ITAT Pune Removes Rs. 30 Lakh Section 69 Addition After Seized Records Point to a Different Buyer

Overview of the Ruling

The Pune Bench of the Income Tax Appellate Tribunal has granted relief to an assessee by directing the deletion of a Rs. 30 lakh addition made under Section 69 of the Income Tax Act, 1961. The core reason for this relief was straightforward: the seized material on which the Assessing Officer had placed reliance did not contain the assessee's name — it referred to an entirely different individual. The case, Shruti Amar Mehta Vs ACIT, Circle-1(1), Pune, bearing ITA No. 2683/PUN/2026, pertained to Assessment Year 2020-21, and the order was pronounced on 14 October 2026 by Accountant Member Manish Borad and Judicial Member Vinay Bhamore.

Background and Origin of the Dispute

How the Case Was Reopened

The matter originated from a search and seizure operation conducted under Section 132 of the Income Tax Act, 1961 in the case of Runwal Group and others on 6 October 2023. Information gathered during this search was forwarded by the DDIT (Investigation), Mumbai, to the Assessing Officer. The information stated that Shri Amar Kantilal Mehta had purchased Flat No. T8-3404 in the "Forest" project of Runwal Group by making an off-the-books cash payment of Rs. 30,00,000/-.

Acting on this information, the Assessing Officer reopened the assessment under Section 147 by issuing a notice under Section 148 on 31 March 2024. The assessee did not file a return in response to this notice and also failed to reply to notices issued under Section 142(1) of the Income Tax Act, 1961.

Reassessment Order and Addition

Proceeding on the basis of a blue-coloured diary recovered during the search and the statement recorded from Smt. Lucy Roy Choudhary of Runwal Group, the Assessing Officer concluded that Amar Kantilal Mehta had paid Rs. 30,00,000/- in cash for the purchase of Flat No. T8-3404 in the "Forest" project.

Through an assessment order dated 28 March 2025, proceedings under Section 147 read with Section 144 of the Income Tax Act, 1961 were completed, determining total income at Rs. 47,71,690/- as against the returned income of Rs. 17,71,690/-. The incremental addition of Rs. 30,00,000/- was brought to tax as unexplained investment under Section 69 of the Income Tax Act, 1961.

Challenges Raised Before the First Appellate Authority

Validity of Proceedings Against a Deceased Person

Before the CIT(A)/NFAC, the assessee — Shruti Amar Mehta, the wife and legal heir of Amar Kantilal Mehta — raised a foundational jurisdictional challenge. It was submitted that Amar Kantilal Mehta had passed away on 24 May 2023, which was prior to the initiation of the reassessment proceedings. She claimed to have informed the Department about his death through the e-portal on 23 December 2023. Despite this, all notices and the assessment order were issued in the name of the deceased individual, and no notice was ever served upon the legal representative.

The grounds of appeal placed before the CIT(A)/NFAC included the following arguments: