DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -4, SURAT, SURAT V. NITESH RAJENDRAPRASAD KHETAN, SURAT

ITSSA 49/SRT/2025

AI Insights

The case involves an appeal by the Deputy Commissioner of Income-tax, Central Circle-4, Surat against Nitesh Rajendraprasad Khetan concerning the Assessment Year 2017-18. The appeal challenged the order of the Ld. Commissioner of Income Tax (Appeals)-4, Surat, which had deleted additions made by the Assessing Officer (AO) regarding unaccounted receipts and deemed income from house property. The Revenue contended that the CIT(A) erred in not appreciating the incriminating nature of the evidence and facts detailed by the AO, which included documents recovered during search proceedings. The Tribunal, referencing a similar case involving the assessee's father, upheld the CIT(A)'s decision, noting that the additions were based on documents that were not executed and thus had no evidentiary value.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 832323 (ITAT-SURAT)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 30-05-2025
• Other Referred Cases: Pr.CIT, Central-3 V/s Abhisar Buildwell (P) Ltd. 2023 149 Taxmann.com 399 (SC), Common Cause vs. Union of India, 77 Taxmann.com 245, Nishant Construction Pvt. Ltd. Vs. ACIT - ITA No. 1502/Ahd/2015, Chintan Jadavbhai J. Patel vs. ITO 404 ITR 76
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Loose papers; Deemed to accrue or arise in india
• Section: 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA KAMBLE, JUDICIAL MEMBER IT(SS)A No. 49/SRT/2025 (Assessment Year: 2017-18) Deputy Commissioner of Income-tax, Central Circle-4, Surat Vs. Nitesh Rajendraprasad Khetan, 3101, Jay Shree Ram Textile Market, Ring Road, Surat [PAN: AIRPK 9852 D] (Appellant) .. (Respondent) Appellant represented by : Shri Mukesh Jain, CIT-DR Respondent represented by: Shri Ramesh Malpani, AR Date of Hearing 20.01.2026 Date of Pronouncement 22.01.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the Revenue against the order dated 04.03.2025 passed by the Ld. Commissioner of Income Tax (Appeals)-4, Surat (‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (‘the Act’ in short) for Assessment Year 2017-18. 2. The Revenue has raised the following grounds of appeal::- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the incriminating nature of evidences & facts detailed by the AO relating to the addition of Rs. 3,14,26,010/- being on- money/unaccounted receipts with respect to transactions in land situated at R.S.No. 36, T.P. No. 8, Umarwada, F.P. No. 83, on the basis of incriminating details/document recovered during the Search proceedings. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in relying upon the decision in the case of Pr.CIT, Central-3 V/s Abhisar Buildwell (P) Ltd. 2023 149 Taxmann.com 399 (SC) and in not appreciating that the documents pertaining to the Assessee were seized in course of the Search Action in the form of loose paper No. 31 to 42, Annexure- A-1 and Page Printed from counselvise.com IT(SS)A No. 49/SRT/2025 DCIT Vs. Nitesh Rajendraprasad Khetan Asst. Year : 2017-18 - 2– No. 8, Annexure A-1 which have been depicted by the Assessing Officer in the body of the assessment order. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 3,14,26,010/- being on- money/unaccounted receipts with respect to land transactions and in not appreciating that Shri Naresh B Agarwal, the key person of M/s Shri Kuberji Enterprise in his statement recorded on oath has stated that loose paper No. 31 to 42, Annexure- A-1 is an amended partnership deed through which Shri Vinod G Goswami and Shri Nitesh B Khetan have been included as partners of the firm. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 13,86,000/- on account of deemed income (notional income) under the head Income from house property thereby ignoring that the Assessee has not offered the same for the period under consideration.” 3. At the outset, the Ld. AR submitted that the issues raised by the Revenue are squarely covered in favour of the assessee by the order of the Coordinate Bench of the Tribunal in the case of the assessee’s father, Shri Rajendraprasad Babulal Khetan, in IT(SS)A No. 67/SRT/2023. It was submitted that the additions in the said case were made on identical facts, on the basis of the same seized material, and were deleted by the Tribunal. A copy of the said order was placed on record. The relevant findings of the Tribunal, dealing with deletion of the addition on account of alleged unaccounted investment/on-money based on the same set of loose papers and alleged partnership amendment deed, have been reproduced before us. For the sake of ready reference, the relevant portion of the order is reproduced hereunder:- “55. Now, we shall take Revenue’s appeal for AY.2020-21 in IT(ss)A No.67/SRT/2023 and Assessee’s cross objection No.12/SRT/2023 for AY.2020-21, wherein the grounds of appeal raised by the Revenue and grounds of appeal raised by the assessee in its Cross Objections are summarized, which are reproduced below: (1) IT(SS)A No.67/SRT/2023 (Revenue Appeal) for AY.2020-21: Printed from counselvise.com IT(SS)A No. 49/SRT/2025 DCIT Vs. Nitesh Rajendraprasad Khetan Asst. Year : 2017-18 - 3– (i).Ground No. 1 to 4 raised by the Revenue relates to deleting addition of Rs.3,15,15,350/- made by the Assessing Officer on account of unexplained investment in land at Umarwada. In these grounds, the grievance of the Revenue is that ld. CIT(A) ignored the incriminating details and documents, two new partners were entered with 2.5% each profit sharing ratio and the contribution of assessee other than banking channel was worked out at Rs.3,15,15,350/-. Since, the assessee failed to explain the contents of the seized paper, hence provisions of section 132(4A) and 292C of the Act are applicable to the assessee. (ii).Ground No.5 relates to deleting addition of Rs.60,30,000/-, made by the assessing officer towards unexplained gift. (2)Assessee’s CO No.12/SRT/2023 for AY.2020-21: (i) The ld. CIT(A) erred in upholding the validity of the assessment order passed by Assessing Officer u/s 143 r.w.s. 153A of the Act.” Page | 37 ITA.142/SRT/2023, IT(SS)A.32, 65 – 67/SRT/2023 & Cos. 11 56. We shall take Ground No. 1 to 4 raised by the Revenue, IT(SS)A No.67/SRT/2023 (Revenue Appeal) for AY.2020-21. The detailed facts relating to Rajendraprasad Babulal khetan-group, have already been narrated by us in this order, in above para, therefore, we do not reiterate the same. Ground Nos. 1 to 4 raised by the Revenue are against the addition of Rs.3,15,15,350/- made by the assessing officer in the name of presumptive unaccounted investment (on-money) alleged to be paid to a partnership firm M/s Shri Kuberji Enterprise to introduce Shri Nitesh Khetan (son of assessee) as partner into the said firm. The ld Counsel argued that though neither the assessee nor his son nor any other family member ever became the partner into the said firm and there has been no basis, material or finding of any such alleged payment of unaccounted investment (on money) to the said firm M/s Shree Kuberji Enterprises or any of its partner(s). The fact that the assessee or any of his family members, have never been partner, into the said firm, must be evident from the data base of this firm on the records of I.T. Department itself. The Ld Counsel further stated that first basis mentioned by assessing officer is the draft 'partnership amendment agreement' of M/s Shri Kuberji Enterprise stated to be seized from the residence of Shri Naresh B. Agarwal as Page Nos. 31 to 42 of Annexure A-1 and pasted on page nos. 3 to 9 of assessment order. From this document following facts are evident viz: (i) M/s. Shri Kuberji Enterprise is a partnership firm formed on 29/01/2014 and registered with the Registrar of Firms (ROF) with regn. No. GUJ/SRT/(17) 38917 dated 05/02/2014. As per information with assessee, Printed from counselvise.com IT(SS)A No. 49/SRT/2025 DCIT Vs. Nitesh Rajendraprasad Khetan Asst. Year : 2017-18 - 4– this firm is assessed with the same assessing officer, (ii)Assessee or his son (Nitesh Khetan) or any other family member was not a partner into the said firm and have never become partner into same, (iii)Parties at Sl. no. '1' to '5' of the draft agreement were partners of the said firm as on the date of this draft agreement i.e. 01/02/2020. By this draft amendment agreement, Shri Nitesh R. Khetan (son of assessee) and Shri Vinod M. Goswami were proposed to be taken as new partners into the said firm w.e.f, 28/01/2020. However, assessee and his son were not prepared to join this firm and, therefore, this draft agreement was not signed by the assessee or his son, Nitesh Khetan. It was just a proposal on the part of partners of said firm, which was never executed by the assessee or his son. Hence, this is just a proposal document which was never executed and materialized. The ld Counsel also argued that as informed to assessee by Shri Vinod Goswami, even the persons who signed this draft agreement also subsequently cancelled it and a cancellation agreement was also signed by them. It is also informed that such cancellation agreement was also seized from the residence of Shri Naresh B. Agarwal. It is not fair on the part of A.O. not to consider and mention about such cancellation agreement. Thus, this was a non-executed, not-materialized and not acted upon document having no evidentiary value. Based on these facts ld Counsel contended that ld CIT(A) has rightly deleted the addition made by the assessing officer, therefore order of ld CIT(A) may be upheld. 57. On the other hand, ld DR for the Revenue, pleaded that the said image/paper are found at the residence of assessee during the search proceedings which proves beyond doubt that the assessee had major role in the said land transaction. Hence, the authentication of the said paper cannot be denied. From the details available with AO it is ascertain that the assessee had made huge investment in land in Surat and is partner in many firms related to Kuberji Group. Further, it is common practice in real estate market in Surat that the land has been sold out and out to the name of some other known person and on-money deal/transactions have been made by land/property dealer. Further, the digital data seized by the search team is as per the Evidence Act, 1872 and I.T. Act, 1961 and as per section 292C of the I.T. Act, there is presumption with regard to content of the seized material. Further, as per the law prevailing, it is duty of the assessee to explain the transactions in respect of papers /material found from his possession. If he fails to explain the transactions appearing in papers/material found from his possession, then such transactions deemed to have been carried by him and revenue is free to hold that the transactions appearing in the diary/papers are nothing but the unaccounted transactions of the Subject. Therefore, based on these facts, ld DR contended that addition made by the assessing officer may be upheld. Printed from counselvise.com IT(SS)A No. 49/SRT/2025 DCIT Vs. Nitesh Rajendraprasad Khetan Asst. Year : 2017-18 - 5– 58. We heard both sides in detail and also perused the records of the case including the paper book filed by the assessee. The ld CIT(A) observed that the land was owned by the firm M/s Shree Kuberji Enterprises. The basis of addition of the assessing officer is the partnership amendment agreement dated 01. 02.2020, wherein the son of the assessee, Shri Nitesh R Khetan and Shri Vinod Goswami were to be admitted, as new partners in firm M/s Shree Kuberji Enterprises. The evidence for the same was two loose papers (page no. 8 and 11 of annexure A-l) found from the residence of Shri Vinod Goswami containing the details of the offer so received. On perusal of the partnership amendment agreement, as pasted on page no. 3 to 9 of the assessment order, it is evident that the same is not signed by one of the existing partners, namely Shri Natwarbhai M. Harlalka and by the incoming partner Shri Nitesh R. Khetan. This shows that the said agreement was not signed by all the parties and did not become final. It is submitted by the assessee that as he or his son Mr. Nitesh Khetan never signed the said agreement, the contents of the same are not applicable to either the assessee or his son. During assessment proceeding, assessee also requested the assessing officer to verify the fact of his son's not joining the said firm from the ITBA and PAN data base of the said firm, latest return filed by the said firm, registrar of firms as also from the said firm and its partners. It was submitted during the appellate proceedings that there is no mention of any adverse finding by the assessing officer in this regard. Thus, nothing has been brought on record by the assessing officer to prove that the assessee or his son had in fact joined the said firm and became its partner. This being the fact of the case that the partnership firm was never reconstituted as envisaged in the copy of the partnership amendment agreement found, the working of the two loose papers referred by the assessing officer without corroboration with the actual facts cannot be fully relied upon for making an addition. Undisputedly, these loose papers contained the details of the offer received by the assessee/his son to become partner into the said firm. When the offer itself was ultimately not materialized, then the addition on the basis of these loose papers containing the details of the offer cannot be sustained. 