RUCHA CONSULTANCY LLP,PUNE vs. ACIT CIRCLE-6(1), MUMBAI, NARIMAN POINT
IN THE INCOME TAX APPELLATE TRIBUNAL
“D” BENCH MUMBAI
BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER
& SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
ITA No. 2358/Mum/2025-AY 2018-19
ITA No. 2359/Mum/2025-AY 2022-23
Rucha Consultancy LLP,
103
/
104,
1st
Floor,
Ramsukh House, Shivaji
Nagar,
Near
Sancheti
Hospital, Pune-411005. Vs.
ACIT, Circle –6(1),
Room
No.
1905,
19th
Floor,
Air
India
Building,
Nariman
Point,
Mumbai-400021. PAN/GIR No. AARFR5880Q
(Appellant)
(Respondent)
ITA No. 2488/Mum/2025-AY 2016-17
ITA No. 2487/Mum/2025-AY 2017-18
ITA No. 2721/Mum/2025-AY 2018-19
ITA No. 2759/Mum/2025-AY 2019-20
ITA No. 2760/Mum/2025-AY 2020-21
ITA No. 2846/Mum/2025-AY 2022-23
DCIT, CC –6(1),
BKC, Room No. 445,
4th
Floor,
Kautilya
Bhawan,
Mumbai-400051. Vs.
Rucha Consultancy LLP,
103
/
104,
1st
Floor,
Ramsukh House, Shivaji
Nagar,
Near
Sancheti
Hospital, Pune-411005. PAN/GIR No. AARFR5880Q
(Appellant)
(Respondent)
Assessee by Shri Nishit Gandhi, AR
Revenue by Shri Umashankar Prasad, CIT-DR
Date of Hearing
13.08.2025
Date of Pronouncement
30.10.2025
आदेश / ORDER
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PER BENCH:
These appeals by assessee and the revenue are against the orders of Commissioner of Income Tax (Appeals)-54,
Mumbai passed u/s. 250 of the Income Tax Act, 1961 (the Act) for Assessment Years (AY) 2018-19 dated 20.02.2025,
AY 2022-23 dated 13.02.2025 and AY 2016-17 to 2020-21
& 2022-23 dated 10.02.2025. 2. First of all we will take up appeal bearing ITA No.
2358/Mum/2025 for AY 2018-19, filed by the assessee and ITA No. 2721/Mum/2025 AY 2018-19 filed by the department against the order passed by Ld. CIT(A) dated
20.02.2025 u/s 250 of the Act for adjudication. The assessee has raised the following grounds of appeal:
i) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 11,00,000/- u/s 69C of the Act on account of unexplained expenditure merely on the basis of alleged documents of loose sheet of paper found from the premises of third party Shri Avish Atal.
ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition only on the basis of loose sheet found by observing that alleged random loose sheet found is record of expenses incurred by assesse without adducing any corroborative evidence in support of the above.
iii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting retraction affidavit of statement
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Rucha Consultancy LLP recorded filed by Ravindra Wadepalle, a third party and Independent Consultant and Prashant Nilawar, Partner of the assesse Firm, hence the addition confirmed by Hon'ble CIT(A) not accepting the retraction filed by them and confirm the addition merely on the basis of reply to their statement recorded which is duly retracted by them having has no evidentiary value in the eyes of law. Therefore, alleged addition made should be deleted.
iv) On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming alleged addition without providing any corroborative evidence to substantiate his allegation that the appellant had incurred the alleged expenditure of Rs.
11,00,000/- as per the loose sheet found, hence it should be deleted.
v) On the facts and circumstances of the case and in law, the Ld CIT(A) erred by observing that loose sheet found and reply to statement recorded of Ravindra Wadepalle and Prashant
Nilawar constitutes corroborative evidence with respect to alleged cash expenses incurred by the assesse in respect of Karav Project.
vi) On the facts and circumstances of the case and in law, the Ld A.O. erred in confirming the impugned addition without appreciating the fact that the alleged transactions mentioned in the said sheet were not carried out by the appellant which was evident from the regular books of accounts maintained by it and also did not contain any reference either to the appellant or its partners nor authenticated by them.
vii) On the facts and circumstances of the case and in law, the Ld A.O. erred in confirming the impugned addition ignoring the fact that the provisions of Section 69C of the Act were not applicable to the fact of the case of the appellant as it had never incurred any such alleged expenditure.
viii) On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the addition of Rs. 11,00,000/- u/s 69C of Act without giving any opportunity to cross-examine
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Mr. Avish Atal from his residence alleged documents was found and relied upon by AO & CIT(A).
The brief facts of the case are that a search action was carried out u/s 132 of the Act from 23.09.2021 to 30.09.2021. During the course of search, various incriminating documents, images from the computers and mobiles, whatsapp chats etc. were discovered. Pursuant to the same, order of assessment was framed u/s. 143/147 of the Act. Thereby making an addition, which were based on the documents / images found / discovered at the time of search. The Assessment was reopened for 6 years and at present we are dealing with AY 2018-19. The additions made in the order of assessment by the Assessing Officer (AO) were challenged before CIT(A), who partly allowed the appeal of the assessee thereby giving substantial relief. Against the said order both the Assessee as well as the Department have filed their respective appeals as mentioned above.
There is only one effective ground in the appeal filed by the assessee, thereby challenging the confirmation of addition of Rs. 11,00,000/-made by AO in respect of certain loose sheets found from the residence of one Shri Avish Atal, therefore the same is taken up for adjudication first.
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During the course of search on the assessee, a search was also conducted at the residence on Shri Avish Atal. During the course of search, a loose sheet was found from the residence of Shri Avish Atal. The said sheet is at Page 161 of the Paper Book and reproduced by the AO at Page 3 of its order. In the said sheet, there are 4 tables. The additions made by the AO pertains to first two items bearing date 23.12.2017 and 15.01.2018 and the amount totaling to Rs. 11,00,000/-. The said sheet was confronted to the assessee seeking reply on the same with Show Cause Notice proposing to add the same u/s 69C of the Act. In response thereof, the Assessee submitted that he has no business connection with Shri Avish Atal and that the addition cannot be made on the basis of such loose unauthenticated document as the revenue has not carried out any inquiry with parties mentioned therein. Apart from above, the opportunity of cross-examination of the parties was not provided to the assessee. The assessee also submitted that the statement u/s 132(4) of the Act or opinion of the parties can’t be relied on to make the addition since the same were all retracted.
However, the AO went ahead and made the addition of Rs. 11,00,000/- in the hands of the assessee u/s 69C of the Act. For the balance entries on the said sheet, the AO made an addition of Rs.3,25,00,000/- in the subsequent
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Rucha Consultancy LLP year i.e. AY 2019-20. The relevance of the same will be explained in the subsequent para.
Although, the Assessee has challenged the said addition before the Ld. CIT(A) on various grounds but the Ld. CIT(A) confirmed the addition primarily on the ground that considering the statements of Shri Ravindra Wadepalle and Shri Prashant Nilawar, it appears that the assessee incurred cash expenses and as such the addition was confirmed.
In order to challenged the said additions, it was submitted Ld. CIT(A) has himself in the order for AY 2019- 20, deleted the addition made by the AO based on the very same page in respect of the balance amount of Rs. 3.25 Cr. Therefore, the reasoning of the ld. CIT(A) seems to be quite contradictory. He further submitted on merits that first of all the AO as well as ld. CIT(A) have not even raised the dispute on the fact / submission that Shri Avish Atal has no business relationship with the assessee. He further submitted that on the documents there is no mention of the name of the assessee. The addition is primarily based on the statement of Ravindra Wadepalle and Prashant Nilawar only. It was further submitted that even these statements were retracted. It was further submitted that while affirming the order of assessment, the AO rejected
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Rucha Consultancy LLP the retraction. Even Ld. CIT(A) has not considered the fact that retraction was not by way of mere affidavit, but was also backed by medical report and police compliant evidencing the fact that the statements were recorded coercively and under duress. He therefore submitted that such statements could not have been made the basis for making the additions. It was further submitted that the said loose sheet of paper found from third party not having business relationship with the assessee and not even mentioning the name of the assessee could not be held as the basis to make the addition in the hands of the assessee.
He further submitted that even otherwise as per Sec. 69C of the Act it is mandatory on the Department to show that expenses were actually incurred by the assessee so as to bring the same to tax in the hands of the assessee. It was further submitted that this specific condition of the onus of the Department to prove the incurring of the expenditure has not been discharged by the AO and therefore the addition deserves to be deleted. It was also reiterated that Ld. CIT(A) himself in his order for subsequent year had accepted this fact and deleted the addition made in the hands of the assessee and therefore there was no reason to take a different view in the present case. It was also fairly submitted by ld. AR that the said
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Rucha Consultancy LLP order of the ld. CIT(A) for AY 2019-20 is also challenged in appeal before the Tribunal in ITA No. 2759/M/25. However, the reasoning contained therein is just and proper and therefore the addition made by the AO be deleted.
On the contrary, Ld. DR relied upon the order passed by the AO as well as ld. CIT(A) and submitted that the addition was rightly made. It was submitted that along with search on the assessee, there was also search on various other parties, whose statements were recorded and in whose possession various documents were found and seized. It was submitted that in the search proceedings, the documents discovered / unearthed therein, the statement of the parties and the consequential additions must be seen as a whole in its entirety. It was also submitted that in their statements recorded during search, Ravindra Wadepalle and Prashant Nilawar both accepted that the amounts mentioned in the said sheet pertains to cash expenses in respect of “Karav” Project. He therefore submitted that the addition made by the AO and confirmed by the Ld. CIT(A) be sustained.
We have heard the Counsels for both the parties, perused the material on record, judgments cited before us and also the orders passed by the revenue authorities.
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From the records, we noticed that the contradictory orders of ld. CIT(A) in different years in respect of the same sheet.
Having noticed so, and adverting to the sheet which forms the basis of additions what can be seen is that the said sheet nowhere mentions the name of the assessee or its partners, it is found from the residence of a person who has no business relationship with the assessee and based on such a sheet the allegation is in respect of unexplained expenditure and that too incurred in cash which is taxed u/s 69C of the Act.
1 We also noticed that the addition is hinged upon the statement of two other parties on the said sheet which is found from a totally different party i.e. Avish Atal. Not just that, even these statements were subsequently retracted. In the light of these facts, we are of the view that the addition made by the AO and confirmed by the Ld. CIT(A) deserves to be deleted firstly because the said sheet nowhere mentions the name of the assessee and it appears to be a loose working or sheet. It is important to point out that the same was not found from the possession of the assessee, but the third party and therefore the presumption cannot be against the assessee and it has to be against the person from whose possession the document was found i.e. Avish Atal.
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2 We also notice that there is no denial to the fact that the assessee had no business relationship with Avish Atal. In any case, the conditions of Sec. 69C mandates incurring of expenditure and the same is not satisfied in the present case. Therefore considering the totality of the facts and circumstances as discu d by us as above, we are of the view that the addition made by the AO and as confirmed by the Ld. CIT(A) is deleted. In the result, this ground of appeal raised by the assessee is allowed.
3 In the result, the appeal of the assessee stands allowed.
ITA No. 2721/Mum/2025 A.Y 2018-19
Now we take up the appeal filed by the Department bearing ITA No. 2721/M/25. In this appeal, the Department has raised the following 6 Grounds of Appeals.
i. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs.8,80,00,000/- u/s 69A of the Act without appreciating the fact that evidence/image under consideration is extract taken from the e-mail of Shri Javed Shaikh who is an employee of the assessee, the onus was upon the assessee to explain the content of the loose sheet found during the search action besides arising question of corroborative document or not?"
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Rucha Consultancy LLP ii. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 1,71,45,375/- u/s 69C of the Act without appreciating the fact that evidence/image under consideration is extract taken from the e-mail of Shri Javed Shaikh who is an employee of the assessee, the onus was upon the assessee to explain the content of the loose sheet found during the search action besides arising question of corroborative document or not?"
"Whether on the facts and in the circumstances of the case and in law, the Ld: CIT(A) erred in deleting the addition made by the AO of Rs. 95,83,100/- u/s 69C of the Act without appreciating the fact that Shri Shailendra Rathi is a close associate of Shri
Prashant Nilawar and explained detailed modus operandi about transaction mentioned in the evidence/image found from his i-
Phone in his statement on oath?"
iv. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs.49,91,500/- u/s 69A of the Act without appreciating the fact that Shri Shailendra Rathi is a close associate of Shri Prashant Nilawar and explained detailed modus operandi about transaction mentioned in the evidence/image found from his i-Phone in his statement on oath??"
υ. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 8,98,40,000/- u/s 69C of the Act without appreciating the fact that Shri Sandesh Suresh Chandra
Mundada, CA of Rucha Group has explained in his statement on oath that the transactions as cash payment mentioned in the loose sheet. The Ld. CIT(A) further did not appreciate that the assessee had given loan and advances to their employees on whose names land registry being done?"
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Rucha Consultancy LLP vi. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs.29,00,000/- u/s 69A of the Act without appreciating the fact that Shri Shailendra Rathi is a close associate of Shri Prashant Nilawar and explained detailed modus operandi about transaction mentioned in the evidence/image found from his i-Phone in his statement on oath?"
vii. "The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal, if need be."
Ground No. 1
1 This ground raised by the revenue related to challenging the order of ld. CIT(A) in deleting the addition made by the AO of Rs. 8,80,00,000/- u/s 69A of the Act without appreciating the fact that evidenced / image under consideration is extract taken from the e-mail of Shri Javed Shaikh who is an employee of the assessee, the onus was upon the assessee to explain the content of the loose sheet found during the search action besides arising question of corroborative document.
2 In this regard, from the records we noticed that during the course of search, an image was found on e-mail of javedshaikh2012@gmail.com apparently belonging to one Javed Shaikh. A copy of the said image is reproduced at Page 12 of the assessment order and is furnished before us at Page No. 164 of the Paper Book. The said image contains
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Rucha Consultancy LLP the title “M.K. Sir” and on top the words “in” & out” are mentioned. According to the AO, the total “in” represents receipts and “out” represents payment and based on that AO proceeded to make an addition of Rs. 8.80 Cr. in the hands of the assessee u/s 69A of the Act. Regarding which, a Show Cause Notice was given to the assessee. In response to the same, the assessee submitted that the document is not reliable and does not pertain to the assessee, as the same contains no mention of the assessee and there is no case to invoke the provisions of Sec. 69A of the Act. It was also submitted that the statement of Javed
Shaikh is not reliable since the same has already been retracted. However, the AO went ahead and made additions u/s 69A of the Act on the basis that the column “in”
represented cash receipt by the assessee and therefore added an amount of Rs. 8.80 Cr u/s 69A of the Act.
However, on appeal various submissions were made and in particular it was submitted that the document found from e-mail is nothing but dumb document or loose sheet of paper. It was submitted that the same cannot be relied on without any corroborative evidence. It was also submitted that the said image was found from the e-mail of Javed
Shaikh, but it was not clear as to who is the author, sender and what is the date of the said e-mail and therefore there was no source established by the AO in respect of the said image. It was also submitted that the 14
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AO had not brought on record any such evidence on record in support of alleged notings / transactions as being dealt by assessee. The assessee also submitted that the document does not belong to the Assessee and it nowhere mentions the name of the assessee but one “M.K. Sir” and therefore the addition cannot be made in the hands of the assessee u/s 69A of the Act.
3 We noticed from the record that the Ld. CIT(A) deleted the addition primarily on the ground that the AO has not brought on record any corroborative evidence linking of such alleged notings of cash transactions with the assessee. He further stated that apart from the absence of corroborative evidence and even in the statement of either of the parties Javed Shaikh or Ravindra Wadepalle there is no explanation whatsoever to explain the correct nature of the transactions. He further held that there is no evidence on record to state that the assessee carried out cash transactions as mentioned in the seized document. Therefore, considering the above facts the addition was deleted.
4 So far as this ground of appeal is concerned, the Ld. Counsel reiterated the same arguments as were raised by him before the revenue authorities and it was submitted that the Ld. CIT(A) had rightly deleted the addition
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Rucha Consultancy LLP considering the entire facts and the law prevalent in this regard. He then referred to the image found and pointed out that there is nothing that could link the said image or even the notings therein to the assessee except that it was found from e-mail of one Javed Shaikh. He further submitted that even Javed Shaikh in his statement which is at pg. 165A of the Paperbook clearly admitted that he is not aware of the contents of the said document and that details can be confirmed by Ravindra Wadepalle or others.
He thereafter took us to the statement of Ravindra
Wadepalle at Page 167 of the Paper Book where again
Ravindra Wadepalle stated that he is not aware of the contents of the said page. The Ld. AR further submitted that these facts have been duly considered by the CIT(A) while passing his order. He submitted that not only the document does not belong to the assessee but also there is no corroboration even by way of statement in respect of said document / image. He further submitted that in the case of the very same party, the image found and the consequential addition made on the basis of such image has been deleted by Hon’ble Tribunal in the case of Partner of the assessee Prashant Prakash Nilawar in ITA Nos.
5689/M/24 & 5073/M/24. He further submitted that even on bare perusal of the document it could be seen that there is nothing contained in the said document that could implicate the Assessee. He lastly submitted that even
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Rucha Consultancy LLP otherwise Sec. 69A is not at all applicable in the present case since in order to invoke section 69A of the Act it is essential that the assessee must be found to be the owner of any money, bullion, jewellery etc. which the Department has miserably failed in proving.
5 On the other hand, Ld. DR relied on the order of the AO. It was submitted that the document was found from Javed Shaikh, who is employee of the assessee and even Ld. CIT(A) had held that the said document is not a loose sheet but document containing elaborate record of transactions. It was further submitted that during the search various statements were recorded and documents were seized and therefore the document so seized and the statements and the findings of search must be read and seen in its entirety and not in a fragmented way. He submitted that the existence or otherwise of the transactions must be seen on the basis of this document. He submitted finally that the Ld. CIT(A) has erred in deleting the addition in the hands of the assessee.
6 We have heard the counsel for both the parties, perused the material placed on record, judgments cited before us and the orders passed by the revenue authorities. From the records we noticed that the document / image was seized from one Javed Shaikh found
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Rucha Consultancy LLP in his e-mail id javedshaikh2012@gmail.com. We also noticed that as per the AO, the said document contains details of receipts & payments [deciphered from ”in” and “out” mentioned therein] and which are linked to the assessee and based on which the amount of Rs. 8.80 Cr. is added in the hands of the assessee on the belief that the same is cash receipt by the assessee. However, on top of the said document the word “M.K. Sir” was mentioned. We further noted that there was no explanation by the AO as regards to how the document titled as “M.K. Sir” is linked to the assessee. There is also no evidence on record to explain or even justify the deduction that “in” mean cash receipt and “out” means cash received. The Ld. CIT(A) has precisely considered this fact and held that there is no corroborative evidence to show any receipt of cash by the assessee. Apart no such cheque payment was ever made by assessee of Rs. 41 Lacs or Rs. 42.17 Lacs as mentioned in documents. Therefore, the ld. CIT(A) deleted the addition. After having gone through in details, the facts of the present case and also the orders passed by the revenue authorities, we are of the view that the document has to be seen as a whole, there are both total “in” & “out” and therefore if at all any addition could be made it could have been difference of both the amounts of Rs. 8.80 Cr. and Rs.
7.64 Cr. However even to add this differential amount, there has to be some linkage of the assessee and the 18
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Rucha Consultancy LLP conditions mandated in Sec. 69A of the Act have to be satisfied. Admittedly these conditions have not been satisfied in the present case. This is because Firstly no such cash of Rs. 8.80 Cr. has been found. Secondly, the ownership has to be established beyond doubt based on a plain reading of section 69A. Even this condition was not satisfied and therefore there was no occasion to make the addition in the hands of the assessee u/s 69A of the Act.
7 Moreover, even the statement of Javed Shaikh mentioned that he is unable to explain the document and Ravindra Wadepalle can only explain the said image. Now, even in the statement of Ravindra Wadepalle, he had expressed his lack of knowledge / inability to explain the image. Therefore, in this way, the owner of the document himself was not aware as to the contents thereof. Therefore considering the same, we confirmed the order of the CIT(A).
We also noticed that the addition was made on the basis of images found from the mobile phone of Javed Shaikh had been deleted by the Co-ordinate Bench of the Tribunal in the case of Prashant Prakash Nilawar in ITA No. 5689 & 5073 /M/24 wherein it is held that, “5. We have heard both the parties and perused the material on record. Admittedly, from the perusal of the image found from the mobile of Shri Javed Shaikh as reproduced in the impugned assessment order, we note that there is nothing mentioned about the name of assessee.
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Further, it was found from person who was an employee of the assessee and had left the employment, as stated by the assessee in his statement. Furthermore, there is no corroborative material brought on record by the authorities below, to conclusively demonstrate that transactions are of the assessee for the purpose of making addition. ...
5.1. In the given set of facts and circumstances, we delete the addition of Rs.70 lakhs made in the hands of the assessee as unexplained money u/s.69A of the Act.
Further, we affirm the deletion of Rs.14 lakhs made by ld.
CIT(A) in respect of addition made by ld. Assessing Officer u/s.69C by holding it as unexplained expenditure.
Accordingly, ground taken by the Revenue is dismissed and that of the assessee is allowed”
8 Therefore, we confirm the order of ld. CIT(A) and dismissed this ground of the revenue’s appeal.
Ground No. 2
This ground raised by the revenue relates to challenging the order of ld. CIT(A) in deleting the addition made by the AO of Rs. 1,71,45,375/- u/s 69C of the Act without appreciating the fact that evidenced / image under consideration was extract taken from the e-mail of Javed Shaikh who was an employee of the assessee.
1 The fact relating to this ground are similar to Ground No. 1 raised by the Department wherein image was found from the e-mail id javedshaikh2012@gmail.com belonging to one Javed Shaikh. Based on this image, the AO made
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Rucha Consultancy LLP the addition u/s 69C of the Act in the hands of the assessee since as per the contents of image there are 2
columns “in” (amount of Rs. 1,07,83,100/-) & “out” and since the “out” (Rs. 1,71,35,475/-) and since out column amount is a greater, the AO had chosen to make an addition treating it as unexplained expenditure u/s 69C of the Act. This addition so made was deleted by the Ld.
CIT(A) for reasons similar to those as given by him in its order for the earlier ground. Against this, the revenue is in appeal before us. The said document is contained at Page
168 of the Paper Book. The parties have admitted that the facts are similar to that in the earlier ground of appeal adjudicated by us. Similar submissions have been raised by both the parties.
13.2
We have perused the document at Page 168 of the Paper Book and also relevant material on record and the submission of the parties and the orders of the lower authorities. Based on the reasons for the earlier Ground of Appeal in respect of image found from e-mail javedshaikh2012@gmail.com, we hereby confirm the order of Ld. CIT(A) of this issue and delete the addition made by the Ld. AO. We find that there is no corroborative evidence which can lead that transactions mentioned as per document is dealt by assessee, also AO has not made any inquiry on the same, also no evidence of cheque payment of Rs. 56,90,750/- made by assessee and recorded in the 21
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Rucha Consultancy LLP books of account brought on record to make the said addition in the hands of the assessee nor even in the statement of the party which could implicate or incriminate the assessee. Further, the onus was on the revenue to establish the incurrence of expenditure as mandated u/s 69C of the Act was not fulfilled and therefore the addition made by the Ld. AO was incorrect and the same was directed to be deleted for the reason stated above.
Accordingly, this ground also stands dismissed.
Ground No. 3
This ground raised by the revenue relates to challenging the order of ld. CIT(A) in deleting the addition made by the AO of Rs. 95,83,100/- u/s 69C of the Act without appreciating the fact that Shailendra Rathi is a close associate of Prashant Nilawar and explained detailed modus operandi about transaction mentioned in the evidenced / image found from his i-Phone in his statement on oath.
1 The facts relevant to this ground are that during the course of search proceedings at residence of Shailendra Rathi, an image was found on the cam scanner app of his i-Phone. The said image is reproduced at Page 23 of the assessment order and is also furnished before us at Page
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172 of the Paper Book. According to the AO, the said image shows transactions / receipts / payments to some “JP(B)
Sir” and as per which the Ld. AO has held that the “receipt” amount is Rs.95,83,100/- and the “paid” amount is Rs.1,41,35,475/-. According to the AO, the said cash receipt of Rs.95,83,100/- was taxable u/s 69A of the Act since it is more than payment. In response, the assessee submitted that the document nowhere mentions name of the assessee. However, the AO was of the view that it pertains to some “JP(B)Sir”. It was further submitted that Shailendra Rathi is an independent consultant and not an employee of the assessee. Therefore, any image pertaining to some third party found with the independent consultant cannot form the basis to make addition in the hands of the assessee. The Ld. AO however discarded this submission and proceeded to make addition u/s 69A of the Act.
However, in appeal, the ld. CIT(A) held that the addition made by the AO could not be sustained because the same is without corroborative evidence to show that the assessee received any money and that there was any such land transaction undertaken by the Assessee nor any cheque payment was received and recorded in books of assessee.
2 As regards the said ground, Ld. AR submitted that the Ld. CIT(A) had correctly held that no addition could be made in the hands of the assessee u/s 69A of the 23 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
Act. He relied on the said document which is at Page 172 of the Paper Book and submitted that there was no mention whatsoever of the assessee or Rucha Group in the same.
He also submitted that the AO had not disputed the fact that Shailendra Rathi was an independent consultant and any image or document found from his mobile phone cannot straightaway be connected to the assessee and the Assessee cannot be fastened with any tax liability based on this. Referring to the said image, ld. AR submitted that a similar addition made on the basis of image found from the mobile phone of Shailendra Rathi had been deleted in the case of Partner of the assessee Prashant Prakash
Nilawar in ITA No. 5689/M/24 and 5073/M/24. He further submitted that even on a bare perusal of the said document, it is evident that there is no mention whatsoever of the assessee and in fact there was no evidence that said image was in anyway related to the assessee. He further submitted that even as per the statement of Shailendra
Rathi which is furnished at Page 174 of the Paper Book, he himself admitted that he was unable to recall the name of the party and that the transactions was in respect of some land at Supa. However, it was submitted that the statement nowhere implicated the assessee and particularly nothing against the assessee could even be inferred. He further submitted that even invocation of Sec.
69A of the Act in the present case is bad-in-law in as much
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Rucha Consultancy LLP as the condition stipulated u/s 69A of the Act are not fulfilled. He further submitted that the AO has gone on incorrect footing to hold that the said alleged transactions, give rise to undisclosed taxable income in the hands of the assessee. He further submitted that the observation of the AO that the receipt is more than expenses as per the said sheet is also incorrect in as much as on bare perusal of the said sheet / image it is evident that the alleged payments as mentioned are higher (Rs. 1,41,35,475/-) and therefore even assuming that there was a receipt of Rs. 95,83,100/-, there was also payment of Rs. 1,41,35,475/- and as a result no taxable income arose after netting-off the two.
He, however, submitted that this argument is only to manifest as to how the addition has been made by the AO in a totally biased manner without even considering plain facts or documents in totality. He, therefore, submitted that the order of the Ld. CIT(A) be upheld and the addition made by the AO be deleted.
3 On the contrary, Ld. DR relied on the order of the AO. He further submitted that along with search on the assessee there was a search on various parties whose statements were recorded and in whose possession various documents were found and seized. He further submitted that, the search proceedings, the documents discovered / unearthed therein, the statement of the parties and the 25 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP consequential additions must be seen as a whole in his entirety and not in a fragmented manner. He also submitted that Shailendra Rathi in his statement did admit that the transactions mentioned in the said document pertain to some land transaction at Supa. Further Shailendra Rathi is also a consultant of the Assessee and therefore the AO has correctly deciphered the document and made the addition. He further submitted that the image clearly shows the transactions of receipt and payment and therefore the AO has correctly added the amount in the hands of the assessee u/s 69A of the Act. He further emphasized that Sec. 69Aof the Act is applied in the present case since it is based on an image showing receipt of cash. He, therefore, prayed that the order of Ld. CIT(A) be reversed.
4 We have heard the rival contentions of the parties, perused the material placed on record and the orders of the lower authorities. At the outset, we noticed that the similar addition made on the basis of the image found from mobile phone of Shailendra Rathi has been deleted by the Co-ordinate Bench of the Tribunal in the case of Prashant Prakash Nilawar in ITA Nos. 5689/M/24 & 5073/M/24. This issue has been considered in detail by this Tribunal in the case of Prashant Prakash
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Rucha Consultancy LLP
Nilawar (Supra) at Para 7 onwards which is reproduced hereunder:
“7. Before us, all the assertions have been reiterated.
Admittedly, it is a fact on record that the image/sheet is found from the mobile of Shri Shailendra Rathi during the course of search at his premises and not unearthed from the assessee. Assessee has denied having any knowledge of said image/sheet. The said image/sheet does not contain name of the assessee or Rucha Group. Shri Shailendra
Rathi is an independent consultant and a third party in the context of assessee. Presumption u/s.132(4A) r.w.s. 292C are rebuttable presumption and such evidence is admissible against the person in whose possession such evidence was found. Therefore, assessee cannot be saddled with the responsibility to explain the image/sheet found from the mobile of a third person, more particularly in the present situation where the owner of the said document i.e., Shri
Shailendra Rathi, himself could not clearly explain the contents therein as is evident from his statements recorded.
7.1. We have already dealt with the provisions of section 65B of the Indian Evidence Act in the above paragraphs, which squarely applies to the present piece of evidence relied upon by the ld.
Assessing
Officer.
On our observations and findings in this respect as stated above, the image/sheet found from the mobile of Shri Shailendra
Rathi being an electronic record, used as evidence for the purpose of making addition in the hands of the assessee is without obtaining necessary certification in this regard and therefore, addition by ld. Assessing Officer is not tenable.
Accordingly, considering the overall factual matrix and discussions made above, we do not find any infirmity in the findings arrived at by ld. CIT(A). Ground no.2 raised by the Revenue is thus, dismissed.”
5 This has also been followed in the Assessee’s own case for AY 2021-22 in ITA 4996 & 5706/Mum/2024 wherein it is held as follows:
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Rucha Consultancy LLP
“12.2. We heard the parties on this issue and perused the record. We noticed that the AO has made this addition on the basis of whatsapp chat and also on the basis of statement given by Shri Shailendra Rathi. The Ld CIT(A) has noticed that the presumption of the assessing officer that Shri Shailendra Rathi is the consultant (employee) of the assessee is not correct. He has stated that Shri
Shailendra Rathi is an independent consultant and not an employee. Hence the basis foundation on which the addition has been made by the AO fails here. Further, the Ld CIT(A) has stated that the whatsapp chat did not contain any reference to the assessee. The Ld CIT(A) has also stated that the Shri Shailendra Rathi also did not refer to the name of the assessee. Accordingly, he held that the whatsapp chat did not have any bearing in the hands of the assessee and hence no addition could be made. Thus, we notice that the AO has made the impugned addition on the basis of a third party statement without bringing any corroborative material to support of his view that the impugned amount of Rs.80 lakhs was received on behalf of the assessee. In support of the above decision, the Ld
CIT(A) has referred to following case laws:-
(a) PCIT (Central) vs. Dwarka Prasad Aggarwal (161
taxmann.com 813)(SC);
(b)
411)(Guj);
(c)
&
Ashok
Garg
(72
taxmann.com355)(Guj);
(d) NarenPremchandNagda vs. ITO (ITA No.3265 (Mum) of 2015.);
(e) CIT vs. Sant Lal (2020)(118 taxmann.com 432)(Delhi);
(f) JawaharbhaiAtmaramHathiwala vs. ITO (2010)(128 TTJ
36)(Ahd);
(g) ACIT vs. Prabhat Oil Mills (1995)(52 TTJ 533)(AhdTrib);
(h) ACIT vs. Anand Kumar Jain (2023)(147 taxmann.com
124)(Mum Trib);
(i) Pramod Pandey vs. ACIT (ITA No.4295 (Delhi) of 2012);
(j) AtulTantiavs.DCIT (ITA No.492/Kol/2021 dated 28-03-
2023);
12.3. From the facts discussed above, we notice that the Ld
CIT(A) has deleted this addition of Rs.80.00 lakhs for justifiable reasons.
In the earlier paragraphs, while adjudicating the issue No.1 urged by the assessee, we have held that the provisions of sec.69A could be invoked only if money is physically found in the hands of the assessee,
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Rucha Consultancy LLP which is not the case. The Ld A.R further submitted that the AO had also made the addition in the hands of Shri
Prashant Prakash Nilawar on the basis of whatsapp chat found in the phone of Shri Shailendra Rathi. The said addition has been deleted by the Tribunal, vide its order dated 12-02-2025 passed in the hands of Shri Prashant
Prakash Nilawar in ITA No.5689 & 5073/Mum/2024. The Tribunal held as under:-
“.....the assessee cannot be saddled with the responsibility to explain the image/sheet found from the mobile of a third person, more particularly in the present situation where the owner of the said document Shri Shailendra Rathi himself could not clearly explain the contents therein as is evident from his statement recorded.”
12.4. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the addition of Rs.80.00 lakhs.”
6 On the other hand, the Ld. DR has not converted the same and the ruling made in the case of Prashant Prakash Nilawar. Therefore, respectfully following the said judgements, on this very ground the addition must be deleted.
7 However, since extensive arguments have been raised by both the sides we consider it appropriate to adjudicate the issue independently as well. We note that, the Ld. CIT(A) has considered the entire issues in detail and thereafter deleted the addition on the ground that there is no corroborative evidence to make the said addition. He has further held that invocation of Sec. 69A in the present case is incorrect. We agree with the findings of the Ld. CIT(A). We further note that the seized document nowhere mention the name of the assessee or its parties, it 29 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP has been found from an independent consultant and relates to alleged transactions pertaining to third party whose name even is not available with the AO. Not just that, there is no evidence whatsoever which could lead to an inference that the transactions relate to assessee in any manner. Therefore, we hereby confirm the order of the Ld. CIT(A) and dismiss this ground of the department.
Ground No. 4
This ground raised by the revenue relates to challenging the order of CIT(A) in deleting the addition made by the AO of Rs. 49,91,500/- u/s 69A of the Act without appreciating the fact that Shailendra Rathi is a close associate of Prashant Nilawar and explained detailed modus operandi about transaction mentioned in the evidenced / image found from his i-Phone in his statement on oath.
1 The facts relating to this ground of appeal are that during the course of search at residence of Shailendra Rathiand image/evidence was found from the CamScanner app of his mobile. As per the AO, the said image contain a record of transactions of receipt and payment on account of (1) VS sir. According to him, the image reflected receipt of Rs.49,91,500/-. He accordingly issued Show Cause
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Rucha Consultancy LLP
Notice and sought a response from the assessee as to why the said amount should not be added under 69A of the act.
In response, the assessee submitted that the image is found from an third party and independent consultant,
Shailendra Rathi. The image nowhere contains the name of the assessee or its partners. The statements relied on by the Ld. AO have already been retracted. There is no occasion to invoke section 69A in the present case.
However, the AO went ahead and added the said amount under section 69A of the act in the hands of the assessee.
The Assessee challenged the said addition before the CIT
(A). The Ld. CIT (A) after considering various submissions made by the Assessee deleted the addition primarily on the ground that there is no corroborative evidence to hold that the assessee in fact received any such cash. He also considered various other submissions before coming to his conclusion. Ultimately, he deleted the addition made by the Ld. AO. The Department is an appeal before us against the said order of the Ld. CIT(A).
2 At the outset, the Ld. AR submitted that the Ld. CIT(A) correctly deleted the addition. Referring to the said image which is at page 175 of the book, he submitted that the said image in no way leads to a conclusion that the alleged transactions stated there in belong to, pertain to or even relate to the assessee. He submitted that the name of 31 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP the assessee is nowhere mentioned. He further submitted that the transaction pertains to some “VS Sir”, and which has been explained by Shri Shailendra Rathi, in his statement, which is at page 176 of the paperbook, wherein he clearly says that the transaction pertains to some Vikas Sharma and not the assessee. He further submitted that as per the statement, cash was received by Shailendra Rathi part of which was spent and for the rest, some gold bullion was purchased for the said Vikas Sharma. In the light of this, there is no basis to even remotely assume that the transaction in any way related to the assessee. Not just that,Shri Shailendra Rathi is an independent consultant and it is not even disputed by the Ld. AO. He also submitted that the transaction is between an independent consultant and a thirdparty known to him, in which the Assessee has no role to play. He further submitted that, section 69A could not be invoked in the present case as the conditions mandated there in are not fulfilled. He further, reiterated that a similar addition based on an image found from the mobile of Shri Shailendra Rathi has been deleted by this Tribunal in the case of the Partner of the assessee, Shri Prashant Prakash Nilawar in ITA No. 5689/M/24 and 5073/M/24 which is also followed in the case of the very same assessee for AY 2021-22 in ITA Nos. 4996/M/24 & 5706/M/24.He, therefore, submitted that the addition made by the AO is unsustainable and the Ld. CIT (A) has 32 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP rightly deleted the same. The said order must be confirmed and he prayed accordingly.
3 On the contrary, ld. DR submitted and reiterated the argument that the entire search proceedings, the statements of the person searched, the findings of the search and the documents/material seized during search must be seen in its entirety. He further submitted that Shailendra Rathi is also a consultant of the assessee and therefore the AO was right in drawing an inference against the assessee. He further submitted that the document clearly reveals receipt of cash and therefore addition is rightly made under section 69A of the act. He relied on the other submissions made by him in respect of the earlier ground and prayed that the order of the Ld. CIT(A) be reversed.
4 We have considered the rival contention of the parties, perused the material placed on record and the orders passed by the lower authorities. At the outset, we noticed that a similar addition made on the basis of the image found from the mobile phone of Shailendra Rathi has been deleted by this Tribunal in the case of Prashant Prakash Nilawar in ITA Nos. 5689/M/24 & 5073/M/24 which has been followed in the Assessee’s own case for AY 2021-22 in ITA 4996 / M / 24 & 5706 / M / 24. The 33 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP relevant extract of the judgements is reproduced above and therefore for the sake of avoiding repetition the relevant extract is not reproduced again. The Ld. DR has not controverted the said fact and the ruling made in the case of Prashant Prakash Nilawar and the Assessee’s own case. Therefore, on this very ground the addition must be deleted and we hold so. Further, even the Ld. CIT(A) has considered the entire facts & issue in detail and thereafter deleted the addition on the ground that there is no corroborative evidence to make the said addition. He has further held that invocation of Sec. 69A in the present case is incorrect. We agree with the findings of the Ld. CIT(A). We further note that the seized document nowhere mentions the name of the assessee or its partners, it has been found from independent consultant and relates to alleged transactions pertaining to third party whose name even is not available with the AO. Not just that, there is no evidence whatsoever which could lead to an inference that the transactions relate to the Assessee in any manner. Therefore, we hereby confirm the order of the Ld. CIT(A) and dismiss this ground of the department.
Ground No. 5
This ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the addition
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2759,2760 & 2486/Mum/2025
Rucha Consultancy LLP made by the AO of Rs. 8,98,40,000/- u/s 69C of the Act without appreciating the fact that Shri Sandesh Suresh
Chandra Mundada, CA of Rucha Group has explained in his statement on oath that the transactions as cash payment mentioned in the loose sheet. The Ld. CIT(A) further did not appreciate that the assessee had given loan and advances to their employees on whose names land registry being done.
1 From the records, we noticed that during the assessment proceedings, AO noted that in the course of the search proceedings at the premises of Rucha Group, one excel sheet named ‘Watad & Rajapur List 01.02.2018.xlsx’ was found at the Pune office in the email id of Shri Sandesh Suresh Chandra Mundada. This email was sent by Shri RavindraWadepalle on 24.08.2018 under the email subject “ratna& raja” from his mail id raviwadepalle6233@gmail.com along with one attached excel file to SandeshMundada. The AO has reproduced the snapshot of excel file in para 12 of the assessment order. On a query raised by AO, the assessee explained that during the course of search, the statements of the parties were recorded under coercion and the statements were retracted subsequently. The assessee further explained that in the seized document, the name of Prashant Nilawar or Rucha group was not mentioned and the transactions
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Rucha Consultancy LLP mentioned were between the buyers and sellers and Rucha group/Prashant Nilawar was no party to the transaction.
AO noted that in respect of the transactions mentioned as ‘self’ for land of total area 384.55 acres amount mentioned was Rs. 8,98,40,000/-. The AO concluded that cash of Rs.
8,98,40,000/- was paid for purchase of land at Ratnagiri at Kumbhavada, Barsu, Rajapur and Watad and accordingly issued show cause notice as to why the said cash alleged to have been paid by the Assessee should not be added u/s.
69C of the Act. In response to that, the assessee submitted that Shri RavindraWadepalle and Shri SandeshMundada were not employees of the assessee but independent professionals /consultants. The assessee further submitted that the excel sheet did not mention the name of either the assessee or its partners. The names/abbreviations such as ‘Ahire’, ‘Anil Singh’, ‘HNCP’, ‘G.K.’, ‘Ugale’ etc mentioned in the sheet were not known to the assessee. As regards the term ‘self’ mentioned in the seized excel sheet, the assessee submitted that it did not own any such lands nor any cheque payments/receipts were made by the assessee. The assessee further submitted that the said sheets were not signed by anyone and were not found in the possession of the assessee or Prashant Nilawar. Therefore, no addition can be made in the hands of the assessee. However, the explanation of the assessee was not accepted by the AO.
On perusal of the sheet, the AO noted that agreement of 36
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Rucha Consultancy LLP lands were executed in the names of various persons mentioned in 2nd column under the heading ‘Buyer’
whereas the name of the actual buyer was mentioned in the 3rd column under the heading ‘Ref’, which meant that actual buyer was the person mentioned in 3rd column but the lands were registered in the names of several persons mentioned in 2nd column. Further, in reply to Q.No.69,
Shri SandeshMundada had explained that ‘GK’ was Gopal
Kela and the amount paid by cheque was of Rs.
13,00,000/- by Gopal Kela. AO also noted that the family members of Shri Prashant Nilawar viz. Padma Nilawar,
Himanshu
Nilawar and other individuals viz.
Ravi
Bondhare, TukaramLandge etc. purchased the land. The AO also issued summons u/s. 131 to the Sub-