ABDULLATIF IBRAHIM BADARPURA,MUMBAI vs. DCIT CENTRAL CIRCLE 4(2), MUMBAI

Thus, the AO on the basis of aforesaid search and seizure proceedings carried out u/s 132 of the Act, issued a notice dated 29.03.2023 u/s 153(C) of the Act to the Assessee, who in response filed his return of income on dated 29.04.2023, declaring total income of Rs. 5,24,900/- as declared originally by filing original return for the assessment year under consideration, on dated 29.08.2018. 4 ITA No..8406/Mum/2025&Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali 5. Thereafter, the AO show caused the Assessee to explain the amount of Rs. 16,00,000/-+9,43,750/- {Rs. 25,43,750/- in total} respectively for the AYs. 2018-19 and 2019- 20, allegedly paid in cash during the year under consideration, over and above the purchase price of shop bearing Shop No. 243, admeasuring carpet area of 7.56 Sq. Mtr. situated at 2ndfloor of Platinum mall, having been paid in installments and to the tune of Rs. 20,09,100/- in total, through banking channel, as against the stamp duty value (circle rate) of Rs. 15,17,292/-.

The Assessee in response to the said show cause submitted its reply, relevant part of the which is reproduced herein, as under:

The Assessing Officer, though considered the aforesaid claim of the Assessee that he has not made any cash payment to RHIL or the Rubberwala Group, as mentioned in the show-cause notice, however, found the said claim of the Assessee, as not acceptable, mainly on the following reasons:

Shri Imran Ansari, a key employee of the Rubberwala Group, who was handling sale and registration of shops in "Platinum Mall", accepted that he had maintained Excel &Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali sheets in which details of every person who paid cash in respect of purchase of shops on cash, was mentioned.

A 16 GB pen drive containing the data related to shops as maintained by Mr. Ansari in Excel sheets was recovered from Mr. Ansari during search proceedings at his residence.

The Assessing Officer, on the aforesaid reasons, held that the Assessee has made the investment of Rs. 16,00,000/-, as unrecorded in the books of accounts maintained by the Assessee and also the Assessee had offered no explanation for the nature and source of such investment and thus the A.O added the amount of Rs. 16,00,000/- as unaccounted cash paid against the purchase of shop during the year under consideration, under section 69 of the Act, vide assessment order dated 09.03.2024 under section 153C of the Act.

The Assessee, thus, being aggrieved against the decision of the AO in making the addition of Rs. 16,00,000/-, preferred first appeal before the Ld. Commissioner by raising various grounds.

The Ld. Commissioner though considered the assessment order and the claim of the Assessee specifically to the effect that he has not made any cash amount over and above the sale consideration amount, as reflected in the sale deed and the AO has also not provided the cross examination of the witnesses, on whose statements the AO has made reliance. However, the Ld.

The Assessee, at the outset, had submitted that in the assessment order, it is nowhere appearing "as on what material and/or which Excel sheet the addition has been made". Further, the Assessing Officer made the addition without confronting the incriminating material and/or providing any opportunity of cross- examination of the witnesses, whose statements were mainly relied upon by the Assessing Officer. Even otherwise, there is no independent material available on record, to substantiate the addition made and affirmed.

On the contrary, the Ld. DR submitted that the Assessee was provided with the combined show-cause notice dated 19.02.2024 along with the relevant details and documents. Further, in the 7 ITA No..8406/Mum/2025&Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali satisfaction note, all the details were mentioned and communicated to the Assessee, which also contains the Excel sheets, detailing the shop number, area, level, total amount, etc.. Further there is direct evidence for making the addition, such as statement of MR. Ansari, excel sheets, pen drive and a fact that Director of RHIL has offered income @ 8% of the unaccounted cash component and therefore, the orders passed by the authorities below cannot be faulted with.

The Hon’ble High Court also considered the Digital Evidence Investigation Manual 2014 issued by the Central Board of Direct Taxes (CBDT), wherein it is mentioned that since Sec. 65A and 65B of the Indian Evidence Act govern the integrity of the electronic record, therefore while handling any digital evidence, the procedure has to be in consonance with the said provisions. The Hon’ble High Court further opined that the contents of the manual cannot have any statutory value or force and in any 8 ITA No..8406/Mum/2025&Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali event, they cannot alter the legal position laid down by the Hon’ble Supreme Court.

The Ld. DR also relied on the judgment passed by the Hon’ble Delhi High Court in the case of Smt. Dayawanti Vs. CIT, [2016] 75 taxmann.com 308 (Delhi), wherein it has been held that statement recorded during the search operation, could be relied upon to make the addition to Assessee’s income.

The Ld. DR further relied on the judgment passed by the Hon’ble Coordinate Bench of Tribunal at Rajkot in the case of DCIT Vs. Gopal Bhupendra Chudasama, [2025] 181 taxmann.com 908 (Rajkot - Trib), wherein the Hon’ble Bench considered the addition made on the basis of pen drive seized from the Accountant, qua “on-money” cash receipts from buyers. However, the Hon’ble Bench ultimately remitted the matter to the file of Ld. CIT(A) with a direction to call for appropriate remand report from the AO.

Thus, in the aforesaid facts and circumstances, 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 &Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali proceedings, either from the Rubberwala Group or Mr. Ansari, whose statement has been made the foundation for making the addition, 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 Revenue 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.

We again considered the rival submissions of the parties to address the specific objections raised by the Ld. DR with regard to the legality of the electronic evidence such as pen drive and excel sheet retrieved from such pen drive. No doubt, Income Tax Authorities are not strictly bound by the Rules of evidence. However, it is the mandate of the law that the material which is to be used against the Assessee, must be brought into the notice &Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali of the Assessee and the Assessee must be given an opportunity to make its representation against such evidence and / or to tender evidence against truth of the recitals contained therein. According to the Digital Evidence Investigation Manual 2014 issued by the CBDT since Sec. 65A and 65B Indian Evidence Act governing the integrity of the electronic record and therefore while handling any digital evidence, the Revenue Authorities are required to follow the procedure in consonance with the said provisions. No doubt CBDT cannot override the legal position laid down by Hon’ble Apex Court, as held by the Hon’ble Madras High Court in the case of Vetrivel Minerals (supra). However, the spirit of the CBDT manual (supra) to the effect that in order to preserve the integrity of electronic record, the procedure adopted has to be inconsonance with the provisions of Sec. 65A and 65B of the Act, cannot be sidelined by the Revenue Authorities as they are bound to follow the CBDT Circulars/guidelines.

We further observe that Hon’ble Delhi High Court in the case of Smt. Dayawanti (supra), has held that the statement recorded during the search operation could be relied upon to make addition to Assessee’s income but the Hon’ble High Court nowhere held that no corroboration is required to rely on such statement. In our view, simpliciter statement cannot be made a basis for making the addition, until and unless the same is 12 ITA No..8406/Mum/2025&Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali corroborated with the substantive evidence. Even otherwise, the Hon’ble High Court has made the simple observation, without laying down any dictum of law and therefore the same is not applicable to the instant case.

Coming to the another judgment relied upon on by the Ld. DR, we observe that Hon’ble Coordinate Bench of the Tribunal in the case of Gopal Bhupendra Chudasma (supra), has dealt with peculiar facts and circumstances of the case and simply made various observations, which cannot be made applicable to the case under consideration, as both the cases are factually dissimilar. Even otherwise, the Hon’ble Bench at Rajkot ultimately remanded the case to the file of Ld. Commissioner for decision afresh by calling the appropriate remand report from the Ld.AO. In our view certain observations made in the order under the peculiar facts and circumstances, have no effects on the factually dissimilar cases and therefore the contention of the Ld. DR that the Hon’ble Bench in that particular case has relied on the digital evidence, can also be relied on this case, having no weightage and/or not entertainable.

Coming to the next contention raised by Ld. DR by drawing attention of this court to para 21 of order passed in Veena Hiralal Mehta (supra) and by submitting that in that particular case because no cash voucher, receipt, ledger or documents signed by the Assessee and / or incriminating material directly connected with the Assessee was ever found, therefore, the Hon’ble Coordinate Bench of the Tribunal has dealt with a specific facts and circumstances. Whereas, facts of the instant case are dissimilar to the aforesaid case, decided by the Tribunal.

The Ld. Counsel for the Assessee in order to contradict the above claim/contention of the Ld. DR placed on record, following assessment orders:

As observed above that the Hon’ble Coordinate Bench of the Tribunal in the case of Veena Hiralal Mehta (supra), has dealt with identical addition on the basis of identical facts and circumstances and evidence and ultimately deleted the sameby observing and holding as under:

The Assessee, at the outset, had submitted that in the assessment order, it nowhere appears in the assessment order as to what material and/or which Excel sheet the addition has been made. Further, the Assessing Officer made the addition without confronting the incriminating material and/or without providing any opportunity of cross-examination of the witnesses, whose statements were mainly relied upon by the Assessing Officer. Even otherwise there is no independent material available on record to substantiate the addition made and affirmed by the authorities below.

On the contrary, the Ld. DR submitted that the assessee was provided with the show-cause notice dated 17.01.2024 along with the relevant details and documents. Further, in the satisfaction note, all the details are mentioned and communicated to the assessee, which also contains the Excel sheets, detailing the shop number, area, level, total amount, etc.. Further there is direct evidence for making the addition, such as statement of MR. Ansari, excel sheets, pen drive and a fact that Director of RHIL has offered income @ 8% of the unaccounted cash component and therefore, the orders passed by the authorities below cannot be faulted with.

Even otherwise, the Assessee had purchased the shop/property under consideration for a consideration/value, more than the value determined by the Stamp Duty Valuation Authority. Further, the Assessing Officer also failed to brought on record any comparable case in the same shopping mall, so as to ascertain the actual rate of transactions made .

We further observe that identical shops in same “ Shopping Mall i.e. Platinum Mall “ were also purchased by various other Assessees, wherein in their cases as well, identical additions were made, and therefore their cases travelled upto the Hon‟ble Coordinate Benches of the Tribunal, who dealt with the cases in detail in the context of the same search and seizure operation, same pen drive, same statements and same offering of income at the rate of 8% on the unaccounted cash components by the Director of the RHIL Group.

The Hon'ble co-ordinate Bench of the Tribunal inPravin Khetaramm Purohit (or Parveen Kheta Ram) vs. DCIT (ITA Nos. 4742 to 4744/M/2025, decided on 15.10.2025) also dealt with identical addition based on the same search and seizure and material recovered and statements recorded and ultimately deleted the identical addition by observing and holding as under: “18. From the records we also noticed that no statement was provided to the assessee, and none of the persons, whose statements were relied upon were produced for cross-examination. Even the extract of the statement mentioned in the assessment order does not indicate the name of the assessee.

In the case of H.R. Mehta v/s Assistant Commissioner of Income- tax, Mumbai 72 taxmann.com110 (Bombay) wherein it was held as under: In the light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and, therefore, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents whose statements were relied upon by him. Despite the request seeking an opportunity to cross examine the deponents and furnish the assessee with copies of statements and disclose material, these were denied to him.

Even otherwise also, the addition made is unsustainable because of the following reasons. As discussed earlier in the order, the basis for addition on account of on–money is the information contained in the pen drive found during the search and seizure operation and the statement recorded under section 132(4) of the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a third party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on–money in cash, no addition can be made under section 69B of the Act. Further contention of the assessee is that in the statement recorded under section 132(4) of the Act, Shi Niranjan Hirandani has not made any reference to the assessee, therefore, in absence of any other corroborative evidence to establish that assessee has paid on–money in cash, no addition can be made. I find substantial merit in the aforesaid submissions of the assessee. In my view, neither the information contained in the pen drive nor the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani are enough to conclusively establish the factum of payment of on–money by the assessee. At best, they can raise a doubt or suspicion against the conduct of the assessee triggering further enquiry / investigation to find out and bring on record the relevant fact and material to conclusively prove the payment of on– money by the assessee over and above the declared sale consideration. Apparently, the Assessing Officer has failed to bring any such evidence 20 ITA No..8406/Mum/2025&Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali / material on record to prove the payment of on– money by the assessee. More so, when the assessee from the very beginning has stoutly denied payment of on–money in cash.” 28. We further observe that the Hon'ble Co-ordinate Bench of the Tribunal consisting both of us, in the case of Deputy Commissioner of Income Tax vs. Dhiren Shah [2025] 180 Taxmann.com 370 (Mumbai – Trib.), in decided on 27.10.2025, has also dealt with an identical addition made on the basis of allegation of cash paid over and above the sale value of an immovable property having been paid through banking channel and ultimately affirmed the order of the Ld. CIT(A) by dismissing the appeal of the Revenue by observing and holding as under:- “7. We have carefully perused the records and have also taken note of the rival submissions. We are of the considered view that there is no authenticity of the impugned screenshot which does not bear any signature of government authority. It appears to be a rough calculation only. Moreover, we find that the AO has also not brought on record any comparable case of the said locality so as to ascertain the actual rates of transactions made. The market rate adopted by the AO is contrary the Stamp Duty rate which is government fixed rate of the property under consideration that has been brushed aside by the AO without finding any infirmity in the same. Moreover, no investigation has been made with the Registration office/Stamp Duty authorities in this regard but he made the addition of such a huge sum without making any effort to corroborate his findings. The WhatsApp chat/post is nothing more than rough working communication between buyer's son and his accountant. It does not specifically mention either the name of the assessee or even the impugned property transaction. The assessee was searched by the Department. However, no corroborative evidence of receipt of any cash over and above the disclosed amount has been brought on record by the AO. 7.1 The AO has placed considerable reliance on the digital evidence in the form of chats. However, we find that the order is completely silent on whether the requirements of section 65B of the India Evidence Act, 1972 have been satisfied or not since the provisions require that to be admissible, they must be accompanied with a valid certificate under section 65B(4). Mere screenshots or forwarded chats have no evidentiary value since they are susceptible to tampering or fabrication. Unless the source devise is produced or section 65B certificate is produced, such chats cannot be relied upon. 7.2 In view of the discussion above, we hold that the addition made by the AO is based more on conjectures and surmises rather than on concrete evidence. Therefore, we do not find any infirmity in the appellate order 21 ITA No..8406/Mum/2025&Ors. Ashok Hanjaji Mali & Abdullatif Ibrahim Badarpura & Amararam Mali deleting the addition made. Consequently, all the grounds of appeal