KAMALKUMAR RAMKUMAR AGRAWAL,AHMEDABAD V. THE DY.CIT, CIRCLE-2(1)(1), AHMEDABAD

ITA 1975/AHD/2025

AI Insights

The case involves Shri Kamalkumar Ramkumar Agrawal, who appealed against the order of the Commissioner of Income Tax (Appeals) which upheld the reassessment of his income for the Assessment Year 2016-17. The reassessment was based on information from a search operation on Navratna Organisers and Developers Pvt. Ltd. (NODPL), which suggested that Agrawal had paid unaccounted cash for a property purchase. The Assessing Officer (AO) added Rs. 56,60,500 to Agrawal's income, treating it as unexplained investment under section 69 of the Income Tax Act. The CIT(Appeals) upheld this addition, leading Agrawal to appeal to the Tribunal. The Tribunal found that the addition was not substantiated by direct evidence linking Agrawal to any cash payments, and thus, the addition was deleted.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841137 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 17-10-2025
• Other Referred Cases: Divyesh Bhupendra Desai v. Principal Commissioner of Income Tax, Ahmedabad-1, PCIT v. Kaushik Nanubhai Majithia
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH M ISHRA
• Assessee Lawyers: KETAN SHAH; AMAN
• Keywords: Reassessment proceedings; Unexplained investment; Document seized; Documents seized; Principle of natural justice; Tangible material
• Section: 147; 148; 271(1)(c); 132; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No.1975/Ahd/2025 (Assessment Year: 2016-17) Shri Kamalkumar Ramkumar Agrawal, C.o. Ketan H. Shah, Advocate 512, Times Square –I, Opp. Ram Baug Bungalow, Thaltej Shilaj Road, Thaltej, Ahmedabad-380059 Vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Ahmedabad [PAN No.AAQPA9837R] (Appellant) .. (Respondent) Appellant by : Shri Ketan Shah, Advocate & Shri Aman Shah, AR Respondent by: Shri Yogesh Mishra, Sr. DR Date of Hearing 18.02.2026 Date of Pronouncement 23.02.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 06.10.2025 passed for A.Y. 2016-17. 2. The assessee has taken the following grounds of appeal: “1. In assuming jurisdiction U/s 148 of the Income Tax Act by issuing notice for the AY 2016-17 dated 30-03-2021, it is said that the whole proceedings is bad in law and void ab initio. 2. The AO erred in assessing total income of the assessee at Rs. 71,86,980/- as against income declared by the assessee at Rs. 15,26,480/- and the CIT(A) erred in Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 2– upholding the same, it is stated that the same being illegal and unwarranted, may kindly be deleted. 3. In making addition as per section 69 of the Act at Rs. 28,30,250/- on account of alleged payment of on money to NODPL for purchase of immovable property and the CIT(A) erred in confirming the same, in absence of any proof of such payment of on-money in cash. 4. The AO erred in making addition as per section 69 of the Act at Rs.56,60,500/- on account of alleged payment of on money and the CIT(A) erred in confirming the same of Rs. 28,30,250/- in spite of the fact that the assessee has duly discharged her onus by providing voluminous evidences and therefore, the addition is required to be deleted. 5. In passing the impugned order dated 16-05-2023 and CIT(A] confirmed the same vide order dated 06-10-2025 by solely relying on the information from the search and has not done any independent inquiry to arrive at a conclusion that the income of the assessee has escaped assessment. 6. In passing the impugned order dated 06-10-2025 without providing entire statement made by the group at the time of search so also an opportunity of cross- examination of the person making such statement, it is stated that the same being in violation of principles of natural justice, the additions may kindly be deleted. 7. In passing the impugned order dated 16-05-2023 and CIT(A) confirmed the same vide order dated 06-10-2025 by decoding the entries found in the excel sheet has been done solely by the AO without any independent verification and in absence of any evidence brought forward by the AO that the assessee has made cash payments. 8. In initiating proceedings solely based on excel sheet, which lacks any corroborative material or signature which was found during search in the premises of a third party which lacks any valid basis for assuming the existence of a transaction between the assessee and developer. Hence, additions made based on dumb document being illegal, may kindly be deleted. 9. In making the impugned addition and confirming the same vide order dated 06-10-2025 without appreciating the fact that there is no direct nexus linking the assessee to the alleged cash payment of Rs. 28,30,250/- which is illegal and void. It be held as such. 10. That, without prejudice, it is submitted that the information and the conveyance deed are pertaining to FY 2010-11 i.e. AY 2011-12. Hence, the impugned addition, if any must be made in AY 2011-12 and not in AY in question, AY 2016-17. 