MUKESH SHARMA,LUCKNOW vs. DCIT/ACIT CEN CIR, DDN , DEHRADUN , DEHRADUN

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN Before Shri Raj Kumar Chauhan, Judicial Member & Shri Sanjay Awasthi, Accountant Member ITA No. 337/DDN/2026 : Asstt. Year : 2020-21 Mukesh Sharma, Vs DCIT/ACIT, 2/367, VivekKhand, Gomtinagar, Central Circle, Lucknow-226010 Dehradun (APPELLANT) (RESPONDENT) PAN No. AQEPS7190P ITA No. 338/DDN/2026 : Asstt. Year : 2020-21 Nupur Sharma, Vs DCIT, 2/367, VivekKhand, Gomtinagar, Central Circle, Lucknow-226010 Dehradun-248001 (APPELLANT) (RESPONDENT) PAN No. IGBPS1138G Assessee by : Sh. Caishu Bansal, CA Revenue by : Sh. Deepak Chaudhary, JCIT Date of Hearing: 24.07.2026 Date of Pronouncement: 24.07.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: These appeals by the assessees are directed against the orders of ld. CIT(A)-3, Noida dated 02.04.2026 passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). By this common order, we propose to decide the ITA Nos. 337 & 338/DDN/2026 as the parties are same and factual matrix is also same and in order to avoid multiplicity of decision, the same are being disposed off accordingly. ITA No. 337/DDN/2026 is taken as lead case.

2 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma 2. There is a delay of 20 days in filing the present appeal. Having considered the explanation furnished by the assessee and respectfully following the judgment of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC), the delay is condoned in the larger interest of substantial justice.

3 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma ld. CIT(A) is not sustainable in law, as the appeal has been dismissed merely by placing reliance on the assessment order without independently appreciating the documentary evidences and judicial precedents placed on record. It was further contended that the specific pleas raised by the assessee regarding violation of the principles of natural justice, absence of any independent corroborative evidence, on the basis third- party documents, denial of the opportunity to cross-examine the alleged recipient of cash, and the fact that the entire sale consideration had been paid through banking channels, have remained un-adjudicated. It was, therefore, submitted that the impugned order suffers from lack of proper adjudication and deserves to be set aside. Accordingly, it was prayed that the matter be restored to the file of the ld.CIT(A) for fresh adjudication on merits after affording adequate and effective opportunity of being heard to the assessee.

4 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma “3. During the course of appellate proceedings, the appellant filed his submissions, a under: “IN THE MATTER OF Mukesh Sharma, 64 A/R, Model Town, Yamuna Nagai Haryana-135001, PAN AQEPS7190P, Appellant Vs. The Assistant Commissioner of Income Tax, Central Circle, Dehradun-Respondent, Assessment Year: 2020-21 Appeal filed on: O1/O3/2O25, Order challenged dated: 04/02/2025 WRITTEN SUBMISSIONS ON BEHALF OF THE APPELLANT 1. Background The present appeal arises out of the assessment order dated 04.02.2025. passed under Section 143(3) r.w.s. 147/153C of the Income-tax Act, 1961, wherein the Assessing Officer made an addition of Rs. 1,75,000/- under Section 69, treating it as unexplained investment and applying Section 11588E. The addition pertains to an alleged "on-money" cash payment of Rs.3,50,000/- (50% attributed to the Appellant), purportedly made jointly with his wife, Smt. Nupur Sharma, for the purchase of land from Shri Keshav Soin. The entire addition is based solely on a loose paper seized during a search on third parties (Shri Krishna Sharma and Smt. Sheetal Sharma) under Section 132. The paper allegedly bore the notation "350000/8", -which the AO interpreted a unaccounted cash payment. 2. Grounds of Challenge No direct evidence exists to establish any cash payment by the Appellant. The entire purchase consideration of Rs. 22,00,000/- was paid through banking channels, as per the registered sale deed. The seized document is an unauthenticated third-party paper with no linkage to the Appellant. As per the order copy received, the seller was never examined or confronted to confirm the alleged on-money. The addition is based purely on presumption and surmise, contrary to settled judicial principles. 3. Detailed Submissions

5 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma 3.1 Entire Sale Consideration Paid Through Banking Channels The Appellant and his wife jointly purchased the property for Rs. 22,00,000/-, as evidenced by the registered sale deed (Annexed). The entire amount was paid via cheque/NEFT, with no cash component recorded or suggested in the deed. 3.2 Limited Sources of Income-No Cash Generation The Appellant is a salaried individual with only salary as income source, as accepted by the Department. Form 16 and computation of Income (Annexed) confirm that the Appellant has no cash-based business activity capable of generating any unaccounted cash. 3.3 No Link Between Seized Document and the Appellant The alleged paper with the notation "350000/8" was neither recovered from the Appellant nor from the seller. Its author is unknown, and no investigation has been carried out to prove any nexus with the Appellant. Reliance on such a loose third- party document is legally untenable. 3.4 Non-examination of Seller - Violation of Natural Justice As per the order received, the alleged recipient of cash, Shri Keshav Soin, was neither examined nor issued notice under Section 131/133(6). In the absence of any statement or confirmation from the seller, the addition lacks evidentiary backing and violates the principle of audi alteram partem. 3.5 Additions Cannot Be Based on Presumption The AO has merely assumed that "on-money" payments are common in property transactions. However, settled law holds that suspicion, however strong, cannot substitute evidence. 4. Legal Precedents in Support

6 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma Case Citation Ratio/Relevance CBI v. V.C. Shukla (1998) 3 SCC 410 (SC) Loose sheets/diaries are not "books of account"; entries therein are inadmissible or at best corroborative and cannot alone fasten liability Common Cause v. (2017) SC Order SC declined to act on diaries/loose Union of India data not maintained in the regular (Sahara- Birla case) course, such loose papers lack evidentiar y value against third parties. CIT V. RV 282 ITR 259 (Mad), aff’d Revenue must prove extra Kalyanasundaram 294 ITR 49 (SC) consideration; uncorroborated statements/ loose papers without Independent enquiry cannot justify addition. CIT v. P.K. 237 ITR 570 (SC) Section 69 is discretionary; Noorjahan additions require objective, evidence-based satisfaction and cannot rest on mere suspicion or disbe lief. PCIT v. Vinita 394 ITR 758 (Del HC) Presumption under Section 292C Chaurasia (HC) applies only against the person from whose possession a document is seized; third-party unsigned papers cannot, by themselves, sustain additions K.P. Varghese v. ITO 131 ITR 597 (SC) Burden is on Revenue to prove understatement of consideration, suspicion or valuation reports cannot replace proof of actual higher consideration paid. Pr. CIT (Central) v. [2023] 457 ITR 262 (Del Mere reference to a person's name Smt. Ritu Singhal HC) in a third- party loose s heet cannot justify addition without corroboration PCIT v. Harjeet [2023] 149 Addition under s.69 cannot be Singh Bhatia taxmann.com 320 (Del made solely on unsigned, undated HC) third-party documents without prov ing authorship or linkage.

In light of the above facts and settled legal principles, the Appellant most respectfully prays that:

The Appellant craves leave to file further evidence or submissions, if required, at the time of hearing.

7 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma FINDINGS, OBSERVATIONS & DECISION 4. In the light of the above submissions and documents filed by the appellant during the course of appellate proceedings and findings of the AO in the assessment order, the various grounds of appeal are adjudicated as below: 4.1 Ground of Appeal No. 1 is general in nature, requiring no specific comments in view of the detailed adjudication in the succeeding grounds. 4.2 Grounds of Appeal Nos. 2 to 4 : In these grounds of appeal, the appellant has challenged the addition of Rs.1,75,000/- (1/2 of 3,50,000/-) made by the AO on account of cash paid for purchase of property. As per AO, the said property has been sold by Sh. Keshav Soin and purchased by the assessee and his wife Smt. Nupur Sharma. The appellant has stated that the addition made by the AO is based on dumb documents. A perusal of the seized document reveals that an amount of Rs. 3,50,000/- has been paid in cash and there is clear reference of the said payment on the seized document dated 06.05.2019. Against the name of the purchasers, the details of the property under contention and its area are also clearly mentioned i.e. Khasra No. 489ख with area 102.23 sq. meters. The said seized document has bifurcated the payments made into "Sale consideration Amount” and "B" Category. In common parlance, the "Sale Consideration Amount7 category payments are the payments made through banking channels and "B” category payments are the payments in cash. In the case of the appellant, the "Sale Consideration Amount77 category is mentioned as Rs. 22 lacs and "B” category is mentioned as Rs. 3.5 lacs. Perusal of the assessment order reveals that payment through banking channels of Rs. 22 lacs has been made by the purchasers. The seized document is very clear on the total transaction amount, the dates on which the payments have been made. The said document wherein the sale consideration for the property under contention is mentioned at Rs. 22 lacs has been seized during the course of search u/s 132. The contention of the appellant that the said document carries no value is not correct as the complete details of the payments made for the impugned property transaction are clearly mentioned on the same. Also, the payment of Rs. 22 lacs paid through banking channels on the said document is part of record and has not been denied by the assessee/purchasers. The assessee cannot claim that part of the document is correct and the other part is not correct.

