ARVIND KETARAM PUROHIT ,MUMBAI V. DCIT CENTRAL CIRCLE 4(2), MUMBAI

ITA 4746/MUM/2025

AI Insights

The case involves two appeals by the assessee, Arvind Khetaram Purohit, against the additions made by the Income Tax Department under section 69C of the Income-tax Act, 1961, for the assessment years 2017-18 and 2018-19. The additions were based on digital material and an Excel sheet recovered during a search and seizure operation at the premises of M/s Rubberwala Housing and Infrastructure Ltd. (RHIL), which allegedly reflected cash payments by various purchasers, including the assessee. The Tribunal examined whether the additions could be sustained solely on the basis of third-party digital records and statements, without any independent corroborative evidence and without affording the assessee an effective opportunity of cross-examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830690 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 28-07-2025
• Other Referred Cases: Rajesh Jain vs. CIT, Heena Dashrath Jhanglani vs. CIT, Akhraj Pukhraaj Chopra vs. DCIT, Shri Anil Jaggi vs. ACIT, Nikhil Vinod Agarwal vs. CIT, Andaman Timber Industries vs. CCE
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: BHARAT KUMAR
• Keywords: Unexplained investment; Principle of natural justice; Search and seizure; Procedural lapse
• Section: 132; 153A; 69; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA Nos. 4747 & 4746/MUM/2025 Assessment Year: 2017-18 & 2018-19 Arvind Khetaram Purohit, 33, 2nd Bhoiwada, Kalbadevi, Mumbai-400 002. Vs. DCIT Central Circle, Kautilya Bhavan, C41-43, Avenue 3, Near Videsh Bhavan, G Block BKC, Bilban Area, Bandra Kurla Complex, Bandra East, Mumbai-400051. PAN NO. AAEPA 3519 Q Appellant Respondent Assessee by : Mr. Bharat Kumar Revenue by : Mr. Rajesh Kumar Yadav, CIT-DR Date of Hearing : 17/11/2025 Date of pronouncement : 20/01/2026 ORDER PER OM PRAKASH KANT, AM These two appeals filed by the assessee arise out of a common order dated 24.07.2025 passed by the learned Commissioner of Income-tax (Appeals)–52, Mumbai, [in short ‘the Ld. CIT(A)’] for the assessment years 2017-18 and 2018-19 respectively. Since both appeals involve an identical issue relating to alleged unexplained investment in the purchase of a commercial property, with the Printed from counselvise.com consent of both parties, assessment year 2017 the lead year. Accordingly, both appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. Now, we take up the appeal of the assessee for assessment year 2017-18 for adjudication. 2.1 Briefly stated, facts of the case are that for the year under consideration, the assessee filed its original return of income on 16.02.2018 declaring 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 , 153C of the Act to the assessee, which was duly served. 2.2 During the assessment proceedings 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, Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 consent of both parties, assessment year 2017–18 was treated as the lead year. Accordingly, both appeals were heard together and are being disposed of by this consolidated order for the sake of we take up the appeal of the assessee for assessment 18 for adjudication. Briefly stated, facts of the case are that for the year under the assessee filed its original return of income on 16.02.2018 declaring a total income of ₹12,50,440/- pursuant to a search and seizure action under section 132 of the tax Act, 1961 conducted on 17.03.2021 in the case of M/s Rubberwala Housing and Infrastructure Ltd. (RHIL), certain digital he 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 to the assessee, which was duly served. During the assessment proceedings u/s 153C read with 153A , 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 ttributed to the assessee, according to which, the Arvind Khetaram Purohit 2 ITA Nos. 4747 & 4746/MUM/2025 18 was treated as the lead year. Accordingly, both appeals were heard together and are being disposed of by this consolidated order for the sake of we take up the appeal of the assessee for assessment Briefly stated, facts of the case are that for the year under the assessee filed its original return of income on -. Subsequently, pursuant to a search and seizure action under section 132 of the tax Act, 1961 conducted on 17.03.2021 in the case of M/s Rubberwala Housing and Infrastructure Ltd. (RHIL), certain digital he 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 issued notice under section to the assessee, which was duly served. u/s 153C read with 153A , 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 according to which, the Printed from counselvise.com assessee had paid cash of Rs.2,00,000/ corresponding to assessment year 2017 previous year corresponding to assessment year 2018 employee of Rubberwala g handling sale and registration of shops in Platinum Mall project of RHIL, stated on oath that excel sheet was found from his laptop and same was maintained by him for recording transaction including receipt of cash componen RHIL’s shops. Shri Imran Ansari in his statement explained as how the cash was being received and forwarded to the Director of the said company. He also explained in detail various columns of the excel sheet maintained. entry of cash component in excel sheet, he used to provide a diary to buyer in which entry of all payments ma buyer used to be recorded. by the Director of the compan disclosure of the cash component received against sale of the shops and other properties and offered the same in the return of income filed in response to notice u/s 153A of the Act. 2.3 During assessment proc Officer issued show cause notice cash component in the sale of the shops might not be treated as unexplained investment sought cross-examination of sa Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 assessee had paid cash of Rs.2,00,000/- in previous year corresponding to assessment year 2017-18 and Rs.9,68,650/ previous year corresponding to assessment year 2018 employee of Rubberwala group, Shri Imran Ansari handling sale and registration of shops in Platinum Mall project of stated on oath that excel sheet was found from his laptop and same was maintained by him for recording transaction including receipt of cash component as well as cheque components . Shri Imran Ansari in his statement explained as how the cash was being received and forwarded to the Director of the said company. He also explained in detail various columns of the ined. He also stated that alongwith recording entry of cash component in excel sheet, he used to provide a diary to buyer in which entry of all payments made by the respective buyer used to be recorded. His statement has been further or of the company. The said company also made disclosure of the cash component received against sale of the shops and other properties and offered the same in the return of income filed in response to notice u/s 153A of the Act. During assessment proceedings of the case, t Officer issued show cause notice to the assessee as why the said component in the sale of the shops might not be treated as unexplained investment of assessee. In response, the assessee examination of said Mr. Imran Ansari. Arvind Khetaram Purohit 3 ITA Nos. 4747 & 4746/MUM/2025 in previous year 18 and Rs.9,68,650/- in previous year corresponding to assessment year 2018-19. A key Shri Imran Ansari, who was handling sale and registration of shops in Platinum Mall project of stated on oath that excel sheet was found from his laptop and same was maintained by him for recording transaction including t as well as cheque components on sale of . Shri Imran Ansari in his statement explained as how the cash was being received and forwarded to the Director of the said company. He also explained in detail various columns of the He also stated that alongwith recording entry of cash component in excel sheet, he used to provide a diary de by the respective His statement has been further affirmed he said company also made disclosure of the cash component received against sale of the shops and other properties and offered the same in the return of income eedings of the case, the Assessing the assessee as why the said component in the sale of the shops might not be treated as . In response, the assessee id Mr. Imran Ansari. But, neither the Printed from counselvise.com copy of the said excel sheet nor cross Ansari was provided. The Assessing on the basis of material found at the premises of RHIL and the statement of Mr. Imran Ansari and director of the company Shri Tabrez Shaikh amount of Rs.2,00,000/ as unexplained investment. 2.4 On appeal, the learned Commissioner of Income upheld the addition, holding inter alia that there requirement to afford cross that the proceedings under section 153C were valid. rejected the other objection mentioning of the invalidity of the proceedings u/s 153C of the Act. On merit also the Ld. CIT(A) distinguished the decision in the case of Rajesh Jain in ITA No. 3842 & 3841/Mum/2023 of Co Tribunal relied upon by the assessee and merits made by 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 was made solely on the basis of third statements recorded during the search of RHIL. that no document bearing the assessee’s handwriting or signature Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 copy of the said excel sheet nor cross-examination of Shri Imran Ansari was provided. The Assessing on the basis of material found at the premises of RHIL and the statement of Mr. Imran Ansari and company Shri Tabrez Shaikh, made addition of the amount of Rs.2,00,000/- paid during the year under consideration as unexplained investment. On appeal, the learned Commissioner of Income upheld the addition, holding inter alia that there requirement to afford cross-examination of Shri Imran Ansari and that the proceedings under section 153C were valid. rejected the other objections of the assessee including not mentioning of the Document Identification Number(D invalidity of the proceedings u/s 153C of the Act. On merit also the Ld. CIT(A) distinguished the decision in the case of Rajesh Jain in ITA No. 3842 & 3841/Mum/2023 of Co-ordinate Bench of the Tribunal relied upon by the assessee and sustained the addit made by the AO. 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 . 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 Arvind Khetaram Purohit 4 ITA Nos. 4747 & 4746/MUM/2025 examination of Shri Imran Ansari was provided. The Assessing on the basis of material found at the premises of RHIL and the statement of Mr. Imran Ansari and made addition of the paid during the year under consideration On appeal, the learned Commissioner of Income-tax (Appeals) upheld the addition, holding inter alia that there was no examination of Shri Imran Ansari and that the proceedings under section 153C were valid. The Ld. CIT(A) of the assessee including not Document Identification Number(DIN) and invalidity of the proceedings u/s 153C of the Act. On merit also the Ld. CIT(A) distinguished the decision in the case of Rajesh Jain in ordinate Bench of the sustained the addition on 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 contended that the addition party digital material and It was submitted that no document bearing the assessee’s handwriting or signature Printed from counselvise.com was found from the sai 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 statement constituted the sole foundation of the addition. During the course of hearing, t that subsequent the assessment, copy of the excel sheet said excel sheet relevant to the assessee is reproduced as under: Floor Name Agreement Name Shop No. Rev. Area Level Total Amount Rev Total Amount Token Amount A Date Token Amount B Date 1st Inst. Payment Date 2nd Inst. Payment Date 3rd Inst. Payment Date Penalty Days Delayed Due Date Date A. Value Rev A. Value G-P Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 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 y 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 subsequent the assessment, the Assessing Officer provided a cel sheet under reference. The relevant columns of the said excel sheet relevant to the assessee is reproduced as under: 3rd Floor Krishna Kumar Agreement Name Arvind K. Purohit 43 73.50 Level 2 3,895,500.00 Rev Total Amount 3,895,500.00 Token Amount A 200,000.00 7.2.2017 Token Amount B 579,100.00 15.9.2017 1st Inst. Payment 389,550.00 20.2.2018 2nd Inst. Payment 951,825.00 8.8.2019 3rd Inst. Payment 99.00 5.11.18 12.2.19 1,775,025.00 1,775,025.00 2,120,475.00 Arvind Khetaram Purohit 5 ITA Nos. 4747 & 4746/MUM/2025 d 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 examine Shri Imran Ansari, whose statement constituted the sole foundation of the addition. During he Ld. counsel for the assessee submitted the Assessing Officer provided a . The relevant columns of the said excel sheet relevant to the assessee is reproduced as under: 3,895,500.00 3,895,500.00 200,000.00 579,100.00 389,550.00 951,825.00 7,822.74 1,775,025.00 1,775,025.00 2,120,475.00 Printed from counselvise.com Rev G-P Parking A.V. 95% AMT TOTAL RECVD. CASH Cash Return Cheque Payment Cheque Payment on 1st Floor Cheque Payment on 2nd Floor Cheque Payment on 3rd Floor Cheque Payment on 4th Floor Cheque Payment on 1st Podium Cheque Payment on 2nd Podium Cheque Payment on 3rd Podium Cheque Payment on TOTAL RECVD. CHEQUE Total Recv. Total Recv. % Bal. Till Date Other Charges & Maintenance A GST @ 18% on Maintenance Maintenance A with GST Other Charges & Maintenance A Paid Maintenance B Paid Interest B BAL 95 % Payment Bal 100 % Payment Bal B BAL W BAL 95 % on A.V. Balance Due Now AGREEMENT MADE AGREEMENT SIGNED PARKING PARKING DETAILS Cheque Balance 100 GST Cheque Balance 95 95 Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 2,120,475.00 3,700,725.00 TOTAL RECVD. CASH 2,120,475.00 - Cheque Payment Cheque Payment on 1st Floor 500,000.00 Cheque Payment on 2nd Floor 920,020.00 Cheque Payment on 3rd Floor Cheque Payment on 4th Floor Cheque Payment on 1st Podium Cheque Payment on 2nd Podium Cheque Payment on 3rd Podium Cheque Payment on Possession TOTAL RECVD. CHEQUE 1,420,020.00 3,540,495.00 91% 160,230.00 Other Charges & Maintenance A 238,140.00 GST @ 18% on Maintenance 42,865.00 Maintenance A with GST 281,005.00 Other Charges & Maintenance B Maintenance A Paid Maintenance B Paid 212,153.81 - 95 % Payment Bal 160,230.00 100 % Payment Bal 355,005.00 - 355,005.00 1,686,273.75 Balance Due Now 266,253.75 AGREEMENT MADE NO AGREEMENT SIGNED PARKING DETAILS Cheque Balance 100 Cheque Balance 95 Arvind Khetaram Purohit 6 ITA Nos. 4747 & 4746/MUM/2025 2,120,475.00 3,700,725.00 2,120,475.00 500,000.00 920,020.00 1,420,020.00 3,540,495.00 160,230.00 238,140.00 42,865.00 281,005.00 212,153.81 160,230.00 355,005.00 355,005.00 1,686,273.75 266,253.75 Printed from counselvise.com Bal on 100% GST Bal Bal GST GST PAID GST BAL GST G-P Bal A Val Bal GST GST PAID GST BAL Interest ST/RG Remark Call Response Cheque Bal GST GST Paid GST Bal Interest ST /REG ST/RG CHARGE Grand Total 3.1 Further, the Ld. 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 arising out of the same search action, wherein similar additions were deleted. Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 213003 1232616 212,153.81 ST/RG CHARGE Further, the Ld. counsel for the assessee submitted that disclosure of the Rubberwala group at 8% of the alleged cash serving declaration, possibly motivated by tax considerations, and could not, by itself, establish that the assessee ad 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 Arvind Khetaram Purohit 7 ITA Nos. 4747 & 4746/MUM/2025 212,153.81 Further, the Ld. counsel for the assessee submitted that disclosure of the Rubberwala group at 8% of the alleged cash serving declaration, possibly motivated by tax considerations, and could not, by itself, establish that the assessee ad actually paid any such cash. The Ld. counsel for the assessee ordinate Bench in other cases arising out of the same search action, wherein similar additions Printed from counselvise.com 3.2 On the other hand, the Ld. Departmental Repr supported the order of the lower authorities. 4. We have heard rival submissions of the parties and perused the relevant materials on record 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 party digital records and statements, without any independent corroborative evidence and without affording the assessee an effective opportunity of cross It is an undisputed position that the entire edifice of the impugned addition rests on (i) an Excel sheet recovered from the possession of a third party during se Shri Imran Ansari explaining the said entries. On the basis of said material and statement of key person, the said company RHIL accepted the fact of the on of the net profit for undiscl actual payment of cash Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 On the other hand, the Ld. Departmental Repr supported the order of the lower authorities. 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 erein 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) 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 party digital records and statements, without any independent ve evidence and without affording the assessee an effective opportunity of cross-examination. It is an undisputed position that the entire edifice of the impugned addition rests on (i) an Excel sheet recovered from the possession of a third party during search, and (ii) the statement of Shri Imran Ansari explaining the said entries. On the basis of said material and statement of key person, the said company RHIL accepted the fact of the on-money received in cash and declared 8% of the net profit for undisclosed income but no material evidencing actual payment of cash—such as receipts, diaries, Arvind Khetaram Purohit 8 ITA Nos. 4747 & 4746/MUM/2025 On the other hand, the Ld. Departmental Representative (DR) We have heard rival submissions of the parties and perused We find that only evidence which have been referred by the Assessing Officer is an excel sheet erein 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) 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- party digital records and statements, without any independent ve evidence and without affording the assessee an It is an undisputed position that the entire edifice of the impugned addition rests on (i) an Excel sheet recovered from the arch, and (ii) the statement of Shri Imran Ansari explaining the said entries. On the basis of said material and statement of key person, the said company RHIL money received in cash and declared 8% osed income but no material evidencing such as receipts, diaries, Printed from counselvise.com acknowledgments, or contemporaneous documents or corroborative linking to the assessee to alleged cash payment has been found from the assessee. Even the alleged diary the statements, was never recovered either from the assessee or during the search of RHIL. 4.2 There is no receipt, no diary, no acknowledgement, no contemporaneous documents and no corroborative linking to the assessee to alleged cash payment has been referred by the lower authorities. It is further evident that despite a specific request, the assessee was denied the opportunity to cross Ansari. The digital material relied upon does not speak for itself and derives its evidentiary value entirely from the explanation furnished by the very person whose statement was relied upon. In circumstances, denial of cross prejudice and strikes at the root of the principles of natural justice 4.3 We find that identical issues arising out of the same search action on the Rubberwala Group have been consistently favour of the assessees by various Coordinate Benches of the Tribunal, wherein additions based solely on such uncorroborated third-party material and statements were deleted. The Revenue has not been able to point out any distinguishing feature record any fresh or independent material to persuade us to take a different view. Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 acknowledgments, or contemporaneous documents or corroborative linking to the assessee to alleged cash payment has been found from the assessee. Even the alleged diary, repeatedly referred to in the statements, was never recovered either from the assessee or during the search of RHIL. There is no receipt, no diary, no acknowledgement, no contemporaneous documents and no corroborative linking to the assessee to alleged cash payment has been referred by the lower It is further evident that despite a specific request, the ssee was denied the opportunity to cross-examine Shri Imran Ansari. The digital material relied upon does not speak for itself and derives its evidentiary value entirely from the explanation furnished by the very person whose statement was relied upon. In circumstances, denial of cross-examination causes manifest prejudice and strikes at the root of the principles of natural justice We find that identical issues arising out of the same search action on the Rubberwala Group have been consistently favour of the assessees by various Coordinate Benches of the Tribunal, wherein additions based solely on such uncorroborated party material and statements were deleted. The Revenue has not been able to point out any distinguishing feature record any fresh or independent material to persuade us to take a Arvind Khetaram Purohit 9 ITA Nos. 4747 & 4746/MUM/2025 acknowledgments, or contemporaneous documents or corroborative linking to the assessee to alleged cash payment has been found , repeatedly referred to in the statements, was never recovered either from the assessee or There is no receipt, no diary, no acknowledgement, no contemporaneous documents and no corroborative linking to the assessee to alleged cash payment has been referred by the lower It is further evident that despite a specific request, the examine Shri Imran Ansari. The digital material relied upon does not speak for itself and derives its evidentiary value entirely from the explanation furnished by the very person whose statement was relied upon. In such examination causes manifest prejudice and strikes at the root of the principles of natural justice. We find that identical issues arising out of the same search action on the Rubberwala Group have been consistently decided in favour of the assessees by various Coordinate Benches of the Tribunal, wherein additions based solely on such uncorroborated party material and statements were deleted. The Revenue has not been able to point out any distinguishing feature or bring on record any fresh or independent material to persuade us to take a Printed from counselvise.com 4.4 Identical addition made in the case of Bharat Solanki in ITA No. 6523/Mum/2025, the Co addition observing as under: “8.5 The Ld. counsel for the assessee submitted that said Rubberwala Group has credited 100% amount of the cash in its books of accounts against offering 8% of income on such declaration. In other words, they have generated huge amount of income in their hands at 33 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 be their own money which they had brought into b 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 t 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 The Ld. counsel for the assessee specifically brought to our attention that Shri Imran Ansari in his answer to question No. 13 of the statement dated 17.03.2021 stated that after receipt of alleged cash from the customers a small diary was being used to pr from the customers. The Ld. counsel for the assessee submitted that no such diary has been recovered from the assessee nor any kind of receipt issued by Rubberwala Group having signature of the assessee has been found premises of the Rubberwala group or from the assessee. The Ld. counsel submitted that in the case of one of the customer sh Rajesh Jain search was conducted by the Department but no such document in the form of diary was found which could corrobo him, Shri Imran Ansari cooked up a story of cash on for benefiting interest of their company. 