RAKESH BALDEVRAJ JUNEJA,MUMBAI vs. INCOME TAX OFFICER WARD 41(3)(1), KAUTILYA BHAVAN

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ITA 1242/MUM/2026Status: DisposedITAT Mumbai18 May 2026AY 2019-202016 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 additions cannot be sustained solely on the basis of third-party statements or documents without corroborative evidence. The AO failed to provide an opportunity for cross-examination and relied on uncertified electronic records.

What were the facts?

The assessee purchased a residential property and the Assessing Officer (AO) made an addition of Rs. 81,00,000/- under Section 69A as unexplained investment, alleging an on-money transaction. This addition was based on third-party information and statements recorded under Section 132(4) without independent corroboration.

What were the issues?

Whether additions can be made based solely on third-party information without corroboration and opportunity for cross-examination. Admissibility of uncertified electronic records in assessment proceedings.

Which sections of the Income-tax Act were involved?

Section 69A,Section 132(4),Section 65B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SANDEEP GOSAIN & HON’BLE BIJAYANANDA PRUSETH

For Respondent: Shri Annavaram Kosuri, SR AR

आदेश / ORDER

PER SANDEEP GOSAIN, JUDICIAL MEMBER: This appeal is filed by the Assessee against the order of Ld. National Faceless Appeal Centre, Delhi vide DIN: ITBA/NFAC/S/250/2025- 26/1083527832(1) dated 10-Dec-2025 for the Assessment Year 2019- 2020. The Assessee has raised the following grounds of appeal:

1.

Addition of Rs. 81,00,000/- u/s 69A as Unexplained Investment:

On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in confirming the addition of Rs. 81,00,000/- u/s 69A as unexplained money in respect of the alleged On Money transaction paid for the purchase of residential property without any cogent or corroborative evidence.

The Appellant submits that the addition of Rs. 81,00,000/- made us 69A as Unexplained Investment be deleted.

2.

Reliance on Third-Party Material

On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in confirming the addition of Rs. 81,00,000 u/s 69A made by the Assessing Officer solely on the basis of third-party information obtained from the incriminating materials and statements recorded of third party's u/s 132(4), without bringing on record any independent inquiry or corroborative evidence against the appellant.

The Appellant submits that the addition of Rs. 81,00,000 u/s 69A made on the basis of such third party statement or material found from the third party in absence of any independent evidence linking the Appellant with the material found from a third party or a third party statement cannot be sustained.

3.

Violation of Principles of Natural Justice

a. On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in upholding the Assessing Officer's action of relying upon statements recorded u/s 132(4) of the Income-Tax Act, 1961 without affording the Appellant any opportunity for cross-examination of persons whose statements were relied upon, which constitutes a gross violation of the principles of natural justice as in view of decision by Hon'ble Supreme Court in the case of Andaman Timber Industries v. Chief Commissioner of Customs (2015) 62 Taxmann.com 3 (SC).

The Appellant submits that a fair hearing and an opportunity to cross examine the parties is not provided.

b. On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in upholding the Assessing Officer's action of relying heavily on the uncertified and unsigned electronic records without ensuring compliance with the mandatory requirements of Section 658 of the Indian Evidence Act, 1872 on the ground that the strict compliance of the Evidence Act does not apply and the authorities may rely on material consistent with its principles.

The Appellant submits that the National Faceless Appeal Centre, Delhi reliance on uncertified electronic evidence by the Assessing Officer duly confirmed by the National Faceless Appeal Centre, Delhi renders the entire assessment order vulnerable to challenge on grounds of inadmissibility.

4.

Addition Based on Suspicion

On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi has erred in relying upon the "test of human probabilities" in the case of Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) and Durga Prasad More v. CIT (1972) 82 ITR 540 (SC) alongiwth third party statement and uncertified and unsigned electronic records, assumed and held that a part of the consideration was paid in cash at the negotiation/booking stage in the absence of direct or cogent corroborating material, notwithstanding later formalities by the Appellant.

The Appellant submits that the application of the "test of human probabilities" is misplaced and constitutes an error of law.

5.

The Appellant craves leave to reserve to itself the right to add, after, amend or annul any of the grounds of appeal at or before the time of hearing and to produce such further evidence, documents and papers as may be necessary.

2.

Ground Nos. 1 to 4 raised by the assessee are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in upholding the additions made by the AO under Section 69A of the Act on account of alleged unexplained investment made by the assessee. Therefore, these grounds are being adjudicated through the present consolidated order.

3.

The Ld. AR appearing on behalf of the assessee reiterated the same arguments as were advanced by the assessee before the Revenue Authorities and also relied upon the written submissions filed before the Ld. CIT(A), which are contained at Pages 9 to 13 of the order of the Ld. CIT(A) and the same is reproduced herein below:

The Appellant purchased residential property under construction at A 295 in Kalpataru Radiance, Goregaon West, Mumbai-400 104 jointly with Rajni Juneja and SmeraJuneja. The said immovable property was purchased from M/s. Kinaya Ventures LLP vide letter of allotment dated 30th July, 2021 for a consideration of Rs. 2,92,09,065/. The stamp duty valuation of the said property was Rs. 2,74,17,825/- The booking application was made on 02.04.2019, the Letter of Intent was signed on10.05.2019, and the Allotment Letter was issued on 30.07.2021. The under construction property was completed and the same was registered vide agreement dated 5th May, 2023. The Appellant has 1/3rd share in the said residential property.

The Agreement for Sale was executed on 05.05.2023 The total consideration for the property was Rs. 2,92,09,065/-, paid in equal 1/3rd shares by each co-owner mentioned above. All payments were made through banking channels, and appropriate TDS was deducted and paid. There were no cash transactions involved in the purchase. The assessment proceedings were initiated based on an excel sheet recovered from the laptop of an employee of Kalpataru Group during a search on 04.08.2023. It was alleged that an unaccounted cash payment of Rs. 81,00,000/- was made by the Appellant in FY 2018-19, relevant to A. Y. 2019-20. The Assessing Officer relying solely on the information found in the incriminating material and the statements recorded u/s 132(4) from employees and the Managing Director of the Kalpataru Group alleged that the appellant made an unaccounted cash payment of Rs. 81,00,000 towards the purchase of Flat No. A-295, The Assessing Officer made the addition of Rs. 81,00,000/- in respect of alleged On Money transaction as Unexplained Investment u/s 69A of The Income Tax Act, 1961 relying heavily on the third party information being incriminating material found during the search and seizure proceedings carried out u/s 132 of the Act on 04.08.2023 and the statements recorded u/s 132(4) without carrying out any independent inquiry and bringing on record any specific evidence to substantiate that the Appellant made alleged cash payment of Rs. 81,00,000/- as On Money. In respect of the above, we submit the following: During the assessment proceedings, the Appellant has categorically denied payment of any cash transaction and furnished all the relevant records, including the registered agreement dated 05.05.2023, allotment letter dated 30.07.2021, and proof of ali payments made through banking channels, equally shared by three co-owners. The date of alleged cash transactions as per the incriminating material is29.01.2019 and 27.02.2019. However, the Appellant signed the letter of intent tobuy the said residential property on 10th May, 2019 against which the allotment letter was issued 30th July, 2021. The Appellant has submitted before the Assessing Officer that the residential property transaction commenced after thea lleged cash transaction date mentioned above i.e. 29.01.2019 and 27.02.2019. Therefore, the Appellant submits that there is no proximity or link between the alleged date and the Appellant's involvement with the property. The residential flat was formally allotted only in July 2021.

The Appellant submits that he categorically denied having paid any unaccounted amount in cash towards the purchase of the said property. All the payments made were duly reflected in the bank statements and TDS records submitted. The allegation of Rs.81,00,000/- being paid in cash is baseless and without any corroborative evidence. The Appellant has furnished a detailed payment schedule, bank statements, and computation of income establishing that the source of all payments made is fully explained and accounted. There is no unexplained investment under Section 69A. The courts have repetitively held that additions based only on seized material found frompremises of third party cannot be considered for making additions in the case ofappellant. The relevant judicial pronouncements are as follows

a. Add. CIT Vs Lata Mangeshkar (97 ITR 696) b. CBI vs. V.C. Shukla (3 SCC 410) c. Shri Mustafamiya H. Sheikh (Vide ITA NO. 2588/Ahd/2012) d. DCIT Vs H.S. Chnadramouli (ITA No. 1551/Barig/2012) e. M/s Mohd. Ayub Mohd. Yakub Perfumers Pvt. Ltd (ITANO. 388/LKW/2013) f. DCIT Vs Pawan Kumar Agarwal (ITA 413 LKW/2012) g. M/s Bhola Nath Radha Krishan 9ITA 5149/Del/2012) h. Pradeep Amrutlal Runwal (149 ITR 548).

Thus, the addition made by the Ld. AO based on information received having no justifiable, corroborative and/or clinching evidences unto the appellant the addition made is absolutely illegal bad in law and therefore needs to be deleted. The addition made by the Assessing Officer is on the basis of material found being certain extract or image of excel file found during the course of the search conducted on a third party.

It is seen that while such material could have been a reason for starting an investigation, the AO has simply relied on such material found from the premises of a third party and relied on third party statement to make the addition without corroborating it with any kind of independent evidence linking such material with the assessee. The Appellant further relies on various high court and tribunal decisions which have underscored the principle that mere possession of nonspecific, non- speaking documents cannot, by itself, justify additions to taxable income and have reinforced the need for corroborative material to validate any tax implications of "Dumb Documents." 1. K.P. Varghese v. ITO: This Supreme Court case is pivotal in understanding the limitations of presumptive evidence and the necessity for corroborative materialto establish tax liabilities from "dumb documents". 2. Commissioner of Income-tax, Delhi v. D.K. Gupta: The Delhi High Court sjudgment in this case reinforced the principle that without corroborative evidence, mere possession of documents suggestive of financial transactions cannot beconclusively deemed as income.

3.

P.R. Metrani v. CIT: This Supreme Court judgment clarified the scope ofpresumptions under Section 132(4A), particularly noting that such presumptionsare primarily relevant for summary assessments immediately following a search for the purpose of deciding on asset retention or release. The Appellant therefore submits that the Hon'ble Courts have clearly held thatdocuments/material found from the premises of a third party or a statement of a thirdparty cannot be relied upon to make additions in the hands of the Assessee, unless suchmaterial or statement is corroborated by independent evidence linking such material tothe assessee. Further, the Appellant submits that the Hon'ble Supreme Court in the case ofUmacharan Shaw and Bros v CIT (1959) 37 ITR 271 held that suspicion, howeverstrong, cannot take the place of evidence. Similarly, raising presumption itself does notamount to proof. Presumption, however strong, cannot take the place of evidence asheld in the case of Pooja Bhatt 66 TTJ (Mum) 817 and in the case of D.M KamaniHUF 65 TTJ (Pat) 504.

Thus, in the absence of any independent evidence linking the assessee with the materialfound from a third party or a third party statement, the addition made by the AO on thebasis of such third party statement or material found from the third party cannot besustained. Thus, the additions made by the Ld. AO is purely based on conjectures, surmises, premises, preponderance of possibilities, guess work and it lacks justifiable, corroborative, clinching evidences whatsoever and therefore, the additions made by theLd. AO needs to be fully deleted in the interest of natural justice and equity.

4.

The assessee also relied upon the following decisions:

Pravin Khetaramm Purohit vs. DCIT, Central Circle, Mumbai ITA Nos.  4742, 4743 & 4744/Mum/2025 Jalaram Tararam Purohit vs. ACIT, Central Circle-4(2), Mumbai ITA Nos.  6060, 6061 & 6062/Mum/2025 Jain Sanjaykumar Sohanraj HUF vs. DCIT, Central Circle, Mumbai ITA  Nos. 7113 & 7114/Mum/2025 Rakesh Jain vs. DCIT, Central Circle-4(2), Mumbai ITA Nos. 3841 &  3842/Mum/2023 Mr. Hoshang Jamshed Mohta vs. ITO-35(1)(4) ITA No. 36/Mum/2023  ITO-13(2)(1), Mumbai vs. M/s. Samriddhi Finvest Advisory Services Pvt. Ltd.  ITA No. 7789/Mum/2019 Mamta Sharad Gupta vs. ITO, Ward-1(2), Kalyan ITA No. 1553/Mum/2021  Chandra Khilwani vs. ITO, Vadodara ITA No. 2234/Ahd/2025  Dimple Shailesh Jain vs. DCIT, Central Circle-4(2), Mumbai ITA Nos. 6732  & 6733/Mum/2025

5.

On the contrary, the Ld. DR relied upon the orders passed by the Revenue Authorities.

6.

We have heard the counsels for both parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that the assessee, being an individual, filed the return of income for the year under consideration. However, the case of the assessee was reopened on the basis of information and documents seized during the course of a search and seizure operation carried out under Section 132 of the Act on 04.08.2023 in the case of the Kalpataru Group.

7.

As per the case set up by the Revenue, an Excel sheet and other incriminating documents were found during the search, which allegedly indicated “on-money” transactions made by the assessee amounting to Rs. 81,00,000/- towards purchase of Flat No. A-295, Kalpataru Radiance, Goregaon West, Mumbai – 400104. Accordingly, the AO made additions under Section 69A of the Act on account of alleged unexplained investment made by the assessee.

8.

On the other hand, the assessee categorically denied having paid any “on-money” in cash to the Kalpataru Group. As per the assessee, the residential flat under construction bearing No. A-295 at Kalpataru Radiance, Goregaon West, Mumbai – 400104 was purchased jointly with Rajni Juneja and Smera Juneja from M/s. Kinaya Ventures LLP vide Letter of Allotment dated 30.07.2021 for a consideration of Rs. 2,92,09,065/-. It was also pointed out that the stamp duty valuation of the said property was Rs. 2,74,17,825/-.

9.

It was further brought to our notice that the alleged dates of cash payments mentioned in the Excel sheet found during the course of search were 29.01.2019 and 27.02.2019. Upon evaluation of the records placed before us, we find that the flat in question was booked by the assessee for the first time on 02.04.2019, as is evident from the Letter of Allotment dated 30.07.2021 placed at Page No. 92 of the Paper Book, wherein it has been specifically mentioned that the application form for booking of the flat was submitted on 02.04.2019. Consequent thereto, the Letter of Intent was issued on 10.05.2019, followed by the Letter of Allotment dated 30.07.2021, which was eventually registered on 05.05.2023.

10.

These facts clearly demonstrate that the alleged cash payments dated 29.01.2019 and 27.02.2019, as reflected in the Excel sheet, were allegedly made even prior to the application for booking of the flat dated 02.04.2019, thereby rendering the allegation factually untenable.

11.

We further noticed that the stamp duty valuation of the property was Rs. 2,74,17,825/-, whereas the assessee had purchased the property for a higher consideration of Rs. 2,92,09,065/-. Moreover, from the very beginning, the assessee had categorically denied having paid any “on- money” to the builder.

12.

It is also observed that the addition in the present case has been made solely on the basis of a third-party Excel sheet and statements recorded during the course of search under Section 132(4) of the Act from employees and the Managing Director of the Kalpataru Group, without conducting any independent inquiry and without bringing on record any direct evidence to establish that the assessee had made cash payments.

13.

Though the AO, in the assessment order, alleged that the assessee had paid Rs. 81 lakhs as “on-money” to the Kalpataru Group, no incriminating material was found during the search to substantiate that the assessee had, in fact, made any such cash payment. On the contrary, the records reveal that the entire consideration was paid through banking channels, and the source of such payments was never doubted by the AO.

14.

The alleged cash entries in the Excel sheet are dated 29.01.2019 and 27.02.2019, whereas the booking application itself was made only on 02.04.2019 and the Letter of Intent was issued on 10.05.2019. Thus, the allegation made by the AO is not only unsupported by evidence but is also factually inconsistent.

15.

Apart from this, the entire addition is based solely upon statements recorded during the search proceedings and the Excel sheet found from a third party, without any corroborative evidence. Admittedly, no opportunity of cross-examination of the persons whose statements formed the basis of the addition was granted to the assessee despite specific requests made in this regard. Further, the Excel sheet relied upon by the Revenue was not accompanied by any certificate under Section 65B of the Indian Evidence Act. Therefore, even assuming that such material was seized during the course of search under Section 132(4) of the Act, the same could only be used against the person searched, namely the Kalpataru Group, and not against the assessee in the absence of independent corroboration.

16.

Thus, the Excel sheet relied upon by the Revenue cannot be treated as admissible evidence in the eyes of law in the absence of compliance with Section 65B of the Indian Evidence Act, as held by the Coordinate Bench of the ITAT in the case of Mamta Sharad Gupta vs. ITO (ITA No. 1553/Mum/2021), wherein it was categorically held that additions based on electronic evidence without compliance with Section 65B of the Indian Evidence Act are unsustainable in law. Having gone through the entire facts of the case, we also noticed that the AO had not conducted any independent verification, particularly when the assessee had consistently denied having paid any cash for purchase of the flat. In this regard reliance is being placed upon the decisions in the following cases:

1.

Pravin Khetaramm Purohit vs. DCIT. Central Circle. Mumbai ITA No.4742. 4743,4744/Mum/2025

Wherein, the assessee categorically denied having paid any amount in cash over and above the agreement value and the information, if any found in the pendrive etc., cannot be considered as 'credible evidence', unless they have been corroborated with any other evidence.

the information claimed in pendrive is concerned, the same was not found from the possession of the assessee and therefore, in the absence of corroborative evidence to establish that the contents of pendrive are correct and authenticated to the extent assessee paid 'onmoney' in cash, no addition can be made.

Reliance is placed on the decision of the Coordinate Bench of ITAT in the case of Rajesh Jain in ITA No. 38428 3841 & ITA No. 3954,3952,3951 and 3950/Mum/2023.

2.

Rakesh Jain vs. DCIT, Central Circle-4(2), Mumbai (ITA No.3842 and 3841/Mum/2023):

Wherein it is observed that the AO has made the addition on the basis of evidence found in the premises of third party. No corroborative material was brought on record to support the statement given, which is mandatory when the assessee denies any such payment. Further the AD also did not provide opportunity ofoross examination to the assessee, even after the said request was made by the assisee. Under these set of facts, we are of the view that the impugned addition of Rs. 1864.200/- cannot be sustained.

3.

Jalaram Tararam Purohit vs Asst. Comm. of Income Tax Central Cir. 4(2), Mumbal. ITA 6060, 6061, 6062/Mum/2025.

4.

Jain Sanjaykumar Sohanraj HUF vs. DCIT, Central Circle, Mumbai, ITA No.7113 & 7114/Mum/2025.

Relied on the following decisions rendered by the Coordinate Benches of the ITAT on identical issues under similar factual circumstances in favour of the assessee, we find no reason to take a different view.

a. The case of Mamta Sharad Gupta, ITA No.1553/M/2021 wherein statement or any material seized during the course of search under section 132(4) of the Act can only be used against Mr. Suraj Parmar of Cosmos Group and not against the assessee without any corroboration. Excel sheet alleged to have been recovered from the office of builders is also not admissible, being not proved under section 65B of the Evidence Act. So in view of the matter, addition made by the AO and sustained by the Ld. CIT(A) is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is allowed.

b. Rajesh Jain in ITA No. 38428 3841 & ITA No. 3954,3952,3951 and 3950/Mum/2023 as discussed in point 2.

5.

Mr. Hoshang Jamshed Mohta vs. ITO-35(1)(4) (ITA No.36/Mum/2023) Wherein the Hon'ble ITAT observed that the Ld. CIT(A) has confirmed the addition mainly on the basis of the statement recorded during the search of the developer and he found fault with the assessee for not producing any documents to disprove the allegation. This impugned action of the Ld. CIT(A) cannot be countenanced It is true that the AO can act upon any material brought to his notice against the assessee but if he is going to rely on those material (in this case the statement recorded u/s 132(4) of the Act of the developer) then he has to give a copy of the same to the assessee and provide an opportunity to the assessee to meet it/rebut/explain the same. Then only the AO can use it against the assesee

6.

Dimple Shailesh Jain vs. Deputy Commissioner of income-tax (DCIT), Central Circle-4(2), Mumbai, ITA No 6732 & 6733/M/2025.

Wherein it is observed that as no incriminating material directly connected with the Assessee, such as cash voucher, receipt, ledger or any document signed by the Assessee, was ever found during the search or post-search proceedings, either from the Rubberwala Group or Mr. Ansari, whose statement has been made the foundation for making the addition, and therefore, in that eventuality, the onus shifts upon the Revenue Department to substantiate/corroborate the evidence collected during the search proceedings and to offer an opportunity for confrontation or cross-examination of the witnesses, whose statements were relied upon, while making the addition. Which the AO failed to substantiate the evidence collected and also failed to give any opportunity of cross examinations of the witnesses, whose statements were relied on and/or made a foundation for making the addition.

17.

Upon careful consideration of the material on record, we find that such material found during the course of search may at best give rise to a reason for initiating investigation; however, no addition can be sustained merely on the basis of third-party statements or third-party documents in the absence of corroborative evidence. Various High Courts and Coordinate Benches of the ITAT have consistently underscored the principle that mere possession of non-specific and non-speaking documents cannot, by itself, justify addition to taxable income, and have reiterated the necessity of corroborative material to validate any tax implication arising from such “dumb documents.”

18.

The Hon’ble Supreme Court in the case of Uma Charan Shaw & Bros. vs. CIT (1959) 37 ITR 271 (SC) held that suspicion, however strong, cannot take the place of proof. Similarly, it has been held that a presumption, howsoever strong, cannot substitute evidence, as observed in Pooja Bhatt 66 TTJ (Mum) 817 and D.M. Kamani HUF 65 TTJ (Pat) 504.

19.

Therefore, in the absence of any independent evidence linking the assessee with the material found from a third party or with the statements recorded from third parties, the addition made by the AO solely on the basis of such third-party material and statements cannot be sustained.

20.

Therefore, considering the totality of the facts and circumstances discussed hereinabove, and taking into consideration the decisions of the Coordinate Benches of the ITAT, the Hon’ble Jurisdictional High Court, as well as the Hon’ble Supreme Court, we are of the considered view that the addition made on account of alleged “on-money” payment is not sustainable in the present case. Accordingly, we allow these grounds raised by the assessee and direct the AO to delete the said addition.

21.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 18.05.2026.

Sd/- Sd/- BIJAYANANDA PRUSETH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 18.05.2026

Copy to: RAKESH BALDEVRAJ JUNEJA, 295 / A WING, 29TH FLOOR, KALPATARU RADIANCE, SIDDHARTH NAGAR, BEHIND 1 ADARSH VIDYALAYA SCHOOL, GOREGAON WEST, MUMBAI-400104, MAHARASHTRA INCOME TAX OFFICER WARD 41(3)(1), 849, KAUTILYA BHAVAN, BANDRA KURLA 2 COMPLEX, BANDRA EAST, MUMBAI-400051, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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