AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 293
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....2) ITA No.1572/PUN/2025 (by Revenue for A.Y. 2021-22) CO No.42/PUN/2025 (by assessee for A.Y. 2021-22) 2. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of land developer and trading in real estate. A search and seizure action u/s 132 of the Act was conducted in the case of Dream Group & Land Developers of Nandurbar on 22.12.2021 during which the case of the assessee was also covered. The assessee filed his return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on 15.03.2022 declaring total income of Rs. 2,16,85,640/-. The return was processed u/s 143(1) of the Act on 08.07.2022 wherein income of the assessee was assessed at Rs. 2,65,16,890/-. Subsequently notice u/s 143(2) of the Act was issued and served on the assessee after obtaining approval from the PCIT, Nagpur. Thereafter, notice u/s 142(1) of the Act was also issued to the assessee along with annexure. During the course of assessment proceedings the Assessing Officer noted that various incriminating documents were found and seized during the course of search. He noted that page No.1 of the loose paper bundle was found and seiz....
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....o 7 were note sheets for memorizing the expected receipts and disbursement of funds of the family member of the assessee. On verification of excel sheet, the Assessing Officer found that the assessee had incurred cash expenditure/transactions of Rs. 74,10,860/- the source of which needs explanation. In this regard, the assessee furnished his explanation for Rs. 10,00,000/- and balance amount of Rs. 64,10,860/- (74,10,860 - 10,00,000) remained un-reconciled and was not corroborated by any supporting documentary evidences. Hence, the Assessing Officer added the same to the total income of the assessee as unexplained expenditure under section 69C of the Act. 5. The Assessing Officer also noted that during the course of search action, an excel sheet containing description of land transactions involving cheque amount and on money received in cash was seized as per Annexure 4. He noted that the seized documents contain land transaction details of selling of 16 plots by the assessee to Shri Kalpesh Babulal Jain for the cheque amount of Rs. 27,70,000/-. However, during the survey action at the business premises of Shri Kalpesh B Jain, nephew of Shri Shantilal Jain, he stated in his stat....
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....CIT(A) erred in confirming the action of the learned A.O in taxing the amount of Rs. 2,36,00,000/- u/s 68 r.w.s. 115BBE of the Act. 3] The learned CIT(A) erred in not appreciating that the amount of Rs. 2,36,00,000/- was rightly offered by the assessee as his business income and there was no reason to tax the same as an unexplained cash credit u/s 68 r.w.s. 115BBE of the Act. 4] The learned CIT(A) erred in holding that the assessee had failed to explain the nature and source of the amount of Rs. 2,36,00,000/- and therefore, the same was rightly taxable u/s 68 r.w.s. 115BBE of the Act. 5] The learned CIT(A) erred in not appreciating that the amount of Rs. 2,36,00,000/- was earned by the assessee from his business and accordingly, the same was taxable as business income of the assessee and there was no reason to tax the said amount as an unexplained cash credit u/s 68 r.w.s. 115BBE of the Act. 6] The learned CIT(A) ought to have appreciated that the assessee had duly offered the amount of Rs. 2,36,00,000/- as his business income and the same was duly credited to the P & L Account and therefore, there was no reason to tax the said amount as an unexp....
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....st any other addition when there was no such ground of appeal raised by the assessee. 5. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) is correct in directing the AO to verify whether any telescoping was allowed for the additional income against any other addition made and allow the set off out of the available balance, thereby shifting the onus of establishing the genuineness and availability of the alleged undisclosed income onto the Assessing Officer. 6. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) is correct in deleting the addition of Rs. 64,10,880/- on account of unexplained expenditure u/s 69C of the Income Tax Act, 1961 made in the Assessment order without appreciating the facts as brought on record. 7. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) is correct in accepting the assessee's explanation that the source of the cash payments constituting the unexplained expenditure was drawings from cash in hand, merely based on the balance sheet as on 31/03/2021 without considering withdrawals as noted in the cash book of the relevant p....
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....d that subsequently the assessee in his statement recorded u/s 131 of the Act on 28.04.2022 has explained that the amount mentioned as loan by him during the course of search action was nothing but his own income. He had categorically stated that he has not taken any cash loan from any person and the documents seized during the course of search action were written only to memorize his own contribution to the business. The documents were written to show to his son that he has so much loan so that he will pay attention to the business. Referring to page 32 of the paper book, which is the Profit and Loss Account for the year ended 31.03.2021, the Ld. Counsel for the assessee drew the attention of the Bench to the amount of Rs. 2.36 crores which has been shown as surplus from regular business income of the transactions as per Note 'G'. He drew the attention of the Bench to the Note 'G' as per Schedule 8 where the assessee has mentioned as under: "G During the year under consideration Rs. 2,36,00,000/- have been received in cash from regular business transactions. The said amount is recorded in books of accounts and has been offered as income from business in Profit and Loss Ac....
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.... the case of Sopan Bandoba Chavan vs. ITO vide ITA No.869/PUN/2024 order dated 19.11.2024 for assessment year 2017-18, he drew the attention of the Bench from para 11 onwards of the order and submitted that the action of the Assessing Officer in treating the additional income declared of Rs. 2 crores as income u/s 68 r.w.s. 115BBE of the Act which was confirmed by the Ld. CIT(A) was set aside and the Tribunal has held that the additional income declared on account of land transactions cannot be brought to tax by invoking provisions of section 68 r.w.s. 115BBE of the Act. Relying on various other decisions, he submitted that the Ld. CIT(A) was not justified in confirming or upholding the action of the Assessing Officer in taxing the surrendered income of Rs. 2.36 crore as income u/s 68 r.w.s. 115BBE of the Act. 20. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). He submitted that the Ld. CIT(A) while deciding the issue against the assessee has considered the decisions both for and against the assessee and finally came to the conclusion that the assessee has simply credited the amount in the Profit and Loss Account and has not....
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....ee has also given a statement recorded u/s 131 of the Act by the Assessing Officer wherein he has clearly stated that the amount of Rs. 2.36 crores is from his own business. It is his submission that since the assessee is engaged into real estate business and no other business is being done by the assessee nor any evidence was found by the search party that the assessee is engaged in any other business other than in real estate business and since the income has been offered as business income in the Profit and Loss Account and notes given in the Notes to the audited accounts, therefore, the same cannot be brought to tax u/s 68 r.w.s. 115BBE of the Act. It is also his submission that if it is a loan then the same cannot be taxed in his hands. It is also his submission that the loose papers found during the course of search are true, correct and genuine and it cannot be held as partly correct and partly incorrect. Further the Assessing Officer has never stated that it is not the income of the assessee and has not found any other evidence other than the activity of sale and purchase of plots. 23. We find some force in the above arguments of the Ld. Counsel for the assessee. A perus....
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....from para 11 read as under: "11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We find the assessee during the course of survey operation had declared an amount of Rs. 2 crore as additional income which was offered in the return of income under the head 'Income from other sources'. Further, the assessee has claimed current year loss of Rs. 86,98,901/- and adjusted the same against the rental income of Rs. 72,170/- and the income declared of Rs. 2 crore during the course of survey proceedings. We find the Assessing Officer in the order passed u/s 143(3) of the Act treated the additional income declared of Rs. 2 crore as income u/s 68 to be read with section 115BBE of the Act. We find the CIT(A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that since such income had arisen to the assessee on account of land dealings which are not recorded in the books of account, therefore, the same was declared as additional income of th....
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....icability of provisions of section 115BBE of the Act in respect of income declared during the course of survey proceedings and offered to tax in the return of income. There is no dispute about the amount of addition to be made nor was there any dispute regarding the head of income under which the same was assessed to tax. The dispute is only with regard to the applicability of provisions of section 115BBE of the Act. Admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account. The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered to tax under the head "Income from business", the Assessing Officer also assessed the same under the head "Income from business". Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions o....
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....stant case during the course of survey had categorically given the details of such cash receipts on account of land transaction and the particulars of land were given at the time of survey itself. In view of the above discussion, we hold that the Ld. CIT(A) was not justified in confirming the order of the Assessing Officer taxing the surrendered income of Rs. 2 crore by invoking the provisions of section 68 r.w.s. 115BBE of the Act. Accordingly, the same is set aside and the grounds raised by the assessee are allowed." 25. As mentioned earlier, even the Ld. CIT(A) in the body of the order has also relied on various decisions including the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Bajargan Traders reported in (2017) 86 taxmann.com 295 (Raj), decision of Ahmedabad Bench of the Tribunal in the case of Choksi Hiralal Maganlal vs. DCIT, decision of Delhi Bench of the Tribunal in the case of Oberoi Motors vs. ACIT vide ITA No.2512/Del/2018 order dated 16.07.2021 for assessment year 2012-13 and various other decisions according to which the undisclosed income found during the course of search or survey action is taxable under any of the five heads of income as spe....
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....n be rebutted by the Department, but the Revenue has not been able to bring any material on the record for rebuttal. Therefore, we are of considered view that no addition can be sustained on the basis of these materials." In the light of the ratio laid down in the above decision, no addition could have been made. In view of the above discussion, we set aside the order of the Ld. CIT(A) and the grounds of appeal No.2 to 6 raised by the assessee are accordingly allowed. 28. In grounds of appeal No.7 and 8 the assessee has challenged the order of the Ld. CIT(A) in confirming the addition of Rs. 37,64,246/- by enhancing the capital gain. 29. Facts of the case, in brief, are that during the course of search proceedings an excel sheet consisting of description of land transactions involving cheque amount and on-money received in cash was seized as Annexure - 4. The seized document contains land transaction details of selling of 16 plots by the assessee for the cheque amount of Rs. 27,70,000/-. However, during the course of survey action at the business premises of Shri Kalpesh Babulal Jain, nephew of Shri Shantilal Jain various documents were found and impounded and his statemen....
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....h cheque. Referring to the seized document, copy of which is placed at page 129 of the paper book, he submitted that all the plots are under one sale deed but plot Nos.23 and 24 have not been sold by the assessee to Shri Kalpesh Jain. Further neither the name of the assessee nor any date appears in the seized documents and there is no mention of any amount paid to Shri Kalpesh Jain. He submitted that these plots might have been sold to some other party and Shri Kalpesh Jain wants to save his skin. Referring to page 130 of the paper book which contains the details of plots noted on the paper seized from Shri Kalpesh Jain, he submitted that the calculation shows in this sheet cannot be treated as correct. He submitted that if the rates mentioned in the seized documents are considered, then the rate for plot No.3 per square feet is Rs. 730.88. Since the entire plot has been sold in one sale deed the rate per square feet should have been the same and no bifurcation is possible. Thus, there is an anomaly in the statement of Shri Kalpesh Jain. 33. Referring to the decision of the Pune Bench of the Tribunal in the case of Chander Mohan Mehta vs. ACIT reported in (1999) 71 ITD 245 (Pune....
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....relied. Further plot Nos.23 and 24 as per the seized document, have not been sold by the assessee to Shri Kalpesh Jain a statement made by the Ld. Counsel for the assessee and could not be contradicted by the Ld. DR. We, therefore, find some force in the arguments of the Ld. Counsel for the assessee that these plots might have been purchased by Shri Kalpesh Jain from some other party and he wants to save his skin. Further Shri Kalpesh Jain never appeared before the Assessing Officer on the appointed date for cross examination. 38. Since in the instant case the seized document does not contain any signature or date or name of the assessee and since some plots in the said seized document have not been sold by the assessee to Shri Kalpesh Jain, therefore, in absence of any concrete evidence before the Assessing Officer that the assessee has received any extra on-money other than what has been disclosed, therefore, no addition could have been made in the hands of the assessee merely on the basis of some un- corroborative statement of Shri Kalpesh Jain. In view of the above discussion, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition of....
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.... Rs. 58.55 lakhs whereas he has already accepted and included Rs. 1,05,00,000/-. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee on the ground that if according to the assessee he has paid an amount of Rs. 58.55 lakhs and accepting payment of Rs. 1.05 crore, this does not fit in logical scheme of things. Therefore, the Assessing Officer held that the assessee had not come clearly on this issue and did not explain satisfactorily the source of Rs. 2,35,09,000/-. Invoking the provisions of section 69B of the Act, the Assessing Officer made addition of the same to the total income of the assessee. 41. Before the Ld. CIT(A) the assessee explained that out of total amount of Rs. 2,35,09,000/- mentioned in the seized document Rs. 176.54 lakhs was paid in cheque and the remaining amount of Rs. 58.55 lakhs only was paid in cash. The assessee filed the details of cheque payment and cash payments. The Ld. CIT(A) called for a remand report from the Assessing Officer and thereafter accepted the submissions of the assessee that cash transactions as per the impugned sheet is only Rs. 58.55 lakhs but he has declared an amount of Rs. 1.05 crores as ca....
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....e assessee has incurred cash expenditure / transactions of Rs. 74,10,860/- and since the assessee furnished explanation to the tune of Rs. 10 lakhs only, the Assessing Officer made addition of Rs. 64,10,860/-. 46. Before the Ld. CIT(A) it was submitted that the total cash expenditure as per seized documents is Rs. 64,10,860/-. It was explained that the said expenses have been incurred from out of drawing of the assessee. The assessee filed a detailed chart to support his submissions. The Ld. CIT(A) on analysis of various details filed by the assessee noted that the assessee has explained the source of cash payment as out of drawings from cash in hand. He noted from the Balance Sheet as on 31.03.2021 that cash in hand of the assessee is Rs. 1,44,04,108/-. Thus, the assessee has sufficient cash in hand from which drawings have been done for the above cash payments. Since according to him the assessee has explained the source of expenses and the Assessing Officer has not given any reasons why he has not accepted the explanation of the assessee, therefore, he deleted the addition. 47. After hearing both sides, we do not find any infirmity in the order of the Ld. CIT(A) deleting t....
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....e notings on loose paper No. 47, bundle No. A-2. 8] The learned CIT(A) failed to appreciate that there was scratching on loose paper No.47, bundle No.A-2 and therefore, question of making any addition in the hands of the assessee on the basis of the said paper simply did not arise and hence, the addition made is not justified and the same may kindly be deleted. 9] The learned CIT(A) failed to appreciate that loose paper No.47, bundle No.A-2 was a dumb paper and no addition could be made in the hands of the assessee on the basis of the notings on the said paper. 10] Without prejudice to the above grounds, the assessee submits that in case, any addition is warranted of Rs. 38,00,000/-, the same should be taxed as a business income of the assessee and not as unexplained money u/s. 69A r.w.s. 115BBE of the Act. 11] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 50. Ground No.1 raised by the assessee is not pressed by the Ld. Counsel for the assessee for which the Ld. DR has no objection. Accordingly, the same is dismissed as 'not pressed'. 51. Ground Nos.2 to 6 raised by the assessee relate to the ....