GURPREET SINGH,PUNJAB vs. ITO. WARD 6(1), CHANDIGARH, CHANDIGARH

That on the facts, circumstances and legal position of the case, the Worthy CIT(A), in Appeal No. NFAC/2019-20/10183266 has erred in passing order dtd. 25.11.2025 in contravention of provisions of s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “Act”).

That on law, facts and circumstances of the case, the ld. AO lacked juri iction to frame a regular scrutiny assessment, when admittedly no material was found from the appellant and the sole basis of the addition was the “Insight Portal information” generated from a third-party search and still the statutory mandatory procedure prescribed u/s 153C was not followed by the Ld. AO.

That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming addition of Rs. 30,00,000/- on account of alleged unexplained investment made in cash in property at M/s Homeland Buildwell

That on the facts, circumstances and legal position of the case, the ld. AO erred in relying upon alleged excel sheets (“FLAT COST-NEW”, “Flat Sanju 01.11.19”) and general statements of unidentified “key persons” of the builder group, without any admissible evidence to show that such material belongs to or pertains to the Appellant.

That on facts, circumstances and legal position of the case, the Ld. AO neither provided the appellant with the opportunity to cross-examine persons whose statements were relied upon nor any opportunity to rebut third-party electronic evidence and hence additions in absence of these opportunities are bad.

That on facts, circumstances and legal position of the case, the lower authorities has erred in charging tax at 60% u/s 115BBE on the additions made u/s 69A even if such addition is academically accepted could be brought to tax at normal rates only.

That on facts, circumstances and legal position of the case, the order passed by Ld. AO and then by Worthy CIT(A) deserves to be quashed since the same has been framed in extreme haste and without affording reasonable opportunity of being heard to the appellant.

That the appellant craves for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.

The assessee is an individual engaged in the business of transportation. The assessee filed the return of income for Assessment Year 2020-21 on 22.03.2021 declaring total income of Rs. 10,14,110/-. Thereafter, the case of the assessee was selected for complete scrutiny under CASS on the basis of “Information in verification cases upload through CRIU”. Notices under sections 143(2) and 142(1) of the Income Tax Act, 1961 were issued and duly served upon the assessee from time to time. During the course of assessment proceedings, the assessee furnished various details including sale deed of immovable property, Form No. 26AS, vehicle loan details, home loan details, computation of income and cash flow statement. It was observed by the Assessing Officer that the assessee had purchased an immovable property being Flat No. 62, Tower-4, Homeland Heights, Sector-70, Mohali during the relevant financial year.

During the course of assessment proceedings, the Assessing Officer received information from the Deputy Director of Income Tax (Investigation)- 2, Ludhiana through the departmental Insight Portal that a search and seizure

Being aggrieved against the assessment order, the assessee preferred an appeal before the Ld. CIT(A)/NFAC challenging the addition made by the Assessing Officer. During the appellate proceedings, the assessee submitted that no incriminating material evidencing any cash payment by the assessee was ever confronted to him and no opportunity of cross examination of the alleged key persons was provided. It was further contended that the entire payment for purchase of the property had been made through banking channels and duly reflected in the books of account and bank statements. The assessee also contended that the addition had been made merely on the basis of assumptions and third-party information without any corroborative evidence directly linking the assessee with the alleged cash payment. Reliance was also placed upon various judicial precedents in support of the contention that no addition could be made merely on the basis of uncorroborated seized material or statements recorded behind the back of the assessee.

The Ld. CIT(A), after considering the assessment order, written submissions filed by the assessee and material available on record, observed that the Assessing Officer had made the addition solely on the basis of information received from the Investigation Wing and statements of third parties recorded during the search proceedings conducted in the case of Homeland Group. The Ld. CIT(A) further noted that no direct evidence showing payment of cash by the assessee had been brought on record by the Assessing Officer and no incriminating material specifically bearing the name or signatures of the assessee had been confronted during the assessment proceedings. The Ld. CIT(A) also took note of the assessee’s contention regarding violation of principles of natural justice for non- providing of statements and seized material relied upon by the Assessing Officer.

The Ld. CIT(A) further observed that the assessee had consistently denied having made any cash payment and had furnished documentary evidences including sale deed, bank statements and cash flow statement to substantiate that the payments were made through banking channels only. Ld. CIT(A) upheld the order passed by the AO.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.

During the course of hearing the Ld. AR submitted that the impugned assessment has been framed solely on the basis of “Insight Portal information” arising from third-party search proceedings conducted in the case of Homeland Group, whereas no incriminating material was found from the possession of the assessee. Therefore, the Ld. AO lacked juri iction to frame assessment u/s 143(3) and proceedings, if any, could only have been initiated u/s 153C of the Act.

