Priyanka Sandeep Runwal Vs DCIT (ITAT Mumbai)
Firestar / Nirav Modi ‘On-Money’ Theory Fails Again: ITAT Mumbai Deletes Cash-Jewellery Additions for Want of Cross-Examination & Corroboration
ITAT Mumbai (C Bench) in Priyanka Sandeep Runwal vs DCIT, Central Circle-4(1) (ITA Nos. 6524, 6522 & 6523/Mum/2024; AYs 2014-15, 2015-16 & 2016-17; order dated 23.12.2025) has allowed all three appeals, deleting additions made as unexplained expenditure on alleged cash (“on-money”) purchase of jewellery from the Nirav Modi / Firestar Group.
The reassessments u/s 147 were triggered solely on the basis of search material found in a third-party search u/s 132 in the Nirav Modi / Firestar group, comprising digital sheets allegedly showing cash sales and statements of Firestar employees. Relying on this material, the AO treated alleged cash purchases of jewellery (₹56 lakh in AY 2014-15 and corresponding amounts in later years) as unexplained expenditure. CIT(A) confirmed the additions, holding that cross-examination was not mandatory.
Reversing the lower authorities, ITAT held that:
- Entire addition rested on third-party digital data and statements, none of which were furnished in full to the assessee
- Requests for cross-examination were expressly made but denied, striking at the root of natural justice
- Statements relied upon described only a general modus operandi and did not specifically establish cash payment by the assessee
- A material inconsistency existed — the sales executive relied upon had joined the group after the alleged transactions, eroding credibility of the digital records
- Section 292C presumption cannot be mechanically extended to a third party from whose possession documents were not found
- Suspicion and probabilities cannot replace proof, especially when no corroborative evidence of cash flow was brought on record
Applying the Supreme Court ruling in Andaman Timber Industries and following coordinate-bench decisions in identical Nirav Modi / Firestar jewellery cases, the Tribunal held that additions based solely on untested third-party material, without confrontation and cross-examination, are unsustainable in law.
