MOOSA SULEMAN RINDANI,MUMBAI vs. ITO, NAVI MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.3471/Mum/2026 (Assessment year: 2019-20)

Moosa Suleman Rindani vs ITO 27(2)(1), Mumbai Shop No.4, Timber Market, IT Office, Vashi Railway Station R.S. Nimkar Marg, Foras Road, Building, Navi Mumbai-400705 Mumbai-400008 PAN: AABPR8883M APPELLANT RESPONDENT Assessee by : Shri Sardaraz H. Nathani-CA Revenue by : Shri Pasale Naganath Bhimrao-(Sr.DR) Date of hearing : 19/05/2026 Date of pronouncement : 22/05/2026 O R D E R Per:Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2019-20, date of order 02.02.2026. The impugned order emanated from the order of the Ld. Income Tax Officer-27(2)(1), Mumbai (for brevity the ‘Ld. AO’) order passed under section 147 r.w.s. 144 of the Act date of order 27.03.2024.

2 ITA No.3471/Mum/2026 Moosa Suleman Rindani 2. The brief facts of the case is that the assessee filed the return by declaring total income Rs.5,46,200/- as per the information available with the Department the assessee had made the cash payment of Rs.7,38,000 for purchase of flat. Accordingly, proceeding in this case were initiated u/sec. 147 of the Act and accordingly notice u/sec. 148 of the Act was served. The assessment was completed u/sec. 147 r.w.s. 144 of the Act and the income was assessed amount of Rs.12,84,200/- against the return income of Rs.5,46,150/- by making addition of Rs.7,38,000/- by invoking of provision of section 69 of the Act. The aggrieved assessee filed an appeal before the Ld. CIT(A). But the Ld. CIT(A) uphold the impugned assessment order. Being aggrieved assessee filed an appeal before us. 3. The Ld. AR contended that a search and seizure action under section 132 of the Act was conducted in the case of M/s. City Corporation Ltd., its Directors, and related entities on 15.02.2023. During the course of the search action at the residential premises of Shri Chetan Ram Borawake, who was working as an office boy in the office of City Corporation Ltd., a hard drive was found and seized as Item No.14 of “Annexure A” by Search Party No. XR-09. From the Excel sheets extracted from the seized hard drive, it was observed that the said sheets contained information relating to sub-contractors who had allegedly received cash payments. Further verification in this regard was stated to be under progress. The information allegedly pertained to payments made in cash to sub- contractors/vendors/employees by M/s. Kelzai Eco Reserves Pvt. Ltd. (in short “KERPL”). Such transactions were allegedly acknowledged by Shri Swapnil Vijay Paranjape, Assistant Manager (Administration) of KERPL, and Shri Tarique Kalimulla Pathan, Senior Officer (Accounts) of Kothrud City Project LLP, a group concern of City Corporation Ltd., in their respective statements recorded under

3 ITA No.3471/Mum/2026 Moosa Suleman Rindani section 132(4) of the Act during the course of search proceedings. It was further submitted that in response to Question Nos. 16 and 30 of their respective statements, the aforesaid persons admitted that cash payments had been made to various concerns. From the Excel sheet, the name of the assessee was also found appearing therein and, after due mapping by the internal auditor of the City Group, it was alleged that the PAN of the assessee corresponded to three transactions amounting to Rs.3,82,000/-, Rs.2,00,000/-, and Rs.1,56,000/- dated 19.01.2019, 07.02.2019, and 15.02.2019 respectively, aggregating to Rs.7,38,000/-. The Ld. AR vehemently opposed the invocation of section 69 of the Act merely on the basis of the allegation that the assessee had received cash. The Ld. AO made observations in paragraph No.8 of the assessment order with regard to the aforesaid transactions aggregating to Rs.7,38,000/-, which are reproduced below: “8. From the above, it is clear that the assessee has made the payment in cash of Rs.7,38,000/-, However the same has not been offered for the taxation and the source of cash payment remained unexplained/ unverified. The assessee has not submitted any details in respect of generation of cash in hand of the assessee. Therefore, the amount of Rs. 7,38,000/- is added u/s 69 of the Income Tax Act. The provision of section 69 of the Act deal with unexplained investment. The provision of section 69 of the Act is reproduced as under :- "Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, ifany, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be income of the assessee of such financial year."

4 ITA No.3471/Mum/2026 Moosa Suleman Rindani 9. In view of the above, it is held that the assessee has made investments in cash to the tune of Rs. 7,38,000/-. The assessee has not offered transaction amount for taxation for the year under consideration and offers no explanation in this regard, therefore addition is made to the tune of Rs. 7,38,000/- under section 69 of the Act. (Addition u/s 69: Rs. 7,38,000/-).”

5 ITA No.3471/Mum/2026 Moosa Suleman Rindani work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.”

6 ITA No.3471/Mum/2026 Moosa Suleman Rindani contained in the impugned appellate order. The relevant paragraph of the impugned appellate order is reproduced below: “The contention of the appellant that he has neither purchased nor enquired about any immovable property and that the name mentioned in the seized material is not known to him is also devoid of merit. The seized data specifically records cash payments against identifiable PANs, including that of the appellant, and the same has been corroborated by statements of responsible officials who were in charge of cash disbursement. The appellant has not brought on record any material to demonstrate that his PAN has been wrongly quoted or misused, nor has he furnished any plausible explanation as to why his PAN would appear in the seized records if no such transaction existed.

