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2026 Supreme(Online)(ITAT) 3946
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Sandeep Gosain, Judicial Member, Bijayananda Pruseth, Accountant Member
Jalaram Tararam Purohit – Appellant
Versus
Asst. Comm. of Income Tax, Central Cir. 4(2), Mumbai – Respondent
ITA No.6060/Mum/2025 (A.Y: 2017-18)|ITA No.6061/Mum/2025 (A.Y: 2018-19)|ITA No.6062/Mum/2025 (A.Y: 2019-20)
For the Appellants/Petitioners: Jitendra Singh
For the Respondents: Kavitha Kaushik,Sr.DR.
Additions u/s 69 for alleged cash payments cannot be sustained based solely on third-party search statements and documents without corroboration, cross-examination opportunity, or confrontation of material, violating natural justice principles.
Headnote:(A) Income Tax Act, 1961 - Sections 69, 132(4), 153C, 250 - Addition on account of alleged unaccounted cash payment for shop purchase - Assessment based on third-party search findings including pendrive data and statements recorded during search on developer group - No corroborative material found from assessee, no opportunity to cross-examine witnesses provided, and no confrontation of adverse material - Principles of natural justice violated - Addition cannot be sustained solely on third-party information without independent verification, cross-examination opportunity, or seized documents linking assessee explicitly to cash payment - Assessee denied cash payment, claiming payment by cheque as per agreement - Following coordinate bench decisions on identical facts, addition deleted. (Paras 3, 8-22)
(B) Natural Justice - Opportunity to cross-examine and confront adverse material mandatory when relying on third-party statements and documents - Failure to provide renders order nullity - Electronic evidence like pendrive data from third-party premises requires corroboration for admissibility and reliability. (Paras 10, 13, 19)
Facts of the case:
Assessee purchased shop from developer group subjected to search where pendrive with cash transaction details and statements of employees/directors confirmed cash collections from buyers. Assessment u/s 153C made addition u/s 69 for alleged unaccounted cash paid over agreement value. Assessee denied cash payment. CIT(A) confirmed addition. Appeals clubbed for A.Ys. 2017-18 to 2019-20.
Findings of Court:
Addition of unaccounted cash deleted for all years as facts identical to prior coordinate bench rulings deleting similar additions.
Issues: Whether addition u/s 69 sustainable based on third-party search material without corroboration, cross-examination opportunity, or confrontation of incriminating evidence to assessee.
Ratio Decidendi: Additions based solely on third-party statements and documents found during their search, without providing assessee opportunity for cross-examination or confronting specific adverse material, violate natural justice. Pendrive data from third-party lacks authentication and corroboration linking assessee to cash payment. Assessee's denial and payment by cheque suffice absent independent evidence.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. assessee's grounds challenging additions under section 69 (Para 5) |
| 2. prior itat decisions favoring assessee on identical facts (Para 6 , 7) |
आदेश/ORDER
PER SANDEEP GOSAIN, JM:
The present appeals has been filed by the assessee challenging the different impugned order 09.08.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Office of the Commissioner of Income Tax, Appeal, CIT (A) 52, Mumbai for the assessment year 2017-18, 2018-19 & 2019-20.
Since all the issues involved in these three appeals are common and identical, therefore, they have been clubbed, heard together and consolidated order is being passed for the sake of convenience and brevity. We shall take ITA No. 6060/Mum/2025, A.Y 2017-18 as lead case and facts narrated therein.
ITA No. 6060/Mum/2025, A.Y 2017-18 The assessee has raised the following grounds:
“1. The Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT (A)") erred in confirming the following additions and disallowances made by the Ld. Assessing Officer without appreciating the facts and circumstances of the case: Hence, the impugned order passed by the Ld. CIT(A) is arbitrary and unlawful.
2. The Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT (A)"] erred in confirming the total income of Appellant at Rs. 10,38,270/- as against the returned Income of Rs. 4,38,270/-.
3. The Ld. CIT(A) is not justified in passing the impugned order dated 09.08.2025 Confirming addition U/S 69 on account of unaccounted cash paid of Rs. 6,00,000/- for purchases of Shop while the Assessee has not paid any Cash but paid Amount by cheque as per agreement.
4. The Ld. CIT(A) is not justified in passing the impugned order dated 09.08.2025 Confirming addition U/S 69 on account of unaccounted cash paid of Rs. 6,00,000/- for purchases of Shop without providing opportunity to cross examine and not following the principles of natural justice.
5. The Ld. CIT(A) is not justified in passing the impugned order dated 09.08.2025 Confirming addition without any documentary evidence in his possession and relied on information provided by investigation department and hence the order is passed as per the satisfaction of investigation officer and not own satisfaction. Such orders are liable to beset aside and the order lacks satisfaction of assessing officer.”
2. At the very outset Ld. AR submitted that the grounds in question raised by the assessee are squarely covered by the series of the decisions of the Coordinate Bench of ITAT in the following cases:
1. ITA Nos. 4742 to 4744/Mum/2025, Pravin K Purohit Vs. DCIT
2. ITA Nos. 5553 to 5555/Mum/2025, Akhraj P Chopra Vs. DCIT
3. ITA Nos. 6363 to 6365/Mum/2025, Bhavana V. Jain Vs. ACIT
4. ITA Nos. 6523 to 6525/Mum/2025, Bharat Solanki Vs. DCIT.
5. ITA Nos. 5499 to 5501/Mum/2025, Manish K Seksaria Vs. DCIT
6. ITA Nos. 5552 & 5556/Mum/2025, Mishra Ganesha Ram Vs. DCIT
7. ITA Nos. 6571, 6569 & 6568/Mum/2025, Manish Mali Vs. DCIT
8. ITA Nos. 5488 to 5489/Mum/ 2025, Darpan H Mehta Vs. DCIT
9. ITA Nos. 6480, 6479 & 6479/Mum/2025, Dinesh Megharam Choudhary.
3. In the case of Pravin K Purohit (supra), the coordinate Bench of ITAT Mumbai Bench had decided the issue in favour of the assessee, the operative portion of the same is reproduced herein below:
8. We have heard the arguments for both the parties and have also perused the material placed on record, judgements cited before me and the orders passed by the revenue authorities. From the records, we noticed that the assessment was completed u/s 153C on account of the fact that a search and seizure action was conducted on 17.03.2021 on Rubberwala group. In search action, premises of M/s. Rubberwala Housing & Infrastructure Ltd (RHIL), its promoter and director-Shri Tabrez Shaikh, and a key employee of Rubberwala group Shri Imran Ansari, who was handling sale & registration of shops in “Platinum Mall” project of RHIL were covered. Among others, statement of these persons were recorded on oath on var
