Income Tax Appellate Tribunal - Mumbai
Mayuri Hitendra Shah,Navi Mumbai vs Assessing Officer, Navi Mumbai on 6 May, 2026
IN THE INCOME-TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.6756/MUM/2025 (A.Y. 2016-17) Mayuri Hitendra Shah v/s. Assessing Officer, Income Plot No. 4, Shreenathji Co -op बनाम Tax Office, Vashi Railway Society, Sector No. 14, Vashi Station Building, Navi Navi Mumbai - 400 703, Mumbai - 400 703, Maharashtra Maharashtra स्थायी लेखा सं ./जीआइआर सं ./ PAN/GIR No: AMLPS5425J Appellant/अपीलार्थी .. Respondent/प्रतिवादी Assessee by : Shri Rajan Kothari,AR Revenueby : Shri Annavaran Kosuri, (Sr. DR) Date of Hearing 10.03.2026 Date of Pronouncement 06.05.2026 आदे श / O R D E R PER PRABHASH SHANKAR [A.M.] :-
The present appeal arising from the appellate order dated 29.09.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as "CIT(A)"] pertaining to assessment order passed u/s. 147 r.w.s. 144 of the Income-tax Act, 1961 [hereinafter referred to as "Act"] dated 26.05.2023 for the Assessment Year [A.Y.] 2016-17.
Page |2 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah
2. The grounds of appeal are as under:-
1. Denial of Natural Justice-Cross Examination Refused:
The learned AO and CIT(A) erred is relying upon seized registers and third- party statements of Bhagwati Developers without granting cross- examination or confrontation of the deponents, contrary to law laid down in Prakash Chand Nahta v. CIT (SC), Kishanchand Chellaram v. CIT (125 ITR 713 SC), and Anil Mohanlal Vira v. ITO (NFAC Order 10 Jan 2025). The entire addition is vitiated.
2. Reliance on Uncorroborated and Generic Evidence:
The so-called 'cash register does not contain the name of the appellant, signature, or counter-receipt linking any cash to her. Per Picasso Developers v. ΙΤΟ (ΙΤΑΤ 2024) and Viswa Vyapar Trading v. DCIT (ITAT Mum), generic entries cannot justify addition u/s 69A without specific identification and corroboration.
3. Contradictory Findings in CIT(A) Order Para 7.4(ii)/(iv):
The CIT(A) acknowledged that ₹75 lakhs were paid via bank cheque but nonetheless treated 1 crore as unexplained cash, ignoring bank flow evidence. Such contradiction renders the order perverse (Anil Mohanlal Vira, NFAC 2025).
4. No Proof of Cash Receipt or Modus Operandi:
The AO failed to identify who accepted the alleged 21 crore cash, how it was transacted, or how the builder's records correlate to the assessee. Per Picasso Developers ITAT 2024, burden lies on Revenue to prove identity, transaction mode, and receipt chain.
5. Improper Application of Section 69A:
Addition u/s 69A requires proof that the assessee was found possessing unexplained money. No cash was found or seized, payment was through bank. Hence, section 69A is inapplicable (CIT v. Daulat Ram Rawatmull 87 ITR 349 SC).
6. Non-Consideration of Statutory Value under Section 50C and Index-II:
Page |3 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah When the registered value is higher than fair market value (Stamp/Index-II), allegation of under-valuation or on-money is misconceived. AO ignored statutory deeming fiction under s. 50C.
3. Briefly stated facts of the case are that the assessee deriving income from rental income and income from partnership firm M/s.
Mahaprabhu Enterprises had filed return of income declaring income for Rs 6,83,920/-. As per information available, consequent to search and survey action was conducted in the case of M/s. Bhagwati Developers who is a builder and developer on October 15, 2018, it was revealed that the assessee had purchased a flat at consideration of Rs 75,00,000/- and had made „On money‟ payment of Rs. 1,00,00,000/-. Thus, total investment of Rs.1,75,00,000/- was made by assessee during previous year to purchase the said immovable property. The AO added Rs. 1 cr. as unexplained deposit u/s 69 of the Act.
4. Before the first appellate authority, the assessee contested the action of the AO inter alia claiming an opportunity to cross examine the said sellers which was denied to him. The assessee had submitted confirmation from the builder denying any such receipt of on-money.It was claimed that the AO failed to carry out specific inquiry related to this case and used generic information available. The AO had not independently carried out any verification for additions and had simply Page |4 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah relied on the DDIT (Inv) information and refused to provide cross examination when requested by the assessee. The ld.CIT(A) however, upheld the action of the AO observing that he didn't find force in the grounds taken by the assessee as it was brought out categorically by the AO that the assessee paid Rs 1,00,00,000/- over and above the registered value of the flat at the time of purchase of the property/flat out of her unaccounted/unexplained sources. Besides, the assessee was not able to discharge the onus to controvert this finding with supporting evidence despite the opportunity given by the AO. Further, it was a finding of fact by the AO, on perusal of the bank statement, that the amount was deposited in the bank account of the appellant and immediately paid to Bhagwati Builders. Further, the request for cross- examination was duly considered by the AO, who did not deem it necessary after analysing the facts and circumstances of the case. The right of cross-examination is not an absolute right. The Hon'ble Supreme Court has also held that the right of hearing does not necessarily include the right of crossexamination. The right of cross- examination must depend upon the circumstances of each case and also on the statute concerned as held in State of J&K vs. BakshiGulam Mohammad AIR 1967 SC 122 and Rameshwarlal Mali vs. CIT 256 ITR 536(Raj.) It was stated that principles of natural justice were duly Page |5 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah adhered to, and a proper opportunitywas given to her by the AO to explain the source of each payment made to the builder, which the appellant failed to do to the satisfaction of the AO during the assessment proceedings.
5. Before us, the ld.AR has pleaded that the addition was not justified and deserved to be deleted. In the alternative, it is submitted that the matter be remanded for fresh examination after grant of cross- examination of the developer and related witnesses. Reliance has been placed on certain decisions of courts and Tribunals. The ld.DR placed reliance on the orders of the authorities below.
6. We have carefully considered all aspects of the case. There is no dispute that the AO has placed heavy reliance on the Investigation wing report without brining on record any corroborative evidence on record before making the impugned addition. Though the assessee brought on record denial by the builder having not been paid any on money without making further enquiry or examining the said person or allowing cross examination to the assessee who made specific request for the same, he went ahead in drawing adverse conclusion and making the impugned addition.
Page |6 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah 6.1 According to us, not allowing the assessee to cross-examine the witnesses though the statement of the witness was made the basis of the impugned order is a serious flaw as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the assessment order is based upon the seized registers and third-party statements of Bhagwati Developers. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the authorities below did not grant this opportunity to the assessee though such an opportunity was repeatedly sought by the assessee.
6.2 In this regard, it may be stated here that in the case of GTC Industries Ltd. v ACIT 65 ITD 380, ITAT Mumbai Bench has relied upon the judgment of Calcutta High Court in the case of Kisanlal Agarwalla v. Collector of Land Customs AIR 1967 & Cal. 80 and quoted this judgment in para 90 which throws light on the right of cross examination-.
"90. There is a good deal of misconception on this question of the right of cross-examination as part of natural justice. Natural justice is fast becoming the most unnatural and artificial justice and for that confusion the Courts are no less responsible than the litigants. Ordinarily the principle of natural justice is that no man shall be a judge in his own cause and that no man should be condemned unheard. This latter doctrine is known as audi alteram partem. It is on this principle that natural justice ensures that both sides should be heard fairly and reasonably. A part of this principle is that if any reliance is plated on evidence or record against a person then that evidence Page |7 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah or record must be placed before him for his information, comment and criticism. That is all that is meant by the doctrine of audi alteram partem, that no party should be condemned unheard. No natural justice requires that there should be a kind of a formal cross-examination. Formal cross- examination is procedural justice. It is governed by rules of evidence. It is the creation of Courts and not a part of natural justice but of legal and statutory justice. Natural justice certainly includes that any statement of a person before it is accepted against somebody else, that somebody else should have an opportunity of meeting it whether it (sic), by way of interrogation or by way of comment does not matter. So long as the party charged has a fair and reasonable opportunity to see, comment and criticise the evidence, statement or record on which the charge is being made against him the demands and the test of natural justice are satisfied. Cross-examination in that sense is not the technical cross-examination in a Court of law in the witness-box."
ITAT has further held that, "As regards the dictum „audi alteram partem‟ the assessee‟s basic contention was that the statements of witnesses and materials which were relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which were adverse to the assessee should have been disclosed to the assessee and the witnesses should have been offered for cross-examination. The right to cross-examine the witness who made adverse report is not an invariable attribute of the requirement of the said dictum. The principles of natural justice do not require formal cross- examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, of law that the revenue could not rely on any evidence which had not been subjected to cross-examination. However, if a witness has given directly incriminating statement and the addition in the assessment is based solely or mainly on such statement, in that eventuality it is incumbent on the Assessing Officer to allow cross- examination. Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of collateral nature."
6.3 In the case of ITO v. M. Pirai Choodi 334 ITR 262 where the High Court had set aside the order of assessment, it was held by the hon‟ble Supreme Court that the High Court should not have set aside the entire ground that no opportunity to cross-examine was Page |8 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah granted, as sought by the assessee and the High Court should have directed the Assessing Officer to grant an opportunity to the assessee to cross-examine the concerned witness.
6.4 Further, the CIT(A) who has co-terminus powers with the AO cannot delete the addition on the ground that opportunity of cross- examination was not given to the assessee, rather he should give this opportunity to the assessee even at appellate stage, if it is crucial to decide the appeal and there is no other material evidence with the Assessing Officer other than the statement of the witness. Rules of evidence do not govern the income-tax proceedings strictly, as the proceedings under the Income Tax Act are not judicial proceedings in the sense in which the phrase "judicial proceedings" is ordinarily used. The AO is not fettered or bound by technical rules of evidence contained in the Indian Evidence Act, and he is entitled to act on material which may or may not be accepted as evidence in a court of law. However, the principles of natural justice need to be applied by the authorities during assessment and appellate proceedings. The hon‟ble Supreme Court in the case of Andaman Timber Industries v Commissioner of Central Excise, Civil Appeal No. 4228 of 2006 has considered that if there was no material with the Department on the basis of which Page |9 ITA No. 6756/Mum/2025 A.Y. 2016-17 Mayuri Hitendra Shah it could justify its action, and if the statement of the two witnesses who were unknown to the appellant was the only basis of issuing the Show Cause Notice, right to cross-examination has to be given.
7. Considering the aforesaid judgments and also in view of the specific request of the assessee to remand the whole issue and also for cross examination of the witnesses of the Revenue,we are of the view that the AO remained under a statutory obligation to facilitate a cross- examination. The assessee could have dispelled the material that the AO acted upon to disprove the authenticity of the impugned transaction only if it was provided an opportunity to cross-examine. Accordingly, we set aside the appellate order and restore the entire issue involving merits with a direction to the AO to allow cross examination to the assessee of the above named person/witnesses and frame the assessment de novo after allowing sufficient opportunity of hearing to the assessee..
7.1 We may make it clear that remanding the matter should not be in any manner construed to deciding the issue on merits. The AO would be at liberty to decide the issue after affording adequate opportunity of hearing to the assessee in this regard.
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8. In so far as the other grounds of appeal are concerned, we do not deem it necessary to delve into them since the entire assessment order is required to be framed de novo by the AO. The assessee would be at liberty to make fresh submissions or file additional evidences as deemed necessary in this regard.
9. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 06/05/2026.
Sd/- Sd/- NARENDER KUMAR CHOUDHRY PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य /ACCOUNTANT MEMBER) Place: मुंबई/Mumbai ददनाुंक /Date .05.2026 Lubhna Shaikh / Steno
आदे श की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai
5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //True Copy// आदे शानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयधकरण/ ITAT, Bench, Mumbai.