Income Tax Appellate Tribunal - Rajkot
Jayeshkumar Labhubhai Babaria,Morbi vs Income Tax Officer, Ward -1, Morbi on 6 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
Before: Dr. Arjun Lal Saini, Accountant Member
And Dr. Dinesh Mohan Sinha, Judicial Member
ITA No. 444/Rjt/2025
Assessment Year 2017-18
Jayeshkumar The ITO, Ward-1,
Labhubhai Babaria Morbi
C/o Sadbhavna Vs
Hospital, Jail Road,
Morbi-363641
PAN: AFZPB7009J
(Appellant)
(Respondent)
Appellant by : Shri D.M. Rindani, Ld. A.R.
Respondent by : Shri Abhimanyu Singh Yadav,
Ld. Sr. DR.
Date of hearing : 26/02/2026
Date of pronounceme nt : 06/04/2026
आदे श/ORDER
PER : Dr. DINESH MOHAN SINHA, J.M.:-
This appeal has been filed by the Assessee on 30/06/2025 against the order dated 23/05/2025 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.
2. Brief facts of the appeal are as mentioned below.
I.T.A No.444/Rjt/2025 A.Y. 2017-18 2Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi There was search and seizure action u/s. 132 of the I.T. Act on the Navratna Group, a Real Estate group in Ahmedabad and it was found that they sold properties and received cash consideration as on money out of books according to assessment order dtd. 18/05/2023. The information was received by the Assessing Officer from the Investigation Wing and Central Circle-1(1), Ahmedabad with respect to the cash payment made by the customers / purchasers was uploaded by the Central Circle- 1(1). The Assessee was also one of the purchasers in the property named 'Kalhaar Blues and Greens' in Sananad of M/s. Sagar Sanand Infrabuild Pvt. Ltd., which is sister concern of Navratna Organisers and Developers Pvt. Ltd. (NODPL). Assessee purchased immovable property in the project along with his wife Smt. Hemlataben Laljibhai Aghera. According to the AO, his share is 50% in total investment of on money for Rs.8350000/-. Assessing Officer has passed the assessment order u/s. 147 rws 144 rws 144B of the I.T. Act, 1961 by adding Rs. 4175000/- in the income of the Assessee being 50% share holder in investment. Aggrieved by the Assessment order, Assessee has preferred appeal before CIT(A), NFAC. CIT(A) has upheld the order of the Assessing Officer and confimred the addition of Rs. 4175000/-. Against the order of CIT(A), assesse has preferred the appeal before us.
3. The grounds of the appeal are as mentioned below.
1. Order u/s. 147 rws 144 rws 144B of the Act is bad in law.
2. The ld. AO has erred in law as well as on facts in making the addition of Rs. 4175000/- under section 69 rws 115BBE of the Income Tax Act on account of unexplained cash payment. The ld. CIT(A) has further erred in law and on facts in confirming the same.
Assessee has also preferred an additional ground before us.
"The order of assessment passed u/s. 147 rws 144 rws 144B of the Act is without jurisdiction and therefore bad in law in the light of reasons recorded and because it is not passed as per special provisions contained in section 153B of the Act."I.T.A No.444/Rjt/2025 A.Y. 2017-18 3
Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi
4. We have heard both the parties and perused all the relevant material available on record. Before going in to merits of the case we would like to refer the chronology of events as the primary contention of the Ld. AR for the Assessee is regarding validity of notice u/s. 148 as it was beyond period of surviving time according to him. The chronology of events during assessment proceedings are as mentioned below
1. Original Notice u/s 148 [deemed notice u/s 148A(b)] of the Act issued on 28/06/2021.
2. Objection was filed by the assesse on 27/11/2021.
3. Show cause notice u/s. 148A(b) was issued by the AO on 27/05/2022.
4. Reply was filed by the Assessee on 10/06/2022.
5. Order u/s. 148A(d) was passed by the AO on 20/07/2022.
6. Notice u/s. 148 issued by the AO on 20/07/2022.
7. Notice u/s. 143(2) was issued by the Assessment Unit on 17/01/2023
8. Noitce u/s. 142(1) was issued by the Assessment Unit on 24.01.2023.
9. Assessee filed reply in part on 07.02.2023.
10. Show cause notice was issued by the Assessment Unit on 11.05.2023.
11. Assessee filed reply on 15.05.2023.
12. After considering reply of Assessee, the assessment order u/s 147 rws 144 rws 144B of the Act was passed by the AO on 18/05/2023.
