₹21 Crore Section 68 Addition Based on Unproved Cash Receipts Deleted by ITAT Patna

DCIT Vs Ajay Kumar (ITAT Patna)

₹21 Crore Addition on Photocopies: Suspicion Could Not Supply the Missing Evidence

The Allegation: Huge Cash Payments Behind a Real Estate Project

The Patna Tribunal upheld the deletion of a ₹21 crore addition under section 68, holding that uncorroborated photocopies, third-party ledger entries and unsupported valuation assumptions could not establish receipt of undisclosed income. The decision also highlights a fundamental statutory requirement: section 68 applies to sums credited in the assessee’s books, whereas the Assessing Officer himself alleged that these receipts were outside the books.

The dispute arose from information received from the Investigation Wing alleging substantial cash payments by Shri Iqbal Singh Sodhi, Director of Saviour Builders Pvt. Ltd., to the assessee and his related companies in connection with the GreenArch real estate project of New Way Homes Pvt. Ltd.

According to the Department, aggregate payments amounted to approximately ₹53.05 crore, including ₹41.60 crore allegedly paid in cash. For assessment year 2013-14, the Assessing Officer reopened the assessment and added ₹21 crore as unexplained receipts under section 68.

Photocopies Produced, Original Evidence Missing

The assessment rested principally on an investigation report, photocopies of alleged cash receipts and certain ledger extracts. Despite repeated requests, the assessee received only part of the material relied upon. Other documents were withheld on the ground of confidentiality.

The assessee denied the alleged cash transactions, disputed the signatures on the receipts and denied any joint venture arrangement between the companies. Both the assessee and Shri Sodhi had also denied the cash payments in statements recorded on oath.

The Tribunal noted that the photocopies were unsupported by original documents and remained uncorroborated by independent evidence. The source and authorship of the ledger material had not been established. Consequently, the Department had failed to prove that the transactions recorded in those papers had actually occurred.

The Payer’s Assessment Undermined the Department’s Case

A significant feature was the assessment of Saviour Builders Pvt. Ltd., where the same allegations had already been examined.

In those proceedings, the Assessing Officer found that no original cash receipts were available, including with the Investigation Wing. The photocopies were uncorroborated and inconsistently signed. The alleged joint venture agreement was also not established.

Instead, Saviour Builders had acquired 42% shareholding through fresh allotment of shares at face value. It had not purchased shares from existing shareholders. The share allotment was documented, and other shareholders had received shares at the same price.

These findings directly contradicted the suggestion that a substantial undisclosed payment had been made to the assessee for acquiring an interest in the project.

An Assumed Land Value Could Not Prove Cash Receipt

The Department’s computation also depended upon an alleged land value of ₹172.80 crore, based on a rate of ₹43,200 per square metre.

However, the documented allotment by the Greater Noida Industrial Development Authority was approximately ₹46.47 crore, at ₹11,618 per square metre. The Tribunal found that the higher valuation was unsupported by any cogent evidence or valuation report.

The problem was therefore more than a disagreement over valuation. The Department had attempted to infer a huge cash payment from an unsubstantiated valuation premise, without proving the payment itself.

Section 68 Required a Credit in the Books

The Tribunal separately held that the addition suffered from a basic statutory defect.

Section 68 operates where a sum is found credited in the books maintained by the assessee and its nature or source is not satisfactorily explained. Here, the Assessing Officer’s own allegation was that the cash receipts were never recorded in the books.

Accordingly, the Tribunal held that invoking section 68 was fundamentally wrong. This finding was additional to the Department’s failure to establish the alleged receipts through reliable evidence.

Third-Party Papers Required Independent Corroboration

The Tribunal relied upon several decisions concerning the evidentiary value of third-party records, including CBI v. V.C. Shukla, Common Cause v. Union of India and Lata Mangeshkar.

It specifically referred to the Karnataka High Court decision in DCIT v. Sunil Kumar Sharma [2024] 159 taxmann.com 179, concerning loose papers recovered from another person. The order also recorded dismissal of the Department’s SLP, reported at [2025] 180 taxmann.com 293.

The Tribunal further held that the presumptions under sections 132(4A) and 292C could not automatically be extended against an assessee who did not possess the documents. Non-disclosure of relied-upon material and denial of cross-examination also weakened the assessment.

The Revenue’s appeals were dismissed. The assessee’s cross-objections were dismissed, with the issues raised therein left open.

Author’s Comments

The size of an allegation does not improve the quality of its evidence. Here, missing originals, disputed signatures, sworn denials, unsupported valuation and contrary findings in the alleged payer’s assessment collectively defeated the addition.

The decision should not be read as granting immunity to every transaction recorded outside the books. Its practical lesson is precise: the Department must prove the receipt and invoke the provision whose statutory conditions are satisfied. A photocopy may prompt an enquiry; it cannot, without reliable supporting material, complete the proof.

