Alleged On-Money Requires Specific Ownership Proof, While WhatsApp Evidence Validates Reduced Section 69A Addition

ORDER

1. These four appeals comprise three appeals filed by the Revenue for A.Ys. 2018-19, 2019-20 and 2021-22 and one appeal filed by the assessee for A.Y. 2021-22. The appeals are directed against the separate orders dated 28.11.2025 passed by the learned Commissioner of Income-tax (Appeals)-52, Mumbai [“the learned CIT(A)”]. The Revenue’s appeals for A.Ys. 201819 and 2019-20 arise from the assessment orders passed under section 143(3) read with section 153A of the Income-tax Act, 1961 [“the Act”], whereas the cross-appeals for A.Y. 2021-22 arise from the assessment order passed under section 143(3) of the Act. Since the appeals arise from the same search action, involve common facts and overlapping evidence and were heard together, they are being disposed of by this consolidated order.

2. In ITA Nos. 539 and 540/Mum/2026, the Revenue has challenged the deletion of additions of Rs. 1,19,00,000 and Rs. 3,96,00,000, respectively, made under section 69 of the Act on account of alleged unaccounted cash investment in shops situated in the project known as “Platinum Mall”.

3. In ITA No. 541/Mum/2026 for A.Y. 2021-22, the Revenue has challenged:

4. In ITA No. 1145/Mum/2026 for A.Y. 2021-22, the assessee has challenged the addition of Rs. 6,09,850 sustained by the learned CIT(A) under section 69A. The assessee contends that the amount represented business receipts already recorded and offered as part of the disclosed turnover. The remaining grounds raised by both sides are either general or consequential in nature.

5. The assessee has also raised a plea under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. In substance, the assessee has questioned the validity of the assessments for A.Ys. 2018-19 and 2019-20 on the ground that the Excel sheet relied upon by the Assessing Officer was seized from the premises of a person belonging to the Rubberwala group and, therefore, the material could have been used against the assessee only by initiating proceedings under section 153C and not in the assessments framed under section 153A of the Act. The assessee has also questioned the evidentiary value of the electronic record and the approval granted under section 153D.

6. Briefly stated, the assessee is an individual engaged in the business of trading in mobile phones and accessories under the name and style of M/s Gopal Telecom and is associated with the trade name “Bhajwad”. A search and seizure action under section 132 was carried out on 17.03.2021 in the Rubberwala group. As part of the same coordinated group-search action, warrants were also issued and executed in the names of the assessee and other persons connected with the Bhajwad group. The assessee’s residential premises were searched and survey action was also carried out at connected business premises.

7. Consequent to the search, assessments for A.Ys. 2018-19 and 201920 were completed under section 143(3) read with section 153A. During the course of the search at the residence of Shri Imran Ashfaque Ansari, an Executive Assistant connected with the Rubberwala group and handling sales of the Platinum Mall project, a pen drive containing an Excel file named “consolidated 1 2 3 balance” was found and seized. The “Master” sheet in the Excel file contained particulars such as the floor, shop number, area, agreement-holder, agreement value, alleged cash component and total sale consideration.

8. In answer to question nos. 50 & 51, Shri Imran Ansari was asked to explain the description “Naresh Bhajwad” appearing in column B of the Master sheet and to furnish the details of the transactions with that person or group. He answered that “Naresh Bhajwad” meant the group of Naresh Bhajwad, comprising Gopal Telecom/patel Telecom, and that the group had booked 24 shops on the first, second and fourth floors of Platinum Mall. The particulars reproduced in the assessment order are summarised below:

9. Shri Imran Ansari further stated that the shops on the first and second floors were booked during the initial phase of the project on 03.02.2017 by Shri Naresh Bhajwad directly with Shri Tabrez Shaikh, CMD of M/s Rubberwala Housing and Infrastructure Limited, whereas the shops on the fourth floor were booked in February 2019 through him.

10. The Assessing Officer also referred to the subsequent statement of referred to the subsequent Shri Imran Ansari concerning the alleged manner in which the cash component was collected. According to Shri Imran Ansari, the assessee would intimate him before sending a person with cash to the office of the Rubberwala group and, on certain occasions, Shri Imran Ansari would visit the assessee’s shop to collect the cash. The Assessing Officer treated the statement as corroboration of the cash entries appearing in the Excel sheet.

11. The Assessing Officer further relied upon the statement of Shri Tabrez Shaikh and upon enquiries made from some of the persons in whose names the agreements were executed. Shri Karan Choudhary denied having made the alleged cash payment for the shop standing in his name. Shri Shravan Choudhary, the assessee’s brother, also denied having paid the alleged cash component relating to the shops standing in his name and stated that the assessee would be the appropriate person to explain the same.

12. The Assessing Officer also referred to the statement of the assessee recorded during the search, in which an amount of approximately Rs. 40 lakh was mentioned. The assessee subsequently explained that the sum of Rs. 40 lakh represented an accounted advance paid on 06.05.2019 through his Kotak Mahindra Bank account and that, under the stress of the search, he had erroneously used the expression “cash”. The assessment order further records that the assessee was offered an opportunity to cross-examine Shri Tabrez Shaikh on 21.08.2021. Shri Tabrez Shaikh appeared on the appointed date; however, the assessee did not attend and did not avail himself of the opportunity.

13. On the basis of the dates recorded in the Excel sheet, the Assessing Officer attributed aggregate alleged cash payments of Rs. 6,06,34,000 to the assessee and made year-wise additions, including Rs. 1,19,00,000 in A.Y. 2018-19, Rs. 3,96,00,000 in A.Y. 2019-20 and Rs. 31,34,000 in A.Y. 2021-22 2019-20 and Rs. 31,34,000 in A.Y. 2021.

14. The learned CIT(A), following the decision of the coordinate Bench in Rajesh Jain v. Dy. CIT [IT Appeal Nos. 3841, 3842, 3954, 3952, 3951 and 3950 (Mum) 2023, dated 26-11-2024], deleted these additions. The learned CIT(A) held, in substance, that the shops stood in the names of different and separately identifiable purchasers; that the assessee could, at the highest, be regarded as having introduced or facilitated the purchasers; and that the cash component relating to the shops of other persons could not be assessed in the assessee’s hands without evidence establishing that the assessee had actually funded those purchases.

15. For A.Y. 2021-22, the Assessing Officer also made an addition under section 69A on the basis of WhatsApp chats recovered from the assessee’s mobile phone. The chats were exchanged with Shri Suraj Patel, an employee of the assessee, and contained expressions such as “7 Kg”, “22 Kg” and “4 Kg”, together with photographs or serial numbers of one-rupee currency notes.

16. The Assessing Officer treated the photographs and serial numbers as the customary identification method adopted in Angadiya/Hawala transactions. Relying upon the statements recorded during the search, he construed the expression “Kg” as denoting lakhs and quantified the unexplained money at Rs. 51,99,850. The learned CIT(A), however, noticed that the decoding and the multipliers adopted in the assessment order were not uniform. He treated the figures as representing thousands, sustained Rs. 6,09,850 and deleted the balance addition of Rs. 45,90,000.

17. The learned Departmental Representative strongly supported the assessment orders. He submitted that the learned CIT(A) had applied the decision in Rajesh Mafatlal Jain without appreciating the material differences between that case and the present case. The decisions relied upon by the assessee arose from their respective facts and could not be mechanically applied merely because the seized material originated from the Rubberwala group.

18. The learned DR submitted that the present case contained a continuous chain of evidence. The Excel file was maintained by Shri Imran Ansari in the ordinary course of handling the sales of Platinum Mall; it identified “Naresh Bhajwad” against the block of 24 bookings; Shri Imran Ansari explained the fields in the Excel sheet and described the manner in which the alleged cash was received from or at the instance of the assessee; Shri Tabrez Shaikh confirmed the receipt of cash on behalf of the builder; and the registered purchasers examined by the Department denied having provided the cash themselves.

19. The learned DR particularly relied upon the statement of the assessee’s brother, Shri Shravan Choudhary, who denied having paid the cash component and stated that the assessee was the appropriate person to explain the payments relating to the units standing in his name. It was contended that the separate agreement-holders were merely the legal owners, whereas the evidence established that the booking and cash arrangements were controlled by the assessee.

20. The learned DR further submitted that the assessee’s initial statement concerning payment of approximately Rs. 40 lakh constituted an additional corroborative link. The subsequent explanation that this was an advance paid through banking channels was stated to require strict verification from the bank statement, the ledger account of the builder and the corresponding treatment in the Excel sheet.

21. The learned DR also distinguished the present case from the decisions relied upon by the learned AR on the issue of cross-examination. This was not a case in which cross-examination had been denied. A specific opportunity was granted, the witness appeared on the appointed date, but the assessee did not avail himself of the opportunity. The assessee could not thereafter contend that the statements had been used without affording an effective opportunity.

22. The learned DR submitted that the assessee himself was searched on the same date as part of the coordinated group-search action. The seized Excel sheet was specifically confronted to him and his statement concerning the bookings, on-money payments and the mode of cash delivery was recorded. Therefore, this was not a case where an addition was made merely on the basis of an unverified document recovered in an independent third-party search.

23. On the jurisdictional issue, the learned DR submitted that warrants were executed in the names of different persons belonging to the same search group. Once the assessee himself was validly searched and assessment proceedings under section 153A were initiated, the Assessing Officer was entitled to consider the entire material unearthed during the same coordinated search action which had a bearing upon the assessee’s income. Section 153C was not intended to require parallel search assessments against an assessee already covered by section 153A merely because a particular document was physically seized from another searched premises.

24. Regarding the WhatsApp addition for A.Y. 2021-22, the learned DR submitted that the primary electronic evidence was found in the assessee’s own mobile phone. The chats, photographs and serial numbers of currency notes were consistent with the mode generally employed for identifying Angadiya transactions. It was submitted that both the assessee and his employee had admitted that the chats related to unrecorded cash transactions and that the expression “Kg” denoted lakhs. The subsequent interpretation that “Kg” denoted thousands was an unsupported retraction. The learned DR accordingly prayed that the entire addition of Rs. 51,99,850 be restored.

25. Per contra, the learned Authorised Representative submitted that the Excel file was found from the residence and possession of Shri Imran Ansari and not from the assessee. No similar Excel sheet, cash receipt, diary, voucher, cash-flow statement, parallel books or other contemporaneous evidence was found from the assessee showing that he had paid the aggregate cash amount attributed to all 24 shops.

26. The learned AR submitted that “Naresh Bhajwad” was merely a group or reference description used by the builder for identifying customers introduced by the assessee. The Excel sheet itself contained a separate column specifying the person in whose name the agreement for each shop had been executed. The existence of separate columns for the group description and the agreement-holder demonstrated that “Naresh Bhajwad” could not be treated as the owner or funder of every shop included in the block.

27. According to the learned AR, the assessee purchased only six shops, namely Shop Nos. 76, 88, 89, 90, 100 and 101, of which Shop No. 76 stood in the name of his wife. The remaining shops were acquired by identifiable relatives or other purchasers through their respective banking channels. Their names, PANs, relationship, purchase agreements and payment particulars were furnished before the authorities. The assessee merely introduced some purchasers to the builder. He neither acted as an agent of the builder nor funded the purchases made by the other persons.

28. The learned AR contended that the statement of Shri Imran Ansari, at the highest, established that the assessee had facilitated or coordinated the block bookings. It did not prove that the assessee was the source of the cash allegedly paid for the shops acquired by independent purchasers. Similarly, the denial made by some of the purchasers could not automatically result in an inference that the assessee supplied the money. The Department was required to bring positive evidence connecting the assessee with the cash investment in each shop.

29. Regarding the sum of Rs. 40 lakh, the learned AR submitted that the assessee was not conversant with legal terminology and had used the words “cash” and “cheque” interchangeably under the pressure of the search. The amount was an advance paid through Kotak Mahindra Bank on 06.05.2019 and was fully verifiable. Reliance was placed on the CBDT Instruction dated 10.03.2003 discouraging confessions unsupported by credible evidence.

30. The learned AR relied upon a number of decisions of the Mumbai Benches of the Tribunal in which additions of on-money arising from the Rubberwala-group search had been deleted. Particular reliance was placed on Rajesh Jain (Supra) It was argued that the material found from the Rubberwala group did not establish that the person whose name was used as a reference or introducer had funded the purchases of all the persons included under that reference.

31. Reliance was also placed upon ITO v. v. Ch. Atchaiah 218 ITR 239 (SC) for the proposition that the income has to be assessed in the hands of the right person. It was submitted that, if any purchaser had made an unexplained investment in his shop, such investment had to be examined in the hands of that purchaser and could not be assessed in the hands of the assessee merely because the assessee had introduced him to the builder.

32. On the jurisdictional issue, the learned AR submitted that, since the Excel sheet was physically seized from the residence of Shri Imran Ansari in the Rubberwala-group search, the material could have been used against the assessee only by following the procedure prescribed under section 153C. It was further submitted that, for completed assessments, no addition could be made under section 153A in the absence of incriminating material found during the search of the assessee. Reliance was placed upon Pr. CIT v. Abhisar Buildwell (P.) Ltd 454 ITR 212 (SC).

33. Regarding the addition under section 69A, the learned AR submitted that the assessment order itself adopted inconsistent multipliers. At some places an expression such as “7 Kg” was quantified at Rs. 70,000, whereas at other places an altogether different multiplication was adopted. No uniform decoding method was applied. The learned CIT(A), therefore, rightly rejected the assumption that every reference to “Kg” represented Rs. 1 lakh.

34. In the assessee’s appeal, it was submitted that even the amount of Rs. 6,09,850 sustained by the learned CIT(A) formed part of the business turnover already In the assessee’s appeal, it was submitted that even the amount of Rs. 6,09,850 sustained by the learned CIT(A) formed part of the business turnover recorded in the regular books. Alternatively, only the profit embedded in such receipts, and not the gross amount, could be brought to tax.

35. We have heard the rival submissions, considered the written submissions and carefully perused the assessment orders, the impugned orders and the material placed before us. We shall first deal with the jurisdictional plea raised by the assessee under Rule 27. The assessee contends that, since the Excel file was physically seized from the residence of Shri Imran Ansari, the Assessing Officer could use that material only by initiating separate proceedings under section 153C.

36. We are unable to accept this contention in the peculiar facts of the present case. The search was conducted in the case of assessee along with Rubberwala group as an integrated and coordinated search action. The assessee was not an unsearched third party. A warrant under section 132 was independently issued and executed in his case. Consequently, jurisdiction under section 153A was validly assumed. The Excel file formed part of the material discovered during the same coordinated search action; the entries specifically related to transactions in which the assessee was alleged to have played a central role; the document was confronted to the assessee; and his statement concerning the bookings and alleged mode of payment was recorded during the search and post-search proceedings.

37. Section 153C provides the machinery for assessing an “other person” on the basis of specified material found during the search of a searched person. Its principal object is to bring within the search-assessment framework a person who was not himself subjected to a search under section 132 but in relation to whom incriminating material is found during the search of another person.

38. Section 153C cannot be interpreted to require the Assessing Officer to initiate successive or parallel search assessments against a person who is himself covered by a valid warrant and is already being assessed under section 153A, merely because some part of the common group-search material was physically seized from another premises covered during the same coordinated search.

39. Acceptance of the assessee’s argument would result in two parallel sets of search assessments for the same person and the same assessment years—one under section 153A pursuant to the warrant executed in his own name and another under section 153C for every relevant document physically recovered from another searched premises. Such duplication is neither contemplated nor required by the statutory scheme.

40. The decisions dealing with documents recovered during the search of an independent third party are distinguishable. Those authorities apply where the assessee was either not searched or the addition in his assessment was founded exclusively upon material obtained in a separate and independent search of another person without any corresponding confrontation or corroborative evidence emerging in the assessee’s search proceedings.

41. In the present case, the assessee was himself searched as part of the same coordinated group action. The Excel entries formed part of the common search material, directly related to the assessee and were specifically confronted to him. Statements concerning the transactions and the manner of alleged cash delivery were also recorded. The material was, therefore, not received subsequently as extraneous information from an unrelated third-party search.

42. We accordingly hold that the Assessing Officer was entitled to consider the material while completing the assessments under section 153A. Separate proceedings under section 153C were not required merely because the Excel file was physically seized from another premises or under another warrant forming part of the same coordinated group search. The assessee’s jurisdictional objection is, therefore, rejected.

43. We shall now adjudicate the appeals for A.Ys. 2018-19 and 2019-20 concerning the alleged payment of on-money in the Platinum Mall project.

44. The learned AR has relied upon several decisions of the Mumbai Benches of the Tribunal in which additions arising out of the alleged on-money transactions recorded during the Rubberwala-group search were deleted. We are fully conscious of these decisions. However, the conclusions in those cases were rendered on the peculiar facts and evidence available therein and cannot be applied mechanically to every case arising from the same group search.

45. In none of the decisions brought to our notice has it been demonstrated that the concerned assessee was also subjected to a simultaneous search, that the relevant seized material was specifically confronted to him, that statements were recorded concerning the alleged payment of on-money and the mode in which the cash was delivered, and that an opportunity to cross-examine the concerned witness was offered but was not availed of.

46. In the present case, the Excel sheet was specifically confronted to the assessee and the Revenue has also relied upon the statements explaining the manner in which the alleged cash was collected. This is also not a case where cross-examination was altogether denied. The assessment order records that Shri Tabrez Shaikh appeared for cross-examination on the appointed date, but the assessee did not avail himself of the opportunity.

47. The decision in Rajesh Mafatlal Jain was rendered having regard to the evidence and circumstances obtaining in that case. The complete seized material and statements considered in that case have not been placed before us to demonstrate that the documents, statements and corroborative circumstances were identical. We are not aware whether a simultaneous search had also been conducted upon the assessee in that case or whether the seized documents had been confronted in the manner done in the present proceedings. The said decision cannot, therefore, be treated as conclusive without first establishing factual parity.

48. At the same time, the relevance and admissibility of evidence are distinct from the attribution of the investment to a particular person. The Excel sheet and the statements cannot be ignored. They constitute relevant material requiring examination. However, the sheet has to be read in its entirety and with due regard to its internal columns.

49. The Excel sheet uses the expression “Naresh Bhajwad” as a common group or identification description. In a separate column, it distinctly records the name of the person in whose favour the agreement for each shop was executed. This distinction is significant. The expression “Naresh Bhajwad” establishes a connection between the assessee and the block of bookings. It may indicate that the assessee negotiated, introduced, coordinated or facilitated the transactions. However, that description, by itself, does not establish that the assessee was the beneficial owner or the source of funds for every shop.

50. Shri Imran Ansari stated that the shops on the first and second floors were booked by the assessee directly with Shri Tabrez Shaikh, whereas the fourth-floor shops were booked through him. This statement supports the Revenue’s case that the assessee played an active role in the bookings. It does not, however, conclusively establish that the entire cash component relating to the shops legally acquired by other identifiable persons came out of the assessee’s funds.

51. Similarly, the denial by a registered purchaser that he personally paid the alleged cash component is relevant but cannot, without further evidence, conclusively establish that the assessee supplied the cash. The identity of the real investor cannot be determined merely through a process of elimination. There must be some positive material connecting the assessee with the source of the alleged cash payment relating to the shop standing in another person’s name.

52. Section 69 authorises an addition in respect of an investment made by the assessee which is not recorded in his books of account and for which he does not offer a satisfactory explanation. The condition that the investment must be one “made by the assessee” is material. There must be a reasonable evidentiary nexus between the assessee and the investment sought to be taxed in his hands.

53. The principle laid down by the Hon’ble Supreme Court in Ch. Atchaiah (Supra) is that the right person has to be assessed. Where the registered agreement and legal ownership of a shop stand in the name of another identifiable and separately assessable person, the cash component relating to that shop cannot ordinarily be assessed in the hands of the assessee merely because he introduced the purchaser or because his trade name was used as the reference for a block of bookings.

54. The Revenue would be justified in assessing the amount in the assessee’s hands if cogent evidence establishes that he was the real source of the cash, notwithstanding that the agreement was executed in another person’s name. However, such a conclusion must be founded upon positive evidence and cannot rest only upon relationship, introduction, coordination of bookings or the use of a common identification name in the builder’s spreadsheet.

55. We therefore hold that the alleged on-money may be considered in the assessee’s hands only in relation to the shops owned by the assessee or where independent evidence establishes that, despite ownership in another person’s name, the assessee was the actual source of the funds. In respect of the shops standing in the names of independently identifiable purchasers, the investment has to be examined in the hands of the real person liable to tax.

56. The addition in the assessee’s hands shall be confined to the on-money, if any, pertaining to the shops owned by the assessee. For a shop standing in the name of the assessee’s wife, relative or any other person, the relationship by itself shall not be treated as sufficient evidence that the assessee was the funder.

57. For the remaining shops, the Department shall be at liberty to take such action, in accordance with law, in the hands of the real persons liable.

58. In view of the Revenue’s appeals for these two years are partly allowed.

59. We now separately take up the cross-appeals for A.Y. 2021-22.

60. The plea under Rule 27 founded upon sections 153A and 153C does not arise in relation to A.Y. 2021-22 because the assessment for this year was completed under section 143(3) of the Act and not under section 153A. The plea, insofar as it is sought to be applied to A.Y. 2021-22, is misconceived and is rejected.

61. The first issue in the Revenue’s appeal relates to the deletion of Rs. 31,34,000 on account of alleged on-money in Platinum Mall. Our findings concerning the nature of the Excel sheet, the separate identity of the agreement-holders and the necessity of assessing the investment in the hands of the real investor apply mutatis mutandis to this year.

62. The other dispute for A.Y. 2021-22 concerns the addition under section 69A based upon the WhatsApp chats recovered from the assessee’s mobile phone. We agree with the learned DR that the chats, photographs and serial numbers of currency notes recovered from the assessee’s own device constituted relevant material requiring an explanation.

63. Income-tax proceedings are not strictly governed by the technical rules of the Indian Evidence Act. Therefore, the material recovered from the assessee’s own mobile phone and confronted to him cannot be excluded solely for want of a certificate under section 65B of the Evidence Act. Nevertheless, relevance of the material does not dispense with the requirement that the amount of the addition must be determined on a rational, consistent and intelligible basis.

64. The assessment order itself discloses inconsistencies in decoding the expression “Kg”. At one place “7 Kg” was quantified at Rs. 70,000; at another place “22 Kg” was quantified at Rs. 22,000; whereas other entries were multiplied on a different basis. No uniform decoding methodology was applied. No independent Angadiya record or other corroborative material applied. No independent Angadiya was brought on record to establish that every reference to “Kg” invariably represented Rs. 1 lakh.

65. The statements recorded during the search may lend support to the inference that the chats concerned cash transactions. However, a general statement cannot cure the internal inconsistencies in the computation or justify the adoption of different multipliers for similar expressions. The precise quantum must be established on the basis of a consistent decoding supported by the material on record.

66. The learned CIT(A), after examining the entries, adopted the figures in thousands and sustained the addition of Rs. 6,09,850. Considering the inconsistent quantification made in the assessment order and the absence of independent material supporting the higher multiplier, we find no infirmity in the conclusion of the learned CIT(A). The deletion of Rs. 45,90,000 is accordingly confirmed and the corresponding ground raised by the Revenue is dismissed.

67. We now take up the assessee’s appeal against the addition of Rs. 6,09,850 sustained by the learned CIT(A). The assessee contends that the amount was already included in the disclosed sales turnover. However, no transaction-wise reconciliation has been furnished before us connecting the WhatsApp entries with the sales recorded in the regular books.

68. The assessee has not identified the corresponding sales invoices, stock-register entries, cash-book entries, ledger accounts or return schedules in which the amount of Rs. 6,09,850 was allegedly included. In the absence of such primary reconciliation, the bare assertion that the amount formed part of the disclosed business turnover cannot be accepted.

69. The alternative contention that only the profit element should be brought to tax also proceeds upon the unproved premise that the WhatsApp entries represented unrecorded business sales. Unless the assessee first establishes the nature of the transactions and their connection with the regular business, the addition cannot be restricted merely to an estimated profit percentage.

70. We, therefore, confirm the addition of Rs. 6,09,850 sustained by the learned CIT(A). The grounds raised by the assessee in ITA No. 1145/Mum/2026 are dismissed.

71. In the result: