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Facts
The assessee filed his return of income which was processed. Subsequently, information from a search and survey led to the Assessing Officer (AO) issuing a notice under Section 147, alleging that the assessee had made an unexplained cash payment of Rs. 2,00,00,000/- for booking two flats. The assessee denied the cash payment, stating that all transactions were through banking channels and the seized material did not belong to him.
Held
The Tribunal held that the CIT(A) was justified in deleting the addition. The addition was based solely on images and loose paper notings from a third-party device, which were not authored by or recovered from the assessee. The CIT(A) correctly noted the lack of primary evidence, corroborative material, and compliance with Section 65B of the Indian Evidence Act.
Key Issues
Whether the addition of Rs. 2,00,00,000/- on account of unexplained cash payment for booking flats, based on third-party electronic data, is sustainable without corroborative evidence and proper certification.
Sections Cited
69, 143(3), 147, 148, 132, 133A, 69A, 153C, 65B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH MUMBAI
आदेश / ORDER
PER MAKARAND VASANT MAHADEOKAR, AM:
This appeal by the Revenue is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 29.08.2025, whereby the Learned CIT(A) deleted the addition of Rs. 2,00,00,000/- made by the Assessing Officer under section 69 of the Income Tax Act, 1961[hereinafter referred Jayesh Umakant Manania to as “the Act”] vide order dated 26.12.2018 passed under section 143(3) read with section 147 of the Act.
The brief facts of the case are that the assessee had filed his return of income on 27.09.2012, declaring total income of Rs. 30,00,378/-, which was processed under section 143(1). Subsequently, information was received by the Assessing Officer from the Deputy Commissioner of Income Tax, Central Circle– 8(4), Mumbai, based on search under section 132 conducted in the case of Shri Pankaj Dhanji Goshar on 10.09.2015, and Survey under section 133A in the case of M/s Kalyanji Velji HUF, a real estate developer.
The material forwarded included images and loose paper details extracted from the iPhone of Shri Pankaj Goshar, allegedly recording cash receipts pertaining to booking of flats in the project “Vivaria” by members of the Manania family. According to the information, out of the total cash receipts of Rs. 12.50 crores recorded therein, a sum of Rs. 2,00,00,000/- was stated to pertain to the assessee during the relevant previous year. On the basis of the aforesaid material, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and issued notice under section 148 on 30.03.2018.
During reassessment proceedings, the Assessing Officer confronted the assessee with the seized materials and the mobile phone data retrieved from the device used by Shri Pankaj Goshar.
Jayesh Umakant Manania According to the Assessing Officer, the data reflected specific dates, amounts, and mode of payment indicating alleged cash transactions for flats purchased in the Vivaria project. The Assessing Officer also issued a detailed show-cause notice, reproduced in the assessment order, alleging that the assessee had made a cash payment of Rs. 2,00,00,000/- for booking two flats in the project.
The assessee denied having made any cash payments, asserted that no flats were booked during A.Y. 2012–13, and contended that all subsequent payments were through normal banking channels. The assessee also submitted that the seized materials did not belong to him, were not authored by him, and originated from a third party. Statements of Shri Pankaj Goshar and Shri Ajay Vishrani, relied upon by the department, were also stated to contain categorical denials of receiving any cash from the assessee. Cross-examination of Shri Pankaj Goshar was conducted, wherein he reiterated that no cash was received from the assessee. The Assessing Officer, however, treated these denials as unreliable and held that the seized electronic material sufficiently established that an unexplained cash payment of Rs. 2,00,00,000/- was made by the assessee.The Assessing Officer accordingly made an addition under section 69A, treating the amount as unexplained investment.
The assessee preferred an appeal before the CIT(A). Before the Learned CIT(A), the assessee raised legal as well as grounds Jayesh Umakant Manania on merit. The assessee also filed Additional Grounds, contending that the proceedings ought to have been initiated under section 153C, since the documents relied upon were seized from third parties and allegedly “related to” the assessee. The Learned CIT(A) admitted the additional legal grounds and after considering the detailed submissions held that the reassessment under section 147 was valid and the AO had tangible material sufficient to form the requisite belief. However, on merits, he gave relief to the assessee by deleting the addition of Rs. 2,00,00,000/-
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:
1. Whether on the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax Appeal has erred in deleting the addition made by the AO of Rs. 2,00,00,000 on account of unexplained money under section 69A of the Income Tax Act,1961.
2. The appellant craves leave to add, amend, alter, OR withdraw any ground of appeal
at the time of hearing.
8. During the course of hearing before us he Authorized Representative (AR) of the assessee reiterated the facts and submitted that the assessee had not booked any flat with M/s Kalyanji Velji HUF during the year under consideration and that all subsequent dealings in later years were through proper banking channels. It was submitted that the alleged cash component of Rs. 2,00,00,000/- was neither supported by any written agreement nor corroborated by any independent evidence of actual payment. The AR emphasized that the entire addition Jayesh Umakant Manania was founded solely upon certain images and loose notings retrieved from the iPhone of Shri Pankaj Goshar, which were admittedly not in the handwriting of the assessee and were never recovered from his possession. It was brought to our attention that both Shri Pankaj Goshar and Shri Ajay Vishrani, when examined by the department, categorically denied having received any cash from the assessee.
