ITAT Mumbai Deletes “On-Money” Addition in Rubberwala Group Shop Purchase Case

The “B” Bench of the Income Tax Appellate Tribunal, Mumbai, delivered its order on 25 February 2026 in the case of Bhagwanti Lalitkumar Jain for Assessment Years 2018–19 and 2019–20. The appeals challenged additions made under Section 69 of the Income-tax Act in proceedings initiated under Section 153C following a search in the Rubberwala group.

Additions Based Solely on Third-Party Search Statements

The Assessing Officer invoked Section 153C after a search in the Rubberwala Housing & Infrastructure Ltd. group, where key persons admitted to receiving “on-money” in cash from buyers of shops in the “Platinum Mall” project. Relying entirely on these statements and digital data seized from third parties, the AO alleged that the assessee had paid cash over and above the registered value for purchase of a shop and made an addition of ₹4.90 lakh as unexplained investment. The assessee consistently denied making any cash payment and pointed out that all transactions were routed through banking channels. The CIT(A) nevertheless upheld the addition.

Tribunal Holds Third-Party Evidence Insufficient Without Corroboration

The ITAT noted that no incriminating material was found from the assessee’s premises and that no seized document directly linked the assessee to any cash payment. The additions were based purely on statements of third parties and electronic records recovered from others, without independent verification or opportunity of cross-examination. Following multiple coordinate bench rulings in identical Rubberwala group matters, the Tribunal held that additions cannot be sustained solely on third-party information without corroborative evidence. It further observed that denial of cross-examination violated principles of natural justice.

Accordingly, the ITAT deleted the additions for both assessment years and allowed the assessee’s appeals in full.