JITENDRA BABULAL SANGHVI,AHMEDABAD vs. DCIT CC 1(1) AHMEDABAD, AHMEDABAD

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ITA 1269/AHD/2024Status: DisposedITAT Ahmedabad13 August 2026AY 2017-20189 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that since the amounts in the seized diaries were already accounted for and confirmed in the hands of the assessee's father, Shri Prakash Babulal Sanghvi, no separate addition was warranted in the assessee's case. The Tribunal also found no infirmity in the assumption of jurisdiction by the AO.

What were the facts?

A search operation led to the seizure of diaries containing ledger entries. The Assessing Officer initiated reassessment proceedings based on these entries, alleging unexplained expenditure by the assessee.

What were the issues?

Whether reassessment proceedings were validly initiated and whether additions for unexplained expenditure based on seized diaries are sustainable when the same amounts were confirmed in the hands of a family member.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 69C,Section 115BBE,Section 132,Section 132(4),Section 56

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI RAHUL CHAUDHARYShri S.N. Soparkar, Sr. Advocate

For Appellant: Shri S.N. Soparkar, Sr. Advocate
For Respondent: Shri Rajneesh Yadav, CIT-DR
Hearing: 18.06.2026Pronounced: 13.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 1269/Ahd/2024 (Assessment Year: 2017-18) Jitendra Babulal Sanghvi, Dy. Commissioner of Vs. 4, Raj Co-op. Housing Society, Income-tax, Nr. Naranpura Railway Crossing, Central Circle 1(1), Naranpura, Ahmedabad-380013 Ahmedabad [PAN : AKTPS 8344 J]

ITA No. 1270/Ahd/2024 (Assessment Year: 2018-19) Jitendra Babulal Sanghvi, Dy. Commissioner of Vs. 4, Raj Co-op. Housing Society, Income-tax, Nr. Naranpura Railway Crossing, Central Circle 1(1), Naranpura, Ahmedabad-380013 Ahmedabad [PAN : AKTPS 8344 J]

ITA No. 1308/Ahd/2024 (Assessment Year: 2021-22) Dy. Commissioner of Income-tax, Jitendra Babulal Sanghvi, Vs. Central Circle 1(1), 4, Raj Co-op. Housing Ahmedabad Society, Nr. Naranpura Railway Crossing, Naranpura, Ahmedabad-13 [PAN : AKTPS 8344 J] ITA No. 1347/Ahd/2024 (Assessment Year: 2021-22) Ratnatris Pharmaceuticals Dy. Commissioner of Income-tax, Vs. Private Limited, Central Circle 1(1), 18, Rajmugat Society, Ankur Ahmedabad road, Naranpura, Ahmedabad-380013 [PAN : AABCI 4573 Q] (Appellant) .. (Respondent) Assessee represented by : Shri S.N. Soparkar, Sr. Advocate

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 2– Revenue represented by: Shri Rajneesh Yadav, CIT-DR Date of Hearing 18.06.2026 Date of Pronouncement 13.08.2026

O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

These appeals comprise ITA Nos. 1269 & 1270/Ahd/2024 filed by the assessee, Shri Jitendra Babulal Sanghvi, and ITA No. 1308/Ahd/2024 filed by the Revenue in the case of the same assessee, arising out of the order dated 03.05.2024 passed by the Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as "the Ld. CIT(A)"] under section 250 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Years 2017-18, 2018-19 and 2021-22, respectively. The present bunch also includes ITA No. 1347/Ahd/2024 filed by the Revenue in the case of Ratnatris Pharmaceuticals Pvt. Ltd., arising out of the order dated 29.05.2024 passed by the Ld. CIT(A) u/s 250 of the Act for AY 2021-22.

2.

Since the issues involved in these appeals are common and interconnected, and arise out of substantially identical facts, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience and brevity.

3.

For the purpose of narration of facts and adjudication, ITA No. 1269/Ahd/2024 in the case of Shri Jitendra Babulal Sanghvi for Assessment Year 2017-18 is taken as the lead case. The decision rendered therein shall, mutatis mutandis, apply to the other connected appeals

4.

The assessee has raised following grounds of appeal in ITA No. 1269/Ahd/2024 for AY 2017-18:-

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 3– “1. The learned CIT(A) has erred in not holding that the notice issued u/s. 148 of the Act is bad in law, illegal and void-ab-initio. The learned CIT (A) has further erred in not holding that procedure as per law was not followed while issuing the notice u/s. 148 of the Act.

2.

The learned CIT (A) has erred in not holding that the assessment order passed by AO u/s. 147 of the Act is bad in law, illegal and null and void.

3.

The learned CIT(A) has erred in confirming the additions made by AO in the Appellant's case and rejecting the submissions that the noting in the seized diaries do not pertain to/belong to the Appellant.

4.

The learned CIT(A) has erred in confirming the addition of Rs. 1,83,92,648/- made by AO u/s. 69C of the Act on account of Unexplained expenditure based on entries in the ledger "Jitu Healtcare" in the diaries seized from the premises of Shri Prakash Sanghvi. The learned CIT (A) has erred in confirming the action of the AO in invoking s. 115BBE in respect of the said addition.

5.

The learned CIT(A) has erred in not holding that the assessment order passed by AO is in gross violation of principles of natural justice.

6.

The Appellant states that the search proceedings carried out in his case are beyond jurisdiction, illegal and void. The consequential assessment order passed is bad-in-law, illegal and void-ab-initio.”

5.

The assessee has raised following grounds of appeal in ITA No. 1270/Ahd/2024 for AY 2018-19:-

“1. The learned CIT(A) has erred in not holding that the notice issued u/s. 148 of the Act is bad in law, illegal and void-ab-initio. The learned CIT (A) has further erred in not holding that procedure as per law was not followed while issuing the notice u/s. 148 of the Act.

2.

The learned CIT (A) has erred in not holding that the assessment order passed by AO u/s. 147 of the Act is bad in law, illegal and null and void.

3.

The learned CIT(A) has erred in confirming the additions made by AO in the Appellant's case and rejecting the submissions that the noting in the seized diaries do not pertain to/belong to the Appellant.

4.

The learned CIT(A) has erred in confirming the addition of Rs.57,06,740/- made by AO u/s. 69C of the Act on account of Unexplained expenditure

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 4– based on entries in the ledger "Jitu Healtcare" in the diaries seized from the premises of Shri Prakash Sanghvi. The learned CIT (A) has erred in confirming the action of the AO in invoking s. 115BBE in respect of the said addition.

5.

The learned CIT(A) has erred in not holding that the assessment order passed by AO is in gross violation of principles of natural justice.

6.

The Appellant states that the search proceedings carried out in his case are beyond jurisdiction, illegal and void. The consequential assessment order passed is bad-in-law, illegal and void-ab-initio.”

6.

The Revenue has raised following grounds of appeal in ITA No. 1308/Ahd/2024 for AY 2021-22:-

“1. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 7,03,79,917 on account of unexplained & unaccounted income as per provision of Section 69A of the Act.

2.

In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 9,70,85,801 on account of unexplained & unaccounted expenses as per provision of Section 69C of the Act.

3.

In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.67,574/- on account of accrued interest from other source u/s. 56 of the Act.”

7.

The Revenue, in the case of Ratnatris Pharmaceuticals Pvt. Ltd., has raised following grounds of appeal in ITA No. 1347/Ahd/2024 for AY 2021-22:-

“1) In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.7,03,79,917/- (protective basis) u/s.69A r.w.s. 115BBE of the I.T. Act on account of unexplained & unaccounted income.

2) In the facts and on the circumstances of the case and in law, the Id. CIT[A) has erred in deleting the addition of Its. 9,71,53,575/- (protective basis) u/s.69C r.w.s.115BBE of the I.T. Act on account of unexplained & unaccounted expenses."

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 5–

8.

