Shruti Amar Mehta Vs ACIT (ITAT Pune)
ITAT Deletes ₹30 Lakh Flat Purchase Addition as Seized Material Names Another Person
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) deleted a ₹30 lakh addition under Section 69 after finding that the Assessing Officer had failed to produce concrete evidence linking the alleged cash payment to the assessee. The seized material relied upon by the Department referred to another individual, and the assessee disputed any connection with that person.
In Shruti Amar Mehta vs. ACIT, Circle-1(1), Pune, ITA No. 2683/PUN/2026, concerning Assessment Year 2020-21, the Tribunal allowed the appeal on the alternative ground challenging the evidentiary basis of the addition.
The order dated 14 October 2026 was passed by Accountant Member Manish Borad and Judicial Member Vinay Bhamore.
Search Information Leads to Reassessment
The dispute arose from information received from the DDIT (Investigation), Mumbai, following a search under Section 132 in the case of Runwal Group and others on 6 October 2023.
According to that information, Shri Amar Kantilal Mehta had purchased Flat No. T8-3404 in the “Forest” project from Runwal Group by making a cash payment of ₹30 lakh.
The Department reopened the case under Section 147 by issuing a notice under Section 148 on 31 March 2024. No return was furnished in response, and notices under Section 142(1) also remained unanswered.
The Assessing Officer relied on a blue-coloured diary and the statement of Smt. Lucy Roy Choudhary from Runwal Group to conclude that the cash payment had been made.
₹30 Lakh Added as Unexplained Investment
Through an order dated 28 March 2025, the Assessing Officer completed reassessment under Section 147 read with Section 144, determining total income at ₹47,71,690, against the returned income of ₹17,71,690.
The assessed income included the disputed ₹30 lakh addition under Section 69, representing the alleged cash payment for the flat.
The assessee challenged both the legal validity of the proceedings and the factual foundation of the addition before the CIT(A)/NFAC.
Proceedings Against Deceased Assessee Challenged
Before the first appellate authority, it was submitted that Amar Kantilal Mehta had died on 24 May 2023, before reassessment proceedings were initiated.
His wife and legal heir, Shruti Amar Mehta, had allegedly informed the Department of his death through her e-portal on 23 December 2023. Nevertheless, notices and the assessment order were issued in the deceased person’s name, without notice to the legal representative.
The appellant argued that the proceedings were void ab initio and that the defect was jurisdictional rather than a procedural irregularity capable of being cured under Section 292B.
The CIT(A)/NFAC, however, restored the matter to the Assessing Officer for fresh assessment after providing a reasonable hearing.
Seized Entry Allegedly Related to Another Buyer
Before the Tribunal, the appellant advanced an alternative ground directly challenging the alleged payment.
Her representative pointed out that the seized material reproduced on page 13 of the assessment order did not contain the assessee’s name. Instead, it referred to Kamlesh Navsariwala.
It was argued that the ₹30 lakh payment dated 5 July 2019, recorded in that material, related to Navsariwala, who was neither known nor related to the assessee.
The representative also submitted that Lucy Roy Choudhary had not named the assessee in her statement. According to the submission, the cash receipt was attributed to Navsariwala.
Purchase Date and Lack of Corroboration Highlighted
The appellant further submitted that the deceased assessee had purchased the flat on 17 September 2021, falling in Assessment Year 2022-23.
This contention accompanied the broader argument that the Department had failed to connect the assessee with the cash entry relied upon for AY 2020-21.
The appellant also challenged reliance on third-party documents and statements without an opportunity for cross-examination.
The central evidentiary objection was therefore specific: the material referred to another person, while no concrete evidence established that the assessee had actually paid the disputed amount.
Coordinate Bench Decisions Support Relief
The Tribunal considered Ashutosh Pandurang Patil vs. ITO, ITA No. 1432/PUN/2026, dated 24 June 2026, cited in support of deletion in comparable circumstances.
It also discussed Abhishek Shivaji Gade vs. ITO, ITA No. 467/PUN/2026, dated 30 April 2026.
In the latter decision, reproduced in the order, an alleged cash payment for a flat was found unsupported by specific positive evidence. The reasoning also addressed uncertainty surrounding an electronic record, retracted statements and denial of cross-examination.
Following these coordinate bench decisions and considering the present record, the Tribunal found that the Assessing Officer had failed to bring concrete evidence establishing payment of ₹30 lakh by the assessee.
Addition Deleted; Jurisdictional Grounds Left Open
The Tribunal set aside the CIT(A)/NFAC order and directed the Assessing Officer to delete the entire ₹30 lakh addition under Section 69.
Having allowed the alternative ground on merits, it treated the remaining grounds as infructuous and did not adjudicate them.
Accordingly, the appeal was allowed, but the order contains no final ruling on the validity of reassessment proceedings initiated in the deceased person’s name.
Cases Discussed
- Ashutosh Pandurang Patil Vs ITO — ITA No. 1432/PUN/2026, order dated 24 June 2026 (ITAT Pune); relied upon. Exact TaxGuru case URL not verified.
- Abhishek Shivaji Gade Vs ITO — ITA No. 467/PUN/2026, order dated 30 April 2026 (ITAT Pune); followed/discussed. Exact TaxGuru case URL not verified.
- Amit Shantaram Bagade Vs ITO — cited in quoted passage from Abhishek Shivaji Gade concerning lack of corroboration for cash payments.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 06.03.2026 passed by Ld. CIT(A)/NFAC for the assessment year 2020-21.
2. The appellant has raised the following grounds of appeal :-
“The Appellant respectfully submits the following grounds of appeal against the order passed by the Learned CIT(A), which are raised without prejudice to each other.
1. The Ld. CIT(A) erred in law and on facts in setting aside the assessment order without adjudicating the specific legal ground challenging the validity of the reassessment proceedings initiated and completed in the name of a deceased person, despite the fact that the death of the assessee had already been intimated to the department prior to issuance of notice under section 148 of the Act.
2. The Ld. CIT(A) failed to appreciate that the notice issued under section 148, the consequential reassessment proceedings and the assessment order passed in the name of a deceased assessee are void ab initio, non-est in law and without jurisdiction, and therefore liable to be quashed.
3. The Ld. CIT(A) grossly erred in not adjudicating the jurisdictional/legal ground raised by the appellant regarding violation of section 159 of the Income-tax Act, 1961 and instead improperly restored the matter to the file of the Assessing Officer for fresh examination.
4. The Ld. CIT(A) failed to appreciate that once the very initiation of reassessment proceedings was void in law, no further verification or remand could have been directed and the only legally permissible course was to quash the reassessment proceedings.
5. The Ld. CIT(A) erred in law in observing that the appellate order “shall be read as passed in the case of Late Amar Kantilal Mehta through legal heir”, without appreciating that jurisdictional defects cannot be cured by such observation, particularly when the reassessment proceedings themselves were initiated and completed against a dead person.
6. The Ld. CIT(A) failed to appreciate that the defect in issuing notice and completing assessment in the name of a deceased person is not a procedural irregularity curable under section 292B of the Act, but a substantive jurisdictional defect rendering the entire proceedings null and void.
7. The appellant craves leave to add, alter, amend, modify, rectify, delete or withdraw any of the above grounds or to raise additional grounds at the time of hearing.”
3. Facts of the case, in brief, are that the assessee is an individual and furnished her return of income u/s 139 of the IT Act on 30.12.2020 declaring income of Rs.17,71,690/-. On the basis of information received from the DDIT (Inv.), Mumbai that a search and seizure action u/s 132 of the IT Act was conducted in the case of M/s. Runwal Group and others on 06.10.2023 wherein it was found that the assessee Shri Amar Kantilal Mehta purchased Flat No.T8-3404 in the project ‘Forest’ from Runwal Group by making cash payment of Rs.30,00,000/-. Therefore, the case of the assessee was reopened u/s 147 of the IT Act by issuing notice u/s 148 of the IT Act on 31.03.2024. The assessee did not furnished return in response to above notice and not filed any reply to the notice issued u/s 142(1) of the IT Act. The Assessing Officer on the basis of blue coloured diary and on the basis of statement of Smt. Lucy Roy Choudhary from the Runwal Group held that the assessee Amar Kanti Lal Mehta has paid Rs.30,00,000/- in cash against the purchase of Flat No.T8-3404 project ‘Forest’ and vide order dated 28.03.2025 completed the assessment proceedings u/s 147 r.w.s. 144 of the IT Act by determining the income of the assessee at Rs.47,71,690/- as against the income of Rs.17,71,690/- returned by the assessee. The above assessed income includes addition of Rs.30,00,000/- u/s 69 of the IT Act being cash paid for purchase of flat.
4. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC wherein it was claimed that the assessee namely Amar Kanti Lal Mehta expired on 24.05.2023 i.e. before the initiation of the reassessment proceedings and the fact of death of the assessee was duly informed to the Department through e-portal of Shruti Amar Mehta on 23.12.2023 who is the wife and legal heir of the assessee however, the notices were issued in the name of the deceased assessee, although the legal heir has communicated to the Department about the death of the assessee and no notice was issued to the legal representative even after having the knowledge of the death of the assessee. Apart from this, it was also argued that the addition of Rs.30,00,000/- u/s 69 of the IT Act was made merely on the basis of third party statements and documents seized from a third party without any opportunity of cross-examination to the assessee. It was also submitted before Ld. CIT(A)/NFAC that the assessment is void ab initio since it was passed in the name of a dead person. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC restored the matter back to the file of the Assessing Officer for fresh assessment after providing reasonable opportunity of hearing to the assessee, accordingly, the appeal was allowed for statistical purposes by Ld. CIT(A)/NFAC.
5. It is the above order against which the assessee is in appeal before this Tribunal.
6. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that it is the alternative ground of the counsel of the assessee that the seized material referred by the Assessing Officer on page no.13 of assessment order does not contain the name of the assessee rather name of one Kamlesh Navsariwala and therefore, it was contented by the counsel of the assessee that the assessee has not paid any amount of Rs.30,00,000/- on 05.07.2019 as referred in the seized material relied on by the Assessing Officer and admittedly, the above amount was paid by one Kamlesh Navsariwala who is neither known to the assessee nor related to the assessee. It was also the contention that Ms. Lucy Roy Choudhary in her statement never took the name of the assessee instead cash was claimed to be received from Mr. Kamlesh Navsariwala. Apart from above, it was also submitted by the counsel of the assessee that the impugned flat was purchased by the deceased assessee on 17.09.2021 i.e. during assessment year 2022-23. In support of its contention that the assessee has not paid any cash in connection with the purchase of flat and the Assessing Officer could not corroborate the name of the assessee with the payment of Rs.30,00,000/- mentioned in the seized material, Ld. Counsel of the assessee placed reliance on the decision of coordinate bench of this Tribunal in the case of Ashutosh Pandurang Patil vs. ITO, ITA No.1432/PUN/2026 order dated 24.06.2026 wherein the Tribunal under identical facts addition u/s 69A of the IT Act being cash paid as unexplained investment in the purchase of immovable property was deleted. Similar view has been taken by the coordinate bench of this Tribunal in the case of Abhishek Shivaji Gade vs. ITO, ITA No.467/PUN/2026 order dated 30.04.2026 wherein identical addition made u/s 69A of the IT Act has been deleted by observing as under :-
“4. We have heard both the parties and perused the records. In this case assessee is a salaried employee working with Government of India. During the year assessee has purchased a flat in Adreno Towers for a consideration of Rs. 71,51,120/-. Based on the search in the case of City Group ld. AO asked the assessee to explain the source of payment and asked assessee to explain whether any cash payment has been made. Assessee submitted source of payments. Assessee also denied any cash payment, however ld. AO based on the statement of Mr. Chetan which was recorded during the search in the case of City Group and based on the excel sheet concluded that assessee had paid cash of Rs. 2,50,000/- for purchase of flat. It is observed that the statement recoded during the search were retracted subsequently. This fact is mentioned by the ld. AO in the assessment order itself. It is also observed that the City Corporation Ltd had issued letter to all the buyers explaining the search and admitting that no cash was received. One such letter is at page No. 167 to 168 of the paper book. The ld. AO has not brought on record any specific positive evidence to prove cash of Rs. 2,50,000/-. Ld. AO has relied on excel sheet however the source of the excel sheet is not clear whether the said excel sheet has been prepared by the builder or any one else. It is also noted that opportunity of cross examination asked by assessee was not provided.
5.1 On identical facts by the decision of Coordinate Bench of ITAT in the case of Amit Shantaram Bagade in ITA Nos. 832 & 6286/Mum/2026, who has purchased the flats from City Group has deleted the addition.
5.2 The ld. AO has failed to establish that assessee had made any cash payments. Accordingly, respectfully following the decision of Coordinate Bench of ITAT in the case of Amit Shantaram Bagade (supra), we direct the AO to delete the addition of Rs. 2,50,000/-.”
7. Respectfully following the above decisions of coordinate bench of this Tribunal (supra) and in the light of our above discussion, we are of the considered opinion that the Assessing Officer failed to brought any concrete evidence on record that the impugned amount of Rs.30,00,000/- was paid by the assessee and therefore, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to delete the addition of Rs.30,00,000/- made u/s 69 of the IT Act. Thus, the alternative ground raised by the assessee is allowed. Since we have allowed the appeal by adjudicating the alternative ground raised by the assessee during the course of hearing, other grounds raised by the assessee becomes infructuous hence not adjudicated by us.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 14th day of October, 2026.
