Nitish Baburao Bhatkar Vs ITO (ITAT Mumbai)
Mumbai ITAT Deletes ₹30 Lakh Alleged On-Money Addition; Third-Party Search Material Without Corroboration Cannot Sustain Section 69C Addition
The Mumbai ITAT deleted an addition of Rs. 30 lakh under section 69C, holding that an alleged on-money payment for purchase of an industrial unit could not be sustained solely on the basis of third-party search material and a general statement recorded during the search on the GNP Group. The Tribunal noted that the assessee had produced the registered sale agreement, builder’s receipts, bank statements, and an affidavit demonstrating that the entire purchase consideration of Rs. 27 lakh was paid through banking channels. It further observed that the seized Excel sheet relied upon by the Assessing Officer referred to another person (“Anup Tejwani”), and no independent enquiry was conducted to establish any nexus between the seized material and the assessee. The Assessing Officer neither examined the builder, provided an opportunity for cross-examination, nor brought any corroborative evidence such as cash trail, receipts, or admissions specifically implicating the assessee. Following its earlier decisions in similar “on-money” cases arising from builder searches, the Tribunal held that uncorroborated third-party statements and seized documents cannot, by themselves, justify an addition under section 69C. Accordingly, the addition was deleted. The Tribunal, however, dismissed the legal grounds challenging the reopening and natural justice as not pressed by the assessee during the hearing.
Cases Discussed
- Prakash Bhaguji Katkade vs ITO, ITO No. 7402/M/2025
- Bharat Harishchandra Purohit vs. DCIT, ITA No. 5831 & 5832/M/2025
- Bharat Laxman Bhiwapurkar vs ITO, ITA No. 3413/M/2023 dated 04.03.2024
- Mamta Sharad Gupta Vs. ITO 1(2), ITA No. 1553/Mum/2021 dated 16.06.2022
- Monika Anand Gupta Vs. ITO, Ward 1(2), ITA No.5561/Mum/2018
- Anand Gupta Vs. ITO, Ward 1(2), ITA No.5561/Mum/2018
- CIT vs P.V Kalyanasundasram (SC), 164 Taxman 78 (SC)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assessee is directed against the order of ld. CIT(A) / NFAC, Delhi dated 16.10.2025 for Assessment Year (AY) 2019-20. The assessee has raised following revised grounds of appeal:
Ground 1-Invalid reopening/borrowed satisfaction
That the learned Assessing Officer erred in law and on facts in assuming jurisdiction under sections 147/148 solely on the basis of third-party search information relating to the GNP group, without conducting any independent verification or enquiry and without establishing a live nexus between the alleged material and the appellant
The impugned reopening, founded merely on Insight Portal inputs and unverified loose papers, reflects borrowed satisfaction and absence of a legally sustainable “reason to believe,” and is therefore liable to be quashed as void ab initio.
Ground 2-Violation of natural justice
That the learned Assessing Officer erred in law and on facts in completing the reassessment without properly considering and adjudicating the detailed objections and evidences filed by the appellant during the assessment proceedings.
Despite specific denial of alleged cash payment, furnishing of documentary evidence, and request for cross-examination, the learned AO failed to deal with the submissions in a reasoned manner, thereby violating the principles of natural justice and rendering the impugned order unsustainable in law.
Ground 3-Addition based on uncorroborated material without
Independent examination
That the addition of ₹30,00,000 is unsustainable as it is based solely on uncorroborated third-party loose papers, without any independent evidence establishing actual payment by the appellant.
The learned Assessing Officer has neither examined the concerned builder nor brought any supporting cash trail or primary material on record to substantiate the alleged on-money transaction. In absence of such corroboration, the impugned addition is liable to be deleted.
4- Documentary evidences ignored/improper invocation of section 69C
The learned Assessing Officer erred in law and on facts in disregarding the contemporaneous documentary evidence placed on record, including the registered agreement dated 28-08-2020, builder’s receipts and ledger, sworn affidavit, and the complete banking trail evidencing payments through accounted channels.
The learned AO, without properly examining or rebutting the said primary evidences, proceeded to invoke section 69C in a mechanical manner without establishing the factual foundation of any unexplained expenditure by the appellant. The impugned addition is therefore unsustainable in law.
Ground 5-Identity nexus not established
That the impugned addition is bad in law and on facts as the primary seized material relied upon records the name of another person, namely Anup Tejwani, and the alleged linkage with the appellant is based merely on a subsequent reconciliation without any independent verification.
The Revenue has failed to establish, through cogent evidence, a clear and direct nexus between the seized entry and the appellant or to demonstrate that any on-money payment was in fact made by him. In absence of such linkage, the addition is unsustainable in law.
Ground 6-Non-speaking order of CIT(A)
That the learned Commissioner (Appeals) erred in law in disposing of the appeal without passing a proper speaking order and without adjudicating the documentary evidence and specific submissions of the appellant, thereby vitiating the appellate order.
Ground 7-Consequential relief
That the appellant denies liability to interest and penalty arising from the impugned addition.
Ground 8-Liberty
The appellant craves leave to add, amend, alter or withdraw any of the above grounds.
2. Brief facts of the case as gathered from the orders of lower authorities are that the Assessing Officer (AO) received information that a search and seizure action was carried out under section 132 on GNP group on 23.09.2021. GNP group was engaged in the construction of industrial and commercial shops in Dombivali and Ambernath area of Thane District,in the name of Roshini Enterprises, Ganadhish GNP and GNP Infracon. During search action certain incriminating document was found and seized which disclosed details of on-money collected by GNP group. On the basis of information, the AO was of the view that assessee has made payment of Rs. 30.00 lacs as on-money for purchase of immovable property. To verify such source of cash deposit and time deposit, the case of assessee was reopened. The AO before issuing notice under section 148, issued under section148 (A)(b) and after getting reply from assessee passed order under section 148A(d) dated 30.03.2023. Thereafter, the AO issued notice under section 148 dated 30.03.2023. During the assessment, the AO issued show cause notice for seeking details of investment by assessee. The assessee in response to show cause notice submitted that assessee has purchased industrial unit for a sum of Rs. 27.00 lacs on 28.08.2020. The assessee furnished complete details of payment made against sale consideration of Rs. 27.00 lacs. The assessee also stated that in addition to Rs. 27.00 lacs. He has paid a development charge of Rs. 1,10,000/- and Rs. 79,721/- on account of two years’ society maintenance in advance. Receipt of such payment was furnished. Reply of assessee was not accepted by AO. The AO held that assessee paid Rs. 27.00 lacs through cheques and Rs. 30.00 lacs as on-money. The AO held that the assessee purchased unit no. 7 on 1st floor, which is matching with the details mentioned on the seized material found during the search action on GNP Group. The assessee paid Rs. 30.00 lacs as initial payment in AY 2019-20.The AO also scanned the copy of information / seized material according to which Rs. 30.00 lacs were paid by cash. The AO on the basis of such material made addition of Rs. 30.00 lacs under section 69C and taxed the same under section 115BBE while passing the assessment order on 21.03.2024.
3. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee submitted that AO made addition on the basis of third-party information. The assessee filed statement of facts with Form-36 (appeal form). In the statement of facts, the assessee stated that name of some other person “AnupTejwani” is mentioned in the table against shop no. 7. There is no relation with Anup Tejwani. The AO has not issued notice under section 133(6) to the builder for his cross examination. The AO has ignored his reply and affidavit. Entire consideration of shop was paid through cheque. The ld. CIT(A) recorded that during appellate proceedings, he issued various show cause notice to the assessee but he has not furnished any written submission. The ld CIT(A) recorded that he is deciding the case on the basis of facts available on record. The ld. CIT(A) held that during assessment, the assessee was provided sufficient opportunity but the assessee failed to submit any submission. The payment of Rs. 30.00 lacs in cash remain unexplained. The addition is made on the basis of statement of KapilTalreja, Accounts Manager of GNP Group and other incriminating document impounded during search operation. Further, aggrieved the assessee has filed present appeal before Tribunal.
4. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representatives (ld. Sr. DR) for the Revenue. The ld. AR of the assessee submits that assessee is a salaried person. The case of assessee was reopened under section 148 on the basis of search material found in GNP group. The AO alleged that assessee made cash payment / on-money of Rs. 30.00 lacs in F.Y. 2018-19 for purchase of unit no. 7 GNP Galaxy, Ambernath and treated such amount as unexplained investment. The assessee never made any cash payment for purchase of such property. The assessee executed registered agreement on 28.08.2020, much after year under consideration. The assessee made payment of Rs. 27.00 lacs through banking channel. Registered agreement with builder, builder receipt and bank statement clearly prove the payment of sale consideration. The assessee also filed his affidavit explaining the fact that entire sale consideration was made through bank mode payment. Once the assessee discharged his burden, the onus shifts on the revenue to produce credible evidence. No evidence of any primary nature was brought on record. There is no confirmation, no cash receipt, no bank withdrawal or no statement of builder supporting such allegation is brought on record. The seized document may be against “Anup Tejwani”. No seized material was provided to the assessee; no investigation was conducted by AO about payment of on-money. The ld. CIT(A) dismissed the appeal in a non-speaking order despite the fact that there is copy of registered agreement and bank details substantiating the purchase consideration was furnished. There is no independent evidence to support the stand of AO. Entire addition of Rs. 30.00 lacs are without any basis.To support his submission, the ld. AR of the assessee relied upon the decision of Mumbai Tribunal in Bharat Harishchandra Purohit vs. DCIT in ITA No. 5831 & 5832/M/2025 and various other decisions related to Rubberwala Group.
5. On the other hand, the ld. Sr. DR for the Revenue supported the order of lower authorities. The ld. Sr. DR for the Revenue submits that AO referred the statement of Mr. Talreja, Accounts Manager who has accepted the payment of on-money. As per his statement, such on-money was paid at the time of booking of unit. There was sufficient material before AO for making such addition of on money.
6. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on the case laws relied by the ld AR of the assessee. We find that the assessee has raised specific ground of appeal related with validity of reopening, violation of natural principal of justice and passing a non-speaking order by ld CIT(A). However, at the time of hearing no submissions were made on such grounds of appeal. Hence, all such corresponding grounds of appeal are dismissed as not pressed. Now adverting to the substantial ground of appeal which relates to addition on account of ‘on-money’ on purchasing the unit in the project of GNP Group.
7. We find that the AO made additions solely on the basis report prepared by the investigation team (page -9 of AO’s order). No cognizance of various documentary evidence furnished by the assessee was taken by AO or the ld CIT(A). The AO has not brought any other corroborative evidence of actual payment of on-money on record. There is specific reference about the name of assessee in the Excell sheet relied by AO. The said document contained the reference of “Anup Tejwani”, the AO has not explained about such name on the seized paper. The statement of key person of builder is general and name of assessee was not disclosed. We find that Statement per se cannot be considered as evidence, against third party unless it is tested by cross examination. We find that co-ordinate bench of this Tribunal in Prakash Bhaguji Katkade vs ITO in ITO No. 7402/M/2025, deleted similar addition which was made on the basis of search on Cosmos Group. Further, similar addition were deleted in case of Bharat Laxman Bhiwapurkar vs ITO ITA No. 3413/M/2023 dated 04.03.2024, and in Anand Gupta Vs. ITO, Ward 1(2) vide ITA No.5561/Mum/2018,
8. In Prakash Bhaguji Katkade vs ITO (supra) the coordinate bench of Tribunal on similar set of facts deleted similar addition on merit, the relevant part of the order is extracted below;
“5. Heard both the sides and perused the material on record. The assessee is an individual deriving income from salary. The assessing officer received information from the investigation wing in respect of search action taken place in the case of Cosmos Group engaged in the business of building and construction and the information relating to on money payment received. The assessing officer stated that for purchasing flat no. A/07 at Harizon Twilte, the assessee had made cash payment of Rs.31,00,000/- over and above the agreement value of the flat. After referring material placed on record the assessee submitted that AO has merely relied upon the statement recorded u/s 132(4) of the Act key persons of the Cosmos Group without bringing on record any incriminating material seized during search action to establish that assessee had paid alleged on money. After perusal of the material on record, it is also noticed that assessing officer has neither shared any incriminating evidence with the assessee nor brought on record to demonstrate that the assessee had actually paid the alleged-on money of Rs.31,00,000/- over and above the agreement price of the property. In spite of repeated request made by the assessee the assessing officer has also not provided any copy of the seized material to the assessee. Vide letter dated 17.12.2018 the assessee has also brought to the knowledge of the assessing officer that director of Cosmos Group Mr. Manish Mehta did not turn up for cross examination on the date of 14.12.2018 however the representative of the assessee was present before him. During the course of appellate proceeding before us the ld. Counsel has also referred the decision of ITAT in the case of Mrs. Mamta Sharad Gupta Vs. ITO 1(2) vide ITA No. 1553/Mum/2021 dated 16.06.2022 on the similar issue of on money as per the search action carried out in the case of Cosmos Group wherein the ITAT has held as under:
“9. Since the sole issue raised in this appeal is covered by the order (supra) passed by the co-ordinate Bench of the Tribunal addition made in this case is not sustainable. Because the addition is made merely on the basis of statement made by one Mr. Suraj Parmar, one of the promoters of Cosmos Group under section 132(4) of the Act without any corroboration. Moreover, statement or any material seized during the course of search under section 132(4) of the Act can only be used against Mr. Suraj Parmar of Cosmos Group and not against the assessee without any corroboration. Excel sheet alleged to have been recovered from the office of builders is also not admissible being not proved under section 65 of the Evidence Act. So, in view of the matter, addition made by the AO and sustained by the Ld. CIT(A) is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is allowed.”
The ld. Counsel has also referred the similar kind of addition made on the basis of search action in the case of Cosmos Group in the case of Monika Anand Gupta Vs. ITO, Ward 1(2) vide ITA No.5561/Mum/2018which was adjudicated by the ITAT, Mumbai dated 21.04.2022 wherein held as under:
“6. I have heard both the parties and perused the record. I find that the addition for on-money payment has been done in this case without any corroborative material found from assessee. The addition is solely based upon some statement of the builder. Such additions are not sustainable on the touchstone of Hon’ble Supreme Court decision in the case of CIT vs P.V Kalyanasundasram 164 Taxman 78 (SC). Moreover, there is nothing on record to suggest that so called electronic evidence collected by revenue at the builder’s office is compliant with the requirement of section 65B of Evidence Act regarding admissibility of electronic evidence. Hence, I set aside the orders of the authority below and direct that the addition be deleted.”
After taking income consideration the above facts and finding of the ITAT we find that similar to the aforesaid decision the addition in the case of the assessee was also solely based upon the statement of the builders and assessing officer could not substantiate the same with any incriminating material. Therefore, following the decision of the ITATs on the similar issue as referred above we consider that addition made by the AO is not sustainable, therefore, same is deleted. Accordingly, the grounds of appeal no.2 to 3 of the appeal of the assessee are allowed.
6. During the course of appellate proceedings before us ground of appeal no.1 was not discussed therefore, the same stand dismissed.
7. In the result, the appeal of the assessee is partly allowed.”
9. Considering the aforesaid decision of Tribunal on similar set of facts and respectfully following the same, the additions made by AO are deleted. In the result, the ground no. 3 of appeal raised by the assessee is allowed.
10. In the result, the appeal of the assessee is partly allowed.
Order was pronounced in the open Court on 23/06/2026.