5. Pursuat to order of the Hon'ble Supreme Court in case of Union of India Vs.Ashish Agarwal & Others (Civil Application No. 3005/2022) decided on 04/05/2022, the impugned notice issued after 01/04/2021 shall be deemed to have been issued under section 148A of the Act as substituted by the Finance Act, 2021 and construed or treated to be a show cause notice in terms of section 148A(b). After reply of assessee in response to show cause notice u/s. 148A(b), Assessing office has to pass the order u/s. 148A(d) in terms of satisfaction note for issuing notice u/s. 148. Therefore, Assessing Officer has passed the order u/s. 148A(d) and issued notice u/s. 148 for filing revised return of income for A.Y. 2017-18 on 20/07/2022. According to the Ld. I.T.A No.444/Rjt/2025 A.Y. 2017-18 4 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi AR of the Assessee the notice u/s. 148 issued on 20/07/2022 is beyond time in view of the Hon'ble Apex Court judgement in case of Rajeev Bansal (2024) 469 ITR 46 (SC) dated 03-10-2024.
7. Now the technical situation has to be analyzed in light of Hon'ble Apex Court Order in case of UOI Vs. Ashish Agarwal (Supra) and UOI Vs. Rajeev Bansal [2024] 167 taxmann.com 70/301Taxmann.com 238 (469 ITR 46 (SC)). The Assessing Officer issued notice u/s. 148A(b) for A.Y. 2017-18 on 28/06/2021 during the extended time period under the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA). Subsequently the Assessing Officer passed order u/s. 148A(d) and issued fresh notice u/s. 148 on 20/07/2022 which is beyond the 'surviving time' available under the Act read with TOLA and therefore barred by limitation in pursuance to the judgement of Hon'ble Apex Court in case of UOI Vs. Rajeev Bansal [2024] 167 taxmann.com 70/301Taxmann.com 238 (469 ITR 46 (SC)) according to the ld AR of the Assessee. This judgement has laid down law in pursuance to the directions issued by the Hon'ble Apex Court in case of Ashish Agarwal (supra) to consider such notice as valid notice or invalid notice depending upon the surviving time left between the date of issuance of notice u/s. 148 of the Act read with section 3(1) of TOLA upto 30.06.2021. The main high light of the case regarding section 149 and section 151 of the Income Tax Act is reproduced here under.
I.T.A No.444/Rjt/2025 A.Y. 2017-18 5Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi Here 30.06.2021 is the most important date for calculating surviving time. Therefore, the event from issuance of notice u/s. 148 under TOLA to event of passing order u/s. 148A(d) and issuance of notice u/s. 148 of the Act are to be considered for taking decision that whether the notice is within the period of surviving time or beyond the period of surviving time. The following table is hereby given for deciding that I.T.A No.444/Rjt/2025 A.Y. 2017-18 6 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi whether notice u/s. 148 is within surviving time or beyond surviving time, which has been calculated as per the directions laid down in the judgement of Hon'ble Apex Court in case of Rajeev Bansal.
A.Y. Date of
No. of Date of Due date Date of Date of Last date of
notice
days of providing of filling reply order u/s. issuance as
u/s. 148
survivi informati reply 148A(d) per
underng on u/s. and surviving
TOLA time 148A(b) notice u/s. time.
availa 148
ble till
30.06.
2021
2017-18 28/06/21 02 27/05/22 11/06/22 10/06/22 20/07/22 18/06/22
days
8. It is apparent from the above table that impugned notice u/s. 148 of the Act was issued beyond the period of 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (Supra) and therefore, such notice is called to be invalid notice in light of above discussion. Therefore, the contention of the Ld. AR of the assesse regarding validity of notice is factually correct as seen from the record perused. Same view has been taken by Hon'ble Jurisdictional High Court in case of Vinodkumar Rughnathbhai Koringa Vs. ITO, [2026] 183 taxmann.comm 463 (Gujarat). The main highlight of the case is reproduced as under.
I.T.A No.444/Rjt/2025 A.Y. 2017-18 7Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi
9. Thus the case is squarely covered by the order of Hon'ble Jurisdictional High Court as mentioned in para 8.
10. In view of above discussion in light of judgement of Rajeev Bansal, on technical issue the appeal of the Assessee survives. Therefore, there is no need to enter in to merits of the case. Considering the arguments of the ld. AR on merits of case and considering his alternative plea, we would like to go through the merits of the case.