As regards the argument relating to non-issuance of notice under section 133(6) or denial of cross-examination, it is noted that the addition is primarily based on documentary evidence seized during a lawful search and corroborated by statements recorded under section 132(4) of the Act. The appellant was confronted with the information and was afforded opportunity to explain the same during the assessment proceedings. The principles of natural justice stand complied with when the assessee is given an opportunity to rebut the material relied upon, which has been done in the present case. Mere reliance on judicial precedents without appreciating the factual distinction, particularly where concrete incriminating material exists, does not render the addition unsustainable.

The provisions of section 69 of the Act clearly provide that where an assessee has made investments which are not recorded in the books of account and offers no satisfactory explanation about the nature and source thereof, the value of such investment may be deemed to be income of the assessee. In the present case, the existence of the cash payment of Rs.7,38,000/- is established by seized material and corroborative statements, and the appellant has failed to explain the source of the said cash payment. Therefore, the conditions for invoking section 69 of the Act are clearly fulfilled.

In view of the foregoing discussion, it is held that the Assessing Officer was justified in treating the cash payment of Rs.7,38,000/- as unexplained investment under section 69 of the Act and in bringing the same to tax. The addition is based on cogent material, proper appreciation of facts and correct application of the statutory provisions. Consequently, the grounds raised by the appellant challenging the addition, as well as the consequential grounds relating to penalty initiation, do not merit acceptance.”

7 ITA No.3471/Mum/2026 Moosa Suleman Rindani 7. We heard the rival submissions and considered the documents available on record. The addition in the present case has been made solely on the basis of certain entries appearing in an Excel sheet extracted from a hard drive seized from the residential premises of a third party, namely Shri Chetan Ram Borawake, who was merely an office boy in the office of City Corporation Ltd. Admittedly, no incriminating material whatsoever was found or seized from the possession of the assessee. The entire addition of Rs.7,38,000/- has been made by relying upon the alleged entries appearing in the third-party Excel sheet along with the statements recorded under section 132(4) of the Act of certain employees of the searched group concerns. On careful perusal of the assessment order, we find that the Ld. AO himself has recorded contradictory observations. In paragraph No.8 of the assessment order, the Ld. AO observed that the assessee had “made payment in cash” of Rs.7,38,000/- and accordingly invoked section 69 of the Act by treating the same as unexplained investment. However, before us, the revenue simultaneously alleged that the assessee had “received cash”. Thus, the very foundation of the addition remains ambiguous and uncertain. The revenue authorities have failed to establish with cogent evidence whether the assessee was the payer or recipient of the alleged cash transaction. Such contradictory stand itself renders the addition unsustainable in the eyes of law. We further find merit in the contention of the assessee that no opportunity of cross-examination was provided despite specific request made before the Ld. AO. The addition has substantially been based upon third-party statements recorded during the search proceedings. The Hon’ble Supreme Court in the case of Andaman Timber Industries (supra) has categorically held that denial of cross-examination where statements are relied upon constitutes a serious violation of principles of natural

8 ITA No.3471/Mum/2026 Moosa Suleman Rindani justice and renders the order unsustainable. In the present case also, though the assessee specifically disputed the correctness of the alleged entries and statements, no effective opportunity for cross-examination was granted by the Ld. AO. We also find that except for the unsigned Excel sheet and generalized statements of third parties, no independent corroborative material has been brought on record by the revenue authorities. The assessee had placed on record the ledger account of M/s. KERPL, erstwhile known as Yashomala Farming and Tourism Pvt. Ltd., demonstrating that the assessee was supplying timber to the said concern and was reflected as a debtor. No evidence has been brought on record by the revenue to establish actual movement of cash from or to the assessee. No bank withdrawal, cash trail, seized receipt, confirmation, acknowledgment, or any contemporaneous evidence has been produced to substantiate the alleged cash transactions. The identical issue has been considered by the Hon’ble Gujarat High Court in the case of Kaushik Nanubhai Majithia (supra) wherein it was held that mere entries in an unsigned Excel sheet recovered from a third party, without corroborative evidence and without establishing actual payment, cannot justify an addition in the hands of the assessee. The Hon’ble High Court further observed that non-providing of statements relied upon and denial of opportunity would vitiate the proceedings. In the present case, the revenue has merely proceeded on assumptions and presumptions arising out of third-party material without bringing any direct evidence against the assessee. Even the nature and authenticity of the Excel sheet have not been independently verified. The revenue has also failed to establish that the alleged transactions represented unexplained investment of the assessee within the meaning of section 69 of the Act. Mere appearance of PAN details in a

9 ITA No.3471/Mum/2026 Moosa Suleman Rindani third-party document, without any supporting evidence proving actual cash transaction, cannot be the sole basis for sustaining addition. Considering the totality of the facts and circumstances of the case, the absence of corroborative evidence, denial of cross-examination, contradictory stand of the revenue authorities, and respectfully following the ratio laid down by the Hon’ble Supreme Court in Andaman Timber Industries (supra) and the Hon’ble Gujarat High Court in Kaushik Nanubhai Majithia, (supra) we hold that the addition of Rs.7,38,000/- made under section 69 of the Act is unsustainable in law. Accordingly, the addition made by the Ld. AO and sustained by the Ld. CIT(A) is hereby deleted. Thus, the grounds raised by the assessee stand allowed.

10 ITA No.3471/Mum/2026 Moosa Suleman Rindani BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI