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Issues: (i) Whether assessments under section 153A could rely on an Excel file physically seized from another premises in the same coordinated search, without initiating proceedings under section 153C; (ii) Whether alleged on-money relating to shops standing in the names of separately identifiable agreement-holders could be assessed as unexplained investment of the assessee; (iii) Whether WhatsApp chats recovered from the assessee's mobile phone justified the addition under section 69A and its quantification.
Issue (i): Whether assessments under section 153A could rely on an Excel file physically seized from another premises in the same coordinated search, without initiating proceedings under section 153C.
Analysis: Section 153C provides the machinery for assessment of an other person where material is found in the search of a person not searched in his own right. Here, an independent search warrant had been executed against the assessee as part of an integrated group search, jurisdiction under section 153A had validly arisen, and the common search material directly relating to the assessee was confronted to him. Physical recovery of the Excel file from another searched premises did not transform the assessee into an unsearched other person or require parallel proceedings for the same assessment years.
Conclusion: The assessments under section 153A were valid and separate proceedings under section 153C were not required. The jurisdictional objection was rejected against the assessee.
Issue (ii): Whether alleged on-money relating to shops standing in the names of separately identifiable agreement-holders could be assessed as unexplained investment of the assessee.
Analysis: The Excel sheet and statements were relevant material and established the assessee's connection with the block bookings. However, the sheet separately identified the agreement-holder for each shop. Use of a common group description, facilitation of bookings, relationship with purchasers, or denial by a purchaser of having paid cash did not by itself establish that the assessee funded the investment. Section 69 requires a reasonable evidentiary nexus showing that the investment was made by the assessee. An unexplained investment must be examined in the hands of the actual person liable, unless positive evidence establishes that another person was its real source.
Conclusion: Addition under section 69 may be made in the assessee's hands only for on-money relating to shops owned by him or where independent evidence proves that he supplied the funds. On-money relating to shops of independently identifiable purchasers cannot be assessed in his hands merely because of association or relationship. The issue was partly in favour of Revenue and partly in favour of the assessee.
Issue (iii): Whether WhatsApp chats recovered from the assessee's mobile phone justified the addition under section 69A and its quantification.
Analysis: The chats, currency-note photographs and serial numbers recovered from the assessee's own mobile phone were relevant material and could not be excluded merely for want of a certificate under section 65B of the Indian Evidence Act. Yet the assessment computation adopted inconsistent multipliers for identical references to "Kg", without a uniform decoding method or independent corroboration for treating every such reference as one lakh. The reduced quantification adopted by the first appellate authority was therefore sustained. The assertion that the residual amount was included in disclosed turnover failed for want of transaction-wise reconciliation with invoices, stock records, cash book, ledgers or return records; the alternative claim for taxation of only profit also remained unproved.
Conclusion: The deletion of the higher addition was confirmed and the addition of Rs. 6,09,850 was sustained against the assessee.
Final Conclusion: Common material from a coordinated search may be used in the search assessment of a person independently searched, but unexplained investment must be attributed on positive proof to the actual investor, and electronic-chat additions must rest on a rational and consistent quantification.
Ratio Decidendi: An addition for unexplained investment requires positive evidence connecting the assessee with the actual source of funds and cannot rest solely on association with, introduction of, or relationship to the registered purchaser.
Unexplained investment attribution requires proof of funding, while coordinated-search material and electronic chats need reliable quantification.
Unexplained investment may be assessed only in the hands of the actual investor, unless positive evidence establishes that another person supplied the funds. Association with purchasers, facilitation of bookings or a common group description does not by itself establish the required evidentiary nexus for on-money attributable to separately identifiable agreement-holders. Material recovered during a coordinated search may be used in an assessment of a person independently searched without separate other-person proceedings where jurisdiction for the search assessment exists and the material directly relates to that person. Electronic chats recovered from the person's mobile device may be relied on, but additions require rational, consistent quantification and supporting evidence; unsubstantiated turnover or profit-only claims do not displace the addition.
Assessment u/s 153A - Search assessment of a searched person - Unexplained investment-assessment in hands of real investor - Electronic evidence-consistent quantification of unexplained money - Unexplained money-failure to reconcile with disclosed turnover Search assessment of a searched person - Material seized in coordinated group search - Use of an Excel file seized from another premises in assessments framed u/s 153A against an assessee independently searched in the same coordinated group-search action - Whether assessments under section 153A could rely on an Excel file physically seized from another premises in the same coordinated search, without initiating proceedings u/s 153C? - HELD THAT: - Section 153C is the machinery for bringing an unsearched other person within the search-assessment framework on the basis of material found in another person's search. Where the assessee was independently searched under a valid warrant, the common group-search material directly related to him, was confronted to him, and statements concerning the transactions were recorded, proceedings under section 153C were not required merely because the Excel file was physically recovered from another searched premises. Requiring recourse to section 153C would result in impermissible parallel search assessments for the same person and years. [Paras 38, 39, 40, 41, 42] The jurisdictional objection was rejected and the Assessing Officer was held entitled to consider the material in assessments under section 153A. Unexplained investment - assessment in hands of real investor - On-money for shops - Addition of alleged on-money for Platinum Mall shops standing in the names of separately identifiable agreement-holders in the assessee's hands - HELD THAT: - The Excel sheet and statements were relevant material and established the assessee's connection with the block bookings, but the common reference description did not by itself prove that he was the beneficial owner or source of funds for every shop. The investment under section 69 must be one made by the assessee, requiring a reasonable evidentiary nexus between him and the cash payment. Denial by a registered purchaser, relationship with an agreement-holder, introduction of purchasers, coordination of bookings, or use of a common trade reference cannot, without positive evidence, establish that the assessee funded a shop owned by another identifiable person. The Tribunal distinguished DCIT v. Rajesh Mafatlal Jain [2024 (11) TMI 1560 - ITAT MUMBAI] for want of demonstrated factual parity. [Paras 54, 55, 56, 57, 61] The alleged on-money could be considered in the assessee's hands only for shops owned by him or where independent evidence established him as the actual source of funds; the Revenue's appeals for 2018-19 and 2019-20 were partly allowed, and the same principle governed 2021-22. Electronic evidence-consistent quantification of unexplained money - WhatsApp chats relating to cash transactions - Quantification of unexplained money from WhatsApp chats containing the expression "Kg" and currency-note identifiers - HELD THAT: - Material recovered from the assessee's own mobile phone and confronted to him was relevant and could not be excluded solely for want of a certificate under section 65B of the Evidence Act, since income-tax proceedings are not governed by its technical rules. However, relevance of the chats did not dispense with the requirement of a rational, consistent and intelligible basis for quantifying the addition. The assessment order applied inconsistent multipliers to similar "Kg" entries and there was no independent material establishing that every such reference represented one lakh. [Paras 62, 63, 64, 65, 66] The restriction of the addition to the amount computed by treating the entries as thousands was upheld, and the Revenue's challenge to deletion of the balance was dismissed. Unexplained money - failure to reconcile with disclosed turnover - Unrecorded business receipts-profit element - Claim that the amount sustained from WhatsApp chats represented disclosed business turnover or, alternatively, was taxable only to the extent of profit - HELD THAT: - The assessee did not furnish a transaction-wise reconciliation linking the WhatsApp entries with recorded sales, invoices, stock records, cash-book entries, ledger accounts or return schedules. In the absence of proof that the entries represented regular business transactions already disclosed, neither the claim of inclusion in turnover nor the alternative claim for taxation of only an estimated profit element could be accepted. [Paras 67, 68, 69, 70] The addition sustained by the Commissioner (Appeals) was confirmed and the assessee's appeal was dismissed. Final Conclusion: The jurisdictional plea failed. The Revenue's appeals for 2018-19 and 2019-20 were partly allowed subject to confining on-money additions to investments attributable to the assessee, while the cross-appeals for 2021-22 were dismissed.