Krishna Mali Vs ACIT (ITAT Mumbai)
On-Money Additions Collapse: ITAT Deletes Sec 69 Additions Based on Third-Party Pen Drive
The ITAT Mumbai deleted additions made under Section 69 towards alleged “on-money” cash payments for purchase of shops, holding that mere reliance on third-party statements and data found in a pen drive is insufficient without independent corroboration.
The additions were based on statements of a key employee of the builder group and Excel data recovered from his pen drive during a search. However, the Tribunal noted that no incriminating material was found from the assessee, no diary evidencing cash payments was recovered, and the assessee consistently denied making any such payments.
Crucially, the Tribunal held that third-party evidence cannot be used against the assessee without proper corroboration and without granting opportunity for cross-examination. Failure to confront the assessee with such material and denial of cross-examination amounted to violation of principles of natural justice, rendering the additions unsustainable.
Following consistent precedents in identical Rubberwala Group cases, the Tribunal concluded that suspicion or unverified electronic data alone cannot justify additions under Section 69, and accordingly deleted the additions for all years.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The assessee has filed the present appeals against the common impugned order dated 01.10.2025, passed under section 250 of the Income Tax Act 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals)-52, Mumbai [“learned CIT(A)], for the assessment years 2017-18, 2018-19 and 2019-20.
