JAYANTILAL PUROHIT,MUMBAI vs. CENTRAL CIRCLE 4(2), MUMBAI

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 3 Group of entities since 2010 and, inter alia, handling the sale and registration of shops in the “Platinum Mall” project of RHIL. In his statement, Shri Imran Ansari submitted that the total price of shops contains cash components and banking channel components, and these components are decided by the Director of RHIL. In his statement, Shri Imran Ansari also submitted that after the buyer chooses the shop which he intends to buy, details of the shop were provided to him and once the buyer agrees with the details and terms and conditions, token amount which is around Rs. 0.50 lakhs to 2 lakhs is charged in cash and entry of same is made in a small diary given to the buyer. During the search proceedings, a 16 GB pen drive was retrieved from the possession of Shri Imran Ansari, wherein data in an Excel sheet was maintained by Shri Imran Ansari. Shri Imran Ansari accepted that the pen drive belongs to him and also accepted that the pen drive contains data maintained for the sale of shops in Platinum Mall. He also explained that these data were prepared by him. Since the details of shops purchased by the assessee, along with the payment made in cash and cheque, were mentioned in the data available on the pen drive, the assessee was asked to show cause as to why the payment made in cash for the purchase of the shops should not be treated as an unexplained investment under section 69 of the Act. Since the assessee did not respond to the show cause notice, the assessee was asked to show cause as to why the assessment should not be completed ex parte under section 144 of the Act on the basis of material available on record. As the assessee even failed to respond to this notice, the Assessing Officer proceeded to complete the assessment on a best judgment basis under section 144 r.w.s. 153C of the Act.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 4

6. The learned CIT(A), vide common impugned order for the assessment years under consideration before us, rejected the contentions of the assessee both on jurisdiction as well as on merits and held that the details available in the pen drive are duly corroborated by the statement of Shri Imran Ansari recorded during the course of search proceedings. The learned CIT(A) vide impugned order also rejected the reliance placed by the assessee on the decision of the Coordinate Bench of the Tribunal in Rajesh Jain, in ITAs No.3842 and 3841/Mum./2023, wherein, as per the assessee, a similar addition on the basis of the search conducted on Rubberwala Group was deleted. Accordingly, the learned CIT(A), vide impugned order, dismissed the assessee's appeal for the assessment years 2017-18 to 2019-20 and upheld the additions made by the AO. Being aggrieved, the assessee is in appeal before us.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 5 year 2019-20 and the booking amount for both shops was paid on 11.12.2018, and therefore, no transaction in respect of the shop was carried out by the assessee during the assessment years 2017-18 and 2018-19. As regards the assessment year 2019-20, the learned AR submitted that the shops were purchased at a consideration of Rs.13,45,925/- and Rs.9,77,400/- which was higher than the stamp duty rate of Rs.13,31,000/- and Rs.9,66,410/-, respectively. The learned AR reiterated the submissions made by the assessee before the learned CIT(A) and submitted that no cash payment was made to the developers/builders for the purchase of the shops, and the entire payment was made by way of account payee cheques. As regards the statement of Shri Imran Ansari and the details found in the pen drive seized during the course of the search, the learned AR submitted that neither the statement nor the seized material/document/pen drive was confronted with the assessee. Further, it was submitted that the uncorroborated Excel sheet and third-party statement were relied upon by the Revenue without corroborating the same with any independent evidence.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 6 1,00,000/- per shop on 11.12.2018 by cheque. Further, another payment of Rs.1,25,343/- and Rs. 1,77,784/- was made by the assessee on 30.05.2019, i.e. prior to the execution of the sale agreement. The balance payment was agreed to be paid by the assessee as per the payment schedule in Annexure A to the agreement, which, as per the assessee, was subsequently paid. From the perusal of the documents placed on record and the order passed by the lower authorities, we find that there is no material to suggest that the assessee made payment of on-money in cash in the assessment years 2017- 18 and 2018-19. This fact is further substantiated by the sale agreements as well as the bank statement placed in the paper book by the assessee, which only suggests that the transaction between the assessee and the builder took place in the financial year 2018-19, relevant to the assessment year 2019- 20. Therefore, we do not find any merits in the impugned additions made under section 69 of the Act for the assessment years 2017-18 and 2018-19, as the purchase transaction itself took place in the assessment year 2019-20.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 7 ordinate Bench also took note of the earlier decision of the Tribunal in Rajesh Jain (supra). The Co-ordinate Bench of the Tribunal, finding the details found from the possession of Shri Imran Ansari as uncorroborated with any independent evidence and relying upon various judicial precedents, directed the AO to delete the addition made under section 69 of the Act in the hands of the taxpayer on the basis of a search and seizure action conducted on the Rubberwala Group and its employee. The relevant findings of the Co-ordinate Bench in Praveen Khetaramm Purohit (supra) are reproduced as follows: - “8. We have heard the arguments for both the parties and have also perused the material placed on record, judgements cited before me and the orders passed by the revenue authorities. From the records, we noticed that the assessment was completed u/s 153C on account of the fact that a search and seizure action was conducted on 17.03.2021 on Rubberwala group. In search action, premises of M/s. Rubberwala Housing & Infrastructure Ltd (RHIL), its promoter and director-Shri Tabrez Shaikh, and a key employee of Rubberwala group Shri Imran Ansari, who was handling sale & registration of shops in “Platinum Mall” project of RHIL were covered. Among others, statement of these persons were recorded on oath on various dates during the course of search as well as post search proceedings. The employee of Rubberwala group confirmed that the cash has been collected from the respective buyers of the shops. However, on the other hand, the assessee denied payment of cash. We noticed that during the search a pendrive with the details of cash transactions with respect to Rubberwala group was found, which was confirmed through statement of Shri Imran Ansari recorded U/s 132(4) of the Act and on this basis, 153C order was framed and the same was upheld by the Ld. CIT(A).

9. We noticed that Ld. CIT(A) although referred the decision of the coordinate bench in case of Rajesh Jain on identical issue but misplace its reliance. After having gone through the basic facts of Rajesh Jain case which is mentioned by Ld. CIT(A) in its order and the same is reproduced as under: 5.1. On 17.03.2021, the residential premise of the assessee was also covered by way of search action u/s 132 of the IT Act, 1961. Search action was also initiated on Rubberwala group on 17.03.2021. In such action along with premises (offices/sites/others) of Rubberwala group entities, residences of various key persons including its promoter and director Shri Tabrez Shaikh, and Shri Imran Ansari - a key employee of Rubberwala group handling sale & registration of shops in “Platinum Mall” project of RHIL were covered under section 132 of the Act. Among others, statement of these persons were recorded on oath on various dates during search as well as post search proceedings. 5.2. During the action on Rubberwala Group, among other, residence (at 109, 2nd Floor, Prabhat Sadan, 109/120 RBC Marg, Agripada, Mumbai Central - 400011) of Shri Imran Ashfaque Ansari was covered under section 132 of the ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 8

I.T. Act, 1961. His statement was also recorded on oath at his residence. Vide question no. 11 of the said statement dt. 17.03.2021, Shri Imran Ansari was questioned about his roles and responsibilities in M/s. Rubberwala Housing & Infrastructure Ltd (RHIL). In response, Shri Imran Ansari stated that he has been working with Rubberwala group of entities since 2010 and inter-alia handling sale and registration of the shops in “PlatinumMall” Project of M/s. Rubberwala Housing & Infrastructure Ltd (RHIL). 5.3. Shri Imran Ansari in his response to question no. 13 & 14 of the said statement explained the complete procedure of the of the sale of shops in the “Platinum Mall” project. While explaining further about the price structure of the shops, Shri Imran Ansari in response to Q. no. 15 categorically revealed that the total price of the shops contains cash component and banking channel component, and these components are decided by Shri Tabrez Shaikh (Director/CMD of RHIL and Promoter of Rubberwala Group). On probing further, Shri Imran Ansari, in response to Q. no. 16, stated that these prices, as decided by Shri Tabrez Shaikh, are communicated to him orally. He also revealed in response to Q. no. 17 of the said statement that data related to shops is maintained by him in excel sheets. Corroborating to the fact that data is being maintained by Shri Imran Ansari in excel sheet, during search proceedings at the residence of Shri Imran Ansari, a 16GB Pendrive was retrieved from his possession. The said pen drive is accepted by Shri Imran Ansari belonging to him and he also accepted that this pen drive is containing data maintained for the sale of shops in Platinum Mall. Shri Imran Ansari explained that this data is prepared by him. Shri Imran Ansari’s this acceptance also corroborates with the fact that the said data was retrieved from the residential premises of Shri Imran Ansari and not from any office of Rubberwala Group. 5.4. It was ascertained that the data is being maintained by Shri Imran Ansari in an excel file namely “consolidated 1 2 3 balance”. In the said file sheets with different name viz “Master”, “Payment” and “Cheque” etc. are found to be maintained. It is also found out that in respect of the sale of shops in the said project, comprehensive data is being maintained in these excel sheets, and in this regard, it is important to mention that the sheet “Master” is so elaborate that the data in the said sheet is spread across 98 columns. Shri Imran Ansari has explained all 98 columns of “Master” sheet and such explanation of each and every column by Shri Imran Ansari further support the fact that the he was maintaining the said data and therefore could explain all these columns with relevance and purpose. Shri Imran Ansari in response to Question no. 22, 23 and 24, has explained in detail the meaning and relevant of each and every column. In column B, against the name of ‘Raj Bhai Jain’/‘Raj BhaiJain(I.S)’, total 27 shops have been entered. Further, these 27 shops are stated (by Shri Imran Ansari) to be booked by the assessee only. Also, ShriTabrez Ahmed Shaikh, Director and Promoter of the RHIL, while deposing statement during post search proceedings on 19.08.2021 categorically confirmed the admission made by Shri Imran Ansari, and has confirmed the data of the said excel to be true byconfirming facts stated by Shri Imran Ansari in his statement. It is also important to note here that the phone number mentioned above i.e., 9892196071 against all 27 shops, is of Shri Rajesh Jain. 5.5. Regarding the frequency of updating the said excel file/sheet, Shri Imran Ansari, in response to Q. no. 25, stated that this sheet is updated on the same day when a payment is received either in cash or cheque (or banking channel). The column A to AR of the sheet “Master” are stated to be updated till 16.03.2021 and other sheets of the said excel file are also stated to be updated till 16.03.2021. It is revealed in the above response that he takes the parties to ShriAbrar Ahmed (who during the search established to be a person handing cash for the Rubberwala Group). ShriAbrar Ahmed, after receiving the cash confirms to Shri Imran Ansari who update the diariesand the said excel file. Such detailed

