TaxTMI 
TaxTMI 
2025 (12) TMI 1832
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....r is bad-in-law, vitiated by procedural lapses, and violates the principles of natural justice, as the materials and statements relied upon in issuing notice u/s 153C were not furnished to the appellant, and no opportunity for cross examination was provided. The order ought to be quashed on these grounds. 2. The Ld. CIT(A) erred in upholding the addition of Rs. 2,00,000/- u/s 69 as unexplained investment allegedly paid in cash towards the purchase of shop premises over and above the agreement value. The addition is bad-in-law, arbitrary, and based on surmises, conjectures, and unreliable evidence with no concrete material to substantiate the alleged cash payment. There is no corroborative evidence of actual cash payment made by the appellant. 3. The authorities failed to appreciate that there is no material on record proving that the appellant paid cash of Rs. 2,00,000/- in respect of the shop premises purchase. Reliance solely on statements or third-party documents, without independent verification or opportunity for rebuttal, renders the addition unsustainable. 4. The CIT(A) erred in confirming the addition of Rs. 2,00,000/- in the assessment year 2017-....
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....cause notice to the assessee. It was recorded in the statement of Shri Imran Ansari that he had been in the employ of the Rubberwala Group since 2010 and was responsible for the sale and registration of shops in the "Platinum Mall". It was further stated that the consideration for the shops comprised two components, a cash component and a banking-channel component, the apportionment of which was allegedly determined by Shri Tabrez Shaikh (Director/CMD of RHIL and promoter of the Rubberwala Group), and that details of such transactions were maintained by Shri Imran Ansari in Excel sheets. The aforesaid assertion was corroborated by the recovery, during the search at the residence of Shri Imran Ansari, of a 16 GB pen drive which he admitted contained the data relating to the sale of shops in Platinum Mall. He also disclosed that he would escort purchasers to one Shri Abrar Ahmed, who, upon receiving cash, would thereafter inform Shri Imran Ansari so that the diaries and the Excel records could be updated. 6. The assessee, however, categorically denied having made any cash payments to any person and disclaimed knowledge of the individuals named in the third-party statements. Import....
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....the basis of a third-party statement or on material alleged to belong to or relate to the assessee, the assessee must be confronted with such material and afforded a meaningful and effective opportunity to cross-examine the persons whose statements are relied upon. In the absence of such confrontation and opportunity for cross-examination, the impugned addition cannot be sustained and the assessment stands vitiated. 8.1 In the present case, the alleged incriminating material namely, the pen-drive, Excel sheets and the statements emanated exclusively from third-party premises. No documentary evidence evidencing payment of any "on-money" by the assessee (such as cash receipts, vouchers or bank records issued by or emanating from the assessee) was recovered from the searched premises. Mere entries in a third-party Excel sheet, without more, cannot be treated as substantive evidence as such material must be authenticated, corroborated and linked to the assessee by independent and cogent evidence. No corroborative evidence of an actual cash payment by the assessee has been placed on the record. Nor were the pen-drive or the statements of Shri Imran Ansari or Shri Tabrez Shaikh suppli....
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.... as under: 5.1. On 17.03.2021, the residential premise of the assessee was also covered by way of search action u/s 132 of the IT Act, 1961. Search action was also initiated on Rubberwala group on 17.03.2021. In such action along with premises (offices/sites/others) of Rubberwala group entities, residences of various key persons including its promoter and director Shri Tabrez Shaikh, and Shri Imran Ansari - a key employee of Rubberwala group handling sale & registration of shops in "Platinum Mall" project of RHIL were covered under section 132 of the Act. Among others, statement of these persons were recorded on oath on various dates during search as well as post search proceedings. 5.2. During the action on Rubberwala Group, among other, residence (at 109, 2nd Floor, Prabhat Sadan, 109/120 RBC Marg, Agripada, Mumbai Central - 400011) of Shri Imran Ashfaque Ansari was covered under section 132 of the I.T. Act, 1961. His statement was also recorded on oath at his residence. Vide question no. 11 of the said statement dt. 17.03.2021, Shri Imran Ansari was questioned about his roles and responsibilities in M/s. Rubberwala Housing & Infrastructure Ltd (RHIL). In respon....
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....that the he was maintaining the said data and therefore could explain all these columns with relevance and purpose. Shri Imran Ansari in response to Question no. 22, 23 and 24, has explained in detail the meaning and relevant of each and every column. In column B, against the name of 'Raj Bhai Jain'/'Raj BhaiJain (I.S)', total 27 shops have been entered. Further, these 27 shops are stated (by Shri Imran Ansari) to be booked by the assessee only. Also, ShriTabrez Ahmed Shaikh, Director and Promoter of the RHIL, while deposing statement during post search proceedings on 19.08.2021 categorically confirmed the admission made by Shri Imran Ansari, and has confirmed the data of the said excel to be true by confirming facts stated by Shri Imran Ansari in his statement. It is also important to note here that the phone number mentioned above i.e., 9892196071 against all 27 shops, is of Shri Rajesh Jain. 5.5. Regarding the frequency of updating the said excel file/sheet, Shri Imran Ansari, in response to Q. no. 25, stated that this sheet is updated on the same day when a payment is received either in cash or cheque (or banking channel). The column A to AR of the shee....
