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Facts
The assessee's original assessment for AY 2016-17 was reopened based on information that he had paid cash 'on-money' for property acquired from Navratna Group, which had admitted receiving such payments during a search. Despite the assessee denying the payment, the AO made an addition of Rs.19,62,500/- under Section 69A, which was subsequently dismissed by the CIT(A) upon appeal.
Held
The Tribunal found no direct evidence of cash payment by the assessee during the search. It held that additions cannot be sustained solely on general statements, third-party admissions, or uncorroborated excel sheets, especially when similar cases of co-owners resulted in no additions. Citing previous Tribunal and High Court decisions, the Tribunal deleted the addition.
Key Issues
Whether an addition for unexplained investment (on-money) under Section 69A can be made based on third-party confessions and uncorroborated evidence, without direct proof of payment by the assessee, and despite similar cases for co-owners yielding no additions.
Sections Cited
143(3), 147, 132, 69A, 153C, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 21.04.2025 for the Assessment Year (A.Y.) 2016-17 in the proceeding under Section 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2016-17 on 30.11.2016 declaring income of Rs.4,87,98,100/-. The original assessment was completed under Section 143(3) of the Act on 04.10.2018 as per returned income. Subsequently, (Assessment Year: 2016-17) Ashokkumar Prahladbai Patel vs DCIT Page 2 of 9 the Assessing Officer had received an information that certain on-money was paid in cash for the purchase transaction made by the assessee & the co-owners in respect of a property acquired from Navratna Group. A search action u/s 132 of the Act was conducted in Navratna Group on 11.04.2017 wherein receipt of on-money by the Group was admitted and Navratna Organisers & Developers Pvt. Ltd. (NODPL) had filed a settlement application disclosing the on-money receipts. On the basis of this information, the case of the assessee was reopened. Though the assessee had denied payment of any on-money, the Assessing Officer had made addition of Rs.19,62,500/- on account of proportionate on- money paid in cash towards purchase of property. The assessment was completed under section 143(3)/147 of the Act on 25.03.2022 at total income of Rs.5,07,60,600/-.
Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
The assessee is now in second appeal before us. The following grounds have been taken in this appeal:
“1) The learned Assessing Officer (AO) has erred in making addition of Rs.19,62,500/- being addition u/s.69A of the Income Tax Act for the unexplained investment and considered it as deemed income. 2) The order passed by the AO is bad in law, illegal and void. 3) Appellant craves leave to Add/Amend/alter/vary or withdraw any or all grounds of appeal.
5. Shri S. N. Soparkar, Ld. Sr. Advocate appearing for the assessee, submitted that in the course of search, no evidence for any cash payment made by the assessee was found. The Assessing Officer had made addition only on the basis of general statement of one Shri Murlidhar Marutibhai Trivedi and the admission of NODPL before the Settlement Commission that it had received on-money in certain transactions. The Ld. Sr. Counsel submitted that the case of other co-owners viz. Moulesh Ashokkumar Patel & Shilpaben Moulesh Patel, was also reopened by the Department for the same reason but no addition was made in their case as the revenue was satisfied with the explanation. He, therefore, submitted that no contradictory stand could be taken in assessee’s case on the basis of the same evidence. He further submitted that Co-ordinate Bench of this Tribunal has considered the admission of NODPL and held that no addition was called for on that basis in the hand of the beneficiaries. Further that Hon’ble Gujarat High Court had also held that no addition could have been made only on the basis of excel sheet found from NODPL. In this regard, reliance was placed on the following decisions: -
(i) Kaushik Nanubhai Majithia ITSS#21/Ahd/2021 ITAT Ahd. (ii) Kaushik Nanubhai Majithia Tax Appeal No. 20 of 2024, Gujarat HC (iii) Jayprakash A Keshwani ITSS # 91/Ahd/2021 ITAT Ahd. (iv) Munjal Mrugesh Jaykrishna ITA # 1793/Ahd/2024 ITAT Ahd.
Per contra, Shri Rajiv Garg, Ld. Sr. DR relied upon the orders of the lower authorities.
(Assessment Year: 2016-17) Ashokkumar Prahladbai Patel vs DCIT Page 4 of 9 7. We have considered the rival submissions. A copy of the reason recorded by the Assessing Officer has been brought on record in the paper-book filed by the assessee. It is found therefrom that the case of the assessee was reopened only on the basis of statement of one Shri Murlidhar Marutibhai Trivedi regarding receipt of on-money and the list of purchasers submitted by NODPL during the post search proceeding. In the reason, the Assessing Officer has not referred to any entry in the excel sheet wherein cash payment of Rs.78,75,000/- was mentioned for acquisition of the property by the assessee along with other three co- owners. As rightly pointed out by the assessee, no evidence was found in the course of search regarding payment of any on-money by the assessee. Merely because NODPL had admitted in its settlement application that on-money was received by it, it does not establish that the assessee had paid on-money in respect of acquisition of property made by him.
The evidences found from NODPL on the basis of which the addition has been made, was examined by the Co-ordinate Bench of this Tribunal in the case of Munjal Mrugesh Jaykrishna in dated 19.03.2025. The finding given in the said order is found to be as under:
“7. The most important facts observed by us pertains to para No.9.1 to 9.4 of the assessment order.
For the sake of ready reference and completeness, the said paragraphs are reproduced hereunder: -
9.1 As per assessee, the decoded is done by the Department is its decoded is done by the Department is its decoded is done by the Department is its decoded is done by the Department is its own and the search party has not given any authenticity for it. However own and the search party has not given any authenticity for it. own and the search party has not given any authenticity for it. own and the search party has not given any authenticity for it.
(Assessment Year: 2016-17) Ashokkumar Prahladbai Patel vs DCIT Page 5 of 9 the amount stated in the above discussion is tallied with the un-coded figures, which are tallied each other.
And as per assessee it is as under: -
In the pink color, the figure of amount is quoted at 37500 on 20.04.2013, it has been seen from the submission of the assessee that the amount of Rs.37,50,000/- has been paid on 25.11.2011. Hence, the plea of the assessee is cleared herewith. The amount paid by the assessee 37,50,000/- is quoted in computer entry is 37500. Thus, it is clear that the decoding has been made perfectly. The date of payment and related entries again and again are reproduced above with the payment of the assessee. 9.2 The statement asked by Shri Murlidhar Marutbhai The statement asked by Shri Murlidhar Marutbhai Trivedi, the The statement asked by Shri Murlidhar Marutbhai The statement asked by Shri Murlidhar Marutbhai Trivedi, the Trivedi, the Trivedi, the accountant of the said NODPL could not be provided as the statement accountant of the said NODPL could not be provided as the statement accountant of the said NODPL could not be provided as the statement accountant of the said NODPL could not be provided as the statement is based on not only the information regarding the assessee only but is based on not only the information regarding the assessee only but is based on not only the information regarding the assessee only but is based on not only the information regarding the assessee only but another person’s only and it is confidential lies with Investigation wing another person’s only and it is confidential lies with Investigation wing another person’s only and it is confidential lies with Investigation wing another person’s only and it is confidential lies with Investigation wing hence, it has not been provided hence, it has not been provided to the assessee. hence, it has not been provided hence, it has not been provided to the assessee. to the assessee. However, the to the assessee.
(Assessment Year: 2016-17) Ashokkumar Prahladbai Patel vs DCIT Page 6 of 9 information received and as available with the assessee is incorporated in the assessment order above. 9.3 NODPL before ITSC has confessed that they have taken on- NODPL before ITSC has confessed that they have taken on NODPL before ITSC has confessed that they have taken on NODPL before ITSC has confessed that they have taken on money out of sale of land and building thereon money out of sale of land and building thereon. It is confessed relevant money out of sale of land and building thereon money out of sale of land and building thereon to all the purchasers of the scheme whatever developed by it. The name of the assessee also inclusive thereon. It is not proper query from the assessee, for his individual, he has confessed before ITSC. 9.4 As regard the payment made in various years hence, the amount involved for this year is only for under question. However, it is brought to kind notice of the assessee that the purchase deed is executed in the the purchase deed is executed in the the purchase deed is executed in the the purchase deed is executed in the year under consideration hence, the all transaction are covered under year under consideration hence, the all transaction are covered under year under consideration hence, the all transaction are covered under year under consideration hence, the all transaction are covered under this year only.” this year only.” this year only.” this year only.”
7.1 A detailed analysis of the relevant paragraphs from the assessment order reveals multiple inconsistencies and procedural lapses that render the addition unjustified. 7.2 Firstly, the decoding of figures has been done solely by the department without any independent verification, and the search party has not provided any authenticity for the same. This statement recorded on decoding has not been part of the assessment proceedings. The Revenue has relied on unverified and coded figures, which have been tallied against the un-coded figures without proper corroboration. Any statement recorded of the Directors or the employees relating to the material found in codes has not been brought on record. This raises serious doubts about the reliability of the figures used to make the addition. Since the authenticity of the decoded amounts is questionable, any conclusions drawn from them cannot be sustained. 7.3 Secondly, the records indicate that the payment details align with the submissions made by the assessee. It has been established that the amount of ₹37,50,000 was paid on 25.11.2011, as per the assessee's records, which match the decoded figures quoted in the assessment order. The repeated mention of these figures in the department's findings confirms that there is no discrepancy in the assessee's declaration of the payments. Hence, the plea of the assessee stands corroborated, and there is no ground for any addition on this account.
(Assessment Year: 2016-17) Ashokkumar Prahladbai Patel vs DCIT Page 7 of 9 7.4 Thirdly, the statement made by Shri Murlidhar Maruthbhai Trivedi, the accountant of NODPL, has not been made available to the assessee. The assessment order itself acknowledges that this statement is based not only on information regarding the assessee but also on another person's details, which are confidential and lie within the Investigation Wing. Since this statement has not been shared with the assessee, reliance on it violates the principles of natural justice. Without providing the assessee an opportunity to cross-examine the statement or verify its contents, the department cannot use it as the basis for making an addition. 7.5 Furthermore, NODPL has confessed before ITSC that it collected on- money from the sale of land and buildings. However, the admission was made in a general context regarding all purchasers of the scheme developed by NODPL. There is no specific mention or direct evidence linking the assessee to this alleged on-money transaction. In the absence of any concrete evidence that the assessee was involved in undisclosed transactions, making an addition solely on presumptions is unsustainable. Any such addition must be backed by clear, conclusive proof rather than general confessions made by third parties.”
On the basis of the above findings, the Co-ordinate Bench had held that no addition was called for on the basis of the evidences provided by NODPL. The Hon’ble Gujarat High Court in the case of Kaushik Nanubhai Majithia (supra) had observed on the evidences found from NODPL as under: - “3. We find inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee
It is further found that the case of the other two co-owners Moulesh Ashokkumar Patel & Shilpaben Moulesh Patel was also reopened by the Department by issue of notice under section 148 of the Act for the A.Y. 2016-17. A copy of the assessment order passed in their cases have been brought on record in the paper-book and it is found therefrom that no addition for any on-money payment was made in their hands. When no addition was made in the case of other co-owners, the Revenue was correct in making the addition of payment of on-money in the hand of the assessee, on the basis of the same evidence.
In view of the above facts and also following the decision of Co- ordinate Bench of this Tribunal referred above, the addition of Rs.19,62,500/- made in the hands of the assessee on account of on- money payment is deleted. The grounds taken by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on this 1st January, 2026.
Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Ahmedabad, the 1st January, 2026 PBN/*