ITAT Agra Sends Back ₹11 Lakh “On-Money” Addition for Fresh Assessment: Cross-Examination Held Essential
The Agra Bench of the Income Tax Appellate Tribunal in Avinash Arora Vs ITO (ITAT Agra) examined an addition of ₹11,00,000 alleged as unaccounted “on-money” paid for purchase of a flat in a project developed by Narayanan Builders and Developers Private Limited. The addition arose from Excel records seized during a search on the builder, which showed a higher sale consideration compared to the registered value.
The Tribunal did not finally decide the taxability of the alleged “on-money” but remanded the matter to the Assessing Officer (AO) for a fresh assessment. The Tribunal held that the assessee must be allowed to cross-examine the persons whose statements formed a crucial part of the Revenue’s case. At the same time, it ruled that absence of a Section 65B(4) certificate under the Indian Evidence Act, 1872, did not by itself invalidate the entire assessment proceedings, though the assessee must be informed of the procedure adopted for seizure and preservation of electronic data.
Background: Search on Builder and Reopening of Assessment
The assessee, Avinash Arora, jointly with his parents, had acquired Flat No. 601 in “Orchid Tower”, Gwalior, a project of Narayanan Builders and Developers Private Limited (M/s NBDPL). A search under Section 132 was carried out on 20.03.2023 in the case of M/s NBDPL and related concerns, during which a Seagate external hard drive and other electronic data were seized.
From an Excel sheet (marked as LPS-1), the Investigation Wing concluded that the total price of the assessee’s flat was ₹72,00,000, out of which ₹39,00,000 had been paid through banking channels. The difference of ₹33,00,000 was alleged to be cash consideration (“on-money”) not recorded in the builder’s regular books. Treating the assessee’s share at 1/3rd, the AO attributed ₹11,00,000 as unexplained investment in cash.
On this basis, the AO reopened the assessment under Section 147 by issuing notice under Section 148. The reassessment culminated in an addition of ₹11,00,000 under Section 69 read with Section 115BBE in the hands of the assessee for Assessment Year 2020-21.
AO’s Findings: Reliance on Excel Data and Statements
Excel Sheet Entries and Matching Transaction Details
During the reassessment, the AO relied heavily on the seized Excel file (NPS-1 / LPS-1), which contained detailed entries of flat sales in Orchid Tower. For Flat No. 601, the sheet reflected:
- Name of buyers: “Prahlad Rai Arora, Jaya Devi Arora, Avinash Arora”
- Flat number and area (1500 sq.ft.)
- Registry date: 13.06.2019
- Amounts for cheque payments, GST, security, maintenance
- Total sale consideration of ₹72,00,000, bifurcated as:
- ₹39,00,000 through cheques / banking channels
- ₹33,00,000 allegedly received in cash outside the books
The AO noted that when confronted under Section 131(1A) on 21.03.2025, the assessee accepted that the flat number, area, registration date, and cheque amounts in the Excel sheet matched his actual transaction and the e-registration records. However, he denied any cash component and expressed inability to explain the difference recorded in the Excel file.
The AO took the view that where one part of a computerized document (e.g., flat particulars, cheque details) is admitted as correct by the concerned assessee, the remaining part (i.e., the cash component) cannot be selectively discarded without cogent evidence. According to the AO, the Excel file represented the “actual sale consideration” and the difference between that figure and the registry value reflected the unaccounted cash portion.
Statements of Builder’s Key Persons
The AO further strengthened the addition by referring to statements recorded under Section 132(4) from:
Shri Niket Jain, Director of M/s NBDPLShri Paras Jain, a person with 50% shareholding in M/s NBDPL (in a later year)Shri Ajay Singh Bhadoriya, accountant of M/s NBDPL
According to the AO:
- These individuals acknowledged that the registered sale deeds were generally made at guideline (registry) value.
- They admitted that the differential between actual sale price and registry value was received in cash as “on-money”.
- Specifically for Orchid Tower “A” and “B”, it was stated that around 40–50% of the sale consideration was taken in cash, which was not reflected in the regular books.
By linking these statements with the Excel data, the AO concluded that the seized electronic record was fully corroborated and that the assessee’s alleged share of ₹11,00,000 represented unexplained “on-money” investment in the flat.
Consequently, an addition of ₹11,00,000 was made under Section 69 (unexplained investment) and taxed as per Section 115BBE.
CIT(A)’s Decision: Addition Confirmed in Full
The assessee’s appeal before the CIT(A) / National Faceless Appeal Centre (NFAC), Delhi was dismissed by order dated 15.01.2026. The CIT(A) upheld both the validity of reassessment and the substantive addition, reasoning as under:
Validity of Reopening and Statutory Basis
- Based on specific information from the Investigation Wing regarding unaccounted cash receipts of ₹33,00,000 (assessee’s share ₹11,00,000) for Flat No.