NARINGARAM RUPARAM CHOUDHARY ,MUMBAI vs. DCIT, CENTRAL CIRCLE 4(2), MUMBAI

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ITA 563/MUM/2026Status: DisposedITAT Mumbai05 June 2026AY 2018-196 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO could not make additions solely based on third-party statements and seized material without independent corroboration or an opportunity for the assessee to cross-examine. The additions were unsustainable as the assessee denied paying any on-money.

What were the facts?

The assessee purchased two shops and allegedly paid 'on-money' in cash over and above the sale consideration. The Assessing Officer (AO) made additions under Section 69 based on information from a seized pen drive and statements from third parties.

What were the issues?

Whether additions under Section 69 for alleged on-money payments are sustainable solely on the basis of third-party information and seized material without independent corroboration.

Which sections of the Income-tax Act were involved?

Section 69,Section 153C,Section 132(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI PRABHASH SHANKAR

For Appellant: Shri Bharat Kumar
For Respondent: Shri Pankaj Kumar (CIT DR)
Hearing: 15.04.2026Pronounced: 05.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER

ITA Nos. 562, 563 & 564/Mum/2026 (Assessment Years: 2017-18, 2018-19 & 2019-20) Naringaram Ruparam Choudhary DCIT, Central Circle 4(2) Shop No. 157, 243, Kautilya Bhawan, C41-43, Patthe Bapurao Marg, Girgaon, S.O., Avenue 3, Near Videsh Bhavan, Mumbai-400 004 Vs. G Block BKC, Gilban Area, Bandra Kurla Complex, Bandra (E), Mumbai-400 051 PAN/GIR No. AGYPC 5259 P (Appellant) : (Respondent) Appellant by : Shri Bharat Kumar Respondent by : Shri Pankaj Kumar (CIT DR) Date of Hearing : 15.04.2026 Date of Pronouncement : 05.06.2026 O R D E R Per Saktijit Dey, Vice President: The present appeals by the assessee arise out of a consolidated order dated 11.10.2025 passed by learned Commissioner of Income Tax (Appeals), Mumbai (‘ld.CIT(A) for short) for the assessment years (A.Ys.) 2017-18, 2018-19 and 2019-20.

2.

At the outset, we must observe, appeals have been filed with delay of 22 days. The assessee has filed application seeking condonation of delay. Having considered the submissions of the parties, we are of the view that the delay in filing the appeals was due to reasonable cause. Accordingly, we condone the delay and admit the appeals for adjudication on merits.

2 ITA Nos. 562, 563 & 564/Mum/2026 (A.Ys.2017-18, 2018-19 & 2019-20) Naringaram Ruparam Choudhary vs. DCIT 3. Thought multiple grounds have been raised by the assessee in the present appeals, however, at the time of hearing, ld. Counsel appearing for the assessee expressed his intention to argue the appeals only on merits. The common issue arising in the appeals on merits relates to additions of addition of various amounts made u/s. 69 of the Income Tax Act, 1961 (‘the Act’ for short).

4.

Briefly the facts relating to this issue are, the assessee is a resident individual. In all the assessment years under dispute, the assessee had filed his return of income in regular course u/s. 139(1) of the Act. A search and seizure operation u/s. 132 of the Act was conducted on 17.03.2021 on Rubberwala Group and others. As alleged, in course of such search and seizure operation, residential premises of the promoter and director of M/s. Rubberwala Housing & Infrastructure Ltd. (‘RHIL’ for short) Shri Tabrez Shaikh and a key employee of Rubberwala group Shri Imran Ansari were also searched. During the search operation, in the residential premises of Shri Imran Ansari, a pen drive containing certain information relating to the transactions of sale of immovable properties developed by RHIL was found and seized. On further verification of the information available in the pen drive, it was found that it contained information regarding the on-money received in cash in respect of sale of properties including sale of shops in the “Platinum Mall” project developed by RHIL. It was also found that the assessee had purchased two shops in Platinum Mall and paid on-money in cash, over and above the sale consideration. Based on such information, the A.O. initiated proceedings u/s. 153C of the Act against the assessee.

5.

In course of assessment proceeding, the A.O. confronted the information available in his position regarding the payment of on-money in respect of purchase of shops. In

3 ITA Nos. 562, 563 & 564/Mum/2026 (A.Ys.2017-18, 2018-19 & 2019-20) Naringaram Ruparam Choudhary vs. DCIT response to the query raised by the A.O., the assessee denied of having paid any on-money in cash, over and above the sale consideration. However, rejecting the claim of the assessee and referring to the statements recorded from the promoter and employee of RHIL, the A.O. ultimately concluded that the assessee, indeed, had paid on-money in cash over and above the sale consideration for purchasing shops. From the information available in the seized material, the A.O. noted that the assessee had paid on-money in cash as under: A.Y. On money paid in cash 2017-18 Rs.2 lacs 2018-19 Rs.20,34,775/- 2019-20 Rs.16,58,387/- 6. Thus, ultimately, the A.O. concluded that the assessee having failed to explain the source of on-money paid in cash in different assessments years, added the amounts noted above u/s. 69 of the Act.

7.

Though, the assessee contested the addition by filing appeals before ld. First appellate authority, however, he was unsuccessful.

8.

Before us, ld. Counsel appearing for the assessee submitted that except the information contained in the pen drive and the statement recorded from the promoter and employer of RHIL, the A.O. had no other corroborative evidence in his possession to conclusively prove that the assessee had paid on-money in cash. He submitted, the additions made under identical facts and circumstances in case of various other assessee’s, who have purchased shops in Platinum Mall have been deleted by ITAT. In this context, he relied upon the following decisions: 1. Dhiraj Solanki vs. DCIT (in ITA No. 6526/Mum/2025 vide order dated 12.02.2026)

4 ITA Nos. 562, 563 & 564/Mum/2026 (A.Ys.2017-18, 2018-19 & 2019-20) Naringaram Ruparam Choudhary vs. DCIT 2. Dimple Shailesh Jain and others vs. PCIT (in ITA Nos. 6732 & 6733/Mum/2025 vide order dated 01.09.2025) 9. Thus, he submitted, the additions made cannot be sustained.

10.

Learned Departmental Representative (‘ld. DR’ for short) strongly relied upon the observations of the A.O. and ld. First appellate authority.

11.

We have considered rival submissions and perused the materials available on record. We have also gone through the case laws cited before us. Undisputedly, based on search and seizure operation conducted in case of entities/persons belonging to Rubberwala Group, proceedings u/s. 153C of the Act were initiated against the assessee. It is the allegation of the department that in course of search of residential premises of Shri Imran Ansari, an employee of RHIL, a pen drive was seized, which contained the details of on- money paid by various persons in respect of shops purchased in Platinum Mall, a project developed by RHIL. However, when confronted, the assessee had flatly denied of having paid on-money in cash to the developer, over and above, the sale consideration as per the registered sale deed. A perusal of the assessment order reveals that the A.O. has primarily relied upon the information contained in the pen drive seized from the employee of RHIL and the statements recorded u/s.132(4) of the Act from the concerned employee and the director and promoter of RHIL. There is no material on record to suggest that except relying upon such third-party statements and information, the A.O. had conducted any other independent enquiry to ascertain whether the contents of the pen drive are authentic or not. When the assessee has specifically denied of having paid any on-money in cash over and above the declared sale consideration, the A.O. cannot reject the claim of the assessee simply relying upon statements recorded from thirty parties without providing any

5 ITA Nos. 562, 563 & 564/Mum/2026 (A.Ys.2017-18, 2018-19 & 2019-20) Naringaram Ruparam Choudhary vs. DCIT

opportunity to the assessee to cross examine them. In fact, upon going through the statements recorded from the promoter and employer of RHIL, part of which has been extracted in the assessment order, we do not find any specific reference by the concerned persons to the assessee. Thus, without bringing cogent material to establish on record that the assessee indeed had paid on-money in cash, the A.O. could not have made the addition when the assessee had specifically denied of having paid any amount in cash. The assessee certainly cannot be called upon to prove the negative negated. While considering an issue of identical nature in case of another assessee, the co-ordinate bench in case of Dhiraj Solanki (supra) has made the following observation: 7. We have considered rival submissions and perused the materials on record. It is evident that the assessee jointly with his brother Shri Praveen Jagadish Solanki had purchased a shop in the ‘Platinum Mall’. In course of search and seizure operation conducted in case of Rubberwala Group and more particularly in the residential premises of Shri Shri Imran Ansari, an employee of Rubberwala Group, a pen drive containing excel sheet was seized wherein, certain transactions relating to sale of shops in ‘Platinum Mall’ were reflected. In course of search and seizure operation, a statement was recorded from Shri Shri Imran Ansari wherein, while explaining the contents of the excel sheets he stated that the excel sheet contained the agreement value and the actual sale price of shops in the mall. He further explained that the difference between the agreement value and actual sale consideration were received in cash from the buyers. 8. It is observed, while explaining the modus operandi Shri Imran Ansari in response to Question No.26 had submitted that at the time of booking of shop the buyer is informed about the component of payment to be made in cash or through cheque. In case of cash payment Shri Imran Ansari verified the amount of cash to be accepted from the buyer and takes the buyer to Mr. Abrar Ahmad (cashier working in Rubberwala Housing and infrastructure Ltd.) who received the cash from the buyers. After receiving confirmation from Mr. Abrar Ahmad regarding the cash received, Shri Imran Ansari makes necessary entries in the diary given to the buyer at the time of booking of shop mentioning the cash amount along with date of payment and also puts his signature against each entry. Surprisingly, though, shops have been sold to number of buyers however not a single diary has been recovered from any of the buyers to demonstrate the fact that against the cash payment entries have been made in the diary and initialed by Shri Imran Ansari. In fact, except the pen drive containing the excel sheet, the AO has not referred to any other incriminating material. 9. Further in response to Question No.15, Shri Shri Imran Ansari has stated that the agreement value is lower than the actual sales consideration. A reference to the response of Shri Imran Ansari to Question No.15 reveals that it only contains the value/price of shops located at different levels. However, the seized material does not explicitly reveal payment of on money by buyers individually. Thus, when the assessee has categorically denied of having paid any cash, merely relying upon a third party statement and limited evidence seized from a third party, assessee cannot be accused of paying on-money in absence of any other corroborative evidence to demonstrate that the facts stated in the statement recorded from the key persons of Rubberwala Group and the excel sheets are authentic. In any case of the matter, in case of the present assessee, the Assessing Officer has made the addition on protective basis. Whereas, the substantive addition

6 ITA Nos. 562, 563 & 564/Mum/2026 (A.Ys.2017-18, 2018-19 & 2019-20) Naringaram Ruparam Choudhary vs. DCIT made in case of assessee’s brother Shri Praveen Jagdish Solanki has been deleted by the very same First Appellate Authority in order dated 18.11.2025 on merits after taking note of all relevant facts. Thus, when the substantive addition has been deleted on merit, the protective addition made at the hands of the assessee cannot survive. Accordingly, we delete the addition. 12. Identical view has been expressed in case of Dimple Shailesh Jain and others (supra). Facts being identical, respectfully following the decisions of the co-ordinate bench referred to above, we hold that the additions made u/s. 69 of the Act in the assessment years under dispute are unsustainable. Accordingly, the A.O. is directed to delete them. In view of our decision on merits, the other grounds raised by the assessee having become academic, do not require adjudication.

13.

In the result, the appeals are partly allowed as indicated above. Order pronounced in the open court on 05.06.2026

Sd/- Sd/- (Prabhash Shankar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 05.06.2026 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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