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INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Sandeep Gosain, Judicial Member, Bijayananda Pruseth, Accountant Member
Rakesh Baldevraj Juneja – Appellant
Versus
Income Tax Officer Ward 41(3)(1) – Respondent
ITA 1242/MUM/2026[2019-2020]
(A) Income Tax Act, 1961 - Section 69A - Unexplained investment - Addition based on third-party documents and statements - Search and seizure under Section 132(4) - Principles of natural justice - Opportunity of cross-examination - Admissibility of electronic evidence under Section 65B of the Indian Evidence Act, 1872.
(B) Income Tax Act, 1961 - Section 69A - Addition based solely on evidence from third-party search without independent corroboration is unsustainable - Third-party statements without opportunity of cross-examination violate natural justice - Electronic evidence without certificate under Section 65B of Evidence Act is inadmissible.
(C) Principles of natural justice - Reliance on statements recorded under Section 132(4) without affording opportunity of cross-examination constitutes gross violation.
(D) Evidence - Electronic evidence - Excel sheet not accompanied by certificate under Section 65B of Indian Evidence Act is not admissible. (E) Addition based on suspicion - Suspicion, however strong, cannot take the place of evidence - Presumption cannot substitute evidence.
Facts of the case:
The assessee, an individual, filed return of income for Assessment Year 2019-2020. The case was reopened based on information from a search and seizure operation under Section 132 of the Act on 04.08.2023 in the case of the Kalpataru Group. An Excel sheet and other incriminating documents were found during the search, allegedly indicating "on-money" transactions of Rs. 81,00,000/- by the assessee towards purchase of Flat No. A-295. The assessee purchased the residential property jointly with others from M/s. Kinaya Ventures LLP vide Letter of Allotment dated 30.07.2021 for Rs. 2,92,09,065/-, with stamp duty valuation at Rs. 2,74,17,825/-. The booking application was made on 02.04.2019, Letter of Intent on 10.05.2019, and the Agreement for Sale was executed on 05.05.2023. The alleged cash payment dates in the Excel sheet were 29.01.2019 and 27.02.2019, which were prior to the booking application date of 02.04.2019. All payments were made through banking channels. The assessee categorically denied any cash payment and requested cross-examination of persons whose statements were relied upon, which was not provided. The AO made addition under Section 69A, which was confirmed by the Ld. CIT(A).
Findings of Court:
The Tribunal found that the Excel sheet relied upon by the Revenue was not accompanied by a certificate under Section 65B of the Indian Evidence Act, making it inadmissible. The addition was solely based on third-party documents and statements recorded under Section 132(4) without independent inquiry or direct evidence linking the assessee. No opportunity of cross-examination was provided to the assessee despite specific requests. The alleged cash payment dates predated the booking application, making the allegation factually untenable. The entire consideration was paid through banking channels, and the source was never doubted. The Tribunal held that material found during search of a third party cannot be used against the assessee without independent corroboration. The decisions in Pravin Khetaramm Purohit, Rakesh Jain, Jalaram Tararam Purohit, Jain Sanjaykumar Sohanraj HUF, Mamta Sharad Gupta, and Dimple Shailesh Jain were relied upon. The principle from Umacharan Shaw & Bros. v. CIT that suspicion cannot take the place of proof was applied.
Issues: (1) Whether addition under Section 69A can be sustained solely on the basis of third-party documents and statements without independent corroboration? (2) Whether reliance on statements recorded under Section 132(4) without opportunity of cross-examination violates principles of natural justice? (3) Whether electronic evidence (Excel sheet) without Section 65B certificate is admissible? (4) Whether the alleged on-money payment was factually consistent with the timeline of the property purchase?
Ratio Decidendi: The Tribunal held that additions based solely on third-party documents and statements without independent corroboration linking the assessee are unsustainable. Material found during search of a third party cannot be used against the assessee without corroborative evidence. Electronic evidence without compliance with Section 65B of the Indian Evidence Act is inadmissible. Failure to provide opportunity of cross-examination violates principles of natural justice. The test of human probabilities cannot substitute for lack of direct or cogent evidence.
Result: Appeal allowed. Addition of Rs. 81,00,000/- under Section 69A deleted. The appeal filed by the assessee is allowed. Order pronounced in open court on 18.05.2026.
| Table of Content |
|---|
| 1. the grounds of appeal, facts, and initial proceedings are summarized. (Para 2 , 3 , 4 , 5 , 6 , 7) |
| 2. assessee's arguments against the addition are detailed. (Para 8 , 9 , 10) |
| 3. court observes that addition is based on uncorroborated third-party evidence. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 4. addition based solely on suspicion or third-party material without independent evidence cannot be sustained. (Para 18 , 19 , 20) |
| 5. the appeal is allowed and the addition is directed to be deleted. (Para 21) |
आदेश / ORDER
PER SANDEEP GOSAIN, JUDICIAL MEMBER
This appeal is filed by the Assessee against the order of Ld. National Faceless Appeal Centre, Delhi vide DIN: ITBA/NFAC/S/250/2025- 26/1083527832(1) dated 10-Dec-2025 for the Assessment Year 2019- 2020. The Assessee has raised the following grounds of appeal:
1 . Addition of Rs. 81,00,000/- u/s 69A as Unexplained Investment:
On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in confirming the addition of Rs. 81,00,000/- u/s 69A as unexplained money in respect of the alleged On Money transaction paid for the purchase of residential property without any cogent or corroborative evidence.
The Appellant submits that the addition of Rs. 81,00,000/- made us 69A as Unexplained Investment be deleted.
2 .Reliance on Third-Party Material
On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in confirming the addition of Rs. 81,00,000 u/s 69A made by the Assessing Officer solely on the basis of third-party information obtained from the incriminating materials and statements recorded of third party's u/s 132(4), without bringing on record any independent inquiry or corroborative evidence against the appellant.
The Appellant submits that the addition of Rs. 81,00,000 u/s 69A made on the basis of such third party statement or material found from the third party in absence of any independent evidence linking the Appellant with the material found from a third party or a third party statement cannot be sustained.
3 . Violation of Principles of Natural Justice
a. On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in upholding the Assessing Officer's action of relying upon statements recorded u/s 132(4) of the Income-Tax Act, 1961 without affording the Appellant any opportunity for cross-examination of persons whose statements were relied upon, which constitutes a gross violation of the principles of natural justice as in view of decision by Hon'ble Supreme Court in the case of Andaman Timber Industries v. Chief Commissioner of Customs (2015) 62 Taxmann.com 3 (SC).
The Appellant submits that a fair hearing and an opportunity to cross examine the parties is not provided.
b. On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi erred in upholding the Assessing Officer's action of relying heavily on the uncertified and unsigned electronic records without ensuring compliance with the mandatory requirements of Section 658 of the Indian Evidence Act, 1872 on the ground that the strict compliance of the Evidence Act does not apply and the authorities may rely on material consistent with its principles.
The Appellant submits that the National Faceless Appeal Centre, Delhi reliance on uncertified electronic evidence by the Assessing Officer duly confirmed by the National Faceless Appeal Centre, Delhi renders the entire assessment order vulnerable to challenge on grounds of inadmissibility.
4 . Addition Based on Suspicion
On the facts and in the circumstances of the case, the Appellant submits that the National Faceless Appeal Centre, Delhi has erred in relying upon the "test of human probabilities" in the case of Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) and Durga Prasad More v. CIT (1972) 82 ITR 540 (SC) alongiwth
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