Arvind Khetaram Purohit Vs DCIT Central Circle (ITAT Mumbai)
ITAT Mumbai Deletes On-Money Additions u/s 69/69B Based on Third-Party Excel Sheets; Denial of Cross-Examination Held Fatal
The Mumbai Bench of the ITAT allowed the assessee’s appeals for AYs 2017-18 and 2018-19 and deleted the additions towards alleged cash “on-money” payments for purchase of a commercial shop, which were made solely on the basis of third-party digital material (Excel sheet) seized during a search on the Rubberwala Group and the statement of a key employee (Shri Imran Ansari).
The Tribunal held that the entire edifice of the addition rested on uncorroborated third-party evidence—namely, an Excel sheet recovered from the premises of the developer and statements explaining its contents—without any independent incriminating material such as cash receipts, diaries, acknowledgments, or documents linking the assessee to alleged cash payments. Importantly, despite specific requests, the assessee was denied the opportunity to cross-examine the person whose statement constituted the foundation of the addition, resulting in a serious violation of principles of natural justice.
The ITAT rejected the Revenue’s reliance on the developer’s self-serving disclosure of on-money (offering only a percentage of alleged cash receipts to tax), holding that an admission by the seller cannot, by itself, fasten tax liability on the purchaser unless the Revenue independently proves that the assessee actually made such cash payments. The Tribunal emphasized that digital data does not speak for itself and derives evidentiary value only through the person interpreting it; therefore, denial of cross-examination was not a curable procedural lapse.
Relying on a consistent line of coordinate-bench decisions arising from the same search action (including Rajesh Jain, Bharat Solanki, Akhraj Pukhraaj Chopra, and others), the Tribunal held that suspicion, presumption, or third-party confessions cannot substitute proof. Accordingly, the impugned additions were held to be unsustainable in law and on facts, and the appeals were allowed in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
