ITAT Mumbai Deletes ‘On-Money’ Additions in Rubberwala Group Search Cases

The “G” Bench of the Income Tax Appellate Tribunal, Mumbai, allowed the appeals of Farhana Usman Badarpura for AYs 2017–18, 2018–19 and 2019–20, deleting additions made under Section 69 in proceedings under Section 153C.

Background: Section 153C Notices Based on Rubberwala Search

The additions arose from a search conducted on the Rubberwala Group on 17 March 2021. During the search, statements were recorded and a pen drive containing excel sheets allegedly reflecting cash components in sale of shops in the “Platinum Mall” project was seized. Based on this material, proceedings under Section 153C were initiated against the assessee, alleging payment of “on-money” in cash over and above the agreement value. The Assessing Officer made additions of ₹2,00,000 under Section 69, which were confirmed by the CIT(A). The assessee challenged the validity of the notice (including absence of DIN), non-supply of incriminating documents, denial of cross-examination, and lack of corroborative evidence.

Tribunal: No Corroboration, Violation of Natural Justice

The Tribunal noted that identical issues arising from the same search had been decided in favour of assessees in several coordinate bench decisions, including Pravin K. Purohit and Rajesh Jain.

It observed that:

1. The alleged incriminating material was found from a third party.
2. No independent corroborative evidence linked the assessee to cash payment.
3. Copies of statements and electronic material were not properly confronted.
4. Opportunity for cross-examination was not granted, violating principles of natural justice.

Following earlier binding precedents and maintaining judicial consistency, the ITAT directed deletion of the additions for all three assessment years.

All appeals were allowed.