ITAT Mumbai Deletes ₹2.5 Lakh ‘On-Money’ Addition in Rubberwala Group Case

The “F” Bench of the Income Tax Appellate Tribunal, Mumbai, allowed the appeals of Vimala Jitendra Jain for AYs 2019–20 and 2020–21, deleting additions made under Section 69 on account of alleged cash payments for purchase of shop premises.

Background: Section 153C Proceedings and Alleged Cash Payment

The assessment was framed under Section 153C following a search on the Rubberwala Group. During the search, a pendrive containing excel sheets allegedly recording cash components in shop sales was found from a key employee of the group. Based on this material and third-party statements, the Assessing Officer made an addition of ₹2.5 lakh under Section 69, alleging cash payment over and above the agreement value. The CIT(A) upheld the addition.

Tribunal: No Corroboration, No Cross-Examination

Before the ITAT, the assessee relied on several coordinate bench decisions involving identical facts arising from the same search. In those cases, additions were deleted due to lack of corroborative evidence and denial of cross-examination.

The Tribunal noted that:

1. The incriminating material was found from a third party, not the assessee.
2. The assessee denied making any cash payment.
3. No independent corroborative evidence was brought on record.
4. Opportunity to cross-examine persons whose statements were relied upon was not granted.

Relying on earlier decisions and principles of natural justice, the ITAT held that such additions could not be sustained merely on third-party statements and untested electronic data.

Accordingly, the additions were deleted for both years and the appeals were allowed.