In Nimbus Projects Limited v. Deputy Commissioner of Income Tax, Central Circle-II, Noida (ITAT Delhi, order dated 09 January 2026), the Delhi Bench of the Income Tax Appellate Tribunal adjudicated appeals for Assessment Years 2015-16, 2016-17 and 2017-18, arising from reassessment proceedings initiated pursuant to a search conducted under Section 132 in the case of Proform Interiors Private Limited.

During the search, documents were seized indicating part payments received in cash by the Proform Group from its clients. The assessee was identified as one such client, and the seized material reflected both cheque payments and alleged cash payments made by the assessee for interior designing and furnishing services. Based on this material, reassessment proceedings were initiated under Sections 147 and 148, and additions were made under Section 69C on account of unexplained cash expenditure amounting to ₹40 lakh for AY 2015-16, ₹20 lakh for AY 2016-17 and ₹2 lakh for AY 2017-18.

Before the appellate authorities, the assessee denied having made any cash payments and contended that the seized document was a third-party paper, incomplete in nature, and constituted a “dumb document” having no evidentiary value. Reliance was placed on judicial precedents including Common Cause (A Registered Society) v. Union of India. The Revenue, on the other hand, contended that the seized document could not be read selectively, as the cheque transactions recorded therein were admittedly reflected in the books of account of the assessee or its related concern, Nimbus Propmart Limited.

The Tribunal observed that the seized document contained entries of both cheque and cash payments, and that the cheque entries precisely matched the transactions recorded in the assessee’s books and bank statements. In such circumstances, the Tribunal held that the document could not be treated as a dumb document and must be read as a whole. Applying the principle of preponderance of probabilities, as laid down by the Supreme Court in Sumati Dayal v. CIT and followed in Swati Bajaj v. CIT, the Tribunal held that once the cheque entries were accepted as genuine, the burden shifted to the assessee to satisfactorily explain the corresponding cash payments, which the assessee failed to do.

Distinguishing the reliance placed on Common Cause, the Tribunal held that the evidentiary value of seized material under the Income-tax Act must be assessed in the context of surrounding facts and corroborative evidence. It concluded that the seized document constituted admissible evidence and that the additions under Section 69C were legally and factually justified.

Accordingly, the Tribunal upheld the additions sustained by the Commissioner (Appeals) and dismissed the assessee’s appeals for all the assessment years under consideration.

Source Link- https://itat.gov.in/public/files/upload/1767957988-qzSRNA-1-TO.pdf

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