59. Therefore, ld CIT(A) observed that there is no material with the assessing officer relating to unaccounted investment/ contribution by the assessee for becoming partner of the said firm. The document relied upon being the partnership amendment agreement dated 01.02.2020 was not executed and cannot be the basis for making the addition. As the revised constitution of the firm was never given effect to, the loose papers No. 8 and Printed from counselvise.com IT(SS)A No. 49/SRT/2025 DCIT Vs. Nitesh Rajendraprasad Khetan Asst. Year : 2017-18 - 6– 11 of annexure A-1, cannot be held to be having necessary evidentiary value for making addition as done by the assessing officer. There is no mention of finding of any material showing that such unaccounted contribution / Investment was in fact made by the assessee or his son. 60. The ld CIT(A) also relied on the judgment of Hon'ble Supreme Court in the case of Common Cause vs. Union of India, 77 Taxmann.com 245 and on the judgment of Hon'ble ITAT, Ahmedabad in the case of Nishant Construction Pvt. Ltd. Vs. ACIT - ITA No. 1502/Ahd/2015 holding that the loose papers by themselves have no evidentiary value and addition cannot be made merely on the basis of jottings on the loose papers in the absence of any other corroborative evidence. The said case of Hon'ble ITAT, Ahmedabad bench has been upheld by Hon'ble Gujarat High Court in the case reported at (2019) 101 Taxmann.com 180 (Gujarat). Relying on the above judicial pronouncement, it was observed that jottings on loose sheets of papers found as page no. 8 and 11 of Annexure A-l containing the details of offer received have no evidentiary value, more so when it is a fact that the said offer was not ultimately accepted and materialized as the assessee or his son did not become partner of the said firm. The assessee also relied upon the decision of Hon'ble Gujarat High Court in the case of Chintan Jadavbhai J. Patel vs. ITO 404 ITR 76 wherein it was held that the unsigned and unexecuted document does not have any evidentiary value and no action can be taken on the basis of such unsigned document. In view of the law laid down in above case laws, the addition made just on the basis of two loose sheets of papers containing the details of offer received but cannot be sustained in the absence of any other corroborative. In view of above facts, ld CIT(A) held that addition made towards the unaccounted/ unexplained investment/ contribution for becoming partner into the said Firm M/s. Shree Kuberji Enterprise and its land cannot be sustained. The incriminating material relied upon by the assessing officer do not suggest any contribution/ investment actually made by the assessee. Therefore, the addition made by the assessing officer of Rs.3,15,15,350/- was deleted by ld CIT(A). We have gone through the above findings of ld CIT(A) and noted that conclusion reached by ld CIT(A) is correct. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.” 4. Before us, the Revenue has not brought on record any distinguishing facts or fresh material to controvert the findings of the Coordinate Bench or to demonstrate that the facts in the present case are materially different. Respectfully following the binding decision of the Coordinate Bench in IT(SS)A Printed from counselvise.com IT(SS)A No. 49/SRT/2025 DCIT Vs. Nitesh Rajendraprasad Khetan Asst. Year : 2017-18 - 7– No. 67/SRT/2023, wherein identical additions made on the same basis were deleted, we find no infirmity in the order of the Ld. CIT(A) in deleting the impugned additions. Accordingly, we decline to interfere with the order of the Ld. CIT(A). 5. In the result, the appeal of the Revenue is dismissed. This Order pronounced in Open Court on 22.01.2026 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Surat; Dated 22/01/2026 btk आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ ) अपील ( / The CIT(A)- 5. िवभागीय Ůितिनिध , अिधकरण अपीलीय आयकर , /DR,ITAT, Surat, 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Surat 1. Date of dictation …dictated in the open court on..…20.01.2026….….. 2. Date on which the typed draft is placed before the Dictating Member … …20.01.2026………… 3. Other Member……20.01.2026…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S …. 20.01.2026…………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement ....... 22.01.2026........ 6. Date on which the fair order comes back to the Sr.P.S./P.S ……22.01.2026…..…………. 7. Date on which the file goes to the Bench Clerk …22.01.2026….….…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "