TaxTMI 
TaxTMI 
2026 (4) TMI 1121
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....ng disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No. 941/Rjt/2024 for assessment year (A.Y.) 2021-22, have been taken into consideration for deciding the above appeals en masse. 3. Although, these appeals filed by the Assessee, and Revenue contains multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Assessee and Revenue. We find that most of the grounds raised by the Assessee and Revenue, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the Assessee and Revenue. With this background, we summarize and concise the grounds raised by the Assessee and Revenue, as follows: "The Ld. CIT(A) erred in deleting the addition of Rs. 2,29,64,065/- out of total addition of Rs. 2,62,44,645/- ignoring the facts of the case that while assessing officer had established the complete chain of unaccounted receipts through the seized excel file." (This is ground nos. 1 to 5 of Revenue's appeal in ITA No.941/Rjt/2024 for A.Y. 2021-22 ....
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....the assessment order. The assessing officer further observed that the data maintained in this sheet is in two parts, that is, upper part and lower part (marked inside separate boxes) and one row is left blank between these two parts. The data maintained in the upper part of the sheet represents the payments made in cash and the data maintained in the lower part of the sheet represents the payment done through banking channel. The assessing officer made elaborate analysis of the seized excel sheet with the ledger account of M/s. Vivan Infraspace LLP (developer of the project RK World Tower) from the books of assessee- firm, and it was observed by the assessing officer that total amount received during Financial Year (F.Y.) 2020-21 by the assessee, from M/s Vivan Infraspace LLP, as per ledger exactly matches with those recorded in lower part of seized excel sheet "Rameshbhai - WT and the same have been made through banking channel. However, the transactions appearing on upper part of seized excel sheet are not reflected in regular books which proves that the assessee has not reported the entire contractual receipts from M/s Vivan Infraspace LLP. During the assessment proceedings, the....
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....ation but the cash receipt as reflected in the said excel sheet was not shown in the regular books of account. Therefore, under such circumstances what is to be taxed is the margin of profit that the assessee retained in cash, which obviously is higher than what is reflecting in books. The contention of the assessee that the net profit rate @ 8% should be adopted is no doubt a reasonable argument as provided under the presumptive scheme of taxation under section 44AD of the Act. However, the evidential value of the seized material showing huge amount of cash receipt cannot be ignored and therefore the contention of the assessee for adopting net profit rate @8% cannot be acceded to. Further, in the case of ITO vs. M/s Shubh Developers, Mehsana reported in (AHD-Trib.) 2024 ITL 1815 having similar set of facts, the Hon'ble ITAT, Ahmedabad Bench adopting the rate of 12.5% as the taxable profit of the assessee. Therefore, ld.CIT(A), in the assessee`s case, for the said unrecorded transactions, estimated the profit @ 12.5% of the cash receipts from M/s Vivan Infraspace LLP, which comes at Rs. 32,80,580/- (12.5% of Rs. 2,62,44,645/-). 8. Aggrieved by the order of the Ld. CIT(A), th....
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....ssee. Therefore, on this account the assessment order of the assessing officer may be quashed. 14. The Ld. Counsel for the assessee also submitted, that issue of valuation of building was neither raised by the assessing officer nor by the assessee during the assessment proceedings. The issue of valuation was also not raised by the learned CIT(A) who has power to enhance the income of the assessee. Therefore, the Tribunal does not have power to enhance the assessment of the assessee on the issue which was neither raised by the assessing officer nor by the assessee and even the learned CIT(A), who has co-terminus power did not raise this issue. Therefore, matter should not be remitted back to the file of the assessing officer to re-look the entire documents and evidences, which were already before the assessing officer. 15. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We do not find merit in the submissions of learned DR for the revenue to ....
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....he assessing officer to substantiate his findings that the assessee has actually received money out of books of accounts, hence, an opportunity of cross examination was mandatory in the assessee`s case under consideration. 17. It is settled law that any additions made in absence of providing opportunity of cross examinations of persons, whose statement has been relied upon for making the additions is in violation of natural justice, hence cannot be sustained. The Hon'ble Supreme Court of India, in the case of Krishnachand Chelaram Vs. CIT 125 ITR 713 (SC) and Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR 0241 (SC) has held that additions without providing the opportunity of cross examination is in violation of natural justice. Thus, we note that additions made in absence of providing opportunity of cross-examination of the persons, whose statement has been relied upon for making the additions is violation of principle of natural justice. We also note that not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which m....
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....en disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed pursuant to search and seizure action. From the search and seizure perspective, such non speaking seized documents are referred to as "Dump Documents". 19. Therefore, we find that no arbitrary addition to the income of the assessee can be made by the Assessing Officer based on the dump documents, loose papers containing scribbling, rough/vague notings in the absence of any corroborative material, evidence recorded and finding that such dump documents had materialized into transactions giving rise to income of the assessee, which had not been disclosed in regular books of accounts by the assessee. For that reliance is placed on the judgement of the Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO [1981] 7 Taxman 13/131 ITR 597 held that the fictional receipt cannot be deemed to be receipt in the absence of any cogent material to support the factum of actual receipt. Moreover, the Hon'ble High Court of Delhi in case of CIT vs. D.K. Gupta [2008] 174 Taxman 476 upheld the order of the Tribunal wherein it was held that Ad-hoc/Dumb Documents with....
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....ility, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. (iii) The meaning of account book would be spiral notebook/ped but not loose sheets. (iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another; (v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to pro....
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....tedly, had no nexus with the assessee and there is no signature of assessee or third-party, on such excel sheet. In the case of Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The entire addition revolving to the excel sheet found and seized from the third- party which is "dump documents" which has no legality in the eyes of the law and the addition exclusively based on such documents needs to be deleted. 22. We note that assessee's issue under consideration is also covered by the judgement of the Hon'ble High Court of Gujarat in the case of PCIT vs. Kaushik Nanubhai Majithia R/Tax Appeal No. 20 of 2024 order dated 06.03.2024, while passing the order the Hon'ble Gujarat High Court has made the following observations: "1. Having noted the findings of the facts returned by the Commissioner of Income Tax (Appeals) ('CITA', in brief) and the Income Tax Appellate Tribunal ('ITAT', herein after), we may reco....
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....so covered by the judgement of the Co-ordinate Bench of ITAT Rajkot, in the case of Sidique Ibrahim Allana, in ITA No.73/RJT/2025, wherein it was held as follows: "Analysis and Conclusion: 18. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer initiated the reassessment proceedings against the assessee, with the approval of Principal Commissioner that the books of accounts or documents, seized or requisitioned under section 132 of the Act, in case of Shri Mansur Mehta Group, pertains or relates to the assessee under consideration. Therefore, we note that there was no search on the assessee. We find that the figure mentioned in the WhatsApp chat at 550/-, has been interpreted by the Assessing Officer by adding five zeros, as if, it is at Rs. 5,50,00,000/- without any basis. We find that what is the basis, to add five more zeros, has not been explained by the Assessing Officer in his assessment order. As....
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....hich is again without any base. The learned DRP did not mention that how the figure of 550/- is apparently at Rs. 550 lakhs. By following arbitrary method, the said figure, could be apparently be presumed at Rs. 5500 lakhs or Rs. 55,000/- lakhs also. Thus, the findings of the Ld DRP, is also based on surmise and conjuncture, so far adding five zeroes are concerned. 21. We also note that the provision of Section 132(4A) and Section 292C of the Act creates deeming fiction on the assessee subjected to search or survey, wherein it may be presumed that any such document found during the course of search / survey from the possession or control of person searched / surveyed belongs to such person and contents of such documents are true. However, in the assessee`s case under consideration, it is an undisputed fact that the impugned loose papers- WhatsApp chat, was not found from the possession of assessee, but the same was found from the possession of third party. Therefore, noting made in such loose papers do not present a preponderance of probabilities, so as to support the allegation of unexplained investment. It is well settled position of law that a nonspeaking document refer....
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....n solely on the basis of such WhatsApp chat. We also place reliance on the decision of Hon'ble Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597 (SC), wherein, it is held that the fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt. 23. Our view is further fortified by the judgement of the Hon'ble High Court of Delhi in case of CIT v. D.K. Gupta [2008] 174 Taxman 476 (Delhi), wherein, Hon'ble High Court had upheld the order of the lower court (ITAT), wherein, it was held that Ad-Hoc / Dumb Documents without any corroborative evidence/finding that the alleged documents have materialized into transactions cannot be deemed to be the income of the assessee. We also find that Co-ordinate Bench of ITAT Mumbai, in case of Amarjit Singh Bakshi (HUF) v. ACIT [2003] 86 ITD 13 (Delhi) (TM) held that any noting in the loose sheet is no evidence by itself. An entry in the books of account maintained in the regular course of business is relevant for purposes of considering the nature and impact of a transaction, but notings on slips of paper or loose sheets of paper cannot fall in this categ....