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 9 mechanism in place further upholds the facts stated by Shri Imran Ansari on oath. It is also important to note here that Shri Imran Ansari also used to call and follow up with the buyers on the numbers saved in his data. As aforementioned, the number, for the shops for which the assessee has paid the cash component, is mentioned as 9892196071, which is the assessee’s own number. Thus, it makes clear that for the cash payment part, for all the above mentioned 27 shops, Shri Imran Ansari used to follow up with Shri Rajesh Jain/assessee only………………… 10. We also noticed that the decision of the Coordinate Bench of ITAT in the case of Rajesh Jain in 3841 & and3950/Mum/2023 on the identical facts is reproduced herein below: 12. The appeal filed by the revenue for AY 2020-21 is with regard to the relief granted by Ld CIT(A) holding that the cash payments relating to the shops purchased by others cannot be assessed in the hands of the assessee. The decision rendered by us in AY 2018-19 and 2019-20 on an identical issue on merits in the earlier paragraphs would apply in this year also. Following the same, we affirm the order passed by LdCIT(A) on this issue.

13. In the appeal filed by the assessee, the addition of alleged cash payment of Rs.18,64,200/- in respect of purchase of shop confirmed by Ld CIT(A) is being assailed.

14. We noticed earlier that the assessee had purchased a shop in the commercial premises developed by Rubberwala group. During the course of search conducted in their hands, incriminating documents containing details of cash collected on sale of various shops were found. The employee of Rubberwala group confirmed that the cash has been collected from the buyers of shops. However, the assessee denied payment of cash. However, the AO relied upon the materials found in the case of Rubberwala group and accordingly made addition of Rs.18,64,200/- in AY 2020-21. The LdCIT(A) also confirmed the same.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 10 that not providing opportunity to cross examine is a serious flaw and it will make the order nullity, as it amounts to violation of principle of natural justice. We are of the view that the above said decision of Hon‟ble Supreme Court shall apply to the facts of the present case.

11. From the above we find that the Coordinate bench has consider the same facts and rightly decided the issue in favour of the assessee and since the facts of the present case are also identical with the facts of Rajesh Jain’s (supra) case, therefore the said decision will be application on the facts of the present case as well. Moreover, the assessee categorically denied having paid any amount in cash over and above the agreement value. The AO has neither confronted assessee with any of the material found during the search on Rubberwala group and even no evidence or seized document has been referred to where any name of the assessee has been explicitly mentioned on account of paying any ‘on-money’.

12. Although it has been claimed in the order of assessment that the assessee had paid on money, but again no such statement has been confronted, neither the seized material /documents /pendrive was confronted to the assessee nor the copy of statement of Key person was confronted.

