In a major relief for property buyers, the Income Tax Appellate Tribunal (ITAT), Mumbai has ruled (December 10) that a buyer of a shop in Platinum Mall, developed by the Rubberwala Group, cannot be taxed for alleged cash (“on-money”) payment in the absence of solid proof.
The tribunal set aside income tax additions made against Bhavana Vikram Jain, a shop buyer, after finding that the tax department relied only on statements of a builder’s employee and an Excel sheet found during a search, without any direct evidence that the buyer actually paid cash.
Background: Search on Rubberwala Group
The case traces its origin to a search and seizure operation conducted by the Income Tax Department on the Rubberwala Group, a Mumbai-based real estate developer.
The Rubberwala Group is promoted by Tabrez Shaikh, with Rubberwala Housing and Infrastructure Ltd. (RHIL) being the flagship company. During the search, tax officials recorded statements of Imran Ansari, a key employee of the group.
A pen drive seized from the employee’s premises allegedly contained Excel sheets mentioning shop numbers, cheque amounts and alleged cash components for sales in Platinum Mall, a commercial project of the group.
Based on this material, the department began issuing notices to several buyers, alleging that they had paid part of the purchase price in cash.
Why Were ‘Earlier Years’ Involved?
The tax department made additions against the buyer for three different financial years:
- Assessment Year 2017–18
- Assessment Year 2018–19
- Assessment Year 2019–20
However, the tribunal noted an important factual detail:
👉 The buyer had booked the shop only on January 1, 2019, and the allotment letter was issued in February 2019.
This means:
- There was no booking
- No payment
- No agreement
in the first two years (2017–18 and 2018–19).
The ITAT clearly held that income cannot be added for years in which no transaction existed at all, calling the department’s approach legally unsustainable.
How Much Was the Shop Price and How Was It Paid?
As per official records:
- Total shop price: ₹21.58 lakh
- Entire amount paid through banking channels
- No cash payment shown in:
- Allotment letter
- Bank statements
- Builder’s official books
Importantly, the tribunal noted that the declared price was higher than the government’s ready reckoner value, which further weakened the department’s claim of undervaluation or cash payment.
What Was the Basis of the Tax Department’s Case?
The entire allegation of cash payment was based on:
- Statement of Imran Ansari, an employee of the Rubberwala Group
- Excel sheets found in a pen drive during the search
There was:
- No cash found from the buyer
- No receipt
- No confirmation from the buyer
- No independent witness
- No bank trail
- No corroboration from buyers or sellers
Despite this, the department added income under Section 69 (unexplained investment), assuming that cash must have been paid.
Why ITAT Rejected the Cash Payment Allegation
The ITAT gave a detailed and clear reasoning:
1. Builder’s Employee Statement Is Not Enough
The tribunal held that a statement made by a builder’s employee, recorded during a search, cannot automatically be treated as truth against a buyer, unless supported by independent evidence.
2. Excel Sheet Found at Builder’s Premises Has Limited Value
The tribunal observed that:
- The Excel file was not prepared by the buyer
- Its authenticity was never proved
- The buyer was never confronted with it properly
An internal document of a builder cannot be used to tax buyers blindly, the tribunal said.
3. Violation of Natural Justice
A key factor was that:
- The buyer was not given a chance to cross-examine Imran Ansari
- Copies of statements were not properly supplied
The ITAT relied on Supreme Court rulings which say that no person can be taxed based on third-party statements without giving them a fair chance to defend themselves.
Earlier Rubberwala Cases Already Decided
The tribunal also pointed out that similar additions had already been deleted in earlier cases arising from the same Rubberwala Group search, including:
- Rajesh Jain vs Income Tax Department
- Praveen Khetaramm Purohit vs DCIT
- Akhraj Pukhraaj Chopra vs DCIT
- Lilaram vs DCIT
In all these cases, the ITAT had consistently held that alleged on-money payments based only on Rubberwala employee statements and electronic data cannot stand.
Final Verdict
- All additions made against the buyer were deleted
- Appeals for all three years were allowed
- The tribunal categorically ruled that there was no proof of cash payment
Why This Judgment Matters
This decision is important because it clearly establishes that:
- Property buyers cannot be taxed merely because a builder is searched
- Builder-side data or statements alone are not sufficient
- Cash payment allegations must be backed by real, verifiable evidence
- Buyers have a right to fairness and due process
For thousands of genuine buyers caught in builder search cases, this ruling offers significant relief and clarity.
