ITAT Upholds 153C Assessments but Deletes Cash Payment Additions for Lack of Corroboration and No Cross-Examination [Read Order]
ITAT upholds the 153C assessments but deletes the cash additions, noting the on-money allegation lacked corroboration and the assessees were not allowed cross-examination.
ITAT Deletes Cash Additions for Lack of Proof while Upholding 153C Assessments
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed four appeals filed by Akhraj Pukhraj Chopra and Lilaram, upholding the validity of assessments completed under Section 153C of the Income Tax Act, 1961, but deleting additions made towards alleged cash payments for shop purchases due to absence of corroborative evidence and denial of cross-examination.
The case stemmed from a search under Section 132 conducted in the premises of the Rubberwala Group, during which the statement of key employee Imran Ansari was recorded. In his statement, he explained that while booking commercial units in the “Platinum Mall” project, the group allegedly accepted on-money from buyers.
On the basis of this statement and a pendrive seized from his residence containing data of cash collections, the Assessing Officer (AO) recorded satisfaction under Section 153C and reopened the cases of the assessees.
The AO treated ₹2,00,000 as unexplained investment under Section 69, alleging cash payment over and above the agreement value for purchase of shop premises for Assessment Years (AY)s 2019–20 and 2020–21. The addition was made solely on the basis of the third-party statement recorded during the search.
Before the CIT(A), the assessees contended that they had never paid any on-money, that no material found during the search named them, and that neither the seized documents nor the statements of Rubberwala Group personnel were ever provided. The CIT(A), however, upheld the addition.
The Bench comprising Pawan Singh (Judicial Member) and Padmavathy S (Accountant Member) examined the record and found the present cases identical in all material aspects to Pravin Purohit.
The Tribunal noted that neither the pendrive data nor the statements were ever confronted to the assessees. The assessees were not given an opportunity to cross-examine the persons whose statements were relied upon and the alleged statement did not name the assessees.
The Tribunal also noted that no diary or evidence indicating cash payment was found from the assessees' possession and additions were based purely on third-party material without independent verification.
Relying on Supreme Court rulings such as Andaman Timber Industries Vs. CCE (2015), the Tribunal held that additions made solely on uncorroborated third-party statements, without providing copies of statements or allowing cross-examination, are legally unsustainable and violate principles of natural justice.
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Accordingly, the ITAT deleted the cash payment additions for all years.
The Tribunal upheld the 153C assessments but deleted the cash additions, thus partly allowing the appeals.
The Assessee was represented by Bharat Kumar, while Rajesh Kumar Yadav appeared for the Revenue
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