VEENA HIRALAL MEHTA ,MUMBAI vs. DCIT CENTRAL CIRCLE 4(2), MUMBAI

Thus, the AO on the basis of aforesaid search and seizure proceedings carried out under section 132 of the Act, issued a notice under section 153 (c) of the Act to the Assessee on dated 19.03.2023, who in response filed return of income on dated 17.04.2023 declaring total income of Rs.24,14,710/-.

“Regarding the alleged cash payments made to RHIL/Rubberwala Group in the above said show cause notice, I submit that I have not made any cash payment to the said builder/developer”.

2. The Promoter and Director of the RHIL Group, Shri Tabrez Shaikh, accepted to take cash from individuals for sale of shops in Platinum Mall and also offered income @ 8% of the said cash, as non-accounted receipts in his statement recorded under section 131 of the Act on dated 19.08.2021.

11. The Ld. Commissioner also considered another ground of the assessee, such as not providing an opportunity for cross- examination of certain individuals, whose statements formed part of the assessment order, which violates the principles of natural justice, rendering the assessment invalid as alleged by the Assessee.

& 5493/M/2025 5 Veena Hiralal Mehta “That, according to the judgment in Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II (2015) 62 taxmann.com 3 (SC), wherein it has been held that denial of cross-examination could vitiate the proceedings only, if the evidence sought to be cross-examined was the sole basis of the order and no opportunity was provided at any stage. However, if adequate opportunity is provided and documents are shared, then such proceedings are not rendered invalid, as in the instant case the necessary material was provided through show-cause notice dated 17.01.2024 and the assessee was granted sufficient opportunity to submit a response, therefore, the argument that material was not supplied or cross-examination was denied, is devoid of merit and does not hold good ground.”

“That the first payment for purchase of the said two shops was made on 07.01.2019 though Cheque. This does not mean that cash payments were made on the date of registration of the property or on the date of the first cheque payment but other incriminating documentary evidence recovered during the course of such proceedings, clearly shows that all the components were paid by many purchasers much earlier and even after the date of registration of the property. Further, as per the accounting principle, the cash should be taxable in the year, when the unrecorded/unaccounted transaction takes place. Thus, the Assessee’s argument regarding the registration date is irrelevant to the applicability of section 69 of the Act for the cash payment made in the relevant financial year.”

by the Assessee on merits of the case, vis-a-vis that the & 5493/M/2025

6. Veena Hiralal Mehta addition made by the Assessing Officer is based solely on third- party statements and excel sheets saved on pen drive recovered from the premises of the third party and without any direct documentary evidence or proof of cash transaction relating to the Assessee. Further, no statement of the Assessee was recorded and the entire exercise was conducted behind her back, thereby violating the principles of natural justice.

& 5493/M/2025 7 Veena Hiralal Mehta 19. 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.

21. We have given thoughtful consideration to the peculiar facts and circumstances of the case and rival claims of the parties. Admittedly, during the search and seizure operation carried out in the premises of Rubberwala Group and Mr. Ansari or otherwise from the Assessee, no cash voucher, receipt, ledger or document signed by the Assessee and incriminating material directly connected with the Assessee, was ever found. Whereas, the Assessee specifically claimed before the Assessing Officer that she has not made any cash payment for the purchase of the shops purchased by her.

& 5493/M/2025 8 Veena Hiralal Mehta 22. 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 .

& 5493/M/2025 9 Veena Hiralal Mehta 25. 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: -

“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.……………………………………………………………………………………………… …………………………………………………………………………………………………… ………………………………………………………………………………….

& 5493/M/2025 10 Veena Hiralal Mehta 19. In view of the foregoing discussions, we are of the view that the addition of Rs.18,64,200/- made by the AO cannot be sustained. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete this addition.”

“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.

“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 & 5493/M/2025 12 Veena Hiralal Mehta Group, wherein, the details of onmoney paid by buyers / prospective buyers to Hiranandani Group concerns are 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 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 & 5493/M/2025 13 Veena Hiralal Mehta 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.

“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 deleting the addition made. Consequently, all the grounds of appeal which are interlinked to each other are hereby dismissed.

8. In the result, the appeal of the Revenue is dismissed.

29. We reiterate that the identical addition has elaborately been dealt with by the Hon’ble Coordinate Benches of the Tribunal in the cases referred to above, which is otherwise unsustainable on the aforesaid analyzation made by us independently specific to the effect that 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 thus 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. The AO though provided the relevant material collected during the search proceedings but in the Assessment order nowhere mentioned such material/documents, except as referred to above such as pen derive, excel sheet and statement of Mr. Ansari etc.. The AO also failed to substantiate the evidence collected and give any opportunity of cross examinations of the witnesses, whose statements were relied on and/or made a foundation for making the addition without considering peculiar fact that the Assessee otherwise has purchased the Shop/property under consideration on a consideration/value, which is otherwise more than the stamp duty value, as 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 cumulative effects, the addition under consideration is deleted by allowing the appeal i.e. filed by the assessee.

& 5493/M/2025 16 Veena Hiralal Mehta 30. In view of our judgment in is also allowed.

Order pronounced in the open court on 06.02.2026.