11. In passing the impugned order dated 16-05-2023 u/s 147 rws 144B and CIT(A) confirmed the same vide order dated 06-10-2025, it is stated that as the present issue arises out of search, the provisions of section 153C would be applicable and not Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 3– section 147/148 as has been done in the present case. It be held as such and the impugned order be quashed. The assessee craves leave to add, amend, alter, or add any ground in the interest of justice.” 3. The brief facts of the case are that the assessee, Shri Kamalkumar Ramkumar Agarwal, filed his return of income for Assessment Year 2016- 17 declaring a total income of Rs.15,26,480/-. Subsequently, the case was reopened under section 148 of the Income-tax Act, 1961 (\"the Act\") on the basis of information received from the Investigation Wing pursuant to a search action under section 132 of the Act carried out on 11.04.2017 in the case of Navratna Organisers and Developers Pvt. Ltd. (NODPL), a real estate developer. The Assessing Officer reopened the case of the assessee on the basis of information stating that the assessee had paid on-money in cash for the purchase of a residential unit from NODPL. During the reassessment proceedings, the Assessing Officer noted that during the search in the case of the Navratna group, certain incriminating digital evidence in the form of an Excel sheet was recovered from a laptop seized from Shri Murlidhar Marutibhai Trivedi, who was found to be a key person coordinating sales and cash components of transactions in the Kalhaar Blues and Greens project. The Excel sheet contained unit-wise details such as area, land price, construction cost, amounts received by cheque and amounts received in cash, recorded in coded form by omitting zeros. The Assessing Officer further observed that NODPL, during post-search proceedings, furnished purchaser-wise details which corroborated the seized Excel data and also admitted before the Income Tax Settlement Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 4– Commission that on-money had been received in cash on sale of villas in the said project. 4. On decoding and correlating the seized Excel data with the registered sale deed of the assessee dated 23.03.2016 for Unit No. 248 in Kalhaar Blues and Greens, the Assessing Officer was of the view that the actual total value of the unit was Rs.1,68,21,000/-, whereas the registered sale deed reflected a consideration of only Rs.1,11,60,500/-. The Assessing Officer treated the differential amount of Rs.56,60,500/- as on- money paid by the assessee in cash. The assessee denied having paid any cash and submitted copies of the booking agreement dated 21.09.2010, conveyance deed, ledger confirmation from the developer and ledger accounts showing payments by cheque. However, as per the Assessing Officer, the assessee did not produce any bank statements and did not furnish any evidence to rebut the seized material. Accordingly, the Assessing Officer treated the amount of Rs.56,60,500/- as unexplained investment under section 69 of the Act and added the same to the income of the assessee, thereby assessing the total income at Rs.71,86,980/-. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). Before the CIT(Appeals), the assessee challenged the validity of reopening under section 147 of the Act on the ground that the reasons were vague and based solely on third-party material and that proceedings ought to have been Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 5– initiated under section 153C and not section 147. The assessee also contended that the Excel sheet seized from a third party was a dumb document having no evidentiary value, that no independent inquiry was conducted by the Assessing Officer, and that the entire addition was based on assumptions and general statements of an employee of the builder group. It was further contended that the complete statement of Shri Murlidhar Marutibhai Trivedi was not provided and that no opportunity of cross-examination was granted, resulting in violation of principles of natural justice. On merits, the assessee reiterated that no cash was paid, that the entire transaction was through banking channels, and alternatively argued that the alleged payment related to F.Y. 2010-11 and could not be taxed in A.Y. 2016-17. The assessee also raised an alternative plea that the property was jointly owned with his wife and, therefore, the addition, if any, should be restricted to 50%. 6. The Commissioner of Income-tax (Appeals), after considering the assessment order, material on record and the submissions of the assessee, upheld the reopening of the assessment. The CIT(Appeals) held that the information emanating from the search in the case of NODPL constituted tangible material justifying reopening under section 147 and that section 153C was not applicable as the seized documents did not belong to the assessee but were recovered from a third party. On the issue of reliance on the seized Excel sheet, the CIT(Appeals) observed that the Excel data was a structured and detailed record which, upon decoding, exactly matched the particulars of the assessee’s registered purchase, and therefore could Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 6– not be treated as a dumb document. The CIT(Appeals) further held that the presumption under sections 132(4A) and 292C of the Act applied and that the assessee failed to rebut the same with any cogent evidence. The contention regarding denial of cross-examination was rejected on the ground that the addition was primarily based on documentary evidence corroborated by post-search disclosures of the developer group and that absence of cross-examination did not vitiate the assessment. 7. On merits of the addition under section 69 of the Act, the CIT(Appeals) held that the substantial difference between the actual value of the unit as per seized material and the registered consideration clearly established payment of on-money in cash. Applying the test of human probabilities and relying on judicial precedents, the CIT(Appeals) confirmed that the Assessing Officer was justified in treating the differential amount of Rs.56,60,500/- as unexplained investment. The plea that the addition related to an earlier year was rejected by holding that the relevant year for taxation was the year in which the conveyance deed was executed and the investment crystallised. However, on the issue of joint ownership, the CIT(Appeals) observed that if the same on-money had already been taxed in the hands of the assessee’s wife to the extent of her 50% share, the Assessing Officer should verify the records and restrict the addition in the assessee’s hands accordingly to avoid double taxation. Subject to this limited verification, the appeal of the assessee was dismissed. Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 7– 8. The assessee is in appeal before us against the order passed by the Commissioner of Income-tax (Appeals) dismissing the appeal of the assessee. 9. Before us, at the outset, the Counsel for the assessee submitted that the shall not be pressing for Ground Nos. 1, 2, 4, 5, 8, 9, 10 and 11. Accordingly, these grounds are being dismissed as not pressed. Further, the Counsel for the assessee reiterated the arguments taken before the Ld. CIT(A) and also placed reliance on various case laws in support of his contention. 10. In response, Ld. DR placed reliance on the observations made by CIT(Appeals) in the appellate order. 11. We have heard the rival contentions and perused the material on record. 12. We have carefully considered the rival submissions, perused the material available on record and examined the judicial precedents relied upon. We find that the entire addition of Rs.56,60,500/- made under section 69 of the Act is founded solely on an Excel sheet seized from a third party, namely an employee/key person of the builder group, without there being any independent, cogent and corroborative material to establish that the assessee had in fact paid any on-money in cash. It is an undisputed position that the said Excel sheet does not bear the name or signature of the assessee, nor does it record any direct acknowledgment of cash Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 8– payment by the assessee. The Assessing Officer has not brought on record any evidence such as cash withdrawals, statements of the assessee, confirmation of receipt of cash from the assessee, or any document linking the assessee with the alleged cash payment. The entire addition is thus based on third-party material and presumptions, without independent verification. We further observe that there was no reference of any cheque payment by the assessee in the excel sheet and therefore, there is no basis of correlate the cash payments mentioned in the excel sheet with the payments made by the assessee. 13. We are of the considered view that reliance placed on the alleged admission of the developer group before the Income Tax Settlement Commission cannot, by itself, be a conclusive proof that the assessee paid on-money. An admission by one party cannot automatically fasten tax liability on another party, unless the Revenue establishes, by positive evidence, that the assessee was a party to such undisclosed transaction. Further, the statements recorded during search, which are sought to be relied upon, were not furnished in full to the assessee and no opportunity of cross-examination was granted, thereby violating the principles of natural justice. It is well settled that any material used against an assessee must be confronted to him and he must be afforded a fair opportunity to rebut the same. 14. In this regard, we find that the issue is squarely covered in favour of the assessee by the decision of the Ahmedabad Bench of the Tribunal in Divyesh Bhupendra Desai v. Principal Commissioner of Income Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 