Sandipkumar Natwarlal Patel Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has ruled in favor of Sandipkumar Natwarlal Patel, an individual assessee, setting aside an income addition of Rs. 8,01,000 made under Section 69 of the Income-tax Act for the Assessment Year 2013-14. The addition, confirmed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, was based solely on a third-party disclosure to the Income Tax Settlement Commission (ITSC) without independent corroborating evidence.
The case originated from information received by the Assessing Officer (AO) that the assessee had allegedly made an advance cash payment of Rs. 8,01,000 on August 29, 2012, to M/s Dharmadev Group for the purchase of two shops. This payment was categorized as “on-money” and its source remained unverified. Consequently, a notice under Section 148 of the Act was issued on March 28, 2018, to reopen the assessment.
During the re-assessment proceedings, the AO proposed to add the amount as unexplained investment. The assessee, in a letter dated October 15, 2018, denied making the alleged cash payment of Rs. 8,01,000 for the shops. He later clarified, on November 6, 2018, that out of the total payment, Rs. 5,94,500 was made by cheque and Rs. 12,500 by cash, for which receipts were issued by the party.
