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Facts
The assessee, Mandar Rawool, appealed an addition of Rs. 6,00,000/- made by the Assessing Officer (AO) and upheld by the CIT(A) for A.Y. 2022-23. The addition was based on an alleged cash payment for a flat purchase, purportedly evidenced by a scanned diary page (Annexure-A6) seized during a third-party search. The assessee contended that the assessment was invalid due to non-invocation of Section 153C, denial of cross-examination, and reliance on a truncated, illegible, and uncorroborated document.
Held
The Tribunal found that the original Annexure-A6 was never produced or shown to the assessee, and the scanned copy was truncated and difficult to read. It noted that the statement of the third-party promoter, Mr. Akshay Doshi, did not specifically implicate the assessee or his flat. The AO's actions constituted 'tampering' with evidence and violated principles of natural justice by denying cross-examination, leading the Tribunal to direct the deletion of the Rs. 6,00,000/- addition.
Key Issues
1. Whether the assessment based solely on alleged incriminating documents found during a third-party search, without invoking Section 153C, is valid. 2. Whether the denial of cross-examination and reliance on truncated, illegible, and unverified third-party evidence violates principles of natural justice, rendering the addition unsustainable.
Sections Cited
Income Tax Act, 1961: Section 250, Income Tax Act, 1961: Section 143(3), Income Tax Act, 1961: Section 153C, Income Tax Act, 1961: Section 250(68), Income Tax Act, 1961: Section 131, Income Tax Act, 1961: Section 132, Income Tax Act, 1961: Section 143(2), Income Tax Act, 1961: Section 142(1)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2022-23 Mandar Rawool, V The Income Tax 2107, L Wing, Bhoomi Acres s Officer, Kudal. Near Hiranandani Estate Internal Road, Opp Suraj Water Park, Kavesar, Thane – 400615 PAN:ATTPR3716Q Appellant/ Assessee Respondent /Revenue Assessee by Shri Harshavardhan Vivek Bapat Revenue by Shri Ambarnath Khule – JCIT(through virtual) Date of hearing 25/11/2025 Date of pronouncement 07/01/2026 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2022-23dated 10.07.2025 emanating from the Assessment Order passed under section 143(3) of the Act, dated 22.03.2024.The Assessee has raised the following grounds of appeal :
[A] “1. On the facts and in the circumstances of the case and in law, the impugned order passed by the learned CIT(A) is bad in law, void ab initio and without jurisdiction, inasmuch as the assessment framed under section 143 of the Act is solely based on information and documents allegedly found during search proceedings conducted at the premises of a third party. It is submitted that in such circumstances, the provisions of section 153C, being a special code with a non obstante clause, are specifically attracted and override the general provisions of section 143 of the Act. The failure of the learned Assessing Officer to invoke section 153C renders the entire assessment proceeding as well as the appellate order unsustainable and ultra vires to the Income-tax Act, 1961.
On the facts and in the circumstances of the case and in law, the impugned order passed by the learned CIT(A) is vitiated and liable to be quashed, as the appellant's specific request for personal hearing through video-conferencing was not granted. The denial of such opportunity is in gross violation of the principles of natural justice and also contrary to the mandate of section 250(68) of the Income-tax Act, 1961 read with the Faceless Appeal Scheme, 2020, which guarantees the right of effective hearing. The impugned order, having been passed without affording a fair and reasonable opportunity of being heard, is bad in law and unsustainable.
On facts and in law, the order passed by the Ld. CIT(A) is bad in law and against principles of natural justice, as the Appellant was not afforded proper opportunity of being heard.
The Ld. CIT(A) erred in upholding the addition of ₹6,00,000/- alleged to be cash payment for purchase of flats, solely on the basis of third-party documents found during search at builder's premises, 2
The Ld CIT(A) failed to appreciate that no cross-examination of the concerned builder from whose custody the papers were seized was allowed, which is in Violation of the principles of natural justice as laid down in binding precedents 6 The Ld. Authorities below erred in relying upon "dumb documents loose sheets found at third party premises, ignoring the settled law that such documents are”
Submission of ld.AR : 2. Ld.Authorised Representative(ld.AR) for the Assessee filed elaborate paper book containing more than 500 pages. The paper book contained copies of the case laws relied by Assessee, submission filed before Assessing Officer and ld.CIT(A). Ld.AR submitted that Assessee has not made any cash payment for the purchase of impugned flat. Assessing Officer has relied on some documents which were found during the search in the case of Bhoomi Group. Ld.AR invited our attention to the so-called incriminating material found during the search which has been scanned and reproduced by the Assessing Officer in the assessment order. Ld.AR submitted that the said paper is not legible, it does not have a date. Ld.AR also submitted that the amount mentioned in the 3 said page is only Rs.6,000/-. Ld.AR also submitted that the said [A] page does not have assessee’s name. Therefore, ld.AR submitted that it is a dumb document. Ld.AR also invited our attention to paragraph 3 of the assessment order, wherein Question No.7 and its Answer of statement of Mr.Akshay Doshi of Bhoomi Group has been reproduced by the AO. Ld.AR submitted that in the statement nowhere Mr.Akshay Doshi has alleged any cash payment by assessee. The Answer to Question No.7 is a general answer. Ld.AR further submitted that Assessee had requested for opportunity of cross-examination, but no cross-examination has been granted. Ld.AR further submitted that the so-called impugned page no.1 which has been reproduced by the Assessing Officer in the assessment order was never provided to the assessee. Till date, Assessee has not been shown the original page no.1. The Assessing Officer has relied on scanned paper only.
2.1 Ld.AR submitted that in this case, Assessing Officer has relied on document seized during search of Bhoomi Group, therefore, provisions of 153C should have been invoked. Hence, the Assessment Order is bad in law.
2.2 Ld.AR filed copies of following case laws : Arti Dhall, New Delhi vs Dcit Central Circle-31(ITAT Delhi) 4 Sita Ram Gupta, New Delhi vs Assessee (ITAT Delhi) Shri Karshni Metals Pvt Ltd, New Delhi vs ITO ward - 23(3) (ITAT Delhi) 1 Prashant Kansal, G B Nagar vs Dcit, Central Circle, Noida (ITAT Delhi) S.K. Chakraborty & Sons vs Union of India (HC - Calcutta) Fayeza Muffadal Contractor vs National Faceless Assessment Centre (HC-Bombay) Andaman Timber Industries vs Commissioner of Central Excise, Kolkata -II (SC) CIT vs Chetan Das Lachman Das (HC - Delhi) C.I.T. (Central) vs Daulat Ram Rawatmull (SC) Principal Commissioner of Income Tax vs Timblo (P) Ltd (HC-Bombay) Smt. Harmohinder Kaur vs Deputy Commissioner of Income Tax, Cental Circle-II, Jalandhar (ITAT-Amritsar) T. Devasahaya Nadar vs Commissioner of Income Tax (HC-Madras) Gtc Industries Ltd. vs Assistant Commissioner of Income Tax (ITAT - Mumbai) Commissioner of Income Tax, West vs Durga Prasad More (SC) Commissioner of Income Tax vs McDowell & Co. Ltd. (SC) Aphrodite Infra (P.) Ltd. vs ACIT (ITAT - Surat) Yardi Software India (P.) Ltd. vs ACIT (ITAT - PUNE) R.S.Das Etc vs Union of India & Ors (SC) Chairman, Board of Mining Examination vs Ramjee (SC) Sumati Dayal vs Commissioner of Income Tax, Bangalore (SC) Mc Dowell & Company Limited vs The Commercial Ta Officer (SC) Assistant Commissioner of Income Tax vs Som Nath Maini (ITAT 5 Chandigarh)
Commissioner of Income Tax vs P. Mohanakala (SC) Hersh W. Chadha vs Assessee (ITAT - Delhi) AVS Infrabuild (P.) Ltd. vs ACIT (HC-Delhi) Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the Assessing Officer and ld.CIT(A).