8.8 We are of opinion that Shri Imran Ansari himself stated that cash payments were recorded in a diary provided to buyers but no such diary was recovered from the assessee. Even in other cases arising from the same search, including that of Shri Rajesh Jain, no such diary was found despite Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 Identical addition made in the case of Bharat Solanki in ITA No. 6523/Mum/2025, the Co-ordinate Bench has deleted the addition observing as under: d. counsel for the assessee submitted that said Rubberwala Group has credited 100% amount of the cash in its books of accounts against offering 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 at 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. 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 t 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 s investment or expenditure. The Ld. counsel for the assessee specifically brought to our attention that Shri Imran Ansari in his answer to question No. 13 of the statement dated 17.03.2021 stated that after receipt of alleged cash from the customers a small diary was being used to provide containing cash details received from the customers. The Ld. counsel for the assessee submitted that no such diary has been recovered from the assessee nor any kind of receipt issued by Rubberwala Group having signature of the assessee has been found premises of the Rubberwala group or from the assessee. The Ld. counsel submitted that in the case of one of the customer sh Rajesh Jain search was conducted by the Department but no such document in the form of diary was found which could corroborate statement of Shri Imran Ansari. According to him, Shri Imran Ansari cooked up a story of cash on-money in his statement for benefiting interest of their company. We are of opinion that Shri Imran Ansari himself stated that cash orded in a diary provided to buyers but no such diary was recovered from the assessee. Even in other cases arising from the same search, including that of Shri Rajesh Jain, no such diary was found despite Arvind Khetaram Purohit 10 ITA Nos. 4747 & 4746/MUM/2025 Identical addition made in the case of Bharat Solanki in ITA ordinate Bench has deleted the d. counsel for the assessee submitted that said Rubberwala Group has credited 100% amount of the cash in its books of accounts against offering 8% of income on such declaration. In other words, they have % 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 at this was one of the beneficial declaration and therefore, they have admitted and paid the taxes. The Ld. counsel for the assessee money and it might ooks in garb of cash on- 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 Ld. counsel for the assessee specifically brought to our attention that Shri Imran Ansari in his answer to question No. 13 of the statement dated 17.03.2021 stated that after receipt of alleged cash from the customers ovide containing cash details received from the customers. The Ld. counsel for the assessee submitted that no such diary has been recovered from the assessee nor any kind of receipt issued by Rubberwala Group having signature of the assessee has been found from the premises of the Rubberwala group or from the assessee. The Ld. counsel submitted that in the case of one of the customer sh Rajesh Jain search was conducted by the Department but no such document in the form of diary was rate statement of Shri Imran Ansari. According to money in his statement We are of opinion that Shri Imran Ansari himself stated that cash orded in a diary provided to buyers but no such diary was recovered from the assessee. Even in other cases arising from the same search, including that of Shri Rajesh Jain, no such diary was found despite Printed from counselvise.com search action. This materially weakens the evidenti statement. 8.9 Further, although the assessment was framed under section 153C of the Act, the incriminating material forming the basis of satisfaction was admittedly not furnished to the assessee in entirety. The assessee also specifically sought cross constitutes the fulcrum of the addition. The request was declined on the premise that the statement was not the sole basis of the addition. However, on a careful examination of the record, we independent evidence apart from the said statement and the Excel sheet maintained by the same person. 8.10 It is well settled that while income strict rules of evidence, the principles of natu where additions are founded on adverse material collected from third parties. Where such material is relied upon as substantive evidence, denial of effective opportunity to rebut or cross of the proceedings. 8.11 In the absence of any corroborative material 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 notice, the principles of natur 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, mis internally contradictory. The said decision has been cited to suggest that cross-examination is necessary only where the third “sole basis” of the addition. This reading is incorrect. In the present case, the Excel sheets and the pen dehors the explanation and interpretation supplied by Shri Imran Ansari. The alleged cash component, the attribution of entries to specific buyers, and the linkage of the assessee to such entr The digital material does not speak for itself. Consequently, the statement is not collateral or incidental evidence but the very foundation of the addition. Much emphasis has been placed by the lower authorities on that income-tax proceedings are not governed by the strict provisions of the Indian Evidence Act. There can be no quarrel with this settled proposition. Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 search action. This materially weakens the evidentiary value of the Further, although the assessment was framed under section 153C of the Act, the incriminating material forming the basis of satisfaction was admittedly not furnished to the assessee in entirety. The assessee also sought cross-examination of Shri Imran Ansari, whose statement constitutes the fulcrum of the addition. The request was declined on the premise that the statement was not the sole basis of the addition. However, on a careful examination of the record, we find that there is no other independent evidence apart from the said statement and the Excel sheet maintained by the same person. It is well settled that while income-tax proceedings are not governed by strict rules of evidence, the principles of natural justice cannot be diluted where additions are founded on adverse material collected from third parties. Where such material is relied upon as substantive evidence, denial of effective opportunity to rebut or cross-examine strikes at the root of fairnes In the absence of any corroborative material 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 d 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 he 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 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, mis internally contradictory. The said decision has been cited to suggest that examination is necessary only where the third-party statement is the “sole basis” of the addition. This reading is incorrect. In the present case, the ts and the pen-drive data have no independent evidentiary value dehors the explanation and interpretation supplied by Shri Imran Ansari. The alleged cash component, the attribution of entries to specific buyers, and the linkage of the assessee to such entries emanate entirely from his statement. The digital material does not speak for itself. Consequently, the statement is not collateral or incidental evidence but the very foundation of the addition. Much emphasis has been placed by the lower authorities on tax proceedings are not governed by the strict provisions of the Indian Evidence Act. There can be no quarrel with this settled proposition. Arvind Khetaram Purohit 11 ITA Nos. 4747 & 4746/MUM/2025 ary value of the Further, although the assessment was framed under section 153C of the Act, the incriminating material forming the basis of satisfaction was admittedly not furnished to the assessee in entirety. The assessee also examination of Shri Imran Ansari, whose statement constitutes the fulcrum of the addition. The request was declined on the premise that the statement was not the sole basis of the addition. However, find that there is no other independent evidence apart from the said statement and the Excel sheet tax proceedings are not governed by ral justice cannot be diluted where additions are founded on adverse material collected from third parties. Where such material is relied upon as substantive evidence, denial of examine strikes at the root of fairness In the absence of any corroborative material 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 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 he assessee specifically disputes its correctness. The learned Commissioner (Appeals) has proceeded on the assumption that since extracts of statements, drive contents were supplied through the show-cause al 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 party statement is the “sole basis” of the addition. This reading is incorrect. In the present case, the drive data have no independent evidentiary value dehors the explanation and interpretation supplied by Shri Imran Ansari. The alleged cash component, the attribution of entries to specific buyers, and the ies emanate entirely from his statement. The digital material does not speak for itself. Consequently, the statement is not collateral or incidental evidence but the very foundation of the addition. Much emphasis has been placed by the lower authorities on the proposition tax proceedings are not governed by the strict provisions of the Indian Evidence Act. There can be no quarrel with this settled proposition. Printed from counselvise.com However, it is equally settled that relaxation of evidentiary rules does not imply abrogation of natural justice. Even material which is otherwise admissible must still satisfy the minimum requirement of fairness when used against an assessee. The Hon’ble Supreme Court in Kishinchand Chellaram v. CIT (125 ITR 713) has unequivocally held tha behind the back of the assessee, if proposed to be used against him, must be subjected to an opportunity of rebuttal in a meaningful manner, which necessarily includes cross 8.13 Considerable the Rubberwala Group that it received on This, however, cannot be determinative of the assessee’s liability. It is trite law that an admission by one party cannot be us against another, unless the latter is afforded an opportunity to test and rebut such admission. The assessee is not estopped from disputing the correctness or applicability of such admission to his case, particularly when the alle payment is denied and no independent corroboration exists. 8.14 The learned Commissioner (Appeals) has sought to distinguish the coordinate Bench decision in Rajesh Jain primarily on the ground that the assessee therein was subjected to search, whereas was not. This distinction is wholly irrelevant to the core issue of evidentiary reliance on third-party material without cross reliance has been placed on the alleged admission by the Rubberwala Group that it received on-money and offered the same 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 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 contrary, they consistently hold that the require of evidence, its role in the adjudication, and the prejudice caused. In the present case:  the assessee has payment;  no cash, diary, or corroborative document was found from the assessee; Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 However, it is equally settled that relaxation of evidentiary rules does not ogation of natural justice. Even material which is otherwise admissible must still satisfy the minimum requirement of fairness when used against an assessee. The Hon’ble Supreme Court in Kishinchand Chellaram v. CIT (125 ITR 713) has unequivocally held that any material collected behind the back of the assessee, if proposed to be used against him, must be subjected to an opportunity of rebuttal in a meaningful manner, which necessarily includes cross-examination where facts are disputed. Considerable reliance has been placed on the alleged admission by the Rubberwala Group that it received on-money and offered the same to tax. This, however, cannot be determinative of the assessee’s liability. It is trite law that an admission by one party cannot be used as conclusive evidence against another, unless the latter is afforded an opportunity to test and rebut such admission. The assessee is not estopped from disputing the correctness or applicability of such admission to his case, particularly when the alle payment is denied and no independent corroboration exists. The learned Commissioner (Appeals) has sought to distinguish the coordinate Bench decision in Rajesh Jain primarily on the ground that the assessee therein was subjected to search, whereas the present assessee was not. This distinction is wholly irrelevant to the core issue of evidentiary party material without cross-examination. Considerable reliance has been placed on the alleged admission by the Rubberwala Group money and offered the same to tax. This, however, cannot be determinative of the assessee’s liability. The ratio of Rajesh Jain rests squarely on two pillars: absence of corroborative material against the assessee, and denial of cross-examination despite specific request. 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. 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 the assessee has categorically denied having made any cash no cash, diary, or corroborative document was found from the Arvind Khetaram Purohit 12 ITA Nos. 4747 & 4746/MUM/2025 However, it is equally settled that relaxation of evidentiary rules does not ogation of natural justice. Even material which is otherwise admissible must still satisfy the minimum requirement of fairness when used against an assessee. The Hon’ble Supreme Court in Kishinchand Chellaram t any material collected behind the back of the assessee, if proposed to be used against him, must be subjected to an opportunity of rebuttal in a meaningful manner, which examination where facts are disputed. reliance has been placed on the alleged admission by money and offered the same to tax. This, however, cannot be determinative of the assessee’s liability. It is trite ed as conclusive evidence against another, unless the latter is afforded an opportunity to test and rebut such admission. The assessee is not estopped from disputing the correctness or applicability of such admission to his case, particularly when the alleged The learned Commissioner (Appeals) has sought to distinguish the coordinate Bench decision in Rajesh Jain primarily on the ground that the the present assessee was not. This distinction is wholly irrelevant to the core issue of evidentiary examination. Considerable reliance has been placed on the alleged admission by the Rubberwala Group money and offered the same to tax. This, however, cannot be determinative of the assessee’s liability. The ratio of Rajesh Jain rests absence of corroborative material against the assessee, and ion despite specific request. 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. CIT(A) relied on various decisions to contend that providing cross examination of sh Ansai was not required. These authorities do not lay examination. On the ment depends on the nature of evidence, its role in the adjudication, and the prejudice caused. In the having made any cash no cash, diary, or corroborative document was found from the Printed from counselvise.com  the alleged diary, though repeatedly referred to in statements, was never recovered; and  the entire edifice of the addition rests on third and electronic data interpreted by those very persons. 8.17 In such circumstances, denial of cross prejudice and cannot be brushed aside as a mere procedural irregularity. 