ITO Vs Chirag Jitendra Shah (ITAT Ahmedabad)
Ahmedabad ITAT Deletes On-Money Addition as Revenue Failed to Link Seized Material with Assessee
The Ahmedabad ITAT dismissed the Revenue’s appeal and upheld the deletion of an addition of ₹1.338 crore made under section 69 towards alleged on-money payment for the purchase of a flat. The Assessing Officer had inferred the payment from entries in a seized Excel file (LEGACY.xlsx) and a WhatsApp brokerage sheet recovered during the search on the Shivalik Group, treating the cash brokerage entry as representing 2% of the alleged cash component paid by the assessee.
The Tribunal observed that the assessee’s name did not appear anywhere in the seized Excel file, WhatsApp image, or in any statement recorded during the search. It held that the Revenue’s attempt to correlate the entry relating to Flat No. B-101 with the assessee was based purely on presumption and conjecture, without any corroborative evidence showing that the assessee had actually paid cash to the builder.
Affirming the CIT(A)’s order, the Tribunal held that no addition can be sustained on hypothetical assumptions in the absence of cogent evidence linking the assessee to the alleged cash payment. Since the figure of ₹1.338 crore itself did not appear in the seized material and no independent evidence supported the allegation of on-money, the addition under section 69 was rightly deleted. The Revenue’s appeal was dismissed.
Cases Discussed
- Commissioner of Income Tax v. Shoorji Vallabhdas and Co. (SC), [1962] 46 ITR 144 (SC)
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 19.11.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2020-21.
2. The Revenue has raised the following Grounds of Appeal:
“1. “Whether the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,33,80,000/- as unexplained investment under Section 69 of the Act, being “on-money” paid by the assessee for the purchase of Flat No. B-101 in Shivalik Legacy project, without appreciating the facts of the case?”
2. Whether the Ld. CIT(A) has failed to appreciate the fact that the modus operandi of Shivalik Group itself proves that they were Involved in “on-money” transactions across several units, including the assessee’s flat, supported by matching digital files and WhatsApp Images?”
3. ” The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.”
4. “It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored”.”
3. Brief facts of the case are that a search action was conducted on the Shivalik Group on 10.02.2022. During the course of search at various premises, several documents and digital devices were found and seized. Statement of various persons were also recorded during search. The A.O. in the assessment order has relied upon seized data from a pendrive marked “Sony Pendrive 16GB” secured from Shivalik House. On retrieval of deleted data from the Pendrive several excel files were retrieved and one excel file namely “LEGACY.xlsx” was also recovered, which was compared by the AO with the Whatsapp image recovered from a seized computer found at Shivalik House.
4. The Excel file contained reference of Unit No. B-101 under the heading ‘AMOUNT CASH’ 267000/- was mentioned. The A.O. then compared this data on LEGACY.xlsx with the “Whatsapp image 2018-11-20 at 13.09.06.jpeg”, which was found from a seized computer named as “Harshida Office Desktop” found at Shivalik House. The said excel file and whatsapp image are reproduced hereunder:
LEGACY.xlsx
WhatsApp Image
5. On the basis of aforesaid WhatsApp Image, the AO observed that the value recorded in excel file in the column “Amount Cash’ against unit Nos. B-502, B-601 and A-302 exactly matched with details of cash brokerage recorded in the WhatsApp image. The AO, thus, concluded that Shivalik Group has paid brokerage in cheque for the deed amount and has paid brokerage in cash for corresponding cash component @ 2% of the sale consideration received in cheque as well as in cash mode. The AO thereafter applied such modus operandi to “LEGACY.xlsx” and concluded that the cash brokerage amount of 267000, represented a cash component of Rs.1,33,80,000/- in respect of Flat No. B-101 purchased by the assessee and, accordingly, made an addition of Rs.1,33,80,000/-u/s. 69 of the Act.
6. Being aggrieved by the order of A.O, the assessee carried the matter before Ld. CIT(A). The CIT(A) allowed the appeal of assessee holding that AO has not brought on record any evidence to establish that the assessee had made any cash payment to Shivalik Group.
7. We have heard both the parties and perused the materials available on record. It is the admitted position that the name of assessee does not appear anywhere in the documents recovered during search or in any of the statements recorded during or after the search. There is no evidence to suggest that the assessee had paid any amount in cash to the builder for purchase of his unit. The attempt of Revenue to connect assessee to payment of ‘On-Money’ on the basis of contents of ‘LEGACY.xlsx’ where Unit No. B-101 is mentioned against Amount Cash’ and its alleged co- relation with the brokerage sheet recovered as Whatsapp image is based on mere presumption. The Whatsapp image cannot be treated as an evidence against the assessee when his name and/or amount paid by him in cheque does not appear in the entries appearing therein. The conclusion of the AO that the entry of 267600 represented brokerage @2% of the cash paid by assessee is nothing but a presumption based on surmise and conjectures and the addition made on such basis cannot be sustained.
8. The Ld. CIT(A) has deleted the addition made by the AO by giving the following findings:
“5.2.6 I have examined the facts of the case and the findings of the AO in his reassessment order. The AO in most parts of his order has discussed the modus operandi of Shivalik Group On perusal of the reassessment order, the name of the appellant does not appear directly in any one of the findings of the AO. The seized materials and the extraction of the seized maternals and examination of it also do not indicate anywhere the name of the appellant.
5.2.7 The contention of the AO that the appellant has made payment of On money is based only on the basis of Excel sheet named “LEGACY.XLS” retneved from “Sony Pendrive 16GB” where Flat No.B101 was written. Against this flat no B101, an amount of Rs.2,67,600/- was shown under the head AMOUNT IN CASH. However, I am of the view that the mere mention of Flat No.8101 and Rs.2,67,600/-shown under the head AMOUNT IN CASH cannot conclusively proof that the appellant has paid on money to the Shivalik group.
5.2.8 The AO has not brought on record a single evidence to establish that the appellant had made any cash payment to Shivalik Group. The AO has noted that though name of the assessee is not mentioned in the same column but subsequent investigation has shown that same flat has been purchased by the assessee which according to my view is at best a hypothesis without any corroborative evidence. The AO is unable to prove with evidence whether the payment in cash was paid by the appellant or Shivalik Group too. Further, the name of the appellant nowhere appears in the statements recorded also.
It is now well settled that Income Tax cannot be levied on hypothetical income as held in Commissioner of Income Tax v. Shoorji Vallabhdas and Co., [1962] 46 ITR 144 (SC).
Thus, it is noted that the AO has not been able to provide a shred of evidence to support his claim that the appellant had paid on money in cash. In absence of evidence, at best addition has been made on the strength of surmises and conjectures. It is a trite law that no assessment can be framed merely on the basis of conjectures and surmises.”
9. The Revenue has been unable to controvert the findings of the Ld. CIT(A). As rightly held by him, the name of the assessee doesn’t appear anywhere in the seized material. The figure of Rs.1,33,80,000/- considered as on-money paid by the assessee, also doesn’t appear anywhere in the seized documents. Thus, the addition made by the AO is based on mere presumption and not on any concrete evidence in this respect. The seized material also doesn’t contain any reference of cheque payments made by the assessee for acquisition of the flat. Under the circumstance, it was not possible to correlate the transaction of cash payment, if any. In the absence of any such corroborative evidence, the Ld.CIT(A) had rightly deleted the addition for Rs.1,33,80,000/- on account of on-money payment.
10. In view of the above facts, we are in agreement with the conclusion drawn by Ld.CIT(A) in the impugned order.
Resultantly, the decision of the Ld. CIT(A) is upheld and the appeal of the Revenue is dismissed being devoid of any merit.
11. In the result, the appeal filed by the Revenue is dismissed.
This Order is pronounced on 31/07/2026
