PUSHPA VIKAS JAIN,MUMBAI MAHARASHTRA vs. CENTRAL CIRCLE 4(2) ACIT MUMBAI , ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI MAHARASHTRA

The Assessee, being aggrieved, preferred first appeal before the Ld. Commissioner challenging the aforesaid addition and the assessment order dated 21.03.2024 passed under section 153C passed by the Assessing Officer, on various grounds including legal in nature, however, failed to get any relief, as the Ld. Commissioner dismissed the appeal by affirming the aforesaid addition on legal as well as on merits and thus, the Assessee being aggrieved, has preferred the instant appeal.

The Assessee controverted the findings of the authorities below, whereas the Ld. DR supported the same.

We have heard the parties and perused the material available on record. We observe that various Hon'ble Co-ordinate Benches of the Tribunal have elaborately dealt with the identical addition made in the identical facts and circumstances, the same search and seizure operation, recovery of the same pen drive and excel sheet, same statement of Mr. Ansari, and on the same fact that RHIL has declared income @ 8% of the undisclosed income qua cash component, as involved in this case and ultimately deleted such addition, by respective orders. For brevity and ready reference, conclusion drawn by co-ordinate Bench in the case of Veena Hiralal & 7096/M/2025 4 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain Mehta Vs. DCIT Central Circle 4(2) {ITA No.5492 & 5493/M/2025 decided on 06-02-2026} is reproduced herein as under: - “ 18. Heard the parties and perused the material available on record. From the assessment order, it clearly appears that the Assessing Officer made the addition mainly on the basis of the pen drive recovered from the premises of Mr. Ansari, the statement of Mr. Ansari wherein he admitted receipt of the cash component by the company, and the statement of the Director of the RHIL Group wherein he admitted statement made and the Excel sheet prepared by Mr. Ansari as true and offered income 8% of the cash amounts/component, as unaccounted receipts.

The Assessee, at the outset, had submitted that in the assessment order, it nowhere appears “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 .

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 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 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 in Rajesh Jain v. DCIT (ITA Nos. 3842 &Ors/2023, ITAT Mumbai, order dated 26-11-2024), also dealt with identical addition made on the basis of third-party statements and pen drive and excel entries, allegedly recovered from the same search and seizure operation as involved in this case and ultimately deleted the identical addition by observing as under: - & 7096/M/2025 6 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain “16. We heard Ld D.R and perused the record. We notice that the AO has made the addition on the basis of evidence found in the premises of third party and also on the basis of deposition made by the employee of the third party. No corroborative material was brought on record to support the statement so given, which is mandatory when the assessee denies any such payment. Further, the AO also did not provide opportunity of cross examination to the assessee, even after the said request was made by the assessee. Under these set of facts, we are of the view that the impugned addition of Rs.18,64,200/- cannot be sustained. In this regard, we may take support from the decision rendered by SMC bench of Mumbai Tribunal in the case of Naren Premchang Nagda vs. ITO (IT Appeal No.3265/Mum/2015 dated 08-07-2016), wherein an identical issue was decided as under: - ………………………………………………………………………………………… ………………………………………………………………………………………… …………………… 17. We also notice that the AO did not provide opportunity to cross examine the persons from Rubberwala group, on whose statements the AO had placed reliance upon. The Hon’ble Supreme Court has held in the case of Andaman Timber Industries vs. Commissioner of Central Excise (2015)(62 taxmann.com 3)(SC) that not providing opportunity to cross examine is a serious flaw and it will make the order nullity, as it amounts to violation of principle of natural justice. We are of the view that the above said decision of Hon’ble Supreme Court shall apply to the facts of the present case. 18.…………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… …………….

The Hon'ble co-ordinate Bench of the Tribunal in Pravin Khetaramm Purohit (or Parveen Kheta Ram) vs. DCIT (ITA & 7096/M/2025 7 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain 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 & 7096/M/2025 8 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain 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.

We further observe that the Tribunal in case of Heena Dashrath Jhanglani ITA no.1665/Mum./2018 (Assessment Year: 2007–08) has also dealt with identical addition made on the basis of Pen drive recovered during the search and without any corroborative material qua alleged cash / on money and ultimately deleted the addition by observing and holding as under: “10. I have considered rival submissions and perused material on record. Undisputedly, the genesis of the addition made of ` 42 lakh on account of alleged payment of on–money in cash towards purchase of a flat lies in a search and seizure operation conducted in case of Hiranandani Group and related persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material / evidence available on record to indicate payment of on– money in cash by the assessee to M/s. Crescendo Associates, however, from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen drive found and seized from the residence of one of the employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of onmoney paid by buyers / prospective buyers to Hiranandani Group concerns are & 7096/M/2025 9 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain mentioned and further, in the statement recorded under section 132(4) of the Act on 14th March 2014, Shri Niranjan Hiranandani, has admitted receipt of on– money in cash towards sale of flats / shops. Thus, it is clear that except these two pieces of evidences the Assessing Officer had no other evidence on record which demonstrates that the assessee had paid on–money in cash for purchase of the flat. It is further relevant to observe, from the assessment stage itself the assessee has requested the Assessing Officer to provide him with all adverse materials and full text of the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani. The assessee had also requested the Assessing Officer for allowing her to cross–examine Shri Niranjan Hiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not acceded 16 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit to by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority, the learned Commissioner (Appeals) in letter dated 18th July 2016, had clearly directed the Assessing Officer to provide the assessee all adverse materials / documentary evidences available with him indicating payment of on–money. However, on a perusal of the remand report dated 23th June 2017, a copy of which is at Page–53 of the paper book, it is very much clear that the Assessing Officer has completely avoided the issue and there is no mention whether the assessee was provided with all the adverse material and if, not so, whether he has provided them to the assessee as per the directions of the learned Commissioner (Appeals). Thus, from the aforesaid facts, it is patent and obvious that the addition of ` 42 lakh made on account of on– money payment in cash is without complying with the primary and fundamental requirement of rules of natural justice. It is well settled proposition of law that if the Assessing Officer intends to utilize any adverse material for deciding an issue against the assessee he is required to not only confront such adverse materials to the assessee but also offer him a reasonable opportunity to rebut / contradict the contents of the adverse material. Further, the assessment order reveals that the Assessing Officer has heavily relied upon the statement recorded from Shri Niranjan Hiranandani, for making the disputed addition. However, it is the allegation of the assessee, which prima–facie appears to & 7096/M/2025 10 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain be correct, that the Assessing Officer has not provided the full text of such statement recorded and has also not allowed the assessee an opportunity to cross– examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic principle of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be sustained.

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 17 4742, 4743 & 4744/Mum/2025 Pravin Khetaramm Purohit 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 / material on record to & 7096/M/2025 11 Pinkydevi Mahendrakumar Jain AND & 7098/M/2025 Pushpa Vikas Jain 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.”

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:-

In view of our decision in all the appeals under consideration, stand allowed.