8.18 We find that, in identical factual circumstances relating to alleged cash “on-money” payments for purchase of shops in Rubberwala Group, the Co Khetaramm Purohit v. DCIT similar additions. The learned also placed reliance upon another decision of the Co-ordinate Bench of the Tribunal in Akhraj Pu and Lilaram Vs DCIT in ITAs No.5553 and 5554/Mum/2025, vide order dated 12.11.2025, wherein similar addition was made on the basis of search and seizure action on Rubberwala Group. Reliance in this regard has been also placed on the no.1665/Mum./2018 (Assessment Year : 2007 Bench of ITAT had decided the issue in favour of assessee and the relevant portion is being reproduced herein below: 10. I have considered rival submissions and perused material on record. Undisputedly, the genesis of the addition made of 42 lakh on account of alleged payment of on cash towards purchase of a flat lies in a search and seizure operation conducted in c persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material/ evidence available on record to indicate payment of on cash by the assessee to M/ from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen drive found and seized from the resi employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of on money paid by buyers / prospective buyers to Hiranan Group concerns are mentioned and further, in the statement recorded under section 132(4) of the Act on 14th March 2014, Shri Niranjan Hiranandani, has admitted receipt of on 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 Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 the alleged diary, though repeatedly referred to in statements, was never recovered; and the entire edifice of the addition rests on third and electronic data interpreted by those very persons. In such circumstances, denial of cross-examination causes manifest prejudice and cannot be brushed aside as a mere procedural irregularity. We find that, in identical factual circumstances relating to alleged cash money” payments for purchase of shops in Platinum Mall a Group, the Co-ordinate Bench of the Tribunal in Khetaramm Purohit v. DCIT (ITA Nos. 4742 to 4744/Mum/2025) has deleted similar additions. The learned also placed reliance upon another decision of ordinate Bench of the Tribunal in Akhraj Pukhraaj Chopra vs DCIT and Lilaram Vs DCIT in ITAs No.5553 and 5554/Mum/2025, vide order dated 12.11.2025, wherein similar addition was made on the basis of search and seizure action on Rubberwala Group. Reliance in this regard has been also 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: I have considered rival submissions and perused material on record. Undisputedly, the genesis of the addition made of 42 lakh on account of alleged payment of on– cash towards purchase of a flat lies in a search and seizure operation conducted in case of Hiranandani Group and related persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material/ evidence available on record to indicate payment of on– cash by the assessee to M/s. Crescendo Associates, however, from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen drive found and seized from the residence of one of the employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of on money paid by buyers / prospective buyers to Hiranan Group concerns are mentioned and further, in the statement recorded under section 132(4) of the Act on 14th March 2014, Shri Niranjan Hiranandani, has admitted receipt of on– cash towards sale of flats / shops. Thus, it is clear that except ese two pieces of evidences the Assessing Officer had no other evidence on record which demonstrates that the assessee had money in cash for purchase of the flat. It is further relevant to observe, from the assessment stage itself the Arvind Khetaram Purohit 13 ITA Nos. 4747 & 4746/MUM/2025 the alleged diary, though repeatedly referred to in statements, was the entire edifice of the addition rests on third-party statements and electronic data interpreted by those very persons. xamination causes manifest prejudice and cannot be brushed aside as a mere procedural irregularity. We find that, in identical factual circumstances relating to alleged cash Platinum Mall from the ordinate Bench of the Tribunal in Praveen (ITA Nos. 4742 to 4744/Mum/2025) has deleted similar additions. The learned also placed reliance upon another decision of khraaj Chopra vs DCIT and Lilaram Vs DCIT in ITAs No.5553 and 5554/Mum/2025, vide order dated 12.11.2025, wherein similar addition was made on the basis of search and seizure action on Rubberwala Group. Reliance in this regard has been decision in case of Heena Dashrath Jhanglani ITA 08) wherein the Coordinate Bench of ITAT had decided the issue in favour of assessee and the relevant I have considered rival submissions and perused material on record. Undisputedly, the genesis of the addition –money in cash towards purchase of a flat lies in a search and seizure ase of Hiranandani Group and related persons. Though, in the assessment order the Assessing Officer has not discussed in detail the nature of incriminating material/ –money in s. Crescendo Associates, however, from the show cause notice dated 4th March 2015, which is reproduced by the Assessing Officer in the assessment order, it appears that the incriminating materials are in the form of pen dence of one of the employees of Hiranandani Group and a statement recorded under section 132(4) of the Act from Shri Niranjan Hiranandani, Director and Promoter of the Group, wherein, the details of on– money paid by buyers / prospective buyers to Hiranandani Group concerns are mentioned and further, in the statement recorded under section 132(4) of the Act on 14th March 2014, –money in cash towards sale of flats / shops. Thus, it is clear that except ese two pieces of evidences the Assessing Officer had no other evidence on record which demonstrates that the assessee had money in cash for purchase of the flat. It is further relevant to observe, from the assessment stage itself the Printed from counselvise.com assessee has 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 cros Hiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not accededto by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority 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 on a perusal o of which is at Page that the Assessing Officer has completely avoided the issue and there is no mention whether the assessee was provided with all the adverse mate 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– 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 r 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 recorded from Shri Niranjan Hiranandani, for making the disputed addition. However, it is the allegation of the assessee, which prima– Officer has not provided the full text of such statemen and has also not allowed the assessee an opportunity to cross examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic principle of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be sustained. 