ITO WARD 3(2), KALYAN, KALYAN vs. FLEX THE HARDCORE HOUSE, THANE

PDF · subscribers
ITA 9521/MUM/2025Status: DisposedITAT Mumbai31 August 2026AY 2019-209 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the seized material, while requiring an explanation, did not establish that the alleged investment was made in the specific assessment year under appeal. The attribution of the cash payment to the relevant financial year was based on an assumption rather than concrete evidence.

What were the facts?

During a search, seized sheets indicated cash payments for commercial units purchased by the assessee. The Assessing Officer treated the unrecorded cash component as income under Section 69 and added it to the assessee's income. The assessee provided evidence of registered agreements and payments through banking channels.

What were the issues?

Whether the addition made under Section 69 for alleged unexplained cash investment was correctly attributed to the assessment year 2019-20, and if the Revenue had provided sufficient material to prove the timing of the investment.

Which sections of the Income-tax Act were involved?

Section 69,Section 115BBE,Section 147,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘F’ BENCH

For Appellant: Shri Subodh Ratna Parkhi
For Respondent: Shri Bal Krishna Yadav
Hearing: 06/08/2026Pronounced: 31/08/2026

आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against the order dated 26.09.2025 passed by the National Faceless Appeal Centre (“NFAC”) for the assessment year 2019–20, arising out of the assessment order dated 19.03.2024 passed under section 147 read with sections 144

2 ITA No.9521/Mum/2025 Flex The Hardcore House and 144B of the Income-tax Act, 1961 (“the Act”). The Revenue is aggrieved by the decision of the learned CIT(A) in deleting the addition of ₹2,19,50,000 made by the Assessing Officer under section 69 read with section 115BBE of the Act. The Revenue has also challenged the findings of the learned CIT(A) concerning the validity of proceedings initiated under section 147, the year of taxability and the alleged denial of opportunity for cross-examination. 2. Brief facts are that the assessee is a partnership firm engaged in the business of running fitness centres. A search and seizure action under section 132 was conducted on 23.09.2021 in the case of the GNP Group. During the course of search at the premises of M/s GNP Consultancy and Solutions Pvt. Ltd., certain loose sheets relating to the commercial project known as “GNP Arcadia”, developed by M/s GNP Infracon, were found and seized. These sheets contained buyer-wise particulars under the columns marked “T”, “S” and “N”. The statements of Shri Kapil Talreja, accounts manager of the GNP Group, and Shri Girish Pawar, promoter of the group and partner of M/s GNP Infracon, were recorded under section 132(4). According to their explanation, “T” represented the total consideration, “S” denoted the consideration recorded in the sale agreement and received through banking channels, whereas “N” represented the cash component not recorded in the regular books of account.

3 ITA No.9521/Mum/2025 Flex The Hardcore House 3. In the seized sheet dated 11.04.2019, four commercial units bearing Nos. 3, 4, 5 and 6 were shown against the name of Shri Ashok Shetty, a partner of the assessee firm. The figures appearing under the column “N”, insofar as these four units were concerned, aggregated to ₹2,19,50,000. The Assessing Officer treated the said amount as cash paid by the assessee over and above the registered consideration and, accordingly, made an addition under section 69 read with section 115BBE of the Act. 4. The assessee, however, submitted that the four commercial units were acquired under a registered agreement dated 25.06.2019 for an aggregate consideration of ₹2,69,46,429, as against their stamp duty valuation of ₹2,01,03,292. Including stamp duty and registration charges, the total recorded cost was stated to be ₹2,71,00,000, which was discharged through banking channels in the following manner:

Date of payment Amount Source 03.08.2017 ₹10,00,000 Partner’s contribution 26.09.2018 ₹11,00,000 Business receipts of the assessee ₹2,50,00,000 25.06.2019 ICICI Bank mortgage loan Total ₹2,71,00,000

4 ITA No.9521/Mum/2025 Flex The Hardcore House 4.1. The assessee furnished the registered agreement, relevant bank statements, loan-sanction documents, audited financial statements and an affidavit of Shri Ashok Shetty denying any payment in cash. It was further contended that the property was acquired and capitalised during the financial year 2019–20, relevant to assessment year 2020–21, and that the seized sheets themselves were dated 11.04.2019 and 23.08.2019. Therefore, according to the assessee, there was no material demonstrating that any alleged cash payment had been made during the previous year relevant to assessment year 2019–20.

5.

The Assessing Officer rejected the explanation substantially on the ground that the receipt of on-money had been admitted by the promoter of the seller group and that such payment was ordinarily made before registration of the property. He further relied upon the approach adopted in the appraisal material that the cash figures appearing in the sheet dated 11.04.2019 could be attributed to financial year 2018–19 because the sheet had been prepared merely eleven days after the close of that financial year. On this reasoning, the entire amount of ₹2,19,50,000 was brought to tax in assessment year 2019–20.

6.

The learned CIT(A), after considering the assessment order, the submissions of the assessee, the documentary evidence

5 ITA No.9521/Mum/2025 Flex The Hardcore House and the remand report of the Assessing Officer, allowed the appeal. Besides his findings on the validity of the reassessment proceedings, he held that the addition was factually misplaced in assessment year 2019–20. He noted that the registered agreement was executed on 25.06.2019, the substantial payment of ₹2.50 crore was made in financial year 2019–20 out of a mortgage loan, and the seized sheets relied upon by the Department were themselves dated 11.04.2019 and 23.08.2019. He further found that there was no independent corroborative evidence establishing actual payment of ₹2,19,50,000 in cash by the assessee during the year under consideration.

7.

We have heard the rival submissions and carefully perused the material placed on record. At the outset, it needs to be observed that the seized sheets, read with the statements recorded during the search, undoubtedly constituted material requiring an explanation from the assessee. However, the existence of such material and the identification of the precise assessment year in which an alleged unexplained investment was made are two distinct matters. For invoking section 69 in assessment year 2019–20, it was incumbent upon the Assessing Officer to establish, on the basis of some discernible material, that the alleged investment was made during the previous year relevant to that assessment year. Here, the entire year-wise attribution rests upon the premise

6 ITA No.9521/Mum/2025 Flex The Hardcore House that, since one of the sheets was dated 11.04.2019, the figures recorded therein could safely be treated as relating to financial year 2018–19 because only eleven days had elapsed after the end of that year. This, in our opinion, remains an assumption unsupported by any buyer-specific date of payment. Neither the seized sheet nor the statements relied upon by the Assessing Officer identify the date or dates on which the alleged cash amounts of ₹43,11,991, ₹59,59,711, ₹58,39,149 and ₹58,39,149 were actually paid. A statement reflecting the cumulative position as on a particular date cannot, without anything further, establish that every receipt recorded therein was made before the commencement of that financial year. The proximity of the sheet to the close of the preceding financial year may give rise to an inference, but cannot substitute the evidentiary requirement of establishing the year in which the investment was actually made.

8.

This assumes greater significance when the registered agreement was executed on 25.06.2019 and the substantial recorded payment of ₹2.50 crore was also made during financial year 2019–20 through an identified mortgage loan. Even the assessment order passed for assessment year 2018– 19 recorded that the purchase and transfer of the capital asset pertained to assessment year 2020–21 and, consequently, no addition was made in that year. The Assessing Officer could not thereafter place the impugned

7 ITA No.9521/Mum/2025 Flex The Hardcore House amount in assessment year 2019–20 merely on an approximation, without bringing on record any positive material showing that the alleged cash was paid between 01.04.2018 and 31.03.2019. We are also unable to overlook the assessee’s contention that the figures appearing under the recorded-payment column of the seized sheets did not fully correspond with the actual payments demonstrably made through banking channels. The assessee had placed on record the registered agreement, bank statements, loan- sanction documents and audited accounts showing the recorded acquisition and its source. These documents may not, by themselves, conclusively disprove an allegation of payment over and above the registered consideration; nevertheless, once the assessee disputed the correctness of the seized entries and specifically questioned their attribution to the year under appeal, the addition could not be sustained solely upon an assumption regarding the timing of the alleged cash payment.

9.

Thus, even if the seized material and the statements recorded from the representatives of the GNP Group are taken at their face value, they do not establish that the alleged unexplained investment of ₹2,19,50,000 was made by the assessee during the previous year relevant to assessment year 2019–20. The addition, therefore, fails on the fundamental requirement of year-specific taxability under section 69. We

8 ITA No.9521/Mum/2025 Flex The Hardcore House accordingly uphold the deletion of the addition by the learned CIT(A). Since the deletion stands sustained on this factual and substantive ground, it is not necessary for us to adjudicate the other issues concerning the applicability of section 153C, the reliance placed upon the decision in Hexaware Technologies Ltd., or the alleged denial of cross- examination. We, therefore, refrain from expressing any opinion on those issues, and the observations of the learned CIT(A) thereon shall not be treated as having been affirmed by us. The remaining grounds raised by the Revenue have consequently become academic.

10.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced on 31st August, 2026.

Sd/- Sd/- (ARUN KHODPIA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 31/08/2026 KARUNA, sr.ps

9 ITA No.9521/Mum/2025 Flex The Hardcore House Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,

(Asstt. Registrar) ITAT, Mumbai

More judgments on Section 69

All 9,011 judgments and leading authorities on Section 69 →

Recent GST High Court judgments

Search GST case law →