AL QURESH EXPORTS,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 8 (2) MUMBAI, MUMBAI

The brief facts of the case are that the assessee, M/s , is a partnership firm engaged in the business of production, trading and export of buffalo meat and other products obtained after slaughter. The assessee also undertakes local sales of meat, offals and other by-products such as horns, hooves and tallow. For A.Y. 2017-18, the assessee filed its return of income on 25.10.2017 declaring total income of ₹6,80,27,480/-. The CPC processed the return under section 143(1) on 09.02.2018 at the income returned by the assessee. Thereafter, the Assessing Officer completed the scrutiny assessment under section 143(3) on 19.12.2019 and assessed the total income at ₹12,69,50,960/-.

Subsequently, the Investigation Wing conducted a survey under section 133A on 04.01.2023 at the premises of the assessee and its group concerns. During the survey, the Investigation Wing found various documents and digital data. `After considering the assessee's reply, the Assessing Officer passed an order under section 148A(d) on 09.01.2024 with the prior approval of the Chief Commissioner of Income Tax (Central)- 1, Mumbai and issued notice under section 148. In response, the assessee filed its return of income on 01.02.2024 declaring income of ₹6,80,27,480/-. The Assessing Officer thereafter issued notice under section 143(2) on 25.02.2024 and notice under section 142(1) along with a questionnaire. He also issued a show-cause notice on 19.06.2024. The assessee filed replies and supporting documents, which the Assessing Officer considered while completing the reassessment.

One of the main issues examined by the Assessing Officer was with respect to unaccounted cash sales of offals/inferior quality meat to Jaffcon from the Solapur plant. During the survey, the Investigation Wing retrieved an Excel sheet titled “Jaffcon-16-17 Receipt (2)” from the workbook “Jaffcon 15-16- Revised after op diff”. According to the Assessing Officer, this sheet contained date-wise cash receipts from Jaffcon amounting to ₹2,19,92,355/- during F.Y. 2016-17. The Investigation Wing also found another Excel workbook titled “RV (RECEIVED) APRIL-16 TO TILL DATE”, containing entries in the name of Jaffcon with narrations such as “IQM sale” and “IQM sale- Advance received”. Another Excel workbook titled “AQE Cash”, found at the assessee's Mumbai head office, also contained entries relating to cash receipts from Jaffcon against IQM sales.

The Assessing Officer further relied upon the statement of Shri Imran Masuldar, consultant of the assessee, recorded on oath under section 131 of the Act on 07.01.2023. The Assessing Officer noted that Shri Masuldar had stated that an amount of ₹1,26,34,580/-was towards cash received from Jaffcon against sale of inferior quality meat/offals. In view of this statement, the Assessing Officer did not accept the assessee's explanation that the Excel sheets contained business projections prepared for investors or for banking purposes. The Assessing Officer observed that the impounded sheets contained specific dates, amounts and narrations relating to cash receipts and the figures appearing in one set of Excel data were supported by corresponding figures found at another location. The Assessing Officer also noted that the assessee had not explained why and on what basis such detailed date-wise figures could be treated as projections rather than actual transactions.

The Assessing Officer also considered the affidavit of Shri Imran Masuldar furnished by the assessee along with its reply dated 20.06.2024. In the affidavit, Shri Masuldar stated that the Excel data showing cash receipts from Noor Bashar, S.A. & Sons, M.S. Trading, M.I. Qureshi and Mohd. Mursalin had been prepared by him only for projection purposes and no cash had actually been received. The Assessing Officer, however, specifically noted that the affidavit did not refer to or explain the Excel sheets relating to Jaffcon. He therefore held that the affidavit did not contradict or retract Shri Masuldar's earlier statement under section 131 insofar as the cash receipts from Jaffcon were concerned, and the Ld. AO declined to treat the affidavit as sufficient to displace the digital evidence found during the survey.

The Assessing Officer also considered the procurement- production-sales mapping furnished by the assessee. The assessee claimed that its entire production and closing stock was fully accounted for and, therefore, no stock was available for making unaccounted cash sales. The Assessing Officer did not accept this explanation. He observed that the issue did not necessarily involve sale of an unaccounted quantity of offals and the assessee could also have suppressed the sale price of the officials by recording a lower amount in the books while receiving a higher amount in cash. Thus, according to him, the fact that purchases and quantitative production was recorded in the books did not by itself rule out suppression of sales.

The Assessing Officer also considered the affidavit and ledger confirmation furnished by Jaffcon stating that it had not entered into cash transactions with the assessee during the relevant period. The Assessing Officer did not accept this confirmation because the assessee did not furnish its corresponding ledger account of Jaffcon. He further observed that Jaffcon's affidavit did not support the assessee's own explanation that the impounded entries were towards future business projections. According to the Assessing Officer, if the entries genuinely were projected future business, some corresponding sales ought to have materialised in the subsequent years. The assessee, however, did not furnish any details of subsequent sales to Jaffcon to support this explanation.

On the basis of the above material, the Assessing Officer held that the digital records were towards actual cash receipts against sales of offals which the assessee had not recorded in its books. The Assessing Officer treated the amount of ₹2,19,92,355/- as suppressed sales and added the same as business income under section 28 of the Act.

The other issue examined by the Assessing Officer was with respect to section 40A(3) of the Act. On examining the Tally data during the survey and post-survey proceedings, the Assessing Officer initially noted cash payments of about ₹2.29 crore under different heads, being transportation, staff welfare, Sangamner project expenses, business promotion, wages, salaries, donations and miscellaneous expenses. The Assessing Officer asked the assessee to explain why section 40A(3) of the Act should not apply to these payments.

After considering the details submitted by the assessee, the Assessing Officer accepted the explanation in respect of several substantial items. In particular, the Ld. AO found from the individual-wise details that payments relating to staff welfare, Wages-I, Wages-II, Wages-III and salary payable/advances/loans did not exceed the prescribed limit per person per day. He therefore did not make any disallowance in respect of these payments. The Assessing Officer, however, retained the disallowance in respect of five categories. In respect of ₹65,000/- paid to Enka Civil Constructions Pvt. Ltd., he noted that the journal entry dated 26.03.2016 showed a payment towards transportation of tiles and the assessee had not established that the amount were separate payments within the permissible limit. As regards ₹2,19,986/- relating to the Sangamner Project, the assessee claimed that the expenditure was capital in nature. The Assessing Officer, however, found that the assessee had not produced evidence to establish that it had capitalised the expenditure and had not claimed it as a revenue deduction.