9. The AR further submitted that an identical addition of Rs. 2,00,00,000/- had been made in the hands of the assessee’s brother, Shri Nimesh Umakant Manania. The AR also invited attention to the decisions of the Co-ordinate Bench in the cases of Kalyanji Velji HUF (ITA No.2284/Mum/2019) and Shri Nimesh Manania (ITA NO. 6178-6180/Mum/2024), wherein identical additions based on the same seized material were deleted.
The Learned Departmental Representative vehemently argued that the Assessing Officer had made the impugned addition on the basis of WhatsApp images and electronic data retrieved during search and survey proceedings in connected cases, and that such material, though originating from a third party, constituted relevant evidence when examined in the light of the surrounding circumstances. It was submitted that, applying the principle of preponderance of probability, the Assessing Officer was justified in concluding that the assessee had in fact made the cash payment of Rs. 2,00,00,000/-, and that the addition deserved to be upheld.
Jayesh Umakant Manania 11. We have carefully considered the rival submissions, perused the orders of the lower authorities, and examined the material placed on record. The Learned CIT(A), while granting relief to the assessee, has recorded several factual findings which go to the root of the matter. These findings emerge directly from the assessment record and from the evidences considered by both sides. We find no infirmity in the approach of the CIT(A) in appreciating such evidentiary deficiencies.
The CIT(A) has noted that the entire addition under section 69 was made solely on the basis of certain images and loose paper notings retrieved from the iPhone of Shri Pankaj Goshar, a third party. These electronic entries did not originate from the assessee, were not authored by him, and were not recovered from his possession. The Assessing Officer did not bring any primary evidence to establish the authorship or ownership of these notings. We find that this factual finding of the CIT(A) is borne out directly from the assessment order and is not disputed by the Revenue. The evidentiary value of third-party loose sheets without linkage to the assessee has repeatedly been held to be weak and incapable of sustaining an addition. The CIT(A) has further observed that the Assessing Officer did not produce any corroborative material to establish the alleged cash payment.
There is no evidence of cash withdrawal from the assessee’s accounts, any flow of unaccounted funds, any agreement or document evidencing such a transaction, or any confirmation Jayesh Umakant Manania from the alleged recipients. Despite these gaps, the AO assumed that a cash payment of Rs. 2,00,00,000/- had been made solely on the basis of electronic images stored in a third-party device. Such an assumption, unsupported by ancillary evidence, does not meet the standard required for sustaining an addition under section 69A.The CIT(A) has recorded that both Shri Pankaj Goshar and Shri Ajay Vishrani, when examined, categorically denied receiving any cash from the assessee. These denials were not rebutted by the AO with any countervailing evidence. A denial by the alleged payee materially weakens the hypothesis of a cash transaction, and the CIT(A) has rightly taken cognizance of this fact. We also note that the assessee’s cross-examination of Shri Goshar (placed at page No. 64-73) further reinforced the absence of any cash dealings. The AO chose to disregard these statements without establishing any contrary material.
The CIT(A) also observed that the electronic data relied upon by the Assessing Officer was not supported by the mandatory certification required under section 65B of the Indian Evidence Act. In the absence of such compliance, the evidentiary foundation of the addition becomes legally untenable.
The CIT(A) has placed reliance on coordinate bench decisions in case of Kalyanji Velji HUF (supra), and Nimesh Manania (supra) (brother of the assessee),wherein identical seized material was held to be “dumb documents” incapable of supporting additions in the absence of corroboration.
Jayesh Umakant Manania 16. We have perused the reasoning adopted in these coordinate bench decisions. The material relied on in the present case is substantially identical and suffers from the same defects. Consistency demands that similar evidentiary deficiencies must lead to similar conclusions.
The CIT(A) has also noted that the very same alleged cash payment of Rs. 2,00,00,000 was assessed in the hands of the assessee’s brother, Shri Nimesh Manania. This stands undisputed on record. An addition that is not only uncorroborated but is also duplicated in another assessment further undermines its credibility and fairness. The principles of natural justice and fair taxation militate against sustaining an addition which causes double taxation without verified evidence.
Having regard to the cumulative deficiencies highlighted by the CIT(A), and noting that the Revenue has not brought any material to dislodge these factual findings, we are of the considered view that the Learned CIT(A) was justified in deleting the addition. The CIT(A) has correctly applied judicial principles and binding precedents in concluding that such material cannot form the basis of a substantive addition. We therefore find no reason to interfere with the order of the Learned CIT(A).
Accordingly, the appeal filed by the Revenue stands dismissed.