COMET ASSOCIATES,MAGANLAL CHAMBERS vs. ACIT 17(1), KAUTILYA BHAVAN

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ITA 2928/MUM/2026Status: DisposedITAT Mumbai16 October 2026AY 2014-1518 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the addition of INR 1,22,06,500/- was unsustainable. The Tribunal noted that there was no material identifying the assessee as a payer of any cash. The statement of Mr. Vora was considered general, conjectural, and retracted. The alleged cash was merely the difference between the stamp duty value and the agreement value. The assessee's explanation was supported by contemporaneous documents that were not rebutted. Crucially, the assessee was denied the opportunity for cross-examination of Mr. Vora, and no enquiry was conducted by the AO, rendering the invocation of Section 69 unsustainable. The Tribunal found that the authorities below had shifted the case from the assessee accepting on-money as a seller to paying on-money as a buyer without pointing to fresh material, indicating the information relied upon was not specific to the assessee. The Tribunal also noted that the AO had not doubted the source of the funds paid to Sunshine Housing and Infrastructure Limited, and the recorded investment was not in dispute. The Tribunal deleted the addition of INR 1,22,06,500/-. Consequently, grounds 9 to 17 and 19-20 were allowed. The legal grounds (2 to 8 and 21) challenging the validity of reassessment proceedings were left open and not adjudicated upon, with liberty granted to the assessee to raise them before the appropriate forum if circumstances warranted. Ground 18, relating to personal hearing before CIT(A), was rendered academic. Grounds 1 and 22 were general and formal.

What were the facts?

The assessee, Comet Associates, filed an appeal against an order of the CIT(A) for Assessment Year 2014-15. The CIT(A) had upheld an assessment order passed by the Assessing Officer (AO) under Section 147 read with Section 144B of the Income-tax Act, 1961. The AO had made an addition of INR 1,22,06,500/-. The assessee contended that the reopening of assessment, the notices issued, and the assessment order were invalid due to procedural defects. Specifically, the assessee argued that the reasons for reopening were erroneous, the notice under Section 148 was barred by limitation, lacked a valid DIN, was not issued in accordance with the Faceless Assessment Scheme, lacked proper approval under Section 151, and that notices under Sections 143(2) and 142(1) were issued by the Assessment Unit instead of the National Faceless Assessment Centre. The assessee also argued that objections filed against reopening were not disposed of properly. On merits, the assessee disputed the addition, stating it was based on a retracted statement of Mr. Nihir Vora and an incorrect assumption that the assessee had transferred property and paid cash.

What were the issues?

1. Whether the reopening of assessment under Section 147 of the Act was valid, considering the reasons recorded and the procedural aspects? 2. Whether the notice issued under Section 148 of the Act was valid, particularly concerning limitation under Section 149, absence of a valid DIN, non-compliance with the Faceless Assessment Scheme under Section 151A, and lack of proper approval under Section 151? 3. Whether the assessment proceedings were vitiated due to notices under Sections 143(2) and 142(1) being issued by the Assessment Unit instead of the National Faceless Assessment Centre, contrary to Section 144B of the Act? 4. Whether the objections filed by the assessee against the reopening were properly disposed of before issuing the notice under Section 148A? 5. Whether the addition of INR 1,22,06,500/- made by the AO and confirmed by the CIT(A) is sustainable on merits, particularly in light of the statement of Mr. Nihir Vora and the nature of the property transaction? Assessee's contentions: The assessee argued that the reopening was based on erroneous facts and law, and the notice under Section 148 was invalid due to limitation, lack of DIN, and non-compliance with faceless assessment procedures and approval requirements. The assessee also contended that procedural defects in issuing notices under Sections 143(2) and 142(1) and the non-disposal of objections vitiated the reassessment. On merits, the assessee argued that the addition was based on a retracted statement of Mr. Nihir Vora, who was an operational employee, not a director, and that the assessee was a buyer, not a seller, of the property. The assessee also claimed that no incriminating material was found and that payments were made from 2008-2012, with registration in FY 2013-14. The assessee relied on the judgment in Ashish Agrawal. Revenue's contentions: The judgment does not record specific contentions for the revenue on these issues.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 148,Section 149,Section 151A,Section 151,Section 143(2),Section 142(1),Section 148A,Section 69,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SAKTIJIT DEY & SHRI GIRISH AGRAWAL

For Respondent: Shri Ajay Soneji, Sr. DR
Pronounced: 16.10.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: C BEFORE SAKTIJIT DEY, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 2928/MUM/2026 (िनधा�रण वष�/Assessment Year: 2014-15) Comet Associates ACIT- 17(1) 301, Maganlal Chambers, Room No 232, 2nd Floor, Baburao Bobade Marg, G-Block, Kautilya Bhavan, Carnac Bunder, Bandra Kurla Complex, Vs. Mumbai - 400009, Bandra East, Maharashtra Mumbai-400051, Maharashtra अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AAFFC7349R

अपीलाथ� �ारा/Appellant represented by: Shri Tarang Mehta, Advocate and Shri Ajay Bhagat, CA ��थ� �ारा/Respondent represented by: Shri Ajay Soneji, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 21.07.2026 घोषणा की तारीख / Date of pronouncement: 16.10.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal by assessee is directed against order passed by ld. Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi, vide order No. ITBA/NFAC/S/250/2025-26/1085283147(1), dated 29.01.2026 against assessment order passed by Assessment Unit Income Tax Department, u/s 147 r.w.s. 144B of Income-tax Act, 1961 (hereinafter referred to as the 'Act'), dated 18.05.2023 for Assessment Year 2014-15. 2. Assessee has raised the following grounds of appeal:

1.

First Appellate order dated 29 January 2026 [‘the impugned order’], passed by the Hon’ble CIT(A), under section 250 of the Income-tax Act, 1961 [‘the Act’] in the case of Comet Associates [‘the Appellant’] is based upon conjectures, surmises, assuming incorrect facts & incorrect application of law. A. Technical grounds: Defects in the assessment procedure and the notices issued for completion of the assessment 2. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in upholding the action of the Ld. Assessing Officer in reopening the assessment under section 147 of the Act. The Appellant submits that the reasons recorded for reopening are erroneous assuming incorrect application of facts and law. The Appellant therefore prays that the notice issued under section 148 and the consequential assessment order be held to be invalid and be quashed. 3. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in upholding the validity of the notice issued under section 148 of the Act, which is barred by limitation under the provisions of section 149 of the Act and in light of the judgment of the Hon’ble Supreme Court in the case of Ashish Agrawal. The Appellant therefore prays that the notice issued under section 148 and the consequential assessment order be quashed. 4. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in upholding the reassessment proceedings despite the fact that the notice issued under section 148 of the Act did not bear a valid DIN as mandated by the Circular issued by the Central Board of Direct Taxes. The Appellant submits that any communication issued by the Income-tax Department without quoting a valid DIN is invalid and deemed to have never been issued. The Appellant therefore prays that the impugned notice and the consequential reassessment order be held to be invalid and quashed. 5. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in upholding the reassessment proceedings where the notice under section 148 was issued by the Jurisdictional Assessing Officer and not in accordance with the Faceless Assessment Scheme prescribed under section 151A of the Act. The Appellant prays that the impugned notice and the consequential reassessment order be quashed. 6. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in not appreciating that the notice issued under section 148 was without proper approval of the specified authority as required under section 151 of the Act, thereby rendering the reassessment proceedings invalid. The Appellant prays that the impugned notice and the consequential reassessment order be quashed. 7. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in upholding the assessment despite the fact that notices under section 143(2) and 142(1) were issued by the Assessment Unit instead of the National Faceless Assessment Centre, in violation of the mandatory procedure prescribed under section 144B of the Act, thereby rendering the assessment void ab initio. The Appellant prays that the impugned notices and the consequential reassessment order be quashed.

8.

On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in not appreciating that the objections filed by the Appellant against reopening of the assessment were not disposed of before passing the order under section 148A of the Act. The Appellant prays that failure to deal with the objections vitiates the reassessment proceedings and therefore the reassessment ought to be held void ab initio. B. Grounds on merits of the case 9. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer solely on the basis of the statements of Mr. Nihir Vora. The Appellant submits that the said statement is false and baseless considering the facts of the case. The Appellant therefore prays that the addition so confirmed may be deleted. 10. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer relying on the statement of Mr. Nihir Vora which was recorded under pressure and subsequently retracted. The Appellant therefore prays that the addition so confirmed may be deleted. 11. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer on an erroneous assumption that the Appellant had transferred the property during the year under consideration, whereas in fact the Appellant had merely purchased the property. The Appellant therefore prays that the addition so confirmed may be deleted. 12. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer based on an incorrect assumption that Mr. Nihir Vora is a director of Sunshine Housing and Infrastructure Limited (‘Sunshine or Company’) whereas he was merely an operational level employee. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 13. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer by blindly relying on the statements of Mr. Nihir Vora, which does not contain any specific or conclusive statement that the Appellant has paid cash to the company. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 14. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer without appreciating the fact that no incriminating material or evidence was found during the course of search establishing that the Appellant had paid any cash towards the purchase of the property. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 15. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer without appreciating the fact that property was acquired in FY 2007-08 where stamp duty value was INR 3,12,49,200/- which was lower than the commercial consideration agreed at INR 4,90,87,000 and merely registration was done in FY 2013-14. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 16. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition of INR 1,22,06,500/- made by the Assessing Officer without appreciating the fact that 90% of the payment were made from the year 2008-2012 and merely registration was done in FY 2013-14. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 17. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition without granting the Appellant an opportunity of cross-examination, thereby violating the principles of natural justice. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 18. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in passing the impugned order without granting the Appellant an opportunity of personal hearing through video conferencing, despite the same having been specifically requested by the Appellant during the appellate proceedings. The Appellant submits that denial of such opportunity is in violation of the procedure prescribed under the Act and the principles of natural justice. The Appellant therefore prays that the impugned order passed under section 250 of the Act may be deleted. 19. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) has erred in confirming the addition despite the fact that Learned AO failed to issue notice u/s 133(6) to Mr. Nihir Vora and the company. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 20. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) erred in confirming the additions made by the Assessing Officer without appreciating the documentary evidence produced by the appellant, explaining the commercial rationale for the transaction, substantiating the rationale for the lower stamp duty. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted. 21. On the facts and circumstances of the case, the appellant states that the Hon’ble CIT(A) erred in confirming the additions made by the Assessing Officer without appreciating the fact that the issue had already been examined during the original scrutiny assessment completed under section 143(3) on 26 December 2016, and therefore the reopening amounts to a mere change of opinion, which is not permissible in law. The Appellant therefore prays that the order passed u/s 250 of the Act may be deleted.

2.1 Ground 1 is general in nature and needs no separate adjudication. Grounds 2 to 8 and ground 21 are legal grounds challenging validity of reassessment proceedings. Grounds 9 to 20 challenge addition of Rs.

1,22,06,500/- made u/s 69. Ground 22 is general and needs no adjudication.

2.2 Grounds 9 to 20 arise from a single addition and are interlinked. Accordingly these grounds are taken up together for adjudication.

3.

Brief facts of the case are that assessee is a partnership firm. It filed its return of income on 22.08.2014, reporting total income at Rs. 26,60,000/-. Case was selected for scrutiny and ld. AO completed assessment u/s 143(3) on 26.12.2016 and accepted returned income of Rs. 26,60,000/-.

3.1 Thereafter, ld. AO received information through Insight Portal from Central Circle-4(1) Mumbai regarding a search operation at premises of Sunshine Housing & Infrastructure Pvt. Ltd. (hereinafter referred to as 'Sunshine'). It was informed that evidences seized revealed cash transactions on sale of units in Dadar Project of Sunshine. Shri Nihir K Vora, Senior Manager (Sales & Marketing) of Sunshine Group had in his statement on oath recorded u/s 132(4) admitted that Sunshine was accepting 'On Money' in cash on sale of units in its Dadar Project. It was further observed that Sunshine had accepted cash of Rs. 1,22,06,500/- on one such sale transaction from assessee during the year under consideration.

3.2 Ld. AO formed a belief that income of assessee did not commensurate with the cash transaction and hence income chargeable to tax had escaped assessment within meaning of section 69. Notice u/s 148 was first issued on 21.04.2021. In terms of directions of Hon'ble Supreme Court in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC) dated 04.05.2022, this notice was treated as notice u/s 148A(b).

Underlying material was provided to assessee on 21.05.2022 and assessee filed its reply. Ld. AO found the reply not tenable and passed order u/s 148A(d). Case was reopened on 28.07.2022 and notice u/s 148 was issued after obtaining necessary approval from competent authority. In response assessee filed return of income on 20.01.2023, reporting total income at Rs. 26,60,000/-.

4.

During the course of hearing, assessee explained before ld. AO that it had not carried out any substantial business activity during the year. It had earned lease rentals on investment property acquired by it and offered the income under head income from house property. It had purchased a commercial office being office no. 11 on 11th floor at plot no. 616 Senapati Bapat Marg, Dadar West, Mumbai, from Sunshine. Source of funds for purchase was funds from partners and external borrowings. PAN, addresses, income tax returns and ledger confirmations of partners and lenders were furnished. Funds were infused through banking channels and bank statements of firm were furnished.

4.1 Assessee further explained that it had booked this property while under construction in FY 2007-08 and made first payment in that year. Payments were made from FY 2007-08 to FY 2012-13 based on level of construction. Project was delayed by builder. Possession was received in December 2013 and property was registered in the name of assessee through its partner, in FY 2013-14. Substantial funds (90%) were already paid during FY 2007-08 to FY 2012-13.

4.2 Vide notice u/s 142(1) dated 19.04.2023, ld. AO asked for bank statements of first four payments made to Sunshine in 2008. Assessee filed reply dated 24.04.2023, wherein it was stated that three payments were made by partners and their relative on behalf of firm directly to builder since bank account of firm was in process of being opened. Fourth payment was made by firm itself. Summary of the four payments as filed is extracted below for ready reference: Date Particulars Amount Payment made by Bimal Salarka on behalf 03-Feb-08 78,00,000 of firm Payment made by Rita Patel on behalf of 14-Feb-08 15,00,000 firm Payment made by Kishor Patel on behalf of 14-Feb-08 15,00,000 firm 10-Mar-08 Payment made by the firm 30,00,000

4.3 Assessee also filed before the ld. AO a reply dated 12.05.2023 containing copies of communication exchanged which included its letter dated 16.12.2013 addressed to Sunshine and also a reply letter dated 20.12.2013 from Sunshine regarding stamp duty payable. Assessee disputed reliance on statement of Shri Vora. It was contended that he was merely an operational level employee and not a director. His statement was retracted by letter dated 23.10.2017 addressed to CIT (Investigation)-2 stating inter alia that statement was recorded when he was in pressurized state of mind and many questions were answered without understanding and as directed or advised by revenue officers. It was contended that no concrete statement was made that assessee paid cash and no incriminating material was found. Cross examination of Shri Vora and issue of summons u/s 133(6) to him and Sunshine were requested. 5. Ld. AO did not accept these submissions and observed that on perusal of agreement for sale dated 31.12.2013, market value of property was Rs. 6,12,93,500/- whereas assessee had paid Rs. 4,90,87,000/-. Accordingly, ‘on-money’ was computed at Rs. 1,22,06,500/- (Rs. 6,12,93,500/- less Rs. 4,90,87,000/-). Ld. AO held that onus was on assessee to discharge that cash was not given as on- money to Sunshine and assessee failed to do so. Amount of Rs. 1,22,06,500/- was treated as unexplained investment and added to total income u/s 69. Request for cross examination of Shri Vora was rejected by ld. AO on the ground that it was not feasible due to prevailing circumstances. Ld. AO relied on certain judicial precedents to hold that right of cross examination is not absolute.

