Naman Vidyapati Patel Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad allowed the assessee’s appeal, holding that a cancelled land sale MOU and refunded amounts meant no escapement of income. The Tribunal ruled the AO’s original assessment was reasonable, and the PCIT’s Section 263 revision was unsustainable, confirming that cancelled transactions with returned consideration do not create taxable cash income.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, heard an appeal filed by the assessee, Naman Vidyapati Patel, challenging the revisional order passed by the Principal Commissioner of Income-Tax (PCIT) under Section 263 of the Income-Tax Act, 1961. The PCIT had set aside the original assessment order for Assessment Year (AY) 2021-22, deeming it erroneous and prejudicial to the interests of the revenue due to the Assessing Officer’s (AO) failure to adequately examine evidence of an alleged unaccounted cash receipt of ₹1.92 crore.
Factual Background
The assessee, an individual, filed a return of income declaring ₹48,10,920. The return was selected for compulsory scrutiny. During the assessment proceedings, the AO noted that a search operation had been conducted on the Nila Sambhav Group, a real estate developer.
A key piece of evidence found was a Memorandum of Understanding (MOU) dated April 2, 2019, between the assessee (potential seller) and Shri Manoj B. Vadodaria, a Director of the Nila Sambhav Group. The MOU detailed the intended sale of the assessee’s land in Vasna, Ahmedabad, for a total consideration of ₹3,21,00,000. Handwritten loose papers were also recovered, suggesting a split payment:
1. ₹1,29,00,000 paid as advance via cheque.
2. ₹1,92,00,000 paid in cash.
Assessment and Assessee’s Defense
