NEETA NARENDRA SHAH ,MUMBAI vs. ITO WARD 20(2)(1), MUMBAI

This appeal filed by the assessee is directed against the order dated 17.04.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "the CIT(A)"] for A.Y. 2022-23 arising out of the assessment order passed u/s 143(3) of the Income Tax Act, 1961 ("the Act").

Brief facts of the case are that the assessee is an individual. During the year under consideration, the assessee along with her husband Shri Narendra Shah and son Shri Heet Shah purchased Flat No. B-102 in Ruparel Orion situated at Chembur, Mumbai for a consideration of Rs.1,29,70,000/-. Subsequently, information was received consequent to search and seizure action conducted u/s 132 of the Act in the case of Ruparel Realty Group on 25.11.2021.

During the course of search proceedings, various incriminating materials in the form of loose papers, diaries, WhatsApp chats, revised cost sheets and other documents were found and seized. The search revealed that the Ruparel Group was engaged in accepting cash over and above the recorded sale consideration from purchasers of flats in its various projects. At the premises situated at 13th Floor, Ruparel Iris, Senapati Bapat Marg, Matunga Road (West), Mumbai, four diaries inventoried as Annexure A-1 to A-4 were found from the workstation of Shri Ramchandran Iyer, Manager (Administration) of the group.

The Assessing Officer observed that page 137 of Annexure A-3 contained the name of Shri Heet Shah, details of Flat No. B-102 and amount of Rs.1 crore. The Assessing Officer further referred to the statement of Shri Ramchandran Iyer wherein he admitted that the diaries were maintained by him and contained details of cash transactions relating to various projects of the group. Reliance was also placed upon the statement of Shri Hitesh Lalchandani, Vice President (Sales), recorded during the course of search proceedings. Based upon

Aggrieved, the assessee preferred appeal before the Ld. CIT(A). The assessee submitted that the entire purchase consideration was paid through banking channels and there was no payment of any cash. It was contended that the addition was made merely on the basis of third-party statements and documents found during search on Ruparel Realty Group. The assessee further submitted that complete statements of Shri Ramchandran Iyer and Shri Hitesh Lalchandani were not supplied and despite specific request no opportunity of cross- examination was granted. It was also argued that the seized material contained only the name of Shri Heet Shah and not the assessee and therefore no addition could be made in the hands of the assessee.

The Ld. CIT(A), however, did not find merit in the contentions of the assessee. He observed that the search action had unearthed substantial evidence demonstrating systematic acceptance of on- money by Ruparel Realty Group. The Ld. CIT(A) noted that the statements of Shri Ramchandran Iyer and Shri Hitesh Lalchandani clearly established the modus operandi adopted by the group. He further observed that page 137 of Annexure A-3 specifically contained the name of Shri Heet Shah, details of the flat and amount of Rs.1 crore and therefore constituted direct incriminating material linking the transaction with the assessee's family. The Ld. CIT(A) held that the assessee had merely denied the allegations without furnishing any cogent evidence to rebut the incriminating material unearthed during

Before us, the Ld. Authorised Representative reiterated the submissions advanced before the lower authorities. The Ld. AR submitted that the addition has been made merely on the basis of third-party statements and documents found during the search on Ruparel Realty Group without any independent corroborative evidence establishing actual payment of cash by the assessee. It was submitted that complete statements of Shri Ramchandran Iyer and Shri Hitesh Lalchandani, copies of diaries, WhatsApp chats and other seized materials were not furnished and no opportunity of cross-examination was granted despite repeated requests.

The Ld. AR placed reliance on the following decisions:

The Ld. AR submitted that the Revenue cannot discharge its burden merely on the basis of uncorroborated third-party material. It was argued that the assessee cannot be asked to prove a negative fact that no cash payment was made and the burden squarely lies upon the Revenue to establish actual payment of on-money.

Per contra, the Ld. Departmental Representative strongly relied upon the orders of the Assessing Officer and the Ld. CIT(A). The Ld. DR submitted that the present case is distinguishable from the decisions relied upon by the assessee since there exists specific incriminating material recovered during the course of search directly linking the assessee's family with the impugned transaction. It was submitted that page 137 of Annexure A-3 specifically contains the name of Shri Heet Shah, details of the flat and amount of Rs.1 crore and the same stands corroborated by the statement of Shri Ramchandran Iyer who admitted maintaining the diary and recording cash transactions therein.

We have heard the rival submissions and perused the material available on record. The short issue before us is whether the addition of Rs.1,10,00,000/- made u/s 69B of the Act on account of alleged payment of on-money for purchase of Flat No. B-102 in Ruparel Orion Project is liable to be sustained.

We find that the addition in the present case is not based merely upon generalized allegations against Ruparel Realty Group. The Revenue has brought on record specific incriminating material seized during the course of search proceedings. Page 137 of Annexure A-3 contains the name of Shri Heet Shah, details of the flat purchased by

We further note that Shri Ramchandran Iyer, Manager (Administration) of Ruparel Realty Group, in his statement recorded during search proceedings categorically admitted that the diaries inventoried as Annexure A-1 to A-3 were maintained by him in the course of his duties and contained details of cash transactions relating to various projects of the group. He specifically admitted that cash received from flat purchasers was being recorded in such diaries. Therefore, the explanation furnished by Shri Ramchandran Iyer provides direct corroboration to the entry appearing in Annexure A-3.

The statement of Shri Hitesh Lalchandani and other materials found during the search further demonstrate that acceptance of on- money was not an isolated occurrence but formed part of a systematic practice adopted by the group. Thus, the seized material cannot be viewed in isolation.

The principal argument of the assessee is that no cross- examination was provided. In our considered view, the facts of the present case are distinguishable from the decisions relied upon by the assessee. Here the addition is not founded solely upon oral statements. There is a contemporaneous seized document recovered during a valid search operation. The statements merely explain and corroborate the contents of the seized material. Therefore, the absence of cross- examination by itself does not render the addition unsustainable.

We also do not find merit in the contention that the seized material contains the name of Shri Heet Shah and not the assessee. The flat was admittedly purchased jointly by the assessee, her

We are also unable to accept the contention that since the registered agreement reflects full consideration paid through banking channels, no addition can be made. We cannot remain divorced from the realities of the real estate sector where on-money transactions have repeatedly surfaced during search proceedings. Once specific incriminating material evidencing payment of cash over and above the documented consideration is found and such material stands corroborated by statements of responsible officials of the developer group, the mere existence of a registered agreement and banking transactions does not rebut the evidentiary value of the seized material.

The judicial precedents relied upon by the assessee are distinguishable on facts. In those cases, additions were deleted primarily because there was either no specific incriminating material identifying the concerned assessee or the additions were based solely on uncorroborated third-party statements. In the present case, there exists a specific seized document containing the name of the assessee's son, flat details and amount of cash, duly corroborated by the statement of the person from whose custody the document was recovered. Therefore, the ratio of those decisions does not advance the case of the assessee.

Accordingly, the grounds raised by the assessee are dismissed.

In the result, the appeal of the assessee is dismissed.