6.

Aggrieved, assessee went in appeal before ld. CIT(A) who rejected the technical grounds holding that notice u/s 148 followed directions of Hon'ble Supreme Court in Ashish Agarwal (supra) and that involvement of jurisdictional Assessing Officer or Assessment Unit did not nullify the assessment. On merits ld. CIT(A) held that statement u/s 132(4) carries significant evidentiary value and that a retraction must be supported by evidence of coercion or factual incorrectness. Ld. CIT(A) held that the statement was corroborated by evidences seized at premises of builder.

6.1 Ld. CIT(A) further observed that it is common knowledge in real estate transactions that on-money is paid over and above registered value. Payment of 90% of recorded consideration earlier was held not to preclude payment of additional cash at the time of possession and registration. Contention of assessee that it was a buyer and not a seller was held to be a semantic misunderstanding or a clerical error in the grounds. Ld. CIT(A) held that partner capital accounts and bank statements for disclosed portion did not explain undisclosed cash component. Addition was confirmed and appeal was dismissed.

7.

Aggrieved, assessee is in appeal before the Tribunal. Ld. Counsel for the assessee drew our attention to the paper book and made submissions as under.

7.1 Ld. Counsel submitted that the addition is based entirely on statement of Shri Vora recorded u/s 132(4). It was pointed out that name of assessee does not appear anywhere in that statement. Ld. Counsel referred to answers to Q.13 and Q.14 and submitted that it is a general statement on practice at Sunshine. It was submitted that the answers only say that difference between agreement value and market value could be on account of earlier commitment or cash component and that Shri Vora was not involved in collection or logistics of cash. It was submitted that no statement was ever recorded of Mr. Kashyap K. Mehta and Mr. Atul S Baharani who are named as persons taking cash.

7.2 Ld. Counsel submitted that Shri Vora retracted his statement by letter dated 23.10.2017. It was submitted that he was not a director and ld. AO wrongly assumed so. It was submitted that no incriminating material was found against assessee and no opportunity of cross examination was granted despite specific request. It was further submitted that ld. AO did not issue summons u/s 133(6) to Shri Vora and Sunshine.

7.3 Ld. Counsel referred to Index II and certified copy of agreement for sale placed in the paper book to submit that agreement was executed on 31.12.2013 and registered on 20.03.2014. It was submitted that property was booked in FY 2007-08 and about 90% of payments were made during 2008 to 2012. Ld. Counsel referred to letters at PB-128 to PB-131 and submitted that consideration of Rs. 4,90,87,000/- was agreed in 2008 when stamp duty value was Rs. 3,12,49,200/- and was lower than the consideration. Ld. Counsel referred to note filed in original assessment proceedings and submitted that same facts were disclosed then and assessment was completed u/s 143(3) accepting returned income. It was thus, submitted that addition u/s 69 is not sustainable.

8.

We have heard both the parties and perused the material on record. We have also given our thoughtful consideration to the submissions made as well as the judicial precedents referred before us. Core issue before us is whether addition of Rs. 1,22,06,500/- u/s 69 on alleged payment of cash as on-money for purchase of commercial office from Sunshine is sustainable. Authorities below have based this addition on three things. First is, information received from Central Circle-4(1) regarding search at Sunshine. Second is, statement of Shri Vora recorded u/s 132(4). Third is, difference between ready reckoner value at registration and agreement value. We examine each of these in turn.

9.

Section 69 as applicable for AY 2014-15 reads as under: “69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.” (Emphasis supplied by us by bold and underline)

9.1 Plain reading shows that there must be an investment made by assessee which is not recorded in books of account. Assessee must also offer no explanation or an explanation which is not satisfactory in opinion of ld. AO. Before such opinion can be formed, there must be material to show that assessee made the investment. Without such material, there is nothing for assessee to explain.

9.2. Ld. AO has relied on answers to Q.13 and Q.14 of statement of Shri Vora as reproduced in the assessment order. Same are extracted below for ready reference: “Q.13 Verification of the details of on-going projects buyers it is seen that many flats are sold below the market value and in some cases difference in agreement value for the same flat, same tower/building and same project. Kindly explain the same in detail. Is there any cash involved in sale of flats? Ans. Sir to showcase the flat/office/shop to the prospect buyer my team members or myself communicating all relevant details such as area, approximate cost, location, amenities. Once the project client communicates his decision with the property showcased by me or my team members then we arrange for a meeting with our management to finalise the cost. Any decision regarding discount, etc. is decided by the management. The final consideration amount is communicated to me/us based on which all necessary documentation such as letter of reservation/agreement for sale etc. is done. The difference in agreement value and the market value of the flat could be on account of either on account of earlier commitment or the difference in value is the cash component taken by the management i.e. Mr. Kashyap K. Mehta and Mr. Atul S Baharani. Q.14 In question no. 13 you have mentioned that the difference in market value and agreement value may be taken as cash component by the management of Sunshine Group i.e. Mr. Kashyap K. Mehta and Mr. Atul S Baharani. Kindly confirm the same? Ans: Yes sir, the difference in market value and agreement value may be taken as cash component by the management of Sunshine Group i.e. Mr. Kashyap K. Mehta and Mr. Atul S Baharani. The decision of taking cash out of sale consideration of the flat/shop/office from the purchaser is the exclusive decision of Mr. Kashyap K. Mehta and Mr. Atul S Baharani. I am not involved in collection and logistics of cash received from the buyers.”

9.3. We find that name of assessee does not appear anywhere in these answers. No project unit or buyer is identified. The statement is a general narration of how sale consideration was finalised at Sunshine.

9.4. Answer to Q.13 states that difference between agreement value and market value 'could be' on account of earlier commitment or on account of cash component. Answer to Q.14 states that the difference 'may be' taken as cash component. These are words of possibility and not of certainty. Shri Vora has himself given earlier commitment as the first possible reason. That is precisely the explanation of assessee for the difference in this case. Shri Vora has further stated that decision of taking cash is the exclusive decision of Mr. Kashyap K. Mehta and Mr. Atul S Baharani and that he is not involved in collection and logistics of cash. Authorities below have not referred to any statement of these two persons. It was brought to our notice that no formal statement was ever recorded of either of them. Thus, the person who made the statement has no knowledge of cash collected and the persons who have such knowledge have said nothing about assessee.

9.5. Ld. AO at certain places has recorded that director of Sunshine admitted on oath that Sunshine was accepting cash. Same is repeated by ld. CIT(A) in his order. Record shows that Shri Vora was Senior Manager (Sales & Marketing) of Sunshine Group. Assumption that he was a director is therefore incorrect. Assessee has also submitted that he does not hold any Director Identification Number (DIN). Authorities below have not controverted this. Statement of an employee who disclaims involvement in cash collection cannot be given weight against assessee who is not even named in it.

9.6. We have perused retraction letter dated 23.10.2017, placed in the paper book addressed to CIT (Investigation)-2. It states that statement was recorded when he was in pressurized mental state because of search action and that many questions were answered without really understanding and as directed or advised by revenue officers. Ld. CIT(A) has held that retraction must be supported by evidence and has termed it late. We find that retraction was made by the deponent himself years before the reopening in year 2022. Ld. CIT(A) has not recorded date of the statement to show how the retraction is late. Ld. AO did not examine Shri Vora after retraction nor issue any summons to test the statement. A retracted statement cannot be the sole basis for fastening liability and ld. AO has to establish own case independently.

10.

