ITAT Ahmedabad Restores Godhavi Land On-Money Additions to CIT(A): Loose Sheet Alone Cannot Sustain Section 69A Additions

Ahmedabad ITAT remands on-money additions against Popular Group sellers, holding a handwritten loose sheet without cash trail or corroboration cannot sustain section 69A additions.

A batch of 31 appeals and cross objections arising from a search conducted on the “Popular Group, Ahmedabad” came before the Income Tax Appellate Tribunal, Ahmedabad “C” Bench on 14 May 2026. The central dispute in most appeals was whether additions under section 69A of the Income Tax Act, treating alleged on-money receipts from sale of non-agricultural land at Godhavi village near Ahmedabad as unexplained money, could be sustained on the basis of a single handwritten loose sheet seized during search. The Tribunal, comprising Shri Siddhartha Nautiyal, Judicial Member, and Shri Narendra Prasad Sinha, Accountant Member, found that the CIT(A) had deleted the additions without adequate examination of all relevant facts and restored the on-money issues to the CIT(A) for fresh consideration. The cross objections filed by the assessees were dismissed.

The Search and the Seized Document

A search and seizure action under section 132 was carried out on 8 October 2020 in the case of the Popular Group, Ahmedabad. The search covered multiple members of the Patel family and connected persons, all of whom had sold parcels of non-agricultural land situated at Godhavi village in Ahmedabad district during financial years 2018-19 and 2019-20.

The central piece of incriminating material relied upon by the Assessing Officer was Annexure A-6, Page 10, a handwritten loose sheet found at the residential premises of Shri Alap Somabhai Patel. During his statement recorded under section 132(4), Alap Patel admitted that the handwriting on the seized page was his own and that the figures mentioned therein were in crores. The page contained the notation “Godhavi 34000 × 25000 = 85 Cr” along with figures of “40” and “30”, together with names and loan-related notings on the left-hand side.

The Assessing Officer interpreted the right-hand side of the page as representing inflows from Godhavi land sales. Applying a rate of Rs. 25,000 per sq. metre to the land area sold, the Assessing Officer computed an estimated total actual sale consideration of Rs. 151.63 crore against documented sale consideration of approximately Rs. 13.26 crore. The figures 85, 40 and 30 were treated as representing actual cash consideration received in three tranches of Godhavi land deals. On this basis, additions were made under section 69A in the hands of each seller-assessee in proportion to their respective ownership shares.

The Assessees' Explanation and the CIT(A) Order

Each assessee furnished detailed explanations during assessment proceedings. Alap Patel contended that the seized page was prepared after Rakshabandhan on 3 August 2020, well after the Godhavi land transactions had been completed between November 2018 and October 2019. He stated that family disputes had arisen after sale of ancestral lands, and his mother and sister had demanded reacquisition of equivalent lands. The figure “34000” was said to represent approximately 34,000 sq. yards being the share of his mother and sister in lands already sold, while “25000” was claimed to be only an estimated future purchase rate. The figure “85 crore” was described as a projected future investment, not actual consideration received.

The assessees also pointed out that the seized page contained no survey numbers, names of purchasers, dates of transactions, document numbers, or any indication that the figures represented actual cash receipts. No cash, bullion, parallel accounts, or corroborative evidence of on-money was found either from the sellers or from the purchasers. Searches were also conducted in the cases of purchasers including Shri Jankhit C. Prajapati on 8 December 2020 and the B-Safal Group including Shri Rajesh Brahmbhatt and Rupesh Brahmbhatt on 28 September 2021, yet no incriminating material evidencing payment of on-money was discovered from their premises.

The CIT(A) accepted the assessees' explanations and deleted the additions. The CIT(A) found that the loose sheet did not conclusively establish receipt of actual unaccounted cash, that the Assessing Officer's estimated calculations did not exactly match the figures of 85, 40 and 30 on the seized page, and that the absence of corroborative evidence from the purchaser side materially weakened the Revenue's case. The CIT(A) also relied on judicial precedents holding that additions under section 153A must be based on incriminating material found during search and that section 69A requires establishment of ownership and possession of unexplained money.

The Revenue's Challenge Before the Tribunal

The Revenue challenged the CIT(A)'s deletion orders across all the connected appeals. The Revenue's grounds contended that the CIT(A) had erred in ignoring incriminating documents found during search written in the assessee's own handwriting, had failed to appreciate the Assessing Officer's detailed analysis, and had incorrectly relied on findings in the case of purchaser Smt. Sonal Rajesh Khandwala to delete additions in the hands of the sellers.

The assessees filed cross objections raising, among other grounds, that the Assessing Officer had not obtained valid approval under section 153D after application of mind, and had not made independent enquiries under section 133(6) or section 131 from purchasers regarding alleged on-money payments.

All appeals and cross objections were time-barred by a minimal number of days. Both the Revenue and the assessees filed affidavits explaining the delay. The Tribunal condoned the delay in all matters, noting the smallness of the delay and absence of perceptible prejudice to the other side.

How the Tribunal Reasoned

The Tribunal examined the CIT(A)'s approach in detail. It found that the CIT(A) had proceeded to delete the additions primarily by relying on findings in the case of purchaser Smt. Sonal Rajesh Khandwala and by treating the absence of corroborative evidence from purchasers as decisive. The Tribunal found this approach required fresh examination.

On the legal question of what a seized loose sheet can establish, the Tribunal referred to the provisions of section 132(4A), which uses the words “it may be presumed”, and noted that such presumption is rebuttable. The Tribunal referred to the Gujarat High Court's decision in CIT v. Dharmendra Sinh Waghela, which held that the presumption under section 132(4A) is rebuttable where the Revenue cannot bring on record material corroborating the seized document. The Tribunal also referred to coordinate bench decisions in ACIT v. Manav Infrastructure P. Ltd. and ACIT v. Bhagvanbhai K. Ajara, which held that if no nexus or reasonable conclusion can be arrived at from seized material, the documents cannot be used against the assessee even if seized during search.

The Tribunal noted that the CIT(A) had reproduced at length the findings from the case of Smt. Sonal Rajesh Khandwala and had treated those findings as having substantial bearing on the sellers' cases. The Tribunal found that while the factual matrix was interrelated, the CIT(A) needed to examine each seller's case on its own facts, including the specific ownership proportions, the survey numbers involved, and the individual additions made.

On the cross objection ground regarding section 153D approval, the Tribunal dismissed it as squarely covered against the assessees by the Ahmedabad Tribunal's decision in Smt. Neelu Sanjay Gupta v. DCIT in IT(SS)A Nos. 147 & 148/Ahd/2019.

The Tribunal's overall conclusion was that the on-money additions required fresh consideration by the CIT(A) with a proper examination of all relevant facts, including the nature of the seized document, the corroborative evidence or lack thereof, and the individual factual position of each assessee. The matters were accordingly restored to the CIT(A) for de-novo consideration. The assessees were given liberty to produce necessary supporting documents before the CIT(A).

Outcome

The Tribunal pronounced its order on 14 May 2026. In the combined result:

• All Revenue appeals (IT(SS)A Nos. 163, 164, 169, 170, 159, 160, 157, 158, 171, 172, 173, 161, 179, 180, 174, 162/Ahd/2024) were allowed for statistical purposes, with the on-money addition issues restored to the CIT(A) for de-novo consideration.
• All cross objections filed by the assessees (C.O. Nos. 47, 48, 49, 50, 45, 46, 55, 56, 51, 52, 53, 54/Ahd/2024) were dismissed.
• Assessee appeals IT(SS)A Nos. 108, 106, 107/Ahd/2024 were allowed for statistical purposes, with issues restored to the CIT(A).
• IT(SS)A No. 174/Ahd/2024 (Revenue's appeal for A.Y. 2020-21 in the case of Gordhanbhai Babaldas Patel) was allowed for statistical purposes; both the on-money issue and the section 68 addition of Rs. 7,37,46,000 on account of unexplained loans given to relatives were restored to the CIT(A) for de-novo consideration.
• IT(SS)A No. 162/Ahd/2024 (Revenue's appeal in the case of Chandubhai B. Patel) was allowed for statistical purposes.
• The section 69A addition of Rs. 9,50,000 on account of seized cash, confirmed by the CIT(A) in one assessee's case, was also restored to the CIT(A) for de-novo consideration in the interest of justice.