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....,200/- in AY 2020-21. The Ld. CIT(A) also confirmed the same. 15. The Id A.R submitted that the addition was made on the basis of third party statement and documents found from the premises of third party. As per the deposition made by the employee of Rubberwala group, the buyers were given a diary, in which, the details of cash received were acknowledged. The Ld A.R submitted the search officials did not find any such diary with the assessee during the course of search operation conducted in his hands. Hence the statement so given by the employee stands disproved. He submitted that the AO has simply relied upon third party statement without bringing any independent material to support the same. The AO also did not provide the opportunity of cross examination despite being asked by the assessee. Accordingly, by placing reliance on various case laws, the Ld A.R submitted that this addition should be deleted. 16. We heard Ld D.R and perused the record. We notice that the AO has made the addition on the basis of evidence found in the premises of third party and also on the basis of deposition made by the employee of the third party. No corroborative material was brou....
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....any other evidence. Since the assessee was not provided with the adverse material, if any, based on which notice u/s 153 of the Act, was issued, in our view, it hampers the primary and fundamental requirement of natural justice. 14. As far as the information claimed in pendrive is concerned, the same was not found from the possession of the assessee but was found as per order of assessment, during the search and seizure conducted in the case of third party therefore, in the absence of corroborative evidence to establish that the contents of pendrive are correct and authenticated to the extent assessee paid 'on-money' in cash, no addition can be made and even otherwise during the entire reassessment proceedings the veracity and reliability of the data recorded in the pendrive was not checked or tested. Therefore, in such a scenariono addition is warranted in the case of assessee. Reliance in this regard has been placed on the decision in case of Heena Dashrath Jhanglani ITA no. 1665/Mum/2018 (Assessment Year : 2007-08) wherein the Coordinate Bench of ITAT had decided the issue in favour of assessee and the relevant portion is being reproduced herein below: ....
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....t is very much clear that the Assessing Officer has completely avoided the issue and there is no mention whether the assessee was provided with all the adverse material and if, not so, whether he has provided them to the assessee as per the directions of the learned Commissioner (Appeals). Thus, from the aforesaid facts, it is patent and obvious that the addition of ' 42 lakh made on account of on-money payment in cash is without complying with the primary and fundamental requirement of rules of natural justice. It is well settled proposition of law that if the Assessing Officer intends to utilize any adverse material for deciding an issue against the assessee he is required to not only confront such adverse materials to the assessee but also offer him a reasonable opportunity to rebut / contradict the contents of the adverse material. Further, the assessment order reveals that the Assessing Officer has heavily relied upon the statement recorded from Shri Niranjan Hiranandani, for making the disputed addition. However, it is the allegation of the assessee, which prima-facie appears to be correct, that the Assessing Officer has not provided the full text of such statement record....
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....of on-money in cash. Notably, while dealing with a case involving similar nature of dispute concerning similar transaction with another concern of Hiranandani Group, the Tribunal in case of Shri Anil Jaggi vs ACIT (supra) has held as under: - ........... 15. Reliance has also been placed in the case of Monika Anand Gupta I.T.A. No. 5561/Mum/2018 (A.Y. 2011-12) whereas coordinate bench held as under. 6. I have heard both the parties and perused the record. I find that the addition for on-money payment has been done in this case without any corroborative material found from assessee. The addition is solely based upon some statement of the builder. Such additions are not sustainable on the touchstone of Hon'ble Supreme Court decision in the case of CIT vs P.V Kalyana sundasram 164 Taxman 78 (SC). Moreover there is nothing on record to suggest that so called electronic evidence collected by revenue at the builder's office is compliant with the requirement of section 65B of Evidence Act regarding admissibility of electronic evidence. Hence, I set aside the orders of the authority below and direct that the addition be deleted. 16. In the case o....
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....s. Odeon Builders Pvt. ltd. (418 ITR 315), it was held that the 'addition/disallowance made solely on third party information without subjecting it to further scrutiny and denying the opportunity of cross examination of the third party renders the addition/disallowance bad in law' 21. In the case of H.R. Mehta vs Assistant Commissioner of Income-tax, Mumbai 72 taxmann.com 110 (Bombay) wherein it was held as under In the light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and, therefore, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents whose statemen....