PHALGUNI PANKAJ NAGORI,SUNTRONICS INDIA PRIVATE LIMITED vs. INCOME TAX OFFICER, WARD 4(1)(1), AHMEDABAD., AAYAKAR BHAWAN (VEJALPUR)

The present appeal has been preferred by the Assessee against the Order, dated 27/02/2026, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 21/03/2024, passed under Section 147 of the Income Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2019-2020. 2. The Assessee has raised following grounds of appeal:

The learned Commissioner of Income-tax (Appeals) erred in law and Assessment Year 2019-2020

The learned Commissioner of Income-tax (Appeals) erred in law and on facts in upholding the reassessment order passed under section 147 read with section 143(3) despite failure of the Assessing Officer to furnish the approval of the competent authority, copies of statements and seized material relied upon, and despite denial of opportunity of cross-examination of the third party, thereby violating principles of natural justice.

The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming the addition of ₹57,47,028/- under section 69A solely on the basis of documents and digital data allegedly found from a third party, without any independent corroborative evidence of cash payment by the appellant, despite the fact that no cash was found, the entire consideration for the property was paid through banking channels, and further erred in relying upon third-party documents without establishing a direct and clear link with the appellant and without affording an opportunity of cross-examination, contrary to settled legal principles.

Without prejudice to the above grounds, the learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming the addition in Assessment Year 2019-20, despite the fact that the payments relating to the property were made in earlier financial years and no investment or payment was made during the year under consideration.

The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming the applicability of section 69A, even though the appellant was never found to be the owner of any unexplained money and the mandatory conditions for invoking section 69A were not satisfied.

The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming taxation of the alleged addition under section 115BBE, which is not applicable in the facts and circumstances of the appellant's case.

The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming levy of interest under sections 234B and 234C, which is bad in law and not sustainable.

The relevant facts as emanating from the records are that the Assessee filed original return of income under Section 139(1) of the Act for Assessment Year 2019-2020 on 17/08/2019 declaring a total income of INR.10,32,380/-. Subsequently, a search and survey action was conducted on 10/02/2022 in the case of Shivalik Shilp and Sharda Group and at the premises of Shri Manish Brahmbhatt, a real estate consultant/broker. During the search, physical documents (diaries/Chopda) and digital data (excel sheets) were seized which contained records of sale transactions of units in the project ‘Sky City Vernis’ developed by M/s Safal Goyal Realty LLP. On analysis of the seized data, the Assessing Officer observed that Unit No. 56 in ‘Sky City Vernis’ was recorded at a total cost of INR.3,26,76,000/- whereas the registered document value was INR.2,11,81,944/-. Therefore, the Assessing Officer concluded that there was unrecorded cash transaction of payment of on-money of INR.1,14,94,056/-. Since the Assessee held 50% share in the said unit alongside her husband, the Assessing Officer formed a belief that INR.57,47,028/- (being 50% of INR.1,14,94,056/-) represented unexplained cash payment made by the Assessee from undisclosed sources. Therefore, reassessment proceedings were initiated by issuing a notice under Section 148 of the Act on 30/03/2023. In response, the Assessee filed her return on 25/04/2023. In response to notices issued by the Assessing Officer. The Assessee filed written submissions on 15/03/2024 denying any cash payment, highlighting that her 50% share of the registered document value amounting to INR.1,05,91,062/- was paid entirely through banking channels. It was contended on behalf of the Assessee that third-party seized documents/statements could not be relied upon by the Assessing Officer without independent corroboration and without granting the Assessee an opportunity of cross-examination. The Assessing Officer rejected the submissions of the Assessee and applying the test of human probabilities, the Assessing Officer passed Assessment Order, dated 21/03/2024, under Section 143(3) read with Section 147 of the Act making adding of INR.57,47,028/- under Section 69A of the Act.

On appeal, the Learned CIT(A) dismissed the appeal filed by the Assessee, upholding both the validity of reassessment proceedings and the substantive addition made under Section 69A of the Act.

Being aggrieved by the above order passed by the Learned CIT(A), the Assessee has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above.

We have heard the rival submissions, and have perused the material on record.

We would first take up Ground Nos. 3, 4, 5 & 6 raised by the Assessee pertaining to the merits of the addition of INR.57,47,028/- made by the Assessing Officer under Section 69A of the Act which was confirmed by the Learned CIT(A).