Cases Discussed

• L.K. Advani Vs. Central Bureau of Investigation — 1997 Cri LJ 2559 (Delhi High Court). Applied: even admissible diary or loose-sheet entries require independent evidence establishing the truth of their contents.
• CIT, Central-1 Vs. Mul Health Care Products Ltd. — 2015 SCC OnLine Bom 3917 (Bombay High Court). Relied upon: loose sheets alone, without corroborative evidence, could not establish bogus purchases.
• ITO Vs. Hallmark Constructions — ITA No. 694/HYD/2009 (ITAT Hyderabad). Relied upon: loose sheets are dumb documents unless corroborative material supports the addition.
• J.R.C. Bhandari Vs. ACIT — [2003] 133 Taxman 44 (Jodh.) (Mag.) (ITAT Jodhpur). Applied: entries in loose sheets recovered from another person have negligible evidentiary value without supporting testimony.
• DCIT Vs. Sunil Kumar Sharma — [2024] 159 taxmann.com 179 (Karnataka High Court). Relied upon: loose sheets recovered from one person could not independently establish liability against another.
• DCIT Vs. Sunil Kumar Sharma — [2025] 180 taxmann.com 293 (Supreme Court). Referred to: dismissal of the Department’s special leave petition as recorded in the Tribunal order.
• Common Cause (A Registered Society) Vs. Union of India — [2017] 77 taxmann.com 245 (Supreme Court). Applied: uncorroborated loose sheets and computer printouts could not justify proceedings based solely on their entries.
• Central Bureau of Investigation Vs. V.C. Shukla & Ors. — AIR 1998 SC 1406 (Supreme Court). Relied upon: entries in books require independent evidence of trustworthiness before fastening liability on another person.
• ACIT Vs. Ms. Lata Mangeshkar — [1974] 97 ITR 696 (Bombay High Court). Applied: third-party ledger entries naming an assessee as recipient were merely corroborative and insufficient without independent direct evidence.
• Kishinchand Chellaram Vs. CIT — (1980) 125 ITR 713 (Supreme Court). Relied upon: undisclosed material and denial of a fair opportunity to contest evidence undermine an assessment.
• Andaman Timber Industries Vs. CCE — (2015) 281 CTR 241 (Supreme Court). Relied upon: denial of cross-examination of a material witness constitutes a serious violation of natural justice.
• CIT Vs. Anil Khandelwal — [2015] 64 taxmann.com 487 (Delhi High Court). Applied: presumptions under sections 132(4A) and 292C cannot automatically operate against a third party.
• Vinit Ranawat Vs. ACIT — [2017] 88 taxmann.com 428 (ITAT Pune). Applied: third-party documents without independent corroboration cannot alone support an addition.
• Mani Square Ltd. Vs. ACIT — [2020] 118 taxmann.com 452 (ITAT Kolkata). Relied upon: presumptions concerning seized or impounded documents do not automatically extend to another assessee.
• Roma Traders Vs. First ITO — [1988] 25 ITD 599 (Pat.) (TM) (ITAT Patna). Applied: section 132(4A) presumption cannot be drawn against a person other than the person from whom books were seized; adequate opportunity to explain entries remains necessary.
• Deoniti Prasad Sing Vs. CIT — (1947) 15 ITR 165 (Patna High Court). Relied upon: the Department cannot adopt contradictory positions concerning the same transactions according to convenience.
• Radhasoami Satsang Vs. CIT — 193 ITR 321 (Supreme Court). Relied upon: consistency in treatment of substantially identical matters.

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT PATNA

These appeals of the Revenue and COs of the assessee are against the order of the Commissioner of Income-tax (Appeals), Patna-3 (hereinafter referred to as the “Ld. CIT(A)”]even dated 12.12.2025 for the AYs2013-14, 2014-15.

2. At the outset, we observe from the appeal foldersof the revenue that there is a delay of 22 days in filing these appeals by the department in support of which a condonation petitions were filed. It was stated in the condonation petitions that the delay has occurred due to obtaining the administrative approvals from the competent authorities, which took quite a long time and therefore the delay, being for bonafide and genuine reasons , may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the reasons cited before us, we are inclined to condone the delay and admit these appeals for hearing.

A.Y. 2013-14

ITA No. 196/PAT/2026 (Revenue’s Appeal)

3. The only issue raised in the various grounds of appeal by the revenue is against the order of ld. CIT (A) deleting the addition of ₹21.00 crores as made by the ld. AO u/s 68 of the Income-tax Act, 1961 (the Act) in respect of unaccounted cash transactions by ignoring the evidentiary value of cash payments made by Shri Iqbal Singh Sodhi to Shri Ajai Kumar Singh on different dates as well the bank transactions reflected in the bank account of M/s New Way Homes Pvt. Ltd. including unsecured loans of ₹1.00 crore each dated 08.11.2012 and 6.12.2012 advanced by M/s Saviour Builders Pvt. Ltd.

3.1. The facts in brief are that the assessee filed the return of income on 29.09.2013, declaring total income of ₹28,54,160/-. The assessee has declared income by way of salary, house property and business income. During the year the ld. AO received information that assessee has entered into cash transactions of ₹21.00 crores which were in the nature of unexplained money. Accordingly, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 30.03.2021. The assessee filed the return of income on 26.04.2021, in compliance declaring income of ₹24,58,160/-. Thereafter, notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued and duly served upon the assessee. The assessee was also provided with the reasons for re­opening on 24.06.2021. Thereafter, the assessee filed objections to the reopening of assessment which were duly disposed off by the ld. AO on 15.09.2021. The information was received by the ld. AO from the office of Additional DIT, Unit-2, New Delhi to the effect that the assessee had entered into unexplained and undisclosed transactions in cash. The information stated that Shri Iqbal Singh Sodhi, Director of M/s Saviour Builders Pvt. Ltd. had entered into joint venture with Shri Ajay Kumar Singh director of M/s New Way Homes Pvt. Ltd.(Green Arch Project). The information stated that for the same project, a sum of ₹53.05 crores was paid by Shri Iqbal Singh Sodhito Shri Ajay Kumar Singh and his related companies. Out of ₹53,05 crores, ₹41.60 crores was received by Shri Ajay Kumar Singh, in cash out of the books of accounts(₹ 21.00 in A.Y. 2012-13 and s. 20.60 in A.Y. 2013­14). The balance of ₹11.45 crores were received through banking channel and reflected in the books of accounts. The AO also extracted the some receipts in the assessment order in Para no.4.2. The ld. AO noted that M/s New Way Homes Pvt. Ltd. and M/s Saviour Builders Pvt. Ltd. both entered into joint venture for Green Arch Project. The ld. AO noted that a plot measuring 40,000/- Sq. mtr. at the rate of 11,618 per Sq. mtr. was allotted to M/s New Way Homes Pvt. Ltd.at Noida extension and the total amount of land payment was ₹46,47,20,000/-. However, it is evident from the MCA website that the Shri Iqbal Singh Sodhi became director of 40% shareholding of M/s New Way Homes Pvt. Ltd. on 22.07.2013. It was also noted by the ld. AO that M/s New Way Homes Pvt. Ltd. and M/s Saviour Builders Pvt. Ltd. at the time of agreement of joint venture qua the land had mutually agreed at the rate of 43,200/- Sq. mtr. for the land measuring of 40,000/- sq. mt. According to the ld. AO the total cost of land before entering into joint venture worked out to ₹1,72,80,00,000/- which was calculated by applying 43,200/-to the total land area of 40,000/- Sq. mtr. According to the ld. AO, Shri Iqbal Singh Sodhi got 42%, shareholding in M/s New Way Homes Pvt. Ltd. and paid the differential total cost of land at the time of allotment to M/s New Way Homes Pvt. Ltd. The ld. AO calculated the cost of land at the time of agreement with M/s New Way Homes Pvt. Ltd. and M/s Saviour Builders Pvt. Ltd. at ₹53,05,76,600/- being 42% of 172,80,00,000 (-) minus 46,47,20,000/-. The ld. AO noted that Shri Iqbal Singh Sodhi paid ₹53.05 crores to Shri Ajay Kumar Singh and its related companies out of the said amount, ₹41.60 crores were paid in cash. The details whereof are given in para no.4.4 of the assessment order aggregating to ₹53,05,00,000/-. Thereafter, the ld. AO noted after analyzing the bank account no. ‘30000015’ of M/s New Way Homes Pvt. Ltd. that two unsecured loans of ₹1.00 crore each on 08.11.2012 and 06.12.2012 were given by M/s Saviour Builders Pvt. Ltd. to M/s New Way Homes Pvt. Ltd. The ld. AO noted that the assessee had not disclosed the said amount in the ITR and its books of accounts. The AO, accordingly, added the same as unexplained receipt u/s 68 of the Act in the assessment framed vide order dated 30.03.2022, u/s 147/ 144B of the Act.

3.2. In the appellate proceedings, the ld. CIT (A), after examining all the details and evidences on record and after taking into account the contentions and submissions of the assessee, deleted the addition by observing and holding as under:

“Appellate findings:

The appellant, an individual, filed return of income for A.Y. 2013-14 declaring total income of Rs.24,58,160/- The Income comprised salary, house property and business income.

The Assessing Officer (AO) received an information alleging that the appellant had received each amounting to Rs.21,00,00,000/- during F.Y. 2012-13 from Shri Iqbal Singh Sodhi in connection with an alleged Joint Venture (JV) project “Green Arch” between M/s New Way Homes Pvt Ltd and M/s Saviour Builders Pvt Ltd. Based on this information, the assessment was reopened u/s 147 and notice u/s 148 was issued on 30.03.2021.

During reassessment, the AO relied primarily on (1) a report of ITO (OSD), Unit-2, New Delhi, (il) photocopies of four alleged cash receipts, and (2) a lodger extracts allegedly showing receipt of cash. The AO held that cash alleged to have been received by the appellant at Rs.21 crore for FY2012-13 represented unexplained income u/s 68.

The appellant repeatedly sought the documents relied upon, including the ITO Delhi report, JV agreement, supporting papers evidencing payment of Rs.53.05 crore and all 19 alleged cash receipts. The AO supplied only partial documents (4 cash receipts, certain ledger pages and approval u’s 151), but refused to provide remaining documents citing “confidentiality”.

The AO finally completed the reassessment on 30.03.2022, making addition of Rs 21,00,00,000/- u/s 60 and initiating penalty u/s 271(1)(c)

During the appellate proceedings, the appellant made detailed submissions and stated that reassessment was initiated solely on the basis of a confidential report of ITC Delhi and alleged documents which were never furnished, despite repeated written requests. Ledger extracts and cash receipts provided later were incomplete, unauthenticated, and only 4 of 19 alleged receipts were supplied. Joint venture agreement and documents evidencing alleged payment of Rs.53.05 crore were never furnished.

Further, the appellant contended that the payments were not received in cash and that the alleged joint venture with Mis Saviour Builders Pvt. Ltd. did not exist. All shareholdings were acquired through fresh allotment of shares at lace value, and the land transactions were properly documented at the GNIDA-approved rates. The alleged cash receipts were fabricated, and signatures were forged.

In continuation, the appellant highlighted the assessment proceedings of M/s Saviour Builders Pvt. Ltd. (AY 2013-14), wherein the AQ of Saviour Builders confirmed that no joint venture existed with New Way Homes Pvt. Ltd. No cash payment was made to the appellant.42% shareholding was acquired through fresh shares issued at face value. Land valuation of Rs. 173.80 crore alleged by the AO was baseless; GNIDA allotment valued the land at Rs. 46.47 crore (Rs. 11,618 per Sqmt), and even current circle rates were much lower than the alleged value. Statements recorded under Section 131(1) of the Act from Sh. Iqbal Singh Sodhi (Director, Saviour Builders) and Sh. Ajay Kumar confirmed that no cash transaction took place and no joint venture named “Green Arch” existed. The appellant requested deletion of the addition of Rs. 21,00,00,000/-.

I have carefully considered the submissions filed by the appellant, the assessment order of M/s Saviour Builders Pvt. Ltd. for FY 2012-13 dated 26.03.2022, the statements recorded u/s 131(1) from both Shri Iqbal Singh Sodhi and Shri Ajay Kumar, the correspondence between the Assessing Officer of Saviour Builders and the Investigation Wing, the documentary evidences placed on record, and the overallfactual matrix.

The appellant has submitted that identical allegations were examined in detail in the assessment proceedings of M/s Saviour Builders Pvt. Ltd., wherein it was alleged that cash aggregating to Rs.53.05 crore had been paid by Shri Iqbal Singh Sodhi (Director, Saviour Builders) to the appellant and his related companies. Out of this, Rs.21 crore was stated to have been paid during FY 2012-13.

The assessment order of M/s. Saviour Builders, passed by the JCIT (OSD) Central Circle-4, New Delhi, categorically records that no cash receipts, original or otherwise, were found or produced in support of the allegation, and the Investigation Wing also confirmed that such receipts were not available with them. The JCIT specifically held that the Xerox copies relied upon in the Enquiry Report were uncorroborated, inconsistently signed, and incapable of being treated as reliable evidence. These findings are fully borne out from the record. The relevant portion of the said order is as under:

“6.7 Considering the submissions made by the assessee, statements recorded on oath and correspondence made with the ITO(Inv.), Unit-2, New Delhi it is clear that enquiry in the said case was made on the basis of compliant made by a third party. However, during the course of assessment proceedings below facts have been established beyond doubt:

1) That, only xerox copies of cash receipt amounting to Rs. 10 crore was brought an record as against the alleged cash payment of Rs. 21 crore made during FY 2012-13.

That, no original cash receipts are available on records. The same was also not available with the ITO (Inv.), Unit-2/ New Delhi.

That, As alleged in the Enquiry Report there is no Joint Venture Agreement between the assessee company, and M’s New Way Homes Pvt. Ltd. rather Greenarchis a residential real estate project constructed and managed in M/s New Way Homes Pvt. Ltd

iv) That, the assessee was not having any joint venture arrangement with M/s New Homes Private Limited. Instead 31,50,000 fresh shares were allotted to the assessee by M/s New Way Homes Pvt. Ltd. having face value of Rs. 10/- issued at par constituting 42% shareholding in M/s New Way Homes Pvt. Ltd. Further, Shares were not only allotted to Saviour but also to other existing shareholders and new shareholders at the same time and same price.

v) That, shares were not purchased from any existing shareholder. Only fresh shares were allotted to assessee and other shareholders.

vi) That, the Book Value of the shares of M/s New Way Homes private Limited before the allotment of fresh shares was less than the face value and the same was allotted to assessee at face value.

vii) That, the alleged value of land, as stated in the Enquiry Report, of Rs. 172.80 crore has not been substantiated or corroborated by any documentary evidences.

viii) That, the alleged land admeasuring 40,000 Sqmt was allotted to M/s Now Way Homes Private Limited by Greater Noida Industrial Development Authority at a value of Rs. 46,47,20,000/-i.e. at the rate of Ra. 11,618 per Sqmt vide allotment letter no. PROPIORS 04/2011/400 dated 01.03.2011 for development of group housing society. Out of the total consideration, only 10% of consideration (0. Rs. 4,64.72.000) was paid at the time of allotment and remaining 90% amount (le 41,82,48,000) was to be paid in 20 Bi­annually instalments from 01.09.2011 and to be paid tilt 01.03.2021 The same was clearly evident from the copy of lease deed executed on 09.05.2011 submitted by assessee vide reply submitted on 25.03.2022.

ix) That, value of land as per stamp valuation authority, at the time of allotment of shares to assessee, was much less than the alleged value of transaction Even as on date, the value of said land as per stamp valuation authority, is less than the alleged value of transaction. As per the lease deed of land it is allotted by GNIDA at the rate of Rs. 11,618 per Sqmt. Further, the circle rate of land as per stamp valuation authority, even as on today i.e. after almost 10 years, is Rs. 33,000 per Sqmt. Since, circle rate of land in 2021-22 is Rs. 33,000 per Sqmt, value of the land at alleged rate of Rs. 43,200 par Sqmt in 2013-14 is unreasonable and not substantiated or corroborated by any documentary evidence.

That, the out of books transaction alleged in the complaint is not based on any cogent reason and also not supported by any documentary evidence, Even in Enquiry Report, there are no conclusive findings. The Xerox copies of alleged money receipts cannot be taken as conclusive evidence without any circumstantial or collaborative documentary evidences.

6.8 In the light of the above facts, it is clear that no prudent businessman shall make such a huge payment of Rs. 170 crores (@Rs. 46200 per Sqmt) for any land circle rate of which, even as on today i.e. after 10 years, is much lower than alleged value and which was allotted by Greater Noida Industrial Development Authority at a value of Rs. 46.47 crore (Rs.11600 per Sqmt) against which only 10% payment was made at the time of allotment. Based on the documents and information available on record, it is evident that compliant made against the assessee is baseless and uncorroborated. Therefore, the allegation that cash payment has been made by Sh. Iqbal Singh, Sodhi as a Director of the assessee company to Sh. Ajay Kumar as Director of M/s New Way Homes Pvt. Ltd. is baseless, unsubstantiated and without any documentary evidences.”

Further, both directors Shri Iqbal Singh Sodhi (Saviour Builders) and Shri Ajay Kumar (New Way Homes Pvt. Ltd.) in their sworn statements denied the existence of any Joint Venture agreement between the two companies. They also denied having carried out any cash transactions.

The assessment order of Saviour: Builders further confirms thatno Joint Venture Agreement of “GreenArch” exists between the parties. “GreenArch” is a project executed and controlled by New Way Homes Pvt. Ltd. alone. The Investigation Wing did not provide any Joint Venture document despite requisition. Thus, the very promise of alleged cash flow on account of a non­existent Joint Venture stands demolished.

The JCIT (OSD) has given clear factual findings that Saviour Builders merely Required 42% shareholding in New Way Homes Pvt. Ltd. through allotment of fresh shares at face value. No existing shareholder sold shares to Saviour Builders.Shares were allotted to multiple shareholders at the same face value, and the book value of these shares was even less than the face value, making any payment of a premium or additional consideration wholly Improbable. These findings directly contradict the AO’s assumption that a large unaccounted consideration changed hands.

Further, the allegation of land being valued at Rs.173.80 crore is found to beThe JCIT (OSD) has given clear factual findings that Saviour Builders merely Required 42% shareholding in New Way Homes Pvt. Ltd. through allotment of fresh shares at face value. No existing shareholder sold shares to Saviour Builders. Shares were allotted to multiple shareholders at the same face value, and the book value of these shares was even less than the face value, making any payment of a premium or additional consideration wholly Improbable. These findings directly contradict the AO’s assumption that a large unaccounted consideration changed hands.

Further, the allegation of land being valued at Rs.173.80 crore is found to becontradicted by the Lease Deed dated 09.05.2011, which clearly shows allotment of the land at Rs.46.47 crore (Rs.11,618 per sq. mtr.). Unsupported even as per current circle rates, which are only around Rs.33,000 per sq. mir. after almost ten years. Contrary to commercial prudence, as held by the JCIT, because the land was allotted on payment of only 10% upfront with the balance payable in instalments until 2021, making any alleged four-fold value Increase within two years untenable.

The JCIT (OSD) therefore concluded that the Investigation Wing’s valuation premise was arbitrary, irrational, and devoid of any evidence. I find no material brought on record by the AO in the present case to rebut these findings.

Further, both key persons namely, Shri Iqbal Singh Sodhi and Shri Ajay Kumarhave categorically denied any cash transactions whatsoever, the genuineness of the purported cash receipts, their signatures on the alleged receipts, the existence of any Joint Venture. Their statements are consistent, uncontroverted by any contrary evidence, and have been accepted by the JCIT (OSD) in the assessment of Saviour Builders.

The cumulative effect of absence of any original cash receipt, categorical dental under oath by both parties, findings of the JCIT (OSD) that the complaint and enquiry were baseless, absence of a Joint Venture, share acquisition being fully explained and documented, unrealistic and unsubstantiated valuation assumptions, and lack of any independent evidence with the AO, is that the allegation of cash receipt of Rs.21 crore by the appellant is entirely devoid of merit. Accordingly, the addition of Rs. 21,00,00,000/- made by the Assessing Officer is deleted in full. The grounds of appeal Nos. 4 to 15 are allowed. ‘contradicted by the Lease Deed dated 09.05.2011, which clearly shows allotment of the land at Rs.46.47 crore (Rs.11,618 per sq. mtr.). Unsupported even as per current circle rates, which are only around Rs.33,000 per sq. mir. after almost ten years. Contrary to commercial prudence, as held by the JCIT, because the land was allotted on payment of only 10% upfront with the balance payable in instalments until 2021, making any alleged four-fold value Increase within two years untenable.

The JCIT (OSD) therefore concluded that the Investigation Wing’s valuation premise was arbitrary, irrational, and devoid of any evidence. I find no material brought on record by the AO in the present case to rebut these findings.

Further, both key persons namely, Shri Iqbal Singh Sodhi and Shri Ajay Kumar havecategorically denied any cash transactions whatsoever, the genuineness of the purported cash receipts, their signatures on the alleged receipts, the existence of any Joint Venture. Their statements are consistent, uncontroverted by any contrary evidence, and have been accepted by the JCIT (OSD) in the assessment of Saviour Builders.

The cumulative effect of absence of any original cash receipt, categorical dental under oath by both parties, findings of the JCIT (OSD) that the complaint and enquiry were baseless, absence of a Joint Venture, share acquisition being fully explained and documented, unrealistic and unsubstantiated valuation assumptions, and lack of any independent evidence with the AO, is that the allegation of cash receipt of Rs.21 crore by the appellant is entirely devoid of merit. Accordingly, the addition of Rs. 21,00,00,000/- made by the Assessing Officer is deleted in full. The grounds of appeal Nos. 4 to 15 are allowed.”

3.3. After hearing the rival contentions and perusing the materials available on record, we find that the undisputedly that the ld. AO received information that assessee has entered into unrecorded and unexplained transactions of ₹21.00 crores during the impugned assessment year. We note that the M/s New Way Homes Pvt. Ltd. and M/s Saviour Builders Pvt. Ltd. are both engaged in the business of real estate. The assessee Shri Ajay Kumar Singh is director of M/s New Way Homes Pvt. Ltd. and Shri Iqbal Singh Sodhi is the director of M/s Saviour Builders Pvt. Ltd. Both these entities have entered into a joint venture project under the name and style of ‘Green Arch Projects’ . We note that a plot admeasuring 40,000/- sq. mt situated in Noida Extension was allotted to M/s New Way Homes Pvt. Ltd. The AO noted that share holding of 42% was given to Shri Iqwal Singhj Sodhi with effect from 22.07.2013. The ld. AO alleged that at the time of entering into, agreement the parties mutually valued the land at 43,200/- per sq. mt valuing the plot at ₹170,80,00,000/-. The ld. AO noted that Shri Iqbal Singh Sodhi has acquired 42% of shareholding in M/s New Way Homes Pvt. Ltd. and paid an amount being 42% of the difference between the aforesaid valuation and original allotment cost of the plot which worked out to ₹53,05,77,600/- [42% (172,80,00,000/- – 46,47,20,000/-)]. The ld. AO noted that the assessee paid ₹11,45,00,000/- through books of accounts by way of share capital/ unsecured loans in the related entities of the assessee and the remaining consideration of ₹41.60 crores was paid by in cash by Shri Iqbal Singh Sodhito the assessee and his related concerns.

3.3.1. We also note that during the course of assessment proceedings, the assessee sought the details/ documents relied on upon by the ld. AO for reopening of assessments. However, the ld. AO only supplied the four cash receipts and refused to provide the remaining documents citing the confidentiality of the documents. The ld. AO finally framed the assessment by making an addition of ₹21.00 crores u/s 68 of the Act on account of unexplained money. We note that the ld. CIT (A) in the appellate proceedings, allowed the appeal of the assessee by noting that identical allegations were examined in great detail in the assessment proceedings of M/s Saviour Builders Pvt. Ltd., wherein it was alleged that aggregate payments amounting to ₹53.05 crores paid by Shri Iqbal Singh Sodhi director of M/s Saviour Builders Pvt. Ltd. to the appellant and the related entities. Out of the said amount, Rs. 21.00 crores was stated to be paid in the impugned financial year. We note that the ld. CIT (A) recorded a finding of fact that the JCIT(OSD), Central Circle -4, New Delhi, categorically recorded a finding that no cash receipts original or otherwise were found or produced in support of the allegation and also the investigation wing affirmed that such receipts were not available with them. The ld. JCIT specifically held that xerox copies relied in the current report were uncorroborated, inconsistently signed and incapable of being treated as reliable evidence. The ld. CIT (A) extracted the order passed by the ld. JCIT, Circle 4,New Delhi, in the appellate order. Thereafter the ld. CIT (A) noted that both the parties have denied having carried out any cash transactions in their respective statements recorded u/s 131 of the Act. It was also stated by the ld. CIT (A) that in the assessment order of M/s Saviour Builders Pvt. Ltd., it was specifically noted that there was no joint venture agreement for “Green Arch Project” between the parties. It was noted by the ld. CIT (A) that the Green Arch Project was executed and controlled by M/s New way homes Pvt Ltd. It was also noted that investigation wing did not provide any joint venture documents despite requisition/request. Thus, the very premise of alleged cash ever given in connection with the plot on account of non-existence joint venture stood demolished. The ld. CIT (A) also noted that that the ld. JCIT (OSD) Central Circle-4, New Delhi also recorded a factual finding for M/s Saviour Builders Pvt. Ltd. merely acquired 42% shareholding in M/s New Way Homes Pvt. Ltd. through allotment of shares at a face value and no existing shareholders had sold their equity shares to M/s Saviour Builders Pvt. Ltd. We also note that shares were allotted to multiple shareholders at the same face value and the book value of the shares was even lessor than face value thereby making the payment of premium or additional consideration a very remote possibility. Therefore, the entire addition made by the ld. AO is based on conjunctures and surmises. Consdering these facts and circumstances, we do not find any infirmity in the order of ld. CIT (A), who has rightly deleted the addition by holding that there was no joint venture agreement and share acquisition was fully explained and documented and the ld. AO has made the addition on the basis of unrealistic and un-substantive valuation assessment which were not corroborated with the evidences.

3.3.2. Moreover, the ld. AO made an addition us/ 68 of the Act by treating the cash transactions of ₹21.00 crores which were allegedly not recorded in the books of account as unexplained receipts u/s 68 of the Act and added the same to the income of the assessee. We have perused the provisions of section 68 of the Act and find that the said provisions are not applicable in the instant case. In our opinion, the provisions of Section 68 of the Act apply only where sum of money is found to be credited into the books of account and the assessee either offers no explanation regarding its nature or source or explanation offered is found to be not satisfactory. We note that in the preset case, the ld. AO has himself noted that the alleged cash receipts of ₹21.00 crores were never recorded in the books of account. Therefore the addition made by the ld. AO u/s 68 of the Act is fundamentally wrong and hence , cannot be sustained. Considering these facts and circumstances, we do not find any infirmity in the order of ld. CIT (A).

3.3.3. We also note that the land valuation done by the ld. AO is not supported by any cogent evidences or valuation report. Therefore, the valuation done by the ld. AO is based on presumptions and surmises. The ld. AO repeatedly arrived noted that Shri Iqbal Singh Sodhi paid ₹1.00 crores to the assessee for becoming the shareholder of M/s New Way Homes Pvt. Ltd. We also note that there was no corroboration to the allegation made by the ld. AO nor any evidences were provided to the assessee to this effect by the AO. We note that the ld. AO alleged the 11 cash receipts exchanged between the assessee and Shri Iqbal Singh Sodhi, however, the ld. AO provided Photo Copies of 4 of such receipts and refused to supply the remaining documents citing the confidentiality reasons. Therefore, the photo copies relied upon by the department were unsupported by the original documents and remained wholly uncorroborated by independent evidences.

3.3.4. The case of the assessee is squarely covered by the Hon’ble Delhi High Court decision in case of L.K. Advani Vs. Central Bureau of Investigation, 1997 Cri LJ 2559 (Del.), wherein while dealing with the entries in diaries and loose sheets, it was held that even assuming such documents to be admissible, they are ‘of little help’ unless the truth of their contents is established by independent admissible evidences. The court further held that mere proof of a document does not prove the truth of the facts stated therein, which must be established by separate evidences. Similarly, the Hon’ble Bombay High Court in case of CIT, Central -1 Vs. Mul Health Care products Ltd. 2015 SCC Online Bom 3917, held that on the strength of lose sheet a case of bogus purchases cannot be made out where no other evidence exists.

3.3.5. Similarly, the Co-ordinate Bench in case of ITO Vs Hallmark Constructions, ITA No. 694/HYD/2009, held that loose sheets are “dumb documents” and that the Assessing Officer is “duty bound to bring on record corroborative material before making an addition on their basis.

3.3.6. Similarly, the co-odinite Bench of the Tribunal, in case of J.R.C Bhandari v. ACIT, [2003] 133 Taxman 44 (Jodh.) (Mag.), dealt with an addition made on the strength of a loose sheet recovered not from the assessee but from a co-employee, and, applying the decision in the case of CBI v. V.C. Shukla(supra),it has held that a mere entry in a loose sheet, by itself, without the sworn statement of the related person supportive of the entry, “hardly has any evidentiary value worth the name”, more so where the sheet is found in the possession of another/third person”.

3.3.7. We also note that on facts materially similar to the present case, the Hon’ble Karnataka High Court, in Dy. CIT v. Sunil Kumar Sharma, [2024] 159 taxmann.com 179 (Karnataka), dealt with diaries and loose sheets recovered from one person being used to make an addition against another who never possessed them, and held, after an extensive review of CBI v. V.C. Shukla(supra) and Common Cause (A Registered Society) v. Union of India, [2017] 77 taxmann.com 245 (SC), that “a sheet of paper containing typed entries and in loose form, not shown to form part of the books of account regularly maintained by the assessee or his business entities, do not constitute material evidence” (para 26), and accordingly quashed the proceedings founded upon them. The Special Leave Petition preferred by the Department against this decision was dismissed by the Hon’ble Supreme Court in Dy. CIT v. Sunil Kumar Sharma, [2025] 180 taxmann.com 293 (SC), thereby affirming the correctness of this view. Loose papers and random computer print-outs of this kind are no better even where high public functionaries are implicated. The Hon’ble Supreme Court, in Common Cause (A Registered Society) v. Union of India, [2017] 77 taxmann.com 245 (SC), declined to direct even an investigation into alleged cash payments to political and constitutional functionaries recorded in random sheets and computer print-outs recovered from business houses, holding that such material is “wholly irrelevant as evidence being not admissible under section 34” and that it “would not be legally justified, safe, just and proper to direct investigation” on the strength of such material (paras 20 and 27).

3.3.8. The Hon’ble Supreme Court, in the Jain hawala diaries case, Central Bureau of Investigation v. V.C. Shukla & Ors., AIR 1998 SC 1406, held that “even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person, and that even where persons named in such entries admitted to the payments shown against them, this was “proof of reliability of the entries so far as they are concerned and not others.”

3.3.9. The Hon’ble Bombay High Court, in ACIT v. Ms. Lata Mangeshkar, [1974] 97 ITR 696 (Bom), applied the same principle to a near-identical situation, i.e., a ledger maintained by someone else naming the assessee as the recipient of payments, and held that such entries constitute “merely corroborative evidence” and cannot sustain an addition in the absence of independent, direct evidence.

3.3.10. The same ratio has been laid recently by the Hon’ble Karnataka High Court in Dy. CIT v. Sunil Kumar Sharma, [2024] 159 taxmann.com 179 (Karnataka), affirmed by the Hon’ble Supreme Court in [2025] 180 taxmann.com 293 (SC), where material recovered from one person was similarly held incapable of fastening a liability on another who never possessed it. In the present case, the of the assessee stands on better footing. The alleged cash transactions themselves were categorically denied on oath by both Sh. Iqbal Singh Sodhi and the Assessee and the Department has produced no independent material to corroborate either the ledger entries or the transactions allegedly recorded therein. The ledger, therefore, remains nothing more than an unverified loose sheet whose source and authorship have never been established and cannot sustain the impugned additions.

3.3.11. Even, we note that the same and identical facts, the JCIT (Osg), Central Circle-4, Delhi has decided the issue in the assessment of M/s Saviour Builders Pvt. Ltd. We also note that the source of materials were never disclosed by the department and cross examination was not allowed and therefore, the entire assessment is based upon the presumption and surmises. The case of the assessee is squarely covered by the decision of Kishinchand Chellaram Vs. CIT (1980) 125 ITR 713 (SC), Andaman Timber Industries Vs. CCE (2015) 281 CTR 241 (SC), wherein it was held that denying cross examination where a witness’s statement forms the basis of the order is ‘a serious flaw which makes the order nullity’, being violation of natural justice.

3.3.12. Even u/s 292C of the Act or otherwise, no such presumption is available in the facts of the present case. The case of the assessee is squarely covered by the decision of Hon’ble Delhi High Court, in CIT v. Anil Khandelwal, [2015] 64 taxmann.com 487 (Delhi) wherein held that the presumption u/s 132(4A)/292C is available only against the person from whose possession or control the documents are found and is not available against a third party and, even against the person from whose possession the documents are found and is merely a rebuttable presumption. The same principle has been reiterated by the Pune Bench of the Tribunal in Vinit Ranawat v. ACIT, [2017] 88 taxmann.com 428 (Pune-Trib.), after considering, inter alia, the decisions in V.C. Shukla(supra) and Lata Mangeshkar(supra), holding that documents found with a third party cannot, in the absence of independent corroboration, constitute the sole basis for making an addition in the hands of another assessee.

3.3.13. The case of the assessee is also supported by the decision of coordinate Bench Kolkata , in Mani Square Ltd. v. ACIT, [2020] 118 taxmann.com 452 (Kolkata-Trib.), wherein while deleting an addition founded on a cash book impounded from a third party in the course of a mere survey, held at para 96 that the presumption under s. 132(4A) read with s. 292C “is only qua the person who is searched and/or from whose possession the books of account and documents are found and none else. The presumption is rebuttable and that where a document was not found or impounded from the appellant’s premises but in the course of survey (not search) conducted against a third party, the presumption set out in Section 292C of the Act does not apply to the appellant, who is “legally entitled to an opportunity of examining these documents” and to cross-examine the third party from whose possession they were found. The Patna Bench of this Tribunal has itself considered this very question in Roma Traders v. First ITO, [1988] 25 ITD 599 (Pat.)(TM), where entries in the seized books of a third party recorded purchases said to have been made by the assessee, the Judicial and Accountant Members differed on whether the presumption u/s 132(4A) could be drawn against the assessee, who was a third party to the seized books. Resolving that difference, the Third Member held that “it is no doubt true that under section 132(4A) presumption can be drawn only against person from whom books are seized and no such presumption can be drawn against any other person while remitting the matter for fresh enquiry on the separate ground that the assessee had not, in any event, been given adequate opportunity to explain the entries. That reasoning applies with even greater force here. The ledger and the alleged cash receipts were never found in the possession of the Assessee at all, but surfaced only through the confidential report of the ITO (Inv.), Delhi, in circumstances weaker even than a survey or search on a third party.

3.3.14. Besides , the principle of consistency is to be followed by the Department in the connected matters. The department cannot take one stand in one case and blow hot and cold at the same time on the same facts in another case. We note that the revenue has accepted that there was no materials to corroborate the alleged cash payments by Shri Iqbal Singh Sodhi director of M/s Saviour Builders Pvt. Ltd. to the appellant and the related entities. We note that the ld. CIT (A) recorded a finding of fact that the JCIT(OSD), Central Circle -4, New Delhi, categorically recorded a finding that no cash receipts original or otherwise were found or produced in support of the allegation and also the investigation wing affirmed that such receipts were not available with them. The ld. JCIT specifically held that xerox copies relied in the current report were uncorroborated, inconsistently signed and incapable of being treated as reliable evidence. The case of the assessee is squarely covered by the decision of Hon’ble Jurisdictional High Court in case of Deoniti Prasad Sing Vs. CIT (1947) 15 ITR 165 (PAT), wherein it has been held that where a department has consistently treated the same transaction in a particular manner and taxed the assessee on that footing, it cannot be allowed to blow hot and cold at the same time, by taking the opposite position on the same transactions when it becomes convenient to do so. Similarly, the Hon’ble Apex Court in case of Radhasoami Satsang Vs. CIT 193 ITR 321 (SC), has also laid down the same ratio.

3.3.15. Considering these facts and circumstances of the case and the decisions as discussed above, we are inclined to hold that the order passed by the ld. CIT (A) is very reasoned and speaking one and does not require our inference. Moreover, the transactions referred to by the department to be part of the money paid to Shri Ajay Kumar Singh was either in the form of loans which were repaid or for the subscription of shares. Therefore, very stand of the department stood demolished that these transactions are part of the consideration over and above disclosed consideration by the assessee in the books of account. Consequently, we uphold the order of ld. CIT (A) by dismissing the appeal of the Revenue.

4. The appeal of the Revenue is dismissed.

A.Y. 2013-14

CO No. 04/PAT/2026 (Assessee’s Appeal)

5. The issue raised in the cross objection is not decided at this stage and the same is left open to be decided at a later stage if need arises for the same.

6. The CO of the assessee is dismissed.

A.Y. 2013-14

ITA No. 200/PAT/2026 (Revenue’s Appeal)&

CO No. 05/PAT/2026 (Assessee’s Appeal)

7. The issues raised in this appeal by the revenue and cross objection by the assessee are similar to ones as decided by us in ITA No. 196/PAT/2026 and CO No. 04/PAT/2026 respectively. Accordingly, our decision would, mutatis mutandis, apply to the appeal of Revenue and CO of the assessee in ITA No. 200/PAT/2026 and CO No. 05/PAT/2026 respectively. Hence, the appeal of Revenue as well as the COs of the assessee are dismissed.

8. In the result, the appeals of the Revenue as well as the COs of the assessee are dismissed.

Order pronounced on 06.10.2026.