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Income Tax Appellate Tribunal, “C” BENCH MUMBAI
Before: HONBLE SHRI SANDEEP GOSAIN & HONBLE SHRI GIRISH AGRAWAL
1. The present appeal has been filed by the assessee challenging the impugned order dated 24.07.2025, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Learned Commissioner of Income Tax (Appeals)-52 (‘Ld. CIT(A)’), for the assessment year 2017-18. The assessee has raised the following grounds of appeal:
4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 1.On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming the stand of A.O. about that issuing the notice u/s 153C of the Act without DIN. It is blatant contravention of the Circular No. 19/2019,dated 14-8-2019 issued by the CBDT. 2.On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming addition without referring to any incrementing document. Besides,he has not referred to any incriminating material in the satisfaction note issued to the Appellant 3. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. for not sharing incrementing documents found during the course of search of rubberwala group which was pertained to the appellant.
On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. about the not providing statement and materials used by him against the appellant 5. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. about opportunity of cross examination of the person whose statements were used against the appellant. 6.On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming addition of Rs. 2,00,000/- u/s 69 of the Act. 7.The Appellant keeps his right reserve to add/modify/delete any ground of appeal
during the appellant proceedings.
2. The brief facts of the case are that the assessee purchased Shop No. 43 on 17.10.2019, admeasuring 73.50 sq. ft., in Platinum Mall constructed by Rubberwala Housing & Infrastructure Pvt. Ltd. for a total consideration of ₹17,75,025/-. During the course of search conducted in the hands of Rubberwala Group, 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 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit of shops. Therefore, while relying upon the materials found in the case of Rubberwala group, the AO framed assessment u/s 143(3) r.w.s 153C of the act, thereby making additions of Rs.2,00,000/- on account of ‘on- money’ paid by the assessee to the builder ie Rubberwala group. And this addition was sustained by Ld. CIT(A) as well.
4. Aggrieved by the order of Ld.CIT(A), the assessee has preferred the present appeal before us on the grounds mentioned hereinabove.
5. All the grounds raised by the assessee are interconnected and interrelated and relates to challenging the order of Ld. CIT(A) in sustaining the additions made by the AO. Therefore, We have decided to dispose of all the grounds raised by the assessee through the present consolidated order.
6. Ld. AR appearing on behalf of the assessee, reiterated the same arguments as were raised by him before the revenue authorities. It was submitted that the price paid by the assessee for the purchase of the residential unit to the builder, as per market value prevalent. Hence, there was no occasion for the assessee to make any cash payment on account of ‘on-money’ to the builder, it was also submitted that no collaborated evidences was furnished to assessee and even no opportunity for cross examination was provided. It was also submitted that there was no whisper about the name of assessee in the 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit statement which is reproduced in the assessment order. Ld. AR also submitted that no certificate under evidence act has been obtained by the department for using electronics data which is mandatory and goes to the roots of the case. It was further submitted that identical issue has already been decided in the case of Rajesh Jain in 3841 & and 3950/Mum/2023. The assessee also relied upon his written submissions and same are reproduced here in below:
The assessee purchased Shop No. 43 on 17.10.2019, admeasuring 73.50 sq. ft., in Platinum Mall constructed by Rubberwala Housing & Infrastructure Pvt. Ltd. for a total ₹17,75,025/-. consideration of Payments towards the purchase were made through proper banking channels— ₹5,00,000/- on 13.08.2019, ₹9,20,000/- on 27.08.2019, and the balance amount of ₹3,55,005/- at the time of execution of the agreement.
The market value of the shop, as determined by the Stamp Duty Authority, was ₹19,77,000/-. Accordingly, the assessee paid stamp duty of ₹1,18,700/- and documentation charges ₹19,800/-, of making the total cost of acquisition ₹19,13,525/-.
While passing the assessment order u/s.153C of the Act,the ld. AO had held that Rs. 2,00,000/- were paid by the Appellant to the seller of the shop in cash. The said allegation was made on the basis of the statement of Mr.Imran Ansari and the excel sheet found from Imran Ansari. 4. It is respectfully submitted that the assessee has made the entire payment to Rubberwala Housing & Infrastructure Pvt. Ltd. only through banking channels. No part of the consideration was paid in cash 5. At the outset, it is respectfully submitted that the assessee purchased Shop No. 43 in “Platinum Mall” from Rubberwala Housing & Infrastructure Pvt. Ltd. during F.Y. 2019-20 relevant to A.Y. 2020-21. The consideration for the said shop 4 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit was duly paid through proper banking channels, and no part of the consideration was ever paid in cash. The allegation of cash payment by the assessee is therefore wholly incorrect and without any basis.
The assessee booked the shop only in F.Y. 2019-20 (A.Y. 2020-21). However, the Ld. A.O. has alleged cash payments not only for A.Y. 2020-21 but also for earlier assessment years, i.e., A.Y. 2017-18 and A.Y. 2018-19. This is factually inconsistent and contrary to human probabilities. It is inconceivable that the assessee could have made cash payments in earlier years for a shop that was booked only in A.Y. 2020-21. Therefore, the allegation itself is misconceived and liable to be rejected.
The sole basis for the addition appears to be an excel sheet allegedly retrieved from the residence of a third party, Shri Imran Ansari. It is submitted that such an excel sheet has no evidentiary value under law in the absence of a certificate under Section 65B of the Indian Evidence Act. Importantly, the data was not recovered from the assessee but from a third party, and therefore cannot be used against the assessee without independent corroboration. Further, the assessee’s name does not appear in the extracts of the statement relied upon in the show cause notice.
8. During the assessment proceedings, the assessee was never provided a copy of the alleged excel sheet, nor was he afforded an opportunity to cross-examine the persons whose statements the department sought to rely upon. The appellant had requested the AO to supply the copy of the excel sheet and allow him to cross examine the person Imran Ansari. Moreover, the extracts of the statements reproduced in the show cause notice do not even mention the name of the assessee, rendering them irrelevant to the present case. In these circumstances, reliance placed by the Ld. A.O. on such material is in clear violation of the principles of natural justice, and therefore the assessment order is bad in law.
It is further submitted that the builder group (Rubberwala) has, for reasons best known to them, offered certain amounts to tax on a presumptive basis at 8%. Such disclosure, however, is entirely voluntary on their part and cannot bind the assessee. The assessee has no role or control in the builder’s disclosure and cannot be penalized for the same.
4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 10. Apart from the uncorroborated excel sheet and third-party statements, the Ld. A.O. has brought no independent evidence on record to establish that the assessee made any cash payment. On the contrary, the assessee has conclusively demonstrated that all payments were routed through banking channels, stamp duty was paid as per the market value determined by the Stamp Authority, and the transaction is fully accounted for in the books.
11. In the case of Hoshang J. Mohta vs. ITO (ITA No. 36/Mum/2023, ITAT Mumbai order dated 31.03.2023), the Hon’ble Tribunal held that an “on-money” addition made solely on the basis of the developer’s statement recorded under section 132(4) and an excel sheet is not sustainable in law when the assessee has categorically denied making such payments and no opportunity of cross-examination of the concerned parties was afforded to the assessee.
12. In the case of Mrs. Mamta Sharad Gupta vs. ITO (ITA No. 1553/Mum/2021, ITAT Mumbai, order dated 16.06.2022), the Tribunal held that an addition made merely on the basis of a third-party statement recorded under section 132(4), without any independent corroboration, is unsustainable. The Tribunal further observed that a statement or material seized during search can be used only against the person from whom it is obtained, and not against the assessee without corroboration. It was also held that an excel sheet allegedly recovered from the builder’s office is inadmissible in the absence of proof under section 65 of the Indian Evidence Act. Accordingly, the addition sustained by the CIT(A) was deleted.
13. In Rajesh Jain v. DCIT (ITA Nos. 3842 &Ors/2023, ITAT Mumbai, order dated Nov 2024), the Tribunal deleted additions made solely on the basis of third-party statements and excel entries allegedly belonging to the Rubberwala Group. It was observed that the AO had relied only on evidence found at a third party’s premises and depositions of its employees, without bringing any corroborative material on record—despite the assessee’s categorical denial. Further, no opportunity of cross-examination was provided to the assessee, despite specific requests. Relying on the Supreme Court’s ruling in Andaman Timber Industries v. CCE (2015) 62 taxmann.com 3 (SC), the Tribunal held that denial of cross-examination constitutes a serious violation of 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit natural justice and renders the order a nullity. Accordingly, the impugned addition of ₹18,64,200/- was deleted.
14. The principle of natural justice and the established principles of tax jurisprudence stipulate that the assessee has to be provided a fair chance to defend his case. In Tin Box Company case the Hon’ble Apex Court has (page 218 of 249 ITR) held that assessment orders must be made after the assessee has been given a reasonable opportunity of setting out his case. In our case, surprisingly till date we are not aware as to what is the basis of the allegation levelled against us 15. In the matter of Dhananjay kumar Singh (402 ITR 91) the Hon’ble Patna High Court has held as under:- “It is a cardinal principle of law that if relevant materials and objections are produced before a quasi- judicial authority, the quasi-judicial authority is duty bound, under law, to advert to them, discuss them and then reject them by recording reasons.”
In this regard, I would like to draw your attention to the judgment of the Hon'ble Supreme Court delivered in the case of Andaman Timber Industries Vs. CCE reported in (2015) 281 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.
I would also like to refer to the judgment of the Hon'ble Apex Court delivered in the case of CIT Vs. Odeon Builders Pvt. ltd. (418 ITR 315) wherein also it was held that the addition/disallowance made solely on third party information without subjecting it to further scrutiny and denying the opportunity of cross examination of the third party renders the addition/ disallowance bad in law.
18. Finally, I would like to refer to the decision delivered in case of H.R. Mehta v/s Assistant Commissioner of Income- tax, Mumbai 72 taxmann.com 110 (Bombay) delivered by the Hon’ble Bombay High Court and the same reads as under. In the light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against him in arriving before passing the order 7 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and, therefore, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable 19. In DCIT v. Mahalaxmi Infracontract Ltd. [2025] 173 taxmann.com 399 (Ahmedabad - Trib.), the Tribunal dealt with a case where the Assessing Officer had made additions under sections 69A and 69C on the basis of unsigned excel sheets seized from the premises of a third party during search, alleging that the assessee had taken cash loans and paid interest thereon in cash. While the CIT(A) deleted the addition relating to cash loans, he sustained the addition towards cash interest payment. On appeal, the Tribunal categorically held that in the absence of any corroborative evidence, an unsigned excel sheet recovered from a third party cannot form the sole basis for making an addition. Since there was no independent material to prove that the assessee had actually paid interest in cash, the addition made under section 69C was unsustainable in the eyes of law and accordingly stood deleted.
In Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom.), the Bombay High Court considered additions made under section 69A on the basis of statements of two persons claiming to have paid money in ‘black’ to the assessee, along with entries in their own books reflecting such alleged payments. The Tribunal, after scrutinizing the evidence, found that the statements suffered from serious infirmities and could not be relied upon. It further held that mere entries in the day-book or ledger of third parties could at best serve as corroborative evidence, but once the direct oral evidence of the alleged payers was disbelieved, no evidentiary value could be attached to such entries. Accordingly, the High Court upheld the Tribunal’s deletion of the additions, holding that unsupported third-party records cannot, by themselves, establish that the assessee had received undisclosed money.
In RakeshBabbar v. ACIT [2025] 174 taxmann.com 347 (Delhi), the Delhi High Court held that where a search conducted on a third party yielded documents such as an excel sheet and statements indicating alleged cash consideration for sale of shops, but those documents pertained only to financial year 2016-17 and not to the 8 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit assessee’s relevant assessment year 2018-19, the same could not be treated as incriminating material for that year. Since section 153C can be invoked only when incriminating material directly relatable to the assessee and to the relevant assessment year is found during search, the Court held that issuance of notice under section 153C for A.Y. 2018-19 was invalid. Consequently, the impugned notice and assessment order were quashed, reinforcing that jurisdiction under section 153C cannot be assumed merely on the basis of third-party excel sheets or statements not pertaining to the assessee’s year of assessment.
22. In light of the above submissions, it is respectfully prayed that the addition made by the Ld. A.O. merely on the basis of unsubstantiated third-party documents/statements, without providing copies of evidence or opportunity of cross- examination, is unsustainable in law as well as on facts. The assessment order, therefore, deserves to be quashed.
7. On the other hand, Ld DR appearing on behalf of the department relied upon the orders passed by the revenue authorities.
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 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 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 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit Ashfaque Ansari was covered under section 132 of the 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 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 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 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………………… 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 10. We also noticed that the decision of the Coordinate Bench of ITAT in the case of Rajesh Jain in 3841 & and 3950/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. 15. The ld A.R submitted that the addition was made on the basis of third party statement and documents found from the premises of third party. As per the deposition made by the employee of Rubberwala group, the buyers were given a diary, in which, the details of cash received were acknowledged. The Ld A.R submitted the search officials did not find any such diary with the assessee during the course of search operation conducted in his hands. Hence the statement so given by the employee stands disproved. He submitted that the AO has simply relied upon third party statement without bringing any independent material to support the same. The AO also did not provide the opportunity of cross examination despite being 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit asked by the assessee. Accordingly, by placing reliance on various case laws, the Ld A.R submitted that this addition should be deleted.
16. We heard Ld D.R and perused the record. We notice that the AO has made the addition on the basis of evidence found in the premises of third party and also on the basis of deposition made by the employee of the third party. No corroborative material was brought on record to support the statement so given, which is mandatory when the assessee denies any such payment. Further, the AO also did not provide opportunity of cross examination to the assessee, even after the said request was made by the assessee. Under these set of facts, we are of the view that the impugned addition of Rs.18,64,200/- cannot be sustained. In this regard, we may take support from the decision rendered by SMC bench of Mumbai Tribunal in the case of Naren Premchang Nagda vs. ITO (IT Appeal No.3265/Mum/2015 dated 08-07-2016), wherein an identical issue was decided as under:- 17. We also notice that the AO did not provide opportunity to cross examine the persons from Rubberwala group, on whose statements the AO had placed reliance upon. The Hon‟ble Supreme Court has held in the case of Andaman Timber Industries vs. Commissioner of Central Excise (2015)(62 taxmann.com 3)(SC) 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 14 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 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’.
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.
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.
As far as the information claimed in pendrive is concerned, the same was not found from the possession of the assessee but was found as per order of assessment, during the search and seizure conducted in the case of third party therefore, in the absence of corroborative evidence to establish that the contents of pendrive are correct and authenticated to the extent assessee paid ‘on- money’ in cash, no addition can be made and even otherwise during the entire reassessment proceedings the veracity and reliability of the data recorded in the pendrive was not checked or tested. Therefore, in such a scenario 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit no addition is warranted in the case of assessee. Reliance in this regard has been placed on the decision in case of Heena Dashrath Jhanglani ITA no.1665/Mum./2018 (Assessment Year : 2007–08) wherein the Coordinate Bench of ITAT had decided the issue in favour of assessee and the relevant portion is being reproduced herein below:
I have considered rival submissions and perused material on record. Undisputedly, the genesis of the addition made of ` 42 lakh on account of alleged payment of on–money in cash towards purchase of a flat lies in a search and seizure operation conducted in case of Hiranandani Group and related persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material / evidence available on record to indicate payment of on–money in cash by the assessee to M/s. Crescendo Associates, however, from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen drive found and seized from the residence of one of the employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of on– money paid by buyers / prospective buyers to Hiranandani Group concerns are mentioned and further, in the statement recorded 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 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 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.
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 17 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 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 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:– ……..
Reliance has also been placed in the case of Monika Anand Gupta (A.Y. 2011-12) whereas coordinate bench held as under.
6. I have heard both the parties and perused the record. I find that the addition for on-money payment has been done in this 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit case without any corroborative material found from assessee. The addition is solely based upon some statement of the builder. Such additions are not sustainable on the touchstone of Hon'ble Supreme Court decision in the case of CIT vs P.V Kalyana sundasram 164 Taxman 78 (SC). Moreover there is nothing on record to suggest that so called electronic evidence collected by revenue at the builder’s office is compliant with the requirement of section 65B of Evidence Act regarding admissibility of electronic evidence. Hence, I set aside the orders of the authority below and direct that the addition be deleted.
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. 17. For the above proposition, we place reliance upon the decision in the case of ITO Vs. Vinod Aggarwal, ITO Vs. Nikhil Vinod Aggarwal, Heena Dashrath Jhanglani Vs. 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit ITO, Padmashrree Dr. D.Y. Patil University Vs. DCIT, ITA Nos. 3264 to 3268/Mum/2022.
From the records we also noticed that no statement was provided to the assessee, and none of the persons, whose statements were relied upon were produced for cross-examination. Even the extract of the statement mentioned in the assessment order does not indicate the name of the assessee.
Apart, the AO during the course of assessment also failed to provide the opportunity to cross examine of the witnesses, whose statements were relied upon by the revenue which resulted in ‘breach of principles of natural justice’. In this regard, reliance is being placed upon the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CCE reported in (2015)281 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’.
20.In the case of CIT Vs. Odeon Builders Pvt. ltd. (418ITR 315), it was held that the ‘addition/disallowance made solely on third party information without subjecting it to further scrutiny and denying the opportunity of cross examination of the third party renders the addition/disallowance bad in law’ 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 21. In the case of H.R. Mehta v/s Assistant Commissioner of Income-tax, Mumbai 72 taxmann.com110 (Bombay) wherein it was held as under In the light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and, therefore, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents whose statements were relied upon by him. Despite the request seeking an opportunity to cross examine the deponents and furnish the assessee with copies of statements and disclose material, these were denied to him.
Taking into consideration the entire facts and circumstances and legal prepositions as discussed by us above, we direct the AO to delete the addition, consequently these grounds raised by the assessee are allowed.
& 4744/Mum/2025, A.Y 2018-19 & 2020-
As the facts and circumstances in these appeals are identical to A.Y 2017-18 (except variance in figures) and the decision rendered in above paragraph would apply mutatis mutandis for these appeals also. Accordingly, the grounds of appeal of the present appeals also stands allowed.
4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 23. In the result, all the appeals filed by the assessee stands allowed.