Jashvantiben Manojbhai Makwana Vs ITO (ITAT Rajkot)
Only Profit Element in On-Money Taxable – ITAT Rajkot Trims ₹ 1.25 Lakh Addition to ₹ 37,500
Assessee, an individual, had not filed her return for A.Y. 2020-21. During a search u/s 132 in the Suchariya Group, documents were found showing receipt of “on-money” in cash for units in Pragati Shopping Centre. A ledger allegedly in Assessee’s name reflected payment of ₹ 1,25,000 in cash towards Shop No. 135 (First Floor). Relying solely on that seized ledger, AO reopened the case u/s 147, treated the said amount as unexplained investment u/s 69, & completed assessment on 06.03.2025.
Before NFAC, Assessee contended that the addition was made purely on an unverified third-party paper without corroboration or opportunity for cross-examination & that such “dumb documents” could not form the sole basis of addition. CIT(A) however confirmed the addition in full.
In appeal before Tribunal, it was argued that even assuming some “on-money” existed, only the profit element thereof can be brought to tax, following CIT v. President Industries (258 ITR 654 – Guj). The Department relied on the AO’s order.
Tribunal observed that the seized material lacked direct evidentiary strength & that the total amount was small (₹ 1.25 lakh). Following the Gujarat High Court precedent, it held that only the embedded profit component in the on-money receipt should be taxable. It therefore restricted the addition to 30 % of ₹ 1.25 lakh = ₹ 37,500, to be taxed at normal rates & not u/s 115BBE.
