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2026 Supreme(Online)(ITAT) 4617
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Sandeep Gosain, Judicial Member, Bijayananda Pruseth, Accountant Member
Jain Sanjaykumar – Appellant
Versus
DCIT, Central Circle, Sohanraj HUF Mumbai – Respondent
ITA No.7113/Mum/2025|ITA No.7114/Mum/2025
For the Appellants/Petitioners: Bharat Kumar
For the Respondents: Vivek permpurna, CIT DR
Additions under section 153C/69 based on third-party search materials deleted for lack of corroboration, non-confrontation of evidence, and denial of cross-examination, violating natural justice.
Headnote:(A) Income Tax Act, 1961 - Sections 153C, 69, 250 - Search and seizure - Assessment based on third-party materials - Additions on account of alleged cash payments ('on-money') made without confronting assessee with incriminating documents or statements, denying opportunity of cross-examination, and lacking corroborative evidence from assessee's premises - Notice issued without DIN in contravention of CBDT Circular - Consolidated satisfaction note for multiple years vitiating proceedings - Additions deleted following coordinate bench decisions on identical facts, as reliance solely on third-party statements and unverified electronic data (pendrive) without testing veracity or providing natural justice violates principles of natural justice. (Paras 2, 3, 10-22)
(B) Principles of Natural Justice - Opportunity to rebut adverse material and cross-examine witnesses whose statements relied upon is mandatory - Failure renders assessment order nullity - Third-party information requires corroboration and scrutiny before use against assessee - Electronic evidence inadmissible without compliance with evidentiary standards and independent verification. (Paras 13, 17-21)
Facts of the case:
Assessments completed under section 153C following search on third-party group revealing pendrive and statements alleging cash collections from buyers of commercial shops. Assessing Officer made additions under section 69 relying on these materials without sharing documents, statements, or allowing cross-examination, confirmed by first appellate authority.
Findings of Court:
Additions unsustainable due to lack of corroborative evidence linking assessee to cash payments, non-provision of seized materials or statements, denial of cross-examination opportunity, and breach of natural justice principles. Directed Assessing Officer to delete impugned additions.
Issues: Validity of section 153C notice without DIN and consolidated satisfaction note; sustainability of additions based on third-party search materials without confrontation, cross-examination, or corroboration; compliance with natural justice.
Ratio Decidendi: Additions based solely on third-party statements and unverified data found from searched persons' premises cannot sustain without independent corroboration, confrontation of material to assessee, and opportunity of cross-examination; such procedural lapses vitiate proceedings.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. consolidation of identical appeals for convenience. (Para 1 , 2) |
| 2. assessee's grounds challenging procedural defects in s.153c notice. (Para 3 , 4) |
| 3. reliance on coordinate bench precedents favoring assessee. (Para 5 , 6) |
| 4. facts of search on rubberwala group and incriminating materials. (Para 7) |
आदेश/ORDER
PER SANDEEP GOSAIN, JM:
The present appealshave been filed by the assessee challenging the different impugned orders passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income Tax, Appeal 52, Mumbai for the assessment year 2019-20 and 2020-21.
2. Since all the issues involved in these 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. 7113/Mum/2025, A.Y 2019-20 lead case and facts narrated therein.
ITA No. 7113/Mum/2025, A.Y 2019-20
The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming the stand of A.O. about that issuing the notice u/s 153C of the Act without DIN. It is blatant contravention of the Circular No. 19/2019,dated 14-8-2019 issued by the CBDT
2. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming addition without referring to any incrementing document. Besides, he has not referred to any incriminating material in the satisfaction note issued to the Appellant.
3. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. for not sharing incrementing documents found during the course of search of rubberwala group which was pertained to the appellant.
4. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. about the not providing statement and materials used by him against the appellant
5. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming stand of A.O. about opportunity of cross examination of the person whose statements were used against the appellant
6. On the facts and circumstances of the case in law, Ld. CIT(A) erred in recording consolidated satisfaction note under section 153C of Income Tax Act 1961, for multiple assessment years, thereby vitiating the entire proceedings.”
7. On the facts and circumstances of the case in law, Ld. CIT(A) erred in confirming addition of Rs. 2,50,000/- u/s. 69 of the Act.”
2. At the very outset Ld. AR submitted that the grounds on merits 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. We notice that 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 & registratio
