Case Law Details
Amber Trade & Consulting Vs ITO (ITAT Delhi)
The ITAT Delhi disposed of three connected appeals for Assessment Years 2020-21, 2021-22 and 2022-23 by a common order. The principal dispute concerned the validity of an addition under Section 69 of the Income-tax Act, 1961, based on information obtained during a search conducted on the Omaxe Group. The Tribunal treated Assessment Year 2020-21 as the lead case.
The assessee, a partnership firm engaged in consultancy services, had filed its return declaring income of ₹77,74,990. Based on information received from the Investigation Wing following a search under Section 132 on the Omaxe Group, the Assessing Officer reopened the assessment under Section 147 on 21.03.2024 and completed the reassessment by making an addition of ₹35,04,000 as unexplained investment under Section 69.
According to the material relied upon by the Revenue, the search on the Omaxe Group resulted in seizure of “MAIN REPORT” Excel files allegedly recording unaccounted cash transactions. The investigation concluded that the files related to Omaxe Group companies, contained only unaccounted cash transactions, that transaction dates before 01.08.2018 had been backdated by ten years, and that the figures recorded were suppressed by a factor of 100. The Assessing Officer also relied on statements recorded during the search from Omaxe Group personnel and on comparisons between the Excel data and ERP records to conclude that the Excel files reflected actual cash transactions. Based on one entry in the Excel sheet, the Assessing Officer alleged that the assessee had paid ₹35,04,000 in cash towards purchase of a property from an Omaxe Group entity. The assessee denied making any cash payment, but the addition was nevertheless made and subsequently sustained by the Commissioner (Appeals).
Before the Tribunal, the assessee argued that the assessment was founded entirely on third-party information and statements without supplying the underlying material or granting an opportunity to cross-examine the persons whose statements were relied upon. It submitted that no copies of the alleged documents, cash receipts or statements had been furnished and that denial of cross-examination violated the principles of natural justice. The assessee contended that effective cross-examination required disclosure of the relevant material and reasonable opportunity to rebut the evidence relied upon by the Department. Reliance was placed upon judicial precedents, including the decision of the Supreme Court in Andaman Timber Industries, to contend that denial of cross-examination vitiated the assessment.
The Revenue supported the orders of the lower authorities.
The Tribunal observed that the impugned addition had been sustained solely on the basis of third-party information allegedly found during the search at the premises of the Omaxe Group, without any independent corroborative evidence connecting the assessee with any actual cash payment. It noted that the Excel sheet neither bore the assessee’s signature nor was authored by the assessee, did not constitute the assessee’s books of account and was unsupported by any signed receipt or acknowledgement. The Tribunal held that such material, by itself, could not constitute the sole basis for making an addition under Section 69. It further observed that no opportunity had been provided to the assessee to cross-examine the Omaxe Group employees whose statements had been relied upon.
The Tribunal found that the issue was squarely covered by the decision of the ITAT Chandigarh in M/s. Amarjot Singh Sohi – HUF v. ITO, which involved similar allegations arising out of the Omaxe Group search. In that case, the Tribunal had held that where the assessee consistently denied making any cash payment, produced documentary evidence showing payments through banking channels, furnished supporting bank statements, Form 26AS, confirmations and an affidavit, and where no opportunity for cross-examination had been granted, the onus shifted to the Assessing Officer to establish the alleged cash transaction with cogent evidence. It was held that additions could not be sustained merely on presumptions arising from third-party electronic data and statements.
Respectfully following the Chandigarh Bench decision and considering the overall facts, the Tribunal set aside the orders of the Assessing Officer and the Commissioner (Appeals) and deleted the addition of ₹35,04,000 made under Section 69 for Assessment Year 2020-21. Since the facts for Assessment Years 2021-22 and 2022-23 were identical, the Tribunal applied the same reasoning to those years and allowed all three appeals.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals are filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals)-23, New Delhi [hereinafter referred to as `1d. CIT(A)] dated 15.10.2025 for the Assessment Year 2020-21, 2021-22 and 2022-23.