11. Now we discuss the merit of the appeal. The Assessing Officer has reopened the case on information sought from investigation department and Central Circle-1, Ahmedabad and made addition of Rs. 4175000/- u/s. 69 rws 115BBE. The issue is squarely covered by the decision of ITAT, Ahmedabad 'B' Bench in case of the DCIT Vs. Abhipush Properties (P) Ltd. Co-incidentally the searched party is same in the case of Abhipush Properties (P) Ltd. and Shri Jayeshkumar Labhubhai Babaria. Facts are completely similar in both the cases. Both the assessees have invested in same project Kalhar Blues & Greens (KBG) in same A.Y. i.e. 2017-18. Therefore, the same set of facts is applicable in case of both the assessees except assessment order as the assessment order has been passed u/s. 153A rws 143(3) in case of Abhipush I.T.A No.444/Rjt/2025 A.Y. 2017-18 8 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi Properties (P) Ltd. whereas the assessment order passed u/s. 147 rws 144 rws 144B in case of Jayeshkumar Babaria. Judgement of ITAT, Ahmedabad 'B' Bench in case of Abhipush Properties (P) Ltd. is as mentioned below.
2. The brief facts of the case are that the assessee, Abhipushp Properties Pvt. Ltd., filed its return of income for A.Y. 2017-18 declaring NIL income, which was later subjected to assessment under section 153A of the Act pursuant to a search action under section 132 of the Act conducted in the Navratna Group on 11.04.2017. During the 153A proceedings, the Assessing Officer specifically scrutinized the assessee's purchase of Unit/Plot No. 117 in the Kalhaar Blues & Greens (KBG) project by issuing detailed questionnaires under section 142(1) of the Act asking the assessee to produce the purchase deed, to give the source of funds for the purchase of plot, bank statements, and other transaction details. After examining these records, the Assessing Officer accepted the assessee's explanation and completed the assessment under section 153A r.w.s. 143(3) on 17.12.2019 without making any addition. Subsequently, on the basis of information from the Insight Portal regarding alleged on-money payments of ₹1,40,01,500 (comprising ₹35,01,500 towards land and ₹1,05,00,000 towards construction) said to have been paid by the assessee to Navratna Organisers & Developers Pvt. Ltd., the Assessing Officer reopened the assessment by issuing a notice under section 148 (later deemed as 148A(b) in terms of Union of India v. Ashish Agarwal). The Assessing Officer relied upon an Excel sheet allegedly found during the search from the laptop of Shri Murlidhar Trivedi, an employee of the Navratna Group, and on the fact that Navratna Group had declared ₹210 crores as unaccounted receipts before the Income Tax Settlement Commission. Based on these documents, the Assessing Officer passed the reassessment order under section 147 on 30.05.2023 and made additions of₹1,05,00,000 under section 69C of the Act as unexplained expenditure and ₹35,01,500 under section 69B of the Act as unexplained investment, treating the difference between registered value and values appearing in the Excel sheet as on-money payments.
I.T.A No.444/Rjt/2025 A.Y. 2017-18 9Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi
3. In the appellate proceedings, the CIT(Appeals) examined the entire factual matrix in detail and found first that the reopening itself was invalid because it was based on the very same facts and documents that were examined thoroughly in the 153A assessment, where no addition was made. The CIT(Appeals) held that reopening on the same facts amounts to a clear change of opinion, which is impermissible under law, and relied on binding decisions including CIT v. Kelvinator of India Ltd. (SC), DCIT v. Bajaj Allianz Life Insurance Co. (SC), and other judicial precedents upholding that section 147 of the Act cannot be used as a tool for review. The CIT(Appeals) then observed that the factual assumption forming the basis of reopening was incorrect, because the assessee had not purchased a constructed villa as alleged; rather, the purchase deed dated 04.08.2016 clearly showed that the assessee had only purchased an open plot of land, and the subsequent sale deed dated 22.01.2021 showed that the construction on the plot was carried out entirely by NODPL at its own cost, and that the buyers made payments for construction directly to NODPL, not to the assessee. Thus, the assessee neither incurred construction cost nor received any construction-related consideration, making the allegation of on-money factually improbable. The CIT(Appeals) further held that the additions made on the strength of an unsigned Excel sheet seized from a third party without any corroborative material had no evidentiary value, relying on several authoritative decisions including the Gujarat High Court in PCIT v. Kaushik Nanubhai Majithia and Bharat A. Mehta, where it was held that third-party digital data or loose sheets cannot be used against an assessee in the absence of independent evidence or cross-examination. The CIT(Appeals) also noted that the Assessing Officer failed to establish any link between the assessee and the alleged on-money transactions and did not provide the assessee an opportunity to cross-examine persons on whose statements or data the additions were founded. The CIT(Appeals) held that the reassessment was based on incorrect facts, presumptions, and conjectures, and that the additions were unsustainable in law as there was no incriminating material belonging to the assessee. Accordingly, the CIT(Appeals) quashed the reassessment order in entirety and directed deletion of both additions under sections 69B and 69C. Interest and I.T.A No.444/Rjt/2025 A.Y. 2017-18 10 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi penalty grounds were held to be consequential or premature and were accordingly dismissed, resulting in the appeal being partly allowed in favour of the assessee.
4. The Department is in appeal before us against the order passed by CIT(Appeals) partly allowing the appeal of the assessee.
5. We have heard the rival contentions and perused the material on record The assessee has raised an additional ground of appeal challenging the validity of the reassessment on the basis that (i) the sanction under section 151 was not granted by the competent authority, namely the Principal Chief Commissioner of Income Tax, and therefore the assumption of jurisdiction under section 148 is bad in law, and (ii) the reassessment is invalid because, in the assessee's view, the correct course available to the Revenue was to invoke section 263 of the Act and not section 147. These additional grounds are purely legal in nature and are sought to be raised under section 254 of the Act. However, in view of the authoritative pronouncement of the Hon'ble Gujarat High Court in Dhanraj Govindram Kella v. ITO [2025] 177 taxmann.com 194 (Guj.) dated 08.07.2025, the contention that the reassessment notice is void for want of proper approval under section 151 cannot be accepted. The Hon'ble High Court, after an exhaustive examination of the substituted reassessment provisions (sections 147 to 151), the effect of TOLA, and the interplay of the Supreme Court decisions in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal, has held that where the original notice issued under the old regime between 01.04.2021 and 30.06.2021 stood saved by virtue of the legal fiction created by the Supreme Court, the sanction obtained by the Assessing Officer from the authority specified under section 151(1)(i) namely, the Principal Commissioner / Principal Director/Commissioner/Director shall be treated as valid, provided the three-year time limit fell within the extended period covered by TOLA. The High Court categorically rejected the argument that sanction of the Principal Chief Commissioner was mandatory in such cases and held that the test for determining the competent authority under section 151 is to examine whether the three-year time limit from the end of the relevant assessment year fell I.T.A No.444/Rjt/2025 A.Y. 2017-18 11 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi between 20.03.2020 and 31.03.2021; if so, then the approval under section 151(i) is sufficient in law. In the present case, the assessee's additional grounds are identical to the contentions rejected by the Hon'ble High Court. Since the facts of the instant case also fall within the framework explained in Dhanraj Govindram Kella (supra), and since the approval granted by the authority under section 151(1)(i) squarely satisfies the legal requirements as interpreted by the High Court, the additional grounds raised by the assessee are dismissed.
6. Accordingly, the additional grounds of appeal sought to be raised by the assessee are rejected and stand dismissed.
7. On Merits, we have carefully considered the rival submissions, examined the entire factual matrix, and perused the material available on record. It is an undisputed fact emerging from the assessment records that the assessee had purchased only an open plot of land bearing Plot/Unit No. 117 in Kalhaar Blues & Greens (KBG) under a registered deed dated 04.08.2016, and no constructed villa was purchased by the assessee during the year under appeal. The assessment order passed under section 153A r.w.s. 143(3) dated 17.12.2019 categorically demonstrations that the Assessing Officer had already examined in detail the transaction relating to this plot, having called for the purchase deed, source of funds, bank statements, and other documents, and after being fully satisfied, accepted the transaction without making any addition. In the subsequent reassessment proceedings, the additions of ₹1,05,00,000 under section 69C and ₹35,01,500 under section 69B have been made solely on the basis of an unsigned Excel sheet allegedly found during the search from the laptop of a third party, namely Shri Murlidhar Trivedi, an employee of Navratna Group, combined with the fact that the group admitted certain unaccounted receipts before the Income Tax Settlement Commission. However, the Assessing Officer has not brought any independent evidence to establish (i) that the said Excel sheet belongs to the assessee, (ii) that the entries therein relate to the assessee, or (iii) that any amount of on-money was ever paid by the assessee to the developer. The law on this issue is well settled that third-party loose sheets, unsigned digital data or uncorroborated documents cannot be used as evidence I.T.A No.444/Rjt/2025 A.Y. 2017-18 12 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi against an assessee unless supported by independent evidence, and unless the assessee is offered cross- examination of the persons whose statements or documents are relied upon. The Hon'ble Gujarat High Court in PCIT v. Kaushik Nanubhai Majithia (Tax Appeal No. 20 of 2024, dated 29.01.2024) held that an unsigned Excel sheet seized from a third party has no evidentiary value and cannot form the basis of an addition unless it is shown to be corroborated and linked to the assessee. Similarly, in ITO v. Bharat A. Mehta [2015] 60 taxmann.com 31 (Guj.), the Court held that