The Assessing Officer further disallowed business promotion expenses of ₹2,66,853/-, donation of ₹4,15,026/- and miscellaneous payments of ₹10,22,715/-, as according to him the assessee had not furnished any specific explanation to show why section 40A(3) of the Act did not apply to these payments. The Assessing Officer restricted the disallowance under section 40A(3) to ₹19,89,580/-,.

In appeal, on the issue of validity of the reassessment and the allegation of denial of opportunity of hearing, the learned CIT(A) held that the Assessing Officer had reopened the assessment on the basis of material found during the survey under section 133A of the Act. The CIT(Appeals) noted that the Assessing Officer had issued notice under section 148A(b), passed an order under section 148A(d) and thereafter issued notices under sections 143(2) and 142(1) of the Act. He further noted that the assessment order itself referred to the replies filed by the assessee on 20.06.2024 and the Assessing Officer had considered those replies. The learned CIT(A), therefore, rejected the contention that the Assessing Officer had denied adequate opportunity to the assessee or had failed to consider its replies.

On the merits of the addition of ₹2,19,92,355/- under section 28, the learned CIT(A) relied on the digital evidence found during the survey. He noted that the Excel sheets contained date- wise entries of specific cash amounts with narrations such as “IQM sale” and that another Excel workbook found at the Mumbai head office contained matching entries. He also relied upon the original statement of Shri Imran Masuldar recorded on oath under section 131, wherein Shri Masuldar had confirmed that the entries were towards cash receipts from Jaffcon against sale of inferior quality meat which the assessee had not recorded in its books.

The learned CIT(A) did not accept the explanation that the Excel sheets were business projections. He observed that projections would ordinarily contain approximate or round figures, whereas the impounded material contained precise date- wise figures such as ₹54,115/-, ₹1,97,100/- and ₹3,85,120/-. He also found it improbable that purely projected figures would appear at two different locations with matching amounts and narrations such as “Cash at Solapur” and “IQM sale”. According to him, the nature of the entries and the fact that corresponding data had been found at different locations supported the fact that the entries were actual transactions rather than hypothetical projections.

The learned CIT(A) also did not accept the subsequent retraction made by Shri Imran Masuldar or the confirmation furnished by Jaffcon. He treated these subsequent documents as self-serving afterthoughts and placed reliance on the original statement of Shri Masuldar recorded on oath under section 131 of the Act. He further agreed with the Assessing Officer that the assessee had failed to explain the basis on which the detailed entries in the Excel sheets could be regarded as projections. The learned CIT(A) also found that the procurement-production-sales mapping furnished by the assessee was not sufficient to overturn the digital evidence found during the survey. The CIT(Appeals) held that the material on record showed systematic suppression of sales and he confirmed the addition of ₹2,19,92,355/- under section 28 of the Act.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

As regards Ground No. 1, the assessee has challenged the validity of the reassessment proceedings on the ground that the notice under section 148 was issued by the Jurisdictional Assessing Officer which was contrary to the procedure contemplated under section 151A, relying upon the decision of the Hon'ble Bombay High Court in Hexaware Technologies Ltd. v. ACIT [2024] 162 taxmann.com 225 (Bom.) / 464 ITR 430 (Bom.).

We find that, subsequent to the aforesaid decision, Parliament inserted section 147A by the Finance Act, 2026 with retrospective effect from 01.04.2021. The Hon'ble Supreme Court in ITO v. Tej Partap Singh [2026] 185 taxmann.com 1007 (SC) thereafter restored the issue to the respective High Courts for fresh consideration in the light of section 147A and kept the question regarding its validity.

Since the controversy regarding the jurisdiction of the Jurisdictional Assessing Officer vis-à-vis section 151A, after insertion of section 147A, has not yet attained finality, we are restoring this limited issue to the file of the Assessing Officer. The Assessing Officer shall decide the issue in accordance with the final binding decision of the Hon'ble jurisdictional High Court and/or the Hon'ble Supreme Court as may be applicable at the relevant time, after granting reasonable opportunity to the assessee.

We have expressed no opinion on the merits of this jurisdictional issue and all contentions of both sides are kept open.

Accordingly, Ground No. 1 is allowed for statistical purposes.

Ground No. 2 is general in nature and does not require separate adjudication.

Ground Nos. 3 and 4 relate to the validity of the approval granted under section 151 of the Act. The assessee has contended that the approval was based on incorrect facts and was granted mechanically without proper application of mind. The assessee has also relied upon the decision of the Hon'ble Bombay High Court in Kartik Sureshchandra Gandhi v. Assistant Commissioner of Income-tax [2023] 154 taxmann.com 193 (Bom.). In Ground No. 5, the assessee has contended that the Assessing Officer confirmed the additions in the absence of any incriminating material, except certain loose sheets found during the survey. Since these grounds concern the validity and foundation of the reassessment proceedings, we will deal with them together.

We have considered the submissions and examined the material placed before us, including the proceedings conducted under section 148A and the approval granted under section 151. On examination of the record as a whole, we do not find any merit in the contention that the Assessing Officer initiated the reassessment mechanically or the specified authority granted approval without application of mind.

The Investigation Wing conducted a survey under section 133A on 04.01.2023 in the case of the assessee and its group entities. During the survey, the Investigation Wing examined various records relating to the assessee's business, including Slaughter and Deboning Reports, Daily Production Reports, MIS Reports, Tally data and digital records. The Investigation Wing also found an Excel sheet titled “Jaffcon-16-17 Receipt (2)”, which contained date-wise entries of cash receipts from Jaffcon during F.Y. 2016-17 aggregating to ₹2,19,92,355/-. Another Excel workbook titled “RV (RECEIVED) APRIL-16 TO TILL DATE” contained corresponding entries relating to Jaffcon, while entries up to October 2016 were also found in the Excel workbook “AQE Cash” at the assessee's Mumbai office. Thus, the information available with the Assessing Officer did not consist merely of one stray or isolated loose sheet.

The Investigation Wing also confronted the relevant digital records to Shri Imran Masuldar, consultant of the assessee during the survey. Shri Masuldar confirmed that he had prepared the Excel sheets and had sent them to the Mumbai office of the assessee. When specifically questioned regarding the entries appearing in the name of Jaffcon, he stated that Jaffcon was a local Qureshi Jamat to whom inferior quality meat had been supplied in cash against receipt vouchers. When the Investigation Wing further pointed out that corresponding entries were not appearing in the assessee's books at Mumbai, Shri Masuldar stated that he was not involved in finalisation of accounts at Mumbai and therefore could not explain their absence.

The Assessing Officer thereafter did not straightaway issue notice under section 148 of the Act. He first conducted an enquiry under section 148A(a) of the Act after obtaining the approval of the CCIT (Central)-1, Mumbai. The assessee filed its reply to the enquiry. Thereafter, the Assessing Officer issued the show-cause notice under section 148A(b) of the Act and also supplied the material relied upon by him. The Assessing Officer asked the assessee to furnish the ledger account of Jaffcon, cash book for F.Y. 2016-17, bifurcation of receipts through banking channels and in cash and party-wise details of cash receipts. The assessee filed replies on 13.12.2023 and 29.12.2023.

The order passed under section 148A(d) of the Act shows that the Assessing Officer considered the assessee's explanations. He examined the contention regarding suppression of offal sales, the assessee's explanation regarding the use of Tally software, the closing-stock position, the Jaffcon entries and the statement of Shri Imran Masuldar. The Assessing Officer also considered the assessee's contention regarding section 40A(3) of the Act. He specifically observed that despite being asked to furnish the ledger of Jaffcon, cash book, bifurcation of receipts and party- wise details of cash receipts, the assessee did not furnish the required documents.

Coming to the approval under section 151 of the Act, we find that the Assessing Officer specifically took note of the fact that since more than three years had elapsed from the end of the relevant assessment year, the Chief Commissioner was the specified authority under section 151(ii). The Assessing Officer thereafter obtained the approval of the Chief Commissioner of Income Tax (Central)-1, Mumbai.

We have also examined the approval placed before us. In particular, para 22 of the approval table is important. The approving authority has not merely granted a stereotyped endorsement such as “Yes” or “Approved”. The remarks recorded in para 22 show that the approving authority examined the proposal and thereafter recorded its satisfaction for permitting the proceedings to continue. When the approval is read together with the proposal placed before the authority, it is clear that the approving authority was conscious of the survey conducted in the assessee's case, the nature of the material found, the facts of suppression of sales, the quantum involved and the statutory basis on which the Assessing Officer sought to proceed. We therefore find that the approval shows due application of mind and cannot be characterised as a mechanical sanction.

The assessee has also pointed out that, in the Annexure to section 151 approval, the out-of-books sales have been shown at ₹13,14,03,321/- and the cash payments at ₹3,34,01,714/-, whereas these figures do not match the amounts considered in the reassessment for the year under appeal. According to the assessee, this difference itself shows that the approval was granted without proper application of mind.

We have considered this objection. In our view, the difference in the figures appearing in the Annexure is, in the facts of the present case, a clerical error and does not affect the validity of the proceedings. The material relating to A.Y. 2017-18 was otherwise clearly identified throughout the reassessment proceedings. The Assessing Officer specifically referred to the Excel workbooks, the entries relating to Jaffcon, the relevant financial year, the cash receipts and the statement of Shri Imran Masuldar.

It is also important that the assessee was fully aware of the precise issues on which the Assessing Officer proposed to reopen the assessment. The assessee filed detailed replies dealing with the cash sales to Jaffcon as well as the cash payments. Therefore, the difference in the figures appearing in the Annexure did not create any confusion about the subject matter of the proceedings and did not prevent the assessee from responding to the case made out by the Assessing Officer.

In these circumstances, we are unable to accept that the entire reassessment proceedings should fail merely because the ₹13,14,03,321/- Annexure mentioned the figures of and ₹3,34,01,714/-. When the proceedings are read as a whole, the relevant transactions, the material relied upon and the issues proposed for examination were clearly identifiable and were duly put to the assessee. We therefore regard the discrepancy in the figures as an inadvertent clerical error which, by itself, does not vitiate the assumption of jurisdiction, especially when effective search has been conducted and substantial material has been found.

The assessee has relied upon the decision of the Hon'ble Bombay High Court in Kartik Sureshchandra Gandhi v. Assistant Commissioner of Income-tax [2023] 154 taxmann.com 193 (Bom.). We find that the said decision was rendered on different facts. In that case, the jurisdictional record itself contained substantive errors with respect to basic statutory conditions for reopening, and the Hon'ble High Court found from the approval itself that the authorities had proceeded without proper application of mind.

The present case stands on a different footing. The distinction is not merely that Kartik Sureshchandra Gandhi concerned an individual whereas the present assessee is a partnership firm. The distinction lies in the nature of the information available with the Department and the manner in which the authorities dealt with that information. In the present case, the proceedings emanated from a detailed survey under section 133A in which the Investigation Wing examined several categories of business records and digital data. The Investigation Wing also confronted the relevant digital material to the person who had prepared it and recorded his statement. Thereafter, the Assessing Officer conducted the statutory proceedings under section 148A, supplied the relied-upon material, called for further records, considered the assessee's explanations and passed a reasoned order under section 148A(d) of the Act. The approving authority thereafter examined the proposal and, as reflected particularly in para 22 of the approval table, recorded its satisfaction before granting approval. We therefore do not find any patent jurisdictional error comparable to the defect noticed by the Hon'ble Bombay High Court in Kartik Sureshchandra Gandhi.

We now deal specifically with Ground No. 5, wherein the assessee has contended that the Assessing Officer proceeded in the absence of incriminating or corroborative material and merely relied upon loose sheets found during the survey.

We are unable to accept this contention on the facts available before us.

In the present case, the survey conducted on 04.01.2023 has a direct legal effect on the reopening proceedings. Explanation 2 to section 148 of the Act provides that where a survey under section 133A is conducted on or after 01.04.2021, the Assessing Officer is deemed to have information suggesting that income chargeable to tax has escaped assessment. In other words, the Assessing Officer is not required to separately establish, at the stage of reopening, that the survey material conclusively proves escapement of income. The survey itself gives the Assessing Officer a legal basis to examine whether income has escaped assessment and to proceed under section 148A and section 148, subject of course to following the prescribed procedure. Since the survey in the present case was conducted on 04.01.2023, this statutory condition was satisfied.

Even otherwise, the material found during the survey was considerably more substantial than what the assessee seeks to describe as mere “loose sheets”. The first Excel workbook contained date-wise receipts from Jaffcon aggregating to ₹2,19,92,355/-. The entries were not vague figures. They were linked with particular dates and a specific party. A second Excel workbook contained corresponding Jaffcon entries with narrations relating to receipt of cash. Further corresponding entries were found at the Mumbai head office in the workbook “AQE Cash”. The narrations appearing in these records included expressions such as “IQM sale” and “IQM Advance”. Thus, the Department found corresponding digital trails at more than one location.

The fact that the same or corresponding transactions appeared in more than one digital record is relevant. A stray loose paper containing an unexplained figure may stand on one footing. However, where date-wise entries concerning the same party appear in separate digital records recovered from different locations and carry transaction-specific narrations, the material cannot prima facie be dismissed as an isolated dumb document without examination.