2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.8345/Del/2025 for AY 2020-21 as lead case to adjudicate the issues under consideration. In this appeal, the assessee has raised the following grounds of appeal :-
“1. That the assessee denies its liability to be assessed at total income of Rs.1,12,78,990/- and accordingly denies the liability to pay tax, interest and penalty thereon.
2. That having regard to the fact and circumstances of the case, Ld. AO has erred in law and on facts in assuming jurisdiction to issue notice u/s 148 of the Income Tax Act, 1961 (the Act) and to frame assessment u/s 147 of the Act and that too without observing the statutory conditions as mentioned in the Sections 147 to 151 of the Act.
3. That Ld. AO has erred in law and on facts in assuming jurisdiction to issue notice u/s 148 and to frame assessment u/s 147 of the Act when the necessary sanctions and approvals as required in the Sections 147 to 151 of the Act were not obtained.
4. That ld. AO has erred in law and on facts in assuming jurisdiction to issue notice u/s 148 without giving any notice u/s 148A or passing order under that section.
5. That Ld. A.O. has erred in law and on facts in passing order u/s 147 when the approval granted by worthy Additional Commissioner of Income Tax, Range-1, Faridabad u/s 148B r.w.s. 152 (3) of the Act in mechanical manner is bad in law and against the law and the assessment order passed by Ld. Assessing Officer u/s 147 is, thus, void.
6. That Ld. A.O. has erred in law and on facts in passing order u/s 147 when the Show Cause Notice was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessment Unit.
7. That in any view of the case and in any matter, notice issued u/s 148 and order passed u/s 147 are without jurisdiction, void ab initio and barred by limitation.
8. That having regard to the fact and circumstances of the case, Ld. A.O. has erred in law and facts in making the addition of Rs.35,04,000/- on account of alleged cash payment for alleged purchase of property from Omaxe group as alleged unexplained investment.
9. That having regard to the facts and circumstances of the case, the orders of authorities below flout the principles of natural justice and more so passed without appreciation of the facts on records, recording incorrect facts, without confronting material relied and without affording the opportunity for cross examination of department’s witnesses and the assessment thus framed is void and bad in law.
3. At the time of hearing, ld. AR of the assessee stressed the ground no.9 which is basically without appreciation of the facts on records, recording incorrect facts, without confronting material relied and without affording the opportunity for cross examination of department’s witnesses and the assessment thus framed is void and bad in law. In this regard, ld. AR of the assessee brought relevant facts to our notice and submitted as under.
4. AR of the assessee submitted that assessee, a partnership firm was engaged in providing consultancy services and assessee filed its return of income for AY 2020-21 on 09.12.2020, declaring income at Rs.77,74,990/-. He submitted that based on the information received from investigation wing, assessee’s case was reopened u/s 147 of the Act on 21.03.2024 and the assessment was completed by making an addition of Rs.35,04,000/- as unexplained investment u/s 69 of the Income-tax Act, 1961 (for short ‘the Act’.
5. He submitted that aggrieved by the action of the AO, assessee preferred an appeal before the ld. CIT (A). Before ld. CIT (A), it was submitted that a search and seizure action u/s 132 of the Act was conducted on 14.03.2022 on M/s Omaxe Group and its associate concerns and the Assessing Officer observed that the incriminating documents related to assessee was also found and seized during the course of search operation, which was shared with the AO. Based on this information, assessee’s case was reopened u/s 147 of the Act on 21.03.2024.
6. He submitted that during the course of search proceedings on ‘Omaxe Group’, comprehensive data on unaccounted transactions undertaken by ‘Omaxe Group’ entities were found to be recorded in “MAIN REPORT” excel files. These files contained bank account statements of different entities of ‘Omaxe Group’, oral evidences of its employees, statements recorded under oath of its customers etc. The post search investigations led to the following conclusions:
(i) The data contained in the “MAIN REPORT” Files was related to various companies of OMAXE GROUP.
(ii) The “MAIN REPORT” Files contained only the unaccounted cash transactions pertaining to various companies of OMAXE GROUP,
(iii) The dates of unaccounted cash transactions mentioned in the “MAINREPORT” excel files for the period prior to 01 Aug 2018 were back dated by 10 years.
(iv) The amounts mentioned in the excel sheets were suppressed by a factor of 100, i.e. to arrive at the actual amount, the value given in the sheet is to be multiplied by 100.
7. He further submitted that the authenticity of the data in the hard disk seized by the department was explained in pages 6 & 7 of the assessment order.
8. Further he submitted that from the data obtained, as per the seized material, it was observed that the cash component received from the customers towards sale of units in various projects of ‘Omaxe Group’ were recorded in excel files, under the caption “In flow Group”, using terms such as Customer, Customer receipt and Customer inflow for various periods. It was also observed that these excel files contained the data of date of receipt, month, ERP ID, location of the project, name of the project, number of units booked, name of the customer, Amount (Rs.in hundreds), name of project head etc. AO reproduced sample details as under:
9. He further submitted that “MAIN REPORT”” excel files contained three work sheets namely RECEIPTS’, PAYMENTS and ‘CLOSING BALANCE’. The contents of these worksheets were discussed in pages 12 to 15 of the assessment order. The post search findings led to the conclusion that the ERP IDs of the “MAIN REPORT” excel file matched with the details contained in ERP database of Omaxe Group’. The ERP data maintained separately by the group, contained the details of all the transactions which were accounted for in the group’s books of accounts. A detailed analysis of ERP database revealed that, it contained the details of the customers along with their customer code (ERP ID), property details PAN etc. On comparing the customer details recorded in the ERP data, seized from Omaxe Group’ Head Office, with ERP IDs available in the “MAIN REPORT excel files, it was found that the names of the Customers in the “MAIN REPORT” and ERP database were found to be exactly matching. Therefore, it could be concluded that the data in the “MAIN REPORT” excel files, pertains to the actual and real transactions carried out by ‘Omaxe Group’.
10. He further submitted that AO reproduced the relevant pages of the investigation report, establishing that cash receipts from different types of customers were recorded in the “MAIN REPORT excel file. However, it was observed, that these cash receipts were not recorded in the regular books of accounts in Omaxe Group of concerns. The investigation report also made a finding that the recordings in the excel files of “MAIN REPORT”, contained figures with a suppression of a factor of 100. The cash slips issued to the customers which contained actuals figures was compared with the recordings in the “MAN REPORT”, and was found that the figures were suppressed by a factor of 100. This was elaborated in pages 32 & 33 of the assessment order. He submitted that such kind of suppression of amount was admitted by Shri. Manish Kumar, president, Omaxe Group in his statement recorded on oath u/s 132(4) of the Act, dated 15.03.2022. Statements were recorded from employees of Omaxe Group, who also admitted that the entries recorded in excel files of “MAIN REPORT”, were not reflected in the actual books of accounts, Thus, it was concluded by the AO that the data in the excel sheet “MAIN REPORT” contained unaccounted transactions, received in cash by Omaxe Group.
11. He submitted that AO further observed that one of the entries in the excel sheet showed that the assessee made a cash payment of Rs.35,04,000/-towards investment in Unit No. INVF/SCO/331 at a project of Omaxe World Street Pvt Limited (formerly known as Robust Build Well Pvt Limited) and details of the excel sheet is reproduced in para 8 of the assessment order in page No.58.
12. He submitted that during the course of assessment proceedings, assessee was required to explain the above-mentioned entry, recovered from the material seized u/s 132 of the Act in Omaxe Group, and assessee denied making any cash payment to Omaxe Group and further assessee also challenged the validity of assessment proceedings but AO rejected the assessee’s objection and made the addition of Rs.35,04,000/-.
13. He further submitted that during the course of appeal proceedings before ld. CIT (A), assessee submitted that the AO was not correct in making the addition of Rs.35,04,000/- u/s 69 of the Act and objected to the issuance of notice by the jurisdictional AO and not by the FAO. He submitted that the AO relied entirely on the third party data without any application of mind and assessee was not given any opportunity for cross examination and assessee was also not given access to the documents. However, he submitted that ld. CIT (A) sustained the addition made by the AO.
14. AR further submitted that against the above order, assessee is in appeal before us. He heavily stressed on his submissions that no opportunity of cross examination was given to the assessee and in this regard, he submitted as under :-
“It is again submitted that the assessee has never confronted with such an information in the first place by the Jurisdictional Assessing Officer. No opportunity of cross examination of witnesses, if any, was ever provided to the assessee who had given statement(s) against the assessee. Not allowing the opportunity to cross- examine or denial of such cross-examination to the assessee may vitiate the very assessment order at a later stage due to such technical irregularity. Similarly, a statement recorded other than that of the assessee during the course of search and post-search investigation proceedings which adversely affects the assessee shall carry evidentiary value only if such a statement has been tested in cross-examination.
It is also pertinent to mention here that the Assessing Officer should also provide the impugned material (like cash receipt issued by the co. / any paper of Investment which shows 35.04 Lakhs on which signature of assessee is placed etc.) and the copies of the statement which are sought to be cross-examined by the assessee. Merely allowing the opportunity to cross-examine a witness without supplying the underlying material shall serve no legal purpose and will merely be a formality.
The notice to cross-examine should also afford reasonable time and reasonable opportunity. It has been seen in practice that mechanical opportunities are provided to the assessee to cross-examine the witness or a statement with only one or two days’ notice that too without supplying the copies of the alleged material or statement due to which the assessee’s are not able to come up to cross-examine such witnesses. In such circumstances, the absence of the assessee can’t be treated as denial of cross-examination.
Reasonable opportunity does not merely mean an opportunity has to be reasonable. There should be adequate notice. The notice must be of opportunity being given. The sufficient length to enable the defence or the case to be prepared. Not only should a person know the case which is made against him but he must also know what evidence has been considered for drawing a presumption affecting him and he must be given a fair and reasonable opportunity to rebut the presumption.
Furnishing specific and intelligible reasons for the proposed action is the concomitant of the concept of reasonable opportunity. It is necessary because the person could make an effective representation only with reference to reasons set out. Omission to comply with the requirement of audi alteram partem, as a general rule, vitiates a decision.
The details of documentary evidence, any, relied upon by your good office or/& statements, if any, recorded of any person(s) in the said case, has not been provided.
This approach by the department goes against the principles of natural justice and fairness, which are fundamental to any legal proceedings. The assessee has the right to be provided with full and complete information about any claims made against him/her, and to be given the opportunity to challenge or refute such claims. The information that has been gathered from the third party may be incorrect or incomplete, and without the opportunity to cross-examine the witness, the assessee is unable to challenge or clarify any discrepancies or inaccuracies.
Areliance must be placed upon the order of the Honourable Supreme Court of India in the case of M/s Andaman Timber Industries Vs Commissioner of Central Excise, Kolkata-IT, where it was stated: “In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify itsits action, as the statement of the aforesaid two witnesses was the only basis for issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.”
B. Failure to give the assessee the right to cross-examine witnesses whose statements are relied upon results in a breach of principles of natural justice. It is further submitted that each and every decision of the Hon’ble Supreme court of the country becomes law of the land and applicable on all courts including quasi body judicial. In this case no opportunity of cross-examination was provided at any stage so any order of Hon’ble Supreme Court is the contempt of court.
15. Further ld. AR submitted that various courts/ITAT have decided in several cases where it has been held that additions cannot be made based solely on statements gathered during the course of search on third parties without giving the opportunity to cross-examine the witnesses. In this regard, he brought to our attention to various decisions which are placed at pages 38 to 42 of the paper book and accordingly, pleaded that the ground may be allowed and hold that the assessment thus framed is void and bad in law.
16. On the other hand, ld. DR of the Revenue objected to the submissions of the AR of the assessee and relied on the findings of the lower authorities.
17. Considered the rival submissions and material placed on record. We observed that the impugned addition was sustained solely on the basis of third-party information allegedly found during search proceedings at the premises of Omaxe Group, without any independent corroborative evidence linking the assessee to any actual cash payment. Further we observed that the said Excel sheet does not bear the signature of the assessee; is not authored by the assessee; does not constitute books of account of the assessee; is not supported by any signed receipt or acknowledgment, and therefore cannot, in isolation, form the sole basis of addition under Section 69 of the Act. Further we observed that no cross examination of such persons of employees of Omaxe Group whose statements were recorded. Further we observed that the issue involved in the present case is squarely covered by the decision of ITAT, Chandigarh in the case of M/s. Amarjot Singh Sohi – HUF vs. ITO in ITA No.1065/CHAN/2025 for AY 2020-21 order dated 07.01.2026 and relevant findings of the said decision are as under :-
“2. It emerges that pursuant to receipt of certain information that the assessee paid cash of Rs.8 Lacs to M/s Omaxe Ltd. in lieu of purchase of shop besides making payment through banking channels, the case of the assessee was reopened and notice u/s 148 was issued on 15-03-2024. The said information stem from search action by the department on Omaxe group and statement recorded from officers of that concern u/s 132(4) of the Act. It transpired that the assessee purchased a shop from Omaxe group in its project situated at Mullanpur. In reply to show-cause notices of Ld. AO, the assessee contended that all the payments were made through banking channels and denied having made any cash payment in the said transaction. The details of payments as made by the assessee were also furnished to Ld. AO. However, considering the statement of officers of M/s Omaxe Ltd u/s 132(4) regarding data pertaining to cash payment gathered from the electronic device wherein the details of assessee making cash payment was mentioned, the assessee’s submissions were rejected by Ld. AO. As per electronic data, the assessee allegedly made payment of Rs.8 Lacs. In the electronic data, the amounts mentioned in the excel sheet was suppressed by factor of “100”. Considering the factual matrix, Ld. AO made addition of Rs.8 Lacs u/s 69 r.w.s. 115BBE of the Act and framed the assessment. The Ld. CIT(A) upheld the action of Ld. AO. Aggrieved, the assessee is in further appeal before Tribunal.
3. From the facts, it clearly emerges that the assessee has, all along, denied having made any cash payment in the transaction. The whole case of Ld. AO stem from search action on the seller group coupled with statement of officers recorded therein. Apparently, one excel sheet has been found which allegedly contain details of cash payment on sale transaction. In the excel sheet, the assessee is shown to have made payment of Rs.8 Lacs on the impugned transaction. However, the assessee has denied the same and contended that all the payments were made pursuant to written agreement and the payments were through banking channels only. The details of such payment have duly been furnished to Ld. AO. No opportunity of cross-examination has ever been provided to the assessee which is in violation of principle of natural justice. In my considered opinion, the onus was on Ld. AO to prove with cogent evidence that cash was exchanged in the transaction. The assessee has furnished all the documentary evidences as available with him to support the contention that all the payments were made through banking channels only. The confirmation of payment has duly been furnished by the assessee from M/s Omaxe Ltd. which is kept on Page No.30 of the paper book. The payments are duly supported by bank statements and the same are reflecting in Form No.26AS of the assessee. The assessee has filed affidavit to the effect that no cash has even been paid to M/s Omaxe Ltd. The assessee could not be asked to prove the negative. In my opinion, the assessee has duly discharged its onus whereas the allegations of Ld. AO remain unsubstantiated. It is trite law that no addition could be made on mere presumptions and assumptions. Considering the facts and circumstances of the case, the impugned addition is not sustainable. I order so. The Ld. AO is directed to re-compute the income of the assessee.
4. The appeal stand allowed.”
18. Respectfully following the aforesaid decision and overall facts of the case, we are inclined to set aside the orders of the lower authorities and delete the addition.
19. In the result, the appeal filed by the assessee for AY 2020-21 is allowed.
20. Since the facts in AYs 2021-22 and 2022-23 are exactly similar to Assessment Year 2020-21, our above findings in AY 2020-21are applicable mutatis mutandis in Assessment Years 2021-22 and 2022-23. Accordingly, the appeals filed by the assessee for AYs 2021-22 & 2022-23 are allowed.
21. To sum up, all the appeals filed by the assessee are allowed as indicated above.
Order pronounced in the open court on this 5th day of June, 2026.
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