DCIT CENTRAL CIRCLE-8(1), MUMBAI, MUMBAI vs. THE ESTATE INVESTMENT COMPANY PRIVATE LIMITED, MUMBAI

Finding of the Assessing Officer 2. The controversy, in essence, centres upon additions made on the basis of certain diaries and loose papers found during the course of search, the evidentiary worth of the statements recorded under section 132(4), and the consequential additions under various heads, particularly capital gains on alleged NOC receipts and unexplained money under section 69A of the Act.

Brief facts as culled out from the records are that the assessee, The Estate Investment Company Pvt. Ltd., is a private limited company incorporated as early as 3rd February, 1945 under the Companies Act, 1913. Over the decades, the company‘s principal objects have been the acquisition of immovable properties, investment in shares and securities, and the advancement of loans. Its income streams have typically comprised dividend and interest income, as also compensation or consideration received upon release or transfer of its rights and interests in parcels of Eksali land located in the Mira–Bhayander region. These lands, governed by long-standing and complex tenurial rights, have been the fulcrum of several transactions undertaken by the company, the nature of which subsequently came under scrutiny during the course of search and post-search proceedings.

On 7th October, 2021, the Investigation Wing of the Department conducted a search and survey action under section 132 of the Act at the premises of the assessee situated and others The Estate Investment Company Pvt. Ltd. and others on the 4th Floor of Seksaria Chambers, Nagindas Master Road, Fort, Mumbai. The search extended over multiple days and encompassed various group entities and individuals associated with the Seksaria family and their business concerns. During the course of the operation, certain diaries, loose papers, digital data and Excel-based management information sheets were found and seized. These documents, according to the Department, contained notings suggestive of cash receipts and payments allegedly pertaining to the release of rights in Eksali lands and ancillary dealings in real estate. Statements of key personnel including Mr. Pawan Kumar Sharma (PKS), Mr. Nandkumar Kudilal Seksaria (NKS), and Mr. Kamal Bubna (KB) were recorded contemporaneously and in the days following the search, forming the bedrock of the Assessing Officer‘s inference regarding unaccounted income.

The Assessing Officer drawing primarily upon these seized diaries and the statements recorded loose sheets and digital data in the form of MIS sheets and excel sheets which were found and seized on 07/10/2021 from the premises of the assessee and related concerns, concluded that the notings represented receipts from grant of NOCs and release of rights in land. The ld. AO particularly noted following documents and diaries. a. 8 Calendar diaries were found in the Godown which were been maintained by the cashier Mr. Pawan Sharma (PKS). b. Electronic Data from the computer of Mr. Tarun Seksaria, which was later printed and which mainly related to purchase of land parcels in Alibaug. c. Some chats on the WhatsApp from the phones of Directors 6. On the basis of these documents and the statements of Mr. Pawan Kumar Sharma (PKS) and Mr. Nandkumar Kudilal Seksaria (NKS) which was recorded during the search operation and post conclusion of search observed that assessee was engaged in the business of release of rights in Eksali land situated at Mira–Bhayandar and adjoining areas and from which confirmation was received from various parties. The diaries bore the initials ―KB‖ which, according to the Assessing Officer, denoted cash received by Mr. Kamal Bubna, the Estate Manager, on behalf of the assessee for facilitating such transactions. Other notings those not bearing the ―KB‖ marking were interpreted as representing unexplained cash receipts or unaccounted dealings unrelated to the NOC transactions. On this basis, the Assessing Officer bifurcated the entries into two broad categories those treated as capital receipts exigible to capital gains tax and others treated as unexplained money under section 69A. Accordingly, ld. AO made following additions:- i. Rs. 5,97,13,000 treated as unaccounted capital gains on account of NOC amount received for release of rights in Eksali land. ii. Rs. 23,000 added as unaccounted income on account of notional interest and unexplained receipts reflected in the MIS sheet. and others The Estate Investment Company Pvt. Ltd. and others iii. Rs. 8,83,60,000treated as unexplained money under section 69A based on cash entries found in the diaries not linked to NOC transactions.

Ld. AO in his order has extracted various statements of the following persons on different dates which can be tabulated in the following manner:- Sr. Deponent Statement Statement Q.Nos No. Recorded dated at 1 Pawan Seksaria 08.10.2021 to Q.1 to Q.44 Sharma (PKS) Chamber 11.10.2021 2. Pawan Air India Various dates Q.1 to Q22 Sharma (Income from 3.1.22 to (PKS) Tax) 25.1.22

The gist and the analysis of these some of the statements are as under:- A. In the statement recorded, PKS on 08/10/2021, inter alia, stated as under:-

