Bharat Solanki Vs DCIT (ITAT Mumbai)
Buyer Can’t Be Taxed on Builder’s Confession Alone- Third-Party Excel & Statements Not Enough- No Cross-Examination, No Direct Evidence—₹12.87 Lakh 69C Additions Quashed by ITAT Mumbai
Mumbai ITAT ‘B’ Bench in Bharat Solanki vs DCIT (ITA Nos. 6523 to 6525/Mum/2025, AYs 2017-18 to 2019-20, order dated 23-12-2025) allowed the assessee’s appeals and deleted additions made u/s 69C towards alleged “on-money” paid in cash for purchase of a shop, holding that additions based solely on third-party digital records and statements—without cross-examination—are unsustainable in law.
The additions arose pursuant to a search u/s 132 in the Rubberwala Group, where Excel sheets were found in a pen drive belonging to an employee (Shri Imran Ansari) allegedly recording cash components of shop sales in Platinum Mall. Based on these Excel entries and statements of the builder group’s employee and director, the AO invoked section 153C and treated alleged cash payments aggregating to ₹12.87 lakh over three years as unexplained expenditure in the hands of the assessee.
Before ITAT, the assessee contended that:
- No incriminating material was seized from the assessee
- Entire case was built on third-party Excel data and statements
- Neither the pen drive nor the full underlying material was supplied
- Request for cross-examination of Shri Imran Ansari was denied
ITAT observed that the assessee was not confronted with primary digital evidence in usable form, and cross-examination of the person whose statements formed the sole basis of addition was denied, striking at the root of natural justice. Tribunal held that statements of builder-side employees and internal Excel sheets, without independent corroboration and without allowing cross-examination, cannot justify additions in the hands of a purchaser.
Relying on binding principles laid down in Andaman Timber Industries (SC) and coordinate-bench decisions in similar Rubberwala/Platinum Mall cases, ITAT held that such additions amount to taxation based on suspicion and borrowed material, which is impermissible.
Accordingly, ITAT deleted the additions for all three assessment years, rendering other legal grounds (DIN defect, 153C validity) academic.
Key takeaway:
In search-based “on-money” cases, buyers cannot be taxed merely on the basis of builder-side Excel sheets and confessional statements. Denial of cross-examination and absence of independent corroboration is fatal—natural justice is not optional, even in 153C proceedings.