entries or notings in the books of another person showing alleged on-money payments cannot justify additions in the hands of an assessee without cogent evidence demonstrating actual payment. The Ahmedabad Tribunal has applied these binding principles consistently, such as in Kiritkumar Champaklal Shah v. ITO (2025 TaxPub (DT) 331, Ahd- Trib), specifically holding that mere reliance on Excel-sheet data found during third-party search and on the builder's admission before the Settlement Commission is insufficient to sustain additions without corroboration and without cross-examination. In the case of Deputy Commissioner of Income- tax, Central vs. Mahalaxmi Infracontract Ltd. [2025] 173 taxmann.com 399 (Ahmedabad - Trib.), the Ahmedabad ITAT held that where Assessing Officer made addition under section 69C of the Act on ground that assessee had paid interest in cash to a third-party, since said addition was made solely on basis of unsigned Excel sheets recovered from premises of third party, without any further corroborative evidence, same was to be deleted. In the case of Pradeep Amrutlal Runwal [2014] 47 taxmann.com 293/149 ITD 548 (Pune - Trib.), the ITAT held that where the Assessing Officer made additions in the case of the assessee on the basis of notings in loose papers found during the search proceedings in case of third party against the name of assessee, as there was no evidence to suggest that payments were made by the assessee additions so made were not justified. In the case of Regency Mahavir Properties [2018] 89 taxmann.com 444/169 ITD 35/64 ITR(T) 628 (Mumbai), the ITAT held that no addition under Section 69 can be made on the basis of documents being found from premises of third party in absence of any document evidencing the fact that assessee had paid any cash as on-money to said party for purchase I.T.A No.444/Rjt/2025 A.Y. 2017-18 13 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi of property. In the case of Vinit Ranawat [2017] 88 taxmann.com 428 (Pune - Trib.), the ITAT held that no addition can be made in the hands of the assessee on the basis ofpapers found with the third party when there was no business connection between the assessee and that third party.
8. Applying these settled principles, we are of the considered view that there is merit in the conclusion of the CIT(Appeals) that the Excel sheet relied on by the Assessing Officer is an unsigned, unverified, third-party digital file, not shown to have any nexus with the assessee. The Assessing Officer has not proved that any money was actually paid by the assessee. On the contrary, the sale deed dated 22.01.2021, placed on record, shows that construction on the plot was carried out by NODPL entirely at its own cost, and that when the assessee eventually sold the unit, the buyers made separate payments towards land to the assessee and towards construction directly to NODPL. This factual finding dismissed the theory of alleged "construction on-money" paid by the assessee.
9. Considering all these facts, on merits, we uphold the order of the IT(Appeals) deleting the additions of ₹1,05,00,000 under section 69C and ₹35,01,500 under section 69B, and the appeal of the Revenue on this issue is dismissed.
10. In the result, the appeal filed by the Revenue is dismissed.
1712. In view of the judgement of ITAT, Ahmedabad in case of Abhipush Properties (P) Ltd., the appeal of the Assessee survives on merit also. On concluding para it is pertinent to note that the additional ground of appeal taken by the Assessee is related to the section under which the AO has passed the order. For A.Y. 2017-18 section 153 was in existence and therefore, the AO has passed order u/s. 153A rws 143(3) in case of Abhipush Properties (P) Ltd. As per the additional ground taken in this case the order ought to have been passed under special provision contained in section 153B. Here the essence of assessment order is important and which is pertaining to the addition made on the basis of third party information. Therefore, the question I.T.A No.444/Rjt/2025 A.Y. 2017-18 14 Shri Jayeshkumar L. Babaria Vs.the ITO, Wd. 1, Morbi before us is whether the addition made on the basis of third party information in form of unsigned excel sheet can be sustained or not. The answer is negative as discussed in the case of Abhipush Properties (P) Ltd, which is reproduced as above. Hon'ble Gujarat High Court has also held in case of Kaushik Nanubhai Majithia (Supra) that an unsigned Excel sheet seized from a third party has no evidentiary value and cannot form the basis of an addition unless it is shown to be corroborated and linked to the assesse. Therefore, there is no need to deal with the additional ground taken by the Assessee, hence it becomes infructuous.
13. Considering all these facts, on merits the addition made in the hands of assesse for Rs. 4175000/- is hereby deleted. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on _06/04/2026_ .
Sd/- Sd/-
(DR. ARJUN LAL SAINI) (DR. DINESH MOHAN SINHA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Rajkot : Dated 06/04/2026
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Rajkot
6. Guard file.
By order/आदे श से,
Assistant Registrar/Senior PS/PS
ITAT, Rajkot