Addition on the basis of third party information in form of unsigned excel sheet can not be sustained – ITAT
In a recent judgment, ITAT Rajkot has held that addition made on the basis of third party information in form of unsigned excel sheet can not be sustained.
ABCAUS Case Law Citation:
5144 (2026) (05) abacus.in ITAT
There was a search and seizure action u/s 132 of the Income Tax Act, 1961 (the Act) on a Real Estate group and it was found that they sold properties and received cash consideration as on money out of books.
The appellant assessee was also one of the purchasers in the property from the said group and his name was found in the excel sheet recovered during the search which allegedly showed that assessee had paid part consideration in cash.
The Assessing Officer reopened the case on information from investigation department and passed the assessment order u/s. 147 rws 144 rws 144B of the Act by adding u/s 69 rws 115BBE, the cash component in the income of the assessee being 50% share holder in investment.
The assessee preferred first appeal before CIT(A), NFAC. Which upheld the order of the Assessing Officer and confirmed the addition.
The Tribunal observed that the Co-ordinate Bench had delat with a similar issue and incidentally the searched party was same in that case. In the said case also the Assessing Officer had relied upon an Excel sheet allegedly found during the search from the laptop of an employee of the Group and on the fact that said Group had declared a large amount as unaccounted receipts before the Income Tax Settlement
Commission. Based on these, the Assessing Officer passed the reassessment order under section 147 and made additions under section 69C of the Act as unexplained expenditure and also under section 69B of the Act as unexplained investment, treating the difference between registered value and values appearing in the Excel sheet as on-money payments. However, the CIT(Appeals) quashed the reassessment order holding that the additions made on the strength of an unsigned Excel sheet seized from a third party without any corroborative material had no evidentiary value,
The Co-ordinate Bench observed that the Assessing Officer had not brought any independent evidence to establish (i) that the said Excel sheet belonged to the assessee, (ii) that the entries therein related to the assessee, or (iii) that any amount of on-money was ever paid by the assessee to the developer.
The Co-ordinate Bench observed that law on this issue is well settled that third-party loose sheets, unsigned digital data or uncorroborated documents cannot be used as evidence against an assessee unless supported by independent evidence, and unless the assessee is offered cross- examination of the persons whose statements or documents are relied upon.
The Co-ordinate Bench observed the following judgments involoving additions made solely on the bases of loose papers/excel sheet found during the search:
| Hon’ble Gujarat High Court | An unsigned Excel sheet seized from a third party has no evidentiary value and cannot form the basis of an addition unless it is shown to be corroborated and linked to the assessee. |
| Hon’ble Gujarat High Court | Entries or notings in the books of another person showing alleged on-money payments cannot justify additions in the hands of an assessee without cogent evidence demonstrating actual payment. |
| ITAT Ahmedabad | Mere reliance on Excel-sheet data found during third-party search and on the builder’s admission before the Settlement Commission is insufficient to sustain additions without corroboration and without cross-examination. |
| ITAT Ahmedabad | Where Assessing Officer made addition under section 69C of the Act on ground that assessee had paid interest in cash to a third-party, since said addition was made solely on basis of unsigned Excel sheets recovered from premises of third party, without any further corroborative evidence, same was to be deleted. |
| ITAT Pune | Where the Assessing Officer made additions in the case of the assessee on the basis of notings in loose papers found during the search proceedings in case of third party against the name of assessee, as there was no evidence to suggest that payments were made by the assessee additions so made were not justified |
| ITAT Mumbai | No addition under Section 69 can be made on the basis of documents being found from premises of third party in absence of any document evidencing the fact that assessee had paid any cash as on-money to said party for purchase of property. |
| ITAT Pune |
No addition can be made in the hands of the assessee on the basis of papers found with the third party when there was no business connection between the assessee and that third party. |
The Co-ordinate Bench found merit in contention that the Excel sheet relied on by the Assessing Officer was an unsigned, unverified, third-party digital file, not shown to have any nexus with the assessee and accordingly deleted the addition.
In the instant case also, following the decision of the Co-ordinate Bench and Gujarat High Court, the Tribunal held that an unsigned Excel sheet seized from a third party has no evidentiary value and cannot form the basis of an addition unless it is shown to be corroborated and linked to the assesse.
Accordingly, addition made in the hands of assesse were deleted and the appeal of the assessee was allowed.
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