Bhavesh Harjiram Solanki Vs DCIT (ITAT Mumbai)
Section 69 On-Money Additions in 153C Assessments Quashed for Violation of Natural Justice: ITAT Mumbai Follows Manish Mali Line
The Mumbai ITAT (“B” Bench) allowed the assessee’s appeals for AYs 2017-18, 2018-19 and 2019-20 and deleted additions made under section 69 on account of alleged cash “on-money” paid for purchase of a shop in Platinum Mall project of the Rubberwala Group.
The additions were made in proceedings under section 153C r.w.s. 143(3) solely on the basis of statements recorded during search on the Rubberwala Group, wherein certain key persons alleged receipt of cash from buyers. The assessee consistently denied having paid any cash and contended that no incriminating document pertaining to him was ever supplied, nor were the statements relied upon furnished or cross-examination allowed.
The Tribunal noted that identical additions arising from the same search had already been deleted in a series of coordinate bench decisions (Manish Mali, Pravin K. Purohit, Bhavana V. Jain, Akhraj Chopra etc.), holding that additions based exclusively on third-party statements without furnishing material and without granting cross-examination violate principles of natural justice. Reliance was placed on the Supreme Court decision in Andaman Timber Industries and Bombay High Court ruling in H.R. Mehta.
Following these binding precedents and in the absence of any distinguishing material brought by the Revenue, the ITAT held that the additions under section 69 were unsustainable in law. The Assessing Officer was accordingly directed to delete the additions for all three assessment years.
The ground relating to DIN defect in the notice under section 153C was dismissed as not pressed. In the combined result, all appeals of the assessee were allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals are preferred by assessee to assail the separate orders of Commissioner of Income Tax Appeals-52, Mumbai (for short “The Ld. CIT(A)”), all dated 01.08.2025, for the Assessment Years (AY) 2017-18, 2018-19 and 2019-20, arises from assessment orders passed u/s 153C r.w.s. 143(3) of Income Tax Act, 1961 (for short “The Act”), all dated 22.03.2024, by The Assistant Commissioner of Income Tax, Central Circle 4(2), Mumbai (for short “the Ld. AO”).