11. Even otherwise also, the addition made is unsustainable because of the following reasons. As discussed earlier in the order, the basis for addition on account of on information contained in the pen drive found during the search Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 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 accededto by the Assessing Officer. When the assessee took up the aforesaid issue before the first appellate authority 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 ` 42 lakh made 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, –facie appears to be correct, that the Assessing Officer has not provided the full text of such statement recorded and has also not allowed the assessee an opportunity to cross examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic iple of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be Even otherwise also, the addition made is unsustainable cause of the following reasons. As discussed earlier in the order, the basis for addition on account of on–money is the information contained in the pen drive found during the search Arvind Khetaram Purohit 14 ITA Nos. 4747 & 4746/MUM/2025 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 examine Shri Niranjan Hiranandani and other parties whose statements were relied upon. Apparently, this request of the assessee was not accededto 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 money. However, f the remand report dated 23th June 2017, a copy 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 rial 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 sh 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 equired 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 upon the statement recorded from Shri Niranjan Hiranandani, for making the disputed addition. However, it is the allegation of the assessee, facie appears to be correct, that the Assessing t recorded and has also not allowed the assessee an opportunity to cross– examine Shri Niranjan Hiranandani, and other persons whose statements were relied upon. This, in my view, is in gross violation of rules of natural justice and against the basic iple of law. In this context, I may refer to the decision of the Tribunal, Mumbai Bench, in Nikhil Vinod Agarwal (supra). Thus, for the aforesaid reason, the addition made cannot be Even otherwise also, the addition made is unsustainable cause of the following reasons. As discussed earlier in the money is the information contained in the pen drive found during the search Printed from counselvise.com and seizure operation and the statement recorded under section 132(4) of the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a third party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on money in cash, no addition can be made under section 69B of the Act. Further 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 o 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 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 declared sale consideration. Apparently, the Assessing Officer has failed to bring any such evidence / material on record to prove the payment of the assessee from the very beginning has stoutly denied payment of on case involving similar nature of dispute concerning similar transaction with another concern of Hiran Tribunal in case of Shri Anil Jaggi v/s ACIT (supra) has held as under:– …….. 8.19 The consistent factual matrix emerging from above decisions is that the additions were made solely on the basis of (i) statements of Shri Imran Ansari, an employee of the Rubberwala Group, recorded during the course of search, and (ii) data contained in an Excel sheet retrieved from a pen drive found from his possession. No incriminating material was found from the assessee. The assessee, from the inception, any cash over and above the documented consideration. 8.20 The Co-ordinate Bench, after an exhaustive examination of the facts, has held that such third uncorroborated by any indepe assessee to the alleged cash payment, do not constitute credible evidence for Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 and seizure operation and the statement recorded under section the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on money in cash, no 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 ranandani 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 e 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 v/s ACIT (supra) has held as The consistent factual matrix emerging from above decisions is that the additions were made solely on the basis of (i) statements of Shri Imran employee of the Rubberwala Group, recorded during the course of search, and (ii) data contained in an Excel sheet retrieved from a pen drive found from his possession. No incriminating material was found from the assessee. The assessee, from the inception, categorically denied having paid any cash over and above the documented consideration. ordinate Bench, after an exhaustive examination of the facts, has held that such third-party statements and electronic records, uncorroborated by any independent evidence and not directly linking the assessee to the alleged cash payment, do not constitute credible evidence for Arvind Khetaram Purohit 15 ITA Nos. 4747 & 4746/MUM/2025 and seizure operation and the statement recorded under section the Act. As regards the information contained in the pen drive, it is the contention of the assessee that the said pen drive was not found from the possession of the assessee but in course of search and seizure operation conducted in case of a party. Therefore, in absence of further corroborative evidence to establish that the contents of the pen drive are correct and authentic to the extent that the assessee paid on– money in cash, no addition can be made under section 69B of 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 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 ranandani are enough to conclusively establish the factum of 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 e relevant fact and material to conclusively prove the 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 money by the assessee. More so, when the assessee from the very beginning has stoutly denied money in cash. Notably, while dealing with a case involving similar nature of dispute concerning similar andani Group, the Tribunal in case of Shri Anil Jaggi v/s ACIT (supra) has held as The consistent factual matrix emerging from above decisions is that the additions were made solely on the basis of (i) statements of Shri Imran employee of the Rubberwala Group, recorded during the course of search, and (ii) data contained in an Excel sheet retrieved from a pen drive found from his possession. No incriminating material was found from the categorically denied having paid ordinate Bench, after an exhaustive examination of the facts, party statements and electronic records, ndent evidence and not directly linking the assessee to the alleged cash payment, do not constitute credible evidence for Printed from counselvise.com sustaining an addition under section 69 of the Act. The Bench further noted that, despite specific requests, the assessee was neither complete adverse material nor afforded an opportunity to cross Imran Ansari or any other person whose statements were relied upon. 8.21 It is well settled that while the rigours of the Evidence Act do not strictly apply to income founded on material which is reliable, cogent, and has a direct nexus with the assessee. Third-party statements, cannot be treated as conclusive unless supported by independent corroborative evidence. give rise to suspicion, but suspicion, however strong, cannot take the place of proof. 8.22 Equally well settled is the principle that if the Assessing Officer proposes to rely upon any adverse material to the detriment of the as such material must be confronted to the assessee, and a reasonable opportunity must be granted to rebut or contradict the same. Where the addition rests substantially on a third examination strikes at the very root breach of the principles of natural justice. The Hon’ble Supreme Court in Andaman Timber Industries v. CCE(supra) 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 a the assessee; and  the assessee was not provided copies of the complete statements or electronic data, nor was cross 8.24 In the absence of any independent corroborative evidence establishing that the assessee had, in 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 distinguish 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 the absence of distinguishing features, such co Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 sustaining an addition under section 69 of the Act. The Bench further noted that, despite specific requests, the assessee was neither confronted with the complete adverse material nor afforded an opportunity to cross Imran Ansari or any other person whose statements were relied upon. It is well settled that while the rigours of the Evidence Act do not income-tax proceedings, additions must nevertheless be founded on material which is reliable, cogent, and has a direct nexus with the party statements, cannot be treated as conclusive unless supported by independent corroborative evidence. At best, such material may give rise to suspicion, but suspicion, however strong, cannot take the place of Equally well settled is the principle that if the Assessing Officer proposes to rely upon any adverse material to the detriment of the as such material must be confronted to the assessee, and a reasonable opportunity must be granted to rebut or contradict the same. Where the addition rests substantially on a third-party statement, denial of cross examination strikes at the very root of the matter and amounts to a serious breach of the principles of natural justice. The Hon’ble Supreme Court in Andaman Timber Industries v. CCE(supra) has categorically held that failure to grant such opportunity renders the order a nullity. 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 the statements relied upon do not specifically record a the assessee; and the assessee was not provided copies of the complete statements or electronic data, nor was cross-examination permitted. 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 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 ordinate Benches of the Tribunal in identical matters arising from the same search action. Judicial discipline requires that, in the absence of inguishing features, such co-ordinate decisions be respectfully followed. Arvind Khetaram Purohit 16 ITA Nos. 4747 & 4746/MUM/2025 sustaining an addition under section 69 of the Act. The Bench further noted confronted with the complete adverse material nor afforded an opportunity to cross-examine Shri Imran Ansari or any other person whose statements were relied upon. It is well settled that while the rigours of the Evidence Act do not tax proceedings, additions must nevertheless be founded on material which is reliable, cogent, and has a direct nexus with the party statements, cannot be treated as conclusive unless At best, such material may give rise to suspicion, but suspicion, however strong, cannot take the place of Equally well settled is the principle that if the Assessing Officer proposes to rely upon any adverse material to the detriment of the assessee, such material must be confronted to the assessee, and a reasonable opportunity must be granted to rebut or contradict the same. Where the party statement, denial of cross- of the matter and amounts to a serious breach of the principles of natural justice. The Hon’ble Supreme Court in has categorically held that failure to no incriminating document or diary evidencing cash payment was found the alleged electronic data was found from the possession of a third the statements relied upon do not specifically record any admission by the assessee was not provided copies of the complete statements or examination permitted. In the absence of any independent corroborative evidence establishing money”, the evidentiary threshold required for sustaining an addition under section 69 or 69C of the During the hearing before us, the learned Departmental Representative ing fact or fresh material to persuade us to take a view different from that consistently adopted by the ordinate Benches of the Tribunal in identical matters arising from the same search action. Judicial discipline requires that, in the absence of ordinate decisions be respectfully followed. Printed from counselvise.com 8.26 On a holistic consideration of the facts and circumstances of the case, we hold that the impugned addition has been made solely on the basis of uncorroborated third assessee an effective opportunity to confront or rebut the same, and in violation of the principles of natural justice. Such an addition cannot be sustained in law. 8.27 Accordingly, the addition of the Act for the assessment year under consideration is deleted. 4.5 It is well settled that while strict rules of evidence do not apply to income-tax proceedings, additions must nonetheless be founded on cogent, reliable material h Suspicion, however strong, cannot substitute proof. An admission or disclosure made by the seller cannot, by itself, fasten liability on the purchaser in the absence of independent evidence establishing actual payment. 4.6 In view of the above discussion, and respectfully following the consistent decisions of the Coordinate Benches on identical facts, we hold that the addition made on account of alleged unexplained investment in purchase of the shop cannot be sustaine Accordingly, the addition made for the assessment year 2017 deleted. 5. Since the issue involved in assessment year 2018 identical, the addition made for that year is also deleted following our decision for the lead assessment year. Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 On a holistic consideration of the facts and circumstances of the case, we hold that the impugned addition has been made solely on the basis of uncorroborated third-party material and statements, without affording the assessee an effective opportunity to confront or rebut the same, and in violation of the principles of natural justice. Such an addition cannot be Accordingly, the addition of ₹1,00,000/- made under section 69C of the Act for the assessment year under consideration is deleted. It is well settled that while strict rules of evidence do not apply tax proceedings, additions must nonetheless be founded on cogent, reliable material having a direct nexus with the assessee. Suspicion, however strong, cannot substitute proof. An admission or disclosure made by the seller cannot, by itself, fasten liability on the purchaser in the absence of independent evidence establishing In view of the above discussion, and respectfully following the consistent decisions of the Coordinate Benches on identical facts, we hold that the addition made on account of alleged unexplained investment in purchase of the shop cannot be sustaine Accordingly, the addition made for the assessment year 2017 Since the issue involved in assessment year 2018 identical, the addition made for that year is also deleted following our decision for the lead assessment year. Arvind Khetaram Purohit 17 ITA Nos. 4747 & 4746/MUM/2025 On a holistic consideration of the facts and circumstances of the case, we hold that the impugned addition has been made solely on the basis of al and statements, without affording the assessee an effective opportunity to confront or rebut the same, and in violation of the principles of natural justice. Such an addition cannot be under section 69C of the Act for the assessment year under consideration is deleted.” It is well settled that while strict rules of evidence do not apply tax proceedings, additions must nonetheless be founded aving a direct nexus with the assessee. Suspicion, however strong, cannot substitute proof. An admission or disclosure made by the seller cannot, by itself, fasten liability on the purchaser in the absence of independent evidence establishing In view of the above discussion, and respectfully following the consistent decisions of the Coordinate Benches on identical facts, we hold that the addition made on account of alleged unexplained investment in purchase of the shop cannot be sustained. Accordingly, the addition made for the assessment year 2017–18 is Since the issue involved in assessment year 2018–19 is identical, the addition made for that year is also deleted following Printed from counselvise.com 6. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open Court on Sd/- (SANDEEP GOSAIN JUDICIAL MEMBER Mumbai; Dated: 20/01/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Arvind Khetaram Purohit ITA Nos. 4747 & 4746/MUM/2025 the result, both the appeals filed by the assessee are ounced in the open Court on 20/01/2026. Sd/ (SANDEEP GOSAIN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Arvind Khetaram Purohit 18 ITA Nos. 4747 & 4746/MUM/2025 the result, both the appeals filed by the assessee are /01/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "