Prakash Bhaguji Katkade v. ITO — ITATOnline record A

Case snapshot

Sections / provisions: 132(4); 147; 148; 69A

Questions before the Court / Tribunal

• Alleged on-money for flat; third-party statements; cross-examination: The reported order concerns an on-money addition based on builder statements and electronic material from a third-party search. The addition is reported as deleted where the taxpayer denied the payment, produced contrary material and was not supplied the relied-on material or cross-examination.

Material facts and background

2. Brief facts of the case are that assessee is individual filed its return of income for A.Y. 2012-13 declaring income of Rs. 2,71,280/-. Initially, the return was accepted. Later on, the case was reopened on the basis of information received from DDIT(Inv), Unit – 1(4), Mumbai wherein it was informed that search was carried out in case of Cosmos Group on 24.09.2024. Cosmos Group is engaged in the business of development of real estate and construction. The AO recorded that during the course of search action, document relating to receipt of onmoney by the assesseewas found. Such details were maintained in the Gmail and yahoo mails of Cosmos Group. The AO further noted that a cash book of onmoney received by Cosmos Group, which contained the flatwise and shop-wise details was prepared in Excel sheets. The statement of Karuna Khambayat, sales head of Cosmos Group was recorded, wherein she accepted that often a cash payment involve on sale of flat/shops/offices. The AO also mentioned about the statement of Suraj Parmar, one of the promotors of Cosmos Group about cash transaction. On the basis of such information, the AO noted that assessee has purchased Flat No. 802 of Cosmos Mary...

Prakash Bhaguji Katkade ITA No. 7402/Mum/2025 (AY: 2012-13)

13 and Rs. 6,00,000/- in A.Y. 2013-14 over and above, the agreement value. On the basis of such information, the case of assessee was reopened after obtaining prior approval of Principal Commissioner of Income Tax (Pr. CIT) – 2, Thane. The notice under section 148 was issued on 29.03.2019. In response to such notice, the assessee filed return of income. The reasons recorded were provided to the assessee. The assessee denied of having paid of on-money against purchase of flat and make request to refer the matter to DVO. The AO recorded that as the case does not pertain to valuation of flat, therefore, request of assessee was declined. 3. The AO on the basis of material issued show cause notice for making addition of unexplained investment. In response to show cause notice, the assessee furnished confirmation letter from Cosmos Builder that they have received Rs. 72.00 lacs form the assessee in respect of Flat No. 802. The confirmation of assessee was not accepted by AO. The AO relied upon alleged incriminating evidence found in search action and the statement in the Excel sheet. The AO by referring the statement of Suraj Parmar, son of Ramesh Parmar recorded on 26.09.2014, made...

Appellant / assessee submissions

declined by ld. CIT(A) by holding that addition is not only made on incriminating material. Further, aggrieved the assessee has filed appeal before Tribunal. 5. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. The ld. AR of the assessee submits that the assessee along with his wife purchased a residential flat being Flat No. 802 at Cosmos Mary Park Thane (West) for a total consideration of Rs. 72.00 lacs. The details of payment areshown in the ledger account, copy of which is filed at page no. 98 to 101 of paper book. The copy of registered agreement dated 04.04.2012 is also placed on record. The assessee has not made any other amount except shown on the sale deed. The AO made addition of Rs. 14,25,000/- by taking view that assessee has made cash payment of Rs. 34,50,000/- out of which 28,50,000/- was paid in cash in the year under consideration. The assessee owned ½ share in the flat, therefore, the AO made addition of Rs. 14,25,000/- being 50% of Rs. 28,50,000/- in the income of assessee. The AO never shared the incriminating material and the basis of making...

builder confirming the payment of Rs. 72,00,000/- by assessee and his wife. The builder has not taken the name of assessee for payment of cash. Otherwise, addition cannot be made on the basis of third-party statement. The ld. AR of the assessee submits that assessee has also challenged the validity of reopening. Before AO, there was no evidence of on-money paid by assessee to Cosmos Group. The AR further reiterated that addition of Rs. 14,25,000/- is not justified as revenue till date has not been able to produce an iota of evidence of having paid of on-money in cash by assessee for purchase of flat. The entire charge is baseless. To support his submission, the ld. AR also relied upon the following case laws wherein addition of on-money payment to cosmos group was deleted:  Aakash Developers vs ACIT ITA No. 1767/M/2025 dated 29.09.2025  Bharat Laxman Bhiwapurkar vs ITO ITA No. 3413/M/2023 dated 04.03.2024  Mrs. Mamta Sharad Gupta vs ITO ITA No. 1553/M/2021 dated 16.06.2022

Revenue / respondent submissions

declined by ld. CIT(A) by holding that addition is not only made on incriminating material. Further, aggrieved the assessee has filed appeal before Tribunal. 5. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. The ld. AR of the assessee submits that the assessee along with his wife purchased a residential flat being Flat No. 802 at Cosmos Mary Park Thane (West) for a total consideration of Rs. 72.00 lacs. The details of payment areshown in the ledger account, copy of which is filed at page no. 98 to 101 of paper book. The copy of registered agreement dated 04.04.2012 is also placed on record. The assessee has not made any other amount except shown on the sale deed. The AO made addition of Rs. 14,25,000/- by taking view that assessee has made cash payment of Rs. 34,50,000/- out of which 28,50,000/- was paid in cash in the year under consideration. The assessee owned ½ share in the flat, therefore, the AO made addition of Rs. 14,25,000/- being 50% of Rs. 28,50,000/- in the income of assessee. The AO never shared the incriminating material and the basis of making...

Tribunal in Akash Developers vs ACIT in ITA No. 1767/M/2025. The ld AR of the assessee submits that he has good case on validity of reopening as well as on merit. 7. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue supported the order of lower authorities. The ld. Sr. DR for the Revenue submits that AO was having sufficient evidence in the form of statement of key person of Cosmos Group and the supporting incriminating material found during the search which is sufficient to make the addition. 8. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that the AO made additions solely on the basis of statement of key persons of Cosmos group. The AO relied on the Excell sheet which is prepared by the investigation team (para-1 of AO order). Copy of incriminating material or the material contained in the alleged Gmail or yahoo mail is neither brought on record no supplied to the assessee. No cognizance of confirmation of builder was taken by AO or the ld CIT(A). Statement per se cannot be considered as evidence, against third party unless it is tested by cross...

Court / Tribunal analysis and reasoning

declined by ld. CIT(A) by holding that addition is not only made on incriminating material. Further, aggrieved the assessee has filed appeal before Tribunal. 5. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. The ld. AR of the assessee submits that the assessee along with his wife purchased a residential flat being Flat No. 802 at Cosmos Mary Park Thane (West) for a total consideration of Rs. 72.00 lacs. The details of payment areshown in the ledger account, copy of which is filed at page no. 98 to 101 of paper book. The copy of registered agreement dated 04.04.2012 is also placed on record. The assessee has not made any other amount except shown on the sale deed. The AO made addition of Rs. 14,25,000/- by taking view that assessee has made cash payment of Rs. 34,50,000/- out of which 28,50,000/- was paid in cash in the year under consideration. The assessee owned ½ share in the flat, therefore, the AO made addition of Rs. 14,25,000/- being 50% of Rs. 28,50,000/- in the income of assessee. The AO never shared the incriminating material and the basis of making...

Tribunal in Akash Developers vs ACIT in ITA No. 1767/M/2025. The ld AR of the assessee submits that he has good case on validity of reopening as well as on merit. 7. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue supported the order of lower authorities. The ld. Sr. DR for the Revenue submits that AO was having sufficient evidence in the form of statement of key person of Cosmos Group and the supporting incriminating material found during the search which is sufficient to make the addition. 8. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that the AO made additions solely on the basis of statement of key persons of Cosmos group. The AO relied on the Excell sheet which is prepared by the investigation team (para-1 of AO order). Copy of incriminating material or the material contained in the alleged Gmail or yahoo mail is neither brought on record no supplied to the assessee. No cognizance of confirmation of builder was taken by AO or the ld CIT(A). Statement per se cannot be considered as evidence, against third party unless it is tested by cross...

facts deleted similar addition on merit, the relevant part of the order is extracted below; “5. Heard both the sides and perused the material on record. The assessee is an individual deriving income from salary. The assessing officer received information from the investigation wing in respect of search action taken place in the case of Cosmos Group engaged in the business of building and construction and the information relating to on money payment received. The assessing officer stated that for purchasing flat no. A/07 at Harizon Twilte, the assessee had made cash payment of Rs.31,00,000/- over and above the agreement value of the flat. After referring material placed on record the assessee submitted that AO has merely relied upon the statement recorded u/s 132(4) of the Act key persons of the Cosmos Group without bringing on record any incriminating material seized during search action to establish that assessee had paid alleged on money. After perusal of the material on record, it is also noticed that assessing officer has neither shared any incriminating evidence with the assessee nor brought on record to demonstrate that the assessee had actually paid the alleged-on money of...

After taking income consideration the above facts and finding of the ITAT we find that similar to the aforesaid decision the addition in the case of the assessee was also solely based upon the statement of the builders and assessing officer could not substantiate the same with any incriminating material. Therefore, following the decision of the ITATs on the similar issue as referred above we consider that addition made by the AO is not sustainable, therefore, same is deleted. Accordingly, the grounds of appeal no.2 to 3 of the appeal of the assessee are allowed. 6. During the course of appellate proceedings before us ground of appeal no.1 was not discussed therefore, the same stand dismissed.

Operative decision and relief

7. In the result, the appeal of the assessee is partly allowed.”

Authorities and precedents appearing in the judgment

• Aakash Developers vs ACIT ITA No. 1767/M/2025 dated 29.09.2025
• Bharat Laxman Bhiwapurkar vs ITO ITA No. 3413/M/2023 dated 04.03.2024
• Mrs. Mamta Sharad Gupta vs ITO ITA No. 1553/M/2021 dated 16.06.2022
• Monika Anand Gupta vs ITO ITA No. 5561/M/2018 dated 21.04.2022
• Supreme Court in Andaman Timber Industries vs CCE 281
• ITO vs Lakhmani Mewal Das 103 ITR 437 (SC) and the decision of Mumbai
• Tribunal in Akash Developers vs ACIT in ITA No. 1767/M/2025. The ld AR of the
• Supreme Court decision in the case of CIT vs P.V Kalyanasundasram 164 Taxman 78 (SC). Moreover

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Alleged on-money for flat; third-party statements; cross-examination. The operative result is classified as Partly Allowed. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Alleged on-money for flat; third-party statements; cross-examination. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Reconstruct the reassessment timeline: original assessment, section 148A notice/reply, approval authority, notice date and the applicable section 149 limitation window.
• Preserve the complete response to section 148A(b), objections and proof of disposal; jurisdictional defects are often decided from the documentary chronology.
• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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