 2021-22 ] Chandresh Vishanji Pandit, DCIT/ACIT-2(1), Rajkot, Block No.B22, Shagun Residency, Aaykar Bhavan, Vs. Satya Sai Hospital Road, Nana Rajkot, Gujarat-360001 Mava, Rajkot, Gujarat-360005 �थायी लेखा सं./जी आइ आर सं./PAN/GIR No.: ACYPP0401C (अपीलाथ�/Assessee) (��यथ�/Respondent) Assessee by : Shri Digant Kiyada, Ld. AR Respondent by : Shri Shishir Kumar, Ld. Sr. DR Date of Hearing : 30/07/2026 Date of Pronouncement : 07/10/2026 :: ORDER :: Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2021-22, is directed against the order 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 19.06.2026, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147 of the Act, dated 11.03.2026. 2. The grounds of appeal raised by the assessee are as follows: 1. The Ld. CIT(A) erred on facts as also in law in the dismissing of ground of appeal relating to initiation of Action u/s 148 of the Act. 2. The Ld. CIT(A) erred on facts as also in law in confirming the addition of Rs.1,00,000/- made by alleging that assessee had paid “on money” through cash of Rs.1,00,000/- for purchase of property in the project RK Empire. The addition u/s 69A of the Act may kindly be deleted. 3. Brief facts qua the issue are that the assessee is an individual and filed return of income u/s 139 of the Act for the year under consideration, on 06.12.2021, declaring therein total income of Rs.8,35,640/-. The assessee has reportedly earned income from salary, capital gain and other sources during the year under consideration. As per the information available with the Department that a search and seizure action u/s 132 of the I.T. Act 1961 was carried out in the case of leading real estate builders of Rajkot and their key associates on 24.08.2021 with the title named "Operation Blue Diamond". Under this operation various prominent builder groups were covered. During the course of action, the modus operandi of the various group namely RK Group, Ananat Group, Gangdev Group and Sucharia Group was unearthed, and their methodology of accounting was discovered. The residential premise (premise A-7) of Shri Girish Vanjani was also covered under search action u/s 132 of the Act. Shri Girish Vanjani is accountant of the RK group and maintains data of the unaccounted transactions as well as all the accounted transactions of the group. During the proceedings, at his premise, various incriminating documents pertaining to the project RK EMPIRE developed by M/s R.K. Infralink LLP were found and seized. These, documents contained information of cash (on-money) payment made by assessee in purchasing unit's in the said project. Since, the documents seized during search action pertained to the assessee and/or the information contained therein related to assessee. Therefore, on the basis of above information, case of the assessee was reopened for assessment and notice u/s 148 of the Act was issued on 30.03.2025 after recording reason and obtaining the necessary approval of the competent authority. The assessee filed his return of income on 28.04.2025, declaring therein total income at Rs.8,40,450/- in response to the notice u/s 148 of Income Tax Act, 1961. During the assessment proceedings, AO issued notice u/s 143(2) & 142(1) to the assessee on various dates. The assessee filed reply in this regard. On the basis of the details available and its re-conciliation with other seized documents during the search action, the quantum of on-money in cash paid by assessee during the year under consideration has been derived which is tabulated hereunder:

4.

The AO issued a show cause notice to the assessee and asked as to why unaccounted cash payment (i.e. 100000/- for the year under consideration) should not be treated as income in its hands under relevant section of income Tax Act. The reply submitted by assessee has been duly considered and acknowledged but not acceptable by the AO. Hence, assessee's failure to produce documents/ evidences in support of cash transactions to the extent of Rs.1,00,000/- during FY 2020-21, to purchase the unit no. 425 in project RK Empire developed by M/s RK Infralink LLP. Accordingly, addition of Rs.1,00,000/- (which is coded supressing two zeros in the miracle ledger reproduced in the order) (cash transactions for unit no. EMP 408) is being made to the total income of assessee for the AY 2021-22 treating the same as unexplained money within the meaning of section 69A r.w.s. 115BBE of the Act. Therefore, the AO completed the assessment u/s 147 by making the addition of Rs.1,00,000/- as unexplained money within the meaning of sec. 69A r.w.s. 115BBE of the Act.

5.

Being aggrieved by the said order of the Assessing Officer, the assessee filed an appeal before the Ld. CIT(A), but remained unsuccessful. Therefore, assessee is left with no other alternative but to knock on the doors of the Tribunal with this appeal praying for justice.

6.

Learned Counsel for the assessee submitted that during the assessment proceedings, the assessing officer has not provided an opportunity for cross examination. The Ld. Counsel also submitted that during the assessment proceedings, the assessee submitted the bank statement and documents of the property and also stated that he did not pay the “on-money” therefore, addition made by the assessing officer may be deleted.

7.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which I have already noted in my earlier para and is not being repeated for the sake of brevity.

8.

I have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the Ld. CIT(A) and other materials brought on record. I find that some of the documents and evidences are self-servicing, documents and evidences on which reliance cannot be placed, therefore, to protect the interest of the revenue, and considering the smallness of the amount an ad hoc, estimated addition should be made in the hands of the assessee. Therefore, I find some merit in the contention of the Ld. Counsel for the assessee. Hence, I find that while the case of the assessee merits some relief, at the same time entire relief cannot be permitted to the assessee. In my view the ends of justice would be met, if a net profit rate of @10% of Rs.1,00,000/-, which comes to Rs.10,000/- , is adopted, since the same would take care of the inconsistencies, in the various documents and evidences submitted before the lower authorities. Therefore, in order to plug the leakage of revenue, I direct the assessing officer to make addition of Rs.10,000/-, by applying the normal rate of income tax (not under section 115BBE of the Act). This adjudication has been done, considering the smallness of the amount, therefore, it is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year.

9.

In the result, appeal of the assessee is partly allowed, in above terms.

Order is pronounced in the open Court on 07/10/2026.

Sd/- [ Dr. Arjun Lal Saini ] S लेखा सद�य/Accountant Member //True Copy// राजकोट/Rajkot िदनांक/ Date: 07/10/2026 Copy of the order forwarded to : 1. The assessee By order 2. The Respondent 3. CIT 4. The CIT(A) Private Secretary 5. DR, ITAT, Rajkot ITAT, Rajkot 6. Guard File

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