Registered Sale Value and Stamp Duty Valuation Alone Cannot Prove Unaccounted Cash Payment in Property Purchase: ITAT Deletes ₹1 Crore Addition [Read Order]

The Income Tax Appellate Tribunal [ITAT] Mumbai Bench has held that the registered sale value of a property and stamp duty valuation by themselves cannot be treated as conclusive proof of unaccounted cash payment in a property transaction. The Tribunal set aside the addition of ₹1 crore made against the assessee and remanded the matter for fresh adjudication after directing the Assessing Officer (AO) to provide an opportunity for cross-examination of witnesses.

The dispute arises from a search and survey conducted on Bhagwati Developers, during which certain seized registers allegedly indicated that the assessee had purchased a flat for ₹75 lakh through banking channels and had additionally paid ₹1 crore in cash as unexplained consideration. Based on the investigation wing’s report, the AO treated the alleged cash component as unexplained investment under Section 69 and made an addition of ₹1 crore.

The assessee Mayuri Hitendra Shah argued that the addition was founded entirely on third-party documents and statements, without any independent verification. It was also contended that the builder had furnished confirmation denying receipt of any extra cash and that the assessee’s repeated request for cross-examination of the builder and related witnesses was unlawfully denied. However, the CIT(A) upheld the addition.

The assessee contended that mere reference to stamp duty valuation and the registered sale value could not lead to an inference of undisclosed cash payment, especially when there was no corroborative evidence linking the assessee to such alleged cash transactions.

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The Bench comprising Narender Kumar Choudhry (Judicial Member) and Prabhash Shankar (Accountant Member) observed that the AO had heavily relied on the investigation report and third-party statements without conducting any independent enquiry or providing the assessee an effective opportunity to challenge the evidence. Referring to judicial precedents including Andaman Timber Industries v Commissioner of Central Excise the Tribunal held that denial of cross-examination in such circumstances amounted to violation of principles of natural justice.

Accordingly, the Bench set aside the appellate order and restored the matter to the AO for de novo assessment after granting cross-examination and adequate opportunity of hearing to the assessee.

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