Nirmala Pennechand Sarda Vs ITO (ITAT Mumbai)
ITAT Mumbai deleted addition of ₹54.10 lakh made u/s 69 towards alleged on-money payment for purchase of a commercial unit, holding that the addition was based only on rough loose papers seized from a third party during search on Surana Group. Tribunal observed that the jotting “613/14-manishji – 108.216” neither mentioned assessee’s name nor established any nexus with her transaction, and no corroborative evidence or independent enquiry was conducted by AO.
The Bench noted that summary sheets prepared by AO showed no on-money receipts for FY 2022-23, the year relevant to the assessment, and the property was purchased at stamp-valuation rate with no evidence of under-valuation. Relying on judicial precedents, Tribunal held that loose papers, builder statements or third-party records alone cannot justify addition without concrete proof of actual payment by assessee.
Accordingly, addition for unexplained investment was deleted and assessee’s appeal allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assessee is directed against the order of ld. CIT(A)/NFAC dated 23.09.2025 for Assessment Year (AY) 2023-24. The assessee has raised following grounds of appeal:
“1. That on the facts and circumstances of the case as well as in law, the Id CIT (A), NFAC, Delhi [CIT (A)) has erred in upholding the validity of the assessment order u/s 143(3) of the Act passed by the Income Tax Officer, Ward-42(2) (4). Mumbai (JAO), whereas the assessment order so passed is clearly invalid, bad-in-law and contrary to the provisions of law. Appellant prays for quashing the assessment order so passed.
2. That on the facts and circumstances of the case as well as in law, the id CIT (A) has erred in upholding the addition made by the A.O. of Rs. 54,10,800/-u/s 69 of the Act in the name of on-money payment for purchase of shop. whereas neither any such on-money was paid by appellant nor there has been any finding of any such on-money paid by the appellant. Addition so made and sustained is wrong, unjustified and contrary to the settled law. Appellant prays for deleting this wrong and unjustified addition.
3. Without prejudice to generality of ground no ‘2’ above, that the Id. CIT (A) has erred in not considering the case laws relied upon by the appellant (assessee) in the written appeal submission filed before Id. CIT (A) and in upholding the addition by taking the view contrary to the law laid down in the case laws so relied upon.
4. Without prejudice to generality of ground no ‘2’ above, that the Id. CIT (A) has erred in upholding the addition made by the A.O of Rs. 54,10,800/- on the basis of seized material of third party, whereas said seized materials pertain to earlier years and there is nothing in the impugned seized material to infer on-money payment by the appellant and that too in the year under appeal.
5. Appellant craves leave to add, alter, delete or modify any ground o f appeal. ”
2. Brief facts of the case are that assessee is individual and filed her return of income for A.Y. 2023-24 declaring income of Rs. 54,10,800/-. Case was selected for scrutiny. During assessment, the assessing officer (AO) recorded that a search action under section 132 was carried out in Surana Group in Surat on 08.12.2023. In the said search action, certain incriminating material of unaccounted transaction pertaining to real estate business of Surana Group was found and seized from the residential premises of Pawankumar Rameshwarlal Lahoti. Out of such incriminating material, certain evidence pertains to project “IFC” that is international finance centre, which is commercial complex. As per the information available on GujRera website, it consists of one tower having 195 units. The project was developed in Vesu area of Surat. The AO also received information from DDIT, Unit-4, Surat that assessee purchase a unit in the project developed by Surana group and has paid on-money as. During the assessment, the assessing officer issued show cause notice which were complied by the assessee with relevant documentary evidence. The AO in para 5.1 of assessment order recorded that in the search action on Surana Group, various evidences were found wherein amounts were written in coded form with suppression ranging from one zero to seven zeros. In the search action, statement of Snehkumar Chhajer was recorded, who disclosed and decoded such zeros. The AO further recorded that financial year-wise summary sheet of receipt of payments were prepared. The assessing officer further recorded that three (3) different set of evidence were found; namely summary sheet, detailed receipts and payments and unit-wise receipt of project “IFC”. The summary sheets were prepared which contained year wise consolidated transactions. The AO scanned such detail on page no. 5 of assessment order under. The AO also scanned other incriminating material summary of different financial year where the amount of on-money transaction relating to unit-wise sale / booking was recorded under the narration “P”. The AO scanned such summary for the period of F.Y. 2019-20 to 2023-24 on page no 6 of his order. The AO also scanned certain other details and the statement of Pawankumar Rameshwarlal Lahoti and Snehkumar Chhajer in assessment order and took his view that his statement under section 132(4) is an important piece of evidence. In para 8 of the assessment order, the AO recorded that as per information from DDIT, Investigation Unit-4, the assessee purchased immovable property of Rs. 30,06,000/- i.e. Unit No. 613 & 614 in “IFC” project developed by S.S. Enterprise, a group concern of Surana group. On show cause notice, the assessee mentioned that she has purchased office bearing floor no. 713 which is on 6thfloor and as per approved plan bearing no. 613 having built-up area of 48.22 square meter and carpet area is 46.56 square meter. On the basis of such reply and the various incriminating evidence, the AO was of the view that assessee has made payment of Rs. 54,10,800/- as on-money for purchase of Unit No. 613 & 614 in project of “IFC”. The AO further issued show cause notice as to why such on-money should not be treated as unexplained investment vide show cause notice dated 23.03.2025. The assessee filed her reply dated 24.03.2025. In the reply, the assessee submitted the loose papers no. 177 to 182 of B-18 which is stated to be found and seized in case of Surana Group, those papers are neither relevant nor such papers have any evidentiary value. She has no concern with any loose papers. Such loose papers are ex-facie rough loose papers. She has nothing to do with such loose papers. The loose papers contained the name of “Manishji” which is unrelated to assessee. She has not paid any unaccounted money. Merely, on the basis of such rough jotting on rough loose papers found from third person, it cannot be said that unaccounted money was paid by assessee. Further, she is informed that such loose papers are not found and seized during search action in case of person from whom she purchased office. Such loose papers were seized from third person. The statement of builder from whom the assessee purchased is not recorded. There is no basis for inferring payment of unaccounted money reply of assessee was not accepted by assessing officer. The AO relied on modus operandi explained by Snehkumar Chhajer and that name of purchaser / investor against respective unit is mentioned with amount of on-money paid against booking / purchase of units in project of “IFC”. The assessing officer thereby added Rs. 54,10,800/- as on-money on account of unexplained investment under section 69 in the assessment order passed on 31.03.2025.
