ITAT Mumbai Scraps On-Money Addition: Third-Party Excel Data Held Inadequate Without Corroboration

Background of the Dispute

The case of Ganesharam Galbaram Mali Vs DCIT came up before the ITAT Mumbai in a batch of appeals concerning Assessment Years (AY) 2017-18 to 2019-20. All matters arose from a common search action and involved the same assessee, so the Tribunal passed a consolidated order. The appeal for AY 2017-18 (ITA No. 8349/Mum/2025) was treated as the lead case, and the reasoning in that year was applied mutatis mutandis to the other years.

The controversy stemmed from a search conducted on 17.03.2021 in the case of “Rubberwala Group”, particularly at the premises of M/s Rubberwala Housing and Infrastructure Ltd. (RHIL), the developer of a commercial project called “Platinum Mall”, Girgaon, Mumbai. The search also covered:

• Shri Tabrez Shaikh, promoter and director of Rubberwala Group, and
• Shri Imran Ansari, a key employee handling sale and registration of shops in Platinum Mall.

During the search and post-search proceedings, statements of these individuals were recorded under Section 132(4) of the Income Tax Act 1961. Based on material and statements found in the Rubberwala Group, the Assessing Officer (AO) alleged that purchasers of units in Platinum Mall had paid unaccounted cash (“on-money”) over and above the registered agreement value.

The assessee in the present appeals had purchased a shop in Platinum Mall. The AO concluded that part of the purchase consideration had been paid in cash and treated it as unexplained investment under Section 69 / Section 69C in different years.

Nature of Addition in the Assessee’s Case

According to the AO, an Excel file seized from a pen drive at the premises of Shri Imran Ansari contained shop-wise details of buyers, agreement values, and alleged cash components. On the basis of this seized digital data and statements of Rubberwala Group personnel, the AO concluded that the assessee had made the following cash payments towards acquisition of the shop in Platinum Mall, aggregating to Rs. 70,69,200/-:

For the impugned year AY 2017-18, the AO treated Rs. 4,00,000/- as unexplained investment allegedly paid in cash, and made an addition under Section 69 / Section 69C. The Section 153C proceedings were triggered on the basis of the seized material from Rubberwala Group, and consequential assessments were passed for AYs 2017-18, 2018-19 and 2019-20.

The CIT(A) affirmed the addition and upheld the validity of the Section 153C proceedings. The assessee carried the matter in appeal before the ITAT Mumbai.

Assessee’s Primary Contentions Before ITAT

Challenge to On-Money Allegation

The assessee’s Authorised Representative (AR) submitted that:

• The assessee had purchased a shop in Platinum Mall for a disclosed consideration as per a registered agreement.
• The AO presumed, solely on the basis of third-party material (Excel sheets and statements of Rubberwala Group personnel), that a portion of the consideration was paid in cash as “on-money”.
• The assessee categorically denied having paid any cash over and above the agreement value.

Despite such denial, the AO made the addition of Rs. 4,00,000/- under Section 69 in AY 2017-18 and similar additions in other years.

Basis of Addition: Third-Party Digital Records and Statements

The AR emphasised that the entire addition was founded on:

1. Excel sheets extracted from a pen drive seized from Shri Imran Ansari, a third party, containing names of customers, shop numbers, agreement values and alleged cash components; and
2. Statements under Section 132(4) of:
   • Shri Imran Ansari, who explained that the Excel sheet recorded agreement values (received by cheque/banking channels) and higher actual prices at which shops were sold, with the difference (on-money) received in cash from buyers and handed over to Shri Tabrez Shaikh; and
   • Shri Tabrez Shaikh, who subsequently confirmed receipt of such cash and offered income @8% on the cash receipts as undisclosed income of RHIL.

The AR argued that no independent material whatsoever was brought on record to show actual payment of cash by this assessee—there were:

• No receipts,
• No diaries,
• No acknowledgements,
• No confirmations, and
• No contemporaneous documents

linking the assessee to any cash transaction.

Violation of Principles of Natural Justice

The AR pointed out that:

• The assessee repeatedly requested copies of all incriminating material and statements forming the basis of satisfaction under Section 153C, and
• Specifically demanded an opportunity to cross-examine Shri Imran Ansari, whose statement was heavily relied upon by the AO and CIT(A).

Despite these requests, cross-examination was not permitted, with the revenue authorities stating that the statement was not the “sole basis” of the addition.