Swati Agrawal Vs ITO (ITAT Agra)
Builder’s Excel Sheet Cannot Become a Buyer’s Tax Bill Without Proof
Information May Trigger Reopening, but Addition Requires Evidence
The Agra Bench of the Income Tax Appellate Tribunal deleted an addition of ₹2,50,000 under Section 69A read with Section 115BBE, which was based on an Excel sheet recovered during a search on a builder group and statements recorded from its employees. The Tribunal found that the alleged cash payment was unsupported by corroborating evidence, while the assessee had not been given an opportunity to cross-examine the persons whose statements were relied upon.
The decision draws a significant distinction between information sufficient to initiate reassessment and evidence sufficient to sustain an addition. An investigation report may justify further examination. However, an allegation appearing in a third party’s electronic record does not, by itself, establish that the assessee made an unaccounted cash payment.
Search on Builder Leads to Reassessment of Buyer
The assessee had filed her return for Assessment Year 2020-21 on 2 January 2021, declaring income of ₹5 lakh from salary and other sources. The return was processed and accepted through an intimation dated 5 January 2021.
Subsequently, the Investigation Wing conducted a search under Section 132 on Bhutani Infra Group and Associates on 4 January 2024. The material recovered included Excel sheet data stored in a pen drive. Statements of employees of the builder group were also recorded on oath.
Based on this material, the Department alleged that the assessee had paid ₹2,50,000 in cash from unaccounted sources to the builder during the relevant year. Her assessment was reopened through a notice under Section 148 dated 30 March 2024.
In response, the assessee filed a return on 12 June 2024 declaring the same income of ₹5 lakh. During the assessment proceedings, she furnished her return, bank statement and bank account details. She explained that she was a salaried employee, had no business activity during the year and categorically denied making the alleged cash payment.
The Assessing Officer nevertheless made the addition through an assessment order dated 1 March 2025. The CIT(A), NFAC, upheld it.
Flat Booking Was Cancelled; Cash Payment Was Denied
Before the Tribunal, the assessee’s representative explained that she had booked a residential flat for a total consideration of ₹15,80,128 and paid a booking amount of ₹4,32,789 through electronic mode.
The booking was subsequently cancelled, and the proposed transaction never culminated in the purchase of a flat.
The representative also pointed out that the recovered Excel sheet reflected an amount of ₹12,76,752, which differed from the agreed consideration for the proposed flat. It was argued that the alleged cash figure was fabricated and that no such payment had been made.
These were the assessee’s submissions. The Tribunal’s ultimate finding rested on the absence of corroboration and the denial of an opportunity to test the third-party statements, rather than a specific finding that the Excel sheet had been fabricated.
Third-Party Material Was Not Open to Effective Challenge
The assessee argued that she had neither been supplied a copy of the electronic record nor afforded an opportunity to cross-examine the builder’s employees or other persons whose statements formed the basis of the addition.
She also challenged the first appellate order for failing to properly consider her submissions and the authorities cited.
The Revenue defended the addition by relying on the Excel sheet and the statements of the builder group’s employees. According to the Department, these materials justified the conclusion that an unaccounted cash payment had been made.
The Tribunal therefore examined whether an addition could be sustained merely on entries in a third party’s electronic record, in the circumstances of this case. The principle that adverse witness statements relied upon against an assessee ordinarily require an effective opportunity of rebuttal and cross-examination has also been discussed in Andaman Timber Industries Vs Commissioner of Central Excise.
No Corroboration, No Cross-Examination, No Sustainable Addition
The Tribunal noted that the assessee had consistently denied making any cash payment to the builder. No corroborating evidence established the genuineness of the Excel sheet’s contents.
It further recorded that the assessee had admittedly not been given an opportunity to cross-examine the persons whose statements were relied upon. The Tribunal emphasised the need to provide an opportunity to rebut third-party documents or cross-examine the persons concerned before using such material against an assessee.
The Revenue also did not claim that any cash had been found in the assessee’s possession.
While the investigation report was sufficient to trigger reopening, the Tribunal held that the addition could not rest solely on generalised, uncorroborated third-party information. It accordingly allowed the appeal, rendering the related stay application infructuous.
Author’s Comments
The ruling underlines that a third party’s entry is an allegation requiring verification, rather than an automatic admission by the assessee. Where the taxpayer disputes the transaction, the Department must establish the evidentiary connection and provide an effective opportunity to challenge the material relied upon.
The decision does not make every builder’s spreadsheet unusable. Its significance lies in the combined deficiencies identified here: no corroborating evidence, a categorical denial and no opportunity for cross-examination. Reopening permitted an enquiry; it did not dispense with the proof necessary to sustain the resulting addition.
Cases Discussed
- Andaman Timber Industries Vs Commissioner of Central Excise, Civil Appeal No. 4228 of 2006, order dated 02.09.2015 (Supreme Court) — Relevant to the principle that denial of cross-examination where witness statements form the basis of an adverse order constitutes a serious violation of natural justice.
FULL TEXT OF THE ORDER OF ITAT AGRA
The aforestated stay application is related to the captioned appeal, therefore, both the matters are being disposed of by this common order. First we take up ITA No. 128/Agr/2026:-
ITA No. 128/Agr/2026
2. This appeal is directed against the impugned order dated 20.01.2026 passed in appeal No NFAC/2019-20/10458750 by the ld. Commissioner of Income Tax, NFAC(Delhi) [(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2020-21, wherein ld CIT(A) has dismissed assessee’s appeal and confirmed the addition of Rs. 2,50,000/- as unexplained cash u/s 69A r.w.s. 115BBE of the Act, made vide, assessment order dated 01.03.2025 passed u/s 147 of the Act.
3. The brief facts state that the assessee e-filed her return of income for A.Y. 2020-21 on 02.01.2021, declaring her net income of Rs. 5,00,000/- received from salary and other sources. The return was processed and accepted vide intimation dated 05.01.2021. A search and seizure action u/s 132 of the Act was conducted on Bhutani Infra Group and Associates on 04.01.2024 by the investigation wing of the department. After analyzing all the seized material, various incriminating evidences including data of excel sheet in the pen drive were found during the search proceedings. Various statements of the employees of the Bhutani Infra Group and Associates were also recorded on oath. It was found that a cash payment of Rs. 2,50,000/- was made by the assessee to Bhutani Infra Group and Associates through unaccounted sources during the year under consideration. The assessee’s case was reopened u/s 147 of the Act by issuance of notice u/s 148 of the Act dated 30.03.2024. Assessee filed return in response thereof on 12.06.2024, declaring the same income of Rs. 5,00,000/- as was declared in the original return. Statutory notices u/s 143(2) and 142(1) of the Act and show cause notices were also issued to the assessee, seeking her to explain the source of the cash of Rs. 2,50,000/-. Assessee submitted copy of ITR, copy of bank statement, details of bank accounts with respect to the query raised with respect to the transactions with M/s Bhutani Infra Group and Associates. Assessee further submitted that she is a salaried employee and had income only from salary and from other sources. Assessee further submitted that she had no business activity during the year under consideration and denied to have ever paid the impugned cash to M/s Bhutani Infra Group and Associates. However, the assessing officer was not satisfied and made the aforesaid addition vide, assessment order dated 01.03.2025 passed u/s 147 of the Act.
4. The appellant assessee preferred an appeal before ld CIT(A), who dismissed assessee’s appeal and confirmed the additions made by the assessing officer.
5. Aggrieved, assessee preferred this second appeal on the following grounds:
“1. Because addition cannot be made without any concrete material merely on the ground of entry found in books of the third party.
2. Because no opportunity of rebutting the evidence OR documents found at the time of survey of third party has been made available to the assessee.
3. Because learned appellate authority has passed a template based order without considering the submissions of the assessee.
4. Because learned appellate authority has not considered the citations of Honorable High Courts and ITATs submitted by the assessee.
5. Because the whole order is wrong in fact and bad in law.”
6. Perused the records. Heard ld representative for the parties.
7. The main point for determination under appeal on the basis of aforesaid grounds, is as to whether ld CIT(A) has erred in confirming the addition of Rs. 2,50,000/- made by the assessing officer on account of unaccounted cash merely on the ground of entry book transactions, found in the electronic record of third party (M/s Bhutani Infra Group and Associates)?
8. Ld AR has submitted that the addition in the present case is based on the third party information without any supporting material evidence. The assessee was neither given the copy of said electronic record nor was afforded any opportunity to cross-examine the employees of the Bhutani Infra Group and Associates or any other persons on whose generalized statements, the said addition has been made. Ld AR has further submitted that the appellant assessee booked a flat with the builder for a total cost of Rs. 15,80,128/- and paid booking amount of Rs. 4,32,789/- paid through electronic mode towards the proposed purchase of a residential flat. The said booking was subsequently cancelled and the proposed transaction never matured into a purchase of flat. Ld AR submits that the amount reflected in the said recovered excel sheet from the premises of the third party is shown to be Rs. 12,76,752/- which is different from the total consideration of the proposed flat. Ld AR thus submits that the excel sheet is merely a fabricated figure of cash payment which was never made by the assessee to the said builder. Prayed to allow appeal.
9. Ld Sr DR for the respondent revenue has stated that the addition has rightly been made on the basis of statements of the Bhutani Infra Group employees and on the basis of the information available in the excel sheet. Ld Sr DR relies on the impugned order, praying to dismiss assessee’s appeal.
10. We notice that an addition of Rs. 2,50,000/- as an unaccounted cash has been made in the hands of assessee on the basis of the information gathered from the excel sheet found in the pen drive during the search and seizure action on Bhutani Infra Group and Associates conducted on 04.01.2024. During the assessment proceedings, assessee has categorically denied to have made any cash payment to the said builder. There is no corroborating evidence to prove the genuineness of the contents of the said excel sheet. Admittedly, the assessee has also not been provided an opportunity to cross-examining any persons on the basis of whose statements, the said addition has been made in the hands of the assessee. It is settled legal principle that document found in the possession of a third party are not admissible in evidence unless an opportunity to rebut the contents of the same or an opportunity for cross-examination is provided to the assessee. It is not the case of the revenue that any cash was found in the possession of the assessee. The investigation report was no doubt sufficient to trigger the reopening, however, the said addition could not be made merely and solely on investigation based generalized information received from third party survey. Such generalized uncorroborated information lacks evidentiary value. The impugned addition is thus unsustainable. The aforesaid point is accordingly determined in positive in favour of the appellant assessee and against the respondent revenue. The appeal is thus liable to be allowed.
SA No. 03/Agr/2026
11. This stay application relates to ITA No. 128/Agr/2026 which has already been allowed in favour of the assessee, hence, the stay application is liable to be dismissed as infructuous.
12. In the result, ITA No. 128/Agr/2026 is allowed and SA No. 03/Agr/2026 is dismissed as infructuous.
Order pronounced in the Open Court on – 28.09.2026
