ITO Vs Daljeet Singh (ITAT Chandigarh)
A Name That Did Not Match, an Addition That Could Not Stand: ₹91.11 Lakh Relief Upheld
Third-Party Records Required Corroboration
In ITO v. Daljeet Singh, ITA No. 462/Chandi/2026, concerning Assessment Year 2018-19, the Chandigarh Tribunal upheld deletion of a ₹91.11 lakh addition under section 69 relating to alleged cash payment for a property.
The addition rested on documents recovered during a search involving the Homeland Group. However, there was no corroborative evidence establishing the alleged payment, the assessee’s name could not be identified precisely in the documents, and no opportunity of cross-examination had been provided.
The Bench comprising Shri Manoj Kumar Aggarwal, Accountant Member, and Shri Rajesh Damodarlal Sharma, Judicial Member, dismissed the Revenue’s appeal by its order dated 1 October 2026.
The decision illustrates the evidentiary weaknesses that arise when an alleged property transaction is attributed to a taxpayer solely through third-party records.
Alleged Cash Payment Over and Above ₹65 Lakh
The assessee had declared income of approximately ₹16.95 lakh.
Following a search under section 132 on 26 February 2020 in the Homeland Group cases, the Department alleged that he had paid ₹91.11 lakh in cash to the seller, over and above the regular cheque payment of ₹65 lakh.
The assessment was reopened through a notice under section 148 dated 31 March 2022.
Although the assessee denied the alleged cash payment, the Assessing Officer rejected his explanation. An assessment was completed on 21 March 2023 under section 147 read with sections 144 and 144B, adding ₹91.11 lakh as unexplained investment under section 69.
The dispute was therefore not about the disclosed cheque payment. It concerned whether the third-party search material reliably established a separate, undisclosed cash component.
The Documents Did Not Precisely Identify the Assessee
Before the Commissioner (Appeals), the assessee challenged the accuracy of the information used against him.
He pointed out discrepancies concerning his name, the flat and the amount allegedly involved. The loose papers contained the name “DS Sethi”, whereas Sethi was not his surname.
This raised a fundamental question about whether the entries actually related to Daljeet Singh and his property transaction.
The assessee also submitted that the documents had been recovered from the laptop of Mr. Monu, who, according to his submission, was not an employee of the Homeland Group at the time of the search.
He further stated that he had not been allowed to cross-examine Mr. Monu or any other relevant person from the group.
These objections questioned both the attribution of the documents and the reliability of the allegation founded upon them.
Earlier Decisions Supported the Assessee’s Case
The assessee relied on Shri Paramjeet Singh Mogla v. ITO, ITA No. 853/Chd/2024, dated 25 March 2025, concerning Assessment Year 2016-17. The order records that the Tribunal had deleted an addition on identical facts in that case.
Reference was also made to the Gujarat High Court’s decision in Pr. CIT v. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, dated 6 March 2024.
As described in the present order, that case involved an unsigned document found at third-party premises, absence of corroborative material and failure to provide the assessee with statements recorded during the search. The proceedings under section 153C were held to be vitiated.
The assessee argued that comparable evidentiary and procedural deficiencies existed in his case.
The Commissioner (Appeals) accepted the submissions and, relying on these decisions, deleted the ₹91.11 lakh addition. The Revenue challenged that relief before the Tribunal.
Tribunal Found No Basis to Restore the Addition
The Tribunal held that the addition had been made merely on the basis of a third-party document, without corroborative evidence substantiating its contents.
It also found that the assessee had never been provided an opportunity of cross-examination, thereby violating principles of natural justice.
The uncertainty surrounding identification was expressly noticed. The Tribunal observed that even the assessee’s name could not be deciphered with exact precision in the alleged incriminating documents.
Considering these deficiencies and the earlier favourable Tribunal decision on a similar issue, it found no reason to interfere with the Commissioner (Appeals)’ order.
The Revenue’s appeal was accordingly dismissed, leaving the deletion intact. The matter was not remanded for fresh assessment.
Author’s Comments
The significance of this decision lies in the combination of defects: uncertain identification, absence of corroboration and denial of cross-examination. Together, they prevented the third-party document from supporting the alleged cash payment.