Briefly stated, the facts giving rise to the present litigation, as emerging from the record in the lead case, i.e., ITA No. 1269/Ahd/2024 for Assessment Year 2017-18 in the case of Shri Jitendra Babulal Sanghvi, are that the assessee is an individual, who, for the AY 2017-18, filed his return of income on 16.09.2017 declaring a total income of Rs.23,76,390/-, which was processed u/s 143(1) of the Act. A search u/s 132 of the Act was conducted on 23.11.2021 in the case of the Ratnamani Group and its key persons, including Shri Prakash M. Sanghvi. During the search, certain handwritten diaries and loose papers were seized from the premises of Shri Prakash M. Sanghvi. On examination of the seized material, the Assessing Officer noticed a ledger styled as "Jitu Healthcare", which was alleged to pertain to the assessee. Based on the entries contained therein and the statement recorded under section 132(4) of the Act, proceedings u/s 147 of the Act were initiated by issuance of notice u/s 148 of the Act.

8.1 In the reassessment proceedings, the assessee denied that the seized diaries or the entries therein pertained to him and contended that the additions were based solely on third-party documents without any independent corroborative evidence. The Assessing Officer, however, rejected the explanation and made an addition of Rs.1,83,92,648/- u/s 69C of the Act on account of unexplained expenditure, besides assessing accrued interest of Rs.48,302/- u/s 56 of the Act. The reassessment was accordingly completed u/s 147 read with section 143(3) of the Act, assessing the total income of the assessee at Rs.2,08,17,340/-.

8.2 Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld. CIT(A), who partly allowed the appeal. The assessee, being aggrieved by the findings of the Ld. CIT(A) sustaining the additions, is in further appeal before the Tribunal.

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 6– ITA No. 1269/Ahd/2024 (AY 2017-18) Assessee’s appeal – Jitendra Babulal Sanghvi Ground Nos. 1 & 2 9. Ground Nos. 1 and 2 challenge the validity of the notice issued under section 148 of the Act and the consequent reassessment order passed under section 147 of the Act.

9.1 We have heard the rival submissions and perused the material available on record. Upon due consideration of the facts and the statutory provisions, we find no infirmity in the assumption of jurisdiction by the Assessing Officer. The reassessment proceedings have been initiated after recording reasons to believe and in accordance with the procedure prescribed under the Act. We also find ourselves in agreement with the findings recorded by the Ld. CIT(A) on this issue. Accordingly, Ground Nos. 1 and 2 raised by the assessee are dismissed.

Ground Nos. 3 & 4 10. Ground Nos. 3 and 4 are interconnected and relate to the addition of Rs.1,83,92,648/- made u/s 69C of the Act on account of alleged unexplained expenditure based on the entries appearing in the ledger "Jitu Healthcare" found in the diaries seized from the premises of Shri Prakash M. Sanghvi. These grounds are, therefore, taken up together for adjudication.

10.1 The Ld. AR submitted that the impugned addition has been made solely on the basis of entries recorded in third-party diaries seized from the premises of Shri Prakash M. Sanghvi. It was contended that neither the diaries belonged to the assessee nor was there any independent evidence to establish that the entries represented actual transactions undertaken by the assessee. It was further submitted that except for the handwritten notings in the seized diaries, no corroborative material whatsoever had been brought on record by the Assessing Officer to justify the addition u/s 69C of the Act.

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 7– 10.2 The Ld. DR, on the other hand, relied upon the assessment order and supported the findings recorded therein. It was submitted that the seized diaries, read together with the statement recorded under section 132(4) of the Act, constituted sufficient evidence to establish the unaccounted expenditure incurred by the assessee.

11.

We have heard the rival submissions and perused the material available on record.

