The Income Tax Appellate Tribunal (ITAT), Mumbai, has deleted an addition of ₹2.5 crore towards alleged “on-money” paid for purchasing a commercial property, holding that an uncorroborated Excel sheet seized from a third party could not sustain the addition under Section 69A of the Income-tax Act, 1961.

The bench of Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member) found that the taxpayer’s name did not appear in the seized sheet, the agreement value recorded in it differed from the registered agreement, and the entire alleged payment had been attributed to her despite her holding only a 25% share in the property. 

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The taxpayer had filed her income tax return on June 25, 2019, declaring a total income of ₹5,25,430.

The reassessment proceedings arose from information shared by the office of the Central Circle 6(1), Mumbai, following a search conducted at GNP Group on September 23, 2021. During the search, the department seized loose sheets and digital evidence relating to property transactions.

Relying on this information, the Assessing Officer initiated reassessment proceedings and ultimately treated ₹2.5 crore as unexplained money under Section 69A, alleging that the taxpayer had paid the amount as on-money for purchasing a property.

The reassessment order was passed on March 25, 2025. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, upheld the addition by an order dated January 15, 2026, prompting the taxpayer to approach the Tribunal.

The taxpayer’s counsel highlighted repeated changes in the amount alleged by the Assessing Officer.

According to the submissions recorded in the order, a notice under Section 148A(b) alleged an on-money payment of ₹2.5 crore. However, the subsequent order under Section 148A(d) referred to ₹1.5 crore, and a notice under Section 142(1) again mentioned ₹1.5 crore.

A show cause notice issued on February 17, 2025, proposed an addition of ₹20 lakh. Another show cause notice dated March 11, 2025, changed the alleged amount to ₹2.5 crore.

The taxpayer argued that these shifting figures showed uncertainty about the alleged transaction and an absence of independent application of mind.

The Tribunal found that the taxpayer’s name did not appear anywhere in the seized Excel sheet.

It also identified a material discrepancy between the agreement value recorded in the sheet and the value shown in the registered property documents. While the Excel sheet stated an agreement value of ₹3 crore, the actual registered agreement value, as reflected in Index-II, was ₹2.5 crore.

The Tribunal observed that the alleged on-money amount had been derived as a balancing figure. Since the underlying agreement value in the sheet was incorrect, the resulting calculation could not stand.

“When the underlying agreement value in the sheet is incorrect, the balancing figure automatically fails,” the Tribunal stated. Manju Kamal Nagdev

The registered documents showed that the property had been purchased jointly by five co-owners, with the taxpayer holding a 25% share.

Nevertheless, the Assessing Officer added the entire alleged on-money payment of ₹2.5 crore to her income.

The Tribunal held that attributing 100% of the alleged payment to a person holding only a 25% ownership share demonstrated a lack of application of mind.

The bench followed the reasoning adopted by a coordinate bench in Sanjeet Kumar Kedarnath Gupta v. ITO, decided on May 13, 2026. That case also concerned an addition based on an Excel sheet recovered during the search at GNP Group.

The earlier ruling explained that Section 69A concerns an assessee found to be the owner of money, bullion, jewellery or another valuable article not recorded in the books of account. It found that an unverified digital sheet seized from a third party, unsupported by corroborative evidence or independent inquiry, was insufficient to sustain the addition in the circumstances before it.

Applying that reasoning, the Tribunal held that Section 69A could not be invoked in the present case because no asset or money had been found in the taxpayer’s possession.

The Tribunal also rejected the expectation that the taxpayer should produce evidence establishing that she had not paid on-money.

It followed the coordinate bench’s reasoning that the law does not compel a person to prove a negative fact. Requiring proof of an act that the taxpayer maintained she had never performed was legally untenable.

The precedent relied upon by the bench also addressed the use of third-party statements without providing an opportunity for cross-examination, holding that such reliance violated the principles of natural justice. The Tribunal found the factual matrix of the present dispute to be identical.

Another relevant circumstance was the department’s treatment of the taxpayer’s case for Assessment Year 2018–19.

Reassessment proceedings for that year had been initiated on the basis of the same Excel sheet and the same GNP Group search material, concerning the purchase of another shop. However, the proposed addition of ₹70.25 lakh was dropped, and the returned income was accepted.

In that assessment, the department had examined and verified the taxpayer’s bank records, purchase documents, payment details, loan information and contributions towards the jointly owned property.

The Tribunal referred to this earlier acceptance and held that the rule of consistency and judicial discipline applied.

Considering the absence of the taxpayer’s name in the seized sheet, the incorrect agreement value, the lack of corroborative evidence, her limited ownership share and the department’s earlier treatment of the same search material, the Tribunal deleted the ₹2.5 crore addition upheld by the CIT(A).

The appeal was allowed by an order pronounced on September 23, 2026. Although the taxpayer had also challenged the reopening on approval-related grounds, the Tribunal’s stated reasons for granting relief addressed the sustainability of the addition on the facts and evidence. 

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