An entry found during another person’s search may warrant investigation. Its attribution to a particular taxpayer and transaction must nevertheless be established through reliable evidence.
Here, the difference between “DS Sethi” and Daljeet Singh was material because it directly affected the connection between the seized record and the assessee. The Revenue had not supplied corroborative evidence resolving that uncertainty.
The order should therefore be read as a finding on the evidentiary record in this case, rather than a blanket rejection of all third-party documents. Its practical lesson is that an alleged cash payment requires a demonstrated link to the taxpayer; an ambiguous entry cannot establish that link by itself.
Cases Discussed:
- Shri Paramjeet Singh Mogla Vs ITO, Ward 6(1), Mohali, ITA No. 853/CHD/2024, AY 2016-17, dated 25.03.2025 – Relied upon; the Tribunal recorded that the addition on identical facts had been deleted.
- Pr. CIT Vs Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, dated 06.03.2024 (Gujarat High Court) – Referred to for absence of corroborative material for a third-party document and non-supply of search statements; proceedings under Section 153C were held vitiated.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
1. Aforesaid appeal by revenue for Assessment Year (AY) 2018-19 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 04.02.2026 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 147 r.w.s. 144 r.w.s. 144B of the Act on 21.03.2023. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
2. The brief facts as captured in the impugned order are that the assessee declared income of Rs.16.95 Lacs. However, the case was reopened and notice u/s 148 was issued on 31.03.2022. The same was pursuant to search action u/s 132 on 26.02.2020 in the case of M/s Homeland Group of cases. On the basis of search findings, it was alleged that the assessee paid cash of Rs.91.11 Lacs to the seller in addition to regular cheque payment of Rs.65 Lacs. Though the assessee refuted the said allegations, the same stood rejected by Ld. AO and the amount of Rs.91.11 Lacs was added as unexplained investment u/s.69 of the Act while framing the assessment.
3. The assessee assailed impugned addition during first appeal and inter-alia, submitted that the addition was made on the basis of wrong information and no opportunity of cross-examination of the person, on the basis of which impugned addition was made, was ever provided to the assessee. The assessee also pointed out that there was incorrect / incomplete information with regard to name of the assessee, flat of the assessee and amount also. In the loose papers, the name was mentioned as ‘DS Sethi’ which was not the surname of the assessee. The assessee also stated that the addition was made on the basis of documents recovered from the laptop of Mr. Monu who was not even employee of M/s Homeland Group at the time of search and no opportunity was given to assessee to cross-examine Mr. Monu or any other person of Homeland Group. Reliance was placed on the decision of this Tribunal in the case of Shri Paramjeet Singh Mogla Vs ITO, Ward 6(1), Mohali. In ITA No. 853/CHD/2024 dated 25.03.2025 for AY 2016-17 deleting impugned addition on identical facts. Reference was also made to the decision of Hon’ble Gujarat High Court has in case of Pr. CIT vs. Kaushik Nanubhai Majithia (TA No.20 of 2024 dated 06.03.2024) holding that the document found from premises of a third-party was without any signature and there was no corroborative material to substantiate the said document. Further, the statements of persons recorded during the search, with reference to alleged seized material, were not provided to assessee. Therefore, entire proceedings u/s 153C was held to be vitiated. Similar facts were stated to be existing in the case of the assessee and there was no corroborative material to substantiate the alleged incriminating document and no opportunity of cross-examination was ever provided to the assessee. The Ld. CIT(A), concurring with aforesaid submissions and placing reliance on these decisions, deleted the impugned addition against which the revenue is in further appeal before us.
4. From the enumerated facts, it is clear that impugned addition has been made merely on the basis of third-party document and there are no corroborative evidences to substantiate the contents of the same. No opportunity of cross-examination has ever been provided to the assessee which vitiates the principles of natural justice. Even the name of the assessee could not be deciphered with exact precision in the alleged incriminating documents. We also find that similar issue stood decided in assessee’s favor by the decision of this Tribunal. Therefore, the impugned order does not call for any interference on our part.
5. The appeal stand dismissed.
Order pronounced on 1st October, 2026
