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The property-sale dispute
Mr Sehgal and his wife jointly owned a Delhi property that was sold to Colorbar Cosmetics Pvt. Ltd. The registered conveyance deed dated 31 October 2019 recorded consideration of ₹1.60 crore. For financial year 2018-19, however, the Assessing Officer (AO) alleged that the real consideration was ₹3.30 crore and treated the ₹1.70 crore difference as undisclosed cash under Section 69A of the Income-tax Act.
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The case followed a 3 February 2021 search involving the Samir Modi and Shivani Modi group. Investigators reportedly seized an Excel workbook titled “BOSS – DEC 18 onwards”, handwritten notes and WhatsApp conversations. The department treated those materials as evidence of an “on-money” payment connected with the property.
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problems| Figure | How it was treated in the proceedings |
|---|---|
| ₹1.60 crore | Sale consideration recorded in the registered conveyance deed dated 31 October 2019. |
| ₹3.30 crore | Total consideration alleged by the AO. |
| ₹1.70 crore | Difference the AO treated as undisclosed cash for FY 2018-19. |
| ₹1.1625 crore | Amount the Commissioner (Appeals) sustained as Sehgal’s alleged 75% ownership share. |
What evidence did the department rely on?
The Excel workbook and handwritten material
The report says the workbook contained entries of ₹1.55 crore and ₹15 lakh. The tribunal’s official search extract describes the loose Excel sheets as undated and unsigned. They recorded figures, but did not themselves establish who made the entries, when they were made, or what transaction each amount represented.
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WhatsApp messages
The department relied on messages referring to ₹50 lakh, ₹50 lakh, ₹20 lakh, ₹5 lakh and ₹30 lakh. Those amounts total ₹1.55 crore. The messages were treated as support for the alleged cash component, yet the tribunal found that they did not, without independent corroboration, identify Sehgal as the recipient or prove that the figures related to this property sale.
Anil Upreti’s statement
The department also relied on a statement attributed to Anil Upreti concerning ₹1.55 crore. According to the reported decision, Upreti was not summoned for proper examination, and Sehgal was not given a meaningful opportunity to cross-examine him even though his statement and documents were important to the assessment.
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Why ITAT Delhi rejected the addition
Figures were not enough without context
The tribunal’s central concern was evidentiary, not technological. WhatsApp chats, spreadsheets and handwritten notes can be relevant, but the material still has to connect the figure to the taxpayer, the specific property, the payment, the recipient and the relevant assessment year. Here, the seized material mainly showed numbers and alleged transactions. It did not conclusively establish that Sehgal received unaccounted cash.
The official ITAT search extract states that “no addition could be made merely on the basis of presumption, assumptions, conjectures or surmises.” A reported explanation of the ruling similarly described the principle as requiring evidence rather than suspicion, however strong.
No effective opportunity to test the third-party evidence
When an assessment depends on another person’s statement or records, the taxpayer must have a genuine chance to examine the source and challenge reliability. The reported findings say the AO did not properly examine the relevant people and did not provide effective cross-examination. Upreti’s absence was particularly significant because the department relied on his statement and related documents.
The Section 153C process lacked a year-specific link
The tribunal also rejected a consolidated satisfaction note covering seven assessment years. The department had not established, year by year, how the seized material connected to income assessable in each year before proceeding under Section 153C. A search-based reassessment cannot treat one collection of documents as automatically relevant to every year; the seized material must have a clear nexus with the income and year being assessed.
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What happened to the assessment and penalty?
ITAT Delhi allowed the appeal and quashed the assessment. The consequential penalty imposed under Section 271D was also cancelled. That outcome removed both the ₹1.70 crore cash addition and the ₹1.1625 crore amount that the Commissioner (Appeals) had sustained as Sehgal’s alleged share.
What taxpayers can do when digital evidence comes from someone else
- Obtain the complete record. Request the original seized files, complete chat exports, spreadsheets, handwritten pages, statements and the documents relied on in the assessment—not just extracts or screenshots.
- Test authenticity and context. Check dates, authorship, device or account linkage, missing messages, edits and whether the figures identify a property, payer, recipient and payment date. An unexplained number is not the same as proof of receipt.
- Reconcile the alleged amount with objective records. Compare the registered deed, bank entries, accounting records, ownership percentages and payment trail. Ask the department to explain any gap rather than assuming the gap is cash.
- Demand examination of material witnesses. If a third party’s statement or documents are relied upon, seek a real opportunity to question that person. In this case, the reported failure to summon Upreti undermined the department’s reliance on his statement.
- Check the assessment year. For a Section 153C proceeding, examine whether the satisfaction note and seized material identify a specific, year-wise connection to the income assessed. A consolidated reference to several years may be vulnerable if that nexus is missing.
- Respond to Section 69A separately. Address possession or receipt, ownership share, date, source and corroboration directly. Do not assume that disproving one document automatically resolves every element of the proposed addition.
What the ruling does—and does not—establish
The decision does not make WhatsApp messages, spreadsheets or handwritten notes unusable in tax proceedings. Digital material can support an addition when it is authenticated, intelligible, tied to the taxpayer and transaction, and backed by independent evidence and properly examined witnesses. The point is narrower: a collection of unexplained figures cannot, by itself, prove that a particular taxpayer received undisclosed property-sale cash.
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The available account is based on a 2026 news report and an official ITAT search extract. Anyone relying on the ruling for litigation should read the certified order for the parties’ full names, appeal numbers, exact findings and any subsequent appellate development.
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