13. Therefore, in our view, the information if any found in the pendrive etc., cannot be considered as ‘credible evidence’, unless they have been corroborated with any other evidence. Since the assessee was not provided with the adverse material, if any, based on which notice u/s 153 of the Act, was issued, in our view, it hampers the primary and fundamental requirement of natural justice.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 11 under section 132(4) of the Act on 14th March 2014, Shri Niranjan Hiranandani, has admitted receipt of on–money in cash towards sale of flats / shops. Thus, it is clear that except these two pieces of evidences the Assessing Officer had no other evidence on record which demonstrates that the assessee had paid on–money in cash for purchase of the flat. It is further relevant to observe, from the assessment stage itself the assessee has requested the Assessing Officer to provide him with all adverse materials and full text of the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani. The assessee had also requested the Assessing Officer for allowing her to cross–examine Shri Niranjan Hiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not acceded to by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority, the learned Commissioner (Appeals) in letter dated 18th July 2016, had clearly directed the Assessing Officer to provide the assessee all adverse materials / documentary evidences available with him indicating payment of on–money. However, on a perusal of the remand report dated 23th June 2017, a copy of which is at Page–53 of the paper book, it is very much clear that the Assessing Officer has completely avoided the issue and there is no mention whether the assessee was provided with all the adverse material and if, not so, whether he has provided them to the assessee as per the directions of the learned Commissioner (Appeals). Thus, from the aforesaid facts, it is patent and obvious that the addition of ` 42 lakh made on account of on– money payment in cash is without complying with the primary and fundamental requirement of rules of natural justice. It is well settled proposition of law that if the Assessing Officer intends to utilize any adverse material for deciding an issue against the assessee he is required to not only confront such adverse materials to the assessee but also offer him a reasonable opportunity to rebut / contradict the contents of the adverse material. Further, the assessment order reveals that the Assessing Officer has heavily relied upon the statement recorded from Shri Niranjan Hiranandani, for making the disputed addition. However, it is the allegation of the assessee, which prima–facie appears to be correct, that the Assessing Officer has not provided the full text of such statement recorded and has also not allowed the assessee an opportunity to cross–examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic principle of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be sustained.

11. Even otherwise also, the addition made is unsustainable because of the following reasons. As discussed earlier in the order, the basis for addition on account of on–money is the information contained in the pen drive found during the search and seizure operation and the statement recorded under section 132(4) of the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a third party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on–money in cash, no addition can be made under section 69B of the Act. Further contention of the assessee is that in the statement recorded under section 132(4) of the Act, Shi Niranjan Hirandani has not made any reference to the assessee, therefore, in absence of any other corroborative evidence to establish that assessee has paid on–money in cash, no addition can be made. I find substantial merit in the aforesaid submissions of the assessee. In my view, neither the information contained in the pen drive nor the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani are enough to conclusively establish the factum of payment of on–money by the assessee. At best, they can raise a doubt or suspicion against the conduct of the assessee triggering further enquiry / investigation to find out and bring on record the relevant fact and material to conclusively prove the ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 12

payment of on–money by the assessee over and above the declared sale consideration. Apparently, the Assessing Officer has failed to bring any such evidence / material on record to prove the payment of on–money by the assessee. More so, when the assessee from the very beginning has stoutly denied payment of on–money in cash. Notably, while dealing with a case involving similar nature of dispute concerning similar transaction with another concern of Hiranandani Group, the Tribunal in case of Shri Anil Jaggi v/s ACIT (supra) has held as under:– ……..

15. Reliance has also been placed in the case of Monika Anand Gupta (A.Y. 2011-12) whereas coordinate bench held as under.

16. In the case of Mrs. Mamta Sharad Gupta, Assessment Year: 2011-12, wherein the coordinate bench has held as under: 9. Since the sole issue raised in this appeal is covered by the order (supra) passed by the co-ordinate Bench of the Tribunal addition made in this case is not sustainable. Because the addition is made merely on the basis of statement made by one Mr. Suraj Parmar, one of the promoters of Cosmos Group under section 132(4) of the Act without any corroboration. Moreover, statement or any material seized during the course of search under section 132(4) of the Act can only be used against Mr. Suraj Parmar of Cosmos Group and not against the assessee without any corroboration. Excel sheet alleged to have been recovered from the office of builders is also not admissible being not proved under section 65 of the Evidence Act. So in view of the matter, addition made by the AO and sustained by the Ld. CIT(A) is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is allowed.

ITAs No.5682, 5683 & 5684/Mum/2025 (A.Ys. 2017-18 , 2018-19 & 2019-20) 13 CTR 241 (SC) wherein it has been held that ‘failure to give the assessee the opportunity to cross examine witness, whose statements are relied upon, results in breach of principles of Natural Justice. It is a serious flaw which renders the order a nullity’.