In response to the same, NKS stated that "I also confirm that sheet also contains the accounting of unaccounted cash transactions. Sir, I don't exactly know the amount of undisclosed cash receipts and undisclosed unaccounted income, but all these will be determined and will be offered for taxation." (iii) In response to Q. 31, NKS stated that the disclosures have been made to avoid prolonged litigation in case of determination of undisclosed income. If undisclosed income is reconciled, the same shall be offered for taxation. Further, he stated that none of the employees, directors, partners and family members will be subjected to prosecution for concealment of undisclosed income. E. Statements of NKS was subsequently recorded under Section 131 of the Act at Room No. 2007A, 20th Floor, Air India Building, Nariman Point, Mumbai-21 on January 4, 2022. In the statement recorded on January 4, 2022, NKS, inter alia, stated as under: (i) In Q6, NKS was asked to comments on the seized diaries. IN response to same, NKS stated that "I would like to state and others The Estate Investment Company Pvt. Ltd. and others that the notings in the diaries do not seems to be legible at many places. The notings are not in an organised manner. I am therefore not able to comment upon the nature of the transactions as the amounts mentioned therein as these diaries pertain to very old period from FY 2014-2015 onwards. I shall verify our records in our office and give explanation on the same wherever applicable" (ii) In Q.7, NKS was asked to offer his comments on the statement recorded by PKS wherein he has stated that the contents of the diary are the details of payments received and payments disbursed in cash and banking channel by him on the direction of NKS, In response to the same, NKS stated that "it must be noted that PKS has been handling the petty cash and bank accounts of all entities. Further, PKS used to take my directions for office related work. However, 1 feel that there is a lot of duplication of these entries as cash return from the bank, petty cash and the receipts used to be deposited in our personal safe or sent home for safekeeping and returned later when required. Prima facie it seems that the payments and receipts have been recorded multiple times under different initials every time the amounts were sent for safe keeping by PKS and were subsequently brought back to the office and handed over to PKS. As these diaries pertain to very old period from 2014 -2015 onwards, therefore, I shall verify our records and give explanation wherever possible" (iii) In Q6, NKS was asked to comments on the statement of TNS, on the excel statement seized, wherein he stated that and others The Estate Investment Company Pvt. Ltd. and others cash derived from rights/grants of NOC was deployed for purchase of various land parcels in Alibaug In response to the same, NKS stated that "since Tarun has been suffering from various illness from time to time, to keep him busy, I assigned him with the task of land acquisition in Alibaug. All our land dealings were coordinated by local aggregator Late Pratap Gambhir. To the best of my knowledge these excel statements are estimates of the cost and profits and projections as prepared by Late Pratap Gambhir. As mentioned to your good self above, occasionally some quantity of cash may have come from release of rights in eksali lands and may have been given to Pratap Gambhir".

Here also NKS has retracted all of his statements by filing the letter dated 7th February 2023, copy of which has been enclosed in the paper book. However, the said retraction has been rejected by AO on the same ground of delay. The ld. AO, in his elaborate order, narrated that during the course of the search proceedings, multiple diaries and loose sheets were found, each containing cryptic entries in the form of initials, figures, and occasional remarks. Amongst these, particular significance was attached to the diaries marked as ―KB,‖ which were stated to have been maintained by the Estate Manager, Mr. Kamal Bubna, allegedly under the instructions of the promoter–director, Mr. Nandkumar Kudilal Seksaria. These entries, according to the Assessing Officer, chronicled cash receipts received by the assessee from various parties in respect of granting No-Objection Certificates (NOCs) for release of rights in Eksali lands situated in Mira–Bhayandar and others The Estate Investment Company Pvt. Ltd. and others and adjoining areas. On this premise, the Assessing Officer held that the said receipts represented unaccounted consideration received for extinguishment of rights, which was assessable as capital gains in the hands of the assessee. As regards the other entries not bearing the marking ―KB,‖ the Assessing Officer assumed them to denote unexplained cash transactions unrelated to any specific land or NOC deal and, therefore, treated them as unexplained money under section 69A of the Act.

Based on this reasoning, the Assessing Officer made substantial additions running into several crores, dividing them into three distinct heads first, those considered as capital receipts subject to tax under the head ―Capital Gains‖; second, notional interest allegedly earned on such receipts; and third, cash transactions categorised as unexplained under section 69A. These additions were founded almost exclusively on the notings in the seized diaries and the accompanying statements of the employees. No independent verification was made from the counterparties purportedly reflected in the diaries, nor were any corroborative documents or contemporaneous records unearthed to substantiate the alleged cash inflows. The Assessing Officer, nevertheless, inferred a pattern of systematic receipt of cash for release of Eksali land rights and proceeded to tax the same accordingly. Findings of CIT(A) 11. When the matter travelled in appeal before the learned Commissioner of Income Tax (Appeals) [―CIT(A)‖], the assessee and others The Estate Investment Company Pvt. Ltd. and others vehemently contested both the factual premise and the legal tenability of the additions. It was submitted that the entire edifice of the assessment rested upon a diary maintained by an employee for his personal reference, without any direction or authorization from the management. It was further urged that the statements recorded under section 132(4) lacked credibility, as they were subsequently retracted with cogent reasons, and that no corroborative evidence whatsoever was found during the search neither cash, nor unaccounted assets so as to lend authenticity to the inferences drawn by the Assessing Officer. The assessee also emphasized that many entries were illegible, repetitive, or incomplete, and could not, in isolation, indicate any taxable transaction.

The learned CIT(A), after a detailed consideration of the rival submissions and the seized material, partly accepted the assessee‘s contentions. He held that the entries bearing the initials ―KB‖ could, at best, be treated as reflecting the assessee‘s transactions in respect of NOC receipts, subject to verification and correction of factual inaccuracies. He, therefore, granted partial relief in respect of certain computational errors identified in the ―KB‖ notings. However, with regard to other entries that were not specifically attributed to the assessee, the CIT(A) concluded that these could not be taxed in its hands in the absence of any corroborative evidence linking them directly to the assessee. The CIT(A) also accepted the contention that the MIS sheets relied upon by the Assessing Officer were entirely subsumed and others The Estate Investment Company Pvt. Ltd. and others within the diary notings, and therefore, any addition based on them would result in duplication and double taxation.

