ITAT Delhi Quashes Section 69 Addition Premised on Omaxe Group Search: Absence of Cross-Examination and Corroborative Evidence Proves Fatal

Background and Overview

The Income Tax Appellate Tribunal, Delhi Bench, disposed of three connected appeals filed by a partnership firm engaged in consultancy services, covering Assessment Years 2020-21, 2021-22, and 2022-23, through a single consolidated order. The core controversy revolved around the legitimacy of an addition made under Section 69 of the Income-tax Act, 1961, which was predicated entirely on documents and data seized during a search operation conducted on the Omaxe Group. Assessment Year 2020-21 was designated as the lead case for adjudication purposes.

The appeals arose against the order of the Commissioner of Income-tax (Appeals)-23, New Delhi, dated 15.10.2025. The Tribunal's ruling, pronounced in open court on 5th June 2026, has significant implications for how additions based on third-party seized material ought to be treated in reassessment proceedings.

The Assessee and the Original Return

The assessee is a partnership firm deriving income from consultancy services. For Assessment Year 2020-21, the firm had filed its return of income on 09.12.2020, declaring total income of Rs. 77,74,990. The case was subsequently reopened by the Assessing Officer under Section 147 of the Income-tax Act, 1961, on 21.03.2024, on the basis of information forwarded by the Investigation Wing following a search and seizure operation conducted on 14.03.2022 under Section 132 of the Act on the Omaxe Group and its associated entities.

Upon completion of the reassessment, the Assessing Officer made an addition of Rs. 35,04,000 as unexplained investment under Section 69 of the Act, asserting that the assessee had made an unaccounted cash payment of that amount towards the purchase of a commercial unit from an Omaxe Group entity, specifically Unit No. INVF/SCO/331 in the Omaxe World Street project of Omaxe World Street Pvt. Limited (formerly Robust Build Well Pvt. Limited).

Nature of Seized Material — The "MAIN REPORT" Excel Files

During the search proceedings at the Omaxe Group's premises, the Investigation Wing seized electronic data stored in what were described as "MAIN REPORT" Excel files. Post-search investigation led the authorities to draw the following conclusions regarding this data:

  • The data contained in the "MAIN REPORT" files was related to various companies of the Omaxe Group.
  • These files exclusively recorded unaccounted cash transactions pertaining to Omaxe Group entities.
  • Transaction dates recorded in the Excel files for the period prior to 01.08.2018 had been backdated by ten years.
  • The monetary figures reflected in the Excel sheets were suppressed by a factor of 100 — meaning the actual amount had to be derived by multiplying the recorded figure by 100.

The Assessing Officer also noted that the "MAIN REPORT" Excel files contained three worksheets: "RECEIPTS", "PAYMENTS", and "CLOSING BALANCE." A comparison of ERP IDs found in the Excel files with the ERP database maintained by the Omaxe Group at its Head Office revealed an exact match of customer names and transaction identifiers, leading the Assessing Officer to conclude that the Excel data reflected real and actual transactions.

Furthermore, Shri Manish Kumar, President of the Omaxe Group, in his statement recorded on oath under Section 132(4) of the Act on 15.03.2022, admitted that amounts in the Excel sheets had been suppressed by a factor of 100. Employees of the Omaxe Group also confirmed in their statements that entries in the "MAIN REPORT" files were not reflected in the regular books of accounts of the group. Cash slips issued to customers were compared with the "MAIN REPORT" data, and the suppression factor was corroborated.

Based on one entry in the Excel sheet identifying the assessee as having made a cash payment of Rs. 35,04,000, the Assessing Officer framed the addition under Section 69 of the Income-tax Act, 1961.

Grounds of Appeal Raised Before the Tribunal

The assessee raised multiple grounds of appeal, which included both jurisdictional and substantive challenges: