2026 (4) TMI 181 - AT - Income Tax

Protective addition for alleged on-money payment fails without direct evidence linking the buyer to undisclosed consideration.

Protective addition under section 69A for alleged on-money payment on property purchase was found unsustainable because the record lacked direct, ... Protective addition for alleged on-money payment - Third-party search material and corroborative evidence - Addition u/s 69A - Absence of direct evidence - Protective addition made in the hands of the deceased assessee on account of alleged on-money payment to the developer - HELD THAT: - The Tribunal followed the co-ordinate Bench decisions Munjal Mrugesh Jaykrishna [2025 (5) TMI 101 - ITAT AHMEDABAD] and Kaushik Nanubhai Majithia [2024 (3) TMI 1339 - GUJARAT HIGH COURT] dealing with the same developer and held that addition could not rest merely on general material emanating from the developer or on presumptions arising from such material. It found that there was no specific mention or direct evidence linking the assessee to the alleged on-money transaction, while the substantive addition had been made in the hands of another co-owner. In the absence of concrete evidence showing the assessee's involvement in any undisclosed transaction, the protective addition was held to be unsustainable in law. [Paras 7] The protective addition was deleted and the assessee's appeal was allowed. Final Conclusion: The Tribunal deleted the protective addition made on account of alleged on-money payment, holding that no direct or concrete material connected the assessee with the alleged undisclosed transaction. The appeal was accordingly allowed. Issues: Whether the protective addition made under section 69A on account of alleged on-money payment for purchase of property could be sustained.Analysis: The addition was founded on material relating to alleged on-money payment to the developer, but the record did not show any direct evidence linking the assessee to the alleged undisclosed payment. The Tribunal noted that the case rested on presumption rather than concrete proof and that the absence of specific, corroborative material made the addition unsustainable. Following the legal position applied in the cited co-owner and jurisdictional precedents, the Tribunal held that a protective addition cannot stand without reliable evidence establishing the assessee's actual involvement in the alleged transaction.Conclusion: The protective addition was deleted and the issue was decided in favour of the assessee.