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Facts
During a search, a pen drive containing an excel sheet was found. This sheet allegedly detailed 'on-money' payments for a housing project. The Assessing Officer (AO) initiated proceedings against the assessees, husband and wife, based on this information and a statement from a third party, leading to additions for unexplained investment.
Held
The Tribunal held that the additions were made on suspicion and conjecture, relying solely on a third-party statement and seized material without independent corroborative evidence. The assessees had consistently denied making any 'on-money' payments. Therefore, the additions could not be sustained.
Key Issues
Whether additions for unexplained investment (on-money payment) are sustainable solely based on seized material and third-party statements without corroborative evidence, and if the amount can be added in full to each co-owner.
Sections Cited
69, 132, 132(4), 139(1), 153C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER
ITA No. 7822/Mum/2025 (Assessment Year:2017-18) Najmussaher Saeed Khan Asst. CIT, Central Circle-4(2) Room No. 12, 1st Floor, 262/280, Room No. 1918, Air India Building, Dawood Baug, Bapty Road, Vs. Nariman Point, Mumbai-400 021 Mumbai-400 008 PAN/GIR No. BRQPK 7919 C (Appellant) : (Respondent) ITA No. 8999/Mum/2025 (Assessment Year:2017-18) Sayeed Mukim Khan Dy. CIT, Central Circle-4(2) 1st Floor, Bilal Masjid Compound, Room No. 1918, Air India Building, M. S. Road, Sonapur, Vs. Nariman Point, Mumbai-400 021 Mumbai-400 008 PAN/GIR No. APQPK 4271 E (Appellant) : (Respondent) Appellant by : Shri Mumtaz Ahmad Respondent by : Shri Vivek Perampurna Date of Hearing : 11.03.2026 Date of Pronouncement : 17.04.2026 O R D E R Per Saktijit Dey, Vice President: Captioned appeals are by two different assessees, arising out of two separate orders of learned Commissioner of Income Tax (Appeals), Mumbai, pertaining to the assessment year (A.Y. for short) 2017-18.
The common issue arising in both the appeals relates to addition made of Rs.15 lacs each in case of the assessee’s as unexplained investment u/s. 69 of the Income Tax Act,
2 ITA Nos. 7822/Mum/2025 & 8999/Mum/2025 (A.Y. 2017-18) Najmussaher Saeed Khan & Sayeed Mukim Khan 1961 (‘the Act’ for short) on account of alleged on-money paid in cash towards purchase of a flat.
Briefly the facts are, the assessees in appeal are resident individuals and are husband and wife. For the assessment year under dispute, both the assessees filed their return of income u/s. 139(1) of the Act. A search and seizure operation u/s. 132 of the Act was carried out on 17.03.2021 in case of Rubberwala group and M/s. Hilton Infrastructure, which as observed by the Assessing Officer (‘A.O.’ for short), is an entity of the Rubberwala group. In course of the said search and seizure operation, residential premises, being Flat No. 1402, Ameena Heights, Agripada, Mumbai of Shri Tabrez Shaikh – Partner in M/s. Hilton Infrastructure and one of the promoters of Rubberwala Group was also searched. In course of search operation in his residential premises, a pen drive was found and seized wherein an excel sheet was found to have been maintained. In the said excel sheet, names of various allottees of flats in the housing project of M/s. Hilton Infrastructure were mentioned. As observed by the A.O., the excel sheet also mentioned the on-money received in cash from the allottees. In this connection, a statement u/s. 132(4) of the Act was recorded from Shri Tabrez Shaikh. When he was confronted with the excel sheet, initially he expressed his inability to explain anything. Subsequently, in course of post search proceedings, Shri Tabrez Shaikh was again called for enquiry and a statement was recorded from him, wherein he was specifically asked about the receipt of on-money. In response to the query raised, Shri Tabrez Shaikh accepted receipt of on-money in cash in respect of Fuego project in different years. Based on the statement recorded from Shri Tabrez Shaikh and the information found in the pen drive, the A.O. initiated proceedings u/s. 153C of the Act in case of the present assesses, since, the assessees had jointly bought
3 ITA Nos. 7822/Mum/2025 & 8999/Mum/2025 (A.Y. 2017-18) Najmussaher Saeed Khan & Sayeed Mukim Khan a flat in the said project and as per the A.O. their name appeared in the excel sheet. In course of assessment proceeding, the A.O. called upon the assessee to explain the source of the alleged on-money paid of Rs.30 lacs. In response to the query raised by the A.O., both the assessees denied of having paid any on-money in cash, over and above, the amount paid through cheque as per the sale deed. The A.O., however, was not convinced. Based on the information contained in the excel sheet and statement recorded from Shri Tabrez Shaikh, he, ultimately, concluded that both the assesses, indeed, had paid on-money in cash to the developer/builder towards purchase of flat. Accordingly, he added the amount of Rs.30 lacs each at the hands of both the assessee’s.
Contesting the additions, the assessees filed appeals before ld. First appellate authority.
In course of proceeding before ld. First appellate authority, the assessees again reiterated their stand of having not paid any on-money in cash, over and above, the declared sale consideration paid through cheque. Alternatively, it was submitted, since, both the assesses, being husband and wife, jointly purchased the property, the alleged on-money paid of Rs.30 lacs cannot be added in case of both of them. While deciding the appeal, though, ld. First appellate authority did not accept the claim of the assessee that they had not paid any on-money in cash, however, he agreed with them that the alleged on-money paid of Rs.30 lacs cannot be added at the hands of each of the assessees, as both are 50% owner of the property. Accordingly, he reduced the addition to Rs.15 lacs each in case of both the assessees.
4 ITA Nos. 7822/Mum/2025 & 8999/Mum/2025 (A.Y. 2017-18) Najmussaher Saeed Khan & Sayeed Mukim Khan 6. We have considered rival submissions and perused the materials available on record. A reading of the respective assessment orders passed in case of the assessees, clearly demonstrate that the foundation of the assessments is based on the pen drive found in course of search and seizure operation in the residential premises of one Shri Tabrez Shaikh, who is stated to be a partner in M/s. Hilton Infrastructure and the statement recorded from Shri Tabrez Shaikh. Apart from these materials, there is nothing on record to suggest that the A.O. made any independent enquiry with other buyers or any other source to unearth the cash trail of the amount mentioned in the excel sheet found in the pen drive. In fact, in the statement recorded from Shri Tabrez Shaikh, there is no specific admission that he had received cash from the present assessees. He has given a general answer to a general question by the Income Tax Authorities. When the assessees from stage of assessment proceedings itself have categorically denied of having paid any cash over and above the declared sale consideration, the A.O. cannot forcefully make the additions simply relying upon a third-party statement and some materials seized from the third party without any other corroborative evidence to demonstrate that the contents of the seized material in the pen drive are correct. Therefore, we are of the firm view that the impugned additions have been made merely on suspicion, conjectures and surmises rather than on cogent evidence. That being the case, additions cannot be sustained. While coming to such conclusion, we have found support from the decision of the Hon'ble Jurisdictional High Court in case of CIT vs. M/s. Ambit Realty Pvt. Ltd. (in ITA No.83 of 2014 judgement dated 07.02.2017). Thus, the A.O. is directed to delete the additions made in case of both the assessee’s.
5 ITA Nos. 7822/Mum/2025 & 8999/Mum/2025 (A.Y. 2017-18) Najmussaher Saeed Khan & Sayeed Mukim Khan 7. In the result, the appeals are allowed. Order pronounced in the open court on 17.04.2026
Sd/- Sd/- (Makarand V. Mahadeokar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 17.04.2026 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,
(Dy./Asstt. Registrar) ITAT, Mumbai