The ledger accounts found and seized during search numbered as Page Nos. 86, 51, 40,37, 29, 30, 33, 34 etc. based on which the addition has been made have been perused (PB Page No. 5 to 22). During the search the ledgers written under various names namely Jigar Sanghvi, Manoj, Kushal, Mukesh, Shashi, & Sheetal were found, written by Shri Prakash Babulal Sanghvi – the father of the assessee. The ledgers are maintained by Shri Prakash Babulal Sanghvi pertains to each of the family members. The entire amounts mentioned in the ledger found in the diary seized by the Department has been owned up by Shri Prakash Babulal Sanghvi and orders of the Tribunal have been passed in the case of Shri Prakash Babulal Sanghvi in ITA No. 1138-1146, 1148 to 1158, 1184/Ahd/2024 for the assessments passed u/s 153A. The additions confirmed by the Tribunal in the case of Shri Prakash Babulal Sanghvi are as under:-

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 8–

11.1 Since the amounts involved in the present case stands intrapolated in the hands of Shri Prakash Babulal Sanghvi and also confirmed by the Tribunal, no separate addition in this case is called for. For the AY 2021-22, from page Nos. 44 to 47 of the Ld. CIT(A)’s order, we find that for the same issue the Ld. CIT(A) has deleted the addition holding that there was no negative balance. The order of the Ld. CIT(A) is volte face on this issue. Since the entire amounts stands confirmed in the hands of Shri Prakash Babulal Sanghvi by the Tribunal as mentioned in the table above, no separate addition is called for.

The appeal of the assessee for the AYs 2017-18 & 2018-19 is allowed and appeal of the Revenue for the AYs 2021-22 on this ground is dismissed.

Ground No. 5 12. In view of our decision in Ground Nos. 3 and 4 deleting the impugned addition, Ground No. 5, being merely consequential, has become academic and is dismissed as infructuous.

Ground No. 6 13. Ground No. 6 challenges the validity of the search proceedings. We find no merit in the said ground. Accordingly, this ground is dismissed.

In the result, the appeal bearing ITA Nos. 1269 & 1270/Ahd/2024 are partly allowed in above terms, whereas the appeal of the Revenue in ITA No. 1308/Ahd/2024 is dismissed.

ITA No. 1347/Ahd/2024 (AY 2021-22) Revenue appeal – (Assessee – Ratnatris Pharmaceuticals Pvt. Ltd.)

14.

Protective addition has been made in the case of Ratnatris Pharmaceuticals Pvt. Ltd. and substantive addition has been made in the case of Shri Jitendra Babulal Sanghvi. The Ld. CIT(A) deleted the substantive addition in the case of Shri Jitendra Babulal Sanghvi on merits, the decision of which has

ITA Nos. 1269,1270, 1308 & 1347/Ahd/2024 Jitendra Babulal Sanghvi & Ratnatris Pharmaceuticals Pvt Ltd Asst.Year : 2017-18, 2018-19 & 2021-22 - 9– been upheld by this Tribunal; thus, the protective addition made in the case of the assessee is liable to be deleted.

In the result, the appeal of the Revenue is dismissed.

15.

In the combined result, the appeals of the assessee, Shri Jitendra Babulal Sanghvi, being ITA Nos. 1269 & 1270/Ahd/2024 are partly allowed, whereas the appeals of the Revenue in ITA No. 1308/Ahd/2024 in the case of Shri Jitendra Babulal Sanghvi and ITA No. 1347/Ahd/2024 in the case of Ratnatris Pharmaceuticals Pvt. Ltd. are dismissed.

The order pronounced in the open Court on 13.08.2026

Sd/- Sd/-

(RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 13.08.2026 **btk आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent. 2. संबंिधतआयकरआयु�/ Concerned CIT 3. 4. आयकरआयु�(अपील) /The CIT(A)- 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल /Guard file. आदेशानुसार/ BY ORDER, True Copy सहायकपंजीकार (Dy./Asstt. Registrar) आयकरअपीलीयअिधकरण, , अहमदाबाद / ITAT, Ahmedabad , ,

1.

Date of dictation … ……words processed by the Hon’ble VP on his PC On …12.08.2026… 2. Date on which the typed draft is placed before the Dictating Member ………..12.08.2026 3. Other Member………….12.08.2026…. 4. Date on which the approved draft comes to the Sr.P.S./P.S…………..12.08.2026… 5. Date on which the fair order is placed before the Dictating Member for pronouncement…13.08.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S….......13..08.2026 7. Date on which the file goes to the Bench Clerk ………13.08.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order……………………………………

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