Ld. CIT(A) accordingly, allowed following reliefs:- (i) Relief of Rs.1,00,18,000 on account of errors in the entries of ‗KB‘ as capital gains (ii) Relief of Rs 23,000 on account of notional interest taxed as capital gains and (iii) Relief of Rs 8,81,10,000 on account of uncorroborated entries under section 69A,

The Assessees have contested the following additions which were confirmed by the CIT(A): 1) Addition of Rs. 4,96,95,000 was made on account of Capital Gains - NOC amount received from Eksali land 2) Addition of Rs. 2,50,000 U/s 69A–entries in diaries not pertaining to NOC were taxed under section 69A 15. Similar additions have been made in other assessment years and the summary of additions which have been confirmed by the ld. CIT(A) on the same reasoning which has been contested by the assessee before this Tribunal are as under:- AY Capital Gains 69A Total KB AY 2014-2015 1,15,96,000 - 1,15,96,000 AY 2015-2016 4,96,95,000 2,50,000 4,99,45,000 AY 2016-2017 2,98,20,000 - 2,98,20,000 and others The Estate Investment Company Pvt. Ltd. and others AY 2017-2018 1,79,63,000 - 1,79,63,000 AY 2018-2019 59,05,000 - 59,05,000 AY 2019-2020 2,27,40,000 - 2,27,40,000 AY 2020-2021 4,86,51,000 - 4,86,51,000 AY 2021-2022 1,25,00,000 - 1,25,00,000 AY 2022-2023 1,89,50,000 4,20,000 1,93,70,000

Apart from the aforesaid grounds on merits of the addition, the Assessee has also raised legal grounds regarding the validity of the Notice under section 148 & validity of DIN on the Assessment Order. Submissions of the A.R: 17. The matter was argued at length before us. The Assessees have also filed detailed written synopsis covering the facts and various arguments made before us and a paper book containing a copy of pages of the diary and the statement of PKS, NKS and KB , MIS Sheet as also other relevant documents, which were relied upon during the hearing. 18. Before us, the learned Authorised Representative (AR) for the assessee opened his arguments with characteristic precision, asserting that the entire assessment proceedings were vitiated by a fundamental misconception of fact and law. He submitted that the Assessing Officer had elevated mere notings in a personal diary into conclusive proof of taxable and others The Estate Investment Company Pvt. Ltd. and others receipts, without undertaking the most rudimentary verification or establishing any nexus between such notings and real-world transactions. The so-called incriminating diaries, he stressed, were maintained by one Mr. Pawan Kumar Sharma (PKS), an employee of the group, purely for his personal reference. The said diaries contained a miscellany of jottings names, figures, abbreviations, and half-legible annotations many of which were repetitive, incomplete, or plainly unintelligible. They were neither part of the statutory books of account nor contemporaneous records of any actual dealings of the assessee. Consequently, the AR contended, the reliance placed by the Assessing Officer upon these diaries, in the absence of corroborative material or supporting evidence, was wholly misplaced and unsustainable in law.

The AR further pointed out that the only foundation on which the Assessing Officer sought to ascribe meaning to these notings was the statement of PKS recorded during search, spanning various dates between 3rd and 25th January, 2022. Yet, even in that statement, PKS had nowhere described the nature of the entries; he had merely identified the names and figures appearing therein, and repeatedly stated that the true explanation would have to be furnished by Mr. Nandkumar Kudilal Seksaria (NKS), the Director of the company. The learned counsel invited our attention to the transcript of PKS‘s statement to demonstrate that it was riddled with conjecture and bereft of any factual basis. He emphasised that the Assessing Officer had drawn sweeping conclusions by extrapolating a stray remark pertaining to one and others The Estate Investment Company Pvt. Ltd. and others page of the diary across hundreds of entries spanning multiple years an exercise that was, in his words, ―factually perverse and legally impermissible.‖ 20. The learned counsel also drew our attention to the statement of Mr. Kamal Bubna (KB), recorded on 8th October, 2021. He pointed out that the said statement was based on a solitary diary page shown to him during the search, on which KB had offered an ad hoc explanation. That isolated statement, the AR lamented, was then magnified and mechanically applied to every other entry in the diaries containing the initials ―KB,‖ without KB being confronted with those entries or his statement being extended to cover them. This, according to the AR, was a blatant misapplication of evidence. The AR added that even NKS, the principal person in charge of the company, in his statement dated 11th October, 2021 and again on 4th April, 2022, had stated unequivocally that the diaries were not coherent; that they contained rough notings, duplications, and personal annotations of PKS; and that he was not in a position to explain their contents. Importantly, NKS had not confirmed or adopted the statements of PKS or KB in any manner whatsoever.

The AR then highlighted that both PKS and NKS had formally retracted their statements during the course of assessment proceedings, through written communications dated 22nd December, 2022 and 7th February, 2023 respectively, giving cogent reasons for such retraction. Despite this, the Assessing Officer had summarily brushed aside these retractions, branding them as ―afterthoughts,‖ without and others The Estate Investment Company Pvt. Ltd. and others affording either individual an opportunity for cross- examination or further clarification. This, he contended, amounted to a flagrant violation of the principles of natural justice. Once a statement is retracted, the law requires the Department to establish its truth through independent corroboration; absent such corroboration, the statement cannot be treated as binding evidence. The AR placed reliance on an array of judicial precedents to fortify his argument that a retracted statement, standing alone and unsupported by any tangible material, lacks evidentiary sanctity and cannot form the sole basis of addition.

The learned Authorised Representative continued his submissions with a meticulous reference to jurisprudence, weaving together a formidable chain of precedents that underscored the impermissibility of making additions solely on the strength of uncorroborated and subsequently retracted statements. He first drew our attention to the decision of the Hon’ble Bombay High Court in CIT v. Reliance Industries Ltd. [(2020) 261 Taxman 358 (Bom)], where the Court had categorically held that a statement recorded during search cannot be relied upon as conclusive evidence unless supported by independent material. In that case, as in the present one, the Assessing Officer had based additions merely on the confession of a third party without any corroboration, which was later retracted. The High Court, affirming the Appellate Tribunal, ruled that when a statement is retracted and no other evidence is adduced, such a statement cannot, by itself, justify the addition. The learned counsel submitted and others The Estate Investment Company Pvt. Ltd. and others that the ratio of this judgment was directly applicable to the present facts, where the Assessing Officer, resting solely on the statements of PKS and KB, had proceeded to frame the assessment without any verification or corroboration from the alleged payers or any independent third-party evidence.

The learned AR next placed reliance on the judgment of the Hon’ble Jharkhand High Court in Shree Ganesh Trading Co. v. CIT [(2012) 214 Taxman 262 (Jharkhand)], wherein it was held that though a statement recorded under section 132(4) constitutes evidence, its reliability and probative worth depend on the surrounding circumstances and corroboration. The Court observed that a bald statement, made without contemporaneous recovery of cash or assets and later retracted, could not be used to fasten liability. Drawing a parallel, the learned counsel emphasised that in the assessee‘s case, no incriminating cash or valuables had been discovered in the course of search; yet, the Assessing Officer had proceeded as though the diary entries were self- proving instruments of truth. Such an approach, he argued, stood condemned by judicial authority.

The learned counsel further fortified his argument by citing the judgment of the Hon’ble Gujarat High Court in Kailashben Chokshi v. CIT [(2010) 328 ITR 411 (Guj.)], where it was held that an admission recorded under section 132(4), if retracted, cannot form the sole basis for addition unless supported by corroborative material. The High Court noted that statements extracted under stressful or coercive circumstances, particularly during search at odd hours, often and others The Estate Investment Company Pvt. Ltd. and others lack voluntariness and hence must be treated with circumspection. The learned AR submitted that this principle had been reiterated in several later pronouncements, including by the coordinate benches of the Tribunal, and represents the settled position of law that mere confessional statements, in the absence of corroboration, are insufficient to sustain additions. He also drew our attention to the Mahadhan Agritech Ltd. v. ACIT (ITA No. 2227/Mum/2024) decision, wherein this very Bench had, following the dictum of Harjeev Aggarwal (Delhi High Court) and Jagdishprasad Joshi (Supreme Court), held that retracted statements under section 132(4) lose all probative value unless independently substantiated by evidence.

The learned counsel, to reinforce the argument, also referred to the official guidelines issued by the Central Board of Direct Taxes (CBDT) itself specifically, Instruction No. 286/2/2003 dated 10th March 2003 and the subsequent Circular F. No. 286/98/2013 dated 18th December 2014 both of which explicitly caution the Department against obtaining confessions of undisclosed income during search or survey operations. These circulars direct that assessments must be founded upon material evidence rather than unverified admissions. The counsel submitted that these instructions, being binding on the revenue authorities under section 119 of the Act, constitute a clear administrative mandate that confessional statements, without corroboration, are not to be made the sole foundation of assessment. He therefore urged that the action of the Assessing Officer in the and others The Estate Investment Company Pvt. Ltd. and others present case anchoring the entire addition upon the retracted statements of PKS and KB was in flagrant violation not only of settled judicial doctrine but of the Board‘s own directives.

The learned Authorised Representative then turned to what he termed the ―central infirmity‖ of the entire assessment the treatment of the seized diaries as conclusive documentary evidence. He contended that even if, arguendo, the statements under section 132(4) were to be disregarded or viewed with circumspection, the diaries themselves, in the absence of any corroboration, were nothing but ―dumb documents‖ incapable of independent evidentiary value. They were not part of the books of account, bore no authentication, and were admittedly maintained by a non-director employee for his own personal convenience. The notings, often incomplete or repeated, were neither dated nor supported by vouchers or receipts. Such raw scribblings, he urged, could not constitute material evidence of income in law. The presumption under section 132(4A), he submitted, applies only to documents found to ―belong to‖ the assessee and does not extend to the private jottings of an employee. It was emphasised that the Department itself had not demonstrated that the seized diaries were maintained under the assessee‘s instruction or supervision.

In support of this proposition, the learned AR drew strength from the celebrated decision of the Hon’ble Supreme Court in Central Bureau of Investigation v. V.C. Shukla & Ors. [Criminal Appeal Nos. 247–256 of 1998], wherein it was held that loose sheets or diaries, not being books of and others The Estate Investment Company Pvt. Ltd. and others account regularly kept in the course of business, are not admissible evidence under section 34 of the Indian Evidence Act. The Court observed that entries made by one person in such documents, unless corroborated by independent evidence, cannot fasten liability on another. This, the AR submitted, was directly applicable to the present case, where the Assessing Officer sought to tax the assessee company on the strength of the personal notings of PKS, without establishing authorship, authenticity, or relevance. He also placed reliance on the judgment of the Hon’ble Supreme Court in Common Cause (A Registered Society) v. Union of India [(2017) 394 ITR 220 (SC)] the celebrated ―Birla–Sahara Diaries‖ case wherein the Court had categorically held that uncorroborated third-party records found in the course of search have no evidentiary value whatsoever.

The learned counsel further cited a line of decisions from the jurisdictional and coordinate benches to reinforce the ―dumb document‖ principle. Reference was made to Principal CIT v. Umesh Ishrani [(2019) 108 taxmann.com 437 (Bom)], where the Hon‘ble Bombay High Court upheld the Tribunal‘s finding that rough, unauthenticated notings in seized diaries, unaccompanied by corroborative evidence, could not justify addition under sections 68 or 69A. He also drew our attention to Harish Textile Engineers Ltd. v. DCIT [(2015) 63 taxmann.com 66 (Bom)], and DCIT v. Padmashree Dr. D.Y. Patil University [(2024) 159 taxmann.com 353 (Mum Trib)], both reiterating that such scribbled records, unless validated through substantive and others The Estate Investment Company Pvt. Ltd. and others inquiry, are mere dumb documents. The AR thus submitted that the legal landscape on this issue is unequivocal: dumb documents, being self-serving, incomplete, or untested, cannot by themselves be a foundation for addition, particularly when the statements accompanying them have been retracted and no further corroboration is forthcoming.

In so far as additions made u/s.69A, without prejudice, arguments were made by the ld. AR can be summarized in the following manner:-

On the legal grounds, the summary of the ld. Counsel submissions are as under:-

The Assessee further submit that none of the above decisions have been stayed by Hon‘ Supreme Court and therefore the same has the binding force on the lower appellate authorities. In this connection the Assessee relies on and others The Estate Investment Company Pvt. Ltd. and others the decision of Jurisdictional Bombay High Court in the case of Bank of India vs ACIT [2025] 170 taxmann.com 422 (Bombay).

The learned Departmental Representative (DR), on his part, sought to defend the orders of the Assessing Officer and the learned CIT(A) with considerable fervour. He submitted that the seized diaries, though not part of the statutory books of account, constituted contemporaneous records maintained by a responsible employee of the group, and therefore, merited serious evidentiary consideration. The DR argued that PKS was not a casual or peripheral employee, but a key managerial person who, by virtue of his long-standing involvement in the affairs of the group, had intimate knowledge of the cash transactions and dealings in Eksali land. The very fact, he contended, that the diaries were discovered from the office premises of the assessee gave rise to a presumption under section 132(4A) that the contents thereof belonged to the assessee. He further argued that the statement of PKS, recorded contemporaneously during the search, carried evidentiary weight and was duly corroborated by the statement of KB, the Estate Manager, who had confirmed that entries marked in his name corresponded to cash received for release of NOCs. According to the DR, such concurrent testimonies could not be brushed aside as unreliable merely because of subsequent retractions.

The learned DR further contended that the retractions filed by PKS and NKS were afterthoughts, strategically made and others The Estate Investment Company Pvt. Ltd. and others only after they had realised the adverse implications of their earlier admissions. Such belated retractions, he argued, should not dilute the evidentiary value of statements recorded under section 132(4), which, by legislative design, enjoy a special evidentiary status. In this connection, he drew reference to certain judicial pronouncements where Courts have held that retractions lacking immediate contemporaneity or supporting explanation cannot be accepted at face value. The DR also maintained that while the diaries may not have been formal books of account, they nevertheless reflected a coherent pattern of transactions covering multiple years, with cross-references to names, amounts, and land parcels, thereby lending internal consistency and credibility to the entries. He urged that the Assessing Officer had correctly distinguished between the entries relatable to NOC receipts and those representing unexplained cash flows, and that the additions were made only after granting due relief for evident duplications and computational inaccuracies.

On the question of corroboration, the learned DR contended that complete mathematical or documentary correlation is not always possible in cases of search, and that circumstantial inference drawn from the seized material can, in appropriate cases, suffice for sustaining an addition. He emphasised that the Assessing Officer, by collating the diaries, the MIS sheet, and the statements of key employees, had constructed a cogent evidentiary mosaic pointing to unaccounted transactions. The DR urged that the Tribunal should not substitute its own appreciation of evidence in place and others The Estate Investment Company Pvt. Ltd. and others of the Assessing Officer‘s considered view, unless such view is perverse or devoid of rational basis. In his submission, the order of the CIT(A), which had already granted substantial relief, represented a fair equilibrium between departmental interest and taxpayer‘s grievance, and no further deletion was warranted. DECISION 36. We have heard rival contentions, perused the voluminous records and relevant finding given in the impugned orders. In so far as the issue relating to taxability of capital gains, it is seen that the entire premise of the ld. AO is based on the statements of PKS and NKS who have alleged to have explained entries in the diary found during the search. From deep scrutiny of the statements it is discerned that PKS in his statement has not identified the nature of entries noted in the diaries and left it for NKS to provide the clarification. NKS on the other hand in his statement has clearly stated that the diaries are not coherent, there are various duplications and most of them are rough notings etc., due to which he is not in the position to provide any clarification nor has offered any explanation or confirmed the statement of PKS. No further statement of NKS was recorded on this issue. Further, in the statement of KB which was recorded in respect of the noting in his name by showing him only one isolated single entry and then the said statement was extrapolated to all the diary entry in the name of KB, without recording his statement on to all the notings in his name in the diaries. Thus, this statement per se cannot lead to conclusion that notings in the diary and others The Estate Investment Company Pvt. Ltd. and others maintained by PKS in his individual capacity can lead to adverse inference in so far as assessee company are concerned or the assessee company or related concerns that they have been taking cash on the deal of the land.

One very important fact to be noted here is that the seized diaries were maintained by the employee of P.K.S., who has himself categorically admitted that these notings were made for his personal purposes only and were not coherent, nor have they been fully explained or corroborated. This fact has been admitted by P.K.S. in his statement recorded in Question No.

Another important fact is that both P.K.S. and N.K.S. have retracted their statements before the learned Assessing Officer. The reasons for such retraction were that they were not even aware that their statements would be used against the assessee company, particularly when the seized diaries were not found from the premises of any director or of the assessee company itself. When statements have been retracted with cogent and plausible reasons, the law casts a corresponding duty on the Assessing Officer to summon those persons, confront them with their earlier statements, and subject them to cross-examination. Such procedural safeguard, as repeatedly emphasised by the Hon‘ble Supreme Court in several decisions cited before us by learned counsel, is not a matter of indulgence but a sine qua non of natural and fair adjudication.

The mere discovery of loose papers or personal diaries, which are not even maintained by the directors of the assessee company and remain uncorroborated by any external evidence, cannot, by itself, form the sole basis for an addition. Particularly so when the authorship and authenticity of such documents are in dispute. The Investigation Wing, which carries out the search, may record statements or seize documents; however, the same are merely inputs for further enquiry. Once the material is transmitted to the jurisdictional Assessing Officer, it becomes incumbent upon him to apply and others The Estate Investment Company Pvt. Ltd. and others his own independent mind and conduct proper enquiry to determine whether such statements or seized documents can lawfully lead to any addition. 39.1. The Assessing Officer cannot act as a mere forwarding agent of the report or view expressed by the Investigation Wing and mechanically incorporate the same in his assessment order without exercising his own judgment as to whether such information or view can legitimately form the foundation of an addition within the four corners of law. At best, the information and material emanating from the Investigation Wing may serve as a trigger or starting point to issue a show- cause notice and seek an explanation from the assessee. But once the assessee has rebutted those materials including any recorded statement with cogent reasons, the Assessing Officer must judiciously evaluate such explanation and undertake at least a prima facie enquiry to test the correctness of the rebuttal and strengthen the evidentiary base of the material relied upon. 39.2. If he fails to do so, sustaining any addition solely on the basis of such material gathered from the search cannot be justified. In the present case, the statements and documents relied upon by the Department have been effectively rebutted and controverted with cogent reasoning, as elaborated in detail above. The Assessing Officer, functioning as a quasi- judicial authority, is bound to apply his mind independently and adjudicate the issue in a fair and reasoned manner. and others The Estate Investment Company Pvt. Ltd. and others 39.3. The presumption under section 132(4A) is, at best, a limited and rebuttable presumption applicable only in the context of seizure and custody, and cannot, by itself, elevate a private employee‘s scribblings into proof of income chargeable to tax. The Assessing Officer‘s reliance on extrapolation— extending the inference drawn from a solitary entry or isolated explanation to hundreds of unverified notings amounts more to conjecture than to judicial reasoning.

This concern is further magnified when the authors of those diaries have retracted their statements and no further examination or cross-verification has been undertaken. In light of these circumstances, the very evidentiary substratum of the additions evaporates, leaving behind nothing but suspicion. The Assessing Officer‘s approach of brushing aside the retractions as afterthoughts, without testing their veracity through examination or cross-questioning, constitutes a serious procedural infirmity.

We therefore hold that the Assessing Officer, in relying solely upon unverified diary entries and uncorroborated statements, has traversed beyond the permissible confines of evidentiary inference. The seized diaries, as earlier discussed, are incapable of interpretation without contextual evidence, and the statements upon which reliance was placed stand nullified by valid retraction. The confluence of these infirmities absence of corroboration, failure to summon and cross- examine, and the intrinsic vagueness of the documents compels us to conclude that the additions made towards alleged capital gains and unexplained money are devoid of factual and legal foundation. In the result, the additions sustained under the head ―Capital Gains‖ amounting to ₹4,96,95,000, and under section 69A amounting to ₹2,50,000, cannot be upheld and are hereby deleted.

Having disposed of the additions of merits, we now turn to legal ground concerning the validity of the assessment and others The Estate Investment Company Pvt. Ltd. and others itself. Upon the submissions and the judicial precedents, especially of Hon‘ble Jurisdictional High Court which is a binding precedent on us, we are persuaded that the reassessment edifice is untenable on two independent yet converging grounds. The assessee has assailed the reassessment orders on two principal planks first, that the notice under section 148 was issued by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer, in contravention of the scheme notified under section 151A vide Notification S.O. 1466(E) dated 29th March 2022; and second, that the assessment order bears a manually inscribed Document Identification Number (DIN), contrary to CBDT Circular No. 19 of 2019 dated 14th August 2019. On the first issue, the legal position is no longer res integra. The Hon‘ble Bombay High Court in Hexaware Technologies Ltd. v. ACIT [(2024) 464 ITR 430 (Bom)] has decisively explained that where Parliament and the delegated notification have assigned jurisdiction to the faceless unit, the jurisdiction of the local officer stands eclipsed. The scheme does not contemplate a concurrent or overlapping authority. Any notice issued dehors the faceless framework is coram non judice and the proceeding is void at inception. The exposition laid down by the Hon‘ble Bombay High Court in Hexaware Technologies Ltd. v. ACIT has since been consistently followed by the same Court in Capital G LP v. ACIT, Abhin Anil Kumar Shah v. ITO [(2024) 468 ITR 350 (Bom)], and Ganesh Nivrutti Jagtap v. ACIT [(2024) 166 Taxmann.com 168 (Bom)], thereby fortifying the principle that the faceless assessment regime under section 151A is not a matter of administrative and others The Estate Investment Company Pvt. Ltd. and others convenience but a jurisdictional imperative. The High Court in these decisions has unambiguously held that once jurisdiction is statutorily vested in the Faceless Assessing Officer, any notice issued by the Jurisdictional Assessing Officer is coram non judice and consequently void ab initio. 42.1. This view now stands further affirmed by the Hon‘ble Supreme Court in Deepanjan Roy v. ADIT [SLP (C) No. 18753 of 2025], wherein the Special Leave Petition filed by the Revenue against the decision of the Hon‘ble Telangana High Court in Writ Petition No. 23573 of 2024 upholding the invalidity of notices issued by the Jurisdictional Assessing Officer under section 148 was dismissed. The dismissal of the SLP lends the imprimatur of the Apex Court to the settled proposition that reassessment notices issued outside the framework of the faceless scheme are jurisdictionally incompetent. 42.2. In the absence of any contrary authority or distinguishing factual matrix, we are bound to follow the consistent line of judicial precedent emanating from the Hon‘ble Jurisdictional High Court. None of these decisions have been stayed, modified, or reversed by the Hon‘ble Supreme Court. Accordingly, these binding pronouncements of the Hon‘ble Bombay High Court command full precedential authority over this Tribunal.

The second legal infirmity relates to the manner in which the impugned assessment orders were issued bearing a manually written Document Identification Number (DIN) and followed by a separate communication of the DIN several and others The Estate Investment Company Pvt. Ltd. and others weeks later. The undisputed factual matrix reveals that the assessment order was dated 27th March 2025, whereas the intimation letter bearing the DIN was generated and communicated on 18th April 2025. Thus, on the date when the assessment order was passed, no DIN existed in the system. The purported handwritten DIN subsequently inserted in the body of the order is a post facto attempt at regularisation. This practice, we regret to note, stands in direct contravention of the binding mandate of CBDT Circular No. 19 of 2019 dated 14th August 2019, which prescribes that ―no communication shall be issued by any income-tax authority without a computer-generated DIN, and any communication issued in contravention thereof shall be treated as invalid and shall be deemed to have never been issued.‖ The Circular, being issued in exercise of powers under section 119 of the Act, has statutory force and is binding upon all officers of the Department.

The Circular admits of only limited exceptions in cases involving system outages, emergencies, or other exceptional circumstances and even then, mandates the recording of reasons in writing, prior approval of the Chief Commissioner or Director General, and contemporaneous documentation of such approval in the assessment record. The Revenue has neither pleaded nor produced any evidence that such conditions were satisfied in the present case. On the contrary, the generation of DIN after nearly three weeks from the date of assessment belies any claim of technical exigency. The omission, therefore, is not a mere procedural irregularity but a and others The Estate Investment Company Pvt. Ltd. and others substantive breach that goes to the root of jurisdiction. The Hon’ble Bombay High Court in Ashok Commercial Enterprises v. ACIT [(2023) 154 Taxmann.com 144 (Bom)] has authoritatively held that failure to issue an order through the designated ITBA portal, or issuance of an order without a valid pre-existing DIN, renders such order invalid and non est in the eyes of law. The Court rejected the argument that subsequent intimation of DIN could cure the defect, holding that such post-dated compliance defeats the purpose of the Circular, which is to ensure transparency, traceability, and audit trail of every communication issued by the Department.

The same principle was reaffirmed by the Hon’ble Madras High Court in CIT v. Laserwords US Inc. [(2025) 175 Taxmann.com 920 (Mad)], where it was held that an assessment order and DRP proceedings issued without a valid DIN were void ab initio. The Court observed that the procedural mandate under Circular No. 19 of 2019 is not directory but mandatory, and that even if a DIN was generated later and handwritten in the order, such post facto insertion could not cure the inherent defect of invalidity. The reasoning was reiterated in CIT (International Taxation) v. Sutherland Global Services Inc. [(2025) 175 Taxmann.com 897 (Mad)], where the Hon‘ble Court observed that the absence of a pre- generated DIN, or the failure to record reasons and obtain prior approval for manual issuance, is fatal to the validity of the order. These rulings, when read conjointly, leave no room for doubt that compliance with the DIN protocol is a jurisdictional prerequisite and not a curable irregularity. and others The Estate Investment Company Pvt. Ltd. and others 46. The coordinate benches of this Tribunal have consistently followed this judicial position. In DCIT (Central Circle–7(2)) v. Shubhkanchi Trading Pvt. Ltd. (ITA No. 1600/Mum/2022), the Tribunal, applying the ratio of Ashok Commercial Enterprises (supra), quashed the assessment order for violation of the DIN requirement, observing that the issuance of a manual order without a computer-generated DIN was antithetical to the CBDT‘s stated policy of transparency and accountability. Likewise, in CIT v. Laserwords US Inc. and Sutherland Global Services (supra), both the High Courts categorically declared that communications issued without valid DINs are ―invalid and deemed to have never been issued.‖ Following these precedents, we hold that the assessment orders impugned before us having been manually issued and followed by post-dated DIN intimations are void in the eyes of law and cannot be sustained. The sanctity of the CBDT‘s procedural safeguards cannot be reduced to a mere formality; they are, in essence, the bedrock of institutional integrity in the era of faceless administration.

Having held so, it necessarily follows that the reassessment proceedings initiated under section 148 by the jurisdictional Assessing Officer, in violation of the Faceless Scheme under section 151A and compounded by the failure to generate and quote a valid DIN, stand vitiated in law. The dual breaches one jurisdictional, the other procedural strike at the root of the assessment‘s validity. The notice under section 148, having been issued by an officer not authorised under the notified scheme, is coram non judice, and the subsequent and others The Estate Investment Company Pvt. Ltd. and others order passed without a valid DIN is a nullity. This conclusion is fortified by the decision of the Hon‘ble Bombay High Court in Hexaware Technologies Ltd. v. ACIT (supra), which has been consistently followed in Capital G LP v. ACIT (Writ Petition No. 15289 of 2024), Abhin Anil Kumar Shah v. ITO [(2024) 468 ITR 350 (Bom)], and Ganesh Nivrutti Jagtap v. ACIT [(2024) 166 Taxmann.com 168 (Bom)]. The dismissal of the Special Leave Petition by the Hon’ble Supreme Court in Deepanjan Roy v. ADIT [SLP (C) No. 18753/2025] lends further imprimatur to this legal position. Thus, we have no hesitation in holding that the reassessment orders impugned before us are void ab initio, both for want of jurisdiction and for breach of mandatory procedural require.

The cumulative effect of our findings leads inexorably to the conclusion that both the reassessment proceedings and the resultant assessment orders are unsustainable. The notice under section 148, issued by an authority bereft of jurisdiction under the Faceless Assessment Scheme, is void ab initio. The assessment order, bereft of a valid, pre-generated DIN, stands condemned by the express stipulations of CBDT Circular No. 19 of 2019, as interpreted by the binding judgments of the jurisdictional and other High Courts. The Revenue, though afforded ample opportunity, has not demonstrated compliance with any of the statutory or procedural conditions that could lend legitimacy to its actions. In this view of the matter, the entire reassessment exercise is vitiated at inception, and all consequential proceedings are rendered nullities in the eye of law. and others The Estate Investment Company Pvt. Ltd. and others 49. In the result, and in consonance with our detailed findings hereinbefore, we hold that (i) the additions made under the head ―Capital Gains‖ on account of alleged NOC receipts and under section 69A on account of alleged unexplained money stand deleted for want of evidence; (ii) the reassessment proceedings initiated under section 148 are quashed for lack of jurisdiction in terms of the Faceless Assessment Scheme; and (iii) the assessment orders are further invalidated for non-compliance with CBDT Circular No. 19 of 2019 owing to the absence of a valid pre-generated DIN. The remaining grounds pertaining to interest under sections 234A, 234B, and 234C are purely consequential and call for no separate adjudication. The appeals filed by the assessees are thus allowed in part, whereas those preferred by the Revenue stand dismissed.

We now turn to the connected appeals for the subsequent assessment years, wherein the facts, issues, and the reasoning adopted by the Assessing Officer are pari materia to those already adjudicated upon in the lead year. In each of these years, the additions have emanated from the same set of diaries and the same statements recorded during the search, with only the quantum of alleged receipts differing in arithmetical magnitude. The learned representatives on both sides fairly conceded that the evidentiary foundation, the nature of seized material, and the pattern of assessment are identical. Having already held that the very basis of these additions is legally infirm and evidentially hollow, it necessarily follows that the same reasoning applies mutatis and others The Estate Investment Company Pvt. Ltd. and others mutandis to these years as well. We therefore adopt our findings and conclusions in the lead appeal as applicable in toto to the remaining years under consideration.

For the sake of ready reference the grounds raised

Without prejudice to the above, Appellants submit that the assessment Order passed by the AO under section 143(3) /148 has been issued without DIN and therefore this Order passed by the AO is a nullity in law and the Appellants pray that the same be quashed.

Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition of Rs. 90,00,000/- even though the Assessing Officer had taken a judicious view in allowing telescoping to the assessee and adding the impugned sum of Rs. 90,00,000/- in respect of

We also note that in certain assessment years, the Assessing Officer has purported to reopen completed assessments merely on the basis of the seized diaries, even though such material pertained entirely to earlier or later years. This mechanical transposition of entries across assessment years, without verifying the temporal correlation of the alleged transactions, amounts to impermissible telescoping of facts. The Hon‘ble Supreme Court in CIT v. Sun Engineering Works (P) Ltd. [(1992) 198 ITR 297 (SC)] held that reopening under section 147 cannot be used as a ploy for roving verification or fishing enquiry into completed matters. and others The Estate Investment Company Pvt. Ltd. and others The Assessing Officer‘s act of extrapolating entries found in one year to reopen other years is precisely the mischief which the Court sought to prevent. On this count too, the reassessments lack legal sanctity.

For completeness, we also record that certain minor computational adjustments made by the CIT(A) in respect of arithmetic reconciliations, while not impugned on merits, stand rendered academic in view of our decision to annul the substantive assessments themselves. Once the foundational assessment is quashed, all ancillary determinations such as depreciation recomputation, interest levies, or carry-forward adjustments lose their footing. In consequence, these incidental matters need no separate adjudication and are rendered infructuous.

Coming now to the appeals preferred by the Revenue, we find that the Department has assailed the relief granted by the learned CIT(A) in respect of certain portions of the seized material which, according to the Department, ought to have been sustained as unaccounted income. The grounds raised are, in substance, that the CIT(A) erred in deleting additions relating to diary entries not marked ―KB,‖ and in holding that the same could not be attributed to the assessee without corroborative proof. Upon careful consideration, we find no merit in the Revenue‘s grievance. The learned CIT(A), in his considered wisdom, had analysed the seized material threadbare and correctly held that only entries specifically identified, explained, and linked to the assessee could even be considered for assessment. The other entries, being stray and and others The Estate Investment Company Pvt. Ltd. and others uncorrelated, were rightly held to be outside the purview of the assessee‘s accountability. Far from committing any error, the CIT(A) exhibited judicial restraint and factual circumspection. His partial relief was grounded in logic, consistency, and fairness. The Revenue‘s attempt to resuscitate these very entries, after their evidentiary infirmity has already been judicially exposed, is a futile exercise.

The Revenue has also sought enhancement of income on the footing that certain unaccounted receipts were wrongly omitted or under-assessed. However, we find that the CIT(A) had no occasion to direct any such enhancement, nor has any cogent material been brought before us to justify it. The powers of enhancement under section 251 of the Act are indeed wide, but they are not unbounded. They must operate within the framework of issues arising out of the assessment before the CIT(A) and cannot extend to introducing new sources of income that were never the subject of consideration before the Assessing Officer. The Hon’ble Supreme Court in CIT v. Shapoorji Pallonji Mistry [(1962) 44 ITR 891 (SC)] and subsequently in Nirbheram Daluram v. CIT [(1997) 224 ITR 610 (SC)] has held that while the appellate authority has plenary powers to confirm, reduce, enhance or annul an assessment, such power of enhancement must be exercised judiciously and only within the confines of the material before it. The Revenue‘s present plea, seeking enhancement at this stage, is therefore not maintainable.

Additionally, the Revenue has taken ground No.1 in most of the years relating to violation of Rule 46A. We have perused and others The Estate Investment Company Pvt. Ltd. and others the papers filed by the assessee, assessment order and order of the ld. CIT(A), we are in agreement with the contention of the ld. AR that no evidence was produced before the ld.CIT(A) in violation of Rule 46A. Even at the time of hearing, ld. DR has not indicated what were the additional evidences which have been entertained by the ld. CIT(A). Thus, these grounds raised

The cumulative outcome of these appeals is thus be summarised, for administrative convenience, as follows:- ITA No. A.Y Result 3012/Mum/2025 2014-15 Allowed 3013/Mum/2025 2016-17 Allowed 3228/Mum/2025 2015-16 Allowed 3227/Mum/2025 2017-18 Allowed 3225/Mum/2025 2019-20 Allowed 3224/Mum/2025 2020-21 Allowed 3223/Mum/2025 2021-22 Allowed 3222/Mum/2025 2022-23 Allowed 3928/Mum/2025 2015-16 Dismissed 3087/Mum/2025 2016-17 Dismissed 3936/Mum/2025 2017-18 Dismissed and others The Estate Investment Company Pvt. Ltd. and others 59. All the appeals filed by the assessees are allowed in full, whereas the cross-appeals preferred by the Revenue are dismissed. No order as to costs. Order pronounced on 17th October, 2025.