Bhagawati M Jain Vs ITO (ITAT Mumbai)
ITAT Mumbai deletes ₹21.99 lakh addition U/s 69B for alleged on-money; holds addition based on third-party statement without cross-examination invalid
In this case, the Mumbai ITAT examined an addition of ₹21.99 lakh u/s 69B made towards alleged “on-money” payment for purchase of a shop, based on search findings in the case of a builder group. The AO relied primarily on third-party statements (builder’s partner) and seized material, alleging that the assessee had paid cash over and above the agreement value.
The Tribunal noted that the assessee had consistently denied any cash payment and had requested:
- Copies of incriminating material, and
- Opportunity to cross-examine the person whose statement was relied upon
However, the AO failed to provide both, and proceeded on the basis of general statements and “human probability” without any direct or corroborative evidence linking the assessee specifically.
The ITAT held that:
- No specific evidence was brought on record to prove cash payment by the assessee
- The statement relied upon was general in nature and did not specifically name the assessee
- Denial of cross-examination amounts to violation of principles of natural justice (relying on Andaman Timber Industries and other precedents)
- Burden of proof lies on the Revenue, and cannot be shifted to the assessee to prove a negative
Accordingly, the Tribunal concluded that the addition was based on mere suspicion without corroboration, and therefore deleted the entire addition u/s 69B. Jurisdictional grounds were left open.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1073449956(1), dated 19.02.2025, passed against the assessment order by Assessing Officer, National Faceless Assessment Centre, Delhi, u/s. 147 r.w.s.144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 26.02.2024, for Assessment Year 2018-19.
