ACIT-CC-4-2, MUMBAI, MUMBAI vs. KESARARAM DAYARAM MALI, MUMBAI

The relevant facts, which permeate all the three years, may be stated in some detail. A search and seizure action under section 132 was carried out on 17.03.2021 in the case of Rubberwala Group and others, in which the residential premises of the assessee were also covered. During the search conducted at the residence of Shri Imran Ashfaque Ansari, a key employee of the Rubberwala Group who was handling sale and registration of shops in the Platinum Mall project, a 16 GB pen drive was found and seized. Shri Imran Ansari accepted that the pen drive belonged to him and contained data maintained by him in connection with sale of shops in the said project. The pen drive contained an Excel file styled “consolidated 1 2 3 balance”, comprising different worksheets including “Master”, “Payment” and “Cheque”. According to the Assessing Officer, the “Master” sheet contained elaborate shop-wise data extending over several columns and recorded, inter alia, the particulars of purchasers, shop numbers, area, agreement value, cheque component, cash component and balances. Shri Imran Ansari, in his statement recorded during the search, explained the manner in which this data was maintained and also stated that the total consideration for the shops comprised both banking-channel and cash components. The AO further relied upon the post-search statement of Shri Tabrez Ahmed Shaikh, Director/Promoter of RHIL, who, according to the assessment order, confirmed

Insofar as the present assessee is concerned, the genesis of the addition lies in the entries appearing in the aforesaid Excel sheet against the expression/name “Kisan Ji”. According to Shri Imran Ansari, this reference was to the assessee and a block of 37 shops had been booked through him. In response to Question No.75 of his statement, Shri Imran Ansari gave details of these 37 shops and, in response to Question No.76, stated that an aggregate amount of ₹6,61,43,050 had been received in cash from the assessee against the booking of the said shops and other associated charges including parking charges. In response to Question No.77, he further explained the manner in which, according to him, the cash was transmitted, namely that the assessee would intimate him and send a person carrying cash to Shri Abrar Ahmed, who was stated to be handling cash for the Rubberwala Group. The AO also noticed that, though the 37 shops were stated to have been booked through the assessee, only two shops stood registered in the assessee’s own name, while the remaining shops were registered in the names of various other persons and entities and the corresponding

The Assessing Officer found further corroboration in a WhatsApp conversation retrieved during the search between Shri Imran Ansari and Shri Abrar Ahmed, who was stated to be handling cash for the Rubberwala Group. The conversation dated 09.03.2021 was explained by Shri Imran Ansari as recording confirmation from Shri Abrar Ahmed of receipt of ₹36,09,350, computed at ₹97,550 per shop in respect of 37 shops, towards other charges. According to the AO, a corresponding entry bearing the same date was also found in the Excel data and this circumstance corroborated the manner in which the cash transactions connected with the block of 37 shops were being recorded. The AO further noticed that the assessee himself, in his statement recorded on 19.03.2021 and subsequently during the assessment proceedings, admitted purchase of Shop Nos.192 and 193

The assessee, however, consistently disputed the further inference drawn by the AO from the aforesaid material. His case during search as well as assessment proceedings was that he had purchased only Shop Nos.192 and 193 and had never purchased or acquired any ownership or beneficial interest in the remaining 35 shops. He explained that the project had initially been proposed as a residential development and that he had approached the management of RHIL for its conversion into a commercial project. Since the developer was willing to consider such conversion if sufficient advance bookings for commercial units were forthcoming, the assessee had brought together various prospective purchasers and facilitated a collective/block booking. According to him, those persons ultimately purchased the

The Assessing Officer did not accept the aforesaid explanation. Apart from the seized Excel data and the statements of Shri Imran Ansari and Shri Tabrez Shaikh, he relied upon an enquiry made under section 133(6) from Shri Ganesharam Modaji Mali, in whose name Shop Nos.73, 74 and 75 stood registered. Shri Ganesharam Mali, through his authorised representative, stated that he had not paid any cash to the Rubberwala Group for purchase of those shops. According to the AO, this denial fortified the statement of Shri Imran Ansari that, notwithstanding registration of the shops

Before the Ld. CIT(A), the assessee challenged the additions both on the legal issue concerning the scope of assessment under section 153A and, independently, on merits. The Ld. CIT(A), after an elaborate discussion, did not accept the assessee’s broader contention that the digital material recovered during the common search action and the statements recorded thereon could not constitute incriminating material merely because the pen drive was recovered from the residence of Shri Imran Ansari. Likewise, the objections concerning the evidentiary value of the electronic material, absence of certificate under section 65B of the Indian Evidence Act and other allied contentions were not accepted. However, while examining the additions independently on merits, the Ld. CIT(A) found considerable distinction between the evidence establishing existence of an unaccounted cash component in the transactions of Platinum Mall and the further inference of the AO that the entire cash component pertaining to all the 37 shops represented investment made by the assessee. He noticed that the assessee had throughout admitted purchase of only Shop Nos.192 and 193 and payment of the cash component relating thereto, whereas he had consistently denied

The Ld. CIT(A) thereafter examined a very material aspect which, in our view, has substantial bearing upon the controversy. During the appellate proceedings, the assessee furnished copies of assessment orders passed in the cases of various persons whose names appeared in the seized Excel sheet as purchasers of the shops. On examination thereof, the Ld. CIT(A) found that in respect of 15 shops the Department had already made additions towards the alleged on-money in the hands of the respective purchasers themselves. The matter did not rest merely upon the assessment orders produced by the assessee. With regard to the remaining shops, the Ld. CIT(A) also examined the appeal receipt register available with him and noticed that additions on account of on-money had been made in the hands of several other actual purchasers who had themselves filed appeals before him. He accordingly recorded a categorical

Another significant circumstance taken note of before the first appellate authority was the assessment made by the Department in the case of M/s KDM Telecom Solutions Pvt. Ltd. Four shops forming part of the very block of 37 shops, namely Shop Nos.183, 184, 199 and 200, stood registered in the name of the said company. In the assessment of that company, a specific contention had been raised that the corresponding cash component had already been assessed in the hands of the present assessee. The Department nevertheless rejected that contention and recorded that since those four shops were registered in the name of M/s KDM

The Ld. CIT(A) also relied upon the decision of the Coordinate Bench in the case of Rajesh Mafatlal Jain in ITA Nos.3842 & 3841/Mum/2023, arising from the same Rubberwala Group/Platinum Mall search and involving substantially similar material. In that case also, the Revenue had sought to assess cash components pertaining to shops purchased by different persons in the hands of one assessee. The Coordinate Bench observed that income or unexplained investment has to be assessed in the hands of the person to

Insofar as Shop Nos.192 and 193 are concerned, the Ld. CIT(A) dealt with them separately. These two shops admittedly stood in the assessee’s name. The assessee had made cheque payments of ₹19,81,950 and ₹19,54,800 respectively and had also admitted the cash component aggregating to ₹40,84,730 relating to these two shops. The Ld. CIT(A) recorded that the assessee had already offered the

Before us, the Ld. CIT-DR strongly relied upon the assessment order and submitted that the Ld. CIT(A) had erred in dissecting individual pieces of evidence instead of

The learned counsel for the assessee, on the other hand, supported the ultimate conclusion of the Ld. CIT(A) and submitted that the Revenue’s case conflated the assessee’s admitted role in coordinating the block booking with actual investment by him in all the shops. It was pointed out that the assessee had never denied his own two purchases or the cash component relating thereto; equally, from the very inception he had denied payment of the alleged cash component for the other 35 shops. The seized Excel sheet itself disclosed the names of the respective purchasers, the shops standing in their names and the corresponding cheque and cash components. More importantly, the Department had subsequently acted upon that very material and made additions in the hands of several of those purchasers. Particular reliance was placed upon the assessment of M/s KDM Telecom Solutions Pvt. Ltd., where the Department itself rejected the contention that the amount stood assessed in the assessee’s hands and held that the cash component was assessable in the hands of the company because the

We have heard the rival submissions, perused the assessment order and the impugned appellate order, and carefully considered the seized material and the circumstances relied upon by both sides. At the outset, we may observe that the controversy before us does not really

We have considered the aforesaid issue in the backdrop of the entire material relied upon by the Assessing Officer. At the threshold, a distinction has to be maintained between two

When the seized Excel sheet is examined from this perspective, an important feature emerges. The Revenue

We are conscious of the Revenue’s argument that Shri Imran Ansari went further and stated that, notwithstanding the different registrations, the cash component of all 37 shops was received from the assessee. That statement is certainly a relevant piece of material and cannot be brushed aside. Equally, the assessee’s admitted cash payment relating to Shop Nos.192 and 193 corresponds substantially with the data maintained by Shri Imran Ansari and thereby lends authenticity to the Excel record. However, reliability of the Excel sheet as a record maintained in the ordinary course of the project and the attribution of the entire cash component recorded therein to the assessee are not one and the same thing. The former may establish that the cash figures recorded against the shops were real transactions; the latter requires some further nexus showing that the money relatable to the 35 independently registered shops actually emanated from the assessee. The assessee never denied the cash component relating to his own two shops. His denial was specific to the remaining shops. In such circumstances, corroboration of the Excel sheet by reference to his admitted investment in two shops cannot, by itself, be extrapolated into proof that he funded the cash consideration of every other shop reflected in the same sheet. There is no material showing corresponding withdrawals by the assessee,

The response of Shri Ganesharam Modaji Mali under section 133(6), on which considerable emphasis has been placed in the Revenue’s grounds as well as before us, does not, in our view, cure this deficiency. Shri Ganesharam Mali, in whose name Shop Nos.73, 74 and 75 stood registered, stated that he had not paid cash to the Rubberwala Group. This was undoubtedly a circumstance which entitled the AO to pursue the enquiry further. However, the evidentiary consequence of such denial has to remain confined to what it actually proves. A statement by the registered purchaser that he did not make the cash payment cannot, without something more, establish that the cash was supplied by this assessee. There is a material difference between disproving one possible source and affirmatively proving another. No material has been brought on record showing transmission of the cash pertaining to these three shops from the assessee to Shri Abrar Ahmed or to any other person of the Rubberwala

Similar is the position regarding the WhatsApp communication between Shri Imran Ansari and Shri Abrar Ahmed concerning ₹36,09,350, explained as ₹97,550 per shop for 37 shops towards other charges. We are deliberately not entering into the technical objection raised by the assessee regarding admissibility of the electronic communication. Taking the material into consideration as relied upon by the Revenue, it corroborates that a consolidated amount connected with the block of 37 shops was being dealt with between persons handling the transactions. But it does not establish that the entire substantive cash consideration of ₹6,61,43,050 relating to all the shops was funded by the assessee. It is also noteworthy that the shop-wise table emanating from the seized data reflects an aggregate “cash amount not accounted in books” of ₹5,98,05,020, whereas the figure ultimately attributed to the assessee was ₹6,61,43,050, which was stated to include other associated charges. We do not regard this difference as

What, however, substantially reinforces the assessee’s case is the subsequent course adopted by the Department itself in the assessments of the persons in whose names the shops stood registered. The assessee placed before the Ld. CIT(A) assessment orders concerning 15 shops demonstrating that the alleged on-money corresponding to those shops had been brought to tax in the hands of their respective purchasers. The Ld. CIT(A) did not stop at the documents furnished by the assessee but also examined his appeal receipt register in relation to the remaining shops and found that additions on account of on-money had similarly been made in the hands of several actual purchasers who had filed appeals before him. This is a categorical factual finding in the impugned order and no material has been brought before us by the Revenue to demonstrate that it is factually incorrect. Thus, this is not merely a case where the assessee asserts that the other 35 shops belonged to other persons; the Department’s own assessment proceedings have, in several cases, treated those persons as the investors liable to explain

The assessment in the case of M/s KDM Telecom Solutions Pvt. Ltd. brings the matter into even sharper focus. Shop Nos.183, 184, 199 and 200 stood registered in the name of the said company. During its assessment proceedings it was specifically pointed out that the corresponding cash amount had already been assessed in the hands of the present assessee. The Department nevertheless recorded that, since the shops stood registered in the name of M/s KDM Telecom Solutions Pvt. Ltd., the cash component had to be considered in the hands of that company. This is significant not because the Revenue can never adopt different conclusions where evidence so warrants, but because no additional material has been shown to us which would reconcile the two positions by establishing that, notwithstanding assessment of the cash component in the hands of the registered purchaser, the source of that very investment was actually the present assessee. If the Revenue’s case was that the registered purchasers were merely ostensible owners and that the assessee was the real investor, there had to be some positive evidence

The aforesaid conclusion is also in accord with the decision of the Coordinate Bench in Rajesh Mafatlal Jain (supra), which arose from the same Platinum Mall project and substantially the same evidentiary setting. The Tribunal held, in substance, that in the case of an unaccounted investment the amount has to be assessed in the hands of the person who actually made the investment; and where the remaining shops were purchased by different persons who were separately assessable, their corresponding cash components could not be brought to tax in the hands of the assessee unless it was shown that he had actually funded those payments. The Coordinate Bench also drew support from the judgment of the Hon’ble Supreme Court in ITO v. Ch. Atchaiah (supra), emphasising that under the Act the Revenue is required to tax the right person in relation to the particular income sought to be assessed. We find no material factual distinction which would warrant departure from that reasoning in the present case. Here also, beyond the two

Coming then to Shop Nos.192 and 193, there is no controversy regarding their ownership or the cash component paid by the assessee. The assessee admitted cash payment aggregating to ₹40,84,730 in respect of these two shops and offered the said amount to tax in A.Y. 2021-22. The Ld. CIT(A) has recorded the fact of such disclosure and payment of tax and has further found that the AO brought no independent material demonstrating that this very cash component was actually paid in an earlier assessment year. The Revenue has not placed before us any material dislodging this factual finding. Once the amount has been offered and subjected to tax in A.Y. 2021-22, the same amount cannot again be brought to tax in another year merely on an allocation or assumption as to the timing of payment, unless there is material establishing that the investment was in fact made during such other year. We therefore find no reason to interfere with the relief granted by the Ld. CIT(A) even in respect of the assessee’s own two shops.

Thus, on an overall appreciation of the evidence, we find that the Revenue has established the existence of an unaccounted cash component in the transactions relating to the Platinum Mall project and has also established that the assessee played a material role in bringing together prospective purchasers and coordinating the booking of the block of 37 shops. The assessee’s own admission further establishes his cash investment in Shop Nos.192 and 193. But none of these circumstances, either individually or cumulatively, supplies the crucial evidentiary link necessary to hold that the cash component relatable to the other 35 shops was an investment made by the assessee. The very seized material identifies separate purchasers and corresponding cheque payments; the registered agreements stand in their respective names; the Department itself has assessed on-money in the hands of several of those purchasers; and no independent financial trail or other cogent material demonstrates that the assessee supplied the funds for their cash components. Coordination of a collective booking cannot, without such evidence, be transposed into ownership or funding of every resulting investment. Section 69 does not bring to tax an unexplained investment in the abstract; it brings to tax an unexplained investment made by

We may finally clarify that, in view of our conclusion on merits, it is unnecessary to adjudicate upon the wider contentions concerning the scope of section 153A in relation to the unabated assessment years, the applicability of presumptions under sections 132(4A) and 292C, the requirement of certification of electronic evidence, or the consequences alleged to flow from non-grant of cross- examination. The Ld. CIT(A) himself had substantially rejected these legal objections but nevertheless deleted the additions after examining their sustainability on merits. We have proceeded on an even broader premise in favour of the Revenue by taking into consideration the seized Excel data, the statements and the electronic material relied upon by the AO. Even upon doing so, the evidence falls short of establishing investment by this assessee in the 35 shops belonging to other identified purchasers. Our decision is therefore confined to this factual and evidentiary determination and does not require adjudication of those collateral issues.

In the light of the foregoing discussion, we find that the Ld. CIT(A) was justified in deleting the additions made under

In the result, all the three appeals filed by the Revenue are dismissed.