Validity of ₹95.56 Lakh Addition as On-Money u/s 69A: ITAT Deletes Addition Due to Lack of Proper Verification [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) deleted the addition of ₹95.56 Lakh as on-money under Section 69A of Income Tax Act,1961, ruling that the addition lacked proper verification.

Munjal Mrugesh Jaykrishna,appellant-assessee,filed his income return on 28.05.2016, showing an income of Rs.67,61,690/-. The Assessing Officer(AO), after receiving information about an on-money transaction of Rs.95,56,000/- to Navratna Organizers and Developers Pvt Ltd (NODPL), found that income had escaped assessment. The assessment was reopened under section 147, and on 28.03.2022, the officer added Rs.95,56,000/- under Section 69A of the Act.

The assessee aggrieved by the decision of the AO appealed before the Commissioner of Income Tax(Appeals)[CIT(A)] who dismissed the appeal. The assessee then appealed before the tribunal.

The two member bench comprising Dr.BRR Kumar(Vice President) and  T.R.Senthil Kumar(Judicial Member)  reviewed the case after hearing both parties. A search under section 132 was conducted at the home of Shri M M Trivedi, a close associate of the Shah family, promoters of NODPL. The Revenue claimed the assessee paid ₹95,56,000 in on-money based on data from Trivedi’s laptop, a list from NODPL, and the assessee’s statement to ITSC. This amount was added to the assessee's income under section 148 of the Act.

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The appellate tribunal identified several issues with the assessment. The department decoded the figures without proper verification, which raised doubts about their accuracy. The payment details from the assessee matched the figures in the assessment order, supporting the assessee’s claim.

The statement from Trivedi was not provided to the assessee, preventing cross-examination, which violated natural justice. Although NODPL admitted to taking on-money, the confession was general and didn’t directly link the assessee to any transactions. Additionally, while the purchase deed was executed in the relevant year, the payments had been made earlier (2009-2013) and could not be considered part of FY 2014-15.

Given these points, the ITAT deleted the addition, stating it lacked a valid basis. The issue of reopening under section 148 was deemed unnecessary.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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