ITAT Delhi Ruling: Section 69 Addition for Alleged On-Money Payment Invalid Without Independent Corroborative Evidence

The Income Tax Appellate Tribunal (ITAT), Delhi Bench (Dehradun), has delivered a significant ruling regarding additions made on account of "on-money" payments based on seized documents. In the case of Om Prakash Gupta Vs D/ACIT, the Tribunal held that additions under Section 69 of the Income Tax Act 1961 cannot be sustained merely on the basis of loose sheets found during a search, especially when such documents bear the name of a different person and lack corroborative evidence such as cash trails or parallel assessments in the hands of the seller.

Case Background and Search Proceedings

The litigation arose from the assessment proceedings for the Assessment Year 2023-24. The assessee had filed a return of income declaring a total income of Rs. 3,23,52,660, which included earnings from house property, business, and other sources.

The genesis of the dispute lay in a search and seizure operation conducted under Section 132 of the Income Tax Act 1961 on 22/11/2023. This operation targeted the group cases of Sh. Jitender Joshi and related entities. The assessee was encompassed in this action as a connected person to the group.

During the assessment proceedings, the Assessing Officer (AO) passed an order under Section 143(3) on 30/03/2025. The AO made a substantial addition of Rs. 1,40,00,000, alleging undisclosed investment under Section 69. Additionally, expenses amounting to Rs. 19,50,000 were disallowed.

Appellate Proceedings before CIT(A)

Aggrieved by the initial assessment, the assessee approached the Commissioner of Income Tax (Appeals)-3, Noida. In the order dated 04/06/2025, the CIT(A) provided partial relief by deleting the disallowance of expenses worth Rs. 19.5 lakhs.