SANJEET KUMAR KEDARNATH GUPTA ,MUMBAI vs. INCOME TAX OFFICER WARD 2(2) KALYAN , MUMBAI

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ITA 6933/MUM/2025Status: DisposedITAT Mumbai13 May 2026AY 2019-2011 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were initiated in contravention of Sections 147 to 151A of the Act. It also found that additions were made relying solely on third-party information without independent application of mind or providing an opportunity for cross-examination.

What were the facts?

The Assessing Officer initiated reassessment proceedings under Section 147 based on third-party information suggesting the assessee paid Rs. 90 lakhs as on-money for an immovable property. The assessee claimed the property was jointly purchased with his brother from M/s. Roshni Enterprises.

What were the issues?

Whether the reassessment proceedings were validly initiated and if additions made were based on proper evidence and adherence to principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 147,Section 148A,Section 148B,Section 151,Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SMT BEENA PILLAI & HON’BLE SHRI GIRISH AGRAWAL

Pronounced: 13.05.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: G BEFORE HON’BLE SMT BEENA PILLAI, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 6933/MUM/2025 िनधा�रण वष�/Assmt. Year: 2019-20) Permanent Account Number: AIYPG7845F INCOME TAX OFFICER SANJEET KUMAR WARD 2(2) KALYAN KEDARNATH GUPTA 2ND FLOOR, RANI FLAT NO. 204 TULIP MANSION KALYAN MOTIRAM GARDEN, KHER MURBAD ROAD ABOVE, Vs. SECTION AMBERNATH CANARA BANK (EAST), MUMBAI-421501, MUMBAI-421306, MAHARASHTRA MAHARASHTRA (अपीलाथ� Appellant) (��थ� Respondent)

Shri Tanzil R. Padvekar and िनधा��रती �ारा/Assessee Shri Bhavik Chheda, represented by: Advocates राज� व �ारा/Revenue represented Shri Prathmesh Lawand - Sr. by: DR सुनवाई की तारीख / Date of conclusion of hearing: 19.02.2026 घोषणा की तारीख / Date of pronouncement: 13.05.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of CIT(A)/National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2025-26/1079497829(1), dated 11.08.2025, passed against the assessment order by Assessing Officer PNE-W- (75)(92), u/s. 147 of the Income-tax Act (hereinafter referred to as the “Act”), dated 07.02.2025, for Assessment Year 2019-20.

2.

Grounds taken by assessee are reproduced as under:

1.

On the facts and in law, the Learned Commissioner of Income Tax (Appeals) [hereinafter referred to as "Ld. CIT(A)"] erred in erred in upholding the re- assessment initiated by the Ld. AO in contravention of Sections 147 to 151A of the Act. 2. On the facts and in law, the Ld. CIT(A) erred in upholding the additions made by Ld. AO merely relying on third-party information and statements without any independent application of mind, opportunity of cross examination and corroborative material to support the same. 3. On the facts and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO without appreciating the fact that no addition can be sustained without any nexus between the seized material and the Appellant. 4. On the facts and in law, the Ld. CIT(A) erred in upholding the additions made by Ld. AO without appreciating the fact that neither any money was found in possession of the Appellant nor was any diary/noting authored by the Appellant. 5. On the facts and in law, the Ld. CIT(A) erred in upholding the additions made by Ld. AO without fulfilling the basic requirements u/s 69A r.w.s. 115BBE of the Act. 6. On the facts and in law, the Ld. CIT(A) failed to appreciate that the Impugned Notice u/s 148 of the Act was wrongly issued relying on Explanation 1 to Section 148 of the Act. 7. On the facts and in law, the Ld. CIT(A) failed to appreciate that the Ld. AO has consequently not followed the procedure stipulated u/s 148B of the Act. 8. On the facts and in law, the Ld. CIT(A) failed to appreciate that the Ld. AO obtained sanction in terms of Section 151 of the Act from the wrong specified authority as the re-opening was initiated beyond a period of three years from the end of relevant Assessment Year. 9. On the facts and in law, the Ld. CIT(A) erred in confirming the additions made by Ld. AO in gross violation of principles of natural justice. 2.1. The issue involved in the present appeal is in respect of addition of Rs.90 lakhs towards alleged on-money paid by the assessee in respect of immovable property purchased by him.

3.

Brief facts of the case as culled out from records are that ld. Assessing Officer received information as per Risk Management Strategy (RMS) formulated by the Board, uploaded by Central Circle – 6(1), Mumbai under the case type “High Risk CRIU/VRU information” on the “verification” module of Insight Portal of the Department. Based on this information, ld. Assessing Officer noticed that assessee has paid on-money of Rs.90 lakhs for purchase of immovable property from M/s. Roshni Enterprises. Accordingly, proceedings u/s. 148A were initiated. Assessee submitted factual position about the purchase of immovable property made by him. According to him, he and his brother Shri Sushil Kumar K. Gupta had jointly purchased a gala, i.e., Unit No.1B, Ground Floor of the GNP Galaxy Phase I, having carpet area of 43.65 sq. meters, equivalent to 470 sq. feet from M/s. Roshni Enterprises, a partnership firm, through its partner Shri Kaustub Shekar Latke. This unit purchased by the assessee jointly with his brother, was registered by way of an agreement of assignment with sub-registrar, Ambernath having serial No. 2501/2020, dated 06.08.2020 for a consideration of Rs.50 lakhs. Out of this total consideration, assessee paid advance of Rs. 5 lakhs on 10.06.2020 in two parts of Rs.2,50,000/- each, for which the receipts were issued and forms part of the agreement of assignment. Assessee submitted that during the year under consideration, i.e., Assessment Year 2019- 20, he did not make any payments. The balance amount after the advance payment were made in installments through proper banking channel. Details of the advance paid by the assessee is as under:

i) Rs.2,50,000/- on 10.06.2020 vide cheque no.229665 issued on Bank of India from account of the assessee.

ii) Rs.2,50,000/- on 10.06.2020 vide cheque no.000051 issued on Bank of India from account of his brother, Shri Sushil Kumar Gupta.

3.1. From the show cause notice issued by ld. Assessing Officer and as reproduced in the impugned assessment in para – 4.2, certain factual information is taken note of. It is noted that a search and seizure action u/s. 132 was conducted on 23.09.2021 in the case of GNP Group and its various premises as well as on its key persons including, employees, promoters/MDs and other associates. GNP Group, inter alia is engaged in construction of industrial and commercial shops through construction entities namely M/s. Roshni Enterprises and others. M/s. Roshni Enterprises is a partnership firm with the following partners having their respective profit-sharing percentage tabulated below:

Name of the partner Profit sharing % Shri Girish N Pawar 40 Shri Kaustub S Latke 10 GNP Consultancy & Solutions Pvt. Ltd. 20 Deepak Sardana 30

3.2. Ld. Assessing Officer observed that during the course of search proceedings, premises of GNP Consultancy and Solutions Pvt. Ltd. was covered in office nos. 704, 705, 706 and 708, Embassy Centre, Jamnalal Bajaj Marg, Nariman Point, Mumbai. From certain loose papers found and seized, ld. Assessing Officer noted that in such loose papers, payment status against various commercial/industrial units sold were maintained with columns of the sheet coded as “A”, “S” and “N”. These details included certain information pertaining to assessee based on which it was alleged that on-money of Rs.90 lakhs has been paid by the assessee pertaining to Assessment Year 2019-20 and Rs.20 lakhs pertaining to Assessment Year 2020-21.

3.3. Assessee made detailed submission on the information which formed the basis in invoking the reopening proceedings against the assessee alleging payment of on-money of Rs.90 lakhs in the year under consideration. The broader contentions of the assessee included-

i) No payment of on-money to Roshni Enterprises. ii) Denial of the allegation mentioned in the show cause notice. iii) Not concerned with the books of Roshni Enterprises. iv) Notice issued on wrong facts and presumption. v) Reliance on the decision of Bombay High Court in WP No. 2545/2010 in the case of Tata Sons Limited. 3.4. According to the assessee, information from the Insight Portal cannot be the sole basis for the issuance of notice u/s. 148. There is no direct link between the information and the income alleged to be escaping assessment. According to the assessee, the approach of ld. Assessing Officer tantamount to making fishing and roving inquiries by proceeding merely on the information made available to him. No doubt, such an information can act as starting or a trigger point but cannot be a conclusive basis for making an addition in the hands of the assessee in absence of any direct or corroborative material, establishing live link between the information made available arising from a search and seizure action in case of a third party, unrelated to the assessee.

3.5. Attention of Bench was also invited to the most clinching fact relating to the purchase transaction undertaken by the assessee for the impugned immovable property, from para -3 of the impugned assessment order, whereby ld. Assessing Officer has taken note of the factual position upon going through the sale agreement wherein the value of property is recorded at Rs.29,81,000/-, however the stamp valuation is at Rs.50 lakhs. He notes that the value adopted for the purpose of stamp duty value is higher than the declared. On this fact, ld. Assessing Officer issued a show cause notice, dated 05.01.2025 on the assessee to explain as to why the investment in the property should not be added u/s. 69 on account of difference in the stamp duty value and the consideration shown. Ld. Assessing Officer noted that the date of agreement and stamp duty payment is 06.08.2020 which does not pertain to the year under consideration, i.e., 2019-20. He thus, dropped the proposed addition in respect of purchase of property of Rs. 50 lakhs as not related to Assessment Year 2019-20. However, he proceeded by taking note that the payment of on-money of Rs.90 lakhs relates to Assessment Year 2019-20 and thus, proposed its addition.

3.6. Assessee strongly contended that ld. Assessing Officer has referred to answer to one of the questions in the statement recorded of Shri Girish N. Pawar, who is the partner of M/s. Roshni Enterprises, during the course of conduct of search in their case u/s. 132(4) on 23.09.2021. In the answer so given, column headings having explained based on which assessee took the adverse view. Assessee also furnished affidavit dated 27.01.2025 stating that no on- money has been paid by him.

4.

In the first appellate proceedings, ld. CIT(A) affirmed the addition made by the ld. Assessing Officer. While doing so, he observed that ld. Assessing Officer has noted about the denial of on- money payment which was not backed by independent supporting evidence other than self-sworn affidavit. He further observed that loose sheets seized during the search were considered reliable circumstantial evidence for payment of on-money and thus, held that burden is on the assessee to rebut the presumption, since principle u/s. 69A is that unexplained money found to be belonged to the assessee is liable to be treated as income unless satisfactorily explained. According to him, Assessing Officer is empowered to make addition using third party material seized in search when corroborative direct evidence is absent.

5.

We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the observations and findings of both, ld. Assessing Officer as well as ld. CIT(A). At the outset, the above narrated observations and finding of ld. CIT(A) lacks the very basic justification as assessee is required to prove the negative which is certainly uncalled for. Reference was made to the decision of Hon’ble Supreme Court in the case of KP Varghese vs. ITO [1981] 131 ITR 597 (SC) who observed in para-4 that it is a well settled rule of law that the onus of establishing the conditions of taxability is fulfilled, is always on the revenue. To throw the burden of showing that there is no understatement of consideration on the assessee would be to cast an almost impossible burden upon him to establish the negative, namely that he did not receive any consideration beyond that declared by him. Thus, Hon'ble Supreme Court laid the burden on the Revenue to establish the conditions for bringing to charge any income in the hands of the assessee.

5.1. Furthermore, ld. CIT(A) has relied upon circumstantial evidence without bringing on record anything cogent to demonstrate and establish live link between the information available and the material for sustaining the addition which demonstrates nothing but assumptions and presumptions without cross verification of independent evidence. His reference to provisions of section 69A also has no legs to stand, since the said section deals with unexplained money found belonging to the assessee. In the present case, the allegation is that assessee has made payment of on-money which is found to be recorded in the loose sheets /material found during the search action in the case of third unrelated party. Moreover, section 69A of the Act can be invoked only where the assessee is found to be the owner of money, bullion, jewelry or other valuable articles, which are not recorded in the books of account and for which no satisfactory explanation is offered. In the present case, the following essential conditions of Section 69A are conspicuously absent:

i. No money was found in the possession of the assessee; ii. The assessee was not the author or custodian of the diary; iii. The loose sheet/noting was recovered from the third party; iv. The entries therein do not bear the assessee's name; v. No corroborative material evidences any transfer of cash from the assessee. 5.2. In the stated factual position, we find force for our adjudication from the judgement of Hon’ble Supreme Court in the case of Common Cause v. Union of India [2017] 77 taxmann.com 245, also popularly known Sahara diaries and Aditya Birla diaries case. In this case, Hon'ble Supreme Court, followed the judgment rendered in case of CBI vs. V.C. Shukla. Shukla [1998] 3 SCC 410. The principles laid down in aforesaid Judgments/Authorities are summarized as under:

i) Entries in loose papers/sheets are irrelevant and not admissible u/s 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible;

ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries, which is a requirement to fasten the liability;

iii) The meaning of account book would be spiral note book/pad but not loose sheets;

iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another;

v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts;

vi) The Court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence.

5.3. Further, in law, it is well settled that entries in the diary of a third party, when uncorroborated and untested through cross- examination, cannot by themselves form the basis of an adverse inference against an assessee. Hon'ble jurisdictional High Court of Bombay in Ashok Commercial Enterprises v. ACIT [2018] 459 ITR 100 (Bom) has categorically laid down that unless there is cogent and corroborative material linking the assessee with the seized material, no addition can be sustained merely on the basis of statements or noting made by third parties.

5.4. It is a settled position of law that a person from whose position such documents are found in the course of action u/s. 132, the contents of such documents have to be considered to be belonging to that person alone. The addition made is solely based on data found from the search carried out in the case of GNP Group. No corroborative and linking evidence has been found except for the statement of the search person. Also, no opportunity of cross examination has been afforded to the assessee on the basis of which addition has been made. Assessee has denied making payment of on- money alleged by the ld. Assessing Officer. Assessee is not an author of the document, wherefrom the information has derived for the purpose of making addition in the hands of the assessee.

5.5. In the conspectus of the factual position and the provisions of law as well as judicial precedents, no adverse view is warranted against the assessee for the addition made of Rs.90 lakhs, alleged to be payment of on-money in the year under consideration. The addition so made is deleted and the grounds raised by the assessee in this regard are allowed.

6.

In the result, appeal of the assessee is allowed.

Order is pronounced in the open court on 13 May, 2026

Sd/- Sd/- (Beena Pillai) (Girish Agrawal) Judicial Member Accountant Member Dated: 13 May, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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