The Investigation Wing confronted the relevant Excel sheet to Shri Imran Masuldar, who confirmed that he himself had prepared the sheets and sent them to the Mumbai office. When specifically asked about Jaffcon, he stated that inferior quality meat had been supplied to Jaffcon in cash against receipt vouchers. Thus, there was a direct link between the person who prepared the digital record, the contents of that record and the nature of the transaction reflected therein.

This statement provides further corroboration to the digital material. Whether the subsequent affidavit or retraction should prevail over the earlier statement is a matter concerning the merits of the addition. However, for the limited purpose of deciding whether the Assessing Officer possessed material for reopening the assessment, it cannot be held that the Excel sheets were not corroborated.

There was also other business material available from the survey. The Investigation Wing examined the Slaughter and Deboning Reports, Daily Production Reports, MIS Reports and Tally backup, apart from the Excel workbooks. The proposal placed before the approving authority specifically referred to these records while discussing the unaccounted sales and cash payments.

The Assessing Officer also did not rely blindly upon the material gathered by the Investigation Wing. During the proceedings under section 148A, he sought verification from the assessee by asking for the Jaffcon ledger, cash book, bifurcation of receipts between banking channels and cash and party-wise cash receipts. These documents were directly relevant to verifying whether the impugned cash receipts stood accounted for in the regular books. In the order under section 148A(d) of the Act the Ld. AO observed was recorded that the assessee did not furnish these documents despite the specific requisition.

Therefore, the material available at the stage of reopening comprised several interconnected elements: the survey conducted under section 133A; multiple digital records containing corresponding Jaffcon entries; transaction-specific narrations; records found at more than one business location; the statement of Shri Imran Masuldar identifying the sheets and explaining the Jaffcon transactions; production and accounting records examined during the survey; and the assessee's inability at the section 148A stage to furnish the books and reconciliations specifically called for by the Assessing Officer.

At the stage of initiation of reassessment, the Assessing Officer is not required to conclusively prove that the impugned receipts constitute taxable income. He has to examine whether the information available to him, considered objectively, justifies further enquiry into possible escapement of income. Questions such as whether the Excel entries were actual sales or projections, whether the affidavits subsequently filed by the assessee are sufficient to rebut the evidence, whether the absence of stock discrepancy weakens the Department's case, and whether the entire turnover or only the profit element can be brought to tax are matters which go to the merits of the addition. We shall examine those issues separately while adjudicating the substantive grounds.

For the purpose of Ground No. 5, however, we are concerned only with the assessee's contention that the Assessing Officer had no incriminating or corroborative material except loose sheets. The record clearly establishes otherwise. The Assessing Officer possessed specific digital evidence supported by corresponding records and a statement recorded during the survey. The proceedings therefore cannot be characterised as having been initiated on suspicion or conjectures.

We accordingly find that the material available with the Assessing Officer constituted sufficient information for initiating reassessment proceedings.

Ground Nos. 6 to 8 are with respect to the addition of ₹2,19,92,355/- under section 28 of the Act on account of cash sales to Jaffcon. The assessee has challenged the addition on the ground that no corresponding cash was found during the survey, no discrepancy was noticed in the stock, the subsequent affidavit of Shri Imran Masuldar stated that the Excel sheets were only projections, and Jaffcon itself filed an affidavit denying any cash transactions with the assessee. In Ground No. 9, without prejudice to the above grounds, the assessee has contended that even if the sales are accepted, the entire amount of ₹2,19,92,355/- cannot be treated as income and only the profit element embedded in such sales can be brought to tax.

We have considered the rival submissions and examined the material available on record. As already discussed while dealing with the earlier grounds, the addition is not based merely upon an isolated loose paper. During the survey, the Investigation Wing found different Excel sheets containing date-wise entries relating to Jaffcon. Similar entries were also found in the Excel data at the assessee's Mumbai office. The Investigation Wing further confronted the relevant material to Shri Imran Masuldar, who confirmed during his statement recorded on oath that he had prepared the Excel sheets and, when specifically questioned about Jaffcon, explained that inferior quality meat had been supplied to Jaffcon in cash.

We do not find the absence of a stock discrepancy to be conclusive in favour of the assessee. The case of the Revenue is not that the assessee purchased or manufactured additional quantity of meat which was outside the books. The Assessing Officer observed that the possibility was that the assessee had suppressed the rate or value at which the offals were sold to Jaffcon. Therefore, there could be no stock difference even if part of the sale consideration realised from the goods generated from the recorded purchases was not fully recorded in the books.

This aspect is of significance keeping in view the nature of the assessee's business. The assessee purchases buffaloes/meat and, after processing and slaughter, obtains different qualities of meat as well as offals and other by-products. The better quality meat is ordinarily exported, whereas the inferior or leftover quality meat/offals are sold locally. The material found during the survey shows that the Jaffcon transactions were with respect to such inferior quality or leftover meat. Therefore, the fact that the purchase of the buffalo/meat appears in the books does not by itself establish that the entire sale proceeds from the different products and by-products from such purchase was also recorded in the books.

As regards the subsequent affidavit of Shri Imran Masuldar, we find that the original statement was recorded during the survey when the relevant digital records were confronted to him. His subsequent affidavit has therefore to be considered along with, and weighed against, that statement and the digital records found during the survey. A subsequent retraction does not automatically erase an earlier statement merely because it is made in the form of an affidavit. The person retracting the statement must explain why the earlier statement was incorrect and the surrounding evidence must also support such explanation. In the present case, the corresponding digital records found at different locations provide support to the inference drawn from the original statement.

The affidavit filed by Jaffcon denying cash transactions has also been considered. However, this affidavit was furnished subsequently and has to be weighed against the internal digital records found from the assessee's premises and the statement of Shri Imran Masuldar concerning those records. The subsequent denial by the customer, by itself, cannot render the material found from the assessee's own records as being non-existent.

Looking into the cumulative effect of the digital records, corresponding entries found at more than one location and the statement recorded during the survey, we do not find sufficient reason to interfere with the finding of the authorities below that the amount of ₹2,19,92,355/- was towards sales/receipts which were not recorded in the regular books. Accordingly, the primary contentions raised by the assessee in Ground Nos. 6 to 8 are rejected.

We now come to the alternative contention raised in Ground No. 9, namely, whether the entire alleged suppressed sales of ₹2,19,92,355/- can be treated as business income.

On this issue, the assessee has placed reliance upon the decision of the Coordinate Bench in its own case for A.Y. 2020- 21 in ITA No. 3662/Mum/2026, order dated 19.08.2026. We have carefully considered the said decision. In that year also, the Assessing Officer had made additions under section 28 of the Act by treating cash receipts reflected in digital records as suppressed sales. The Coordinate Bench accepted the assessee's alternative contention that the entire suppressed turnover could not automatically be treated as income and held that what could be brought to tax was the profit element embedded in such turnover. Looking into the assessee's historical net-profit rate of approximately 1.5% and the nature of the unrecorded receipts, the Coordinate Bench estimated the profit at 2% of the suppressed turnover.

The aforesaid decision in the assessee's own case is undoubtedly relevant and the basic principle laid down therein deserves to be followed. A sale receipt and business income are not necessarily the same thing. Ordinarily, turnover includes both recovery of the cost of the goods and the profit earned on their sale. Therefore, merely because a particular sale is not recorded in the books, the entire sale value does not automatically become profit.

However, the decision for A.Y. 2020-21 cannot be applied mechanically without considering an important factual contention specifically raised by the learned Departmental Representative in the present appeal.

The learned DR has submitted that the assessee purchases buffaloes/meat as part of its regular business and the entire cost of such purchases has already been debited in the regular books and claimed while computing the profit disclosed in the return of income. From those very purchases, the assessee obtains different products. The better quality meat is generally exported, whereas the inferior quality/leftover meat and offals are sold locally. According to the Revenue, the amount of ₹2,19,92,355/- were the sale proceeds of such leftover or inferior quality meat to Jaffcon.

We find considerable force in this submission.

The principle laid down in the order for A.Y. 2020-21 is that only the real income embedded in the suppressed turnover should be brought to tax. That principle does not mean that an assessee becomes entitled to a second deduction of an expenditure which has already been claimed and allowed in the regular computation of income. The principle that only profit embedded in turnover is taxable and the equally fundamental principle that the same expenditure cannot be deducted twice have to operate together.

This distinction is important in the present case. It is not the allegation of the Assessing Officer that the unaccounted sales are related to goods which have been purchased outside the books. They relate to inferior quality/leftover meat or offals arising out of the very buffaloes/meat purchased and processed in the assessee's regular business. If the full purchase cost of those animals and the related common processing expenditure has already been debited to the Profit and Loss Account and allowed while computing the return of income filed by the assessee, that expenditure has already reduced the taxable profit of the assessee once. It cannot again be deducted from the undisclosed Jaffcon receipts while estimating the income from those receipts.

The Coordinate Bench decision for A.Y. 2020-21 does not lay down that 2% must invariably be applied to every suppressed undisclosed sale of the assessee irrespective of the manner in which the corresponding costs have already been accounted for. The correct exercise is to identify the actual income which escaped assessment on the facts of the particular year.

There is therefore a distinction between two situations. If the suppressed sale relates to goods for which the assessee has incurred a corresponding cost which has not already been claimed or allowed in the regular accounts, such cost has to be taken into consideration while computing the profit embedded in the suppressed undisclosed turnover. On the other hand, if the purchase and processing costs attributable to those goods have already been fully debited and allowed in the regular books, allowing those very costs once again against the undisclosed sale proceeds would amount to a double deduction. In that situation, the income embedded in the undisclosed receipts would be higher, subject to deduction only of such further expenditure, if any, which was actually incurred for earning those receipts and which has not already been claimed in the books.

We therefore accept the assessee's alternative contention in Ground No. 9 in principle, that what is taxable under section 28 of the Act is the income arising from the undisclosed sales and not mechanically the gross turnover merely because the receipts were not recorded in the books. At the same time, we are unable to mechanically apply the net-profit rate of 2% adopted for A.Y. 2020-21 without first examining the specific contention of the Revenue regarding the accounting of the corresponding purchase and processing costs in the present year.

The correct exercise, in our view, is to ascertain what portion of the cost attributable to the inferior quality/leftover meat sold to Jaffcon has already been accounted for by the assessee in the Profit and Loss Account and has already been allowed while computing the returned income. If the purchase cost of the buffaloes/meat and the related processing expenditure have already been fully claimed in the regular accounts, the Assessing Officer shall not allow the assessee a second deduction of the same expenditure while computing the income from the undisclosed Jaffcon sales. However, if the assessee establishes that any expenditure attributable to such sales was not already claimed or allowed in the regular books, the Assessing Officer shall take such expenditure into account while computing the income embedded in the undisclosed sales.

For this limited purpose, we restoring the computation of income arising from the undisclosed sales of ₹2,19,92,355/- to the file of the Assessing Officer. The Assessing Officer shall examine the assessee's audited accounts, purchase records, production and yield records and the manner in which the cost of the buffaloes/meat and the related processing expenses have been accounted for. The Ld.AO shall examine if the assessee has actually incurred any expenses in relation to undisclosed sales of ₹2,19,92,355/- which have not been already recorded in regular books of accounts and if the said expenses have already been recorded against regular sales then no benefit of deduction of those expenses shall be allowed.

We make it clear that the Coordinate Bench decision for A.Y. 2020-21 shall guide the Assessing Officer on the principle that taxation is of the income embedded in undisclosed turnover and not of total turnover as such. However, the rate of 2% adopted in that year shall not be applied mechanically if the facts of the present year show that the cost attributable to the alleged Jaffcon sales has already been fully absorbed and allowed in the regular books. The Assessing Officer shall compute the appropriate profit looking into the actual accounting treatment and shall grant the assessee reasonable opportunity to furnish the necessary cost and accounting records.

Accordingly, Ground Nos. 6 to 8 are dismissed, whereas Ground No. 9 is allowed for statistical purposes in light of the directions given above.

Ground Nos. 10 and 11 are with respect to the disallowance of ₹19,89,580/- under section 40A(3) of the Act. The assessee has contended that the Assessing Officer did not properly examine the nature of the individual payments and the supporting documents furnished by the assessee and that the learned CIT(A) also confirmed the disallowance without examining whether the individual payments actually crossed the prescribed monetary limit or were covered by the exceptions under Rule 6DD.

We have heard the rival submissions and examined the material available on record. The Assessing Officer had initially identified cash payments aggregating to about ₹2.29 crore. However, after examining the break-up furnished by the assessee, the Assessing Officer himself accepted that a substantial part of these payments being staff welfare, wages and salary-related payments, did not attract section 40A(3), as the individual payments were within the prescribed limit. The Assessing Officer restricted the disallowance to the following five items: transportation expenses paid to Enka Civil Constructions Pvt. Ltd. of ₹65,000/-, Sangamner Project expenses of ₹2,19,986/-, business promotion expenses of ₹2,66,853/-, donation of ₹4,15,026/- and miscellaneous payments of ₹10,22,715/-, aggregating to ₹19,89,580/-.

At this stage, we may refer to the decision of the Coordinate Bench in the assessee's own case for A.Y. 2020-21 in ITA No. 3662/Mum/2026, order dated 19.08.2026. In that year also, the Assessing Officer had initially identified larger cash payments and, after accepting the assessee's explanation in respect of several items, finally confirmed the disallowance under section 40A(3) in respect of certain payments. The Coordinate Bench examined the manner in which section 40A(3) is required to be applied and observed as under:

The Coordinate Bench thereafter further observed:

The Coordinate Bench accordingly restored the matter to the Assessing Officer with the following direction:

We find that the same principle applies to the year under consideration. There is, however, one important statutory difference which requires consideration. The present appeal relates to A.Y. 2017-18. For this assessment year, the monetary limit prescribed under section 40A(3) was ₹20,000/- per person per day. The Finance Act, 2017 reduced this limit from ₹20,000/- to ₹10,000/- only with effect from 01.04.2018 and, therefore, the reduced limit applies from A.Y. 2018-19 onwards. The Assessing Officer, however, proceeded throughout on the basis that the applicable general monetary limit for the year under consideration was ₹10,000/-.

This aspect is important because the disallowance under section 40A(3) of the Act cannot be made merely by taking the aggregate amount appearing under a particular ledger head. The statutory test has to be applied payment-wise and person-wise. The Assessing Officer has to first identify the person to whom the payment was made, the date of payment and the amount paid or aggregate of amounts paid to that person on that particular day. Only thereafter can it be examined whether the applicable monetary limit was crossed and, if so, whether the payment is covered by any of the exceptions provided under Rule 6DD.

We therefore find that the retained disallowance of ₹19,89,580/- requires fresh examination on this basis.

As regards the payment of ₹65,000/- to Enka Civil Constructions Pvt. Ltd., the Assessing Officer observed that the journal entry dated 26.03.2016 was payment towards transportation of tiles. The assessee relied upon the higher limit of ₹35,000/- which was applicable to transportation payments. In our view, the Assessing Officer shall verify the underlying voucher, the nature of the service and the actual payment details. If the payment was in fact for plying, hiring or leasing of goods carriage, the applicable statutory limit shall be considered accordingly. The Assessing Officer shall then examine whether there was one payment of ₹65,000/- or separate payments to different persons/on different dates.

As regards the Sangamner Project expenses of ₹2,19,986/-, the assessee had specifically claimed before the Assessing Officer that these were towards capital expenditure. The Assessing Officer rejected the contention essentially because the assessee did not furnish sufficient evidence to establish that the amount had actually been capitalised and had not been claimed as revenue expenditure. This aspect also requires factual verification. Section 40A(3) of the Act operates in relation to expenditure in respect of which a deduction is claimed in computing business income. Therefore, if the assessee establishes from its books and audited financial statements that the amount was capitalised and was not claimed as a revenue deduction, the Assessing Officer shall examine the applicability of section 40A(3) of the Act in that factual background rather than merely proceeding from the cash-book figure.

Similarly, in relation to the business promotion expenses of ₹2,66,853/-, donation of ₹4,15,026/- and miscellaneous payments of ₹10,22,715/-, the Assessing Officer appears to have sustained the disallowance because the assessee had not furnished a specific explanation at the assessment stage. In our view, the mere aggregate amount appearing under each ledger head cannot by itself establish violation of section 40A(3) of the Act. The Assessing Officer must examine the vouchers and ascertain whether any payment or aggregate of payments to the same person on the same day exceeded ₹20,000/-, which was the applicable limit for A.Y. 2017-18. If the ledger amount was towards several payments to different persons or payments made on different dates, each remaining within the applicable limit, section 40A(3) of the Act cannot be invoked merely because the total amount debited under the ledger head during the year exceeds ₹20,000/-.

In the case of the donation also, the Assessing Officer shall first verify whether the amount was actually claimed as an expenditure while computing the business income. If no deduction of the expenditure itself has been claimed, the question of disallowing the same expenditure under section 40A(3) would require examination in that light. Also, if the assessee contends that any particular payment is covered by Rule 6DD because of the nature of the payment, business circumstances or the identity of the payee, the Assessing Officer shall examine such contention with reference to the relevant evidence and the applicable clause of Rule 6DD.

Thus, following the principle laid down by the Coordinate Bench in the assessee's own case for A.Y. 2020-21, we find that neither the entire disallowance can be sustained merely on the basis of aggregate ledger figures nor can it be deleted without verification of the underlying transactions. The correct enquiry has to be made at the level of each payment.

We accordingly restore this limited issue to the file of the Assessing Officer with a direction to examine the payment-wise, person-wise and date-wise details, the relevant ledgers, vouchers and supporting documents in respect of the five disputed heads aggregating to ₹19,89,580/-. While carrying out this exercise, the Assessing Officer shall apply the monetary limit legally applicable to A.Y. 2017-18, being ₹20,000/- per person per day, subject to the higher limit applicable to qualifying payments for plying, hiring or leasing goods carriages.

The Assessing Officer shall also verify whether any of the disputed amounts, particularly the Sangamner Project expenditure or donation, were not claimed as deductible revenue expenditure in the first place and shall apply section 40A(3) in accordance with law. The Assessing Officer shall afford reasonable opportunity to the assessee to furnish the necessary payment-wise details and supporting documents and shall confine himself to this limited verification.

Accordingly, Ground Nos. 10 and 11 are allowed for statistical purposes.

In the result, the appeal of the assessee for A.Y. 2017-18 is partly allowed for statistical purposes.

Since the facts and issues involved in the present appeal are similar to those considered by us for A.Y. 2017-18, we dispose of the grounds following our findings above, with necessary changes for the amounts and facts relevant to this year.

Ground Nos. 1 and 2are with respect to the validity of the reassessment proceedings under sections 148 and 151A. For the reasons recorded by us for A.Y. 2017-18 and having regard to the subsequent insertion of section 147A by the Finance Act, 2026 with retrospective effect from 01.04.2021, we restore this limited jurisdictional issue to the file of the Assessing Officer. The Assessing Officer shall decide the issue in accordance with the binding decision of the Hon'ble jurisdictional High Court and/or the Hon'ble Supreme Court, as may be applicable, after granting reasonable opportunity to the assessee. Accordingly, Ground Nos. 1 and 2 are allowed for statistical purposes.

Ground Nos. 6 to 9 relate to the additions of ₹70,91,000/-, ₹41,00,868/- and ₹37,62,196/- under section 28 of the Act towards unrecorded/suppressed sales. The assessee has also relied upon subsequent retraction affidavits. Following our findings for A.Y. 2017-18, we find that the subsequent retractions and the absence of corresponding cash at the time of survey do not, by themselves, overturn the records and digital material found during the survey. We therefore uphold the finding that the impugned amounts were towards sales/receipts not fully recorded in the regular books. Accordingly, Ground Nos. 6 to 9 are dismissed.

In Ground No. 10, the assessee has alternatively contended that only the profit embedded in the suppressed sales can be brought to tax. Following our findings for A.Y. 2017-18 and the Coordinate Bench decision in the assessee's own case for A.Y. 2020-21 in ITA No. 3662/Mum/2026, order dated 19.08.2026, we accept this contention in principle. We restore the computation to the Assessing Officer, who shall compute the incremental profit actually embedded in the suppressed receipts, without treating the entire turnover as income and without allowing deduction of any expenditure which was already claimed in the regular books. Accordingly, Ground No. 10 is allowed for statistical purposes.

Ground Nos. 11 and 12 relate to the disallowance of ₹5,91,461/- under section 40A(3). Following our findings for A.Y. 2017-18, we restore the issue to the Assessing Officer for verification on a payment-wise, person-wise and date-wise basis. For A.Y. 2018-19, the applicable general monetary limit is ₹10,000/- per person per day, subject to the higher limit applicable to qualifying payments for plying, hiring or leasing goods carriages. The Assessing Officer shall also examine the assessee's claim under Rule 6DD and whether the expenditure was actually claimed as a deduction. Accordingly, Ground Nos. 11 and 12 are allowed for statistical purposes.

Ground No. 13, alleging violation of principles of natural justice, is dismissed for the reasons noted for A.Y. 2017-18. Ground No. 14 is general in nature and requires no separate adjudication.

In the result, the appeal of the assessee for A.Y. 2018-19 is partly allowed for statistical purposes.

Ground Nos. 1 and 2 are with respect to the validity of the reassessment proceedings under sections 148 and 151A of the Act. We have already dealt with this issue in the earlier assessment years. In view of the subsequent insertion of section 147A by the Finance Act, 2026 with retrospective effect from 01.04.2021, we restore this limited jurisdictional issue to the Assessing Officer. The Assessing Officer shall decide the issue in accordance with the final binding decision of the Hon'ble jurisdictional High Court and/or the Hon'ble Supreme Court, as may be applicable at the relevant time, after giving reasonable opportunity to the assessee. Accordingly, Ground Nos. 1 and 2 are allowed for statistical purposes.

In Ground Nos. 3 to 6 the assessee has challenged the reassessment on the grounds that the Assessing Officer went beyond the basis on which the assessment was reopened, that the approval under section 151 of the Act was mechanical and based on incorrect facts, and that the additions were made only on the basis of loose sheets without any supporting material. We have considered similar objections in the earlier years. For the reasons recorded therein, we find that the Assessing Officer initiated the reassessment on the basis of specific material and digital records found during the survey and followed the procedure under section 148A. We therefore find no reason to take a different view for this year. Accordingly, Ground Nos. 3 to 6 are dismissed.

Ground Nos. 7 to 12 are with respect to additions under section 28 of the Act of ₹25,50,000/-, ₹42,54,505/-, ₹81,58,646/-, ₹20,06,886/- and ₹4,74,976/- towards cash sales or receipts not recorded in the regular books. The assessee has also relied upon the later retraction affidavits filed by its employees. Following our findings for the earlier years, we find that a later retraction, by itself, cannot wipe out the digital records found during the survey. Similarly, merely because corresponding cash was not physically found at the time of survey does not prove that the transactions recorded in those records never took place. We therefore uphold the finding that these amounts were towards sales or receipts which were not fully recorded in the books. Accordingly, Ground Nos. 7 to 12 are dismissed.

In Ground No. 13, the assessee has raised an alternative plea that even if the suppressed sales are accepted, the entire sales amount cannot be treated as income and only the profit earned from such sales can be taxed. We have accepted this principle for the earlier assessment years. The Coordinate Bench has also taken the same view in the assessee's own case for A.Y. 2020-21 in ITA No. 3662/Mum/2026, order dated 19.08.2026.

We therefore accept this contention in principle. However, the assessee cannot claim the same purchase or processing expenses twice. We accordingly restore this limited issue to the Assessing Officer. The Assessing Officer shall examine the accounts and compute the actual additional profit arising from the suppressed receipts. He shall not treat the entire turnover as income, but at the same time shall not again allow any expenditure which the assessee has already claimed in its regular books. Accordingly, Ground No. 13 is allowed for statistical purposes.

Ground Nos. 14 and 15 are with respect to the disallowance of ₹39,30,327/- under section 40A(3). Following our findings for the earlier assessment years, we restore this issue to the Assessing Officer for fresh verification. The Assessing Officer shall examine the payments person-wise, date-wise and payment- wise and apply the limit of ₹10,000/- per person per day, subject to the higher limit applicable to qualifying payments for plying, hiring or leasing goods carriages. He shall also examine whether any payment is covered by Rule 6DD and whether the amount was actually claimed as an expenditure in the Profit and Loss Account. Accordingly, Ground Nos. 14 and 15 are allowed for statistical purposes.

In Ground No. 16, the assessee has challenged the addition of ₹3,27,250/- under section 69A of the Act as unexplained money.

We have examined the material on record. During the survey, the Department found an Excel workbook containing party-wise details of invoices and cash receipts. The Assessing Officer did not treat all the entries in the same manner. He examined each entry separately.

Where the Assessing Officer could connect a cash receipt with a business sale, he treated that amount as business income under section 28 of the Act. However, there were five cash receipts aggregating to ₹3,27,250/-, being ₹1,92,500/- shown against “Local”, ₹70,000/- against Irfan Sheri, ₹1,450/- against Salman Qureshi, ₹58,800/- against Mahesh Latur and ₹4,500/- against Sameer Inamdar, for which the assessee did not explain the nature or source. The Assessing Officer therefore treated these amounts as unexplained money under section 69A of the Act.

We find this distinction made by the Assessing Officer to be reasonable. He has not treated every cash entry found in the Excel sheet as unexplained money. Wherever the entry could be connected with the assessee's sales, he treated it as business income. He applied section 69A only to those cash receipts for which the assessee could not explain what the amount was towards, why it was received, or where it was recorded in the books.

The assessee has generally denied having received any unaccounted cash. In our view, such a general denial is not sufficient. Once specific cash entries were found in the assessee's own digital records, the assessee was required to give a proper explanation for each entry and show from its books how the amount had been accounted for. The assessee has not given any explanation or reconciliation for these five receipts.

We also do not accept the argument that the addition should be deleted because the survey team did not find the corresponding cash physically. The entries relate to F.Y. 2018-19, whereas the survey took place on 04.01.2023, several years later. It cannot reasonably be expected that the same cash received years earlier should still be available at the assessee's premises on the date of survey. What is relevant is whether the records show receipt of the money during the relevant year and whether the assessee can satisfactorily explain it.

The Excel records also cannot be treated merely as meaningless loose sheets. The same digital records contained several bank receipts which matched the entries in the assessee's regular books, both in amount and date. This gives credibility to the records. The assessee cannot accept the entries which match its books but ask us to ignore the cash entries appearing in the same records merely by calling them projections.

The learned CIT(A) has also noted that the digital records came from the assessee's own computers and the bank entries appearing in those records matched the regular Tally accounts, whereas the cash entries were not found in the books. The assessee has not produced any material to rebut these facts.

Looking at the matter as a whole, we find that the addition is not based merely on suspicion. There are specific cash-receipt entries in the assessee's own digital records; other entries in the same records match the regular books; and the assessee has failed to explain the nature and source of the five cash receipts aggregating to ₹3,27,250/- or show that they were accounted for in its books.

We therefore find no reason to interfere with the addition made under section 69A. Accordingly, Ground No. 16 is dismissed.

Ground No. 17 alleges violation of the principles of natural justice. Following our findings for the earlier assessment years, we find no basis to accept this ground. The Assessing Officer confronted the relevant material to the assessee and considered the replies filed before completing the assessment. Accordingly, Ground No. 17 is dismissed.

In the result, the appeal of the assessee for A.Y. 2019-20 is partly allowed for statistical purposes.

Ground Nos. 1 and 2 are with respect to the validity of the reassessment proceedings under sections 148 and 151A of the Act. We have already dealt with this issue in the earlier assessment years. In view of the subsequent insertion of section 147A by the Finance Act, 2026 with retrospective effect from 01.04.2021, we restore this limited jurisdictional issue to the Assessing Officer. The Assessing Officer shall decide the issue in accordance with the final binding decision of the Hon'ble jurisdictional High Court and/or the Hon'ble Supreme Court, as may be applicable at the relevant time, after giving reasonable opportunity to the assessee. Accordingly, Ground Nos. 1 and 2 are allowed for statistical purposes.

In Ground Nos. 3 to 5, the assessee has challenged the reassessment on the grounds that the approval under section 151 was not furnished, that the material relied upon for reopening was not supplied along with the notice under section 148A(b), and that the additions were made only on the basis of loose sheets without any independent supporting material. We have considered similar objections in the earlier assessment years. For the reasons recorded therein, we find no reason to take a different view for this year. The reassessment proceedings arose from specific material and digital records found during the survey and the Assessing Officer proceeded under section 148A before reopening the assessment. We therefore do not find any ground to invalidate the reassessment on these objections. Accordingly, Ground Nos. 3 to 5 are dismissed.

Ground Nos. 6 and 7 are with respect to the disallowance of ₹55,84,595/- under section 40A(3) of the Act. Following our findings for the earlier assessment years, we restore this issue to the Assessing Officer for fresh verification. The Assessing Officer shall examine the disputed payments person-wise, date-wise and payment-wise and apply the monetary limit of ₹10,000/- per person per day, subject to the higher limit applicable to qualifying payments for plying, hiring or leasing goods carriages. The Assessing Officer shall also examine whether any payment is covered by the exceptions under Rule 6DD and whether the amount was actually claimed as an expenditure while computing the business income. The assessee shall be given reasonable opportunity to furnish the relevant vouchers and supporting documents. Accordingly, Ground Nos. 6 and 7 are allowed for statistical purposes.

In Ground No. 8, the assessee has alleged violation of the principles of natural justice. Following our findings for the earlier assessment years, we find no independent basis to annul the reassessment on this ground. Further, in respect of the issue restored by us, the Assessing Officer has been directed to give reasonable opportunity to the assessee. Accordingly, Ground No. 8 is dismissed.

Ground No. 9 merely seeks liberty to raise appropriate contentions in respect of individual parties and payments forming part of the disallowance under section 40A(3). Since we have already restored the issue under section 40A(3) to the Assessing Officer for payment-wise and person-wise verification, the assessee shall be at liberty to place the relevant explanation and supporting material before the Assessing Officer. Accordingly, Ground No. 9 is disposed of in terms of our directions in Ground Nos. 6 and 7.

In the result, the appeal of the assessee for A.Y. 2021-22 is partly allowed for statistical purposes.

Ground Nos. 1 and 2 are with respect to the disallowance of ₹17,86,425/- under section 40A(3) of the Act. Following our findings for the earlier assessment years, we restore this issue to the Assessing Officer for fresh verification. The Assessing Officer shall examine the disputed payments person-wise, date-wise and payment-wise and apply the limit of ₹10,000/- per person per day, subject to the higher limit wherever applicable. He shall also examine whether any payment is covered by Rule 6DD and whether the amount was actually claimed as an expenditure in the Profit and Loss Account. Accordingly, Ground Nos. 1 and 2 are allowed for statistical purposes.

Ground No. 3 alleges violation of principles of natural justice. Since the issue under section 40A(3) has been restored to the Assessing Officer with a direction to give reasonable opportunity to the assessee, no separate adjudication is required. Accordingly, Ground No. 3 is disposed of.

Ground No. 4 seeks liberty to raise appropriate contentions in respect of individual parties whose payments were disallowed under section 40A(3). Since the issue itself has been restored to the Assessing Officer, the assessee shall be free to furnish the relevant explanation and supporting documents for each payment. Accordingly, Ground No. 4 is disposed of in terms of our directions above.

In Ground No. 5, the assessee has challenged the addition of ₹2,90,000/- under section 69A of the Act. The Assessing Officer found from the digital records that the amount was towards cash received from Rehan Malegaon against sale of bones and the amount was not recorded in the regular books. We therefore find no reason to accept the assessee's contention that the entry was merely an unauthenticated loose sheet.

However, the Assessing Officer himself has identified the nature and source of the amount as cash receipt against sale of bones. Therefore, following our findings for the earlier assessment years, the receipt has to be considered as an undisclosed business receipt and the income arising from such receipt has to be computed on the same basis as directed by us for the undisclosed sales in the earlier years. The Assessing Officer shall accordingly compute the actual additional profit embedded in the undisclosed receipt of ₹2,90,000/-, without mechanically treating the entire receipt as income and without allowing any expenditure which was already been claimed in the regular books for a second time.

Ground No. 6 is general in nature and does not require separate adjudication.

In the result, the appeal of the assessee for A.Y. 2022-23 is partly allowed for statistical purposes.

In the combined result, the appeal of the years before us are partly allowed for statistical purposes.