MUNJAL MRUGESH JAYKRISHNA,AHMEDABAD V. THE DY.CIT, CIRCLE-1(1)(1), AHMEDABAD

ITA 1793/AHD/2024

AI Insights

The case revolves around an appeal by Munjal Mrugesh Jaykrishna against the order of the Commissioner of Income-Tax (Appeals), which confirmed the addition of Rs. 95,56,000 as unexplained money under Section 69A of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer following a reopening of the assessment under Section 147, based on information about alleged on-money transactions in real estate. The Tribunal's decision to allow the appeal was based on the examination of procedural lapses and the lack of concrete evidence linking the assessee to the alleged transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473914 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: MUKESH PATEL
• Keywords: Principle of natural justice
• Section: 147; 148; 250; 132; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE PRESIDENT SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER I.T.A. No.1793/Ahd/2024 (Assessment Year: 2015-16) Munjal Mrugesh Jaykrishna, 30, Ambika Society, Nr. Usmanpura Garden, Ahmedabad-380013. [PAN No. ABBPJ 5977 F] Vs. The Deputy Commissioner of Income Tax, Circle-1(1)(1), Ahmedabad. (Appellant) .. (Respondent) Appellant by : Shri Mukesh Patel, AR Respondent by: Shri Rignesh Das, Sr.DR Date of Hearing 23.01.2025 Date of Pronouncement 19.03.2025 O R D E R PER: DR. B.R.R. KUMAR, VICE PRESIDENT: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"CIT(A)\" for short) dated 30.08.2024, passed u/s 250 of the Income- tax Act, 1961, (hereinafter referred to as \"the Act\" for short) for the Assessment Year (AY) 2015-16. 2. The Assessee has taken the following grounds of appeal: (1) Without prejudice to the above challenge on legality, even on the merits of the case, the learned CIT-Appeals erred in law and on facts in ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 2– confirming the addition of Rs.95,56,000 made by the Assessing Officer as Unexplained money u/s. 69A of the IT Act. (2) That on the facts and the circumstances of the case, as also in law, the learned CIT-Appeals grievously erred in not appreciating the merits of the appellant's contentions that the aforesaid addition of Rs.95,56,000 was grossly unjustified and could not be sustained.” 3 In this case, the assessee filed return of income for the year under consideration on 28.05.2016 declaring total income of Rs.67,61,690/-. Based on the information received from DCIT, Central Circle 1(1), Ahmedabad regarding on-money transaction to Navratna Organizers and Developers Pvt Ltd (NODPL) in purchase of Unit/Villa amounting of Rs.95,56,000/-, the Assessing Officer observed that the same had been escaped assessment; thus, he reopened the assessment u/s. 147 of the Act. Subsequently, the Assessing Officer framed the assessment u/s 147 r.w.s. 144B of the Act on 28.03.2022, making addition of Rs. 95,56,000/- as per the provision of Section 69A of the Act. 4. Aggrieved by the order of the Assessing Officer, assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee. 5. Aggrieved, the assessee is now in appeal before us. 6. We have heard the arguments of both the parties at length and examined the pertinent facts relevant to adjudication of this case which are :- ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 3– • A search action u/s 132 of the Income-tax Act, 1961 has been undertaken at the residential premises of one person namely Shri M M Trivedi, and various documents have been found and seized. Shri M M Trivedi is a close confident of Shah Family who are the promotors of company namely Navratna Organizers and Developers Pvt Ltd (NODPL). • During the search, based on the data found in the laptop of Shri M M Trivedi and based on the list submitted by NODPL containing list of purchasers and based on the submission of the assessee before the Hon’ble ITSC that the assessee has been accepting on-money in cash for sales of villas, the Revenue alleged that the assessee has paid on-money of Rs.95,56,000/-. • While treating the amount of Rs.95,56,000/- as undisclosed amount escaped tax, notice u/s 148 has been issued and assessment has been completed determining the undisclosed income of Rs.95,56,000/-. 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:- ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 4– 9.1 As per assessee, the decoded is done by the Department is its own and the search party has not given any authenticity for it. However 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. ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 5– 9.2 The statement asked by Shri Murlidhar Marutbhai Trivedi, the accountant of the said NODPL could not be provided as the statement is based on not only the information regarding the assessee only but another person’s only and it is confidential lies with Investigation wing hence, it has not been provided to the assessee. However, the 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-money out of sale of land and building thereon. It is confessed relevant 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 year under consideration hence, the all transaction are covered under 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 ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 6– 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. 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 ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 7– 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. 7.6 Finally, the purchase deed in question has been executed in the year under consideration, hence the on-money payments have already been made in the same year, i.e. FY 2014-15, whereas the payments for the purchases have been made on 11.04.2009 of Rs.15 lakhs, 17.11.2009 of Rs.10 lakhs, 27.03.2010 of Rs.12.50 lakhs, 25.11.2011 of Rs.37.50 lakhs & 08.01.2013 of Rs.8.01 lakhs. Even on this count, it cannot be said that the amounts have been paid in the FY 2014-15. ITA No.1793/Ahd/2024 Munjal Mrugesh Jaykrishna Vs. DCIT Asst.Year : 2015-16 - 8– 7.7 Hence, based on the facts presented in the assessment order, the addition made to the income of the assessee needs to be deleted as it lacks a valid basis. 7.8 Since the addition made by the Assessing Officer is deleted on merits, any adjudication on the issue of reopening u/s 148 becomes academic in nature and hence not resorted to. 8. In the result, appeal of the assessee is allowed. This Order pronounced in Open Court on 19.03.2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE PRESIDENT (True Copy) Ahmedabad; Dated 19.03.2025 TRUE COPY आदेश क\u0007 आदेश क\u0007 आदेश क\u0007 आदेश क\u0007 \b\tत\u000bल\rप अ\u0010े\rषत \b\tत\u000bल\rप अ\u0010े\rषत \b\tत\u000bल\rप अ\u0010े\rषत \b\tत\u000bल\rप अ\u0010े\rषत/Copy of the Order forwarded to : 1. अपीलाथ\u0016 / The Appellant 2. \b\u0017यथ\u0016 / The Respondent. 3. संबं\u001cधत आयकर आयु त / Concerned CIT 4. आयकर आयु त(अपील) / The CIT(A)- 5. \rवभागीय \b\tत\tन\u001cध, आयकर अपील(य अ\u001cधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड- फाईल / Guard file. आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार उप/सहायक पंजीकार उप/सहायक पंजीकार उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील(य अ\u001cधकरण, अहमदाबाद आयकर अपील(य अ\u001cधकरण, अहमदाबाद आयकर अपील(य अ\u001cधकरण, अहमदाबाद आयकर अपील(य अ\u001cधकरण, अहमदाबाद / ITAT, Ahmedabad "