LOVTINDER KHANNA,MOHALI vs. INCOME TAX OFFICER, WARD-6(1), MOHALI , MOHALI

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: PHYSICAL MODE BEFORE: SHRI. LALIET KUMAR, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 1665 /Chd/2025 िनधा�रण वष� / Assessment Year : 2019-20 Lovtinder Khanna बनाम The ITO C/o Tejmohan Singh, Advocate Ward-6(1), Mohali # 527, Sector 10-D, Chandigarh �ायी लेखा सं./PAN NO: ABUPK9391B अपीलाथ�/Appellant ��थ�/Respondent िनधा�रती की ओर से/Assessee by : Shri Tej Mohan Singh, Advocate राज� की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 22/06/2026 उदघोषणा की तारीख/Date of Pronouncement : 24/06/2026 आदेश/Order PER LALIET KUMAR, J.M This appeal has been preferred by the assessee against the order dated 14.11.2025 passed by the Ld. CIT(A), NFAC, Delhi, for Assessment Year 2019-20. 2. The assessee has raised the following effective ground:

2 deed, and the builders written confirmation, all of which conclusively establish that every payment was made through banking channels and that no cash payment was ever made. 5. That the addition of Rs. 9,00,000/- u/s 69 r.w.s. 115BBE is unjustified, arbitrary and contrary to facts, as no unexplained investment is shown, no cash withdrawals exist, and the AO failed to bring even a shred of evidence linking the assessee to any alleged cash payment. 6. That the assessment stands vitiated due to violation of natural justice as the assessee was never afforded an opportunity to cross-examine the builder OR the Investigation Wing officials whose alleged findings formed the sole basis of the addition. 7. That the AO conducted no independent investigation, made no verification from SBP Group, issued no summons, examined no person, and merely reproduced the Investigation Wings report, which cannot constitute legal evidence against the assessee. 8. The appellant craves leave to add, amend OR withdraw any grounds at the time of hearing. 3. Brief facts of the case are that the assessee, an individual and retired employee of the Health Department, Government of Punjab, filed his return of income declaring total income of Rs.3,27,760/-. Subsequently, information was received from the Investigation Wing, Mohali pursuant to search and seizure action conducted u/s 132 of the Act in the case of SBP Group on 21.01.2021. During the course of search, certain electronic data allegedly contained details of customers who had purchased flats/shops from SBP Group along with alleged cash components received from them. 4. On the basis of an entry appearing in an Excel sheet allegedly recovered from the premises of SBP Group, it was noticed that against the name of the assessee, namely "Lovtinder Khanna", mobile number 8146469536, Shop No.08, SBP Homes Gardenia, Sector-126, Kharar, an amount of Rs.9,00,000/- was reflected in the column titled "Cash". The Assessing Officer formed a belief that the assessee had paid cash amount of Rs.9,00,000/- over and above the documented sale consideration and consequently reopened the assessment. 5. During reassessment proceedings, the assessee submitted that he had merely booked the shop on 05.08.2018 by making payment of Rs.50,000/-

3 through account payee cheque and that the allotment itself was made subsequently on 24.12.2019. The assessee furnished copies of the allotment letter, agreement for sale, conveyance deed, bank statements and certificate issued by the builder demonstrating that the entire consideration stood paid through account payee cheques and RTGS. It was specifically contended that no cash payment whatsoever had been made to the builder. 6. The Assessing Officer, however, relying solely upon the information received from the Investigation Wing and the entry appearing in the Excel sheet recovered from the premises of SBP Group, concluded that the assessee had paid cash amount of Rs.9,00,000/- for purchase of the shop and treated the same as unexplained investment u/s 69 of the Act taxable u/s 115BBE. 7. Aggrieved, the assessee carried the matter before the Ld. CIT(A). The assessee reiterated that the entire addition was founded exclusively upon third- party material allegedly recovered from the premises of SBP Group and that no corroborative evidence had been brought on record. It was further submitted that the registered conveyance deed, builder's certificate and bank statements conclusively established that all payments had been made through banking channels. The Ld. CIT(A), however, was of the view that the seized Excel sheet constituted reliable evidence and accordingly confirmed the addition. 8. Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 9. Before us, the Ld. AR submitted that the authorities below have proceeded merely on the basis of an uncorroborated Excel sheet recovered from the premises of a third party. It was contended that neither any statement of the builder implicating the assessee nor any cash receipt, voucher, acknowledgement, diary entry or evidence of movement of cash has been brought on record. The assessee has consistently denied making any cash payment and has furnished complete documentary evidence evidencing payment through banking channels.

4 10. The Ld. AR further submitted that the assessee had specifically requested the Assessing Officer to provide the statements and material relied upon by the Investigation Wing. However, neither complete material was supplied nor any opportunity to cross-examine the persons allegedly connected with the seized material was afforded. It was argued that the addition is therefore violative of principles of natural justice. 11. The Ld. DR relied upon the orders of the lower authorities and submitted that the seized Excel sheet specifically mentions the name of the assessee, the property purchased and the cash component and, therefore, the addition was rightly made. 12. We have heard the rival submissions and carefully perused the material available on record. 13. The undisputed facts are that the assessee purchased Shop No.08 in SBP Homes Gardenia project. The entire documented consideration stands recorded in the allotment letter, agreement for sale and conveyance deed. The payments reflected therein have been made through banking channels and the same have not been disputed by the Revenue. 14. The sole basis of the impugned addition is an entry appearing in an Excel sheet allegedly recovered during search proceedings conducted in the case of SBP Group. Except for such entry, no independent evidence has been brought on record by the Revenue to establish that the assessee actually paid cash amount of Rs.9,00,000/-. 15. We find that no statement of any director, employee or authorised representative of SBP Group affirming receipt of cash from the assessee has been placed on record. No cash receipt, voucher, acknowledgement, loose paper or other incriminating material evidencing payment of cash by the assessee has been found. Likewise, no evidence has been brought on record to

5 demonstrate availability of unaccounted cash with the assessee or corresponding cash withdrawals relatable to the alleged payment. 16. On the contrary, the assessee furnished copies of the allotment letter, agreement to sell, registered conveyance deed, bank statements and certificate issued by the builder showing that the entire sale consideration stood paid through banking channels. The Revenue has neither disproved nor rebutted the documentary evidence furnished by the assessee. 17. We further find merit in the contention of the assessee that an addition in the hands of an assessee cannot be sustained merely on the basis of entries found in records maintained by a third party unless the Revenue establishes, through cogent and corroborative evidence, that such entries represent actual transactions undertaken by the assessee. Suspicion, however strong, cannot substitute legal proof. 18. At this stage, it would be relevant to note that an identical controversy arising out of the same search conducted in the case of SBP Group came up for consideration before the Coordinate Bench of the Tribunal in ITA No.487/Chd/2025. The Coordinate Bench, after detailed consideration of the evidentiary value of the seized Excel sheets and the legal principles governing additions based upon third-party material, held that no addition can be sustained merely on the basis of entries appearing in electronic records found from the premises of the builder unless the Revenue independently establishes the actual flow of unaccounted money from the purchaser to the builder. The Tribunal observed that where the assessee furnishes documentary evidence demonstrating payment through banking channels and the Revenue fails to bring any corroborative material establishing cash payment, such additions are liable to be deleted. 19. Similar view was reiterated by the Coordinate Bench in its order dated 03.02.2026, wherein in paragraph 4.12 the Tribunal held that digital entries, loose sheets or third-party records by themselves do not constitute conclusive

6 evidence against an assessee unless supported by independent enquiry, corroborative material and evidence establishing actual payment of on-money by the assessee. 20. Respectfully following the ratio laid down by the Coordinate Bench in ITA No.487/Chd/2025 as well as the order dated 03.02.2026, and considering the facts of the present case, we find that the Revenue has failed to discharge the burden cast upon it for proving that the assessee had actually made cash payment of Rs.9,00,000/- over and above the documented consideration. 21. The addition has been sustained merely on the basis of an uncorroborated Excel sheet recovered from the premises of a third party. In absence of any direct or circumstantial evidence establishing actual payment of cash by the assessee, the impugned addition cannot be sustained in law. 22. Accordingly, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition of Rs.9,00,000/- made u/s 69 r.w.s. 115BBE of the Act. 23. In the result, the appeal of the assessee is allowed. Order pronounced on 24/06/2026 Sd/- ( LALIET KUMAR) JUDICIAL MEMBER AG आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकर आयु�/ CIT 3. आयकर आयु� (अपील)/ The CIT(A) 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�ीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.

BY ORDER, ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KENDRIYA SADAN, SECTOR-9A CHANDIGARH