Findings &Analysis : 4. We have heard both the parties and perused the records. Assessee Mr.Mandar Sitaram Rawool is an Individual filed Return of Income for A.Y.2022-23 on 31.12.2022 declaring total income of Rs.15,52,314/-. The assessee’s case was selected for scrutiny. It is mentioned in the assessment order that the main issue was as per information uploaded through VRU, Assessee has paid cash of Rs.6,00,000/- to V.R. Construciton Pvt. Ltd.
4.1 It is observed that notice u/s.143(2) dated 02.06.2023 was served electronically on assessee which is at page no.1 to 3 of the paper book. Assessee filed elaborate submission on 17.06.2023 which contains Computation of Income, Copy of Loan Statement, Copy of Index-II showing purchase of property, List of Bank Accounts, Source of Investment in the flat purchased during the year 6 V.R.Construction Pvt. Ltd. It was submitted that total value of the flat was Rs.73,65,949/- out of that Assessee had availed Home Loan from Bank of Rs.55,00,000/- and Rs.18,65,949/- was sale contribution out of savings. Assessee field copies of bank statements. Then, another notice u/s.142(1) was issued on 03.08.2023. Assessee filed elaborate reply on 18.08.2023. Then, another notice u/s.142(1) dated 29.01.2024 was electronically served. Assessee filed elaborate reply on 05.02.2024. The said reply contained 14 enclosures uploaded on the portal. This included copy of the loan agreement, copy of the purchase agreement for the impugned flat.
4.2 Thus, no question was asked by Assessing Officer regarding the so-called cash paid for purchase of flat vide the above referred notices.
4.3 The show-cause notice dated 20.02.2024 was issued to the Assessee. Vide said show-cause notice Assessing Officer for the first time asked Assessee explanation regarding alleged cash payment of Rs.6,00,000/- to V.R. Constructions Private Limited for purchase of flat. Assessing Officer also incorporated scanned page 7 no.1 of a diary called Annexure-A6 seized during the search in the Bhoomi Group in the show-cause notice dated 20.02.2024. The said scanned copy is reproduced here as under :
4.4 The said scanned copy also appears in the assessment order. Assessee filed reply denying any cash payments. However, Assessing Officer made an addition of Rs.6,00,000/- to the total income of the Assessee and passed assessment order on 8 22.03.2024. Aggrieved by the assessment order, Assessee filed appeal before ld.CIT(A). Ld.CIT(A) confirmed the addition. Assessee had raised the ground before ld.CIT(A) that opportunity of cross-examination was not provided. Assessee also raised the ground that 153C should have been invoked. However, ld.CIT(A) confirmed the addition.
5 Aggrieved by the order of the ld.CIT(A), Assessee has filed appeal before this Tribunal.
5.1 It is noted that the addition has been made solely based on so- called page no.1 of Annexure-A6 which was seized during the search in the case of Bhoomi Group on 31.12.2021. V.R. Construction Private Limited is part of the Bhoomi Group and its office was also searched under section 132 of the Act. In the case of V.R. Construction Private Limited, Panchanama was drawn on 03.01.2022. The impugned page no.1 of Annexure-A6 was seized from V.R.Construction Private Limited’s Office.
We have already reproduced the scanned copy of the impugned page no.1 of Annexure-A6 which appears in the show- cause notice dated 20.02.2024 and Assessment Order. It is 9 important to mention here that the original page no.1 of Annexure- A6 was never produced before us. It appears from the assessment order that even Assessing Officer does not have the original page no.1 of Annexure-A6, as in the first paragraph of assessment order, Assessing Officer has referred information uploaded by VRU regarding cash payment of Rs.6,00,000/-. Thus, it seems that original page no.1 of Annexure-A6 was not available with the Assessing Officer. Be it as it may be, the fact is original page no.1 of Annexure-A6 was never produced before us, nor original was shown to the Assessee.
