ITAT Agra on Section 69A: Third-Party Excel Sheet Alone Insufficient to Tax Alleged Cash Payment

1. Background and Context

The Agra Bench of the Income Tax Appellate Tribunal in Swati Agrawal Vs ITO (ITAT Agra) examined whether a cash addition of ₹2,50,000 made under Section 69A read with Section 115BBE could stand when the only incriminating material was an Excel sheet recovered from a builder group and statements of its employees.

The Tribunal concluded that such third-party material, without supporting evidence and without allowing the assessee to cross-examine the relevant persons, did not constitute adequate proof to justify the addition. Importantly, the Tribunal drew a clear line between:

  • Information sufficient to reopen an assessment under Section 147, and
  • Evidence strong enough to sustain an addition under Section 69A.

2. Key Facts of the Case

2.1 Return Filing and Original Processing

  • The assessee filed her return of income for Assessment Year 2020-21 on 02.01.2021, declaring income of ₹5,00,000 from salary and other sources.
  • The return was processed and accepted through an intimation dated 05.01.2021.

2.2 Search on Builder Group and Discovery of Excel Sheet

  • A search and seizure operation under Section 132 of the Income Tax Act 1961 was conducted on Bhutani Infra Group and Associates on 04.01.2024 by the Investigation Wing.
  • During the search, the Department recovered various seized materials, including:
    • Excel sheet data stored in a pen drive, and
    • Statements of employees of Bhutani Infra Group and Associates recorded on oath.
  • From this material, the Department inferred that the assessee had allegedly paid ₹2,50,000 in cash from undisclosed sources to the builder during the relevant year.

2.3 Reassessment Proceedings Initiated

  • Based on the investigation findings, the assessee’s case was reopened under Section 147.
  • A notice under Section 148 dated 30.03.2024 was issued.
  • In response, the assessee filed a return on 12.06.2024, declaring the same income of ₹5,00,000 as in the original return.

2.4 Assessment Stage

  • Statutory notices under Section 143(2) and Section 142(1) were issued, along with show cause notices requiring the assessee to explain the alleged cash payment of ₹2,50,000.
  • The assessee submitted:
    • Copy of her ITR,
    • Bank statements, and
    • Details of her bank accounts relating to dealings with M/s Bhutani Infra Group and Associates.
  • She stated that:
    • She was a salaried individual,
    • She had no business income during the relevant year, and
    • She had never paid the alleged cash amount to the builder.

Despite this categorical denial and absence of direct evidence of cash movement, the Assessing Officer (AO) completed the reassessment under Section 147 vide order dated 01.03.2025, making an addition of ₹2,50,000 as unexplained cash under Section 69A read with Section 115BBE.

2.5 First Appeal Before CIT(A), NFAC

  • The assessee challenged the reassessment order before the Commissioner of Income Tax (Appeals), NFAC (Delhi) under Section 250.
  • By order dated 20.01.2026 in Appeal No. NFAC/2019-20/10458750, the CIT(A), NFAC dismissed the appeal and confirmed the addition of ₹2,50,000.

3. Assessee’s Submissions Before ITAT

3.1 Grounds of Appeal

The assessee raised, in substance, the following objections before the Tribunal:

  • An addition cannot be made solely on the basis of an entry in the records of a third party without any independent, concrete evidence.
  • She was not given any meaningful opportunity to rebut the material found during the search of Bhutani Infra Group and Associates.
  • The order of the first appellate authority was a stereotyped, template-style order, not dealing with her specific contentions.
  • Judicial precedents cited by her were not properly appreciated.
  • Overall, the order was flawed both on facts and in law.

3.2 Facts About the Flat Booking

The assessee’s representative clarified the background of her dealings with the builder: