Ashokkumar Prahladbai Vs DCIT (ITAT Ahmedabad)
Developer’s Admission Can’t Bind Buyer: On-Money Addition Fails Without Direct Evidence: ITAT Ahmedabad Deletes ₹19.62 Lakh- Excel Sheet & Third-Party Statement Not Enough: ITAT Gives Relief to Property Purchaser
The Ahmedabad “A” Bench of the ITAT, vide order dated 01.01.2026 in Ashokkumar Prahladbai Patel v. DCIT (ITA No.1300/Ahd/2025, AY 2016-17), allowed the assessee’s appeal and deleted the addition of ₹19,62,500 made u/s 69A on account of alleged on-money payment for purchase of immovable property.
The reassessment was initiated based on search u/s 132 in the Navratna Group, where the developer admitted before the Settlement Commission that it had received on-money in certain transactions. Relying on a general statement of the developer’s accountant and a list of purchasers, the AO alleged that the assessee, being one of the co-owners of the property, had paid proportionate on-money in cash. However, no incriminating material or evidence was found during the search to establish that the assessee had actually made any such cash payment.
The Tribunal noted that the addition rested entirely on third-party material—namely, an unsigned excel sheet and the general admission of the developer—without any direct nexus to the assessee. Crucially, the statement of the accountant relied upon by the AO was never supplied to the assessee for cross-examination, violating principles of natural justice. Following earlier coordinate bench decisions and the Gujarat High Court ruling in Kaushik Nanubhai Majithia, the Tribunal held that a developer’s confession of receiving on-money cannot automatically lead to an addition in the hands of the buyer in absence of corroborative evidence.
The Tribunal also took note of the fact that no addition was made in the hands of the other co-owners of the same property on identical facts, and held that the Revenue could not adopt a contradictory stand in the assessee’s case. Applying the rule of consistency and parity, the Tribunal concluded that the impugned addition was unsustainable.
Accordingly, the ITAT deleted the addition of ₹19.62 lakh and allowed the appeal in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
