ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(4), MUMBAI, MUMBAI vs. RAVI OMPRAKASH AGRAWAL, NAGPUR

आदेश / O R D E R PER BENCH: These cross appeals preferred by the assessee as well as the Revenue, along with the cross objections filed by the assessee, emanate from the common impugned order dated 15.04.2025 passed by the learned Commissioner of Income Tax (Appeals)- 54, Mumbai, for Assessment Years 2022-23 and 2023-24, arising out of assessment orders framed under section 143(3) of the Income Tax Act, 1961 pursuant to a search and seizure action conducted under section 132 of the Act in the case of Ravi Agrawal Group on 10.05.2023. Since common issues, interconnected facts, overlapping evidences and substantially similar controversies arise in all these appeals and cross objections, they were heard together and are being disposed of by way of this consolidated order for the sake of convenience, continuity and judicial consistency. 2. The brief factual matrix, necessary for adjudication of the present controversy, is that the assessee, Shri Ravi Omprakash Agrawal, is an individual deriving income under various heads including income from house property, income from business, capital gains and income from other sources and is regularly assessed to tax under the provisions of the Act. A search and seizure action under section 132 was carried out in the case of the assessee and related entities on 10.05.2023, during the course of which statements of various persons were recorded,

3 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal documents and loose papers were seized and certain digital evidences were allegedly found by the Investigation Wing. Consequent thereto, assessments for Assessment Years 2022-23 and 2023-24 came to be completed making various additions under different provisions of the Act. Aggrieved by the additions so made, the assessee preferred appeals before the learned CIT(A), who vide the impugned appellate order partly allowed the appeals and granted certain reliefs while sustaining or modifying certain additions. Being dissatisfied with the findings of the learned CIT(A), both the assessee as well as the Revenue are in appeal before us on diverse grounds. 3. We shall first take up the issue for Asstt Year 2023-24 relating to the addition of Rs.1,80,448/- made by the Assessing Officer under section 69C of the Act on account of alleged unexplained expenditure towards interest purportedly paid by the assessee in respect of investment in shares of Infibeam Avenues Limited. The said addition has been deleted by the learned CIT(A), against which the Revenue is in appeal, whereas the assessee has supported the deletion and has also raised a cross objection challenging the very foundation of the addition on the ground that the same has been made merely on the basis of third-party statement without any corroborative material and without granting opportunity of cross-examination. The Revenue has raised the following grounds in ITA No. 4946/Mum/2025 :– ―1. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in deleting the addition of Rs.1,80,448/- made u/s 69C of the Act without considering that the findings of the AO was based on the findings of search and

4 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal corroborated by the statements of Shri Ravindra Maloo and Shri Ajay Kejriwal and Shri Ajay Kejriwal, the director of Choice Equity Broking Pvt. Ltd., in his statement recorded on oath has admitted that the major transactions are done in scripts of Infibeam Avenues Limited and the traders have done trading activities for synchronized trades and profit booking? 2. Whether, on the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs.1,80,448/- made u/s 69C of the Act by holding that the AO has cherry picked the investment in shares of Infibeam Avenues Ltd. only and made no addition in respect of alleged interest payment in respect of investment in Vakrangee Ltd. and while doing so, whether the learned CIT(A) has erred in considering the fact there was no interest paid with respect to Vakrangee Ltd. as the same has been sold in the F.Y. 2021-22 and as such no addition was warranted in A.Y. 2023-24?‖

5 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal deposed that the assessee had asked him to invest Rs. 2 to 3 crores in the shares of two companies, namely Infibeam Avenues Limited and Vakrangee Limited, sometime in the year 2019, for which, according to him, the assessee was to pay interest at the rate of 18% per annum and the ultimate profit or loss from such transactions was to be borne by Shri Ravi Agrawal. Search was also carried out at the office premises of Choice Equity Broking Pvt. Ltd., where the statement of Shri Ajay Kejriwal, Director of the said company, came to be recorded, wherein he stated that synchronized trading was done by the assessee’s group entities in the shares of Infibeam Avenues Limited to artificially manipulate the share price of the scrip. 6. On the basis of the aforesaid statements, the Assessing Officer issued notice dated 22.10.2024 under section 142(1) of the Act, calling upon the assessee to explain the same. The assessee filed reply dated 13.01.2025. Thereafter, show cause notice dated 24.01.2025 was issued proposing addition of Rs.1,80,448/- under section 69C of the Act, being 18% on the alleged investment amount of Rs.15,03,736/- in Infibeam Avenues Limited. The assessee again filed reply dated 01.02.2025, however, the explanation was not accepted by the Assessing Officer, who proceeded to make the said addition as unexplained expenditure under section 69C. In appeal, the learned CIT(A) deleted the addition holding, inter alia, that the Assessing Officer could not have cherry-picked only a part of the statement and, having not

6 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal made any addition in relation to Vakrangee Limited, could not have sustained addition in respect of alleged interest relating to Infibeam Avenues Limited alone. 7. Before us, the learned counsel for the assessee submitted, at the outset, that the entire premise of the addition is fundamentally misconceived, inasmuch as Shri Ravindra Maloo was not an outsider or a lay investor who had allegedly acted merely as a conduit for the assessee, but was himself a person deeply entrenched in the stock broking and securities business. It was submitted that Shri Ravindra Maloo was working as Regional Head, Central India, with Anand Rathi, a stock broking firm, and had been associated with the business of broking and trading in shares for more than 20 years. Thus, according to the assessee, investment in shares and securities was not an alien activity for Shri Ravindra Maloo; rather, it constituted his normal field of professional and commercial activity. Once this factual background is appreciated, the learned counsel submitted, the natural and reasonable inference would be that the investment made by Shri Ravindra Maloo in the shares of Infibeam Avenues Limited and Vakrangee Limited was made by him in his own capacity and on his own commercial judgment. It was contended that the assessee had, at the highest, merely recommended or suggested the said scrips for investment, but such recommendation cannot, by any stretch of legal imagination, be elevated into an arrangement where the investment is to be treated as that of the assessee

7 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal or where interest liability can be fastened upon the assessee without any independent proof. It was therefore argued that the very first limb of the assessee’s case is that the investment was of Shri Ravindra Maloo himself, made in his own capacity, by a person who had vast experience in stock market operations; and the assessee neither owned such investment, nor financed it, nor paid any interest thereon. 8. The learned counsel further submitted that the shares in question were purchased by Shri Ravindra Maloo in his own name and in his own capacity and that the profit or loss arising from such investment belonged to him alone. It was specifically submitted that there is no material, much less any seized material, to show that the assessee had ever undertaken to indemnify Shri Ravindra Maloo for any loss or to appropriate any profit from such transaction. Equally, there is no material to show that any interest was paid by the assessee to Shri Ravindra Maloo. The addition under section 69C necessarily presupposes incurring of expenditure by the assessee. Therefore, unless there is some evidence of actual incurring of expenditure, or at least some reliable material demonstrating liability and payment, section 69C cannot be invoked merely because a third party makes a statement. The assessee thus submitted that the foundational condition of section 69C itself remained unfulfilled. 9. The learned counsel further submitted that even the statement of Shri Ravindra Maloo, assuming it is to be

8 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal looked into, has to be read as a whole and not by tearing one sentence out of context. Attention was invited to the fact that in response to Question No.17, Shri Ravindra Maloo himself stated that “some shares I bought myself as well.” According to the assessee, this statement itself demolishes the entire premise adopted by the Assessing Officer because once the maker of the statement himself admits that certain shares were purchased by him independently, then the Assessing Officer was duty-bound to determine which shares, if any, were allegedly purchased at the behest of the assessee and which shares represented independent investments of Shri Ravindra Maloo. Without undertaking any such exercise, the Assessing Officer could not have mechanically presumed that the entire investment in Infibeam Avenues Limited represented investment made on behalf of the assessee. It was thus submitted that the addition is based entirely on assumptions and conjectures without there being any identification or correlation of actual shares allegedly purchased for and on behalf of the assessee. 10. The learned counsel further submitted that there is no evidence whatsoever on record to establish how many shares of Infibeam Avenues Limited or Vakrangee Limited were allegedly purchased by Shri Ravindra Maloo under instructions of the assessee and how many shares were purchased by him independently. In absence of such segregation and determination, the computation of interest at the rate of 18% on Rs.15,03,736/- is wholly arbitrary and

9 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal without any factual foundation. The Assessing Officer has neither brought any material to establish actual payment of interest nor has he brought any material to establish any arrangement whereby the assessee had agreed to compensate Shri Ravindra Maloo. It was thus argued that the impugned addition has been made merely on hypothetical assumptions unsupported by any corroborative evidence and therefore deserves to be deleted. 11. The learned counsel further submitted that the statement of Shri Ajay Kejriwal is wholly irrelevant insofar as the present addition is concerned. According to him, the addition under consideration is not on account of synchronized trading or alleged manipulation in the scrip of Infibeam Avenues Limited but is specifically an addition under section 69C towards alleged unexplained expenditure by way of interest payment. The statement of Shri Ajay Kejriwal nowhere suggests that the assessee had paid any interest to Shri Ravindra Maloo. Therefore, reliance placed by the Revenue on the said statement is completely misplaced and does not in any manner corroborate the impugned addition. 12. Proceeding further, the learned counsel submitted that the sole basis for making the addition under section 69C of the Act is the statement of Shri Ravindra Maloo and such statement, standing alone and unsupported by any documentary evidence or incriminating material discovered during the course of search proceedings, cannot form the

10 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal sole basis for making addition under section 69C. It was submitted that neither from the premises of the assessee nor from the premises of Shri Ravindra Maloo was any document, evidence, noting, ledger, WhatsApp communication, cash trail, bank trail or any other material found which could establish that the assessee had paid interest to Shri Ravindra Maloo. There is no evidence of movement of funds, no evidence of incurring of expenditure and no material whatsoever evidencing actual payment of interest. In such circumstances, the addition has been made merely on the basis of assumptions and bald allegations contained in a third-party statement. Reliance in this regard was placed on the decisions in the cases of CIT v. Jagdish prasad Mohanlal Joshi, Kailashben Manharlal Chokshi v. CIT, CIT v. Harjeev Aggarwal, PCIT v. Ms. Kavita Agarwal and CBDT Instruction dated 18.12.2014, to canvass the proposition that additions cannot be sustained merely on the basis of confessional statements unless the same are supported by independent corroborative material. 13. The learned counsel further submitted that section 69C is a deeming provision and therefore the conditions prescribed therein are required to be strictly fulfilled before any addition can be sustained. According to him, before invoking section 69C, the Revenue must first establish that expenditure was actually incurred by the assessee. In the present case, there is absolutely no evidence to establish incurring of any expenditure by the assessee. The Assessing

11 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Officer has merely presumed that because certain investment was allegedly made by Shri Ravindra Maloo, therefore interest expenditure must have been incurred by the assessee. Such inferential assumption, according to the assessee, cannot substitute legal proof required under section 69C. 14. The learned counsel also strongly assailed the addition on the ground of violation of principles of natural justice. It was submitted that the entire addition has been made on the basis of statement of Shri Ravindra Maloo recorded behind the back of the assessee, however no opportunity to cross- examine Shri Ravindra Maloo was ever afforded despite specific request made by the assessee. It was submitted that once a statement of a third party is sought to be relied upon adversely against an assessee, then grant of opportunity of cross-examination becomes indispensable. Denial of such opportunity renders the statement legally unusable against the assessee. Reliance was placed on the judgments of the Hon’ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise and CIT v. Odeon Builders (P.) Ltd., as well as the decisions in PCIT v. Shapoorji Pallonji & Co. Ltd. and IPCA Laboratories Ltd. v. DCIT. 15. The learned counsel lastly submitted that the cross objection filed by the assessee specifically challenges the legality of the addition on account of denial of cross- examination and absence of evidentiary value of third-party statement. However, it was fairly submitted that if the

12 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal deletion made by the learned CIT(A) is upheld on merits, then the ground raised in the cross objection may be treated as academic. 16. Per contra, the learned CIT-DR strongly relied upon the assessment order and submitted that the statement of Shri Ravindra Maloo clearly establishes that the investment in shares of Infibeam Avenues Limited and Vakrangee Limited was made at the behest of the assessee and that the assessee had agreed to compensate him by way of interest at the rate of 18% per annum. It was further submitted that the statement of Shri Ajay Kejriwal corroborates the larger modus operandi relating to synchronized trades in the shares of Infibeam Avenues Limited and therefore the Assessing Officer was justified in drawing adverse inference against the assessee. According to the learned CIT-DR, the learned CIT(A) erred in deleting the addition merely on the ground that the Assessing Officer had cherry-picked part of the statement. It was thus submitted that the order of the Assessing Officer deserved to be restored. 17. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the statements recorded during the course of search proceedings and the entire material placed before us in relation to the addition of Rs.1,80,448/- made under section 69C of the Act. The controversy before us is confined to the addition made by the Assessing Officer towards alleged unexplained expenditure in the nature of

13 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal interest said to have been paid by the assessee to Shri Ravindra Maloo in relation to investment in shares of Infibeam Avenues Limited. The basis of the addition is the statement of Shri Ravindra Maloo recorded during the course of search proceedings, wherein it was stated that the assessee had asked him to invest funds in the shares of Infibeam Avenues Limited and Vakrangee Limited and that interest at the rate of 18% per annum was allegedly payable by the assessee. Based on the said statement, the Assessing Officer computed alleged interest at Rs.1,80,448/- on the investment amount of Rs.15,03,736/- and treated the same as unexplained expenditure under section 69C.

14 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Shri Ravindra Maloo either towards losses or by way of interest. The assessee also pointed out that even in the statement relied upon by the Assessing Officer, Shri Ravindra Maloo himself had stated that “some shares I bought myself as well,” thereby clearly indicating that the investments were not exclusively attributable to the assessee.

15 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal material to demonstrate that expenditure has in fact been incurred, the deeming fiction contained in section 69C cannot be invoked merely on assumptions or inferential allegations. In the present case, the Assessing Officer has proceeded purely on presumption that because investment was allegedly made by Shri Ravindra Maloo, therefore interest expenditure must necessarily have been incurred by the assessee. Such assumption cannot substitute legal proof required for invoking section 69C. The addition is not based on any actual evidence of payment but on a presumed obligation inferred from an uncorroborated third-party statement.

16 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal thereon. Such computation, in absence of factual segregation and supporting evidence, is wholly arbitrary.

17 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal one part of the statement while ignoring the other part. Such selective reliance itself demonstrates uncertainty in the Revenue’s case. Further, admittedly, no opportunity of cross-examination of Shri Ravindra Maloo was afforded to the assessee despite specific request. The entire addition having been founded on a third-party statement recorded behind the back of the assessee, denial of cross- examination assumes considerable significance, particularly when no corroborative material exists independent of such statement.

18 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal the addition on account of denial of cross-examination is rendered academic and is accordingly left open.

19 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 26. The Revenue has raised the following grounds in ITA No.4946/Mum/2025:– ―3. Whether, on the facts and in the circumstances of the case, the learned CIT(A) has erred in restricting the addition of Rs.197,39,54,122/- u/s 69A and addition of Rs.184,03,58,935/- u/s 69C to Rs.19,07,10,652/- being 5% of total payments and receipts 197,39,54,122 + 184,02,58,935, by holding that the assessee is engaged in Angadia services and has only earned profit from the cash movements and while doing so whether the learned CIT(A) failed to consider that the assessee has never disclosed any income from angadia business neither in the return of income nor during the search nor during the post search proceedings? 4. Whether, on the facts and in the circumstances of the case, the learned CIT(A) has erred in restricting the addition of Rs.197,39,54,122/- u/s 69A and addition of Rs.184,03,58,935/- u/s 69C to Rs.19,07,10,652/- being 5% of total payments and receipts 197,39,54,122 + 184,02,58,935, without considering the fact that the entries of cash payments and receipts are evident from the materials seized during the search action, the onus of proving the source of the same falls upon the assessee. Therefore, once the assessee failed to explain the source of cash receipts/payments along with supporting evidences, the income from such receipts/payments remains unexplained in the hands of the assessee?‖ 27. The assessee, in Cross Objection No.263/Mum/2025, has raised the following ground:– “2. On the facts and circumstances of the case of appellant and in law, the CIT(A) failed to appreciate that the AO erred in making addition of Rs.184,02,58,935/- as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act without appreciating that the source of cash payment is from the cash receipts found and recorded in loose paper/notepad of Deepak Singh and once the cash receipt of Rs.197,39,54,122/- is added as unexplained money u/s 69A of the Act then cash

20 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal payment of Rs.184,02,58,935/- which are made out of cash received again cannot be termed and added as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act.‖ 28. The assessee has also raised grounds in its own appeal in ITA No.3560/Mum/2025 against the addition sustained by the learned CIT(A), which read as under:– ―1. (a) The Commissioner of Income Tax (Appeals)-54, Mumbai erred in confirming the estimated addition of Rs.19,07,10,652/- being 5% of total turnover of cash received of Rs.197,39,54,122/- and cash payment of Rs.184,04,58,935/- as per loose papers/diaries/note book found from the premises of Deepak Singh, as profit from undisclosed business of cash transportation, i.e. Angadia service, as against commission/collection charges of Rs.175 per one lac received by the appellant for facilitating transportation/movement of cash from one place to another. The appellant submits that he has facilitated transportation / movement of cash from one place to another, i.e. Angadia service, and has received commission/collection charges of Rs.175 per one lac and hence additions on account of commission/collection charges shall be restricted to Rs.175 per lac as against addition at 5% of total turnover of cash received and cash payment confirmed by the CIT(A). (b) The CIT(A) erred in confirming addition of Rs.19,07,10,652/- being 5% of total turnover of cash received and cash paid without appreciating that activity of receipt and payment is one transaction and commission/collection charges is received only once on the execution of complete transaction i.e. receipt of cash from one location and payments of cash to another location and hence addition confirmed by the CIT(A) at 5% on both cash received and cash paid is unjustified and same shall be restricted to 5% on the complete transaction i.e. either cash received or cash paid. (c) Without prejudice to above, the addition made by the CIT(A) by estimating the profit from undisclosed business of cash transportation, i.e. Angadia service, at 5% of total turnover of

21 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal cash received and cash paid is excessive and unjustified; and on the facts and circumstances of the case of the appellant and in law same shall be reduced. 29. The relevant facts, in brief, are that during the course of search action carried out in the case of the assessee, at the address being 301/302, Karm Sankalp Building, Opp. Rajawadi Garden, Ghatkopar East, Mumbai, the statement of Shri Deepak Singh, who was alleged to be the cash handler of Ravi Agrawal Group, was recorded. During the course of search, several loose papers, diaries and note books, stated to be in the handwriting of Shri Deepak Singh, were found. In his statement, Shri Deepak Singh explained the nature of dealings recorded therein as relating to movement of cash, namely cash being collected from one person and delivered to another person as per instructions received from the assessee as well as from Shri Sanket Khemuka and Smt. Monica Khemuka. He further stated that the said loose papers, note pads and diaries were sent to Shri Khemraj Parate, accountant, for records and accounting purposes. Pursuant to the said statement and the notings found during search, notice dated 22.10.2024 under section 142(1) was issued to the assessee seeking his explanation. 30. The assessee filed reply dated 13.01.2025, explaining the nature of such entries. Thereafter, show cause notice dated 24.01.2025 was issued proposing addition of Rs. 214,74,96,122/- under section 69A as unexplained money and addition of Rs.193,32,30,899/- under section 69C as unexplained expenditure. The assessee filed detailed reply

22 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal dated 01.02.2025. However, the explanation was not accepted by the Assessing Officer and, after reworking the figures, the total cash receipts were computed at Rs.197,39,54,122/- and total cash payments at Rs.184,03,58,935/. The Assessing Officer accordingly added the former amount under section 69A and the latter amount under section 69C. In appeal, the learned CIT(A) held that the entire addition could not be sustained in the manner made by the Assessing Officer, but proceeded to estimate profit at 5% of the aggregate cash receipt and cash payment, thereby restricting the addition to Rs.19,07,10,652/. Against this finding, both the parties are before us. 31. Before us, the learned counsel for the assessee submitted, at the outset, that the entire approach of the Assessing Officer in treating the cash receipts of Rs.197,39,54,122/- as unexplained money under section 69A and cash payments of Rs.184,03,58,935/- as unexplained expenditure under section 69C is wholly misconceived, because the loose papers and diaries, when read in their entirety along with the statement of Shri Deepak Singh, do not evidence ownership of cash in the hands of the assessee. According to the assessee, the entries represent movement and transportation of cash from one location to another and from one person to another, for and on behalf of third parties, on commission or collection charge basis. Such activity, in common commercial parlance, is known as Angadia service. It was submitted that throughout

23 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal assessment as well as appellate proceedings, the consistent stand of the assessee has been that the monies recorded as cash receipts and cash payments belonged to other persons; the assessee, through his persons, merely facilitated movement or transportation thereof and did not own, possess beneficially or enjoy the said cash. Therefore, the entire premise of invoking section 69A and section 69C, according to the learned counsel, is contrary to the very nature of the entries and the statement relied upon by the Revenue itself. 32. The learned counsel submitted that the statement of Shri Deepak Singh, if read as a whole and not in a selective or truncated manner, clearly shows that the assessee was engaged in the activity of collection and delivery of cash and not in ownership of such cash. In response to Question Nos.10 and 11, Shri Deepak Singh explained his role and responsibility by stating that he was handling cash transactions, namely taking and giving cash, after receiving directions from Smt. Monica Sanket Khemuka and Shri Ravi Omprakash Agrawal. He stated that he accepted cash from parties and handed it over either to Monica madam or to other parties as directed by Monica madam or Ravi sir. He further stated that he delivered cash to various persons as per directions given to him. While explaining the modus operandi, he stated that he would receive directions as to whether cash was to be received or delivered; accordingly, he would collect cash from persons informed by Ravi or Monica

24 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal and deliver the cash to the concerned person as directed. He also stated that, to confirm the correct person, he would share currency note number of small denominations through WhatsApp with the person to whom cash was to be delivered or from whom cash was to be accepted. He further stated that after completion of the cash transaction, he would report to Monica Khemuka, Ravi Agrawal, Khemraj Parate or other concerned persons, and he would maintain notings in note pads and ledgers and send copies of such ledgers of cash receipts and payments to Khemraj Parate through WhatsApp. According to the learned counsel, this narration itself shows that the essence of the activity was collection and delivery of cash for others and not acquisition or ownership of cash by the assessee. 33. It was further submitted that the same position stands fortified from the answers of Shri Deepak Singh to Question Nos.14 and 16, wherein he stated that two vehicles were provided for collection and delivery of cash and that the same vehicles were used for transportation of cash. The learned counsel submitted that this part of the statement is important because the entire reference to vehicles is in the context of collecting and delivering cash. If the cash were really the assessee’s own unexplained money, there would be no occasion to describe the activity in terms of collection from one person and delivery to another person. The use of vehicles specially designed for carrying cash only demonstrates that the activity was one of cash movement or

25 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal transportation. The statement, therefore, far from proving the case of the Revenue, in fact supports the assessee’s stand that the diaries represented Angadia activity and the assessee was not the owner of the cash so recorded. 34. The learned counsel then drew attention to Question No.28 of the statement of Shri Deepak Singh, wherein he confirmed that the loose paper bundles found and seized during search contained his handwritten papers relating to day-to-day cash received, cash given, miscellaneous expenditure, opening cash balance and closing cash balance. He stated that entries on the left side of each page related either to cash received by him or cash accepted by Ravi Agrawal or Monica Khemuka, whereas entries on the right side related to cash given or cash expenditure. He also stated that initially he made rough notings on loose papers and later prepared final statements of cash in and cash out. According to the learned counsel, the very structure of the diary, showing cash in and cash out, opening and closing balances, and names of persons from whom cash was collected and to whom cash was delivered, is consistent only with an activity of cash transportation and not with generation of unaccounted income by the assessee. The statement does not say that the cash belonged to the assessee; it only says that the cash transactions were related to the assessee and Monica Khemuka in the sense that directions for collection and delivery were received from them. The learned counsel submitted that this distinction

26 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal between “related to” and “belonging to” is crucial, and the Assessing Officer has erroneously converted an activity of handling or transportation into an allegation of ownership. 35. It was further submitted that the entire modus operandi is also reiterated in Question No.69 of the statement of Shri Deepak Singh, where he again explained how cash was collected from one person and ultimately delivered to another person as per the directions of the assessee or Monica Khemuka. Thus, the learned counsel submitted, the statement itself, which is the primary material relied upon by the Department, repeatedly describes an activity of cash collection and cash delivery. It does not describe the assessee as the owner of the cash. It does not show that the cash receipts were income of the assessee. It does not show that the cash payments were expenditure incurred by the assessee. The entries, according to him, merely represent movement of funds belonging to others, and the assessee’s taxable income, if at all, could only be the commission or collection charges earned from facilitating such movement. 36. The learned counsel further submitted that the assessee had also furnished before the lower authorities an entire mapping demonstrating how cash collected from one person was delivered to another person and that the said mapping was placed in the paper book for Assessment Year 2023-24. The assessee had also referred to several sample diary pages to show that cash received was almost

27 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal simultaneously or within a short period paid out or delivered, thereby establishing that the assessee was only temporarily handling the cash for onward delivery. Reference was made to entries where amounts of Rs.8 crores, Rs.2 crores, Rs.58 lakhs, Rs.1 crore, Rs.50 lakhs, Rs.2 crores, Rs.3 crores, Rs.20 lakhs and Rs.10 lakhs were recorded as received and paid. According to the learned counsel, such receipt and payment pattern is inherently inconsistent with ownership of cash. A person who owns unexplained cash does not simultaneously record its receipt from one party and payment to another; such pattern unmistakably bears the imprint of Angadia operations. 37. It was then submitted that, even otherwise, if the Revenue’s allegation that the entries do not represent Angadia business is to be accepted, then the Department must explain what exactly the entries represent. The learned counsel submitted that the assessee, in his individual capacity, is not engaged in any business having cash sales. Therefore, the amounts in the diary cannot be regarded as cash sales. It is also not the case of the Revenue in the assessment order that these receipts are loan transactions of the assessee. There are no corresponding entries of interest income which would have normally followed if the entries were loans. Similarly, cash payments do not represent expenditure incurred by the assessee because they are outgoings to other persons corresponding to cash earlier received. Thus, according to the assessee, once cash sales,

