Ashokbhai Kanjibhai Savsani Vs ITO (ITAT Rajkot)
Property On-Money Addition Restricted to 10%; Normal Tax Rates Apply: ITAT
The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) restricted an addition of ₹9,71,000 concerning alleged on-money paid for an office purchase to 10%, sustaining ₹97,100 and deleting ₹8,73,900. Following its decision in Nitaben Kirtikumar Parekh v. ITO, stated to involve identical facts, the Tribunal also directed that the sustained amount be taxed under the normal provisions of the Income-tax Act, 1961 instead of Section 115BBE.
The assessee had filed his return for Assessment Year 2020-21 on 11 July 2020, declaring total income of ₹7,09,710. The assessment was subsequently reopened through a Section 148 notice dated 31 March 2024, based on Investigation Wing information alleging an undisclosed cash payment for the purchase of immovable property from Vivan Infraspace LLP.
Allegation arose from seized accounting software data
The information originated from search, seizure and survey proceedings involving real estate developers in Rajkot, including the R.K. Group.
During the search, the Department seized data maintained in accounting software known as “Miracle”, allegedly recording unaccounted cash transactions relating to property purchases and sales. The Investigation Wing also relied on statements recorded under Section 132(4) from key persons of the group.
Based on this material, the Assessing Officer alleged that the assessee had paid ₹9,71,000 in cash to Vivan Infraspace LLP towards Office No. 234 in the R.K. World Towers project.
The assessee acknowledged purchasing the office for a disclosed consideration of ₹8,63,500 but denied paying any amount beyond that consideration.
The Assessing Officer rejected the explanation and added ₹9,71,000 as unexplained investment under Section 69, taxing it under Section 115BBE. The CIT(A) sustained the addition.
Assessee sought relief based on coordinate bench decision
Before the Tribunal, the assessee relied on Nitaben Kirtikumar Parekh v. ITO, ITA No. 506/Rjt/2026.
His representative submitted that, on identical facts, the Tribunal had restricted an alleged on-money addition to 10% of the disputed amount, considering an offer to surrender income to buy peace.
The assessee accordingly requested that the addition be restricted to ₹97,100 and the remaining ₹8,73,900 be deleted.
Tribunal restricts addition and excludes Section 115BBE
Following the cited decision, the Tribunal directed the Assessing Officer to sustain only 10% of ₹9,71,000, amounting to ₹97,100, and delete the balance.
It further directed that tax on the sustained addition be computed under the normal provisions of the Act rather than Section 115BBE, in accordance with the basis of the decision relied upon.
The Assessing Officer was instructed to recompute the total income and tax liability accordingly. The assessee’s appeal was partly allowed
Cases Discussed
- Nitaben Kirtikumar Parekh v. ITO — ITA No. 506/Rjt/2026 (ITAT Rajkot), followed.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2020-21, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 26.09.2025, which in turn arises out of an order passed by assessing officer u/s. 147 of the Act, dated 22.03.2025.
02. Brief facts of the case are that the assessee is an individual who filed his return of income for the Assessment Year 2020-21 on 11.07.2020, declaring total income of Rs.7,09,710/-. Subsequently, pursuant to information received from the Investigation Wing regarding alleged payment of on-money in connection with the purchase of immovable property from Vivan Infraspace LLP, the assessment was reopened and notice under section 148 of the Income-tax Act, 1961, dated 31.03.2024 was issued. In response thereto, the assessee filed his return declaring same income. The information received by the Assessing Officer emanated from search, seizure and survey proceedings conducted by the Investigation Wing in the cases of leading real estate developers of Rajkot, including the R.K. Group. During the search proceedings, data maintained in accounting software known as “Miracle”, allegedly containing details of unaccounted cash transactions relating to the purchase and sale of properties, was seized. The Investigation Wing also relied upon statements recorded under section 132(4) of the Act from key persons of the group concerning the recording of such transactions. On the basis of the information so received, the Assessing Officer alleged that the assessee had paid money of Rs.9,71,000/- in cash to Vivan Infraspace LLP towards the purchase of Office No. 234 in the project known as R.K. World Towers. During the assessment proceedings, the assessee admitted having purchased the office for a sale consideration of Rs.8,63,500/-, but denied having made any cash payment over and above the disclosed consideration. The Assessing Officer, however, held that the assessee had failed to furnish a satisfactory explanation regarding the alleged cash payment and treated Rs.9,71,000/- as unexplained investment under section 69 of the Act. The said amount was subjected to tax under section 115BBE of the Act, and the total income was assessed at Rs.16,08,710/-.
03. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. Commissioner of Income Tax (Appeals), challenging, inter alia, the addition of Rs.9,71,000/- as unexplained investment and its taxation under section 115BBE of the Act. However, appeal of the assessee was dismissed by sustaining the order of the AO.
04. Still, aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal.
05. At the time of hearing, the Ld. AR submitted that the issue involved in the present appeal is covered by the decision of the tribunal in the case of Nitaben Kirtikumar Parekh v. ITO, in ITA No. 506/Rjt/2026, wherein, on identical facts and circumstances, the Tribunal restricted the addition on account of alleged onmoney payment to 10% of the disputed amount, considering the assessee’s offer to surrender income to buy peace. The Ld. AR, therefore, prayed that the addition of Rs.9,71,000/- made in the present case be restricted to 10% thereof, amounting to Rs.97,100/-, and the balance addition of Rs.8,73,900/- be deleted.
06. We have considered the submissions of the Ld. AR and perused the material available on record. Respectfully following the decision of the tribunal in the case of Nitaben Kirtikumar Parekh v. ITO, in ITA No. 506/Rjt/2026, stated to have been rendered on identical facts and circumstances, we direct the Assessing Officer to restrict the addition of Rs.9,71,000/- to 10% thereof, amounting to Rs.97,100/-, and delete the balance addition of Rs.8,73,900/-. As regards the tax treatment of the amount sustained, we direct the Assessing Officer to compute the tax on the sustained addition of Rs.97,100/- under the normal provisions of the Income-tax Act, 1961, and not under section 115BBE of the Act, in accordance with the basis of the decision relied upon by the assessee. The Assessing Officer shall accordingly recompute the total income and tax liability after giving effect to this order. Accordingly, the ground raised by the assessee is partly allowed.
07. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on this 15th day of October, 2026.