The facts relevant for adjudication of the connected grounds are that the Assessee and her husband jointly purchased Unit No. 56 in ‘Sky City Vernis’ for documented consideration of INR.2,11,81,944/-. The Assessee paid her 50% share of INR.1,05,91,062/- through regular banking channels. The sole basis of addition of INR.57,47,028/- made in the hands of the Assessee was the entry found in loose papers/excel sheets recovered from the premises of real estate broker (namely, Mr. Manish Brahmbhatt). It was contended by the Learned Authorised Representative for the Assessee that the Assessee was never found in possession or ownership of any unexplained money, which is a mandatory statutory precondition for invoking Section 69A of the Act. The unsubstantiated third-party loose papers, excel sheets, or diary entries from a broker cannot form the basis of an addition under Section 69A without independent corroborative evidence establishing actual cash movement from the Assessee. Without prejudice, all payments relating to the property were made in financial years prior to the previous year relevant to Assessment Year 2019-2020 and therefore, no addition could have been made in the Assessment Year 2019-2020. 9. Per contra, the Learned Departmental Representative strongly relied upon the findings of the Assessing Officer and Learned CIT(A), contending that seized physical diaries and digital records maintained by the broker clearly showed that the total consideration paid by the Assessee was more than the documented consideration. Cost of Unit No. 56 was recorded at INR.3,26,76,000/-, and the same evidenced that on-money cash payments were made by the Assessee.

We have given thoughtful consideration to the rival submissions and perused the records. We note that the Assessing Officer has made the addition solely on the basis of search material. A perusal of Paragraph No. 3.1 to 3.9 of the Assessment Order shows that the search action was carried out at the premises of broker/real estate consultant. The broker used to facilitate the real estate transactions for a brokerage of 1 to 2% and was also involved in collection of unaccounted cash on- money payments. No brokerage was charged from the purchasers. The record of transactions brokered by the broker included sale of Unit No. 56 purchased by the Assessee along with her husband. The tabulated details contained in Paragraph 3.9 of the Assessment Order state the date of initial deal as 02/04/2015. In reply filed before the Assessing Officer, the Assessee has stated that entire share of consideration was paid on or before 29/08/2017 [falling prior to the relevant previous year] and this has not been disputed by the Revenue. The CIT(A) has noted that registration of sale deed was done on 23/07/2018 [falling during the relevant previous year], and therefore, the Assessing Officer was justified in making the addition for the Assessment Year 2019- 2020. Thus, there is no material on record to show payment of on- money by the Assessee except for a noting in diary which states ‘Total Cost (as per evidence): 3,26,76,000/-‘. Here also the noting refers to ‘Total Cost’ and not to ‘consideration’. It is also not clear whether the aforesaid noting is limited to charging of commission from builder or the same also pertains to receiving on-money from the buyer. In our view, while the aforesaid may constitute sufficient material to initiate reassessment proceedings under Section 147 of the Act, the same does not constitute sufficient evidence to hold that the Assessee had paid on-money for purchase of Unit No. 56 in project ‘Sky City Vernis’ developed by M/s Safal Goyal Realty LLP. In our view, given the fact that all payments were made in years prior to the relevant previous year shifts the preponderance of possibility in favour of the Assessee and against the Revenue. Given the aforesaid, we overturn the decision of the Learned CIT(A) and delete the addition of INR.57,47,028/- made in the hands of the Assessee under Section 69A of the Act. Thus, Ground No. 3 and 6 raised by the Assessee are allowed, while Ground No. 4 and 5 containing alternative contentions are dismissed.

Ground Nos. 1 & 2 raised by the Assessee challenge the validity of the reassessment proceedings under Section 147 of the Act.

We note that the Learned CIT(A) has concluded that the reopening has been initiated on the basis of tangible material emanating from search proceedings wherein specific entries were found in seized excel sheets and other documents mentioning the project ‘Sky City Vernis’, Unit No.56, the names of the purchaser-Assessee, the documented value and the total cost. The aforesaid findings of the Learned CIT(A) are based upon material on record and we do not find any infirmity in the same. At the stage of initiation of reassessment proceedings what is required to be examined is whether there is prima facie material on the basis of which the Assessing Officer could initiate reassessment proceedings. Whether that material is sufficient to conclusively prove that income has escaped assessment is to be examined during the reassessment proceedings and not at the time of initiation of reassessment proceedings [Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34]. We have in paragraph 8 above concluded that the Assessing Officer had sufficient material to initiate reassessment proceedings under Section 147 of the Act. Therefore, we decline to interfere with the order passed by the Learned CIT(A) rejecting challenge to validity of reassessment proceedings. Thus, Ground No. 1 and 2 raised by the Assessee are dismissed.

Ground No7 raised by the Assessee pertaining to the levy of interest under Section 234B/C of the Act is disposed as being consequential in nature.

In result, present appeal preferred by the Assessee is partly allowed.

""यथ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT JEETENDRA DEVENDRABHAI UPADHYAY DN: c=IN, o=PERSONAL, title=6087, 4. आयकरआयु"(अपील) / The CIT(A) DEVENDRAB 2.5.4.20=7e5568a89b633f174b28a80f5 e63c638da40b7313fb47ebaefda841cf5 9d1703, postalCode=380059,

HAI st=Gujarat, िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण/ DR, ITAT, serialNumber=816dc56e896211a1a21c cc4abc94ddc94458f4a1b37be8e1854e UPADHYAY 9399295106d4, cn=JEETENDRA

DEVENDRABHAI UPADHYAY गाड"फाईल /Guard file. Date: 2026.10.28 10:09:26 +05'30' आदेशानुसार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.