The Ld. AR further submitted that the addition of Rs.30,00,000/- has been made merely on the basis of alleged excel sheets and statements of third parties, which neither belonged to nor pertained to the assessee. No corroborative evidence establishing actual cash payment by the assessee was brought on record.

It was further argued that the Assessing Officer violated the principles of natural justice by neither providing copies of statements and electronic material relied upon nor granting opportunity to cross-examine the alleged key persons. The assessee had consistently explained that the entire payment for purchase of property was made through banking channels and had furnished sale deed, bank statements and loan documents in support thereof.

Without prejudice, the Ld. AR submitted that even if the addition is sustained, provisions of section 115BBE are not applicable and the same

Per contra, the Ld. DR relied upon the orders of the lower authorities.

We have heard the rival submissions and perused the material available on record. The sole issue arising for adjudication relates to the addition of Rs.30,00,000/- made by the Assessing Officer on account of alleged unexplained investment under section 69 of the Income Tax Act on the basis of information received from the Investigation Wing consequent to search proceedings conducted in the case of Homeland Group.

It is an undisputed fact borne out from the assessment records that no incriminating material whatsoever was found from the possession or premises of the assessee. The entire addition has been made merely on the basis of certain alleged excel sheets retrieved from laptops seized during search in the case of Homeland Group and statements recorded from third parties during the course of search proceedings. It is further noticed that neither any document bearing signatures or handwriting of the assessee nor any independent corroborative evidence evidencing actual payment of on- money by the assessee has been brought on record by the Assessing Officer. The assessee, on the contrary, had consistently denied having made any cash payment and furnished documentary evidences in the form of sale deed, bank statements, loan documents and cash flow statement demonstrating that the entire consideration stood paid through banking channels.

We further notice that the Assessing Officer proceeded solely on the basis of generalized information received from the Investigation Wing without carrying out any independent enquiry whatsoever. No statement relied upon by the Assessing Officer was supplied to the assessee, and no opportunity of cross-examination of the persons whose statements were relied upon was afforded despite a specific request. Such action of the Assessing Officer is in clear violation of principles of natural justice. It is now a settled proposition of law that any material collected behind the back of the assessee without affording opportunity of rebuttal and cross-examination cannot be relied upon for making an addition.

We find that identical additions arising from the same search proceedings conducted in the case of Homeland Group came up for consideration before the Chandigarh Bench of the Tribunal in the case of Sadhu Ram Gupta in ITA no 873&874 /Chd/ 2025 wherein under identical set of facts the Coordinate Bench deleted the addition by holding that no addition can be sustained merely on the basis of third-party excel sheets and uncorroborated statements in absence of any independent material evidencing actual cash payment by the assessee. Similar view has also been taken by the Coordinate Bench in the cases of Paramjeet Singh Mogla Vs. ITO in ITA no 853/Chd/2024 and Gurumukh Singh Bhatti , ITA no 529/chd/2025 wherein additions made on the basis of Homeland Group search material were deleted for want of corroborative evidence and for violation of principles of natural justice.

The Coordinate Bench in the aforesaid decisions has categorically held that loose excel sheets or third-party electronic data by themselves do not constitute conclusive evidence unless supported by cogent independent material establishing actual flow of unaccounted money from the assessee. It has further been held that suspicion, however strong, cannot take the place of legal evidence and additions under section 69 cannot be sustained merely on probabilities and presumptions.

In the present case also, except for generalised information emanating from third-party search proceedings, no direct evidence has been brought on record by the Revenue to establish that the assessee had actually paid a cash amount of Rs. 30,00,000/- over and above the documented consideration. The Revenue has failed to discharge the primary burden cast upon it to prove existence of unexplained investment. The assessee, on the other hand, has duly substantiated the source and mode of payment through documentary evidence which remains unrebutted.

In view of the totality of facts and respectfully following the decisions of the Coordinate Benches in the cases of Sadhu Ram Gupta (supra), Paramjeet Singh Mogla Vs. ITO (supra) and Gurumukh Singh Bhatti,(supra) we hold that the addition of Rs.30,00,000/- made by the Assessing Officer under section 69 of the Act is unsustainable in the eyes of law. Accordingly, the same is directed to be deleted. Since the addition itself has been deleted, the consequential applicability of section 115BBE does not survive for adjudication.

In the result, appeal of the Assessee is allowed.

""थ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"ीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File