Kanubhai Dhulabhai Patel Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, has partially allowed an appeal filed by assessee Kanubhai Dhulabhai Patel, deleting a significant portion of an addition made by the Assessing Officer (AO) for unexplained investments in land. The decision, pronounced on July 3, 2025, hinges on the unreliability of a draft Memorandum of Understanding (MOU) found during a survey, which was used as the sole basis for the addition.
The case pertains to the Assessment Year 2010-11 and involves two separate additions for alleged unexplained investments in land purchases in Hathijan and Ropda. The core of the dispute was whether the assessee had paid unaccounted-for cash amounts over and above the registered sale deeds.
Hathijan Land Addition Deleted
The primary point of contention was an addition of Rs. 52,91,053 made by the AO concerning a land purchase in Hathijan village. Mr. Patel and another individual, Rameshbhai N. Savaliya, were joint purchasers with a 40% and 60% share, respectively. The AO alleged that both parties had paid a substantial cash amount beyond the declared sale consideration of Rs. 1,01,48,900.
This allegation was based on loose papers discovered during a survey at the office of an Advocate, Shri Paresh Hiralal Modi. A key flaw in the AO’s case was that the assessee, Mr. Patel, had no connection to the said advocate. The papers themselves were found to be rough, containing numerous corrections, and were unsigned by any of the parties involved.
