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Facts
During a search operation on the Suchariya Group, a ledger was found indicating that the assessee, Jashvantiben Manojbhai Makwana, made an unaccounted cash payment of Rs. 80,000 for a shop. The Assessing Officer treated this as unexplained money under Section 69A, and the CIT(A) confirmed the addition. The assessee appealed to the ITAT.
Held
The ITAT noted procedural lapses by the AO, including not providing the assessee with a copy of the third-party statement or allowing cross-examination. Considering the smallness of the amount and the agreement of both parties for an estimated addition, the Tribunal directed the AO to make an ad-hoc disallowance of 30% of Rs. 80,000 (i.e., Rs. 24,000) as the profit element of the 'on-money'.
Key Issues
The key legal issues were the validity of an addition made under Section 69A based on a third-party ledger without independent corroboration or cross-examination, and the appropriate quantum of addition for unexplained cash payment.
Sections Cited
Section 69A, Section 115BBE, Section 147, Section 144B, Section 148, Section 143(2), Section 142(1), Section 132, Section 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC”
Before: DR. ARJUN LAL SAINI
आदेश/ORDER Per, Dr. Arjun Lal Saini, A.M
Captioned appeal filed by the assessee, pertaining to Assessment Year 2021- 22, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals) (‘CIT(A)’), dated 17.09.2025, which in turn arises out of an assessment order passed by Assessing Officer u/s. 147 of the Act, on 16.03.2025.
Grounds of the appeal raised by the assessee are as under: 1. The Ld. CIT(A) erred in not adjudicating the addition of 280,000 made under section 69A, based on a third-party ledger lacking any reference to the assessee, without independent corroboration, ignoring the possibility of fabrication, and contrary to valuation accepted by the Stamp Valuation Authority. 2.The Ld. CIT(A) erred in not adjudicating the addition made without any evidence of additional source of income to justify the alleged unexplained investment.
The Ld. CIT(A) erred in confirming the addition based merely on assumptions and suspicion, without any conclusive evidence to establish the genuineness of the document relied upon.
4. The Ld. CIT(A) erred in not appreciating that the addition was made without affording the assessee sufficient opportunity of hearing and without allowing cross- examination of the person whose statement was relied upon.
5. The Ld. CIT(A) erred in dismissing the appeal without considering that the assessment order is arbitrary, illegal, and in violation of principles of natural justice.
6. Without prejudice, the assessee reserves the right to add, amend, or withdraw any ground of appeal before or at the time of hearing.
3. Briefly stated, the relevant material facts are as follows. As per information, a search and seizure operation was conducted u/s 132 of the I.T. Act, on Suchariya Group (residence of Shri Hari Singh Sucharia). During the search and seizure operation, certain incriminating documents containing details of cash transactions of the project "Pragati Shopping Centre" were found and seized. These ledgers contained individual ledgers showing unaccounted cash receipt by the builder. Ledger in name of assessee has been found showing that the assessee has made cash payments to the tune of Rs. 80,000/- in order to acquire FF (First floor) Unit/shop No. 135 of Pragati Shopping Centre. Further, assessee failed to explain the sources of the above on-money payment, therefore, unaccounted on-money payment of Rs.80,000 was treated as unexplained money u/s 69A rws 115BBE of the Act.
Page 2 of 5 Therefore, assessment is completed u/s 147 r.w.s. 144B of the I.T. Act, 1961 at assessed income of Rs. 3,25,930/- (Rs. 2,45,930/- as per ITR u/s 148 + Rs. 80,000/- u/s 69A).
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the CIT(A), who has confirmed the action of the Assessing Officer, therefore, assessee is in appeal before this Tribunal.
Learned Counsel for the assessee, at the outset submitted that required documents and evidences were submitted by the assessee before the assessing officer to prove his claim. However, only addition made by the A.O. is to the tune of Rs. 80,000/- therefore, considering the smallness of the amount an estimated addition @ 10% should be made in the hands of the assessee.
On the other hand, Ld. D.R. for the Revenue, argued that in order to protect the interest of the revenue, an estimated addition @ 30%, may be made in the hands of the assessee, on Rs.80,000/-.
I have heard both the parties. I note that assessee is engaged in providing tuitions to students. The original return of income has not been filed, by the assessee, as her total income was below basic exemption limit. It is a fact that the assessee is not well aware of the process and intricacies involved in the assessment proceedings. However, the return in response to notice under section 148 has been filed vide acknowledgment number 178591550170424 declaring total income of Rs. 2,45,930/-. Further, response to notices under section 143(2) and 142(1) as well Page 3 of 5 as response against show cause notice under section 147 have been submitted by the assessee. I also, note that the entire assessment has been initiated and completed solely on the basis of a single document, an alleged dump ledger, which is digital and editable, and which contains incomplete particulars and does not bear signature or handwriting of either of the parties. Additionally, the assessment is solely based on a statement recorded under section 132 of the Act from a third party, the builder, during a search operation. However, the Assessing Officer failed to provide a copy of the said statement to the assessee and did not grant any opportunity for cross examination, despite such a request having been made. This amounts to a serious procedural lapse and violation of the assessee's fundamental right to a fair hearing.
Therefore, learned Counsel submitted that assessee`s case has sufficient merit, however, due to smallness of the amount, an estimated addition may be made at the rate of 10% which would be sufficient and would be agreeable to the assessee.
I find that statement recorded during search corroborates the evidence found in search, therefore I find that there is only a little merit in the case of the assessee. Therefore, considering the above facts and circumstances of the case and the fact that both parties have agreed for adhoc addition/estimated addition, and entire on money cannot be treated profit of the assessee and only profit element of the “on- money”, may be taxed, in the hands of the assessee, therefore, to meet the end of justice, I direct the A.O. to make disallowance @ 30% of Rs. 80,000/-, which comes to Rs. 24,000/-, by applying normal rate of income. It is also made clear that instant adjudication have been done, considering the special facts and Page 4 of 5 circumstances of the assessee`s case, therefore, it shall not be treated as a precedent in any preceding or succeeding assessment year.
In the result, appeal filed by the assessee is partly allowed in above terms.
Order pronounced in the open court on 12/01/2026.