Ld. CIT(A) has held that the statement is corroborated by evidences seized at premises of builder. Ld. CIT(A) has also recorded that based on seized materials it was found that assessee paid unaccounted cash. Neither ld. AO nor ld. CIT(A) has identified any seized document showing that assessee paid cash. Only material placed by ld. Assessing Officer in the assessment order is a table relating to Flat No. 11. Same is reproduced below:

Project Name: Power-Sunshine Housing Pvt. Ltd. RR value Amount Saleable (Market Flat Name of the Agreement Receipts till Reservation Agreement Registration Area (Sq. value at the No. purchaser Value (Rs.) 31/08/2017 date date date Ft.) time of (Rs.) Registration) Comet 11 4895 4,90,87,000/- 4,90,87,000/- 18/10/2012 31/12/2013 20/03/2014 6,12,93,500/- Associates

10.1 This table records amount received till 31.08.2017 as Rs. 4,90,87,000/- which is same as agreement value. It does not record receipt of any cash over and above agreement value. Last column is ready reckoner value as market value at time of registration. The table therefore does not support the allegation of cash payment. On the contrary it shows receipts equal to agreement value. Reservation date in this table is 18.10.2012. Assessee has contended that booking was made in 2008. Sunshine by its letter dated 20.12.2013 confirmed that office Unit No. 10 was reserved in name of assessee vide reservation letter dated 10.03.2008 and later changed to Unit No. 11 on specific request of assessee. Ld. AO has not examined this variance nor confronted assessee with it. Ld. AO had himself called for bank statements of first four payments made in 2008 and has not recorded any adverse finding on them.

10.2. Assessee requested ld. AO to provide copy of any other documents, statements and materials relied upon. Assessment order does not reflect that any such material was furnished. Ld. AO could have obtained the seized material from Central Circle-4(1) and confronted it to the assessee. No such exercise was done. Ld. CIT(A) has referred to additional cash payment found during search of builder. Record does not disclose any such finding.

11.

Alleged amount is Rs. 1,22,06,500/- which the ld. AO in the assessment order has computed it as a difference between market value of Rs. 6,12,93,500/- and amount paid of Rs. 4,90,87,000/-. Index II at PB-77 shows that agreement was executed on 31.12.2013 and registered on 20.03.2014 with consideration of Rs. 4,90,87,000/- and market value of Rs. 6,12,93,500/-. The latter is a stamp duty valuation and not a price agreed between parties. Mere difference between stamp duty value and consideration cannot by itself lead to inference that cash was paid. Principle laid down by Hon'ble Supreme Court in CIT v. K.P. Varghese (1981) 131 ITR 597 (SC) is that burden to prove that consideration actually passed exceeds the one recorded lies on Revenue. We find this principle equally applicable here. Ld. AO has also not invoked section 56(2)(vii). That provision as applicable for AY 2014-15 was confined to individual and HUF and did not apply to a firm.

11.1. Sunshine in its letter dated 20.12.2013 addressed to assessee has explained the position. It stated that consideration of Rs. 4,90,87,000/- was agreed in 2008 when ready reckoner value was approximately Rs. 3,12,49,200/- and that as ready reckoner value rose to Rs. 6,12,93,500/- by registration in FY 2013-14, stamp duty was payable on that higher value. This letter was in response to letter dated 16.12.2013 of assessee seeking clarification on why stamp duty was payable on a higher amount. Both letters were exchanged in December 2013 which is long before any information from search at Sunshine came to light. Computation of stamp duty value of 2008 at Rs. 3,12,49,200/- being 260.41 sq. mtrs. at Rs. 1,20,000 per sq. mtr. is also on record.

12.

Facts of booking and payments are also recorded by ld. AO. He has also recorded that assessee booked the under construction property in FY 2007-08 and made first payment in that year and that substantial funds (90%) were paid during FY 2007-08 to FY 2012-13. Four payments aggregating Rs. 1,38,00,000/- made in February and March 2008 are tabulated above and supported by bank entries. Note filed on 24.12.2016 in original assessment proceedings also states that property was booked in 2008 and that more than 90% of payments were made from 2008 to 2012. Original assessment u/s 143(3) was completed on 26.12.2016 accepting returned income. Stand of assessee has thus remained consistent.

12.1. Ld. AO has not doubted source of Rs. 4,90,87,000/- paid to Sunshine. Ld. CIT(A) too has treated partner capital accounts and bank statements as relating to disclosed portion without doubting them. Assessee has also stated that investment in property is recorded in its books. Ld. AO has not found otherwise. Recorded investment is thus not in dispute. Alleged additional cash is the only issue and for this there is no evidence of payment.

13.

Ld. CIT(A) has held that it is common knowledge in real estate transactions that on money is paid over and above registered value. It is also held that payment of 90% earlier does not preclude payment of additional cash at final stage. These are possibilities. Tax cannot be levied on suspicion however strong. Ld. CIT(A) treated contention of assessee that it was a buyer and not a seller as a semantic misunderstanding or a clerical error in the grounds. This is factually incorrect. Reasons recorded for reopening as reproduced by assessee state that assessee was accepting on-money while selling units in a building at Dadar and that during the year assessee accepted unaccounted on money in cash of Rs. 1,22,06,500/- while selling units. Ld. AO in assessment order itself has noted that assessee emphasized that it did not accept any on money as mentioned in reasons for reopening. Authorities below have thus, shifted the case from acceptance of cash by assessee as a seller to payment of cash by assessee as a buyer without pointing to any fresh material. This also indicates that the information relied upon was not specific to assessee.

13.1. Ld. CIT(A) held that assessee failed to provide source for additional cash payment of Rs. 1,22,06,500/-. Obligation to explain source arises only after Revenue establishes that investment was made. That foundation is missing here.

14.

Assessee sought cross examination of Shri Vora. Ld. AO rejected the request as not feasible due to prevailing circumstances without stating any circumstance. Ld. AO relied on decision of Coordinate Bench of ITAT in GTC Industries Ltd. v. ACIT [1998] 60 TTJ 308 (Bom). The same decision records that where a witness has given a directly incriminating statement and addition is based solely or mainly on such statement it is incumbent on ld. AO to allow cross examination. Here the addition rests mainly on statement of Shri Vora. Denial of cross- examination is therefore, contrary to the very precedent relied upon by ld. AO. It is also settled that a statement of a third party cannot be used against assessee without opportunity to test it. Assessee also sought issue of summons u/s 133(6) to Shri Vora and Sunshine. Assessee had explained that Sunshine has gone under insolvency proceedings. Assessment order is silent on this request. Ld. AO had power to enquire from Central Circle-4(1) Shri Vora and Sunshine. No enquiry was conducted. Ld. CIT(A) too has not dealt with the contentions on cross examination and summons.

15.

On cumulative consideration we find as under: 1. There is no material identifying assessee as payer of any cash. 2. Statement of Shri Vora is general, conjectural and retracted. 3. Alleged cash is only the difference between stamp duty value and agreement value. 4. Explanation of assessee is supported by contemporaneous documents which were never rebutted. 5. Assessee was denied opportunity of cross examination and no enquiry was conducted by ld. AO. Section 69 cannot be invoked in such circumstances. Addition of Rs. 1,22,06,500/- is unsustainable. 15.1. We have appreciated the facts of booking in FY 2007-08 and payments from FY 2007-08 to FY 2012-13 as part of the record supporting explanation of assessee. In view of our finding that foundation for invoking section 69 is absent we do not find it necessary to decide whether stamp duty value of year of agreement or of year of registration is relevant for any other provision. Accordingly, we delete the addition of Rs. 1,22,06,500/- made by the ld. AO. Ground nos. 9 to 17, 19 and 20 are allowed.

16.

Since addition is deleted on merits, legal grounds 2 to 8 and 21 raised against validity of reassessment proceedings are left open and not adjudicated upon by granting liberty to the assessee to raise the same before appropriate forum, if the circumstances so warrant. Ground no. 18 relating to opportunity of personal hearing before ld. CIT(A) is also rendered academic and is left open. Grounds 1 and 22 are general and formal in nature and need no adjudication.

17.

In the result, appeal of the assessee is allowed.

Order is pronounced in the open court on 16 October, 2026

Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice President Accountant Member Dated: 16 October, 2026 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER, ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.27 13:11:23 +05'30' (Dy./Asstt.Registrar) ITAT, Mumbai

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