Third-Party Statements Alone Insufficient; ITAT Deletes Additions

The assessee, an individual earning mainly interest income, was subjected to proceedings under Section 153C following a search on the Rubberwala Group. During the search, the department allegedly found Excel sheets and statements indicating that shops in the “Platinum Mall” project were sold for both cheque and cash consideration.

Based on statements of Shri Imran Ansari and seized electronic data, the Assessing Officer alleged that the assessee had paid unaccounted cash while purchasing shops in the project. Additions under Section 69 were made for A.Ys. 2017-18 to 2019-20 aggregating to Rs. 1.07 crore. The assessee denied any cash payment and argued that the additions were based solely on third-party statements and incomplete Excel sheet extracts, which were never fully supplied. It was also contended that no incriminating material was found in her possession and no cross-examination opportunity was granted. The CIT(A), however, upheld the additions.

Main Issue: Whether additions under Section 69 can be sustained merely on the basis of third-party statements and Excel sheet entries seized during the search, without corroborative evidence directly linking the assessee to cash payments.

Tribulan’s Decision: The ITAT allowed all appeals and deleted the additions. It held that the department’s case rested entirely on third-party statements and electronic data recovered from the searched party, while no incriminating material was found from the assessee. The Tribunal noted that the complete Excel sheet was never furnished, and only selective extracts were relied upon despite inconsistencies in the data.

It further observed that no cash trail, receipt, withdrawal pattern, acknowledgement, or other corroborative evidence linking the assessee to actual cash payments was produced. The Bench reiterated that suspicion, however strong, cannot replace proof under Section 69. Relying on earlier Tribunal rulings from the same search group, it held that additions based merely on unverified third-party electronic data and statements are unsustainable without independent corroboration and proper opportunity of rebuttal. Accordingly, all additions were deleted.

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