In a significant ruling favouring homebuyers, the Income Tax Appellate Tribunal (ITAT) Mumbai Bench has deleted a ₹25 lakh addition made on account of alleged “on-money” payment in the case of Sanjeetkumar Kedarnath Gupta for Assessment Year 2020-21.
The assessee, along with his brother Sushilkumar K. Gupta, had jointly purchased a shop (Unit No.1B, Ground Floor) in GNP Galaxy Phase-1 project developed by the GNP Group. The purchase agreement was registered at ₹50 lakhs, and the assessee’s share of ₹22.5 lakhs was paid through regular banking channels.
Background of the Case (Chronology)
- The return of income for AY 2020-21 was filed declaring total income of ₹6,29,530.
- On 23.09.2021, the Income Tax Department conducted a search and seizure operation at the premises of M/s. GNP Consultancy and Solutions Pvt. Ltd. (part of the GNP Group), which is engaged in real estate development.
- During the search, an Excel sheet was seized containing details of various buyers. The sheet allegedly showed that the assessee and his brother had paid extra cash (on-money) of ₹25 lakh in AY 2020-21 over and above the registered sale consideration.
- Based on this seized material and statements of builder’s employees recorded under Section 132(4), the Assessing Officer (ITO Ward 2(2), Kalyan) issued notice under Section 147 and passed a reassessment order dated 22.03.2025, adding ₹25 lakh as undisclosed income.
- The assessee challenged the addition before the National Faceless Appeal Centre (NFAC/CIT(A)), which upheld the addition vide order dated 04.11.2025.
- Aggrieved, the assessee approached the ITAT Mumbai Bench.
Key Arguments & ITAT Ruling
The assessee, represented by Advocate Tanzil Padvekar, strongly denied having paid any on-money. It was argued that the addition was based solely on loose sheets/Excel data seized from a third party (the builder), without any corroborative evidence.
The ITAT Bench comprising Om Prakash Kant (Accountant Member) and Anikesh Banerjee (Judicial Member) delivered the order on 12.06.2026 in ITA No.1011/Mum/2026.
The Tribunal observed:
- In an identical matter for AY 2019-20 involving the same assessee (ITA No.6933/Mum/2025, pronounced on 13.05.2026), the Coordinate Bench had already deleted the ₹90 lakh addition on similar facts.
- Mere appearance of the buyer’s name in the builder’s internal Excel sheet does not constitute sufficient evidence to hold the buyer liable for on-money payment.
- Entries in loose papers or Excel sheets seized from a third party have very weak evidentiary value and are not admissible as standalone proof (relying on Supreme Court judgments in the Sahara Diaries case, CBI vs V.C. Shukla, and K.P. Varghese vs ITO).
- The burden of proof lies on the Revenue to establish the chargeability of income. The assessee cannot be asked to prove a negative.
- No cash was found in the possession of the assessee. There was no independent corroborative material linking the assessee to any actual cash payment.
- The assessee was not allowed to cross-examine the builder’s employees whose statements were relied upon.
- Section 69A was wrongly invoked in the facts of the case.
Respectfully following its own earlier order in the assessee’s case, the ITAT deleted the entire ₹25 lakh addition and allowed the appeal.
Significance of the Order
This ruling reinforces that Income Tax authorities cannot make additions in buyers’ hands merely on the basis of notings in builders’ internal records without concrete corroborative evidence. It is expected to provide relief to several other homebuyers who faced similar additions following the GNP Group search.
Also Read: Big Relief for Housing Societies: ITAT Mumbai Allows Deduction on Interest from Co-operative Banks
