TaxTMI 
TaxTMI 
2026 (1) TMI 1614
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....g Officer in making an addition of Rs. 1,00,000/- as unexplained investment under section 69 of the Income-tax Act, 1961, for the Assessment Year 2018-19, without proper appreciation of facts and law. 2. The CIT(A) failed to appreciate that the Assessing Officer had made the impugned addition merely on surmises and assumptions, without bringing any cogent material on record to establish the existence of such investment alleged to have been made by the appellant. 3. The learned CIT(A) has erred in law and on facts in upholding the addition without providing the appellant an effective opportunity of cross-examination of the persons whose statements have been relied upon, thereby violating the principles of natural justice." 4. The authorities below erred in ignoring the specific submissions and documentary evidence filed by the appellant in response to the Show Cause Notice, thereby violating the principles of natural justice, as the explanation tendered was not duly considered before making or sustaining the addition. 5. The addition under section 69 is unsustainable as there was no finding of any investment, cash payment, or unexplained asset in ....
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....g the statement of key person of Rubberwala group would submit that such person vaguely stated that around Rs. 50,000/- to Rs. 2,00,000/- were collected from buyers of shops / units in Mall. There is no evidence of payment of such on-money. In fact, the assessee has not paid any such on-money. The key person has not specifically taken the name of assessee. The addition is based merely on presumption basis. Even otherwise, of such facts were considered by co-ordinate bench of this Tribunal in case of Pravin Khetaramm Purohit. The ld. AR, further, submits that copy of statement or material gathered during the search action was not shared with the assessee. There is no corroborative evidence except the vague statement of key person against the assessee. There is no evidence for making such addition against the assessee. The ld AR of the assessee also relied on the decision of Tribunal in following cases: ⮚ Pravin K Purohit vs DCIT (ITA No. 4742-4744/M/2025) ⮚ Akhraj P Chopra vs DCIT (ITA No. 5553-5555/M/2025 & ITA No. 5554- 5557/M/2025) ⮚ Bhavana V Jain vs ACIT (ITA No. 6363-6365/M/2025) ⮚ Bharat Solanki vs DCIT (ITA No. ....
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...., on the other hand, the assessee denied payment of cash. We noticed that during the search a pendrive with the details of cash transactions with respect to Rubberwala group was found, which was confirmed through statement of Shri Imran Ansari recorded U/s 132(4) of the Act and on this basis, 153C order was framed and the same was upheld by the Ld. CIT(A). 9. We noticed that Ld. CIT(A) although referred the decision of the coordinate bench in case of Rajesh Jain on identical issue but misplace its reliance. After having gone through the basic facts of Rajesh Jain case which is mentioned by Ld. CIT(A) in its order and the same is reproduced 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 und....
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....eing maintained by Shri Imran Ansari in an excel file namely "consolidated 1 2 3 balance". In the said file sheets with different name viz "Master", "Payment" and "Cheque" etc. are found to be maintained. It is also found out that in respect of the sale of shops in the said project, comprehensive data is being maintained in these excel sheets, and in this regard, it is 4742, 4743 & 4744/Mum/2025 PravinKhetarammPurohit 12 important to mention that the sheet "Master" is so elaborate that the data in the said sheet is spread across 98 columns. Shri Imran Ansari has explained all 98 columns of "Master" sheet and such explanation of each and every column by Shri Imran Ansari further support the fact 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 Pro....
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....ed by the assessee, the addition of alleged cash payment of Rs.18,64,200/- in respect of purchase of shop confirmed by Ld CIT(A) is being assailed. 14. We noticed earlier that the assessee had purchased a shop in the commercial premises developed by Rubberwala group. During the course of search conducted in their hands, incriminating documents containing details of cash collected on sale of various shops were found. The employee of Rubberwala group confirmed that the cash has been collected from the buyers of shops. However, the assessee denied payment of cash. However, the AO relied upon the materials found in the case of Rubberwala group and accordingly made addition of Rs.18,64,200/- in AY 2020-21. The Ld. CIT(A) also confirmed the same. 15. The ld 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 conducte....
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....terial found during the search on Rubberwala group and even no evidence or seized document has been referred to where any name of the assessee has been explicitly mentioned on account of paying any 'on-money'. 12. Although it has been claimed in the order of assessment that the assessee had paid on money, but again no such statement has been confronted, neither the seized material /documents /pendrive was confronted to the assessee nor the copy of statement of Key person was confronted. 13. Therefore, in our view, the information if any found in the pendrive etc., cannot be considered as 'credible evidence', unless they have been corroborated with 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 e....
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....d also requested the Assessing Officer for allowing her to cross-examine Shri NiranjanHiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not acceded to by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority, the learned Commissioner (Appeals) in letter dated 18th July 2016, had clearly directed the Assessing Officer to provide the assessee all adverse materials / documentary evidences available with him indicating payment of on-money. However, on a perusal of the remand report dated 23th June 2017, a copy of which is at Page-53 of the paper book, it 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 Rs. 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 se....
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....ection 132(4) of the Act from Shri NiranjanHiranandani are enough to conclusively establish the factum of payment of on-money by the assessee. At best, they can raise a doubt or suspicion against the conduct of the assessee triggering further enquiry / investigation to find out and bring on record the relevant fact and material to conclusively prove the payment of on-money by the assessee over and above the declared sale consideration. Apparently, the Assessing Officer has failed to bring any such evidence / material on record to prove the payment of on- money by the assessee. More so, when the assessee from the very beginning has stoutly denied payment 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 bee....
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....o failed to provide the opportunity to cross examine of the witnesses, whose statements were relied upon by the revenue which resulted in 'breach of principles of natural justice'. In this regard, reliance is being placed upon the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CCE reported in (2015)281 CTR 241 (SC) wherein it has been held that 'failure to give the assessee the opportunity to cross examine witness, whose statements are relied upon, results in breach of principles of Natural Justice. It is a serious flaw which renders the order a nullity'. 20.In the case of CIT Vs. Odeon Builders Pvt. ltd. (418ITR 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 v/s 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 ....