The scanned copy of page no.1 which appears in the show- cause notice and assessment order is truncated and complete scanned copy of page no.1 of Annexure-A6 has not been provided to the Assessee. From the Scanned copy of page no.1 of Annexure-A6, it is difficult to read the date. Even the number is not clearly visible. Assessing Officer has reproduced a Chart in the assessment order which has been alleged to have been explained by Mr.Akshay Doshi in his statement recorded under section 131 on 11.04.2022. We have perused the relevant part of the statement reproduced by Assessing Officer and noted that nowhere the name Mandar Sitaram Rawool appears. Mr.Akshay Doshi has not alleged specifically any 10 cash payment by Mr.Mandar Sitaram Rawool. In Answer to Question No.7, Mr.Akshay Doshi had explained transactions pertaining to M-Wing of Project Bhoomi Acres. The said part of the statement has been reproduced by Assessing Officer. Mr.AkshayDoshi has not explained regarding L-Wing of Project Bhoomi Acres. Assessee has purchased Flat No.2106 in L-Wing of Bhoomi Acres vide agreement dated 28.12.2021 which is duly registered. Mr.Akshay Doshi has not explained in his statement anything regarding L-Wing, as seen from the Answer to Question No.7 which is reproduced by Assessing Officer.
Thus, on perusal of the scanned copy of page no.1 of Annexure-A6, it is not clear how much amount was paid, whether it was cash or by cheque and date of payment. On perusal of the impugned page no.1 of Annexure-A6, there is no material to infer that transactions mentioned pertains to Bhoomi Acres.Therefore, it is a dumb document. Also, the Assessing Officer has not produced the entire copy of page no.1 of Annexure-A6, hence from the page no.1 of Annexure-A6 it cannot be understood that it pertains to Bhoomi Acres. Assessing Officer has tamperedthe evidence by producing truncated copy of page no.1 of Annexure-A6 in the show- cause notice and in the assessment order. Whenever Assessing 11
Assessing Officer has made addition of Rs.6,00,000/- for A.Y.2022-23 alleging that Assessee has paid Rs.6,00,000/- cash to V.R. Constructions Private Limited for purchase of Flat. Ironically, in paragraph 5 of the assessment order, Assessing Officer states that addition of on-money has been made in the case of V.R. Construction Private Limited for A.Y.2021-22 in the order passed under section 143(3) dated 31.12.2022. The relevant paragraph 5 of the assessment order is reproduced here as under : “5. Importantly, in the course of assessment proceedings for A.Y.2021- 22 in the case of M/s. V R Constructors Pvt. Ltd., details have been called for on the aforesaid issue and accordingly, addition in respect of receipt of 'on-money' was made in the assessment order passed u/s.143(3) of the Act dated 31-12-2022. From the aforesaid seized documents vis-a-vis the evidences gathered in the course of search and subsequent assessment proceedings, it is amply clear that ……………” 9.1 Thus, on one hand in the case of V.R. Constructions Private Limited addition of on-money has been made in A.Y.2021-22, but on the other hand, addition has been made in the case of Assessee for A.Y.2022-23.
We have already mentioned above that the so-called impugned page no.1 of the Annexure-A6 is a dumb document for the elaborate 12 [A] reasons discussed in earlier paragraphs. It is also a fact that original document was never shown to the assessee. It is also a fact that opportunity of cross-examination of Mr.Akshay Doshi has not been provided to the Assessee when statement of Mr.Akshay Doshi has been reproduced in the assessment order.
In these facts and circumstances of the case, for all the reasons discussed, we direct Assessing Officer to delete the addition of Rs.6,00,000/-. Accordingly, Ground No.4, 6 and 7 raised by the Assessee are allowed.
Since we have decided the case on merits of the addition, the remaining grounds i.e.1, 2, 3 and 5 are dismissed as unadjudicated. Ground No.8 is consequential in nature and does not need any adjudication at this juncture, accordingly Ground No.8 is dismissed.
In the result, appeal of the Assessee is partly allowed. Order pronounced in the open Court on 07th January, 2026. VINAY BHAMORE Dr.DIPAK P. RIPOTE JUDICIAL MEMBER ACCOUNTANT MEMBER पपणे / Pune; ददिधंक / Dated : 07 Jan, 2026/ SGR 13