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Facts
During a search operation at a third party's premises, a document was seized indicating that the assessee, Sudha Aswal, made a cash payment of Rs. 16,89,000/- over and above the registered sale consideration for a land purchase. The Assessing Officer added this amount under Section 69B, which the CIT(A) upheld.
Held
The tribunal held that the seized document was a 'dumb document' as it did not explicitly mention 'cash' payment and was not corroborated by any statement or evidence. Furthermore, the assessee was denied the opportunity to cross-examine the third party from whom the document was seized, violating principles of natural justice. Therefore, the addition was deleted.
Key Issues
The key legal issues were whether an addition under Section 69B could be sustained solely based on a 'dumb document' seized from a third party, and if denying the assessee the right to cross-examine the third party violated principles of natural justice.
Sections Cited
Section 69B, Section 132, Section 147, Section 148, Section 250
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Income Tax Appellate Tribunal, DEHRADUN “SMC” BENCH: DEHRADUN
Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL
ORDER
PER MANISH AGARWAL, AM :
The present appeal is filed by assessee against the order dated 17.11.2025 by Ld. Commissioner of Income Tax (A)-3, Noida [“Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 02.03.2024 passed u/s 147 of the Act pertaining to Assessment Year 2019-20.
Brief facts of the case are that, a search operation conducted u/s 132 of the Income Tax Act, 1961 ('Act' for short) was carried out in the case of one, Shri Krishna Sharma & Smt. Sheetal Sharma on 02.02.2022. As per AO, during the search, several incrimination documents, loose sheets, digital devices were found and seized at residential and business premises of Shri Krishna Sharma & Smt.
Sheetal Sharma. The case of the assessee was centralized with DCIT(Central Circle), Dehradun vide order dated 15.03.2023 of the Ld. Principal Commissioner of Income Tax, Dehradun. The assessment proceedings were initiated by issuing notice u/s 148 of the Act on 29.03.2023. In response, the assessee complied with the notice issued u/s 148 of the Act by filing Return of Income electronically for the year under consideration on 26.04.2023 declaring a total income of Rs. 6,40,740/-. The Ld. A.O. based on the incriminating material found during the search at the residence of Shri Krishna Sharma & Smt. Sheetal Sharma, observed that the assessee i.е., Smt. Sudha Aswal had purchased land part of Khasra no 492 KA, measuring 143.120 sq. mtrs., situated at Mauzan Tarla Nagal, Parwadoon, Dehradun from Shri Keshav Soin, for the total sale consideration of Rs. 19,90,000/- and further made a cash payment of Rs. 16,89,000/- over and above the amount of Sale Deed. Since, the date of sale deed, detail of land /Khasra no., area and the sale consideration of the said plot as available on the State Government website, exactly matches with the entries in the aforesaid seized documents, therefore, the AO made the addition of Rs. 16,89,000/- under Section 69B of the Act, 1961 vide Assessment Order dated 02.03.2024.
Aggrieved by the assessment order 02.03.2024, the assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 17.11.2025, dismissed the Appeal of the Assessee. As against the order of the Ld. CIT(A) dated 17.11.2024, the Assessee preferred the present appeal before the Tribunal.
The Ld. Counsel for the Assessee addressing on Ground of appeal Nos. 3 & 5 submitted that the authorities below committed error in making/sustaining the addition amounting to Rs. 16,89,000/- u/s 69B of the Act relying on the loose sheet of paper which is nothing but ‘dumb document’. Further submitted that there is no mentioning of ‘cash’ payment and the alleged incriminating material being a ‘dumb document’ which was not corroborated with any of the statement or evidence. Further submitted that though the loose paper was not found from the possession of the Assessee, the Revenue has not provided opportunity for cross-examination. Therefore, submitted that the addition made by the A.O. which has been upheld by the Ld. CIT(A) is liable to be deleted.
Per contra, the Ld. Department's Representative submitted that the Assessee admitted the fact of purchase of property and conveniently denied the ‘cash payment’ for purchase of the said property. Even in the seized document, it is clearly mentioned regarding payment of Rs. 16.89 lakhs apart from payment made through banking channel of Rs. 19.90 lakhs. Further submitted that the seized document clearly establishes the fact of payment of Rs. 16,89,000/- over and above the amount of sale consideration mentioned in the sale deed. The Ld. Departmental Representative relying on the orders of the Lower Authorities, sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. The sole basis for making addition was the document seized in the premises of Sh. Krishna Sharma and Smt. Page | 3 Sheela Sharma during the search operation conducted u/s 132 of the Act on 02.02.2022, wherein in-front of Assessee’s name two figures have been mentioned. For the sake of ready reference, the seized documents i.e. Page No. 6 & 7 of Annexure A-2 are reproduced as under:-
From the plain reading of the above seized document, it was found that there is no mentioning of the word ‘cash’. Admittedly the documents, have been seized from the third party, however, the Assessee has not been provided with opportunity of cross examination. The Assessee has specifically raised a Ground before the Ld. CIT(A) regarding violation of principals of natural justice on the ground that the Assessee has not been given opportunity of cross examination of the said Krishna Sharma. However, the Ld. CIT(A) held that the opportunity of cross examination is not a compulsory requirement before deciding the matter.
The Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise(2015) 62 Taxmann.com (S.C) held as under:-
“not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the Page | 5 truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above.”
As observed earlier, the seized document has no mention of the payment of cash and there is no corroborative statement recorded from the seized person i.e. Shri Krishna Sharma. The assessment order came to be passed without providing opportunity of cross examination of the said Shri Krishna Sharma, which is contrary to the ratio laid down by the Hon'ble Supreme Court in the case of Andaman Timber Industries (supra). Thus, the Ld. CIT(A) has committed error in upholding the impugned addition. In view of the above, we find no reason to upheld the addition sustained by the Ld. CIT(A), finding merits in Ground of appeal Nos. 3 & 5 of the Assessee, we allow the same.
In the result, Appeal of the Assessee is partly allowed.
Order pronounced in the open Court on 12.03.2026.