TaxTMI 
TaxTMI 
2026 (1) TMI 1620
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.... of the case are that for the year under consideration, the assessee filed its original return of income on 16.02.2018 declaring a total income of Rs. 12,50,440/-. Subsequently, pursuant to a search and seizure action under section 132 of the Income-tax Act, 1961 conducted on 17.03.2021 in the case of M/s Rubberwala Housing and Infrastructure Ltd. (RHIL), certain digital material in the form of an Excel sheet was found, allegedly reflecting cash payments by various purchasers, including the assessee. On the basis of such material, the Assessing Officer following due procedure under the law, issued notice under section 153C of the Act to the assessee, which was duly served. 2.2 During the assessment proceedings u/s 153C read with 153A of the Act, it was noticed that the assessee had booked a commercial shop in "Platinum Mall", a project developed by RHIL. The Excel sheet recovered from the premises of RHIL, as explained by one of its employees, Shri Imran Ansari, indicated alleged cash payments attributed to the assessee, according to which, the assessee had paid cash of Rs. 2,00,000/- in previous year corresponding to assessment year 2017-18 and Rs. 9,68,650/- in previous year c....
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.... the AO. 3. Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 29 and relied on the submission made before the lower authorities. The Ld. counsel for the assessee referred to ground Nos. 3 to 6 of the appeal and contended that the addition was made solely on the basis of third-party digital material and statements recorded during the search of RHIL. It was submitted that no document bearing the assessee's handwriting or signature was found from the said premises and no diary or receipt allegedly for acknowledging cash was recovered either from the assessee or during search of the group. Despite specific requests, the assessee was neither furnished with complete adverse material nor granted an opportunity to cross-examine Shri Imran Ansari, whose statement constituted the sole foundation of the addition. During the course of hearing, the Ld. counsel for the assessee submitted that subsequent the assessment, the Assessing Officer provided a copy of the excel sheet under reference. The relevant columns of the said excel sheet relevant to the assessee is reproduced as under: Floor 3rd Floor Name Krishna Kumar Agreement Name Arv....
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....d. counsel for the assessee submitted that disclosure of the Rubberwala group at 8% of the alleged cash receipts was a self-serving declaration, possibly motivated by tax considerations, and could not, by itself, establish that the assessee had actually paid any such cash. The Ld. counsel for the assessee relied on the decision of the Co-ordinate Bench in other cases arising out of the same search action, wherein similar additions were deleted. 3.2 On the other hand, the Ld. Departmental Representative (DR) supported the order of the lower authorities. 4. We have heard rival submissions of the parties and perused the relevant materials on record. We find that only evidence which have been referred by the Assessing Officer is an excel sheet wherein name of the assessee is appearing and entry of cash payment is recorded, which has been further explained by Shri Imran Ansari key employee of the RHIL. No other evidence has been referred either by the Assessing Officer or by the Ld. CIT(A) 4.1 The controversy before us is narrow and lies in a short compass as to whether the alleged unexplained investment in the purchase of the shop can be sustained solely on the basis of third-....
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....fering 8% of income on such declaration. In other words, they have generated huge amount of income in their hands at 33% of tax on the 8% income of the cash declared. For example, if the assessee get credited Rs. 100 in its books of accounts against cash received then it has paid taxes @ 33% on the Rs.8 which work out to Rs.2.6. The Ld. counsel for the assessee submitted that this was one of the beneficial declaration and therefore, they have admitted and paid the taxes. The Ld. counsel for the assessee submitted that the assessee has never paid such cash on-money and it might be their own money which they had brought into books in garb of cash on-money for tax benefit. 8.6 We are of opinion that though the Rubberwala Group has admitted receipt of unaccounted cash and offered a percentage thereof to tax, such admission by the seller cannot, by itself, fasten liability upon the purchaser unless there is cogent evidence establishing that the purchaser actually made such payment. The disclosure by the developer may explain the source of its own funds, but it does not dispense with the burden on the Revenue to prove the assessee's investment or expenditure. 8.7 Th....
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....aterial directly connecting the assessee with the alleged cash payment, and in the absence of cross- examination of the person whose statement is relied upon, the addition rests on suspicion and presumption rather than proof. 8.12 It is well settled that mere furnishing of copies of statements or documents does not, by itself, satisfy the requirement of natural justice, where such material is sought to be used adversely against an assessee and the assessee specifically disputes its correctness. The learned Commissioner (Appeals) has proceeded on the assumption that since extracts of statements, Excel data, and pen-drive contents were supplied through the show-cause notice, the principles of natural justice stood fully complied with. This approach conflates disclosure of material with testing of material, which are legally distinct concepts. The reliance placed by the learned Commissioner (Appeals) on Andaman Timber Industries is, with respect, misconceived and internally contradictory. The said decision has been cited to suggest that cross-examination is necessary only where the third-party statement is the "sole basis" of the addition. This reading is incorrect. In the pr....
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....ame to tax. This, however, cannot be determinative of the assessee's liability. The ratio of Rajesh Jain rests squarely on two pillars: 1. absence of corroborative material against the assessee, and 2. denial of cross-examination despite specific request. 8.15 Both these features are present in the case before us. Judicial discipline mandates that a coordinate Bench decision on identical facts be followed unless shown to be per incuriam, which is not the case here. 8.16 The ld CIT(A) relied on various decisions to contend that providing cross examination of sh Ansai was not required. These authorities do not lay down a blanket proposition dispensing with cross-examination. On the contrary, they consistently hold that the requirement depends on the nature of evidence, its role in the adjudication, and the prejudice caused. In the present case: ● the assessee has categorically denied having made any cash payment; ● no cash, diary, or corroborative document was found from the assessee; ● the alleged diary, though repeatedly referred to in statements, was never recovered; and ● the entir....
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.... in cash towards sale of flats / shops. Thus, it is clear that except these two pieces of evidences the Assessing Officer had no other evidence on record which demonstrates that the assessee had paid on-money in cash for purchase of the flat. It is further relevant to observe, from the assessment stage itself the assessee has requested the Assessing Officer to provide him with all adverse materials and full text of the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani. The assessee had also requested the Assessing Officer for allowing her to cross-examine Shri Niranjan Hiranandani 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 m....
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....o addition can be made under section 69B of the Act. Further contention of the assessee is that in the statement recorded under section 132(4) of the Act, Shi Niranjan Hirandani has not made any reference to the assessee, therefore, in absence of any other corroborative evidence to establish that assessee has paid on-money in cash, no addition can be made. I find substantial merit in the aforesaid submissions of the assessee. In my view, neither the information contained in the pen drive nor the statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani 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....
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....s categorically held that failure to grant such opportunity renders the order a nullity. 8.23 In the present case, it is undisputed that: ● no incriminating document or diary evidencing cash payment was found from the assessee; ● the alleged electronic data was found from the possession of a third party; ● the statements relied upon do not specifically record any admission by the assessee; and ● the assessee was not provided copies of the complete statements or electronic data, nor was cross-examination permitted. 8.24 In the absence of any independent corroborative evidence establishing that the assessee had, in fact, paid cash "on-money", the evidentiary threshold required for sustaining an addition under section 69 or 69C of the Act remains unmet. 8.25 During the hearing before us, the learned Departmental Representative could not bring on record any distinguishing fact or fresh material to persuade us to take a view different from that consistently adopted by the Co-ordinate Benches of the Tribunal in identical matters arising from the same search action. Judicial discipline requires that, in....