Mishra Ganesha Ram Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal, Mumbai, considered the assessee’s appeals against the common order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre dated 01.09.2025 for Assessment Years 2019-20 and 2020-21. The principal issue was the validity of additions made under Section 69 of the Income Tax Act, 1961, on the basis of search material recovered from the Rubberwala Group in proceedings initiated under Section 153C.
The proceedings arose from a search conducted under Section 132 on 17.03.2021 in the case of the Rubberwala Group, including M/s. Rubberwala Housing & Infrastructure Ltd. During the search, the Revenue alleged that the assessee had purchased a shop in “Platinum Mall”, Mumbai, and had paid cash of Rs.30,78,653 over and above the recorded consideration, comprising Rs.30,37,050 in Assessment Year 2019-20 and Rs.41,603 in Assessment Year 2020-21. The allegation was based on statements of Shri Imran Ansari, an employee of the Rubberwala Group, and data allegedly contained in a 16 GB pen drive recovered from his residence, which purportedly recorded cash components received from purchasers of shops.
The Assessing Officer relied upon the statements of Shri Imran Ansari and other persons connected with the Rubberwala Group, as well as the Excel sheets allegedly found in the pen drive, to conclude that the assessee had made unexplained cash investments. The assessee denied having made any cash payment, disputed any knowledge of the persons whose statements were relied upon, asserted that the property had been purchased jointly and that his share could not exceed one-third, and specifically requested copies of the statements, incriminating material and an opportunity to cross-examine the persons concerned. These requests were not accepted. The Assessing Officer nevertheless made additions under Section 69, while the Commissioner (Appeals) restricted the additions to the assessee’s one-third share, resulting in sustained additions of Rs.10,12,350 for Assessment Year 2019-20 and Rs.13,868 for Assessment Year 2020-21.
Before the Tribunal, the assessee contended that the alleged incriminating material neither belonged to nor implicated him, that no seized document specifically referred to him, and that the additions were based solely on untested third-party statements and electronic data recovered from another person’s premises. The assessee further submitted that neither the statements nor the electronic records had been furnished and that no opportunity for cross-examination had been granted. Reliance was placed on the coordinate Bench decision in Pravin Khetaramm Purohit v. DCIT, which had considered identical facts arising from the same Rubberwala Group search.
The Tribunal observed that the alleged incriminating material, namely the pen drive, Excel sheets and statements, had emanated entirely from third-party premises and that no document evidencing payment of cash by the assessee had been recovered. It held that mere entries in a third-party Excel sheet could not constitute substantive evidence unless corroborated, authenticated and independently linked to the assessee. The Tribunal noted that the Revenue had not produced any corroborative evidence establishing actual cash payment by the assessee and had neither supplied the pen drive or statements to the assessee nor provided an opportunity for cross-examination. It observed that suspicion, however strong, cannot substitute proof and that untested third-party statements alone could not sustain an addition under Section 69.
The Tribunal relied extensively upon the coordinate Bench decisions in Pravin Khetaramm Purohit v. DCIT and Rajesh Jain, which arose from the same Rubberwala Group search and involved identical issues. Those decisions had held that additions based solely on third-party statements, electronic data recovered from another person’s premises and uncorroborated allegations of on-money payments could not be sustained where the assessee had been denied access to the material and the opportunity to cross-examine the deponents. The Tribunal also referred to decisions including Andaman Timber Industries v. Commissioner of Central Excise, CIT v. Odeon Builders Pvt. Ltd., H.R. Mehta v. Assistant Commissioner of Income-tax, Heena Dashrath Jhanglani v. ITO, Monika Anand Gupta, Mrs. Mamta Sharad Gupta, ITO v. Vinod Aggarwal, ITO v. Nikhil Vinod Aggarwal, and Padmashrree Dr. D.Y. Patil University v. DCIT in support of the principles governing natural justice, cross-examination and reliance on third-party material.
The Tribunal held that the Revenue had failed to confront the assessee with the adverse material, failed to establish any independent corroborative evidence linking the assessee with alleged cash payments, and failed to provide an opportunity of cross-examination. It concluded that the additions under Section 69 could not be sustained. Following the earlier coordinate Bench decisions, the Tribunal deleted the additions confirmed by the Commissioner (Appeals) for both assessment years. In view of the deletion on merits, the remaining grounds challenging the proceedings under Section 153C, including the absence of DIN, the validity of the satisfaction note and other procedural objections, were treated as academic and were not adjudicated. Both appeals were allowed.
Cases Discussed
- Pravin Khetaramm Purohit v. DCIT, Central Circle, Mumbai (ITAT Mumbai), ITA Nos. 4742/4743/4744/Mum/2025
- Rajesh Jain (ITAT Mumbai), ITA Nos. 3842, 3841, 3954, 3952, 3951 & 3950/Mum/2023
- Padmashrree Dr. D.Y. Patil University v. DCIT (ITAT Mumbai), ITA Nos. 3264 to 3268/Mum/2022
- Monika Anand Gupta (ITAT Mumbai), ITA No. 5561/Mum/2018
- Mrs. Mamta Sharad Gupta (ITAT Mumbai), ITA No.1553/Mum/2021
- Heena Dashrath Jhanglani v. ITO (ITAT Mumbai), ITA No.1665/Mum/2018
- Naren Premchang Nagda v. ITO (ITAT Mumbai), ITA No.3265/Mum/2015
- ITO v. Vinod Aggarwal (ITAT Mumbai), ITA No.2573/Mum/2017
- ITO v. Nikhil Vinod Aggarwal (ITAT Mumbai), ITA No.2574/Mum/2017
- CIT v. Odeon Builders Pvt. Ltd. (Delhi High Court), 418 ITR 315
- H.R. Mehta v. Assistant Commissioner of Income-tax, Mumbai (Bombay High Court), 72 taxmann.com 110
- Andaman Timber Industries v. Commissioner of Central Excise (Supreme Court), (2015) 62 taxmann.com 3 (SC)
- CIT v. P.V. Kalyanasundaram (Supreme Court), 164 Taxman 78 (SC)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These two appeals by the Assessee are directed against the common order dated 01.09.2025 passed by the Ld. Commissioner of Income Tax Appeals/National Faceless Appeal Center, Delhi [in short Ld. CIT (A)] for Assessment Year 201 9-20and 2020-21. The issue in dispute being common in both appeals, same were heard together and disposed of by way of a consolidated order for the sake of convenience and avoid repetition of fact.
2. Firstly, we take up the appeal of the assessee for A.Y. 2019-20. The grounds raised by the assessee in appeal are reproduced as under:-
1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming the stand of A.O. about that issuing the notice u/s 153C of the Act without DIN. It is blatant contravention of the Circular No. 19/2019,dated 14 –8-2019 issued by the CBDT
2. On the facts and circumstances of the case in law, Ld CIT(A) erred in confirming addition without referring to any incrementing document. Besides,he has not referred to any incriminating material in the satisfaction note issued to the Appellant.
3. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. for not sharing incrementing documents found during the course of search of rubberwala group which was pertained to the appellant.
4. On the facts and circumstances of the case in law, Ld CIT(A) erred in confirming stand of A.O. about the not providing statement and materials used by him against the appellant
5. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. about opportunity of cross examination of the person whose statements were used against the appellant
6. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming addition of Rs. 10,12,350/ – u/s 69 of the Act.
7. On the facts and circumstances of the case, the CIT(A) erred in holding that a combined satisfaction note is valid in the eyes of l, aw as current legal and judicial precedent overwhelmingly requires separate satisfaction notes for each assessment year and/or entity; the recording of a combined or consolidated satisfaction note has consistently been held to vitiate the proceedings under section 153C of the Income Tax Act.
3. Consequent to a search and seizure action under section 132 of the Act on 17.03.2021 in the case of the “Rubberwala” Group, including its flagship concern M/s Rubberwala Housing & Infrastructure Ltd. (RHIL), proceedings under section 153C were initiated in the case of the assessee.
3.1 Briefly stated the facts of the case are that the Assessee filed its return of income for the year under consideration on 28.06.2019 declaring total income of Rs.2,86/-. ,790 Consequent to a search and seizure action u/s. 132 of the Income Tax Act, 1961 (For short, “the Act”) was carried out on “Rubberwala” group including its flagship concern M/s Rubberwala Housing & Infrastructure Ltd. (RHIL). During the search action, it was gathered that the assessee purchased a shop in “Platinum Mall” Building, Girgaon, Mumbai and amount of Rs. 30,78,653/ – was paid in cash for acquisition of the property. Further, the cash was paid by the assessee in A.Y. 2019 -20 and A.Y. 2020 -21 amounting to Rs. 30,37,050/ – and Rs. 41,603/ – respectively. Thereafter, proceedings under section 153C were initiated in the case of the assessee .
4. During the search, certain statements of key persons— most notably, Shri Imran Ansari, an employee handling sale and registration of shops in the “Platinum Mall” were recorded. A pen drive of 16 GB was retrieved from his residence, which he purportedly admitted contained excel files allegedly recording cash components received from various buyers.
5. Relying upon the above material and the statements of third parties, the Assessing Officer issued a show-cause notice to the assessee. The Assessing Officer referred to the statement of Shri Imran Ansari who stated that he had been working with Rubberwala Group of entities since 2010 and was handling sale and registration of the shops in “Platinum Mall” and also revealed that the total price of the shops contained cash component and banking channel component and these components are decided by Shri Tabrez Shaikh (Director/CMD of RHIL and Promoter of Rubberwala Group) and that such data related to shops was maintained by him in excel sheets. Corroborating to the fact that data was being maintained by Shri Imran Ansari in excel sheet, during search proceedings at the residence of Shri Imran Ansari, a 16GB pen drive was retrieved from his possession which he accepted that it contained data maintained for the sale of shops in Platinum Mall. He also revealed that he used to take the parties to Shri Abrar Ahmed who after receiving cash confirms back to Shri Imran Ansari to update the diaries and excel file.
6. The assessee categorically denied having paid any cash to any person, disputed knowledge of the individuals named, and specifically asserted that the purchase was in joint ownership and his share, even if assumed, could not exceed one-third. Crucially, he sought the statements and adverse material relied upon and requested opportunity to cross-examine the persons whose depositions were invoked. These requests were not acceded to by the Assessing Officer. Based on the finding of search in case of RHIL Group and also the fact that RHIL Group had offered 8% of the overall unaccounted receipts. , the ld AO made an addition of ₹30,37,050/- u/s 69 of the Act in A.Y. 2019-20, treating the same as unexplained cash investment towards the shop allegedly purchased jointly by the assessee.
6. Aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A) who confirmed the said addition to the extent of 1/3 rd share of assessee in the relevant shop amounting to Rs. 10,12,350/ – in A.Y. 2019 -20 and Rs. 13,868/ – in A.Y. 2020-21. Further, aggrieved by the addition confirmed by the ld. CIT(A), the assessee has preferred this appeal before us.
7. Before us, the ld. AR of the assessee submitted that the incriminating material found in the possession of Rubberwala Group does not implicate the assessee. Further, the ld. CIT(A) has erred in confirming the stand of Assessing Officer despite not providing any statement of third party on which reliance was sought to be placed and even no cross examination has been granted. Moreover, the material or statement referred to is not an “evidence” at all against the assessee in the eyes of law and hence no reliance can be placed thereon without any corroborative or cogent evidence against the assessee. It is vehemently argued that addition u/s. 69 of the Act cannot be made or confirmed merely on guess work or assumptions and there has to be positive evidence against the assessee which has not been brought on record. He further relied on the decision of Pravin Khetaramm Purohit v. DCIT, Central Circle, Mumbai [ITA no. 4742/4743/4744 / Mum / 2025] .
8. We have heard rival submission of parties and perusal the relevant material on record. We find substantial merit in the contentions of the assessee. It is a well-settled principle of law that where an addition is sought to be made solely based upon the statement of a third party or upon material allegedly belonging to or relating to the assessee, the assessee must be confronted with such material and afforded an effective opportunity to cross-examine the persons whose statements are relied upon. Failure to do so vitiates the assessment itself.
8.1 In the case alleged incriminating material i.e. pen drive, excel sheets and statements, have emanated exclusively from third-party premises and n o document evidencing payment of on-money by the assessee like any receipt of cash payment issued by the assessee etc was found from the possession of the searched person. In our opinion, mere entries in a third-party excel sheet cannot, by themselves, constitute substantive evidence unless duly corroborated, authenticated, and linked to the assessee by independent and cogent material. No corroborative evidence of actual cash payment by the assessee exists. Neither the pen drive nor the statements of Shri Imran Ansari or Shri Tabrez Shaikh were supplied to the assessee. The CIT(A)’s approach of merely restricting the addition to 1/3rd does not cure the fundamental infirmity of absence of legally admissible evidence against the assessee. It is trite law that suspicion, however strong, cannot take the place of proof. Third-party admissions, untested and uncorroborated, cannot form the sole basis of an addition under section 69. The Revenue has failed to discharge the burden cast upon it to bring on record credible, independent, and cogent material establishing that the assessee made any payment in cash over and above the recorded consideration. The coordinate Bench of Tribunal in the case of assessee Pravin Khetaramm Purohit v. DCIT (supra) held that : –
“8. We have heard the arguments for both the parties and have also perused the material placed on record, judgements cited before me and the orders passed by the revenue authorities. From the records, we noticed that the assessment was completed u/s 153C on account of the fact that a search and seizure action was conducted on 17.03.2021 on Rubberwala group. In search action, premises of M/s. Rubberwala Housing & Infrastructure Ltd (RHIL), its promoter and director-Shri Tabrez Shaikh, and a key employee of Rubberwala group Shri Imran Ansari, who was handling sale & registration of shops in “Platinum Mall” project of RHIL were covered. Among others, statement of these persons were recorded on oath onvarious dates during the course of search as well as post search proceedings. The employee of Rubberwala group confirmed that the cash has been collected from the respective buyers of the shops. However, on the other hand, the assessee denied payment of cash. We noticed that during the search a pendrive with the details of cash transactions with respect to Rubberwala group was found, which was confirmed through statement of Shri Imran Ansari recorded U/s 132(4) of the Act and on this basis, 153C order was framed and the same was upheld by the Ld.CIT(A).
9. We noticed that Ld. CIT(A) although referred the decision of the coordinate bench in case of Rajesh Jain on identical issue but misplace its reliance. After having gone through the basic facts of Rajesh Jain case which is mentioned by Ld. CIT(A) in its order and the same is reproduced as under:
5.1. On 17.03.2021, the residential premise of the assessee was also covered by way of search action u/s 132 of the IT Act, 1961. Search action was also initiated on Rubberwala group on 17.03.2021. In such action along with premises (offices/sites/others) of Rubberwala group entities, residences of various key persons including its promoter and director Shri Tabrez Shaikh, and Shri Imran Ansari – a key employee of Rubberwala group handling sale & registration of shops in “Platinum Mall” project of RHIL were covered under section 132 of the Act. Among others, statement of these persons were recorded on oath on various dates during search as well as post search proceedings.
5.2. During the action on Rubberwala Group, among other, residence (at 109, 2nd Floor, Prabhat Sadan, 109/120 RBC Marg, Agripada, Mumbai Central – 400011) of Shri Imran Ashfaque Ansari was covered under section 132 of the I.T. Act, 1961. His statement was also recorded on oath at his residence. Vide question no. 11 of the said statement dt. 17.03.2021, Shri Imran Ansari was questioned about his roles and responsibilities in M/s. Rubberwala Housing & Infrastructure Ltd (RHIL). In response, Shri Imran Ansari stated that he has been working with Rubberwala group of entities since 2010 and inter-alia handling sale and registration of the shops in “PlatinumMall” Project of M/s. Rubberwala Housing & Infrastructure Ltd (RHIL).
5.3. Shri Imran Ansari in his response to question no. 13 & 14 of the said statement explained the complete procedure of the of the sale of shops in the “Platinum Mall” project. While explaining further about the price structure of the shops, Shri Imran Ansari in response to Q. no. 15 categorically revealed that the total price of the shops contains cash component and banking channel component, and these components are decided by Shri Tabrez Shaikh (Director/CMD of RHIL and Promoter of Rubberwala Group). On probing further, Shri Imran Ansari, in response to Q. no. 16, stated that these prices, as decided by Shri Tabrez Shaikh, are communicated to him orally. He also revealed in response to Q. no. 17 of the said statement that data related to shops is maintained by him in excel sheets. Corroborating to the fact that data is being maintained by Shri Imran Ansari in excel sheet, during search proceedings at the residence of Shri Imran Ansari, a 16GB Pendrive was retrieved from his possession. The said pen drive is accepted by Shri Imran Ansari belonging to him and he also accepted that this pen drive is containing data maintained for the sale of shops in Platinum Mall. Shri Imran Ansari explained that this data is prepared by him. Shri Imran Ansari’s this acceptance also corroborates with the fact that the said data was retrieved from the residential premises of Shri Imran Ansari and not from any office of Rubberwala Group.
5.4. It was ascertained that the data is being maintained by Shri Imran Ansari in an excel file namely “consolidated 1 2 3 balance”. In the said file sheets with different name viz “Master”, “Payment” and “Cheque” etc. are found to be maintained. It is also found out that in respect of the sale of shops in the said project, comprehensive data is being maintained in these excel sheets, and in this regard, it is important to mention that the sheet “Master” is so elaborate that the data in the said sheet is spread across 98 columns. Shri Imran Ansari has explained all 98 columns of “Master” sheet and such explanation of each and every column by Shri Imran Ansari further support the fact that the he was maintaining the said data and therefore could explain all these columns with relevance and purpose. Shri Imran Ansari in response to Question no. 22, 23 and 24, has explained in detail the meaning and relevant of each and every column. In column B, against the name of ‘Raj Bhai Jain’/‘Raj Bha iJain(I.S)’, total 27 shops have been entered. Further, these 27 shops are stated (by Shri Imran Ansari) to be booked by the assessee only. Also, ShriTabrez Ahmed Shaikh, Director and Promoter of the RHIL, while deposing statement during post search proceedings on 19.08.2021 categorically confirmed the admission made by Shri Imran Ansari, and has confirmed the data of the said excel to be true byconfirming facts stated by Shri Imran Ansari in his statement. It is also important to note here that the phone number mentioned above i.e., 9892196071 against all 27 shops, is of Shri Rajesh Jain.
5.5. Regarding the frequency of updating the said excel file/sheet, Shri Imran Ansari, in response to Q. no. 25, stated that this sheet is updated on the same day when a payment is received either in cash or cheque (or banking channel). The column A to AR of the sheet “Master” are stated to be updated till 16.03.2021 and other sheets of the said excel file are also stated to be updated till 16.03.2021. It is revealed in the above response that he takes the parties to ShriAbrar Ahmed (who during the search established to be a person handing cash for the Rubberwala Group). ShriAbrar Ahmed, after receiving the cash confirms to Shri Imran Ansari who update the diariesand the said excel file. Such detailed mechanism in place further upholds the facts stated by Shri Imran Ansari on oath. It is also important to note here that Shri Imran Ansari also used to call and follow up with the buyers on the numbers saved in his data. As aforementioned, the number, for the shops for which the assessee has paid the cash component, is mentioned as 9892196071, which is the assessee’s own number. Thus, it makes clear that for the cash payment part, for all the above mentioned 27 shops, Shri Imran Ansari used to follow up with Shri Rajesh Jain/assessee only…………………
10. We also noticed that the decision of the Coordinate Bench of ITAT in the case of Rajesh Jain in ITA No. 3842& 3841 & ITA No. 3954,3952,3951 and3950/Mum/2023 on the identical facts is reproduced herein below:
12. The appeal filed by the revenue for AY 2020 -21 is with regard to the relief granted by Ld CIT(A) holding that the cash payments relating to the shops purchased by others cannot be assessed in the hands of the asse The decision rendered by us in AY 2018 -19 and 2019 -20 on an identical issue on merits in the earlier paragraphs would apply in this year also. Following the same, we affirm the order passed by LdCIT(A) on this issue.
13. In the appeal filed by the assessee, the addition of alleged cash payment of Rs.18,64,200/– in respect of purchase of shop confirmed by Ld CIT(A) is being assailed. 14. We noticed earlier that the assessee had purchased a shop in the commercial premises developed by Rubberwala During the course of search conducted in their hands, incriminating documents containing details of cash collected on sale of various shops were found. The employee of Rubberwala group confirmed that the cash has been collected from the buyers of shops. However, the assessee denied payment of cash. However, the AO relied upon the materials found in the case of Rubberwala group and accordingly made addition of Rs.18,64,200/-in AY 2020-21. The LdCIT(A) also confirmed the same.
14. The ld A.R submitted that the addition was made on the basis of third party statement and documents found from the premises of third party. As per the deposition made by the employee of Rubberwala group, the buyers were given a diary, in which, the details of cash received were acknowledged. The Ld A.R submitted the search officials did not find any such diary with the assessee during the course of search operation conducted in his hands. Hence the statement so given by the employee stands disproved. He submitted that the AO has simply relied upon third party statement without bringing any independent material to support the same. The AO also did not provide the opportunity of cross examination despite being asked by the assessee. Accordingly, by placing reliance on various case laws, the Ld A.R submitted that this addition should be deleted. 16. We heard Ld D.R and perused the record. We notice that the AO has made the addition on the basis of evidence found in the premises of third party and also on the basis of deposition made by the employee of the third party. No corroborative material was brought on record to support the statement so given, which is mandatory when the assessee denies any such payment. Further, the AO also did not provide opportunity of cross examination to the assessee, even after the said request was made by the assessee. Under these set of facts, we are of the view that the impugned addition of Rs.18,64,200/– cannot be sustained. In this regard, we may take support from the decision rendered by SMC bench o f Mumbai Tribunal in the case of Naren Premchang Nagda vs. ITO (IT Appeal No.3265/Mum/2015 dated 08 -07-2016), wherein an identical issue was decided as under:-
17. We also notice that the AO did not provide opportunity to cross examine the persons from Rub berwala group, on whose statements the AO had placed reliance upon. The Hon ‟ble Supreme Court has held in the case of Andaman Timber Industries vs. Commissioner of Central Excise (2015)(62 taxmann.com 3)(SC) that not providing opportunity to cross examine is a serious flaw and it will make the order nullity, as it amounts to violation of principle of natural justice. We are of the view that the above said decision of Hon ‟ble Supreme Court shall apply to the facts of the present case.
11. From the above we find that the Coordinate bench has consider the same facts and rightly decided the issue in favour of the assessee and since the facts of the present case are also identical with the facts of Rajesh Jain’s (supra) case, therefore the said decision will be application on the facts of the present case as well. Moreover, the assessee categorically denied having paid any amount in cash over and above the agreement value. The AO has neither confronted assessee with any of the material found during the search o n Rubberwala group and even noevidence or seized document has been referred to where any name of the assessee has been explicitly mentioned on account of paying any ‘on-money’.
12. Although it has been claimed in the order of assessment that the assessee had paid on money, but again no such statement has been confronted, neither the seized material /documents /pendrive was confronted to the assessee nor the copy of statement of Key person was confronted.
13. Therefore, in our view, the information if any found in the pendrive etc., cannot be considered as ‘credible evidence’, unless they have been corroborated with any other evidence. Since the assessee was not provided with the adverse material, if any, based on which notice u/s153 of the Act, was issued, in our view, it hampers the primary and fundamental requirement of natural justice.
14. As far as the information claimed in pendrive is concerned, the same was not found from the possession of the assessee but was found as per order of assessment, during the search and seizure conducted in the case of third party therefore, in the absence of corroborative evidence to establish that the contents of pendrive are correct and authenticated to the extent assessee paid ‘on – money’ in cash, no addition can be made and even otherwise during the entire reassessment proceedings the veracity and reliability of the data recorded in the pendrive was not checked or tested. Therefore, in such a scenariono addition is warranted in the case of assessee. Reliance in this regard has been placed on the decision in case of Heena Dashrath Jhanglani ITA no.1665/Mum./2018 (Assessment Year : 2007– 08) wherein the Coordinate Bench of ITAT had decided the issue in favour of assessee and the relevant portion is being reproduced herein below:
10. I have considered rival submissions and perused material on record. Undisputedly, the genesis of the addition made of 42 lakh on account of alleged payment of on–money in cash towards purchase of a flat lies in a search and seizure operation conducted in case of Hiranandani Group and related persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material/ evidence available on record to indicate payment of on–money in cash by the assessee to M/s. Crescendo Associates, however, from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen drive found and seized from the residence of one of the employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of on – money paid by buyers / prospective buyers to Hiranandani Group concerns are mentioned and further, in the statement recorded under section 132(4) of the Act on 14th March 2014, Shri Niranjan Hiranandani, has admitted receipt of on–money in cash towards sale of flats / shops. Thus, it is clear that except these two pieces of evidences the Assessing Officer had no other evidence on record which demonstrates that the assessee had paid on–money in cash for purchase of the flat. It is further relevant to observe, from the assessment stage itself the assessee has requested the Assessing Officer to provide him with all adverse materials and full text of the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani. The assessee had also requested the Assessing Officer for allowing her to cross–examine Shri Niranjan Hiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not accededto by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority, the learned Commissioner (Appeals) in letter dated 18th July 2016, had clearly directed the Assessing Officer to provide the assessee all adverse materials / documentary evidences available with him indicating payment of on–money. However, on a perusal of the remand report dated 23th June 2017, a copy of which is at Page–53 of the paper book, it is very much clear that the Assessing Officer has completely avoided the issue and there is no mention whether the assessee was provided with all the adverse material and if, not so, whether he has provided them to the assessee as per the directions of the learned Commissioner (Appeals). Thus, from the aforesaid facts, it is patent and obvious that the addition of ` 42 lakh made on account of on–money payment in cash is without complying with the primary and fundamental requirement of rules of natural justice. It is well settled proposition of law that if the Assessing Officer intends to utilize any adverse material for deciding an issue against the assessee he is required to not only confront such adverse materials to the assessee but also offer him a reasonable opportunity to rebut / contradict the contents of the adverse material. Further, the assessment order reveals that the Assessing Officer has heavily relied upon the statement recorded from Shri Niranjan Hiranandani, for making the disputed addition. However, it is the allegation of the assessee, which prima–facie appears to be correct, that the Assessing Officer has not provided the full text of such statement recorded and has also not allowed the assessee an opportunity to cross–examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic principle of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be sustained.
11. Even otherwise also, the addition made is unsustainable because of the following reasons. As discussed earlier in the order, the basis for addition on account of on–money is the information contained in the pen drive found during the search and seizure operation and the statement recorded under section 132(4) of the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a third party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on –money in cash, no addition can be made under section 69B of the Act. Further contention of the assessee is that in the statement recorded under section 132(4) of the Act, Shi Niranjan Hirandani has not made any reference to the assessee, therefore, in absence of any other corroborative evidence to establish that assessee has paid on–money in cash, no addition can be made. I find substantial merit in the aforesaid submissions of the assessee. In my view, neither the information contained in the pen drive nor the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani are enough to conclusively establish the factum of payment of on–money by the assessee. At best, they can raise a doubt or suspicion against the conduct of the assessee triggering further enquiry / investigation to find out and bring on record the relevant fact and material to conclusively prove the payment of on–money by the assessee over and above the declared sale consideration. Apparently, the Assessing Officer has failed to bring any such evidence / material on record to prove the payment of on–money by the assessee. More so, when the assessee from the very beginning has stoutly denied payment of on–money in cash. Notably, while dealing with a case involving similar nature of dispute concerning similar transaction with another concern of Hiranandani Group, the Tribunal in case of Shri Anil Jaggi v/s ACIT (supra) has held as under:–
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15. Reliance has also been placed in the case of Monika Anand Gupta I.T.A. No. 5561/Mum/2018 (A.Y. 2011 –12)whereas coordinate bench held as under.
6. I have heard both the parties and perused the record. I find thatthe addition for on-money payment has been done in thiscase 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 Kalyana sundasram 164 Taxman 78 (SC). Moreover there is nothing on record to suggest that so called electronic evidence colled ect 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.
16. In the case of Mrs. Mamta Sharad Gupta, ITA No.1553/M/2021 Assessment Year: 2011 -12, wherein the coordinate bench 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.
17. For the above proposition, we place reliance upon the decision in the case of ITO Vs. Vinod Aggarwal, ITA No. 2573/Mum/2017, ITO Vs. Nikhil Vinod Aggarwal, ITA No. 2574/Mum/2017 Heena Dashrath Jhanglani Vs.ITO, ITA No.1665/M/2018, Padmashrree Dr. D.Y. Patil University Vs. DCIT, ITA Nos. 3264 to 3268/Mum/2022.
18. From the records we also noticed that no statement was provided to the assessee, and none of the persons, whose statements were relied upon were produced for cross- Even the extract of the statement mentioned in the assessment order does not indicate the name of the assessee.
19. Apart, the AO during the course of assessment also failed to provide the opportunity to cross examine of the witnesses, whose statements were relied upon by the revenue which resulted in ‘breach of principles of natural justice’. In this regard, reliance is being placed upon the decision of Hon’ble Supreme Court in the case of Andaman Timber Industries Vs. CCE reported in (2015)281 CTR 241 (SC) wherein it has been held that ‘failure to give the assessee the opportunity to cross examine witness, whose statements are relied upon, results in breach of principles of Natural Justice. It is a serious flaw which renders the order a nullity’.
20. In the case of CIT Vs. Odeon Builders Pvt. ltd. (418ITR 315), it was held that the ‘addition/disallowance made solely on third party information without subjecting it to further scrutiny and denying the opportunity of cross examination of the third party renders the addition/disallowance bad in law’
21. In the case of H.R. Mehta v/s Assistant Commissionerof Income-tax, Mumbai 72taxmann.com110 (Bombay) wherein it was held as under
In the light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and, therefore, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents whose statements were relied upon by him. Despite the request seeking an opportunity to cross examine the deponents and furnish the assessee with copies of statements and disclose material, these were denied to him.
22. Taking into consideration the entire facts and circumstances and legal prepositions as discussed by us above, we direct the AO to delete the addition, consequently these grounds raised by the assessee are allowed.”
9. In view of the foregoing discussion, the absence of confrontation, lack of cross-examination, absence of any incriminating material belonging to the assessee, and respectfully following the decision of the co-ordinate bench of this Tribunal, we delete the addition confirmed by the ld. CIT(A) and the ground no. 6 and 7 raised by the assessee are allowed on merits. In view of the fact that the addition has already been deleted on merits, therefore all other grounds rendered academic and require no adjudication.
10. Since the facts and circumstances of the case are identical for A.Y. 2020-21, the decision rendered for A.Y. 2019 -20 above shall apply mutatis mutandis to A.Y. 2020 -21 as well and the addition confirmed by the ld. CIT(A) is deleted.
11. In the result, appeals of the assessee are allowed.
Order pronounced in t he open Court on 23/12/2025.
