DUSHYANTBHAI RANCHHODBHAI PATEL,AHMEDABAD vs. THE DY.CIT, CIRCLE-2(1)(1), AHMEDABAD

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ITA 1721/AHD/2025Status: DisposedITAT Ahmedabad17 December 2025AY 2014-15Bench: SHRI SANJAY GARG (Judicial Member)5 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal observed that the assessee's property purchase occurred after the search action on the Dev Group. Therefore, any information from the search related to on-money prior to the search date could not be used as a basis for an addition in the assessee's hands for a subsequent transaction. The Ld. DR conceded this point, and the Tribunal consequently deleted the impugned addition.

What were the facts?

The assessee purchased a commercial property in December 2014. The assessment was reopened for A.Y. 2014-15 after four years based on a search action on Dev Group (the seller) in January 2013, where Dev Group admitted receiving 'on-money' for property sales. The AO made an addition of Rs. 23 Lakhs as unexplained investment under Section 69, which the CIT(A) confirmed.

What were the issues?

Whether an addition for unexplained investment based on a search action conducted prior to the assessee's property purchase is legally sustainable, and if the reopening of assessment after four years lacked valid jurisdiction or tangible material.

Which sections of the Income-tax Act were involved?

Section 250,Section 69,Section 147,Section 148,Section 144B,Section 132,Section 153C,Section 271(1)(c),Section 271(1)(b),Section 210,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG

For Appellant: Shri Jaimin Shah, A.R, Shri Ravindra, Sr. DR
For Respondent: Shri Ravindra, Sr. DR
Hearing: 15/12/2025Pronounced: 17/12/2025

(आदेश)/ORDER

The present appeal has been preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 14.07.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2014-15.

2. The grounds of appeal raised by the assessee are as under:

“01. That the Ld. CIT(A), NFAC has erred both in law and on facts while rejecting the appeal of the appellant without considering facts and documents on records and therefore the addition made by A.O. of Rs. 23,00,000/- being unexplained investment u/s 69 required to be deleted.

2.

That the Ld. assessing officer has re-open the case of the appellant after 4 years without any tangible material on record and hence the re-opening itself is bad in law illegal and required to be quashed.

3. That the reasons recorded to reopening the case of the appellant for A.Y. 2014-15 are vague and only a fishing activity and as such the re-opening itself is bad in law and order passed u/s 147 r.w.s. 144B dated 29.03.2022 required to be quashed.

4. That the notice issued u/s 148 dated 31/03/2021 by assessing officer Circle 2(1)(1), Ahmedabad is without jurisdiction and as such the reopening u/s 147 of the Income Tax Act, 1961 itself is bad in law and required to be quashed.

5. That the appellant case was re-opened u/s 147 on the basis of information or documents received from searched proceedings u/s 132 on 03.01.2013 is against the provision of section 153C of the Income Tax Act, 1961 and therefore the re-opening itself is bad in law, illegal and void.

6.

That the addition made of Rs. 23,00,000/- u/s 69 of the Act, on the basis of declaration of M/s Dev Procon Ltd. before the settlement commission, without giving opportunity of cross examination is against the principal of natural justice and hence it requires to be deleted.

7. That the Ld. A.O. has made addition made u/s 69 of Rs. 23,00,000/- and sustained by the NFAC without any documents on record or without any evidence is not valid in law and require to be deleted.

8.

That the appellant has specifically denied for any cash payment, however the addition made on the basis of third party declaration without cross examination and without any other material on record is against the facts on record, and hence heavy addition made of Rs. 23,00,000/- required to be deleted. 09. That the appellant has not suppressed any facts nor concealed any Income, however the penalty initiated u/s 271(1)(c) and 271(1)(b) requires to be drop. 10. That the appellant has neither committed default of Sec. 210 nor made any default in payment of advance tax and therefore unwanted interest charged u/s 234A, 234B, 234C and 234D requires to be deleted. 11. Your appellant craves leave to add, amend, deleted or alter any of the grounds till the appeal is finally heard and decided.”

3.

Brief facts of the case are that the assessee had purchased property/commercial office space on 10th December, 2014 from M/s. Dev Procon Ltd. for a consideration of Rs.43,11,743/- in which assessee had 50% share and accordingly, the assessee paid Rs.21.55 Lakhs. Thereafter, the case of the assessee was reopened u/s.147 r.w.s. 148 of the Act after four years from the end of the relevant assessment year, wherein, the AO alleged that a search action was carried out in the case of Dev Group on 03.01.2013. Pursuant to which, the Dev Group approached the Settlement Commission and offered certain income on account of on-money received from the sale of the properties in the building in question. The AO, on the basis of the same, observed that since the Dev Group had admitted to have received on-money on sale of property, hence, the assessee might have paid the on-money for the sale of the property in question and accordingly made the impugned addition of Rs.23 Lakhs in the hands of the assessee. The Ld. CIT(A) confirmed the addition so made by the AO.

4.

Before this Tribunal, Ld. AR appearing for the assessee, has submitted that the assessee had purchased property on 10.12.2014 whereas the search action in the case of Dev Group was carried out on 03.01.2013. This apparently showed that the assessee had purchased the property after the search action was carried out in the case of Dev Group, therefore, income offered on account of on-money by Dev Group on sale of property before the date of search or any transaction found during the course of search has no implication, so far as the transaction of purchase of property by the assessee is concerned. The Ld. AR has further submitted that the assessee was the 50% shareholder of the property and the AO was, even otherwise, not supposed to make the entire addition in the hands of the assessee alone.

5.

The Ld. DR has fairly agreed that since in this case the property was purchased by the assessee after the search action, therefore, any material found in the search action in the case of Dev Group cannot be made basis for making addition in the hands of the assessee.

6. In view of this, impugned addition made by the AO is not sustainable in the eyes of law and same is accordingly deleted.

7.

In the result, appeal filed by the assessee stands allowed.

This Order pronounced on 17/12/2025

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