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Facts
A search was conducted, and during the search, documents, images, and chats were discovered. The AO made additions based on these findings, which were challenged before the CIT(A). The CIT(A) partly allowed the assessee's appeal, providing substantial relief. Both the assessee and the department filed appeals against this order.
Held
The Tribunal noted contradictory orders from the CIT(A) in different years regarding the same sheet. It was observed that the sheet did not mention the assessee's name and was found from a third party with whom the assessee had no business relationship. The statements relied upon were also retracted. Considering these facts, the Tribunal held that the addition made by the AO and confirmed by the CIT(A) deserved to be deleted. The grounds of appeal raised by the assessee were allowed.
Key Issues
Whether additions made based on loose sheets/documents found from third parties and retracted statements are sustainable without corroborative evidence.
Sections Cited
69C, 132, 143, 147, 69A
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Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWAL
आदेश / ORDER
2 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
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.
First of all we will take up appeal bearing for AY 2018-19, filed by the assessee and 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
3 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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
4 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
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.
5 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
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
6 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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
7 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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
8 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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.
9 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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.
11.1 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.
10 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 11.2 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 discusdd 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.
11.3 In the result, the appeal of the assessee stands allowed.
ITA No. 2721/Mum/2025 A.Y 2018-19
12. 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?"
11 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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?"
12 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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 12.1 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.
12.2 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
13 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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.
12.3 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.
12.4 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
15 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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 & 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
16 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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.
12.5 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.
12.6 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
17 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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.
12.7 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 & 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.
19 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
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”
12.8 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.
13.1 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
20 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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. ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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.
14.1 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
22 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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.
14.2 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 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
24 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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.
14.3 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.
14.4 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 & 5073/M/24. This issue has been considered in detail by this Tribunal in the case of Prashant Prakash
26 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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.”
14.5 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:
27 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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) KailashbenManharlalChokshi vs. CIT (328 ITR 411)(Guj); (c) DCIT vs. Narendra Garg & 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,
28 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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 & 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.”
14.6 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.
14.7 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.
15.1 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
30 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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).
15.2 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 and 5073/M/24 which is also followed in the case of the very same assessee for AY 2021-22 in & 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.
15.3 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.
15.4 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 & 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
34 ITA 2358,2359,2488,2487,2721, 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.
16.1 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
35 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 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-Registrars of respective areas for submission of registered deed. Copies of the sale deeds were received from the sub-registrar in many cases. AO noted that the persons mentioned in 2nd column had actually bought land and registered in their names and paid the amounts by cheque. The AO finally concluded that lands purchased under the names as ‘self’ was purchased by assessee in the name of various persons and for which cash amounting to Rs. 8,98,40,000/- was paid by relatives of the assessee. Since the assessee had not explained the source of payment of cash, AO made addition of Rs. 8,98,40,000/- u/s. 69C of the Act.
37 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 16.2 On the contrary, the ld. AR submitted that the Ld. CIT(A) has correctly considered the facts and thereafter deleted the addition made by the learned AO. He submitted that the addition made by the AO is grossly incorrect in as much as it is based on a presumption that cash has been paid for the acquisition of the properties, purchased by the relatives of the partners of the assessee or the associate/sister concerns of the Assessee. However, on a perusal of the documents relied on by the AO himself, it is evident that in all these cases, the amount paid is entirely in cheque and the column specifying the payment in cash is either blank or shows zero. The agreements are duly registered and even reflected in the books of the respective parties while at the same time, no such investment/asset is reflected in the books of the assessee meaning thereby, the purchase is not made by the assessee, but by the other parties. Now in the very same documents relied on by the AO, there are various other entries which give the bifurcation of amount paid in cheque and in cash. Therefore, even assuming for a moment that the Ld. AO was correct in relying upon the said document, even then the most important point is, there is no mention of any amount in the cash column, which could justify an inference that cash was actually paid by the assessee in respect of the purchase of the said properties. The fact that the amounts are paid in cheque is corroborated by the Ld.
38 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP AO himself in his order at page 52 and 53 of assessment order. He further submitted that if a document is to be relied on, then it should be relied on completely or be not relied on at all. In this regard, the Ld. Counsel for the assessee stressed on the well settled, legal principle that there cannot be any part acceptance and part rejection of a document relied on by the AO. According to him, in this case, the AO has agreed that the column specifying cash received reflects the cash payments made to the farmers after receiving from the buyers. He further submitted that assuming, without accepting the alleged state of affairs, for the sake of argument,even then so far as the entries mentioned as self in the said excel sheet (relied on by the AO and which is at page 182 of the paper book) are concerned, the amount reflected under the column cash is zero. Therefore, admittedly, there is no question that any cash was paid for the purpose of acquisition of the properties/lands. He further submitted that even as per the statements of Mr. Sandesh Mundada, Mr Ravindra Wadepalle and Mr. Prashant Nilawar there is nothing against the present assessee. He further submitted that in any case the email was sent by two independent persons and amounted to a communication between the two of them. He submitted that such a communication cannot be a basis to make addition in the hands of the assessee. He further submitted that in the present case the Ld. AO has 39 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP invoked section 69C of the act and made the addition as unexplained expenditure in cash. However, the primary onus as regards, the actual incurring of expenditure cast on the AO has not been discharged by him. He further submitted that the Ld. CIT(A) has correctly held that there is no corroborative evidence at all on the basis of which the addition could be made in the hands of the assessee. He, therefore, submitted the addition made by the Ld.AO be deleted.
16.3 On the other hand, the Ld. DR vehemently submitted that the AO has rightly made the addition in the hands of the assessee. The assessee has himself accepted that cash was received from buyers and paid to farmers at the time of recording of the statement during search. Therefore, admittedly, this is the practice adopted by the assessee. He further submitted and reiterated that the outcome of search proceedings, the statement of various parties taken during search, the findings of the search and the documents discovered during the search must be seen in their entirety and not in a fragmented way. He submitted that the both Sandesh Mundada and Ravi Wadepalle, though independent, are consultants of the Assessee as well and this is not even disputed by the Assessee. He further submitted that admittedly lands have been purchased by the sister concerns of the assessee and 40 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP for which there are registered agreements and a sample of which has also been reproduced by the Ld. AO in his order. He submitted that the Assessee has not led any evidence to show that he has not paid for the said properties in the face of the observation of the Ld. AO that the Assessee paid cash to its related parties to acquire those lands listed in the said sheet(s). Therefore, taking a complete and broad view of the matter, it is evident that the AO had correctly added the amount under section 69C of the Act and the CIT(A) has erred in deleting the sad addition.
16.4 We have considered the rival contention of the parties, perused the material placed on record and the orders passed by the lower authorities. From the records, we noticed that there is no purchase of any asset / land by the assessee and not even reflected in the seized document relied on by the Ld. AO. We also notice that the excel sheet is found from e-mail of one CA Sandesh Mundada sent to him by one Shri Ravindra Wadepalle on 24.08.2018. The assessee has stated that Shri Sandesh Mundada is an independent consultant / CA and Shri Ravindra Wadepalle is also an independent consultant and that the exchange of document between the said two transactions could not be the basisto make the addition in the hands of the assessee.
41 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 16.5 Now, the fact that Shri Sandesh Mundada is an independent consultant / CA and Shri Ravindra Wadepalle is also an independent consultant are not seriously disputed by the Ld. AO. Therefore, any exchange of document between the independent parties which does not even the name of the assessee or even has a reference to the assessee cannot be the basis to make addition in the hands of the assessee who is not party to the said communication. Now coming to the very document on the basis of which addition is made. On a bare perusal of the said document which are filed before us at Pages 182 to 191 of the Paper Book, it is evident that there are specific entries / columns differentiating between the cheque amount and the cash amount. Without going further into the details of the same, it should be straightaway seen that the items mentioned as “self” in the table at Page 182 of the Paper Book form the basis of the addition. In the said table, the amount of cash in respect of entries marked as “self” is showing negative figure which is arrived at after reducing cheque amount (column 8) from the total column (column 6), while in other cases it is showing positive figure. Now, the very same amount of Rs. 8.98 Cr. is shown to be in cheque. At the same time on the other documents atPages 184, 187, 188, 189 it is seen that the cash column is “blank” and only the cheque column mentions the “amount”. Further, the amount mentioned in cheque is 42 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP actually registered agreement value is corroborated by the Ld. AO himself in his order at Pages 52 – 53 of the said order. Therefore, the amount paid in cheque and the agreement value are tallied.
Now, coming to the addition made by the Ld. AO u/s 69C, it needs to be seen that the whole basis is the inference that the assessee paid cash and that amounted to expenditure in cash for the purchase of the said property / land by the sister concerns of the Assessee or its related parties. There is no further enquiry by the Ld. AO to validate this conclusion arrived at by him. Despite having registered agreements before him and despite having conducted an extensive search no evidence has been relied on to conclusively prove this theory of the AO that the Assessee paid cash to its related parties for acquisition of lands in their names. The Ld. CIT(A) has duly and rightly appreciated this fact that, there is no evidence whatsoever to substantiate this theory of paying cash. Not just that, as stated by the Ld. Counsel for the assessee that document cannot be partly accepted and partly rejected. Going by this settled principle, and perusing the document it could be seen that the column reflecting cash is blank in respect of the entries mentioning “self” which forms the basis of the addition. This leads to an inevitable conclusion that even as per this document,
43 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP there is no payment in cash. Apart from this, there is no other evidence with the AO to show that the land was actually purchased by the assessee as alleged and that any cash was paid for the same. Considering totality of the facts, we are of the opinion that the addition made by the Ld. AO has been rightly deleted by the Ld. CIT(A). We, therefore, confirm the order of the CIT(A) and dismiss this ground of the Department.
Ground No.6
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. 29,00,000/- u/s 69A of the Act without appreciating the fact that Shailendra Rathi is a close associate of Shri Prashant Nilawar and explained detailed modus operandi about transaction mentioned in the evidenced / image found from his i-Phone in his statement on oath. 18.1 In this regard, we have heard counsels of both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that it was conceded by both the parties that the addition made herein are based on the very same document which formed the basis of the addition of Rs. 50 lakhs in AY 2016-17 and 44. ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP Rs. 29 lakhs in AY 2017-18. We have already deleted the additions made for the above two years in our order for the earlier years, AY 2016-17 and which is followed in AY 2017-18. We have held as follows in ITA 2488/ Mum/2025 for AY 2016-17: “We have heard rival contentions and perused the material on record including the orders of the lower authorities. At the outset, we note that a similar issue has been decided by this Tribunal in the case of Prashant Nilawar, the Partner of the Assessee Firm, for AY 2021-22 wherein the addition made on the basis of image found from Shri Shailendra Rathi has been deleted from the hands of the assessee. Like-wise, the addition is also deleted in the case of the assessee for AY 2021-22 by this Tribunal. The Ld. DR has not controverted nor disputed the findings in the said order passed except stating that the Tribunal should consider the issues afresh and in more detail. However, in the present case, we have noted that the addition spring out of images found from independent consultant (which fact is undisputed) pertaining to third party i.e. some Mahindrekar Sir. In the absence of any corroborative evidence that the said document or image represented any of the transactions of the assessee. Further, it cannot be said that the assessee could be taxed on the basis of the said document though it is well settled that images found on phone or from whatsapp chat cannot be the basis to make addition in the hands of an assessee without any further corroborative evidence. This issue has been considered in detail by this Tribunal in the case of Prashant Prakash 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
45 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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.”
18.2 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: “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 46 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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) Kailashben Manharlal Chokshi vs. CIT (328 ITR 411)(Guj); (c) DCIT vs. Narendra Garg & 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) Jawaharbhai Atmaram Hathiwala 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, 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
47 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP dated 12-02-2025 passed in the hands of Shri Prashant Prakash Nilawar in & 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.” In view of the above and considering totality of the fact, we hold that no addition can be made in the hands of the assessee based on images found from i-Phone of Shri Shailendra Rathi who is independent consultant. Accordingly, this ground of revenue is dismissed. In the result, the appeal filed by the revenue is dismissed.”
18.3 Therefore, while relying upon the findings recorded above, we delete the addition made in this year as well which are based on the very same image / document from Shailendra Rathi. We would also like to point out that the same addition was also made in 2017–18 and making the same again herein this year clearly amounts to taxing the same amount twice, which is impermissible. We therefore uphold the order of the Ld. CIT(A) and dismiss the ground raised by the department.
18.4 In the result, all the grounds raised by the assessee in A.Y 2018-19 are stands dismissed.
ITA No. 2488/Mum/2025, AY 2016-17
48 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP The revenue has raised the following grounds: 1. "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 u/s 69A of the Act of Rs.6,39,17,095/- 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, Shri Javed Sheikh in his statement on oath stated that he had received it from the office of Rucha group to show it to Prashant Nilawar?"
2. "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 u/s 69A of the Act of Rs.50,00,000/- without appreciating the fact that Shri Shailendra Rathi has given his statement in the capacity of consultant to the Rucha Group. The Ld. CIT(A) further did not appreciate that Shri Shailendra Rathi in his statement explained detailed modus operandi about transaction mentioned in the evidence/image found from his i- Phone?"
3. "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 19. This ground raised by the revenue relates to challenging the order Ld. CIT(A) in deleting the additions made by the AO u/s 69A of the Act without appreciating that evidence / image under consideration is extract taken from the e-mail of Javed sheikh who is an employee of the assessee and in his statement he had admitted received it from the office of Rucha Group to show it to Prashant Nilawar.
49 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 19.1 The facts necessary to decide this ground are that during the course of search, certain images were extracted from the e-mail id of javedshaikh2012@gmail.com. According to the AO, Javed Shaikh was an employee of the assessee group and it was concluded by him that the images found on the E-mail pertains to certain land transactions in respect of which there was a total cash receipt of Rs. 7,52,02,795/- and cheque of Rs. 2,69,37,500/-.Out of the said cash receipts as alleged, cash receipts pertaining to AY 2016-17 of Rs. 6,39,17,095/- was added in the hands of the assessee u/s 69A of the Act. Assessee carried the matter in appeal before the CIT(A), who deleted the addition.
19.2 The DR, while relying upon the order passed by the AO submitted that the additions were made on the basis of images / sheet found from the E-mail of the employee of the Assessee. It was further submitted that the said sheet contained various notings as regards cash and cheque and is therefore definitely not loose sheet of paper. It was also argued that the search operation extensively carried out on the assessee group, its partners and employees may be seen as a whole and the findings therein including the seized documents may be seen in their entirety.
50 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 19.3 Whereas on the contrary Ld. AR while relying upon the order of Ld. CIT(A) submitted that on the bare perusal of the loose sheet reproduced on Page 3 of the assessment order, it is evident that there is no mention of the assessee or Rucha Group on the same. In fact, there is no mention of any person whatsoever in the said sheet found. He further submitted that the image was found from Javed Shaikh in his E-mail ID. However, the said Javed Shaikh is not involved in the day-to-day maintaining of books of accounts of financial transactions of the assessee. Therefore, according to Ld. AR there is no basis to allege that he could have any day to day or up to date details or knowledge of the business transactions of the Assessee. As per Ld. AR, the addition were based on presumptions as and the sheet which forms the basis of the addition was found from Javed Shaikh is nothing but loose sheet of paper. Even at the time of recording of statement, the person possessing the said document i.e. Javed Shaikh himself admitted that he is not aware of the contents of the said sheet. Therefore, his statement neither implicates the assessee nor can be relied upon to draw any adverse inference against the Assessee. It was also submitted that such a statement could not be the basis to make the additions. He further submitted that in the case of Partner of the assessee Prashant Nilawar, similar addition were made on the basis of images retrieved from the phone of 51 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP the same Javed Shaikh, has been deleted by the Hon’ble Tribunal in & 5073/M/24. It was further submitted that in any case in the absence of any link between assessee and the said sheet or notings therein, there was no case to make the addition in the hands of the assessee. He lastly submitted that even otherwise Sec. 69A invoked in the present case mandates existence of money, bullion, jewellery etc. and the assessee being the owner thereof. However, apart from this loose sheet of paper nothing has been unearthed or discovered so as to invoke Sec. 69A of the Act.
19.4 We have heard the counsels for both parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that although Ld. DR has argued that the images found from Javed Shaikh is not a loose sheet of papers and that the search operation and the findings therein must be seen in entirety of facts, however, at the same time, we cannot overlook the fact that the Ld. CIT(A) has deleted the same primarily on the basis that there is no name of the assessee found mentioned from the loose sheet as well as no evidence was brought on record by AO for any such land transactions dealt by the assessee and no evidence was found to link the assessee to the said alleged transactions as mentioned in the said document.
52 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP We have gone through the documents placed on record particularly bank statements and books of accounts. He also noticed that based on the images retrieved from same Javed Shaikh, the Tribunal has alredy deleted the addition in the case of ACIT v. Prashant Nilawar – ITA 5689 and 5073 / Mum / 2024 who is stated to be Partner of the assessee. In the said decision it has been 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. 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”
19.5 Therefore considering the above decision and the order of the Ld. CIT(A) and also considering the material placed on record, we found that Ld. CIT(A) had rightly deleted the additions. 19.6 No new facts or circumstances have been brought on record to controvert or rebut the findings recorded by Ld.
53 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP CIT(A) therefore we find no reasons to interfere into the same, thus we uphold the findings of Ld. CIT(A) and dismiss the ground raised by the department. Ground No. 2
20. This ground raised by the assessee relates to challeing the order of Ld. CIT(A) in deleting the addition made by AO u/s 69A of the Act of Rs. 50,00,000/- without appreciating the fact that Shri Shailendra Rathi has given his statement in the capacity of consultant to the Rucha Group.
20.1 Ld. DR while relying upon the order of AO submitted that Ld. CIT(A) did not appreciated the fact that Shailendra Rathi in his statement had explained detailed modus operandi about transaction mentioned in the evidence / image found from his i-Phone. It was further submitted that the search, the findings therein and the evidence has to be seen as a whole in its entirety. It was pointed out that Shailendra Rathi is related to the assessee and provided consultancy services therefore addition ought to have been sustained by Ld. CIT(A).
20.2 On the other hand Ld. AR while relying upon the order of Ld. CIT(A) submitted that the addition made were merely on the basis of loose sheet without any corroborative evidence of linking alleged transactions with 54 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP the assessee. It was further submitted that no such alleged land transactions of Supa Land was carried out by the assessee and even the name of the assessee was not found mentioned in the document. The assessee had not made any such cheque payment therefore Ld. CIT(A) had correctly deleted the addition after considering each and every fact in the matter. It was further submitted that Shailendra Rathi is an independent consultant and image found in the mobile phone of such independent consultant represented transactions with some third person and therefore cannot be the basis to make addition in the hands of the assessee without any corroborative evidence in this regard. He further submitted that similar addition based on the images found from whatsapp chat in the phone of Shri Shailendra Rathi has been deleted by the Hon’be Tribunal in the case of ACIT v. Prashant Prakash Nilawar, Partner of the assessee, was covered in the same search & 5073/M/ and which has been followed by this Hon’ble Tribunal in the Assessee’s own case for AY 2021-22 in ITA 4996 / M / 24 and ITA 5706 / M / 24. Therefore, the order of the Ld. CIT(A) for AY 2021-22 based on which the addition is deleted has been affirmed by the Hon’ble Tribunal. He relied on these orders to submit that the addition made by the Ld. AO has been rightly deleted by the Ld. CIT(A).
55 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 20.3 We have heard the counsels of both the parties, persued the material placed on record, judgements cited before us and also the orders passed by the revenue authorites. From the records we noticed that similar issue has already been decided by the Tribunal in the case of Prashant Nilawar, the Partner of the Assessee Firm, for AY 2021-22 wherein the addition made on the basis of image found from Shailendra Rathi has been deleted. The Ld. DR has not controverter nor disputed the findings in the said order passed.
20.4 In the present case, we have noticed that the additions were made out on the basis of images found from independent consultant . Therefore in the absence of any corroborative evidence that the said document or image represented any of the transactions of the assessee, no addition could have been made. Even otherwise the identical issue has already been considered in detail by this Tribunal in the case of Prashant Prakash Nilawar (Supra), which is reproduced herein below: “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
56 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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.” 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: “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 57 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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) KailashbenManharlalChokshi vs. CIT (328 ITR 411)(Guj); (c) DCIT vs. Narendra Garg & 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) Atul Tantiavs.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, 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 & 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 58 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 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.”
20.5 Therefore considering the totality of the facts as discussed by us above, we are of the view that Ld. CIT(A) had rightly deleted the addition. No new facts or circumstances have been brought on record to controvert or rebut the findings recorded by Ld. CIT(A) therefore we find no reasons to interfere into the same, thus we uphold the findings of Ld. CIT(A) and dismiss the ground raised by the department.
20.6 In the result, the appeal filed by the revenue stands dismissed.
ITA No. 2487/M/25 For AY 2017-18
As the facts and circumstances in these appeals are identical to for the A.Y 2016-17 (except variance in figures) and the decision rendered in above paragraph would apply mutatis mutandis for these appeals also. Accordingly, the grounds of appeal of the revenue are dismissed.
59 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 21.2 In the result, all the appeals filed by the revenue stands dismissed.
The revenue has raised the following grounds 1. 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 u/s 69A of the Act of Rs. 4,74,00,000/- without appreciating the fact that the sheet / incriminating material sent by Shri Dashrath Athavale employee of the Rucha Group to Shri Sandesh Mundada (employee of the Rucha Group) and further the Ld. CIT(A) has also erred in appreciating that Shri Sandesh Mundada explained that the seized document contains details of cash received from various offices of Rucha sub-group i.e. Mumbai, Pune, Panvel etc.?
2. 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 u/s 69C of the Act of Rs. 3,25,00,000/- without appreciating the fact that Shri Ravi Wadepalle has explained that Shri Avish Atal is a friend of Shri Prashant Nilawar and also Shri Avish Atal is admitted in his statement on oath that Shri Prashant Nilwar is my college friend and documents were kept in the reference of Shri Prashant Nilawar?
3. 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 u/s 69C of the Act of Rs. 24,50,000/- & Rs. 3,63,48,000/- without appreciating the fact that Shri Ravi Wadepalle (close associate of the Rucha Group) had explained in his statement on oath that the payments were made to Sameer employee of the Rucha Group that is itself revealed as corroborative evidence found during the course of search action?
22. As per the facts of the present case, during the course of search proceedings, a sheet was seized at the Pune Office of the assessee, Rucha Consultancy LLP. This was 60 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP confronted to Shri Sandesh Mundada, CA who acknowledged that the same was received in e-mail from one Shri Dashrath Athavale, an employee of the Rucha Group. The mail was received on 29.10.2018 at 5:34 pm as per the assessment order. Based on the said sheet and the statement of Shri Sandesh Mundada, the AO held that the said sheet reflected cash receipt and payment and therefore made addition of Rs. 4,74,00,000/- in the hands of the assessee treating same as “unexplained money” u/s 69A of the Act. Against said action of the AO, the assessee filed an appeal before the Ld. CIT(A), who allowed the appeal of the assessee primarily on the ground that there is no corroborative evidence to show that the assessee actually received the said cash. Further, he also stated that even as per the statement of Shri Sandesh Mundada (which remained unconfronted to the assessee), the transactions were not confirmed to be those undertaken by the assessee. Therefore, deleted the addition made by the AO. 22.1 Against this order of the Ld. CIT(A), the Revenue has filed the present appeal on the following ground:- Ground No. 1 22.2 This ground raised by the revenue relates to challing the order of Ld. CIT(A) in deleting the additions made by the AO u/s 69A of the Act of Rs. 47400000/-.
61 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 22.3 The Ld. DR while relying upon the order of AO submitted that Sandesh Mundada is Consultant to the assessee and is therefore connected to the assessee. He further submitted that the document relied on by the AO contain details of various dates and it was sent to Sandesh Mundada by an employee of the Assessee. He further submitted that Sandesh Mundada in his statement recorded during search even explained the transactions. Therefore, the AO was right in making the addition in the hands of the Assessee. He further reiterated before us that the search proceedings, the statements taken during search, the findings of the search and the various documents seized during the search should be seen as a whole in their entirety. He submitted that the order of the Ld. CIT(A) be reversed. 22.4 On the contrary Ld. AR while relying upon the order passed by the Ld. CIT(A), submitted that the additions were rightly deleted. It was submitted that first of all the document nowhere mentions name of the assessee and is found from the custody of the independent CA. He further submitted that though the mail is sent from one of the employees of the assessee Shri Dashrath Athavale, yet neither the entries mentioned in the said document nor alleged transactions therein pertain to the assessee. He further submitted even as per the statement of Sandesh Mundada from whose e-mail the said document was found.
62 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP It is stated that the said document pertains to transactions of purchase of land in Ratnagiri District by “some people” and not the assessee. He further stated that apart from the statement of Sandesh Mundada, there is no corroborative evidence against the assessee during the search or even post-search proceedings which could justify the addition. He also submitted that there is not a single transaction of the nature / amount mentioned in the said loose sheet of papers is dealt by assessee and therefore the same cannot be used to make addition in the hands of the assessee. He also reiterated the submission made before the Ld. CIT(A) that in any case the said sheet is a loose sheet of paper which cannot be the basis to make the addition. He also submitted that in any case Sec. 69A could not be invoked in the present case since the conditionsmandated therein are not fulfilled. 22.5 We have heard the counsels for both the parties, perused the material placed on record, judgemnets cited before us and also the orders passed by the revenue authorities. From the records, we noticed that the Department has challenged the action of the Ld. CIT(A) in deleting the addition of Rs. 4.74 Cr. made by the AO based on the documents found at the Pune Office of the assessee. The said document is reproduced at Page 3 of the assessment order. As per the AO based on the said document and the statement of one Sandesh Mundada, it
63 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP was held that the assessee received cash of Rs. 4.74 Cr. during the year. In this regard, we first of all note that Sandesh Mundada is an independent consultant and this fact is not seriously contested by the Ld. CIT(DR) and is not even disputed by the lower authorities. Apart from that, we also note that the document does not mention the name of the assessee or its partners, etc. Further, even as per the statement of Sandesh Mundada, the document pertains to some transactions for purchase of land by “some people”. Further, we note that the relevant extract of the statement is also reproduced at Page 8 of the assessment order. We, notice that even in the statement there is nothing against the assessee which could be specifically linked or connected to the Assessee. Therefore Ld. CIT(A) had rightly deleted the addition. 22.6 No new facts or circumstances have been brought on record to controvert or rebut the findings recorded by Ld. CIT(A) therefore we find no reasons to interfere into the same, thus we uphold the findings of Ld. CIT(A) and dismiss the ground raised by the department Ground No.2
23. This ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the additions made by the AO u/s 69C of the Act of R. 3,25,00,000/-. 23.1 Ld. DR while relying upon the on order of the AO submitted that in the earlier order, the addition made on 64. ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP the basis of very same document has been confirmed by the Ld. CIT(A) and therefore there is no question that a contrary view should be allowed to be taken by Ld. CIT(A) on this ground. He further submitted that the document was found from friend of the assessee and the same was also explained by another Consultant of the assessee Shri Ravindra Wadepalle and therefore the addition must be sustained. He again reiterated that the search proceedings, the findings therein, the documents seized and the statements of various parties must be considered in entirety. He submitted that the said sheet contains details of expenditure / payment in cash and which is stated to be for Karav Project and therefore the AO rightly invoked Sec. 69C of the Act and requested to restore the order of A.O. 23.2 On the other hand Ld. AR while relying upon the order of Ld. CIT(A) submitted that as a matter of fact Shri Avish Atal had no business relation with the assessee. He further submitted that even the sheet nowhere mentions assessee or any of its partners. He also submitted that the statement given by Shri Avish Atal nowhere implicates the assessee and therefore could not be the basis to make addition in the hands of the assessee. He further submitted that Shri Avish Atal is an unrelated third party and anything found in his possession cannot be even presumed to be belonging to the assessee. He further submitted that in any case the assessee was not granted the cross-
65 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP examination of Shri Avish Atal and in the absence of such cross-examination, the addition made bythe Ld. AO could not be sustained and in fact even the entire order passed falls flat on the ground. He also submitted that the addition made by the Ld. AO is u/s 69C of the Act and for the same to be triggered, particularly, onus is on the Revenue to show that the said expenses is actually incurred. Now, in the facts of the present case, there is no such evidence except the said loose sheet of paper. He also submitted that even assuming for a moment without accepting that the said sheet of paper contains details of expenses, even then there cannot be a presumption that the assessee incurred the same or made the payments mentioned therein. He also relied on submissions made by him for AY 2018-19 where part of the addition was made by the Ld. AO relying on the very same document.He also further submitted that the Ld. CIT(A) correctly deleted the addition.
23.4 We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records, we noticed that the Department has challenged the action of the Ld. CIT(A) in deleting the addition of Rs. 3,25,00,000/-. We note that while adjudicating Ground No. 1 of the assessee’s appeal
66 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP for AY 2018-19 which challenged the addition on the basis of some document, we have analysed the said document, submission of both the parties and also the relevant material on record. In the said order we have held as follows: 10. 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. 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.
11. 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.
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 discusdd by us as above, we are of the view that the addition made by the AO and as confirmed by the Ld.
67 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
CIT(A) is deleted. In the result, this ground of appeal raised by the assessee is allowed. 23.5 Based on our findings in the order for AY 2018-19 in ITA No. 2358/Mum/25. we uphold that the order of the CIT(A) in deleting the addition cannot be found fault. We also note that the Ld. CIT(A) has considered the entire material on record and therefore deleted the addition. Therefore considering the above facts we uphold the order Ld. CIT(A) and dismissed this ground raised by the revenue. Ground No. 3
24. This Ground raised by the revenue relates to challenging the order Ld. CIT(A) in deleting the addition made by the AO u/s 69C of the Act of Rs. 24,50,000/- & Rs. 3,63,48,000/-. 24.1 Ld. DR while relying upon the order of AO submitted that the addition is made on the basis of document seized from Shri Ravindra Wadepalle who is Consultant for the assessee and in whose possession the said document were found. He further submitted that the Ld. CIT(A) wrongly deleted the additions on the ground of absence of any corroborative evidence when the documents were already found and seized and which were explained to be giving details of cash expenditure of the assessee in the statement given by Shri Ravindra Wadepalle. He further submitted that the search proceedings, the statement recorded during search, the findings and the documents
68 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP unearthed during the search should be seen in entirety. He further submitted that the addition u/s 69C is correctly made especially in respect of Rs. 24,50,000/-which is said to be paid in cash to one Sameer who is working for the assessee. As far as the other addition is concerned, the Ld. DR submitted that the entire contents of the document at Page 44 of Annexure A2 were explained item-wise by Shri Ravindra Wadepalle to be cash expenditure incurred by the assessee in respect of various lands / projects. He further submitted that Shri Ravindra Wadepalle is working as Consultant for the assessee in respect of land aggregation etc. Therefore, requested to sustain the addition made by the A.O. 24.2 On the other hand Ld. AR while relying upon the order of Ld. CIT(A) submitted that it is not clear whether any further enquiry was conducted by the AO in respect of the said person Sameer to whom allegedly cash payment of Rs.24,50,000/- was made. He seriously questioned the validity of the said sheet of paper being considered as evidence for the purpose of making addition. He also stated that the conditions for invoking section 69C of the Act are not fulfilled in the present case. He also submitted that assuming that any such payment was made, then even as per the statement relied on by the AO based on which he made the addition, the amount was paid to an employee of 69 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP the Assessee and therefore there is no question of any income arising on the same. 24.3 So far as the other addition of Rs. 3,63,48,000/- is concerned based on Page 44 of Annexure A2 which is reproduced at Page 24 of the assessment order and at Pages 31 to 33 of the assessment order. He submitted that the said sheet of paper is nothing but a random loose sheet with certain notings and names, there is no specific date. He also submitted that addition springs out of such sheet found from third person, one Shri Ravindra Wadepalle residence. Therefore, the assessee neither possessed the said documents nor any presumption could be made against the Assessee in respect of the same. He further submitted that the AO has simply relied on the statement of Shri RavindraWadepalle for making the said addition. The said statement has already been retracted. He further submitted that even otherwise there is no evidence whatsoever with the AO to link the assessee to the alleged transactions and also to allege any cash expenditure made by the assessee. In the light of this argument, he further submitted that Sec. 69C not at all be invoked in the present case since the conditionsmandated therein are not at all fulfilled in the present case and in particular the conditions pertaining to actual incurring of expenditure. He, therefore, submitted that both the additions made by the Ld. AO be deleted.
70 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 24.4 We have heard the counsels for both the parties, perused the material on record and perused the orders of lower authorities. There are two additions in this Ground of Appeal which are adjudicated separately as follows: - i) Addition of Rs. 24,50,000/- in respect of Page 41 of Annexure A2 24.5 This addition has been made by Ld. AO based on the paper reproduced at Page 24 of the assessment order. We noticed that the said document nowhere mentions name of the assessee but mentions name of Sameer and thereafter, some notings and figures. This document is found in possession of a third party Shri Ravindra Wadepalle and the sole basis of theaddition is his statement given by him in respect of notings mentioned in the said papers. This statement has been primarily made as the basis by the AO in coming to the conclusion that the amount of Rs. 24,50,000/- (which is total of all the figures which are not struck-off) is cash payment by the assessee to one Sameer and which is taxed u/s 69C of the Act. The CIT(A) has deleted this addition on the basis that there is no corroborative evidence to justify such addition. We have perused the assessment order and it is surprising to note that as per the AO himself the said Sameer to whom allegedly cash has been paid by the assessee is employee of the assessee himself (Refer Para 9.6 on Page 29 of the assessment order). If that is the case then it is not 71. ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP understood as to how any addition can at all be made in the hands of the assesseewhen amount is paid by the employer to his employee, even if it is cash. The same does not amount to be expenditure per se and certainly not income not even deemed. That apart, admittedly the document is found from third person and so the presumption is against that person and not the assessee. However, even if the presumption is invoked against the assessee, it is not clear as to how an addition can be made in the hands of the assessee based on the statement of third person in whose possession such loose papers is found containing some random notings. We, therefore, uphold the order of Ld. CIT(A). ii) Addition of Rs. 3,63,48,000/- in respect of Page 44 of Annexure A2 found from Shri RavindraWadepalle 24.6 So far as this addition is concerned, we note that the said document is reproduced at Pages 24 and 31 of the assessment order. On a bare perusal of the said document, it is revealed that the name of the assessee is nowhere mentioned nor that of any of its Partners. This document was found in the possession of the third party, independent consultant, one Shri Ravindra Wadepalle. In his statement recorded during search, Shri Ravindra Wadepalle explained each and every entry mentioning payment made to various persons. The Ld. AO based on this document and the statement of Shri Ravindra
72 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP Wadepalle added the said amount u/s 69C of the Act. According to the AO, the addition had to be made since the explanation given by Shri Ravindra Wadepalle was in respect of the transaction related to land at Karav and in respect of such land at Karav already an addition of Rs. 3.25 Cr. was made in the very same AY i.e. AY 2019-20. Therefore, addition had to be necessarily made even in respect of this paper. He also stated that the assessee has not explained the transactions and therefore addition must necessarily be made. We however note that Firstly the document is not found in possession of the assessee but of third party and therefore no presumption can be drawn against the assessee. As a natural corollary the assessee cannot be asked to prove something he is not found to be owner of. In other words, the assessee cannot be asked to prove the negative. Therefore, this reasoning given by AO must be completely rejected. We note that the Ld. CIT(A) has considered the material in detail and thereafter come to a conclusion that the addition has been made by the Ld. AO without any corroborative evidence whatsoever so as to sustain disallowance / addition u/s 69C of the Act. 24.7 We completely agree with the reasoning of the CIT(A). We must also point-out that we have already deleted the addition of Rs.3.25 cr and confirmed the order of the CIT(A) in respect of the addition of Rs. 3.25 Cr. in respect of Karav Land Project challenged in Ground 2 of Department’s
73 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP appeal. Therefore, the same reasoning has to be followed and even on this ground the addition deserves to be deleted. However going further, we also note that the document if seen independently, the same, nowhere can lead to a conclusion that Sec. 69C of the Act can at all be invoked based on such document. We would also like to point-out that in the explanation of the said document at Page 33 of the assessment order, it has been explained by Shri Ravindra Wadepalle that Rs. 1.5 Lacs is paid in cash to Shri Prashant Nilawar. It is noted that in documents found nowhere name of Shri Prashant Nilawar is mentioned. It could well be concluded that the addition made by the Ld. AO is without any corroborative evidence or material and simply on the basis of certain presumption and the statement of Shri Ravindra Wadepalle which itself is retracted. Considering the totality of the facts, we have no hesitation in upholding the order of the CIT(A) on this ground. Accordingly, this Ground of Appeal raised by the Department is dismissed. 24.8 As a result, the appeal of the Department is dismissed. A.Y 2020
21. The revenue has raised the following grounds of appeal:
1. 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 u/s 69A of the Act of Rs. 12,20,00,000/- without appreciating the fact that the evidence found from Google Drive
74 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP of Ashish Chhangani who is an employee of the assessee show that cash cash of Rs. 12.20 Crores was received for Chakan Project and same is not recorded in the books of account of the assessee. Further the Ld. CIT(A) has also erred in appreciating that corroborative evidences found during the search action on GNP Group wherein it is found that payment were made by the assessee to the GNP Group for the Chakan Project? 2. 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 u/s 69A of the Act of Rs. 1,05,00,000/- without appreciating the fact that during the course of search proceedings the document found and seized from e-mail of Shri Ashish Chhangani (employee of the assessee) that is also corroborate with the whatsapp chat of Shri ShailendraRathi and Shri NileshToshniwal to the extent that assessee had some transaction in respect of Kulaswamini Works? 25. The facts pertaining to this Ground of Appeal are that during the course of search images / evidence were found from the Google Drive account linked to Shri Ashish Chhangani. According to the AO, the said Shri Ashish Chhangani is an employee of the assessee and therefore was in a position to explain the contents of the said document. The said image is reproduced at Page 3 of the assessment order. The AO further mentioned that during the course of search in the case of GNP Group, further evidence of certain transactions of Chakan Project was found from the premises of M/s GNP Consultancy Pvt. Ltd. The copies of the seized document are reproduced at Pages 4 & 5 of the assessment order. The AO was of the opinion that the said sheet recovered from GNP Group stated that Shri Prashant Nilawar / Rucha Group has paid cash of Rs. 8.71 Cr. Based on this, it was observed by the AO that as 75. ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
per the image found from Shri Ashish Chhangani, a sum of Rs. 12.20 Cr. was received by assessee and out of which a sum of Rs. 8.71 Cr. was paid by the assessee. As a result, for the alleged receipt of Rs.12.20 Cr the Ld. AO made an addition u/s 69A of the Act in the hands of the Assessee. Aggrieved by the said order assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) deleted the addition holding that in the absence of corroborative evidence, the addition made by the AO u/s 69A is not sustainable. Against this order by the Ld. CIT(A), the Department has filed an appeal on the following Grounds: - Ground No. 1 25.1 This ground raised by the revenue relates to challenging the order Ld. CIT(A) in deleting the addition made by AO u/s 69A of the Act of Rs. 12,20,00,000/-. 25.2 In this regard Ld. DR while relying upon the order of AO submitted that the search proceedings conducted on various persons, findings therein, the document seized and the statement recorded must be seen as a whole in entirety and not in a fragmented way. He submitted that though Shri Ashish Chhangani did not know the details of the seized document, he did mention that the figures contained in the said document are in Lacs and that is admitted in statements of Shailendra Rathi and Prashant Nilawar. He further submitted that the Partner of the assessee and their Consultant Shri Shailendra Rathi both admitted that
76 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP this was a land proposal at Chakan. Once this is so admitted, there is no question of denying that the cash was not received. He further submitted that the reliance on the documents seized from the GNP Group’s search is only to the extent of confirming the fact that the land transaction at Chakan actually took place and for which the Partner of the Assesee, Shri Prashant Nilawar paid cash and which is also recorded in the documents seized from GNP Group. He submitted that, therefore, there was no error on the part of the AO in concluding that cash was received by the assessee and also further adding the same u/s 69A of the Act. 25.3 On the other hand Ld. AR while relying upon the order of Ld. CIT(A) submitted that the addition was made without corroborative evidence. He submitted that, the assessee should have been provided an opportunity to explain the contents of the document seized from GNP Group and also opportunity to cross-examine Shri Shailesh Patil according to whom the said sheet containing details of cash transactions. The linking of the said separate documents found from third party by the Ld. AO is seriously questionable. Referring to the said document which is reproduced at Page 7 of the assessment order, he submitted that the said document nowhere contains name of the assessee or its Partners. However, it was found from Shri Ashish Chhanganiwhen confronted, he expressed his
77 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP inability to explain the contents of the said document and stated that Shri Ravindra Wadepalle may be aware of the same. However, it is rightly noted by the Ld. CIT(A), that no statement of Shri Ravindra Wadepalle on the said document was ever taken. Therefore, in the absence of any explanation of the document from Shri Ashish Chhanganior Shri Ravindra Wadepalle, the document could not be relied on. He further pointed out that even as per the statement of Shri Prashant Nilawar, he has stated that the said sheet probably mentions some land proposal of Chakan, MIDC, Pune and for which he had to facilitate acquisition. However, even this statement is retracted. He further submitted that the Ld. AO is blowing hot & cold at the same time in as much as he held that Rs. 12.20 Cr. received by the assessee, but then relied on the document seized from the third party wherein he stated that the assessee paid Rs. 8.71 Cr. for the said land. He submitted that, it was also explained to the Ld. AO that there is an apparent conflict in the statement of Shailendra Rathi relied on by the AO and the state of affairs as assumed by him. He submitted that if the statement is seen to be correct then land was to be purchased by some company in Bangalore, but if the documents seized from GNP are seen, then it appears that as per the AO, the Assessee has acquired the land and paid for it. It therefore shows apparent confusion in the mind of the AO. He further
78 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP submitted that there is absolute no evidence before the AO to show that the transactions actually took place especially when the person from whose possession the document was found had no idea about the same and as per the statement of Partner, it was a mere proposal. 25.4 He further submitted that even the statement given by Shri Shailendra Rathi does not implicate the assessee but in fact confirms the fact that it was mere proposal.While all these statements have been retracted even if reliance is placed on these, then nothing could be found against the assessee. He, therefore, submitted that there was no occasion to make this addition. He further submitted that this very Tribunal has in the case of the very same assessee for AY 2021-22, deleted the addition based on images found from the sameperson Shri Ashish Chhanganiin & 5706/M/24. He submitted relying on the same that the addition made by the Ld. AO be deleted. He further submitted that in any case there is no corroborative evidence to even remotely conclude that the assessee received cash of Rs. 12.20 Cr. It must be noted that no such cash was seized or found during the course of search. He further submitted that no evidences were found in the nature of any MOU / Agreement, allotment letter or anything else which could even remotely prove the existence / receipt of the alleged cash of Rs. 12.20 Cr. for the said land at Chakan.
79 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 25.6 He further submitted that the very same issue based on the very same document was examined by the AO during the assessment proceedings for the AY 2021-22 and no adverse inference was drawn against the assessee. Further, even in AY 2022-23 the very same issue was examined and no addition was made by the Ld. AO. He further submitted that on a bare look on the said document, it could be seen that there is no mention of the assessee or any of its Partner and this is relevant because the AO has linked this to the assessee simply based on the seizure from Shri Ashish Chhangani, who is an employee of the Assessee, though he himself admitted that he is not aware of the contents of the said document. He further submitted that the assessee was not granted entire statement of the said Shri Shailendra Patil in whose possession the document pertaining to GNP Group was found.Even on this ground the addition cannot be sustained since the same springs out of a theory of the AO without anything more. He further submitted that the addition made by the Ld. AO be deleted since the provisions of Sec. 69A are not applicable in the present case and therefore the Ld. CIT(A) rightly deleted the addition. 25.7 We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue
80 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP authorities. From the records we noticed that in the case of same assessee for the earlier year, the addition was made on the basis of images / document found from Shri Ashish Chhangani and which was deleted by the this Tribunal in & 5706/M/24. The relevant extract of the same is as follows: “6.6. We heard the parties and perused the record. We noticed earlier that the AO has made these additions on the basis of an image found from the smart phone of Shri Ashish Chhangani, who was working as personal assistant of Shri Prashant Nilawar. The said image is extracted below for the sake of convenience: ... A perusal of the above said image would show that it does not contain the name of the assessee. The entries in “figures” are noted as “Kg”, which was deciphered as “Lakhs of rupees”. Shri Ashish Chhangani has stated that this image was received from some other employees, meaning thereby, he has neither created this document nor it was a document sent by the partners. Hence, the explanation given by him with regard to the contents of the document, in our view, cannot be relied upon unless it is corroborated with some other credible evidence. In the absence of such corroboration, this image has only to be considered as “dumb document”. 6.7. We noticed that Shri Ashish Chhangani has retracted his statement. Though the AO has rejected the said retraction, in our view, the statement given by him alone cannot be the basis for making the addition. We notice that the assessee has totally disowned the document as well as the statement given by him. The Ld A.R submitted that the presumption u/s 292C/ 132(4A) of the Act may be invoked in the hands of Shri Ashish Chhangani only
81 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP and not against the assessee. However, we noticed that the above said image was not prepared by Shri Ashish Chhangani and it was received by him from some other person. Hence the presumption u/s 292C/132(4A) cannot be invoked in his hands of also and in that case, the AO was not right in law in presuming that the alleged transactions mentioned in the image belong to the assessee. We find merit in the said contentions. 6.8. The Ld A.R submitted that the AO had made similar addition in the hands of Shri Prashant Nilawar on the basis of image found in his whatsapp. The co-ordinate bench, vide its order dated 12-02-2025 passed in and 5073/Mum/2024 passed in the hands of Shri Prashant Nilawar, has deleted the addition holding that the AO did not bring any other corroborative material to support the entries found in whatsapp message. Identical view has been taken by Visakhapatnam bench of ITAT in the case of Shri ManchukondaShyam (ITA 87 (Viz) 2020 dated 23- 09-2020). The Surat bench of ITAT has also expressed identical view in the case of ACIT vs.ShankarNebhumalUttamchandani (ITA 321/Surat/2022). 6.9. It is well settled proposition of law that abstract documents, which could not be corroborated with any other credible evidences, should be considered as dumb documents only. In that case, the AO could not have made addition on the basis of dumb documents. In the case of Common Cause vs. UOI (2017) (77 taxmann.com 245) (SC), it was held that the entries in loose papers/sheets are irrelevant and inadmissible as evidence. It was further held that "such loose papers" are not books of account and the entries therein are not sufficient to charge a person with liability.
82 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
6.10. We noticed earlier that the AO has made the addition of Rs.2.10 crores u/s 69A of the Act as unexplained money. We shall examine as to the provisions of sec.69A can be invoked in the facts of the present case. Section 69A of the Act reads as under:- “69A. Unexplained money, etc. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.” A careful perusal of the above said provision would show that this provision could be invoked only if the assessee is “found to be the owner of any money, bullion, jewellery or other valuable article.” Thus, for invoking the provisions of sec.69A of the Act, it is required to be shown that the above said assets were physically available and further, the assessee was found to be the owner thereof. In the instant case, no physical money was found either with the assessee or with any other person and hence the question of the assessee, being owner of the same does not arise. Hence, the provisions of sec.69A are not applicable to the facts of the present case. 6.11. If the assessee was not found with any money, then the provisions of sec.69A cannot be invoked. In that case, then what could be taxed under the Act is the profit element involved in those transactions, if the said document is clearly
83 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP established as belonging to the assessee. However, we have noticed that the impugned whatsapp image is a dumb document and the AO could not have made addition on the basis of that image without bringing any credible material on record. Accordingly, we hold that the Ld CIT(A) was not justified in confirming the addition of Rs.2.10 crores made by the AO on the basis of image found in the phone of an employee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition of Rs.2.10 crores.” 25.8 We further noticed that the Ld. CIT(A) has come to a finding of fact that no corroborative evidence could be led by the Department to show that the assessee actually received the alleged cash. Therefore, he rightly deleted the addition. 25.9 No new facts or circumstances have been brought on record to controvert or rebut the findings recorded by Ld. CIT(A) therefore we find no reasons to interfere into the same, thus we uphold the findings of Ld. CIT(A) and dismiss the ground raised by the department. Ground No. 2
26. This ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the addition made by the AO u/s 69A of the Act of Rs. 1,05,00,000/-. 26.1 In this regard Ld. DR while relying upon the order of AO submitted that the addition has been rightly made by the Ld. AO. He further submitted that the image found from Shri Ashish Chhangani pertains to “Kulaswamini Works” and the image found from Shri Shailendra Rathi’s
84 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP whatsapp chat mentions “Kulaswa” which is obviously “Kulaswamini”. Since in the said image shared on whatsapp, the amount of Rs. 1,05,00,000/- is reflected, it is obvious that the same is cash receipt by the assessee. He also submitted that it is undisputed fact that Shri Shailendra Rathi is also connected to the assessee and admittedly he is assessee’s consultant. He again reiterated that the search proceedings, the findings therein, the document seized and the statement recorded must necessarily seen in entirety and not in a fragmented way to come to the right conclusion. He prayed that the addition made by the Ld. AO be sustained and the order of the Ld. CIT(A) may be reversed. 26.2 On the other hand Ld. AR while relying upon the order of Ld. CIT(A) submitted that the AO had completely mixed-up two separate documents simply to make addition in the hands of the assessee. He submitted that first image is of hand-written note” found from Shri Ashish Chhangani which mentions “Kulswamini” whereas the other sheet is a sheet / image found from whatsapp chat of two totally different parties Shri Shailendra Rathi & Shri Nilesh Toshniwal. 26.3 He submitted that on a bare perusal of the image found from Shri Ashish Chhangani that can be seen that there is no mention of such figure of Rs. 1,05,00,000/- and instead there is a mention of various numbers and the date
85 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP mentioned on the said document is 20.02.2020. At the same time on a bare perusal of the said image of the sheet found from whatsapp chat of Shri Shailendra Rathi, it could be seen that there is mention of figure of Rs. 1,05,00,000/- that states “From JS at Pune against Kulaswa” and the date is 11.03.2020. However, there is no connection established by the Ld. AO between the said two documents. He further submitted that the statement of all the parties have been retracted and therefore there can be no reliance on the same. He, however, submitted that in the present case it is not shown as to how these two documents in anyway manifest the same transactions. He further submitted that there is no such receipt of cash of Rs. 1,05,00,000/-. 26.4 He further submitted that any chat between the private parties cannot be the basis to make addition in the hands of the assessee. In this regard, he relied upon the judgment of this Tribunal passed in the case of Shri Prashant Nilawar, the Partner of the assessee in & 5073/M/24. He also relied on the judgment of this Tribunal in the assessee’s own case was AY 2021-22 & 5706/M/24 to canvass the proposition that the addition cannot be made on the basis of whatsapp chat. He further submitted that in fact in the case of the very same assessee, the addition made based on image found from Shri Ashish Chhangani has been 86 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP deleted by this Tribunal in AY 2021-22.He further submitted that the provision of Sec. 69A are not at all applicable in the present case as none of theconditions mentioned therein are fulfilled in the present case. He therefore prayed for confirming the order of CIT(A). 26.5 We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that no direct correlation has been established by the AO between image found from Shri Ashish Chhangani and the whatsapp chat between Shri Shailendra Rathi & Shri Nilesh Toshniwal. We further note that the addition made by the AO primarily rest on the whatsapp chat between Shri Shailendra Rathi and Shri Nilesh Toshniwal who are two independent parties. We also note that the no further enquiry seems to have been conducted by the AO as to what exactly is “Kulaswamini Works” referred to in the assessment order and how the whatsapp chat of Shri Shailendra Rathi could be linked to the assessee in respect of Kulaswamini Works as alleged by the AO. In that view of the matter, no addition can be made at all. We hold accordingly. 26.6 We also noticed that in the case of the Partner of the assessee the proposition that no addition can be made simply on the basis of whatsapp image have been elaborately discussed. It has been held as follows in the 87 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP judgment in the case of Shri Prashant Nilawar & 5073/M/24: “8.4. It is trite law that addition cannot be made only on the basis of WhatsApp conversation between third parties without adducing corroborative evidence in support of such allegation. We also take note of detailed observations made by ld. CIT(A) after considering various judicial precedents to state that documents/material found from the premises of third party or a statement of third party cannot be relied upon to make additions in the hands of the assessee, unless such material or statement is corroborated by independent evidence, linking such material to the assessee. To our mind, such material can be a good reason for starting an investigation, however, ld. Assessing Officer has simply relied on such material found from the premises of a third party and relied on third party statement to make addition without corroborating it with any kind of independent evidence and enquiry. ... 9. ...it is important to note that the impugned additions in the present appeals are based on electronic images/sheets found and seized from the mobile of the concerned persons/third parties in the course of their respective searches. In the present era of technology and digital communication, additions cannot be simply based on extracts of WhatsApp conversation between third parties without placing on record corroborative evidence to support the allegations. We make a useful reference to certain provisions contained in the Information Technology Act, 2000, wherein the term “electronic record” is defined in Section 2(t). According to this section, it means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche. In this Act, section 11 deals with attribution of electronic records for the purpose of attributing the same to the originator of such electronic records. Section 11 is reproduced as under: 11. Attribution of electronic records.— An electronic record shall be attributed to the originator—
88 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
(a) if it was sent by the originator himself; (b) by a person who had the authority to act on behalf of the originator in respect of that electronic record; or (c) by an information system programmed by or on behalf of the originator to operate automatically. 9.1. In the present case, before us, additions have been made on the basis of electronic images / sheets found and seized from the mobiles of concerned persons/third parties which are electronic records. Section 132(4A) r.w.s. 292C contains presumption as to evidence which is admissible against the person in whose possession or control such evidence is found and such a presumption is a rebuttable presumption. Section 11 of the Information Technology Act also attributes the electronic record to its originator when it was sent by the originator himself or any person authorised on his behalf or by a system programmed by or on behalf of the originator. Keeping the provisions of the Act and of Information Technology Act discussed herein, there cannot be any presumption or attribution on the assessee in respect of the electronic records (electronic images / sheets found and seized from the mobiles) based on which additions have been made in the hands of the assessee. 9.2. In the given context, Hon'ble Supreme Court in the case of Ambalal Sarabhai Enterprise vs. KS Infraspace LLP Ltd, Civil Appeal No. 9346 of 2019 dealt on the aspect of WhatsApp chats and observed as under: "The WhatsApp messages, which are virtual verbal communications, are matters of evidence with regard to their meaning and its contents to be proved during trial by evidence-in-chief and cross-examination. The emails and WhatsApp messages will have to be read and understood cumulatively to decipher whether there was a concluded contract or not". 9.3. Hon'ble Apex Court highlighted the importance of proving the contents of WhatsApp chat during trial by evidence and also cross examination. In the present case, ld. A.O neither provided any evidence in support of the WhatsApp chats relied upon by him nor did he provide the opportunity to cross examine the third parties even after a specific request was made by the assessee.
89 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
9.4. Also, Coordinate Bench of ITAT, Chennai in the case of Mr. A. Johnkumar vs. DCIT in dealt with issues relating to additions made based on WhatsApp messages and observed as under: “First of all, WhatsApp messages cannot be considered as a conclusive evidence to draw an adverse inference against the assessee, unless those WhatsApp messages are supported by corroborative evidences to indicate that those messages and contents represents undisclosed income of the assessee. ......The AO neither bring on record from which person, the assessee has received cash and to whom the assessee has distributed cash. The AO neither made out a case of source for cash and destiny of cash distributed by the assessee. In other words, the AO has abruptly concluded in his own understanding of the messages, the assessee has received so much of cash and distributed so much of cash and which is nothing but cash for votes and hence, concluded that the assessee has incurred a sum of Rs.17 Crs. for distribution of cash to voters and which is nothing but unexplained expenditure taxable u/s.69C of the Act..........Further, the AO had relied upon the WhatsApp messages sent from assessee's mobile phone to Mr. Somu and had given his own meaning to those messages. In the process, the AO neither tested the admissibility of WhatsApp messages as evidence u/s.69B of Evidence Act, nor examined Mr. Somu the recipient of messages sent by the assessee. The AO without carrying out necessary enquiries and also examining those persons, simply concluded that those messages are meant for distribution of cash and the assessee has spent such a huge amount for election expenses. In our considered view, the findings recorded by the AO is purely on suspicion and surmises manner without any evidences to justify his findings.” 26.7 We further note that in the assessee’s own case for AY 2021-22 in & 5706/M/24, the addition made on the basis of image found from Shri
90 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP Ashish Chhangani & Shri Shailendra Rathi whatsapp chat / mobile has been deleted. (In the context of additions based on whatsapp chat of Shailendra Rathi) “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) KailashbenManharlalChokshi vs. CIT (328 ITR 411)(Guj); (c) DCIT vs. Narendra Garg & Ashok Garg (72 taxmann.com 355)(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);
91 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
(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) AtulTantia vs.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, 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 & 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.” 26.8 Like-wise, the addition made based on image found from Shri Ashish Chhangani has been deleted by the Tribunal in the Assessee’s own case for Ay 2021-22 which is also reproduced above. We further note that no evidence whatsoever has been brought on record by the Ld. AO to establish that the cash was actually received by the assessee. It must be seen that even as per the theory of preponderance of probability, there is equal probability
92 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP that “Rs. 1,05,00,000/- received from JS at Pune”could well be assumed to be pertaining to the independent consultant, ShailendraRathi, though the statements are retracted. The theory can equally also apply to it. However, based on the observation above, the addition cannot be made in the hands of the assessee without any further evidence. Therefore Ld. CIT(A) rightly deleted the addition, thus we uphold the same and dismissed the ground raised by the revenue. 26.9 In the result, the appeal of the Department is dismissed.
& A.Y 2022-23 27. These are the cross-appeals filed by the assessee as well as the department challenging order of Ld. CIT(A) who in turn finally alleged appeal of the assessee filed against the assessment order dt. 20.03.2024. Since there are common issues involved and the appeal pertains to same year, same are being disposed-off together.
The assessee has raised various Grounds of Appeals. At the direction of this bench, the Assessee has filed revised and concised Grounds of Appeals. The same are taken up for consideration. 28.1 In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) [“the Ld. CIT(A)”] erred in confirming the action of the Learned
93 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP Assessing Officer [“the Ld. AO / the AO”] in rejecting the retraction of statements of Shri Prashant Nilawar, Partner of Rucha Consultancy LLP and other deponents recorded u/s 132(4) of the Income Tax Act, 1961 [“the Act” for short] without appreciating that the statements were recorded under duress and coercion which is evidenced not just by the affidavit’s but also by the Police Complaints and medical certificates furnished bythe respective deponents before the Investing Officers as well as the Ld. AO and the Ld. CIT(A). 28.2 This ground raised by the assessee relates to challenging the order of CIT(A) in rejecting various retractions filed by the Partner of the assessee firm and various other persons whose statements were recorded at the time of search. Since this Ground of Appeal is relevant on various other Grounds of Appeals raised in the appeal filed by both the assessee as well as Department, the same is adjudicated along with other Grounds of Appeals and after considering the facts in each of the other grounds. Ground No. 2 raised by the Assessee is as under: “Addition of Rs. 2,50,00,000 u/s 69A of the Act on the basis of whatsapp chat allegedly found from the mobile phone of third party Mr. ShailendraRathi: 28.3 In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 2,50,00,000/- u/s 69A of the Act on the basis of whatsapp
94 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP chat allegedly found from the mobile phone of third party, independent consultant, Mr. Shailendra Rathi without appreciating the fact that, (i) the whatsapp chat is between two independent third parties namely Shri Shailendra Rathi and Shri Santosh Shelar; (ii) Whatsapp chat is neither books nor documents based on which an inference could have been drawn as regards undisclosed income; (iii) It did not have any reference to the appellant / did not relate to the appellant in any manner whatsoever; (iv) Shri Shailendra Rathi has in fact retracted his statement taken u/s 132(4) and no reliance could have been placed on the same for making the impugned addition; and; (v) In any case, the provisions of section 69A are totally inapplicable in the present case, therefore the addition is totally contrary to the extant law and unsustainable.” 28.4 The facts pertaining to this Ground of Appeal are that during the course of search proceedings, at the premises of ShailendraRathi at Flat No. 203, B-3, Kumar Parisar, Near Mahesh Vidyalaya, New D.P. Road, Kothrud, Pune – 411 038, certain screenshots of whatsapp chats between Shri ShailendraRathi & one Shri Santosh Shelar were found. Shri Shailendra Rathi was confronted with these whatsapp chats at the time of search and was asked to explain the same. The screenshot of the whatsapp chats are reproduced at Page 3 of the assessment order. The same are also furnished before us at Pages 110 – 111 of the 95. ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP Paper Book. In his statement during search, Shri Shailendra Rathi stated that the chats pertain to certain land transactions at Talegaon. The said land was to be purchased by Shri Santosh Shelar and for which certain payments were allegedly made in cheque and in cash. As per his statement, the cash component was Rs.
90. Lacs and Rs. 1.60 Cr. was in cheque to be paid to the farmers directly. However, this statement stood retracted later on. The however, rejected the submissions of the assessee and added the entire amount of Rs. 2.5 Cr. as unexplained money in cash in the hands of the assesseeu/s 69A of the Act. 28.5 Against this addition, the assessee preferred an appeal before the Ld. CIT(A). The assessee in addition to the arguments raised before the Ld. AO further submitted that the said whatsapp chat is between two independent parties and nowhere mentions the assessee. It was further submitted that the statement of Shri ShailendraRathi is retracted and cannot be relied on. It was also submitted that the assessee never sold the land at Talegaon nor has transacted with Shri Santosh Shelar. Therefore, even otherwise whatsapp chats have no bearing on the assessee. In addition, various other arguments were raised. However, the Ld. CIT(A) in his order confirmed the said addition upholding the rejection of retraction and further upholding the addition on the ground that on the strength of the said
96 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP whatsapp chats and the statement of Shri Shailendra Rathi& Shri Prashant Nilawar, the addition must be confirmed. He also held that the appellant has not submitted any evidence of the amount being returned to Shri Santosh Shelar nor any affidavit from Shri Santosh Shelar that the amount was received back by him. Consequently, the addition was confirmed by the Ld. CIT(A).Against this, the assessee has filed an appeal on the ground reproduced above. 28.6 At the outset, the Ld. Counsel for the assessee submitted that the Ld. CIT(A) has completely misdirected himself in upholding the addition on the ground that the cash was not returned back by the assessee nor any evidence in this regard of returning of cash has been furnished before him. He submitted, however, the Ld. CIT(A) completely lost sight of the fact that the plea of the assessee right from the beginning of assessment is that no such cash was ever received by the assessee. He also submitted that, based on the seizure made during search, there is no evidence to show that any such cash was found or seized and that too from the assessee. He, therefore, submitted that on this plea itself the confirmation of the addition by the Ld. CIT(A) deserves to be reversed. He further submitted that it is an admitted fact that Shri ShailendraRathi is an independent consultant and the whatsapp chat is between such independent consultant
97 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP and third party. Therefore, the same cannot directly implicate the assessee. 28.7 He further submitted that, in any case whatsapp chats cannot be the basis to make addition and which has been so held in a number of judgments of our Tribunal as well as the Hon’ble Supreme Court Prashant Nilawar v/s ACIT - ITA 5689/M/24 & 5703/M/24, ACIT v/s Shankar Nebhumal Uttamchandani – ITA 321 / Surat / 2022, et. al.]. He, therefore, submitted that it was imperative on the part of the revenue to further corroborate these chats in order to arrive at a conclusion of adding the amount in the hands of the assessee. He further submitted that even the reliance on the statement of any of the parties is flawed because all the parties have retracted their statements and establishes the fact that the same were recorded under duress and coercion. He further submitted that there cannot be part acceptance and part rejection of the statement in much as if the statement is treated as “correct” to the extent of receipt of cash for a land transaction, then the statement must also be held to be “correct” to the extent that the said transactions stood “cancelled” in this regard reliance is being placed upon the decision in the case of Glass Lines Equipments Co. Ltd. v/s. CIT – (2002) 253 ITR 454 (Guj)]. Therefore, in that view of the matter, it was submitted there is no scope for making an addition in the hands of the assessee.
98 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 28.8 Ld. AR also submitted that if the AO does not believe the assessee, then the right course of action could have been made further investigation / enquiry by AO on the said whatsapp chats by confronting the parties with whom the transactions were allegedly made. Not doing this has resulted in making addition on the basis of mere presumption and surmises and which is impermissible. Without prejudice to above, he submitted that there are no such transactions of Rs. 1.6 Cr. in the books of the assessee. Further when the statement of Shailendra Rathiis seen, it clearly mentions cheque of Rs. 1.6 Cr. and in that view of the matter, there is no scope for making any addition in respect of the said transactions at all, since the transaction never took place. 28.9 Further reliance was placed upon the order passed by this Tribunal in the case of assessee in ITA 4996/M/24 & 5706/M/24 and the order of the Tribunal in the case of Shri Prashant Nilawar, the Partner of the assessee in ITA 5689/M/24 & 5703/M/24 to submit that on similar facts based on images found from the mobile phone of Shri Shailendra Rathi, the addition made by the Ld. AO was deleted by this Tribunal. Not just that even it was held that no addition at all be made based on whatsapp chats. He further submitted that the entire addition be deleted in toto.
99 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
On the other hand, Ld. DR vehemently urged that the AO as well as the Ld. CIT(A) were absolutely right in making and confirming the addition u/s 69A of the Act. He submitted that the search proceedings, the evidence therein, the statement of the parties and the documents seized should be seen in their entirety. He submitted that Shri Shailendra Rathi has admitted in his statement that there was a receipt of amount as mentioned in the whatsapp chats. He further submitted that admittedly Shri Shailendra Rathi is a consultant of the assessee and therefore AO was right in connecting him to the Assessee and thereafter making the addition in the hands of the assessee based on the statement of Shailendra Rathi. He further submitted that the Ld. CIT(A) has rightly held that the addition made by the Ld. AO must be sustained. He fully and completely relied on the order of the Ld. CIT(A) in order to bolster his argument. 30.1 We have heard the Counsel for both the parties, considered the documents placed on record and also the rival contentions of the parties, and also perused the order of the lower authorities. 30.2 From the records, we noticed that the Tribunal relying on the order in the case of Shri Prashant Nilawar in ITA 5689/M/24 & 5703/M/24 (supra), the Partner of the assessee, has held after considering various judgments, that no addition can be made on the basis of whatsapp
100 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP chats. We also note that in the case of very same parties Shri Shailendra Rathi, the addition made on the basis of images found from the whatsappchats from his mobile phone were deleted by this Tribunal in the case of Partner of the assessee Shri Prashant Prakash Nilawar and it was followed in the case of the very same assessee for the earlier year i.e. AY 2021-22. The relevant extract is reproduced as below: Shri Prashant Nilawar in ITA 5689/M/24 & 5703/M/24 (supra) “8.4. It is trite law that addition cannot be made only on the basis of WhatsApp conversation between third parties without adducing corroborative evidence in support of such allegation. We also take note of detailed observations made by ld. CIT(A) after considering various judicial precedents to state that documents/material found from the premises of third party or a statement of third party cannot be relied upon to make additions in the hands of the assessee, unless such material or statement is corroborated by independent evidence, linking such material to the assessee. To our mind, such material can be a good reason for starting an investigation, however, ld. Assessing Officer has simply relied on such material found from the premises of a third party and relied on third party statement to make addition without corroborating it with any kind of independent evidence and enquiry. ... 9. ...it is important to note that the impugned additions in the present appeals are based on electronic images/sheets found and seized from the mobile of the concerned persons/third parties in the course of their respective searches. In the present era of technology and digital communication, additions cannot be simply based on extracts of WhatsApp conversation between third parties without placing on record corroborative evidence to support
101 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP the allegations. We make a useful reference to certain provisions contained in the Information Technology Act, 2000, wherein the term “electronic record” is defined in Section 2(t). According to this section, it means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche. In this Act, section 11 deals with attribution of electronic records for the purpose of attributing the same to the originator of such electronic records. Section 11 is reproduced as under: 11. Attribution of electronic records.— An electronic record shall be attributed to the originator— (a) if it was sent by the originator himself; (b) by a person who had the authority to act on behalf of the originator in respect of that electronic record; or (c) by an information system programmed by or on behalf of the originator to operate automatically. 9.1. In the present case, before us, additions have been made on the basis of electronic images / sheets found and seized from the mobiles of concerned persons/third parties which are electronic records. Section 132(4A) r.w.s. 292C contains presumption as to evidence which is admissible against the person in whose possession or control such evidence is found and such a presumption is a rebuttable presumption. Section 11 of the Information Technology Act also attributes the electronic record to its originator when it was sent by the originator himself or any person authorised on his behalf or by a system programmed by or on behalf of the originator. Keeping the provisions of the Act and of Information Technology Act discussed herein, there cannot be any presumption or attribution on the assessee in respect of the electronic records (electronic images / sheets found and seized from the mobiles) based on which additions have been made in the hands of the assessee. 9.2. In the given context, Hon'ble Supreme Court in the case of Ambalal Sarabhai Enterprise vs. KS Infraspace LLP Ltd, Civil Appeal No. 9346 of 2019 dealt on the aspect of WhatsApp chats and observed as under: "The WhatsApp messages, which are virtual verbal communications, are matters of evidence with regard to their
102 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP meaning and its contents to be proved during trial by evidence-in-chief and cross-examination. The emails and WhatsApp messages will have to be read and understood cumulatively to decipher whether there was a concluded contract or not". 9.3. Hon'ble Apex Court highlighted the importance of proving the contents of WhatsApp chat during trial by evidence and also cross examination. In the present case, ld. A.O neither provided any evidence in support of the WhatsApp chats relied upon by him nor did he provide the opportunity to cross examine the third parties even after a specific request was made by the assessee. 9.4. Also, Coordinate Bench of ITAT, Chennai in the case of Mr. A. Johnkumar vs. DCIT in dealt with issues relating to additions made based on WhatsApp messages and observed as under: “First of all, WhatsApp messages cannot be considered as a conclusive evidence to draw an adverse inference against the assessee, unless those WhatsApp messages are supported by corroborative evidences to indicate that those messages and contents represents undisclosed income of the assessee. ......The AO neither bring on record from which person, the assessee has received cash and to whom the assessee has distributed cash. The AO neither made out a case of source for cash and destiny of cash distributed by the assessee. In other words, the AO has abruptly concluded in his own understanding of the messages, the assessee has received so much of cash and distributed so much of cash and which is nothing but cash for votes and hence, concluded that the assessee has incurred a sum of Rs.17 Crs. for distribution of cash to voters and which is nothing but unexplained expenditure taxable u/s.69C of the Act..........Further, the AO had relied upon the WhatsApp messages sent from assessee's mobile phone to Mr. Somu and had given his own meaning to those messages. In the process, the AO neither tested the admissibility of WhatsApp messages as evidence u/s.69B of Evidence Act, nor examined Mr. Somu the recipient of messages sent by the assessee. The AO without carrying out necessary enquiries and also examining those persons, simply concluded that those messages are meant
103 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP for distribution of cash and the assessee has spent such a huge amount for election expenses. In our considered view, the findings recorded by the AO is purely on suspicion and surmises manner without any evidences to justify his findings.” 30.3 We further note that in the assessee’s own case for AY 2021-22 in & 5706/M/24, the addition made on the basis of image found from Shri Ashish Chhangani & Shri Shailendra Rathi whatsapp chat / mobile has been deleted (In the context of additions based on whatsapp chat of ShailendraRathi) “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 ShailendraRathi. The Ld. CIT(A) has noticed that the presumption of the assessing officer that Shri ShailendraRathi is the consultant (employee) of the assessee is not correct. He has stated that Shri ShailendraRathi 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 ShailendraRathi 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) KailashbenManharlalChokshi vs. CIT (328 ITR 411) (Guj);
104 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP
(c) DCIT vs. Narendra Garg & Ashok Garg (72 taxmann.com 355) (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) AtulTantia vs. 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, 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 ShailendraRathi. 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 & 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 ShailendraRathi 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.” 30.4 The Ld. DR has not controverted the observations in the said judgment except stating that each year must be considered separately and each evidence must be adjudicated individually. We, however note that, the facts
105 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP are similar and therefore the judgments in the earlier years would have to be followed. However, even considering the said whatsapp chats individually, we notice that the same are between Shri Shailendra Rathi and Shri Santosh Shelar other independent party. The chats nowhere mention the name of the assessee. There is also no evidence that any such cash is found or seized. Further, the statement of the parties have already been retracted and this retraction has also been taken note of by this Tribunal in the case of assessee as well its Partner (cited supra). 30.5 We noticed that post receipt of the said screenshots of the whatsapp chats and the statement recorded during search, the Ld. AO has not made any further enquiries as to the actual nature of transactions. This is of significance because the Ld. CIT(A) has confirmed the addition on the ground that the assessee could not adduce evidence that the amounts stated in the chats was returned back. However, in our understanding, the first step was to enquire whether the transactions actually took place, whether the cash was actually paid and whether the same pertains to the assessee. The lack of evidence to show the return of the alleged cash stood at the weak foundation of presumption that cash was actually received first by the assessee whereas the assessee has right from the beginning submitted that no such cash was ever received and this fact of receipt of cash remains under serious
106 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP dispute considering the facts in the present case. We, therefore, hold that the Ld. CIT(A) erred in confirming the addition u/s 69A of the Act based on our findings above.We also note that the condition mentioned in Sec. 69A of the Act are not fulfilled in the present case and therefore also the addition made by the Ld. AO deserves to be deleted. We hold accordingly. In the result, this Ground of Appeal of the assessee is allowed. Ground No. 3 raised by the Assessee is as under: “Addition of Rs. 1,00,00,000 u/s 69A of the Act on the basis of whatsapp chat allegedly found from the mobile phone of third party Mr. ShailendraRathi: 21.1 This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in sustaining addition u/s 69A of the Act on the basis of whatsapp chat allegedly found from the mobile phone of third party independent consultant, Mr. Shailendra Rathi without appreciating the fact that: (i) the whatsapp chat is between two independent third parties namely Shri Shailendra Rathi and Shri Pramod Pagaria; (ii) Whatsapp chat is neither books nor documents based on which an inference could have been drawn as regards undisclosed income; (iii) It did not have any reference to the appellant / did not relate to the appellant in any manner whatsoever; (iv) Shri Shailendra Rathi has in fact retracted his statement taken u/s 132(4) and no reliance could have been placed on the same for 107 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP making the impugned addition; and; (v) In any case, the provisions of section 69A are totally inapplicable in the present case, therefore the addition is totally contrary to the extant law and unsustainable.” 31.2 The facts pertaining to this Ground of Appeal are that during the course of search at the premises of Shri Shailendra Rathi, certain whatspp chats between him and one Shri Pramod Pagaria were found. The screenshot of the said whatsapp chat is reproduced at Page 5 of the assessment order and is also furnished before us at Page 124 of the Paper Book. The said chat was confronted to Shri Shailendra Rathi during the course of search who stated that Shri Pramod Pagaria is a businessman based in Nagpur and the chat is between him and Shri Pramod Pagaria. According to Shri Shailendra Rathi, Shri Pramod Pagaria was interested in purchasing land at Talegaon and for which Shri Pramod Pagaria had given an advance of Rs.
1. Cr. In his statement Shri Shailendra Rathi gave details of the chat and explained the same and thereafter confirmed the receipt of the said cash. The relevant extract of the statement is at page 6 of the assessment order and is also furnished before us at Page 125 of the Paper Book. Further on Page 126 in the extract of the statement, Shri ShailendraRathi stated that the very same conversation is in respect of transactions of purchase of land at Wardha by Shri Pramod Pagare. Based on this statement, at the time
108 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP of assessment, the AO proceeded further and made the addition of Rs. 1 Cr. u/s 69A of the Act. The said addition was challenged in appeal before the Ld. CIT(A). Before the CIT(A), the assessee primarily submitted that the whatsapp chat is between two independent parties Shri Shailendra Rathi & Shri Pramod Pagaria and the assessee has nothing to do with them. It was further submitted that the statement relied on had already been retracted. It was also submitted, there is no evidence nor any investigation conducted by the Ld. AO to verify whether there was any such alleged land transaction. It was submitted that the provision of Sec. 69A is not attracted in the present case. Therefore, the addition made by the Ld. AO must be deleted. In addition to this, various other arguments were raised. The Ld. CIT(A), however, relying on his order on the earlier ground (addition of Rs. 2.5 Cr. on the basis of whatsapp chats found from Shri ShailendraRathi and third party) confirmed the addition made by the Ld. AO. The Ld. Counsel for the assessee Shri Nishit Gandhi primarily relied on his submission made in the earlier grounds of appeals which are summarized as follows: i) Whatsapp chats cannot be the basis to make the addition as has been held in the number of judgments including that of the assessee for AY 2021-22 and its Partner (referred supra). ii) In any case, Whatsapp chats between two independent parties cannot be the basis to make addition in the hands of the assessee.
109 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP iii) The statement relied on by the Ld. AO have already been explained / retracted and therefore cannot be the basis to make addition iv) No such cash was even found or seized. He submitted that the Ld. CIT(A) completely misdirected himself in the sense that the addition was sustained on the ground of inability of the assessee to explain the return of cash whereas in the first place, the assessee has claimed that no such cash was received. v) The provision of Sec. 69A is not at all applicable in the present case as the conditions mandated therein are not fulfilled. He therefore submitted that the addition made by the Ld. AO and confronted by the Ld. CIT(A) be deleted. 31.3 On the other hand, the Ld. DR also adopted a similar argument to the one raised by him in respect of Ground No. 2 (addition based on whatsapp chats) between Shri Shailendra Rathi and third party. He again submitted that the search proceedings, the findings of the search, the statement of the parties, and the whatsapp chats / documents seized / must be seen in entirety. He, therefore, prayed for confirming the order of the CIT(A). 31.4 We have heard rival contention of the parties, considered the material on record and alsothe orders of the lower authorities. The screen shot of the whatsapp chats conversation is reproduced at Page 5 of the assessment order and also filed before us at Page 124 of the Paper Book. Since the facts are similar to Ground No.2 raised above and since the Ld. CIT(A) has also extensively relied on his own order in respect of facts of ground / addition, we are of the opinion that our observation qua Ground No.
110 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 2 are equally applicable on this issue as to whether any addition could be made on the basis of whatsapp chats. 31.5 We also note that the Ld. CIT(A) sustained the addition on the ground of inability of the assessee to furnish evidence as regards returning back of the cash, without appreciating that the plea of the assessee has been that it has not received any such cash. We have earlier held that before concluding that the addition could at all be made u/s 69A it was necessary for the Ld. AO to make further enquiry to ascertain the factum of receipt of cash. Therefore, in the absence of any such further enquiries, the addition made by the Ld. AO cannot be sustained. The Ld. CIT(A) has gone as per the assessment order and simply held that the amount was received and therefore in the absence of findings of returning back, the addition must be sustained. After analyzing the facts, we reject this reasoning of the Ld. CIT(A). Therefore, relying on the observation made by us in respect of Ground No.2 as held and considering the fact before us, we hereby delete the addition made by the Ld. AO. Therefore, Ground No. 3 of the assessee is allowed. Ground No. 4 raised by the Assessee is as under: “Addition of Rs. 50,00,000 u/s 69A of the Act on the basis of whatsapp chat allegedly found from the mobile phone of third party Mr. ShailendraRathi:
111 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 32.1 This ground raised by the assessee relates to challenging the addition of Rs. 50,00,000/- u/s 69A of the Act on the basis of whatsapp chat allegedly found from the mobile phone of third party independent consultant, Mr. Shailendra Rathi without appreciating the fact that; (i) the whatsapp chat is between two independent third parties namely Shri Shailendra Rathi and Shri Pandeji V S; (ii) Whatsapp chat is neither books nor documents based on which an inference could have been drawn as regards undisclosed income; (iii) It did not have any reference to the appellant / did not relate to the appellant in any manner whatsoever; (iv) Shri Shailendra Rathi has in fact retracted his statement taken u/s 132(4) and no reliance could have been placed on the same for making the impugned addition; and; (v) In any case, the provisions of section 69A are totally inapplicable in the present case, therefore the addition is totally contrary to the extant law and unsustainable.” 32.2The facts pertaining to this Ground of Appeal are that during the course of search, whatsapp chat conversation between Shri Shailendra Rathi and one Shri Pandeji VS was found which is reproduced at Page 8 of the assessment order. According to the Ld. AO, this whatsapp chat pertained to receipt of cash of Rs.
50. Lakhs by the assessee and based on the statement of Shri Shailendra Rathiduring the search, an addition was made u/s 69A
112 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP made in the hands of the assessee. Against the said addition, the assessee filed an appeal before the Ld. CIT(A) who confirmed the same on ground similar to those as stated in the earlier paragraph wherein addition was made based on whatspp chats between Shri ShailendraRathi and other parties. Against the said order, the assessee has filed present appeal. 32.3 The Ld. Counsel for the assessee submitted that the facts pertaining to this ground are again similar to the earlier two grounds thereby the addition made by the Ld. AO relying on whatsapp chats between Shri Shailendra Rathi and third party. He reiterated the submission made earlier in respect of the addition based on whatsapp chats of Shri Shailendra Rathi. Further, specific to these chats, he submitted that the chats are between two independent parties and in any case if the statements have to be accepted then the entire statements should be accepted which also included the express mention that the transaction stood “cancelled”. He also submitted that the Ld. CIT(A) misdirected himself while adjudicating this ground. He relied on the arguments raised by him in respect of the earlier Grounds of Appeals. 32.4 On the other hand, the Ld. DR also relied on arguments raised by him in respect of the other Grounds of Appeals as stated earlier and prayed for sustaining the addition.
113 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 32.5 We have heard the rival contention of the parties, considered the material on record and perused the order of lower authorities. 32.6 We note that the Ld. CIT(A) has adopted the same line of reasoning as adopted by him in the earlier Grounds of Appeal while confirming the addition in respect of whatsapp chats of Shri Shailendra Rathi with third party. He also adopted the same reasoning that since the assessee could not provide any evidence of returning back the said cash, the addition must be sustained. 32.7 We note that this line of reasoning has already been rejected by us in the earlier paragraph while dealing with a similar issue raised in the earlier Grounds of Appeals. Therefore, relying on our observation and conclusion in the earlier Grounds of Appeals, we allow this Ground of Appeal of the assessee. The ground of appeal is therefore allowed. Ground No. 5 raised by the Assessee is as under: “Addition of Rs. 38,49,000 u/s 69A of the Act based on the loose sheet allegedly found from the premises of the appellant and statement of employee Shri Lalit Mishra:
33. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in making the addition of Rs. 38,49,000/- u/s 69A of the Act on the basis certain loose sheet found from the premises of one Shri Lalit Mishra without appreciating that: (i) The loose sheet of 114 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP paper relied upon by him did not have any reference to the appellant; (ii) The statement of Shri Lalit Mishra recorded u/s 132(4) relied on by the AO is in fact self-contradictory and manifests confused state of mind / lack of knowledge; (iii) Shri Lalit Mishra has in fact retracted his statement taken u/s 132(4) and no reliance could have been placed on the same for making the impugned addition; and; (iv) In any case, the provisions of section 69A are totally inapplicable in the present case since the Appellant never received the alleged amount of Rs. 38,49,000/-, therefore, the addition is totally contrary to the extant law and unsustainable.” 33.1 The facts pertaining to this ground of appeal are that, during the course of search on RuchaGroup, a loose paper was found and seized, which is reproduced at page 23 of the assessment order. This loose paper was confronted to one Shri Lalit Mishra who stated in his statement during search that the same was in his handwriting.Based on the said loose sheet of paper and the statement made by Shri Lalit Mishra, the assessing officer asked the assessee as to why no addition should be made under section 69A of the act treating the amounts mentioned in the said paper as unexplained money in the hands of the assessee. In response to the same, the assessee submitted that the addition sought to be made is based on a loose sheet and the statement explaining the same is given by a person
115 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP who is an office boy. It was also explained that no addition be made based on such retracted statements and that the loose sheet of paper did not denote any real transactions. However, the assessing officer went ahead and made an addition u/s section 69A of the act in the hands of the assessee. The saidaddition was challenged in appeal before the Ld. CIT (A). The Ld.CIT (A), however, confirmed the addition. Against the same, the assessee has filed the present appeal on the above mentioned ground. 33.2 The Ld. Counsel for the assessee, submitted that the addition simply springs out of a loose sheet of paper. This fact is admitted by the assessing officer himself in the order where he himself mentions that “a loose paper was found and seized” at pg. 23 of his order. He further submitted that the Ld. CIT (A) erred in confirming the addition made by the AO simply on the ground that the said loose sheet of paper represented expenses of Rucha Group and both Shri Ashish Chhangani and Shri Prashant Nilawar in their statements accepted that Shri Lalit Mishra and Shri Pawan Mishra were involved in transporting cash for the Assessee. He submitted that such an observation is contrary to, firstly, the retracted statements of the parties. Further it is also contrary to the very statement of Shri Lalit Mishra in as much as, in his own statement Shri Lalit Mishra could not identify the persons to whom he made the payment (Refer his statement at pg. 185 of Paper Book). He
116 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP further submitted that the Assessing Officer as well as the Ld. CIT(A), completely failed to appreciate the fact that Shri Lalit Mishra is an office assistant and is in no way involved in the day-to-day running of the Assessee firm, and therefore, any statement made by him could not be used against the assessee especially when the allegation is in respect of the business transactions of the assessee. He further submitted that in any case there is no basis to invoke section 69A of the Act since there is no such seizure of cash nor any such cash was found. Without prejudice, he further submitted that as far as the opening balance of Rs. 28.19 lakhs is concerned, the same can certainly be not added in the relevant year. To this extent the addition is completely unsustainable. He finally submitted the order of the Ld. CIT (A) be reversed. 33.3 On the other hand, Ld. DR submitted that the addition has been rightly made by the Ld. AO and rightly affirmed by Ld. CIT (A). He stated that the search proceedings, the findings therein, the statements of the parties and the document seized must be read in entirety. He said that, admittedly, both Shri Ashish Chhangani and Shri Prashant Nilawar have accepted in their statement that Shri Lalit Mishra and Shri Pawan Mishra, where involved in receipt and delivery of cash. He, therefore, submitted that in the light of these findings, the addition confirmed by the Ld. CIT (A) must be sustained.
117 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 33.4 We have heard the rival contentions of the parties, the material on record and also perused the orders of the lower authorities. We notice that the AO has himself admitted in his order that the addition is based on loose sheet of paper. Now, this loose sheet of paper was confronted to one Shri Lalit Mishra. The said loose sheet is at Page 23 of the order. There is a statement of Shri Lalit Mishra at Page 25 – 26 of the order which is also submitted before us at Page 184 – 185 of the Paper Book. 33.5 On a perusal of the said loose sheet, it is noticed that there is mention of the amount of Rs. 28,19,000/- which is explained to be given by one Shri Pawan Kumar Mishra to One Shri Lalit Mishra (whose statement is relied on the Ld. AO) and thereafter there are notings in respect of payments. However, this amount is shown to be opening balance given by PawanMishra.We also note that the assessee has submitted that Shri Lalit Mishra was only an office boy and there is no such cash found or seized as mentioned in the statement. 33.6 We further notice that the statement has already been retracted and in his retraction, Lalit Mishra had specifically complained of exercise of duress and coercion on him and his family members. It is further corroborated by medical report which is at Page 189 and police complaint which is at Page 190 – 191 of the Paper Book apart from retraction affidavit at Page 186 – 188 of the 118 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP Paper Book. Thus, in the totality of the facts and circumstances and in particular the provision of Sec. 69A of the Act, we direct the Ld. AO to delete the addition made by him. Therefore ground raised by the assessee is allowed. Ground No. 6 raised by the Assessee is as under: “Addition of Rs. 15,00,000 u/s 69C of the Act merely based on the statement of Shri Lalit Mishra:
34. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the addition of Rs. 15,00,000/- u/s 69C of the Act on the basis of statements of Shri Lalit Mishra recorded u/s 132(4) of the Act without appreciating that: (i) No addition could have been made on the basis of a mere statement; (ii) In any case, the statement stood retracted and therefore could not relied on for making the additions; and; (iii) Section 69C is not invocable in the present case and therefore the addition made by the Ld. AO is contrary to to law and deserves to be deleted.” 34.1 The facts pertaining to this ground of appeal are in a very narrow compass. The learned assessing officer, based on a mere statement of Shri Lalit Mishra, added an amount of ₹15 lakhs in the hands of the assessee as unexplained expenditure under section 69C of the act. The relevant extract of the statement is reproduced at page 28 of the assessment order and is also before us at page 192 and 193 of the paperbook. While the assessee explained that 119 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP there is no basis to make such an addition, since the statement of Shri Lalit Mishra was recorded under duress and coercion and was subsequently retracted, the AO, however, rejecting the said submission made an addition under section 69C of the act. Against the said addition, the assessee filed an appeal before the Ld. CIT (A), who confirmed the addition on the ground that the retraction was not a valid retraction and the same was also rejected by the AO. Against the said order of the Ld. CIT (A), the assessee has filed a present appeal based on the ground stated above. 34.2 The Ld. Counsel for the assessee submitted, that admittedly, the addition simply arises out of a statement and nothing more. Unlike other additions, there is neither any document or any other evidence based on which the addition is made.Now, there could not be any addition, simply on the basis of a statement and nothing else. He submitted that the position is too far settled toWarrant Any specific citation. He next submitted that, even as per the statement of the party, Shri Lalit Mishra, he himself is not clear as to who is the person to whom the payment was made. He, therefore, submitted that the statement is too scanty an evidence to implicate the assessee particularly in the light of the fact that the said statement also stood retracted/explained. He submitted that the Ld. CIT (A) erred in holding that the retraction was not valid since
120 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP based merely on an affidavit, without appreciating that the said person Shri Lalit Mishra had also filed a police complaint and attached a medical certificate showing the consequences of coercion and duress exercised on him and his family. He stated that this retraction has been taken note of by the Tribunal in the Assessee’s own case in ITA 4996/M/24 & 5706/M/24 and thereafter accepted. He, therefore, prayed that the addition made by Ld. AO be deleted. 34.3 As against this, Ld. DR strongly relied on the orders of the lower authorities and submitted that, once it was accepted that Shri Lalit Mishra was working for the assessee and handling cash for the assessee, any statement made by him in respect of such payment of cash to a third-party on the instruction of another employee of the assessee, must be held to be correct. He reiterated that the search proceedings, the findings therein, the statements of the parties and documents seized must be seen in entirety. He prayed for confirming the addition. 34.4 We have heard the rival contentions of the parties, the material on record and also perused the orders of the lower authorities. We note that, the addition springs out only of statement of Shri Lalit Mishra, which is also retracted. We have upheld this retraction in the earlier ground of appeal. Not just that, even Shri Lalit Mishra whose statement is recorded, does not know the person to whom the payment
121 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP is made. There’s no other evidence to make the said addition. Further in order to invoke section 69C of the Act the onus is on the Revenue to establish the actual incurrence of expenditure. In that view of the matter, the addition made by the Ld. AO is directed to be deleted. Therefore this ground raised by the assessee stands allowed. Ground No. 7 raised by the Assessee is as under: “Addition of Rs. 1,50,00,000 u/s 69A of the Act based on the cash found from the premises of Shri Gaurav Somani:
35. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the addition of cash on hand found at the premises of third party Mr Gaurav somani of Rs. 1,50,00,000/- u/s 69A of the Act without appreciating that; (i) The premises where the said cash was found was neither owned nor rented or otherwise used in any manner by the appellant; (ii) The addition simply springs out of an uncorroborated statement of one Shri Gaurav Somani; (iii) The presumption u/s 292C / 132 (4A) lies against the person in whose possession the cash is found which in this case is Shri Gaurav Somani and not the Assessee; and; (iv) In any case, the addition is contrary to law and deserves to be deleted.”
122 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 35.1 The facts pertaining to this ground of appeal are that, during the course of search on the assessee, one Shri Gaurav Somaniwas also subjected to search at 205, Samuel Street, Masjid Bunder belongs to M/s Rucha Consultancy LLP. In the said search cash of ₹1,50,00,000 was found and seized at the said premises. When confronted with the same, Shri Gaurav Somani stated that the cash was handed over to him by Shri Lalit Mishra or Shri Pawan Mishra. Based on this statement, the addition was made in the hands of the assessee, despite the assessee disclaiming and denying the ownership said cash. This addition was carried in appeal before the Ld. CIT (A). Before the Ld. CIT (A), it was again reiterated that the cash does not belong to the assessee and that the statement of Shri Gaurav Somani without any confrontation to the assessee is unreliable. It was also submitted that it is not clear as to why Shri Gaurav Somani gave such statement before the officers of the Department. The assessee also submitted that the Ld. AO has wrongly made an addition under section 69A of the Act. Apart from this, various other grounds were also raised by the assessee challenging the said addition. The Ld. CIT (A), however, confirmed the said addition based on his statement recorded. Therefore, the assessee filed an appeal before us on the ground stated above.
123 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 35.2 The Ld. Counsel for the Assessee, submitted that in the present case, the addition simply springs out of the statement of Gaurav Somani and nothing more. Even in this statement, the assessee or its partners are not named. Therefore, there is no question of assuming that the said cash belongs to the assessee. It also be noted that the presumption under section 292C / 132(4A) applies directly to Gaurav Somani and not the assessee. The presumption in fact stands unless rebutted with evidence. In this case, other than the statement, there is nothing else to even remotely state that the said cash belongs to the assessee. Therefore, the same cannot be added in the hands of the assessee. Assessee submits that if any such alleged payment would have been actually made to Gaurav Somani, evidence would have been found during massive search carried out on assessee and its group in respect of such alleged payment. In fact, no any such evidence was even remotely found by Investigation Wing during the search carried out on entireRucha group including their employees, staff, consultants etc. about alleged payment of Rs 1.50 Crores ever given to Gaurav Somani. Apart from the statement of Shri Gaurav Somani, there is no other corroborative evidence found against the assessee during the search or post search proceedings suggesting that the said Rs. 1.50 Crores is owned by the Assessee. No evidence is found suggesting said amount was paid to the assessee,
124 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP therefore, no addition can be made merely on statement of Shri Gaurav Somani without any corroborative evidence. 35.3 He also submitted that the statement of Shri Gaurav Somani was not confronted at the time of search to Shri Lalit Mishra or Shri Pawan Mishra and therefore cannot be relied on. He also submitted that in any case, the statements of Shri Lalit Mishra, ShriPawan Mishra and Shri Prashant Nilawar are all retracted and could not be relied on. He also submitted that the provisions of section 69A cannot be invoked in the present case, since there is no proof that the assessee is the owner of the alleged cash, and therefore the addition made by the Ld. AO as sustained by the Ld. CIT (A) deserves to be deleted, and it is prayed accordingly. 35.4 On the other hand, Ld. DR submitted that the cash was discovered from a person known to the Office employees of Rucha group, Shri Lalit Mishra and Shri Pawan Mishra. As per the said statement of Shri Gaurav Somani, the cash is given to him by Shri Lalit Mishra or Shri Pawan Mishra. He further submitted that, Shri Lalit Mishra and Pawan Mishra are undertaking receipt and delivery of cash for the assessee and this fact is also admitted by the partner of assessee in a statement during search. He further submitted that the search proceedings, the findings therein, the statements of the parties and the documents seized must be read in their entirety. He heavily
125 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP relied on the order of the lower authorities praying for sustaining the addition as made by the Ld. AO. 35.5 We have heard the rival contentions of the parties, the material on record and also perused the orders of the lower authorities. We noticed that as submitted by the Assessee and as per the record before us, the premises where the cash was found were owned by Shri Gaurav Somani and not the assessee. This submission is not controverted or refuted by any of the lower authorities as also the Ld. CIT(DR). Secondly, even in his statement recorded at the time of search, Shri Gaurav Somani does not name the assessee or his partners.Now, on a perusal of the order of the Ld. CIT(A), it is noticed that he has primarily relied on the statement of Shri Gaurav Somani from whom the cash was found and on this basis held that since as per Shri Gaurav Somani, cash was received from Shri Lalit Mishra or Shri Pawan Mishra, the addition was rightly made in the hands of the assessee. He also held that since Shri Prashant Nilawar, Partner of the assessee admitted in his statement that Shri Pawan Mishra & Shri Lalit Mishra were involved in receipt and delivery of cash and since Shri Gaurav Somanialso mentioned in his statement about receipt of cash from Shri Lalit Mishra or Shri Pawan Mishra, the addition was rightly made by AO, as held by the Ld. CIT(A).
126 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 35.6 However, we notice that, the basic tenet of presumption under the Act is given a complete go-by in as much as the cash was found in possession of Shri Gaurav Somani, from the premises owned by Shri Gaurav Somaniand other than his statement, there is no other solid or corroborative evidence to show that the cash belongs to the assessee.On the contrary, the presumption under the act applies fully against Shri Gaurav Somani in whosehands the addition should have been made. On a query raised by this bench as to whether any addition has been made in the hands of Gaurav Somani, the Ld. Counsel for the Revenue expresses his inability to clarify on the same. That apart, it is also a settled law that the addition cannot be made simply on the basis of the statement of the third party implicating or incriminating an assessee. This holds significant relevance in the present facts before us in as much as ifsuch an addition is allowed to be sustained then it can lead to wreaking havoc in as much as cash found in the possession of any party can be added in the hands of any party of his choice based on his statement during search. The said proposition would have serious repercussion and would in fact render the provisions of Sec. 132(4A) & 292C largely redundant. 35.7 In that view of the matter and considering the facts in totality, we hereby direct the Ld. AO to delete the addition
127 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP made in the hands of the assessee. Therefore the ground raised by the assessee stands allowed. Ground No. 8 raised by the Assessee is as under: “Addition of Rs. 94,17,000 u/s 69A of the Act on the basis of i-message chat between Shri ShailendraRathi and Shri Ashish Chhangani:
36. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in sustaining the addition of Rs. 94,17,000/- [Rs. 1,00,00,000/- (-) Rs. 15,83,000/-] u/s 69A of the Act based a whatsapp chat between Shri ShailendraRathi and Shri Ashish Chhangani on the allegation of it being cash on hand of group entities as per books dt. 06.04.2021 without appreciating that; (i) the message chat between Shri ShailendraRathi and Shri Ashish Chhangani relied upon by him did not have any reference to the appellant and did not belong to the appellant in any manner whatsoever; (ii) Message Chat is neither books nor documents based on which an inference could have been drawn as regards undisclosed income; (iii) It merely contained addition of some alleged numbers and did not have any kind of noting which could even remotely suggest that it denoted cash balance of the appellant; (iv) The additions is based on retracted statements and therefore unsustainable since no reliance could have been placed on the same for making the impugned addition; and; (v) In any case, the provisions of section 69A are 128 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP totally inapplicable in the present case, therefore the addition is totally contrary to the extant law and unsustainable.” 36.1 The facts pertaining to this ground of appeal are that, during the course of search, an I-Message Chat was discovered in the mobile phone of Shri ShailendraRathi. In the said chat, there was a message of 6th April, 2021 where figures noted as 60 + 15 + 35 = 110 were sent. This message is sent by Shri Shailendra Rathi to Shri Ashish Chhanganiand it is interpreted by the Ld. AO (based on the statement of Shailendra Rathi during the course of search) that cash of Rs. 1.10 Cr. was lying at various offices of Rucha Group. This conclusion of the Ld. AO rested primarily on the statement of Shri Shailend raRathi who explained the same. The images of the said chat is at Page 200 of the Paper Book and the relevant extract of the statement of the parties is at Pages 201, 202 & 203 of the Paper Book. Based on the said chat and the statement of Shri Shailendra Rathi, the AO proposed addition ofRs. 94,17,000/- [Rs. 1.10 Cr. – Rs. 15,83,000/-, amount of cash as per books of Assessee], u/s 69A of the Act. Against the said proposed addition, the assessee made various submissions and primarily submitted that the chat is between Shri Shailendra Rathi& Ashish Chhangani but it nowhere mentions the said figuresas cash. It is just a message and to which no reply is actually received. It was 129 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP further stated that the statement of parties have already been retracted and cannot be relied on.The assessee made various other submissions. However, the Ld. AO made the addition u/s 69A of the Act amounting to Rs. 94,17,000/-. The said addition was challenged in appeal before the Ld. CIT(A)who confirmed the addition on the ground that both Shri Shailendra Rathi & Shri Prashant Nilawar have in their statement admitted the facts that the said chats represented cash balance as on 06.04.2021. He further stated that cash balance as per books of Rucha Group was Rs. 15,83,000/- and the appellant was not able to explain the source of excess cash of Rs. 94,17,000/-. This addition made by the Ld. AO based on i-Phone chat of Shri ShailendraRathi was upheld. Against the said addition, the assessee has filed the present appeal. 36.2 The Ld. Counsel for the assessee submitted that in a similar set of facts, this Tribunal has deleted the addition made in the hands of the assessee based on whatsapp chat found from i-Phone of Shri ShailendraRathi in the case of partner of the assessee Shri Prashant Nilawar in ITA 1569/M/24 & 5073/M/24 and this is been subsequently followed by this Tribunal in the assessee’s own case for the earlier year in ITA 4996/M/ 24 & 5706/M/24. 36.3 He therefore stated that relying on the same reasoning, the addition made by the Ld. AO must be deleted. He further submitted that even assuming for a 130 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP moment that the chats actually represented cash balance, even then, no such cash was actually found or seized at the offices as mentioned in the statement. He also submitted that even looking at the very statement and the dates of the chats, it is evident that it is on 06.04.2021 which is in the beginning of the previous year FY 2021
22. (AY 2022-23).Now, as per the statement, this message reflects Opening Balance of cash. This itself shows that the cash cannot be treated as the income of the relevant year since the Opening Balance of the Current Year is actually the Closing Balance of the earlier year. That apart, he submitted that the statement given by the parties have already been retracted and even taken note of by our Tribunal in the years referred to above and therefore cannot be relied on. 36.4 He further submitted that Shri ShailendraRathi is an independent Consultant. Therefore, the personal chats cannot be the basis to make addition in the hands of the assessee. He finally submitted that the addition made by the Ld.AO as sustained by the Ld. CIT(A) deserves to be deleted. 36.5 On the other hand, Ld. DR submitted that the search proceedings, the findings therein, the statement of the facts and the document seized must be seen in their entirety. He strongly relied on the order of the lower authorities to contend that the addition is rightly
131 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP sustained. He also submitted that it is an admitted fact that Shri ShailendraRathi is a Consultant of the assessee whereas Shri Ashish Chhangani to whom the message is sent is employee of the assessee. The statement duly explains the said chat. He therefore submitted that the order of the Ld. CIT(A) be upheld on this ground as well. 36.6 We have heard the rival contentions of the parties, the material on record and also perused the orders of the lower authorities. We note that similar additions based on whatsapp chat of Shri Shailendra Rathi have been deleted by this Tribunal as held by us while adjudicating similar grounds raised in the present appeal. The Ld. DR could not controvert the same. We also note that no such cash was found or seized nor any reference of such seizure has been made in the assessment order. 36.7 Therefore, the question of ownership of cash which is not found or seized is seriously disputable. As a result, the provisions of Sec. 69A cannot be invoked. There is also nothing more than the said digits mentioned in the message. Therefore, the additions casts serious doubts without any further enquiry. We also note that to the admission of lower authorities as also the Ld. CIT(DR) stated cash represents Opening Balance. Now, it is a settled position that Opening Balance is in fact Closing Balance of the earlier years. Further, there is no such addition made in the earlier years as well. Therefore, it
132 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP cannot be treated as income (not even deemed income) of the impugned assessment year. Therefore, also, the addition is unsustainable. Considering the totality of the facts in the light of this fact, addition made by the Ld. AO is directed to be deleted. Therefore the ground of appeal raised by the assessee is allowed. 36.8 In the result the appeal filed by the assessee stands allowed.
A.Y 2022-23 37. The revenue has raised the following grounds of appeal: 1. “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. 5,00,000/- u/s 69C of the Act without appreciating the fact that Shri ShailendraRathi has given his statement in the capacity of consultant to the Rucha Group. The Ld. CIT(A) further did not appreciate that Shri ShailendraRathi in his statement explained detailed modus operandi about transaction as mentioned in the whatsapp chat between ShailendraRathi and “Rajbhoj Sir EE Nashik PWD?” 2. “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. 80,00,000/- u/s 69A of the Act and of Rs. 15,00,000/- u/s 69C of the Act without appreciating the fact that Shri Prashant Prakash Nilawar had admitted in his statement on oath that Mr. Pawan Mishra collects & delivers cash in Rucha Group. I will furnish the detailed explanation about all the same in 15 days’ time but the detailed reply neither submitted during the course of search proceedings nor during the assessment proceedings?” 3. “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. 80,00,000/- u/s 69A of the Act without appreciating the fact that the seized document had shown receipt of Rs. 80 lakh and further Ld. CIT(A) also erred in 133 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP appreciating that Shri RavindraWadepalle, in his statement on oath recorded u/s 132(4) admitted that notings made on seized sheet were made by him related to transaction of Rucha Group?” 4. “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. 33,60,500/- u/s 69C of the Act without appreciating the fact that Shri Pawan Mishra, employee of the Rucha Group had explained categorically in his statement on oath, names to whom date-wise payment were made and further Ld. CIT(A) also erred in appreciating that Shri Prashant Nilawar admitted in his statement on oath that Shri Pawan Mishra is working in the office of the Rucha Group as a cash handler?” 5. “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. 1,90,00,000/- u/s 69C of the Act without appreciating the fact that Shri Shailendra Rathi has given his statement in the capacity of consultant to the Rucha Group. The Ld. CIT(A) further did not appreciate that Shri Shailendra Rathi in his statement explained detailed modus operandi about transaction as mentioned in the whatsapp chat between Shailendra Rathi and Dinesh Baheti?” 37.1 The facts pertaining to this Ground of Appeal are that, during the course of search, certain whatsapp chat was found from the phone of Shri Shailendra Rathi, Assessee’s consultant. The said whatsapp chat was confronted to him to which he explained that the whatsapp chats between him and one Rajbhoj Sir was in respect of delivery of Rs.
5. Lakhs cash at Nashik at the instruction of Shri Rajbhoj Sir. In the said statement, it was explained that the transaction could not take place. Copy of the said chats is furnished before us at Page 132 of the Paper Book
134 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP whereas the relevant extract of the statement of Shri ShailendraRathi is at Page 133 of the Paper Book. 37.2 The AO asked the assessee to show cause as to why the said amount of Rs. 5 Lakhs could not be added as unexplained expenditure u/s 69C of the Act in the hands of the assessee. The assessee resisted the said addition on various grounds. He primarily submitted that the whatsapp chat was between Shri Shailendra Rathi and independent third party and therefore the same could not be the basis to make addition in the hands of the assessee as document found nowhere name of assessee is mentioned also any evidence of any such alleged expenses incurred is found thereof. It was also urged that the statement made by Shri Shailendra Rathi stood retracted and was therefore inadmissible as evidence. The Ld. AO, however, proceeded to add the said amount of Rs. 5 Lakhs in the hands of the Assessee as unexplained expenditure u/s 69C of the Act, on similar lines as the various other additions made by him on the basis of whatsapp chat of Shri Shailendra Rathi. The said addition was challenged in appeal before the Ld. CIT(A) and the Ld. CIT(A) after considering the totality of the facts deleted the addition. 37.3 The Ld. DR while relying upon the submission made in respect of other additions based on the very same fact of whatsapp chats found from the mobile phone of Shri Shailendra Rathi with various parties. He prayed for 135 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP sustaining the addition on the ground that the Ld. CIT(A) based on similar chats confirmed the addition made by the Ld. AO. He relied on the order of the Ld. AO. 37.4 On the other hand, the Ld. AR submitted that the issue in respect of addition on the basis of whatsapp chat found from the mobile of Shri Shailendra Rathi has already been decided by this Tribunal in the case of the Partner of the assessee in which also been followed in the assessee’s own case for the earlier year i.e. AY 2021-22. He prayed that the same reasoning be adopted here and the order of the Ld. CIT(A) be confirmed. He also submitted that there is no other corroborative evidence to link the assessee with the said chat and there is no evidence at all to prove, even remotely, that, any such cash was paid at all. He prayed for confirming the order of the CIT(A) and thereby confirm the deletion of the addition. 37.5 We have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and also the orders passed by the revenue authorities. From the records we noticed that no addition be made on the basis of whatsapp chat between two different third parties without any corroborative evidence, on similar issue of addition based on whatsapp chat found from phone of Shri Shailendra Rathi, we have already deleted the additions while adjudicating the Grounds of Appeal raised by the assessee, following the order of this 136 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP very Tribunal in the assessee’s own case for the earlier year as also in the case of the Partner of the assessee. The CIT(DR) has not been able to controvert the said ruling. We, therefore, confirm the order the Ld. CIT(A) based on the reasoning given by us in respect of the ground raised by the assessee where the addition made on the basis of whatsapp chat found from Shri Shailendra Rathi were deleted by us. Therefore this ground raised by the revenue stands dismissed. Ground No. 2
38. The facts pertaining to this Ground of Appeal are that, during the course of search proceedings, certain text messages were found from the mobile phone of Shri Ashish Chhangani from his residence. Copy of the screenshot of the said text messages is reproduced at Page 12 of the assessment order and furnished before us at Page No. 134 of the Paper Book. The said text messages were confronted to Shri Ashish Chhangani at the time of search and he explained that its the screenshot of the message sent to 7420074204 on 14.05.2021 at 9.46 PM from his iPhone SE. He further explained that the various names / entries mentioned in the said text messages pertains to collection and delivery of cash. He also explained that Shri Pawan Mishra is the right person to explain the transaction. Further, he also stated that the number mentioned in the sheet are amount in lakhs but he is not able to confirm
137 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP whether these are cash receipts or cash payments. The relevant extract of his statement is reproduced before us at Pages 135, 136 & 137 of the Paper Book. 38.1 Based on this screenshot of the text messages and the statement of Shri Ashish Chhanghani, the Ld. AO show caused the assessee as to why the addition of Rs. 80 Lacs in respect of alleged cash receipt and Rs. 15 Lacs in respect of alleged cash payment should not be added in the hands of the assessee u/s 69A & 69C of the Act respectively. The assessee submitted that the addition cannot be made simply on the basis of the chat which does not contain or mention the name of the assessee. It was also submitted that the statement of Shri Ashish Chhangani was retracted and therefore could not be relied on. It was also submitted that even the statement itself manifests the confusion, lack of knowledge in the mind of Shri Ashish Chhangani and therefore cannot implicate the assessee. The Ld. AO, however, went ahead and added Rs. 80 Lacs u/s 69A as alleged cash received and also added Rs. 15 Lacs u/s 69C as alleged cash payment, in the hands of the assessee. 38.2 Against the said addition, the assessee filed an appeal before the Ld. CIT(A) who after consideration of various facts deleted the addition primarily relying upon his reasoning in respect of various issues adjudicated in the other Grounds of Appeal before him. He also observed that 138 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP there was no corroborative evidence in respect of the said addition which could co-relate assessee with the said alleged cash transaction. He also held that in the absence any admission by Shri Prashant Nilawarconfirming such cash transactions, the addition made by the Ld. AO u/s 69A & 69C of the Act could not be sustained. He ultimately held that the addition of Rs.
80. Lacs &Rs.
15. Lacs made by the Ld. AO be deleted. Against this order of the Ld. CIT(A), the Revenue has filed the present appeal. 38.3 At the outset, the Ld. Counsel for the revenue / Ld. CIT(DR) vehemently urged that the Ld. CIT(A) incorrectly deleted the addition. He further submitted that the search proceedings, the findings during search, document seized from various parties and the statement of all the parties during search must be considered in entirety. He submitted that Shri Ashish Chhangani from whose mobile phone the said messages werefound is actually personal assistant of Shri Prashant Nilawar, the Partner of the assessee firm and therefore his statement has strong evidentiary value. He further submitted that all the 4 items are transactions in cash and which has been admitted at the time of search. He also submitted that the Ld. AO considered the facts in proper perspective and thereafter made the addition in the hands of the assessee. He relied on the order of the Ld. AO to submit that the addition
139 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP made by the Ld. AO is to be restored and the order of the Ld. CIT(A) be reversed. 38.4 On the other hand, the Ld. Counsel for the Assessee Shri Nishit Gandhi submitted that on similar facts based on the documents / images found from Shri Ashish Chhangani, the addition made by the Ld. AO has been deleted by this Tribunal in the case of very same assessee for the earlier year. He further submitted that even in the Grounds of Appeal raised by the Department, there is no averment as regards the statement of Shri Ashish Chhangani but instead reliance placed on the allegation that Shri Pawan Mishra used to handle the cash for the assessee which is confirmed by Shri Prashant Nilawar in his statement though the statement stood retracted but in the absence of specific averment as to reliance on the statement of Shri Ashish Chhangani, no addition could at all be made in the hands of the assessee, based on such statement of Ashish Chhangani. 38.5 He further submitted that even as per the statement recorded during search, the person from whom the text messages were found could not explain the entire transactions. He further submitted that even the explanation given by him during the course of search is inchoate and incomplete. Further, the said statement is also retracted and therefore cannot be relied upon at all. He also submitted that there is no denying the fact that the 140 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP message was sent by Shri Ashish Chhangani from one number owned by him to another number owned by him. In short the chat is between two numbers owned by the very same person, which can in no way implicate the Assessee at all. Further, AshsishChhangani, has neither accepted the transaction nor is he in a position to make any statement and therefore, he simply stated that Shri Pawan Mishra would be able to explain the same. However, no corroborating statement of Shri Pawan Mishra is brought on record or even relied on. As far as the allegation of payments of Rs.15,00,000/- is concerned, the Ld. Counsel submitted that there is absolutely no evidence except the said image which could even remotely implicate the Assessee. He also submitted that, in any case, if the allegation of the said amount being payment is accepted even then it must be held to be sourced out of the said alleged receipts and be telescoped in the receipts. 38.6 He further submitted that in any case, the necessary conditions mandated in Sec. 69A andSec. 69C are not fulfilled in the present case and therefore the Ld. CIT(A) rightly deleted the addition. He prayed for sustaining the said order. 38.7 We have heard rival contention of the parties, considered the material on record and also perused the orders of the lower authorities.
141 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 38.8 At the outset, we note that a similar addition made in the hands of the assessee based on the images / documents / chats found from Shri Ashish Chhangani has been deleted by this Tribunal in the assessee’s own case for earlier year. The Ld. CIT(DR) has not been able to controvert the same. Even we have in our order above while dealing with the grounds raised by the assessee, deleted the additions based on images / chats found from Shri Ashish Chhangani and therefore relying on the same reasoning, we confirm the order of the Ld. CIT(A) in deleting the addition in the hands of the assessee. It is also significant to see that the text messages are sent by same person on his different numbers, both owned by him. If that is so, then there is no question of implicating the assessee on the basis of such messages. We may further note that even the statement of Shri Ashish Chhangani does not implicate the assessee in the sense that the entire explanation is inchoate / incomplete. Even in the grounds raised by the Department, there is no allegation or averment as regards the statement of Shri Ashish Chhangani in whose possession the said text messages were found and instead reliance is placed on the allegation that one Pawan Mishra used to handle the cash for the assessee and therefore the addition cannot be sustained. We do not subscribe or approve of such allegation without any corroborative evidence. Therefore, since there is no 142 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP specific challenge in the grounds raised by the Department, the addition made by the Ld. AO deserves to be deleted and we accordingly confirm the order of the Ld. CIT(A). We also note that the additions are based on the text messages send by Ashish Chhangani from one number to another number owned by him. Now, therefore, the conditions of section 69A are not fulfilled in the present case which mandate existence of unexplained money and the ownership thereof of the Assessee (as per section 69A). Similarly, the conditions mandated u/s 69C are also not fulfilled in the present case which mandates incurrence of expenditure without any satisfactory explanation as regards the source thereof. In this case, admittedly alleged receipts (Rs.80 lakhs added u/s 69A) and payments (Rs.15 lakhs added u/s 69C) are found from the same text message chats and therefore admittedly the source of expenditure is explained from the very same text messages, even if the allegation is considered as correct. Therefore, there is no basis at all to make addition u/s 69C of the Act. This ground of appeal raised by the revenue is dismissed. Ground No. 3
39. The facts pertaining to this ground of appeal are that, during the course of search on the assessee, one Shri Ravindra Wadepalle was also searched and the search action was also carried out at his residential premises at 143 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP flat number 1702, B wing, 17th floor, Lodha New Cuffe Parade, Wadala East, Mumbai – 400 022. In the said search, a loose paper containing certain notings was found. The said loose paper is reproduced at page 15 of the assessment order which is furnished before us at pg. 149 of the Paper book filed by the Assessee. This loose paper was confronted to Shri Ravindra Wadepalle during the course of search. In response to the questions seeking explanation on the said loose sheet, he stated that the sheet is in his handwriting and that the same contained details of transactions pertaining to financial year 2015–
16. He also explained that the transactions pertain to receipt and payment in cash. The extract of this statement is furnished at pg. 150 of the paper book. Based on the said loose paper and the statement of Ravindra Wadepalle, the assessing officer confronted the assessee to show cause as to why no addition should be made in respect of the entries reflecting receipt of cash of Rs.80,00,000 (70 +10) as income of the assessee under section 69A of the Act. The assessee in response submitted that the loose sheet of paper is no evidence at all, particularly because it is a mere loose sheet of paper and it does not have any mention about the name of assessee or any of its partners. It was also submitted that Ravindra Wadepalle is an independent consultant and the statement of Ravindra Wadapalle cannot be relied on as the same has already been 144 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP retracted. The Ld. AO, however, made an addition of Rs.80 lakhs under section 69A of the act treating the same as unexplained money in cash. Against the addition, the assessee filed an appeal before the learn it CIT(A). Ld. CIT(A) deleted the addition made by the Ld. AO. Against this order of the Ld. CIT(A), the Revenue has preferred the present appeal on the ground as stated above. 39.1 The Ld. Counsel for the Revenue / Ld. CIT(DR) appearing on behalf of the assessing officer vehemently urged that the Ld.AO was right in making the addition in the hands of the assessee. He further submitted that the search proceedings, the findings during search, document seized from various parties and the statement of all the parties during search must be considered in entirety. He submitted that Ravindra Wadepalle is known to the assessee and it is an admitted fact that he is a consultant of the assessee. He also submitted that the explanation given by him is binding and therefore the addition must be sustained. He also submitted that each of the entries on the said loose sheet of paper where explained by him meticulously and therefore the Ld. CIT(A) erred in deleting the addition made by the Ld. AO on the ground that there is no corroborative evidence as regards the transactions as mentioned in the said sheet of paper. He prayed for restoring the order of the Ld.AO.
145 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 39.2 On the other hand, the Ld. Counsel for the assessee submitted that first of all on a bare perusal of the said document. It is evident that the same is nothing but a mere loose paper containing some rough noting. It neither mentions the name of the assessee nor any of its partners. The fact that it is a loose sheet of paper is also admitted by the assessing officer himself. Not just that, the addition is made on the basis of a retracted statement of Ravindra WadePalle, who admittedly is an independent consultant and the document is found from his possession and therefore, the presumption cannot be invoked against the assessee. He submitted that even if the statement on the basis of which the addition is made is to be seen, it is emphatically stated that the transactions pertain to FY 2015-16. Now, it is a settled law that a statement cannot be partly accepted and partly rejected as has been done in the present case, and therefore, if the statement is to be considered as correct, then there is no occasion to make such an addition in the hands of the assessee for the relevant assessment year. He submitted that no such addition is made for AY 2016–17 relevant to FY 2015–16, though even that year was assessed and which was also in appeal before this Hon’ble Tribunal. Therefore, there is no question of making an addition in the relevant assessment year. He ultimately prayed to confirm the order of the Ld. CIT(A).
146 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 39.3 We have heard rival contention of the parties, considered the material on record and also perused the orders of the lower authorities. 39.4 At the outset, we notice that as per Ld. AO himself what is discovered in the loose sheet of paper and that too from the residential premises of one Shri RavindraWadepalle who is neither a Partner nor a Manager nor an employee of the assessee. Even this sheet of paper which is at Page 149 of the Paper Book and reproduced in the assessment order at Page No. 15, there are rough notings which are explained during the course of search by Shri RavindraWadepalle to be receipts in payment and cash. The relevant extract of the statement is at Page 150 of the Paper Book. While the statement made by him has already been retracted, it is worth noting that even as per his statement the transaction mentioned in the said seized loose papers pertains to FY 2015-16. 39.5 We also note that the said loose paper on a standalone basis does not lead to any conclusion. We agree with the Ld. Counsel for the assessee that his statement cannot be partly accepted and partly rejected. Therefore, even if for a moment the said seized paper is to be treated as valid evidence based on the statement of Shri RavindraWadepalle, even then, as per the very same statement, the transactions are not of the relevant assessment order but of AY 2016-17. Admittedly, no 147 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP addition is made in AY 2016-17 in the hands of the assessee and even the appeal for AY 2016-17 is before us. Therefore, on this primary ground, the addition must be deleted and the Ld. CIT(A) order to this extent is confirmed. We also note that even otherwise there is no evidence or even discovery of seizure of such cash based on which the assessee could be implicated. Therefore, no addition could be made in his hands u/s 69A of the Act. In that view of the matter, the addition has been rightly deleted by the Ld. CIT(A). We hold upon accordingly. This ground of appeal is stands dismissed. Ground No. 4
40. The facts pertaining to this Ground of Appeal are that, during the course of search and seizure on Rucha Group, the statement of one Shri Pawan Mishra was also recorded. In his statement, he has stated that he paid Rs.10,00,000/- to one Shri Hemant Joshi one or two days before the festival of Ganesh Chaturthi and further stated that cash of about Rs. 23,60,500/- was given to Shri Hemant Joshi in July / August, 2021. He also stated that the said cash was given at the direction of Nilawar Sir based on this statement which is reproduced at Pages 19, 21 of the assessment order and it is also filed before us from Pages 171, 175 & 176 of the Paper Book. The AO asked the assessee as to why no addition should be made in respect of said amount of Rs. 33,60,500/- in the hands
148 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP of the assessee u/s 69C of the Act. The assessee explained that the addition cannot be made on the statement of Shri Pawan Mishra since the same is already retracted. In any case, the addition is made on the basis of certain bald averments which have not been corroborated. However, the Ld. AO proceeded to make an addition u/s 69C of the Act. The said addition was challenged in appeal before the Ld. CIT(A). 40.1 After considering various arguments, the Ld. CIT(A) deleted the addition made by Ld. AO holding that there was no corroborative evidence that such cash payment was actually made. It was also held that there is no such admission by Shri Prashant Nilawar regarding carrying out of such cash transaction and therefore the addition be deleted. Against the said order of the Ld. CIT(A), the revenue has preferred appeal in the present case on the ground as stated above. 40.2 The Ld. DR submitted that it is an admitted fact that cash of Rs. 18,80,000/- was found from the premises of the assessee. It is also a admitted fact that Shri Pawan Mishra who was confronted with the said cash and whose statement was recorded and subsequently relied on us by the Ld. AO, is an employee of the assessee. He further submitted that the Ld. CIT(A) has erred in appreciating the fact that the addition made isin respect of unexplained expenditure and not in respect of unexplained money. He
149 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP further submitted that the Ld. CIT(A) should have confirmed the order of the AO since the actual cash payment were made by person who was in-charge of the cash.He further submitted that the search proceedings, the findings during search, document seized from various parties and the statement of all the parties during search must be considered in entirety. He prayed for reversing the order of the CIT(A) on this ground. 40.3 On the other hand, the Ld. Counsel for the assessee submitted that Ld. CIT(A) has rightly deleted the addition. He further submitted that the statement that has been recorded already stood retracted and therefore it has no evidentiary value. Not just that, there is no corroboration of the said statement and it is the primary reason why the Ld. CIT(A) has deleted the addition. He, further, pointed out that in the statement of Shri Pawan Mishra himself, he has stated that the certain notings are not even in his handwriting, that he has not made the notings and therefore he is unable to explain the same. There is no other evidence relied on by the Ld. AO except the statement and the loose paper at pg. 175 of Paper book. He further submitted that even the person to whom payments were allegedly made or from whom the amounts were received could not be identified by Shri Pawan Mishra. He further relied on the detailed submission made before the Ld. CIT(A) and prayed for upholding the order of the Ld. CIT(A).
150 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 40.4 We have heard the rival contention of the parties, considered the material on record and also perused the orders of the lower authorities. We note that the addition has been made by the Ld. AO on the basis of the statement of Shri Pawan Mishra which has been retracted. We also note that apart from the statement, there is no other evidence, material or even the statement of any other party based on which addition has been made except the loose paper as mentioned in the statement (at pg. 175 of paperbook). Therefore, in order to sustain the addition, it must be seen whether the statement itself is a reliable evidence or not. 40.5 On perusal of the retraction of the statement of Shri Pawan Mishra filed before us at Pages 171 to 176 of the Paper Book, we note that the statement contains certain inconsistencies for e.g. in respect to Question 30 which is at Pages 174 & 175 of the Paper Book. Shri Pawan Mishra could explain part of the document and for the other part he could not explain. Further, he even stated that it is not his handwriting. Now, one may wonder how can the explanation given by a person or document written by another person lead the implication of a third person which in this case is the assessee, without any other, further corroborative evidence. It is based on this reasoning that the Ld. CIT(A) has deleted the addition made in the hands of the assessee.
151 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 40.6 We also note that Shri Pawan Mishra despite stating that he paid to one Shri Hemant Joshi on the direction of Nilawar Sir in answering Q. No. 32, nowhere the name of Shri Hemant Joshi is mentioned in documents relied upon as well no further enquiry or investigation on this aspect was made by the search party or even the AO. As such, the statement remained uncorroborated. In that view of the matter, we hold that the Ld. CIT(A) has rightly deleted the addition. This Ground of Appeal is stands dismissed. Ground No. 5
41. The facts pertaining to this Ground of Appeal are that, during the course of search two images from chats between Shri Shailendra Rathiwith one Shri Dinesh Baheti were found from the iPhone of Shri Shailendra Rathi. The said images are reproduced at Pages 29 – 30 of the assessment order and are also filed before us at Pages 195 – 196 of the Paper Book. The said images were confronted to Shri ShailendraRathi at the time of search. The relevant extract of his statement is before us at Page 197 of the Paper Book. He stated that Shri Dinesh Baheti from Nanded was involved in receiving cash and for which he had given details of delivery of Rs. 50,00,000/- in Mumbai which was delivered to one Shri BaluBafna in Mumbai and another Rs. 40,00,000/- to the said Shri BaluBafna and another Rs.
1. Cr. was given to Shri KetanNagda at Nanded.
152 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 41.2 Based on his evidences, the AO show caused the assessee as to why the addition of Rs. 1,90,00,000/- should not be made in the hands of the assessee since as per the AO the said amount was paid in cash by the assessee. The assessee explained that the whatsapp chats is between two independent parties, does not mention the name of assessee and in any case the statement of Shri Shailendra Rathi is already retracted. 41.3 Some other submissions were also made, however, the Ld. AO made the addition at Rs. 1,90,00,000/- in the hands of the assessee. The assessee carried this in appeal before the Ld. CIT(A). In appeal, the submission made before the Ld. CIT(A) were reiterated. Further, it was submitted that in the whatsapp chat nowhere name of the assessee, it is between two independent parties and that whatsapp chat cannot be the basis to make the addition. It was also mentioned that in the chat nowhere the name of M/s Rucha Consultancy LLP or any of its Partner is stated or referred to. In addition, various other submissions were also made. The Ld. CIT(A) deleted the said addition holding that no evidence was found during the search or even in assessment proceedings which correlate the assessee with the alleged cash payment transactions. He also held that in the absence of any admission by the Partner of Shri Prashant Nilawar regarding such cash transactions, no addition u/s 69C could be made in the hands of the 153 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP assessee. Against this order of the Ld. CIT(A), the Revenue has preferred an appeal before us on the ground reproduced above. 41.4 The Ld. Counsel for the Revenue / Ld. CIT(DR) at the outset submitted that it is not denied by any of the party that Shri Shailendra Rathi is providing consultancy to the assessee. He also submitted that the said chat was in respect of cash payment and this fact was also admitted by Shri ShailendraRathi in his statement during search. He further submitted that the search proceedings, the findings during search, document seized from various parties and the statement of all the parties during search must be considered in entirety. He submitted that the addition was rightly made by the AO u/s 69C of the Act since this was admittedly an unexplained expenditure in cash and these facts were admitted by Shri ShailendraRathi in his statement during search. 41.5 On the other hand, the Ld. Counsel for the assessee submitted that a similar issue has been adjudicated by the Hon’ble Tribunal in the case of the Partner of the assessee which has been followed in the case of the assessee for earlier year by the Hon’ble Tribunal. He submitted that the issue is in respect of addition on the basis of whatsapp chat / images and this issue was appropriately dealt by this Tribunal and accordingly the same should be followed.
154 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP 41.6 He further submitted that in the present case as rightly held by the Ld. CIT(A), there is no evidence whatsoever to link the assessee that the alleged cash payment done is to be taxed u/s 69C of the Act. In fact, admittedly Shri Shailendra Rathi is an independent consultant and the chat is between him and a third party.Therefore, the same cannot be the basis to make the addition in the hands of the assessee. He further submitted that there is no mention of the assessee firm or any of its Partners in the said chat and therefore such chat cannot implicate the assessee. He also submitted that despite being an extensive and exhaustive search operation, there is no evidence whatsoever to corroborate the such statement in order to make an addition in the hands of the assessee u/s 69C of the Act. He, therefore, prayed for confirming the order of the Ld. CIT(A). 41.7 We have heard rival contentions of the parties, considered the material on record and also the orders of the lower authorities. 41.8 We note that a similar issue has already been adjudicated by this Tribunal in the case of Shri Prashant Nilawar, Partner of the Assessee firm. We have also while adjudicating the Grounds of Appeal of the assessee deleted the addition made on the basis of chats / images found from mobile phone of Shri Shailendra Rathi. We note that the Ld. CIT(DR) has not controverted or refuted the said
155 ITA 2358,2359,2488,2487,2721, 2759,2760 & 2486/Mum/2025 Rucha Consultancy LLP judgment for the earlier year in the case of the Partner of the assessee in the assessee’s firm case for AY 2021-22. Accordingly, following the order passed and our adjudication in the other Grounds of Appeal s on this issue, we are upholding the order of the Ld. CIT(A). We also note that as rightly pointed out by Ld. CIT(A), there is absolutely no corroborative evidence that can link the chat to the assessee nor any statement or admission of the Partner of the assessee in respect of the said alleged cash payment. In that view of the matter, the addition made by the Ld. AO is rightly deleted by the Ld. CIT(A). We hold accordingly. This Ground of Appeal is dismissed. 41.9 In the result the appeal filed by the revenue stands dismissed.
42. In the result the appeals filed by the assessee stands allowed and appeal filed by the revenue is dismissed.