9– Tax, Ahmedabad-1, ITA No. 802/Ahd/2024, order dated 29.08.2024, wherein, on identical facts arising out of the same search action in the Navratna Group and based on similar Excel-sheet data, the Tribunal held that in the absence of any specific incriminating material directly evidencing payment of on-money by the assessee, no adverse inference could be drawn. The Tribunal, after detailed examination, allowed the appeal of the assessee. For ready reference, paragraph 7 and 8 of the said decision is reproduced below for ready reference: “7. We have heard the rival contentions and perused the material on record. Firstly, we are of the considered view that the Assessing Officer had made sufficient enquiries on this aspect during the course of 147 proceedings, which is evident from various notices issued by the Assessing Officer, specifically to enquire into the aspect of payment of on-money cash amounting to Rs. 55,00,000/- towards purchase of property. Secondly, we observe that on going through the contents of the 263 order, the PCIT has not given any specific findings as to where the Assessing Officer has erred in facts and in law in the assessment order is coming to an incorrect conclusion. Thirdly, we observe that even the table produced at Para 5.7 of the 263 order does not state that the assessee had paid a sum of Rs. 55,00,000/- in cash towards purchase of immovable property. Fourthly, the assessee had made a specific averment that the excel sheet found during the course of search pertains to period 2008-2013 and hence the contents of the excel sheet have no bearing for the impugned period under consideration. Therefore, in view of the present facts, placed before us, we are of the considered view that there is no adverse incriminating material in possession of the Department specifically mentioning payment of Rs. 55,00,000/- as cash on-money payment towards purchase of immovable property. Accordingly, looking into the instant facts, we are of the considered view that there is apparently no lack of enquiry by the Assessing Officer on the issue of on-money payment of a sum of Rs. 55,00,000/- towards purchase of immovable property, and secondly the order passed under Section 263 of the Act by Ld. PCIT has not given any specific findings as to where the Assessing Officer is wrong in passing the assessment order. Therefore, looking into the instant facts, we are of the considered view that the assessment order is not erroneous and prejudicial to the interest of the Revenue.” “8. Accordingly, in view of the facts placed before us and the judicial precedents on the subject, the appeal of the assessee is allowed.”We further note that the aforesaid view of the Tribunal stands fortified by the judgment of the Hon’ble Gujarat High Court in PCIT v. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, wherein the Hon’ble Court held that mere entries in an unsigned Excel sheet found from a third Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 10– party, without corroborative evidence and without establishing actual payment by the assessee, cannot form the sole basis for making additions in the hands of the assessee. 15. We further note that the above view stands fortified by the judgment of the Hon’ble Gujarat High Court in Principal Commissioner of Income Tax v. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, wherein it has been held that mere entries in an unsigned Excel sheet recovered from a third party, without any corroborative material and without establishing actual payment by the assessee, cannot be made the sole basis for making additions in the hands of the assessee. 16. Respectfully following the aforesaid decision of the Ahmedabad Bench of the Tribunal and the binding ratio laid down by the Hon’ble Gujarat High Court, and in the absence of any independent and reliable evidence to establish that the assessee had paid on-money in cash, we hold that the addition of Rs.56,60,500/- made under section 69 of the Act is unsustainable in law. Consequently, the addition is directed to be deleted. In view of our decision on merits, the other grounds raised by the assessee become academic and do not require separate adjudication. 17. In the result, the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 23/02/2026 Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/02/2026 TANMAY, Sr. PS TRUE COPY Printed from counselvise.com ITA No. 1975/Ahd/2025 Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 11– 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, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 20.02.2026 (Dictated on dragon software) 2. Date on which the typed draft is placed before the Dictating Member 20.02.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .02.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 23.02.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 23.02.2026 7. Date on which the file goes to the Bench Clerk 23.02.2026 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 "