ABHIMANYU GUPTA ,PATIALA vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-PATIALA , PATIALA

5. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the initiation of proceedings under section 148 of the Act as against Section 153C as the evidence being relied upon was found from the premises of the searched person and as such upholding of the issuance of notice under section 148 as against Section 153C is illegal, arbitrary and unjustified.

6. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the addition of Rs.50,00,000/- representing alleged unexplained cash paid in lieu of purchase of property from M/s Homeland Heights Group under section 69 of the Act which is arbitrary and unjustified.

7. That the Ld. Commissioner of Income Tax has erred in brushing aside the explanations given alongwith evidence that no cash was ever given while purchasing the property which is arbitrary and unjustified.

8. That the Ld. Commissioner of Income Tax has erred in upholding the addition only the basis of some digital information extracted from the computers of third parties which cannot be made the basis to burden the assessee with tax liability and as such the addition made is arbitrary and unjustified.

9. That while upholding the above addition, the learned Commissioner of Income Tax (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so made is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable.

10. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that burden is on the revenue which burden has not been discharged before making addition under section 69 of the Act. 11. That the Ld. Commissioner of Income Tax (Appeals) has further erred in not appreciating that the addition upheld is based on the statements of third parties without providing cross examination of the persons on the basis of which the alleged addition has been made despite requesting for the same which is against the Principals of Natural Justice and as such the addition upheld is arbitrary and unjustified. 12. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the application of the provisions of Section 115BBE which are not attracted in the instant case and as such the order passed is arbitrary and unjustified. 13. That the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the levying of interest under section 234 of the Act which is not leviable on the facts of the instant case. 13. That the appellant craves leave to add or amend the grounds of appeal

before the appeal is finally heard or disposed off.

14. That the order of the Ld. Commissioner of Income Tax(Appeals) is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.

3.1 The Assessing Officer noted that during the course of search, certain documents in the form of an excel sheet were allegedly found, indicating that the assessee had purchased Flat No. T-3/51 in the project “Homeland Heights” and had allegedly paid Rs.50,00,000/- in cash over and above the cheque/RTGS payments reflected in the registered documents.

3.2 According to the Assessing Officer, statements of certain employees of the builder recorded during search proceedings revealed a modus operandi of receipt of sale consideration partly through banking channels and partly in cash. Relying primarily upon the said excel sheet and third-party statements, the Assessing Officer concluded that the assessee had made unaccounted cash payment of Rs.50,00,000/-.

3.3 The assessee denied having made any such cash payment and repeatedly requested for complete back-end material and opportunity for effective cross- examination. Although partial material was supplied, no direct evidence such as receipt, confirmation, or admission by the assessee was brought on record.

3.4 The Assessing Officer, however, rejected the submissions of the assessee and made an addition of Rs.50,00,000/- as unexplained investment under section 69 of the Act, completing the assessment under section 147 read with section 144B of the Act.

6.1 A specific legal objection was also raised regarding jurisdiction. It was contended that the reassessment proceedings were initiated and completed by the Jurisdictional Assessing Officer (JAO), whereas under the Faceless Assessment Scheme, such powers vested only with the Faceless Assessing Officer (FAO). In this regard, reliance was placed on the decision of this Bench in Vikas Jain v. ACIT, ITA No. 838/Chd/2024. 6.2 LD. AR vehemently submitted that the issue involved is squarely covered in favour of the assessee by the decision of the Coordinate Bench of the ITAT in the case of Shri Sadhu Ram Gupta Vs. ITO in & 874/Chd/2025 dt. 12/08/2025, arising out of the very same search conducted in the case of Homeland Group.

6.3 It was submitted that in the case of Shri Sadhu Ram Gupta (supra), the Tribunal categorically held that additions made merely on the basis of an excel sheet recovered from the premises of the builder and statements of third parties, without any independent corroborative evidence or admission by the assessee, are unsustainable in law.

6.4 The Ld. AR pointed out that the facts in the present case are identical, as the assessee has made all payments through banking channels, the registered value tallies with bank statements, and no cash was found to be paid by the assessee. It was argued that no receipt, no confirmation from the builder, and no incriminating material belonging to the assessee were found. It was therefore contended that the order of the Ld. CIT(A) deserves to be quashed and the addition deleted in toto.

9.2 Respectfully following the above binding precedent, we hold that the reassessment framed under section 147 in the present case is without jurisdiction and liable to be quashed.

The Tribunal further held that denial of cross-examination of such witnesses renders the addition unsustainable. 10.2 Similarly, in Raman Seth vs. DCIT (ITA No. 966/CHD/2025), the coordinate bench held: “When reassessment proceedings are founded entirely on third-party material and the assumption of jurisdiction itself is vitiated, the consequent assessment order cannot survive in law.”

10.3 In the present case also, there is no independent evidence to establish actual flow of cash from the assessee. There is no receipt, no confirmation from the builder, and no admission by the assessee. The entire consideration as per registered documents has been paid through banking channels. The addition rests solely on third-party digital entries and statements recorded behind the back of the assessee, without granting cross-examination.

10.4 Applying the same logic to the present case, the addition of Rs. 50,00,000/- is based on a list of persons found on a "loose paper" or digital records of the builder. There is no independent evidence that this cash actually flowed from the assessee. Following the precedent in Sadhu Ram Gupta, where the Tribunal deleted similar additions on the ground that third-party admissions and records cannot bind an assessee without conclusive proof, we find the addition in the present case to be unsustainable. Consequently, we quash the order of the Ld. CIT(A) and direct the AO to delete the addition of Rs. 50,00,000/-.