ANAS MOHAMMED ASIF TELI,MUMBAI vs. DY CIT CC 4(2), MUMBAI

The Ld. AR filed a paper book containing pages 1 to 171, which has been placed on record. The Ld. AR contended that the assessee has categorically denied having made any cash payment to RHIL in connection with the purchase of the said commercial property. It was further submitted that no opportunity of cross-verification was granted to the assessee in respect of the additions made by the Ld. AO. The Ld. AR respectfully placed reliance on the order of the Coordinate Bench of the ITAT, Mumbai, in the case of Ankit Jems (P.) Ltd. vs. ITO reported in (2025) 178 taxmann.com 454 (Mum-Trib), wherein it was held that an addition under section 69, made solely on the basis of information received from investigation proceedings in another group case, could not be sustained in the absence of any cogent evidence against the assessee, particularly when the assessee had denied the transactions and the purchase records did not reflect any such entries.

He further respectfully relied on the order of the Coordinate Bench of ITAT Mumbai in the case of Bharat Solanki vs. DCIT reported in [2026] 182 taxmann.com 68 (Mumbai-Trib.). Observations of the bench in contended in following paragraphs are reproduced as below:- “8.12 It is well settled that mere furnishing of copies of statements or documents does not, by itself, satisfy the requirement of natural justice, where such material is sought to be used adversely against an assessee and the assessee specifically disputes its correctness. The learned Commissioner (Appeals) has proceeded on the assumption that since extracts of statements, Excel data, and pendrive contents were supplied through the show-cause notice, the principles of natural justice stood fully complied with. This approach conflates disclosure of material with testing of material, which are legally distinct concepts. The reliance placed by the learned Commissioner (Appeals) on Andaman Timber Industries is, with respect, misconceived and internally contradictory. The said decision has been cited to suggest that cross-examination is necessary only where the third-party statement is the "sole basis" of the addition. This reading is incorrect. In the present case, the Excel sheets and the pen-drive data have no independent evidentiary value de hors the explanation and interpretation supplied by Shri Imran Ansari. The alleged cash component, the attribution of entries to specific buyers, and the linkage of the assessee to such entries emanate entirely from his statement. The digital material does not speak for itself. Consequently, the statement is not collateral or incidental evidence but the very foundation of the addition. Much emphasis has been placed by the lower authorities on the proposition that income-tax proceedings are not governed by the strict provisions of the Indian Evidence Act. There can be no quarrel with this settled proposition. However, it is equally settled that relaxation of evidentiary rules does not imply abrogation of natural justice. Even material which is otherwise admissible must still satisfy the minimum requirement of fairness when used against an assessee. The Hon'ble Supreme Court in Kishinchand Chellaram v. CIT [1980] 4 Taxman 29/125 ITR 713 (SC) has unequivocally held that any material collected behind the back of the assessee, if proposed to be used against him, must be subjected to an opportunity of rebuttal in a meaningful manner, which necessarily includes cross-examination where facts are disputed. 8.13 Considerable reliance has been placed on the alleged admission by the Rubberwala Group that it received on-money and offered the same to tax. This, however, cannot be determinative of the assessee's liability. It is trite law that an admission by one party cannot be used as conclusive evidence against another, unless the latter is afforded an opportunity to test and rebut such admission. The assessee is not estopped from disputing the correctness or applicability of such admission to his case, particularly when the alleged payment is denied and no independent corroboration exists. 8.14 The learned Commissioner (Appeals) has sought to distinguish the coordinate Bench decision in Rajesh Jain primarily on the ground that the assessee therein was subjected to search, whereas the present assessee was not. This distinction is wholly irrelevant to the core issue of evidentiary reliance on third-party material without cross-examination. Considerable reliance has been placed on the alleged admission by the Rubberwala Group that it received on-money and offered the same to tax. This, however, cannot be determinative of the assessee's liability. The ratio of Rajesh Jain rests squarely on two pillars:

absence of corroborative material against the assessee, and 2. denial of cross-examination despite specific request. 8.15 Both these features are present in the case before us. Judicial discipline mandates that a coordinate Bench decision on identical facts be followed unless shown to be per incuriam, which is not the case here. 8.16 The ld CIT(A) relied on various decisions to contend that providing cross examination of sh Ansari was not required. These authorities do not lay down a blanket proposition dispensing with cross-examination. On the contrary, they consistently hold that the requirement depends on the nature of evidence, its role in the adjudication, and the prejudice caused. In the present case: • the assessee has categorically denied having made any cash payment; • no cash, diary, or corroborative document was found from the assessee; • the alleged diary, though repeatedly referred to in statements, was never recovered; and • the entire edifice of the addition rests on third-party statements and electronic data interpreted by those very persons. 8.17 In such circumstances, denial of cross-examination causes manifest prejudice and cannot be brushed aside as a mere procedural irregularity. 8.18 We find that, in identical factual circumstances relating to alleged cash "on-money" payments for purchase of shops in Platinum Mall from the Rubberwala Group, the Co- ordinate Bench of the Tribunal in Praveen Khetaramm Purohit v. Dy. CIT [IT Appeal Nos. 4742 to 4744/Mum/2025, dated 15.10.2025] has deleted similar additions. The learned also placed reliance upon another decision of the Co-ordinate Bench of the Tribunal in Akhraj Pukhraaj Chopra v. Dy. CIT [IT Appeal Nos. 5553 and 5554/Mum/2025, dated 12-11-2025], wherein similar addition was made on the basis of search and seizure action on Rubberwala Group. Reliance in this regard has been also placed on the decision in case of Heena Dashrath Jhanglani v. ITO [IT Appeal No.1665/Mum./2018, dated 11.01.2019] (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: 10. 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 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 Rs. 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 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:– ……. 8.19 The consistent factual matrix emerging from above decisions is that the additions were made solely on the basis of (i) statements of Shri Imran Ansari, an employee of the Rubberwala Group, recorded during the course of search, and (ii) data contained in an Excel sheet retrieved from a pen drive found from his possession. No incriminating material was found from the assessee. The assessee, from the inception, categorically denied having paid any cash over and above the documented consideration. 8.20 The Co-ordinate Bench, after an exhaustive examination of the facts, has held that such third-party statements and electronic records, uncorroborated by any independent evidence and not directly linking the assessee to the alleged cash payment, do not constitute credible evidence for sustaining an addition under section 69 of the Act. The Bench further noted that, despite specific requests, the assessee was neither confronted with the complete adverse material nor afforded an opportunity to cross-examine Shri Imran Ansari or any other person whose statements were relied upon. 8.21 It is well settled that while the rigours of the Evidence Act do not strictly apply to income-tax proceedings, additions must nevertheless be founded on material which is reliable, cogent, and has a direct nexus with the assessee. Third-party statements, cannot be treated as conclusive unless supported by independent corroborative evidence. At best, such material may give rise to suspicion, but suspicion, however strong, cannot take the place of proof. 8.22 Equally well settled is the principle that if the Assessing Officer proposes to rely upon any adverse material to the detriment of the assessee, such material must be confronted to the assessee, and a reasonable opportunity must be granted to rebut or contradict the same. Where the addition rests substantially on a third-party statement, denial of cross- examination strikes at the very root of the matter and amounts to a serious breach of the principles of natural justice. The Hon'ble Supreme Court in Andaman Timber Industries (supra) has categorically held that failure to grant such opportunity renders the order a nullity. 8.23 In the present case, it is undisputed that:

The Ld. AR further contended that an identical factual issue had already been adjudicated by the Coordinate Bench of the ITAT, Mumbai, in cases arising out of the search conducted in the Rubberwala Group. The Coordinate Bench has consistently held that additions relating to alleged cash payments for the purchase of commercial properties, based solely on third-party statements, cannot be sustained. In support, reliance was placed on the decisions in Bhavana Vikram Jain vs. ACIT (ITA Nos. 6363 & 6364/Mum/2025, order dated 10.12.2025), Akhraj Pukhraj Chopra vs. DCIT (ITA Nos. 5553 & 5555/Mum/2025, order dated 12.11.2025), and Kulsum Aaqib Memon vs. DCIT (ITA No. 6540/Mum/2025, order pronounced on 06.01.2026). In all these cases, the Coordinate Bench of the ITAT has taken a consistent view that, in the absence of any cogent incriminating material, additions made merely on the basis of excel sheets or third-party statements are unsustainable.

The Ld. AR respectfully relied on the order of the Coordinate Bench of ITAT Mumbai in case of Pravin Khetaram Purohit vs. DCIT in ITA Nos. 4742 to 4744/Mum/2025 date of pronouncement 15/10/2025. The identical fact is adjudicated by the Bench & relevant observations are reproduced as below:- “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.

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. 14. 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 no addition is warranted in the case of assessee. Reliance in this regard has been placed on the decision in case of HeenaDashrathJhanglani 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:”

The Ld.AR advanced his argument and relied on the order of the Coordinate Bench of ITAT Mumbai ‘D’ Bench in the case of Dimple Shailesh Jain vs DCIT, in ITA No.6732 and 6733/Mum/2025 date of order 01.09.2025. The relevant paragraph no.12 of the said order is reproduced as below: “12. Having heard the parties and perusing the material available on record and giving thoughtful consideration to the peculiar facts and circumstances of the case and rival claims of the parties, it is observed that from the assessment order that it clearly appears that the Assessing Officer made the addition mainly on the basis of the excel sheet retrieved from pen drive recovered from the premises of Mr. Ansari, the statement of Mr. Ansari, wherein he admitted receipt of the cash component by the company, and the statement of the Director of the RHIL Group, wherein he admitted statement made and the Excel sheet prepared by Mr. Ansari, as true and offered income 8% of the cash amounts/component, as unaccounted receipts.”

The Ld. DR argued and contended that the RHIL group had accepted the cash transactions with the parties. So, the cash transactions are duly accepted on basis of the recorded statement. Though the RHIL declared the cash component during the search action and declared net profit @8% and paid the tax. So, the Ld. DR supported and relied upon the orders of the revenue authorities. He respectfully relied on the order of the Hon’ble Gujrat High Court in case of Kamleshbhai Dharamshibhai Patel vs. CIT reported in [2013] 31 taxmann.com 50 (Guj). The Ld. DR invited our attention in relevant paragraphs of the impugned appellate order which are reproduced as below:- “8.29. In the present case, the AO has clearly provided the necessary material through the show cause notice and granted the appellant sufficient opportunity to submit a response. Therefore, the argument that there was non-supply of material or not providing opportunity of cross-examination is devoid of merit and does not hold ground. 8.30. In the case of Chairman Mining Board v. Ramjee 1977 AIR 965 SC, the Hon'ble Supreme Court observed as under: - "Natural justice is no unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential procedural propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice without reference to the administrative realities and other factors of a given case can be exasperating. Courts cannot look at law in the abstract or natural justice as a mere artifact... If the totality of circumstances from denial of reasonable opportunity the Court will decline to be punctilious or fanatical as if the rules of natural justice were sacred scriptures."

Per Contra, the Ld.AR contended that the identical fact was duly considered by the Hon’ble Gujrat High Court in the case of PCIT vs Kaushik Nanubhai Majithia in R/Tax Appeal No.20 of 2024 date 06.03.2024. The relevant paragraphs 2 and 3 are reproduced as below: “2. The excel sheet, according to the learned Counsel for the Revenue, contained the details of payment made by the assessee to the developer, with respect to which tax had been paid by the developer before the Settlement Commissioner. The findings returned by the CITA and ITAT on the issue is sought to be assailed on the ground that the payment of tax by the developer, in whose premises search was conducted, before the Settlement Commissioner, with respect to the amount entered in the excel sheet found from the possession of the assistant working with the developer, is sufficient proof of the transaction between the assessee and the developer. 3. We find inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated.”

We have heard the rival submissions and perused the material available on record. The issue involved in the present appeal relates to the addition of Rs.8,71,700/- made under section 69 of the Act on account of alleged cash payment towards purchase of a shop in Platinum Mall, Girgaon, Mumbai. The addition has been made primarily on the basis of statements recorded during search proceedings in the case of Rubberwala Group and certain data allegedly contained in an Excel sheet/pen drive recovered from a third party. It is an admitted position that no incriminating material, cash, diary, document or any other direct evidence was found from the possession or control of the assessee to establish that the assessee had paid any cash over and above the registered consideration. The assessee has consistently denied having made any such cash payment. Further, the material relied upon by the 17 Assessing Officer emanates from third-party proceedings and the statements of persons connected with the developer group. However, the assessee was neither afforded an effective opportunity to cross-examine such persons nor was any independent corroborative evidence brought on record to directly link the assessee with the alleged cash payment.

We find that the identical issue arising out of the very same search action in the case of Rubberwala Group and relating to alleged on-money payments in respect of Platinum Mall has already been considered by the Coordinate Benches of the Tribunal in several cases, including Bharat Solanki (supra), Pravin Khetaram Purohit (supra), Akhraj Pukhraj Chopra (supra), Bhavana Vikram Jain (supra), Kulsum Aaqib Memon (supra) and Dimple Shailesh Jain (supra). In those cases, the Coordinate Benches have consistently held that additions made merely on the basis of third-party statements, Excel sheets or pen-drive data, without any independent corroborative material and without granting an opportunity of effective cross-examination, cannot be sustained in law.

The reliance placed by the Revenue on the alleged admission of the Rubberwala Group and the fact that the developer may have offered income on the alleged cash component cannot, by itself, be determinative of the liability of the present assessee. An admission by a third party cannot be used as conclusive evidence against the assessee unless the assessee is granted an effective opportunity to test and rebut such material. The Hon’ble Gujarat High Court in Kaushik Nanubhai Majithia (supra) has also held that proceedings against an assessee cannot be sustained merely on the basis of an unsigned Excel sheet found from a third party and the fact that the developer had paid tax on such amount, in the absence of corroborative material establishing actual payment by the assessee.

In the present case, the revenue has not brought any distinguishing feature or fresh material on record to justify a view different from the consistent view already taken by the Coordinate Benches on identical facts. The addition is founded on uncorroborated third-party material and statements, without any direct nexus with the assessee and without compliance with the principles of natural justice. Suspicion, however strong, cannot take the place of proof. Accordingly, respectfully following the consistent view taken by the Coordinate Benches of the Tribunal in identical matters arising out of the same search action, we hold that the addition of Rs.8,71,700/- made under section 69 of the Act is unsustainable. The same is, therefore, deleted.

In the result, the appeal of the assessee bearing ITA No.8585/Mum/2025 is allowed Order pronounced in the open court on 09th day of July 2026 Sd/- Sd/-

गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI