TaxTMI 
TaxTMI 
2026 (8) TMI 1857
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....in the case of Ravi Agrawal Group on 10.05.2023. Since common issues, interconnected facts, overlapping evidences and substantially similar controversies arise in all these appeals and cross objections, they were heard together and are being disposed of by way of this consolidated order for the sake of convenience, continuity and judicial consistency. 2. The brief factual matrix, necessary for adjudication of the present controversy, is that the assessee, Shri Ravi Omprakash Agrawal, is an individual deriving income under various heads including income from house property, income from business, capital gains and income from other sources and is regularly assessed to tax under the provisions of the Act. A search and seizure action under section 132 was carried out in the case of the assessee and related entities on 10.05.2023, during the course of which statements of various persons were recorded, documents and loose papers were seized and certain digital evidences were allegedly found by the Investigation Wing. Consequent thereto, assessments for Assessment Years 2022-23 and 2023-24 came to be completed making various additions under different provisions of the Act. Aggrieved by....
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....ssee, in Cross Objection No. 263/Mum/2025 has raised the following ground :- "1. The Commissioner of Income Tax (Appeals)-54, Mumbai failed to appreciate that the AO erred in making addition of Rs. 1,80,448/- as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act merely on the basis of statement of third party recorded during the course of search action, without allowing cross examination of such party; hence on the facts and circumstances of the case of appellant and in law, the statements made by third party have no evidentiary value and no addition can be made in case of appellant by relying upon such statements." 5. The relevant facts, in brief, are that a search was conducted in the case of Ravi Agrawal Group on 10.05.2023 under section 132 of the Act. During the course of the said search proceedings, search was also conducted at the residence of Shri Ravindra Maloo. In the statement recorded under section 132(4), Shri Ravindra Maloo is stated to have deposed that the assessee had asked him to invest Rs. 2 to 3 crores in the shares of two companies, namely Infibeam Avenues Limited and Vakrangee Limited, sometime in the year 2019, for which, according to him, t....
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....le inference would be that the investment made by Shri Ravindra Maloo in the shares of Infibeam Avenues Limited and Vakrangee Limited was made by him in his own capacity and on his own commercial judgment. It was contended that the assessee had, at the highest, merely recommended or suggested the said scrips for investment, but such recommendation cannot, by any stretch of legal imagination, be elevated into an arrangement where the investment is to be treated as that of the assessee or where interest liability can be fastened upon the assessee without any independent proof. It was therefore argued that the very first limb of the assessee's case is that the investment was of Shri Ravindra Maloo himself, made in his own capacity, by a person who had vast experience in stock market operations; and the assessee neither owned such investment, nor financed it, nor paid any interest thereon. 8. The learned counsel further submitted that the shares in question were purchased by Shri Ravindra Maloo in his own name and in his own capacity and that the profit or loss arising from such investment belonged to him alone. It was specifically submitted that there is no material, much less ....
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....ficer has neither brought any material to establish actual payment of interest nor has he brought any material to establish any arrangement whereby the assessee had agreed to compensate Shri Ravindra Maloo. It was thus argued that the impugned addition has been made merely on hypothetical assumptions unsupported by any corroborative evidence and therefore deserves to be deleted. 11. The learned counsel further submitted that the statement of Shri Ajay Kejriwal is wholly irrelevant insofar as the present addition is concerned. According to him, the addition under consideration is not on account of synchronized trading or alleged manipulation in the scrip of Infibeam Avenues Limited but is specifically an addition under section 69C towards alleged unexplained expenditure by way of interest payment. The statement of Shri Ajay Kejriwal nowhere suggests that the assessee had paid any interest to Shri Ravindra Maloo. Therefore, reliance placed by the Revenue on the said statement is completely misplaced and does not in any manner corroborate the impugned addition. 12. Proceeding further, the learned counsel submitted that the sole basis for making the addition under section 69C of ....
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....ite specific request made by the assessee. It was submitted that once a statement of a third party is sought to be relied upon adversely against an assessee, then grant of opportunity of cross-examination becomes indispensable. Denial of such opportunity renders the statement legally unusable against the assessee. Reliance was placed on the judgments of the Hon'ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise and CIT v. Odeon Builders (P.) Ltd., as well as the decisions in PCIT v. Shapoorji Pallonji & Co. Ltd. and IPCA Laboratories Ltd. v. DCIT. 15. The learned counsel lastly submitted that the cross objection filed by the assessee specifically challenges the legality of the addition on account of denial of cross- examination and absence of evidentiary value of third-party statement. However, it was fairly submitted that if the deletion made by the learned CIT(A) is upheld on merits, then the ground raised in the cross objection may be treated as academic. 16. Per contra, the learned CIT-DR strongly relied upon the assessment order and submitted that the statement of Shri Ravindra Maloo clearly establishes that the investment in shares of I....
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.... in his own capacity and there was no material whatsoever to show that the investments belonged to the assessee or that the assessee had undertaken any obligation to compensate Shri Ravindra Maloo either towards losses or by way of interest. The assessee also pointed out that even in the statement relied upon by the Assessing Officer, Shri Ravindra Maloo himself had stated that "some shares I bought myself as well," thereby clearly indicating that the investments were not exclusively attributable to the assessee. 19. Upon a careful appreciation of the record, we find substantial force in the contention of the assessee. The entire addition rests solely upon the statement of Shri Ravindra Maloo. Except for the said statement, there is absolutely no corroborative material brought on record by the Revenue to establish actual payment of interest by the assessee. No seized document, ledger, diary, loose paper, bank trail, cash trail, WhatsApp communication, receipt or any contemporaneous material evidencing payment of interest has been found either from the premises of the assessee or from Shri Ravindra Maloo. The Assessing Officer has not brought any evidence on record to establish t....
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....ayment of interest by the assessee to Shri Ravindra Maloo. Thus, the said statement has no direct evidentiary nexus with the impugned addition. 23. Another important aspect which goes to the root of the matter is that the Assessing Officer has selectively relied upon the statement of Shri Ravindra Maloo. The statement itself referred to investment in both Infibeam Avenues Limited and Vakrangee Limited. However, no corresponding addition in respect of alleged interest relating to Vakrangee Limited has been made by the Assessing Officer. The learned CIT(A), therefore, rightly observed that the Assessing Officer had cherry-picked only one part of the statement while ignoring the other part. Such selective reliance itself demonstrates uncertainty in the Revenue's case. Further, admittedly, no opportunity of cross-examination of Shri Ravindra Maloo was afforded to the assessee despite specific request. The entire addition having been founded on a third-party statement recorded behind the back of the assessee, denial of cross- examination assumes considerable significance, particularly when no corroborative material exists independent of such statement. 24. Thus, having regard ....
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....arned CIT(A) has erred in restricting the addition of Rs.197,39,54,122/- u/s 69A and addition of Rs. 184,03,58,935/- u/s 69C to Rs. 19,07,10,652/- being 5% of total payments and receipts 197,39,54,122 + 184,02,58,935, by holding that the assessee is engaged in Angadia services and has only earned profit from the cash movements and while doing so whether the learned CIT(A) failed to consider that the assessee has never disclosed any income from angadia business neither in the return of income nor during the search nor during the post search proceedings? 4. Whether, on the facts and in the circumstances of the case, the learned CIT(A) has erred in restricting the addition of Rs. 197,39,54,122/- u/s 69A and addition of Rs. 184,03,58,935/- u/s 69C to Rs. 19,07,10,652/- being 5% of total payments and receipts 197,39,54,122 + 184,02,58,935, without considering the fact that the entries of cash payments and receipts are evident from the materials seized during the search action, the onus of proving the source of the same falls upon the assessee. Therefore, once the assessee failed to explain the source of cash receipts/ payments along with supporting evidences, the incom....
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....oth cash received and cash paid is unjustified and same shall be restricted to 5% on the complete transaction i.e. either cash received or cash paid. (c) Without prejudice to above, the addition made by the CIT(A) by estimating the profit from undisclosed business of cash transportation, i.e. Angadia service, at 5% of total turnover of cash received and cash paid is excessive and unjustified; and on the facts and circumstances of the case of the appellant and in law same shall be reduced. 29. The relevant facts, in brief, are that during the course of search action carried out in the case of the assessee, at the address being 301/302, Karm Sankalp Building, Opp. Rajawadi Garden, Ghatkopar East, Mumbai, the statement of Shri Deepak Singh, who was alleged to be the cash handler of Ravi Agrawal Group, was recorded. During the course of search, several loose papers, diaries and note books, stated to be in the handwriting of Shri Deepak Singh, were found. In his statement, Shri Deepak Singh explained the nature of dealings recorded therein as relating to movement of cash, namely cash being collected from one person and delivered to another person as per instructions received....
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....elonged to other persons; the assessee, through his persons, merely facilitated movement or transportation thereof and did not own, possess beneficially or enjoy the said cash. Therefore, the entire premise of invoking section 69A and section 69C, according to the learned counsel, is contrary to the very nature of the entries and the statement relied upon by the Revenue itself. 32. The learned counsel submitted that the statement of Shri Deepak Singh, if read as a whole and not in a selective or truncated manner, clearly shows that the assessee was engaged in the activity of collection and delivery of cash and not in ownership of such cash. In response to Question Nos.10 and 11, Shri Deepak Singh explained his role and responsibility by stating that he was handling cash transactions, namely taking and giving cash, after receiving directions from Smt. Monica Sanket Khemuka and Shri Ravi Omprakash Agrawal. He stated that he accepted cash from parties and handed it over either to Monica madam or to other parties as directed by Monica madam or Ravi sir. He further stated that he delivered cash to various persons as per directions given to him. While explaining the modus operandi, he....
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.... by Ravi Agrawal or Monica Khemuka, whereas entries on the right side related to cash given or cash expenditure. He also stated that initially he made rough notings on loose papers and later prepared final statements of cash in and cash out. According to the learned counsel, the very structure of the diary, showing cash in and cash out, opening and closing balances, and names of persons from whom cash was collected and to whom cash was delivered, is consistent only with an activity of cash transportation and not with generation of unaccounted income by the assessee. The statement does not say that the cash belonged to the assessee; it only says that the cash transactions were related to the assessee and Monica Khemuka in the sense that directions for collection and delivery were received from them. The learned counsel submitted that this distinction between "related to" and "belonging to" is crucial, and the Assessing Officer has erroneously converted an activity of handling or transportation into an allegation of ownership. 35. It was further submitted that the entire modus operandi is also reiterated in Question No.69 of the statement of Shri Deepak Singh, where he again expla....
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....s of interest income which would have normally followed if the entries were loans. Similarly, cash payments do not represent expenditure incurred by the assessee because they are outgoings to other persons corresponding to cash earlier received. Thus, according to the assessee, once cash sales, loans, income and expenditure are ruled out on the basis of the Revenue's own material, the only reasonable and commercially consistent inference is that the entries pertain to transportation or movement of cash on commission basis. 38. The learned counsel further submitted that the learned CIT(A), after appreciating the seized material and the surrounding evidences, has himself recorded a factual finding that the evidences seized during search indicate cash transportation business. Once the learned CIT(A), on appreciation of the same material, has accepted the essential nature of the activity as Angadia/cash transportation, then the Revenue cannot, without bringing any further evidence, seek to restore the entire addition under sections 69A and 69C. It was submitted that the Revenue has not shown any material to dislodge the factual finding that the assessee was engaged in cash trans....
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....hifted upon the assessee to explain source of money belonging to others when the Revenue itself had in its possession names and details of the parties from whom cash was received. 41. The learned counsel further submitted that the word "owner" in section 69A is of great significance and cannot be diluted to mean mere physical handling or temporary custody. The assessee's case is that he was merely a transporter or facilitator of cash movement, and the real owners were the persons from whom the cash was collected. In order to invoke section 69A, the Assessing Officer had to establish that the assessee enjoyed ownership rights over the cash, namely power of enjoyment, right of possession to the exclusion of others, power to alienate or charge the property, or beneficial entitlement thereto. No such material has been brought on record. The assessee placed reliance on the decision of the Hon'ble Calcutta High Court in Bimal Kumar Damani v. CIT [2003] 261 ITR 635 and the decision of the Hon'ble Supreme Court in D.N. Singh v. CIT 150 taxmann.com 301, to submit that ownership cannot be presumed merely because certain articles or entries are found in connection with an asses....
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....ries merely show cash given, cash delivered or cash paid to identified persons. Such delivery of cash in the course of Angadia activity cannot be equated with expenditure. According to the assessee, "payment" and "expenditure" are not synonymous for the purpose of section 69C. Every outgoing of money is not expenditure; expenditure connotes an amount spent by the assessee for some purpose of his own. Here, the assessee was merely passing on cash received from one party to another. Therefore, section 69C has no application. Reliance was placed on CIT v. Golani Brothers [2017] 85 taxmann.com 355 (Bombay HC), Kailash Ramavatar Goenka v. ACIT, ACIT v. Sankalp IN and The Estate Investment Company Pvt. Ltd. v. DCIT in support of the proposition that when source of payment is explained or when the same represents movement of money already considered, separate addition under section 69C is impermissible. 45. Without prejudice, the learned counsel submitted that the statements of the associates recorded during search were recorded under tremendous pressure and therefore cannot be relied upon in isolation. It was pointed out that in response to Question Nos.103 and 104, the assessee had s....
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....ry, aggregating to Rs.10, which is commercially absurd in the context of cash transportation activity. It was thus submitted that even if some income is to be estimated, the same can only be reasonable commission income and not an arbitrary percentage of gross receipts and gross payments. 48. It was further submitted that the assessee also incurred expenses in connection with the cash transportation activity, such as fuel, drivers, travel, vehicles and safety arrangements. Certain expenses such as Nagpur trip expenses were also recorded in the seized material, including entries of Rs. 1,17,000/- Rs.58,500/- Rs.39,000/- Rs.78,000/- Rs.58,500/- and Rs.19,500/-. Therefore, even commission receipts cannot be treated as pure profit without considering corresponding expenditure. The assessee submitted that ultimately only real income can be brought to tax and not gross movement of funds. Reliance was placed on the decision of the Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383. 49. The learned counsel placed strong reliance on the decision of the coordinate bench in Dikesh Mehta v. DCIT, wherein in the context of Angadia type money transfer tr....
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....panies and individuals of the group and are being contested separately. Therefore, the same entries or same cash movement cannot again be added in the hands of the assessee merely by assigning them a different colour in appellate proceedings. If the Department itself alleges that certain cash belongs to particular group entities or particular business activities, then addition, if any, has to be examined in the hands of the relevant assessee and not entirely in the hands of Shri Ravi Agrawal. 52. With regard to cash inflow entries tabulated by the learned CIT-DR, the assessee submitted that entries alleged to be relating to builders actually represent amounts received from various builders for transportation of their cash on commission basis and hence fall within the assessee's Angadia activity. With regard to entries alleged as cash received on account of bogus billing, it was submitted that the allegation is self-contradictory because the Department's case elsewhere is that amounts were received through banking channels against invoices and cash was allegedly paid against bogus bills; therefore, alleging cash receipt on account of bogus billing is contrary to the Depar....
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....egate cash receipts and cash payments. According to him, the entries represent unaccounted cash transactions and since the assessee failed to establish the source of cash receipts and the nature of cash payments, the Assessing Officer was justified in making additions under sections 69A and 69C. 55. The learned CIT-DR further submitted that the diaries and loose papers were not dumb documents but detailed records of cash inflow and outflow maintained in the handwriting of Shri Deepak Singh. The entries were supported by statement recorded during search and therefore constituted incriminating material. He submitted that the assessee cannot avoid the consequences of such seized material merely by describing the activity as Angadia services without producing cogent evidence of commission structure, customer confirmations, books of account or independent proof showing that the cash belonged to third parties. It was further submitted that the learned CIT(A), having accepted that the business was undisclosed, ought not to have restricted addition to an estimated percentage, more particularly when the assessee himself had not disclosed such income either in the return of income or duri....
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...., he specifically stated that he used to accept cash from parties and hand over the same to the persons directed by Ravi Agrawal or Monica madam. He further explained that for identifying the correct person, small denomination currency note numbers were shared through WhatsApp and after completion of the transaction he used to report the same to the concerned persons. In response to Question Nos.14 and 16, he stated that vehicles were used for transportation of cash. Further, in Question No.28, he explained that the seized note books and loose papers contained details of day-to-day cash receipts, cash deliveries, opening balances and closing balances maintained by him. 59. A careful reading of the seized material and the statement of Shri Deepak Singh, in our considered opinion, clearly demonstrates that the entries recorded therein pertained to movement and transportation of cash from one person to another and not to ownership of cash in the hands of the assessee. The diaries themselves contain corresponding entries of cash received and cash delivered. The notings record names and particulars of persons from whom cash was collected and to whom it was delivered. The material thu....
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....ssee, in his individual capacity, is not shown to be carrying on any business capable of generating such huge cash receipts. The entries in the diaries do not indicate generation of income but merely movement of funds. The pattern reflected in the seized material, namely receipt of cash from one person followed by delivery to another person, supports the explanation of the assessee that the activity was in the nature of Angadia or cash transportation service. 63. The learned CIT(A), after appreciating the seized material and surrounding circumstances, has himself recorded a categorical finding that the material indicated cash transportation business. Once this factual finding is accepted, the inevitable consequence is that the gross cash handled cannot be treated as income or unexplained money of the assessee. In a cash transportation or Angadia activity, the cash belongs to the persons for whom the service is rendered; the intermediary or transporter merely earns commission or collection charges for facilitating the movement thereof. The gross amount handled is not the income of the transporter. Therefore, the addition of Rs.197,39,54,122/- under section 69A proceeds on a compl....
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....% of the aggregate cash receipts and cash payments. On this aspect also, we are unable to approve the estimation adopted by the learned CIT(A). The learned CIT(A) has not referred to any seized material, comparable case, industry practice or independent evidence demonstrating that commission or profit in Angadia-type activity is earned at 5% of the value of cash transported. Further, the learned CIT(A) has applied the rate on both receipts as well as payments, though both represent merely two legs of the same transaction. 68. The assessee has consistently maintained that commission or collection charges were received at Rs.175 per Rs.1 lakh of cash transported, which works out to approximately 0.175%. The seized material itself indicates that vehicles were used, cash was transported physically from one place to another and certain trip and transportation expenses were incurred. The assessee also referred to various entries of Nagpur trip expenses and related transportation costs recorded in the seized material. In absence of any contrary material brought by the Revenue, the explanation furnished by the assessee appears far more consistent with the nature of activity reflected in....
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..... Since the cash receipts of Rs.197,39,54,122/- are higher, the commission income shall be computed at 0.175% thereof. The balance addition sustained by the learned CIT(A) is directed to be deleted. 73. Consequently, the grounds raised by the Revenue seeking restoration of the gross additions under sections 69A and 69C stand dismissed. The grounds raised by the assessee challenging the estimation of profit at 5% on the aggregate of cash receipts and cash payments are partly allowed in the manner indicated hereinabove. The cross objection raised by the assessee challenging the separate addition under section 69C also succeeds in principle, as we have held that the corresponding cash payments could not independently be treated as unexplained expenditure once the source thereof was traceable to the cash receipts recorded in the same seized material. 74. We shall now deal with the controversy arising in Assessment Year 2023-24, relating to the additions made by the AO with respect to alleged builder financing activity. With respect to alleged builder financing the AO made addition of Rs.2,78,82,000/- as alleged cash returned by the builders to the assessee and addition of Rs.48,2....
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.... AO u/s 69A r.w.s. 115BBE of the Act shall be deleted (b) Without Prejudice to above, the CIT(A) erred in confirming addition of Rs.48,26,384/- made by the AO u/s 69A r.w.s. 115BBE of the Act without appreciating that no money, bullion. Jewellery etc of any kind belonging to the Appellant were found during the course of search and seizure action and hence provision of section 69A r.w.s. 115BBE of the Act has no application in his case and addition made by the AO shall be deleted. (c) The CIT(A) erred in confirming addition of Rs.2,31,46,262/- made by the AO as alleged interest income earned by the Appellant in cash against the finance provided to builders. The Appellant submit that he has made investment in properties and not earned any interest income in cash or otherwise which is not recorded in his books of accounts as alleged by the AO. The AO made the impugned addition merely on the basis of assumption. surmises and conjecture without there being supporting documents/ corroborative and cogent material on record; hence on the facts and circumstances of the case and in law, additions made by the AO shall be deleted. (d) The CIT(A) erred in con....
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....roup purchase unsold properties from builders and developers, and the said transaction of purchase is recorded in the books of accounts of the Assessee. However, it is allegedly a financing arrangement for the builder and the property received is a collateral for such loan. Once the tenure of the loan is over, the said property is resold back to the builder, and in such a transaction, interest of 18-24% per annum is charged. The same is allegedly computed in the following manner: Scenario 1: where market value of property is higher than alleged agreed loan: If the market value of the property is higher than the alleged agreed loan, then the builder returns the differential amount (i.e. market value of property - alleged agreed loan) to the Appellant in cash. Further, the Appellant receives interest in cash on the alleged loan component. Scenario 2: where market value of property is lesser than alleged agreed loan: If the market value of the property is lesser than the alleged agreed loan, then the Appellant pays the differential amount (i.e. loan agreed - market value of property) to the builder in cash. On such alleged loan, the Appellant receives interest in cash. ....
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....id order, the Assessee as well as the Revenue are in the present appeals before this hon'ble Tribunal. 81. The counsel of the assessee has manyfold arguments. He firstly argued that all transactions were genuine property purchases through banking channels, duly recorded in the books, with stamp duty paid and agreements executed as outright sale deeds. These properties were disclosed as investments, and capital gains on their sale have been accepted by the department. Once the department has taxed capital gains, it cannot recharacterize the same transactions as financing arrangements. Therefore, additions under sections 69A and 69C are fundamentally unsustainable. 82. Secondly, the allegation of the AO is that Rs.2,78,82,000 was cash returned to the assessee. The counsel of the assessee argued that this sum originated from the very cheque payments made by the assessee for property purchases. Since section 69A applies only when the source of funds is unexplained, and here the source is clearly explained and accepted by the AO himself, the addition cannot stand. For this proposition, the learned counsel relied on series of judicial precedents, CIT v. Golani Brothers [2017] 8....
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....ed that the group would purchase unsold flats or properties from financially distressed builders. These purchases were not intended as genuine investments but as collateral for financing. The agreement value was paid through banking channels, but the difference between the registered value and the finance amount was allegedly returned in cash by the builder. The term sheets and statements indicate that interest was charged at 24% per annum, often collected in cash or disguised as rent agreements when occupancy certificates were available. Builders were required to pay 3 -12 months of interest upfront, again largely in cash. Furthermore, Varsha Chavan (Arun Gupta Advisors Pvt. Ltd.) has confirmed her role as mediator between builders and Monica Khemka, sharing excel sheets detailing deal values, cash components, and agreement values. Arun Gupta has explained that he arranged financing through Ravi Agrawal's group, with properties purchased at a haircut of 30-50% of market value. He admitted commission was taken in cash. Naveen Agrawal has stated that builders returned the cash differential and interest in cash, and that he prepared ledgers showing agreement values, finance amoun....
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....such inconsistency showed the Revenue itself was unsure of how the transactions were taxable, which meant the additions were based on assumptions, conjectures, and surmises rather than concrete evidence. On this basis, the Assessee submitted that the additions made by the AO deserved to be deleted and set aside. 88. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the seized material relied upon by the Assessing Officer and the statements referred to during the course of proceedings in relation to the additions made towards alleged builder financing transactions. The Assessing Officer, on the basis of certain loose papers and entries found during search proceedings, inferred that the assessee had entered into financing transactions with various builders involving cash movement and interest components. On this basis, the Assessing Officer made addition of Rs.2,78,82,000/- treating the same as alleged cash returned by builders to the assessee under section 69A. Further addition of Rs.48,26,384/- was made treating alleged cash paid to builders as unexplained money under section 69A and an addition of Rs.2,31....
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....leged builder financing and said payment is part of sale consideration of property purchased. In view of the above, provision of section 69C does not apply and assessee deserve relief. To that extent, order of learned CIT(A) is modified. 91.1 Insofar as the addition of Rs.2,31,46,262/- toward interest income is concerned we find the force in the argument of assessee that the assessee has made investment in properties, (both under construction and in ready possession) for capital appreciation and earning rental income. The assessee has earned rental income of Rs.4,50,0000 in respect of shop no. Shop No.1, Wing B&C, W.E. Highway, Malad to M/s. Sai Enterprise (ready possession) and offered rental income as Income from House Property and assessed accordingly for the year under consideration. It is further submitted that he has also sold two office premises (i.e. part of office on Ground floor and 1st Floor) for aggregate sale consideration of Rs. 10,11,83,000/- and offered short term capital gain of Rs. 1,68,73,734/- for the year under consideration and accepted by the Assessing officer. The above fact, substantiate the claim of assessee that he acquires immovable properties for cap....
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....reby totaling the purchase consideration to Rs.1,91,10,820/- which has duly been disclosed in balance sheet under the head "Fixed Assets- Agriculture Land". Further, the group company of the Assessee, M/s Umang Trading Private Limited ("Umang") has sanctioned loan of Rs.8,00,00,000/- to M/s. Sangamner Loni Infrastructure Pvt Ltd (group concern of Mohd. Israil Sheikh) ("Sangamner") during the relevant financial year 2022-23, and disbursed loan of Rs.6,20,00,000/- and received upfront Interest of Rs. 16,74,000/- for 3 months (i.e. March 03, 2023 to June 02, 2023). Umang has accounted the interest income of Rs.5,59,182/- for the year under consideration and offered the same to tax. Sangamner has repaid the entire loan of Rs. 6,20,00,000/- on April 13, 2023 (financial year 2023-24) and excess interest paid by Sangamner to Umang of Rs. 9,36,751/- has been refunded to them by Umang. 96. The Assessing Officer in the show cause notice has observed that the transaction of Mohd. Israil Sheikh and his group concerns with Assessee and his group concerns for purchase of land and unsecured loans in the name of M/s Sangamner Loni Infrastructure Pvt. Ltd are nothing but an arrangement for obtai....
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....served deletion. 98. The counsel argued that the AO's allegation of builder financing and interest income was based only on snapshots and assumptions in the show cause notice. In reality, Sangamner repaid the loan to Umang in April 2023, but the Assessee continued to hold ownership of the land purchased for Rs.1,80,00,000 and never resold it to Sangamner, which disproves the AO's theory of a financing arrangement. 99. The learned counsel further argued that no statement or evidence suggested that the assessee received interest in cash from Mohd Israil Shaikh or Sangamner. Even Mohd Israil Shaikh confirmed only the borrowing from Umang at 12% interest, not any payment to the assessee. Thus, the addition of Rs.12,42,740 as alleged interest income was argued to be baseless, unsupported by evidence, and liable to be deleted. In conclusion, the counsel maintained that the transaction was a genuine property purchase by the assessee, while the loan and interest were entirely in Umang's domain, and therefore the addition in the assessee's case was unsustainable and rightly deleted by the CIT(A). 100. On the contrary, the learned DR argued that as per agreement, int....
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.... in law addition of Rs.20,72,100/- made by the AO shall be deleted (b) Without Prejudice to above, on the facts and circumstances of the case of the Appellant and in law, the CIT(A) erred in confirming the action of AO in making addition of Rs.20.72,100/- u/s 56(2)(x)(b) of the Act without referring the valuation of the property to Department Valuation Officer as per 3rd Proviso to section 56(2)(x) r.w.s. 50C(2) of the Act. The Appellant submit that the AO shall be directed to refer the valuation of the property to Department Valuation Officer to determine the Fair Market Value of the property. (c) Without Prejudice to above, the CIT(A) erred in confirming the action of AO in making the impugned addition without appreciating that once the transactions for purchase of properties are treated as finance transactions, then no addition u/s 56(2)(x)(b) of the Act can be made in Appellant's case; hence, additions made by the AO of Rs.20,72,100/- u/s 56(2)(x)(b) of the Act is contrary to the additions made by him for treating the transaction as finance transaction." 104. The relevant facts, in brief, are that during the year under consideration, the Assess....
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....val submissions, perused the assessment order, the impugned order of the learned CIT(A) and the material available on record in relation to the addition of Rs.20,72,100/- made under section 56(2)(x) of the Act in respect of purchase of property situated in Balaji Arcade. The Assessing Officer observed that the assessee had purchased the said property for a consideration lower than the value adopted by the stamp valuation authority and accordingly invoked the provisions of section 56(2)(x) by treating the differential amount of Rs.20,72,100/- as taxable in the hands of the assessee. The learned CIT(A), after examining the factual matrix and the documents placed on record, sustained the addition. 108.1 Upon a careful appreciation of the material available before us, we do not find any infirmity in the conclusion arrived at by the learned CIT(A). The provisions of section 56(2)(x) specifically provide that where an immovable property is received for a consideration lower than the stamp duty value and the difference exceeds the prescribed limit, the differential amount becomes chargeable to tax in the hands of the purchaser. In the present case, the Assessing Officer has adopted the....
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....inating material in the form of whatsapp chats show that the assessee was involved in cash movements and the assessee has failed to prove with supporting documents that the transaction to collect cash from sudam has not been executed?" 112. The assessee, in Cross Objection No.262/Mum/2025, has raised the following ground :- "1. (a) The Commissioner of Income Tax(Appeals) - 54, Mumbai ['the CIT(A)'] failed to appreciate that the AO erred in making addition of Rs. 1,50,00,000/- u/s 69A r.w.s. 115BBE of the Act and addition of Rs.4,91,00,000/- u/s 69 r.w.s. 115BBE of the Act without appreciating that no money, bullion, Jewellery etc of any kind belonging to the Appellant were found during the course of search and seizure action and hence provision of section 69A r.w.s. 115BBE and 69 r.w.s. 115BBE of the Act has no application in its case. (b) The CIT(A) failed to appreciate that the AO erred in making impugned addition of Rs. 1,50,00,000/- and Rs.4,91,00,000/- respectively by merely relying upon the alleged WhatsApp chats/ digital data etc found during the course of search and seizure action, which have no evidentiary value." 113. The facts in brief, in....
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....based solely on a WhatsApp chat and the statement of Shri Sanket Khemuka, without any corroborative evidence. The WhatsApp message did not establish that cash was received or paid, and at best reflected a proposed transaction that never materialized. Even Sanket Khemuka's statement merely explained the meaning of the message but did not confirm any cash exchange. Reliance solely on unverified digital communication is impermissible, and several judicial precedents support that such electronic records cannot be the sole basis for addition. The learned counsel for the assessee relied on various judgments Mahadhan AgriTech Limited v. ACIT [ITA No.2227/Mum/2024 & Ors., dated July 24, 2025] (Mumbai - Trib.), ACIT Vs. Prashant Prakash Nilawar [ITA No.5689/Mum/2024](ITAT Mumbai), ACIT Vs. Anan Jaikumar Jain 218 TTJ 813 (Mumbai - Trib.), A. Johnkumar Vs. DCIT 220 TTJ 187 (Chennai - Trib.), Atul Tantia Vs. DCIT [ITA No.492/Kol/2021] (Kolkata - Trib.), Designer Point (India) P. Ltd Vs. ACIT [ITA No.2517/Del/2022] (Delhi- Trib.), DCIT Vs. Classic Marble Co. (P) Ltd 38 NYPTTJ 1274 (Mumbai - Trib.), Vetrivel Minerals Vs. ACIT 437 ITR 178 (Madras HC), Simtools (P) Ltd Vs. DCIT 219 TTJ 887 (Mu....
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....f the learned CIT(A), the WhatsApp chats relied upon by the Assessing Officer and the surrounding material placed on record in support of the addition of Rs.1.50 crore made under section 69A of the Act. The Assessing Officer proceeded to make the impugned addition primarily on the basis of certain WhatsApp communications exchanged between Shri Sanket Khemuka and one assessee, from which an inference was drawn that cash amounting to Rs.1.50 crore belonged to the assessee and represented unexplained money liable to be taxed under section 69A. The learned CIT(A), after appreciating the contents of the chats and examining the surrounding circumstances, deleted the addition. 118.1 Upon a careful examination of the material available on record, we find ourselves in agreement with the conclusion reached by the learned CIT(A). At the outset, it is pertinent to note that section 69A can be invoked only where the assessee is found to be the owner of money, bullion, jewellery or other valuable article and fails to offer satisfactory explanation regarding the nature and source thereof. Thus, ownership of the alleged money is the foundational requirement for invoking the deeming fiction cont....
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.... of assessee as unexplained investment u/s 69 of the Act. The learned CIT(A), deleted the addition of Rs.4,91,00,000/- holding that there is no corroborative evidence to support the impugned addition. The Revenue is aggrieved by the deletion of addition of Rs.4,91,00,000/- and has come up in appeal, whereas the assessee has filed the cross objection on the ground that no money, bullion, jewellery etc of any kind belonging to the assessee were found during the course of search and seizure action and hence provisions of section 69 has no application. 120. The Revenue has raised the following grounds in ITA No.4945/Mum/2025 :- "6. Whether on the facts and the in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs. 4,91,00,000/- u/s 69 of the Act holding the statement of Deepak Singh is contradictory and there is no corroborative evidence found during the search to support the statement of Shri Deepak Singh and while doing so whether the Ld.CIT(A) has failed to consider that there are incriminating material in the form of whatsapp chat and the assessee has failed to provide any documentary evidences about the source and nature of the invest....
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.... on record, came to the conclusion that there is no corroborative evidence to support the addition of Rs.4,91,00,000/- and held that the statement of Shri Deepak Singh is contradictory, and accordingly deleted the entire addition. Aggrieved, the Revenue has filed an appeal and assessee filed Cross Objection before the Tribunal on the stated grounds. 125. The counsel argued that the addition of Rs. 4,91,00,000 was made solely on the basis of WhatsApp chats and the statement of Shri Deepak Singh, without any corroborative evidence. The WhatsApp messages only contained photos of gold biscuits, with no indication that the Assessee had purchased, received, or owned them. Such digital communication, without independent corroboration, cannot be treated as incriminating material. The statement of Shri Deepak Singh itself was contradictory as he admitted that gold was received from Bhupesh and handed over to someone else, which shows the gold did not belong to the Assessee. Hence, neither the chats nor the statement can justify the addition. The counsel emphasized that section 69 applies only when the assessee is found to be the "owner" of unexplained money or valuables. In this case, no....
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....tion under section 69 and ultimately computed the alleged value of gold at Rs.4,91,00,000/- by adopting the rate of Rs.49,100/- per 10 grams for 10 kilograms of gold. 127.1 The assessee, in reply dated 25.09.2024, specifically objected to the proposed addition on the ground that no gold biscuits or any valuable article were found or seized from the possession of the assessee during the course of search and that there was no corroborative material to establish ownership of the alleged gold in the hands of the assessee. It was further submitted that except for the WhatsApp image and the statement of Shri Deepak Singh, there was no evidence of purchase, possession, ownership, delivery or movement of gold by the assessee. The assessee also contended, without prejudice, that even assuming such transaction existed, the material at best reflected transportation or handling activity and not ownership of gold by the assessee. 127.2 Upon a careful appreciation of the material available on record, we find substantial force in the contention of the assessee. The issue involved herein is substantially similar to the addition of Rs.1.50 crore dealt with by us in the preceding ground, where....
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....Revenue on this issue stand dismissed. 128. We shall now deal with the next controversy relating to the additions of Rs.5,53,30,040/- (AED 27,66,502) u/s 69A of the Act and Rs.5,53,69,665/- (AED 27,68,483) u/s 69C of the Act made by the AO on the basis of digital data and WhatsApp Chat found from the mobile of one Shri Pratik Sangpal wherein the evidences of cash movement of United Arab Emirates (AED) was found. On the basis of said digital data and WhatsApp Chats the AO made addition of Rs.5,53,30,040/- being cash received as unexplained money u/s 69A of the Act and addition of Rs.5,53,69,665/- being cash paid as unexplained expenditure u/s 69C of the Act. The learned CIT(A) confirmed the entire addition made by the AO. Aggrieved by the additions made by the AO and confirmed by the Ld. CIT(A), the assessee has come up in appeal before the Tribunal. 129. The Assessee has raised the following grounds in ITA No.3559/Mum/2025 :- "1 (a) The Commissioner of Income Tax(Appeals) - 54. Mumbai [CIT(A)] erred in confirming the action of AO in making addition of Rs.5,53,30,040/- (AED 27.66.502) as unexplained money u/s 69A r.w.s. 115BBE of the Act on account of alleged cash rec....
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.... June 13, 2024 was issued to the Assessee seeking explanation for the same. In response to the said allegation, the Assessee, vide his submissions dated August 26, 2024, stated that Shri Pratik Sangpal was employee of M/s SSB Accounting and Book keeping, a firm belonging to Mr. Jagdish Raimalani, Dubai from 2015 to January 2022. Since the data pertains to a period when he was not an employee of the Assessee, he does not want to comment on the same. 131. The Assessing Officer issued a show cause notice dated September 17, 2024 proposing an addition of Rs.5,53,30,040/- (AED 27,66,502) u/s 69A of the Act and Rs.5,53,69,665/- (AED 27,68,483) u/s 69C of the Act stating that the Assessee has failed to explain source of the said receipts. In response to the said notice, the Assessee vide his submissions dated September 25, 2024, raised his objections to the said addition and submitted that the evidence on record makes it clear that Shri Pratik Sangpal was an employee of M/s SSB Accounting belonging to Mr. Jagdish Raimalani, and the Assessee has nothing to do with the said transactions. 132. The assessee further submitted without prejudice basis that the payments of Rs. 5,53,69,665/-....
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....rtain persons and onward payments to others, often involving third parties. The DR highlighted that Pratik Sangpal himself admitted in his statement that some of these transactions were carried out as per the Assessee's instructions. The DR argued that this established the nexus between the Assessee and the unaccounted AED dealings. The CIT(A) has confirmed the addition made by the AO in absence of any explanation from the assessee. The DR defended this approach by stating that existence of unaccounted AED transactions was undeniable. The Assessee had argued that the transactions belonged to third parties and not to him. The DR countered that the pattern of entries, corroborative statements, and directions attributed to the Assessee showed that he was indeed involved. Therefore, the DR urged the Tribunal to uphold the additions sustained by the CIT(A). 135. The counsel noted that the Departmental Representative relied on Pratik Sangpal's statements to justify the additions. However, the Assessee had already addressed these points, showing that the transactions involved third parties and not the Assessee. Therefore, the DR's submissions did not alter the position that....
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....n 69C. The Assessing Officer, in effect, has sought to tax both sides of the same transaction, resulting in duplication of addition. Such an approach is contrary to the intrinsic nature of the entries reflected in the seized material itself. The learned CIT(A), in our considered opinion, has correctly appreciated this factual position while granting relief to the assessee. 137. Thus, having regard to the entirety of the facts and circumstances, the nature of the seized material and the reasoning already given by us while adjudicating the issue relating to cash transportation/Angadia activity, we are of the considered opinion that the additions made by the Assessing Officer under sections 69A and 69C in relation to AED transactions could not have been sustained in the manner done in the assessment order. The corresponding receipts and payments reflected in the seized material formed part of the same integrated flow of funds and, in absence of cogent evidence establishing ownership of unexplained money or independent unexplained expenditure in the hands of the assessee, separate additions on both sides were not justified. Accordingly, we find no infirmity in the relief granted by ....
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....24. 141. The learned counsel of the assessee submitted that the addition of Rs. 5,71,508/- for the assessment year 2022-23 is on account of allegations and statements identical to that of the addition of Rs. 1,80,448/- for the assessment year 2023-24. The Assessee therefore relies on his contentions and propositions in respect of the said addition which has been made by under (I) for assessment year 2023-24 above. 142. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the statements recorded during the course of search proceedings and the material placed before us in relation to the addition of Rs.5,71,508/- made under section 69C of the Act towards alleged unexplained interest expenditure relating to investment in shares of Infibeam Avenues Limited and Vakrangee Limited. The facts and controversy involved in the present ground are substantially identical to the issue already adjudicated by us while dealing with the addition of Rs.1,80,448/- for Assessment Year 2023-24. Here also, the addition has been made primarily on the basis of the statement of Shri Ravindra Maloo wherein it was alleged that invest....
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.... and manner of payment thereof. Thus, the addition remains purely inferential and conjectural in nature. 142.4 Accordingly, following the detailed reasoning and findings already recorded by us while adjudicating the identical issue for Assessment Year 2023-24, and having regard to the absence of corroborative evidence establishing actual payment of interest by the assessee, we are of the considered opinion that the addition of Rs.5,71,508/- made under section 69C is unsustainable both on facts and in law. The learned CIT(A), therefore, was justified in deleting the addition. Consequently, the grounds raised by the Revenue on this issue stand dismissed. 143. We shall now advert to the next controversy arising in Assessment Year 2022-23, relating to the addition of Rs. 19,51,01,055/- made by the Assessing Officer as unexplained money under section 69A of the Act and further addition of Rs.17,67,50,999/- made as unexplained expenditure under section 69C of the Act. The said additions arose on the basis of loose papers, diaries and note books found from the premises where statement of Shri Deepak Singh, alleged cash handler of Ravi Agrawal Group, was recorded. The learned CIT(A),....
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....7,67,50,999/- as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act without appreciating that the source of cash payment is from the cash receipts found and recorded in loose paper/note pad of Deepak Singh and once the cash receipt of Rs. 19,51,01,055/- is added as unexplained money u/s 69A of the Act then cash payment of Rs.17,67,50,999/- which are made out of cash received again cannot be termed and added as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act." 146. The assessee has also raised grounds in its own appeal in ITA No.3559/Mum/2025 against the addition sustained by the learned CIT(A), which read as under :- "2. (a) The CIT(A)erred in confirming the estimated addition of Rs. 1,85,92,6021- being 5% of total turnover of cash received of Rs. 19,51,01,055/- and cash payment of Rs. 17,67,50,999/- as per loose papers/ diaries/ note book found from the premises of Deepak Singh, as profit from undisclosed business of cash transportation (i.e. Angadia Service),as against commission/ collection charges ofRs.175 per one lac received by the Appellant for facilitating transportation/ movement of cash from one place to another. The Appellant submit th....
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....f Rs. 19,51,01,055/- as unexplained money under section 69A of the Act and Rs. 17,67,50,999/- as unexplained expenditure under section 69C of the Act. The Assessee filed an appeal to CIT(A), and the CIT(A) restricted the said addition to Rs.1,85.92,602/- (being 5% of total receipts an payments 19,51,01,055+17,67,50,999) for the assessment year 2022-23 is on account of allegations and statements identical to that of the addition of Rs.197,39,54,122/- u/s 69A and Rs. 184,03,58,935/- u/s 69C of the Act for the assessment year 2023-24. 148. The learned counsel for the Assessee submitted that the additions made for A.Y. 2022-23 were identical in nature to those made for A.Y. 2023-24, and therefore the same arguments and propositions apply. The counsel argued that the Assessing Officer had made additions of Rs.19,51,01,055 under section 69A (unexplained money) and Rs.17,67,50,999 under section 69C (unexplained expenditure). The CIT(A) restricted these to 5% of the total receipts and payments, i.e., Rs.1,85,92,602. However, the basis of these additions was the same set of allegations, WhatsApp chats, and statements relied upon in A.Y. 2023-24. Since the Assessee had already demonstrate....
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....nds of the assessee. 149.2 Upon a careful appreciation of the seized material and the statements of Shri Deepak Singh, we find that the controversy involved herein is identical in principle to the issue already adjudicated by us in earlier paragraphs. The seized entries reflect corresponding inflow and outflow of cash and the material itself indicates collection and delivery of cash on instructions received from various persons connected with the group. No physical cash corresponding to the impugned additions was found from the possession of the assessee. Further, no independent material has been brought on record by the Revenue to establish ownership of the entire cash receipts in the hands of the assessee. The Assessing Officer has proceeded merely on the basis that the assessee was involved in handling or facilitating movement of cash and has therefore treated the entire receipts as unexplained money and the corresponding payments as unexplained expenditure. 149.3 As already held by us while adjudicating the similar issue for Assessment Year 2023-24, mere handling or transportation of cash cannot automatically lead to the conclusion that the assessee was owner thereof for ....
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....sed of in the aforesaid terms. Order pronounced on 4th August, 2026. CORRIGENDUM ORDER ARUN KHODPIA, ACCOUNTANT MEMBER AND AMIT SHUKLA, JUDICIAL MEMBER Dt. 21-08-2026 The Tribunal, vide its order dated 04.08.2026, passed in the above appeals has noticed certain clerical/typographical errors and inadvertent inconsistencies in paragraphs 101, 136, 136.2 and 137 of the said order. The same are hereby rectified under section 254(2) of the Income-tax Act, 1961, to the extent stated below: 101. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the seized material and the relevant entries relied upon by the Assessing Officer in support of the addition made towards alleged interest income from Shri Mohd. Israil Shaikh. The Assessing Officer, on the basis of certain seized notings and entries found during the course of search proceedings, inferred that the assessee had advanced funds to Shri Mohd. Israil Shaikh and had earned interest thereon which was not disclosed in the return of income. Accordingly, the addition was made treating the same as undisclosed interest income of the assessee....