8 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma The denial of the purchaser of having not paid any amount above the registered value goes against the primary evidence available in the nature of seized document which clearly mentions the amount of Rs. 22 lacs as the sale consideration. Subsequent denial of a transaction which is clearly made out from the seized document cannot be taken as ground for providing any relief to the assessee. Also, it needs to be highlighted here that the veracity of the seized document stands confirmed as another buyer of a different property i.e. Ashulekha Gupta (PAN: AIYPG1714H) mentioned in the documents seized during the course of same search has acknowledged the cash payment made for purchase of that property. The said issue has been dealt in detail in appeal case of Ashulekha Gupta in order dated 01.09.2025 in Appeal No. CIT (Appeals), Noida-3/10049/2018-19. Hence the veracity of the seized documents stands proved. The Hon'ble Supreme Court in the case of CIT vs. Smt. P. K. Noorjahan reported at [1999] 237 ITR 570 has held that "if, the assessee's explanation regarding the source of investment is not found to be satisfactory, the AO has the discretion to treat such investment as assessee's income.” Further, the Hon'ble High Court of Madras in the case of Thiru S. Shyam Kumar vs. ACIT reported at [2018] 99 taxmann.com 39 has held as under: “Unexplained investment (On-money payment) - A search was conducted in business premises of assessee wherein certain loose slips were recovered, which showed several entries pertaining to cash and cheque transactions in respect of purchase of a property- Assessee accepted in his statement that slip represented on-money payment made for purchase of property in question - Later on, assessee retracted from his statement and claimed that loose slips were only dumb slips - Tribunal however, rejected claim of assessee and confirmed addition - Whether since notings in loose slips were clear, retraction made by assessee after period of two years was rightly rejected as an afterthought - Held, yes - Whether thus, impugned order could not be interfered - Held, yes” The Hon'ble Karnataka High Court in the case of C. Ramakrishna vs. Deputy Commissioner of Income-tax reported in [2023] 154 taxmann.com 40 (Karnataka), held as under: Section 69A of the Income-tax Act, 1961 - Unexplained money (Illustrations) - Assessment year 2009-10 -

9 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma Assessing Officer made additions in hands of assessee on basis of seized loose papers which revealed money transaction between assessee and others relating to a property - It was noted that transaction of payment with respect to relevant assessment year was confirmed - Whether since lower authorities had concurrently recorded findings of fact against assessee, appeal was to be dismissed - Held, yes [Para 5] [In favour of revenue] The Hon'ble High Court of Jharkhand in the case of Mahabir Prasad Rungta vs. Commissioner of Income-tax (Appeals), Ranchi reported at [2014] 43 taxmann.com 328 (Jharkhand), held as under: "Pursuant to a search of assessee’s premises, Assessing Officer made an addition on ground of undisclosed income on basis of loose sheets seized during search - Whether loose sheets seized during search sometimes contain valuable information and thus those are to be regarded as 'documents' within meaning of section 158B(b) - Held, yes - Whether there is presumption raised under section 132(4A) regarding documents seized and in light of such presumption, assessee ought to have produced other documents to disprove entries made in loose sheets - Held, yes - Whether since assessee had not adduced any rebuttal evidence to show that entries made in diary/loose sheets were not income in hands of assessee, addition upheld by Commissioner (Appeals) and Tribunal were justified - Held, yes" From the above judgments, it is clear that once there is adequate documentary proof available showing the payment of on-money, the purchaser cannot be allowed to go scot free with respect to alleged unaccounted cash payments made. Also, Section 292C as amended by Finance Act, 2008 conveys as under: “Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search u/s 132 (w.e.f. 01.10.1975), or survey u/s 133A (w.e.f. 01.06.2002), it may, in any proceeding under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

10 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]” The provisions of Section 292C make it very clear that the seized document pertain to the assessee and the contents of the document are true. In view of above discussion and facts of the case, the addition made by the AO on the said grounds is sustained. Accordingly, these grounds of appeal are dismissed. 4.3 Ground of Appeal No. 5 has not been argued by the AR during appellate proceedings. 5. In the result, the Appeal is Dismissed.” 8. From the above extract, we have noticed that the material fact and legal precedents referred by assessee are not duly considered by the ld. CIT(A), therefore impugned order is not passed as per section 250(6) of the Act.

11 ITA Nos. 337 & 338/DDN/2026 Mukesh&Nupur Sharma result, the appeal No. 337/DDN/20256 is allowed for statistical purposes.