28 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal loans, income and expenditure are ruled out on the basis of the Revenue’s own material, the only reasonable and commercially consistent inference is that the entries pertain to transportation or movement of cash on commission basis. 38. The learned counsel further submitted that the learned CIT(A), after appreciating the seized material and the surrounding evidences, has himself recorded a factual finding that the evidences seized during search indicate cash transportation business. Once the learned CIT(A), on appreciation of the same material, has accepted the essential nature of the activity as Angadia/cash transportation, then the Revenue cannot, without bringing any further evidence, seek to restore the entire addition under sections 69A and 69C. It was submitted that the Revenue has not shown any material to dislodge the factual finding that the assessee was engaged in cash transportation activity. The dispute, therefore, according to the assessee, can at best be with respect to estimation of commission or profit from such activity, but the entire gross receipts and gross payments cannot be taxed as unexplained money or unexplained expenditure. 39. The learned counsel then addressed the legal requirement of section 69A of the Act. It was submitted that section 69A can be invoked only where, in any financial year, the assessee is found to be the owner of money, bullion, jewellery or other valuable article and such money or article is not recorded in the books of account and the assessee

29 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal offers no explanation about the nature and source thereof or the explanation offered is not satisfactory. Thus, ownership of money is the first and foundational condition for invoking section 69A. In the present case, the assessee was not found to be owner of Rs.197,39,54,122/-. The amount was not found physically in possession of the assessee. What was found were diaries and notings recording movement of cash. Those notings themselves contained names, particulars and details of persons from whom cash was collected and to whom cash was delivered. Therefore, the source of the cash, insofar as the assessee was concerned, stood explained from the seized material itself. If the Department was of the view that the persons named in the diary had unexplained cash, the proper course was to examine such persons and investigate the source in their hands. However, without conducting such enquiry, the Assessing Officer could not have fastened the entire cash receipt upon the assessee as his unexplained money. 40. The learned counsel further submitted that the diary itself recorded the details of persons from whom cash was collected, including names, details and contact numbers. In response to Question No.42, Shri Deepak Singh had also given names and mobile numbers of several persons from whom cash was collected or to whom cash was delivered. The Assessing Officer had ample power under the Act to summon those persons, verify the entries and investigate the source. However, no such exercise was carried out. According to the

30 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal assessee, once the seized material itself indicates that cash was collected from identified third parties, the assessee cannot be treated as owner of the cash merely because he facilitated its movement. The burden cannot be artificially shifted upon the assessee to explain source of money belonging to others when the Revenue itself had in its possession names and details of the parties from whom cash was received. 41. The learned counsel further submitted that the word “owner” in section 69A is of great significance and cannot be diluted to mean mere physical handling or temporary custody. The assessee’s case is that he was merely a transporter or facilitator of cash movement, and the real owners were the persons from whom the cash was collected. In order to invoke section 69A, the Assessing Officer had to establish that the assessee enjoyed ownership rights over the cash, namely power of enjoyment, right of possession to the exclusion of others, power to alienate or charge the property, or beneficial entitlement thereto. No such material has been brought on record. The assessee placed reliance on the decision of the Hon’ble Calcutta High Court in Bimal Kumar Damani v. CIT [2003] 261 ITR 635 and the decision of the Hon’ble Supreme Court in D.N. Singh v. CIT 150 taxmann.com 301, to submit that ownership cannot be presumed merely because certain articles or entries are found in connection with an assessee. According to the assessee, in the present case, even possession in the strict

31 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal sense is not established, much less ownership; what is established at the highest is temporary handling of cash for transportation. 42. It was further submitted that no unaccounted cash or valuable article remotely approximating Rs.197,39,54,122/- was found from the assessee during the course of search. The learned counsel submitted that section 69A contemplates a situation where the assessee is found to be owner of money, bullion, jewellery or valuable article. In the present case, no such cash was found. The entire addition has been made merely on the basis of diary entries which, on their own terms, recorded cash inflow and outflow. Thus, according to the assessee, the basic precondition for invoking section 69A fails. Reliance was placed on Patoa Brothers v. CIT [1982] 133 ITR 672 (Gauhati HC), CIT v. Ravi Kumar [2007] 294 ITR 78 (Punjab & Haryana HC) and the coordinate bench decision in Mahadhan AgriTech Limited v. ACIT, to submit that addition under section 69A cannot be sustained merely on notings unless ownership of money is established. 43. Coming to the addition under section 69C, the learned counsel submitted that the addition of Rs.184,03,58,935/- as unexplained expenditure is equally unsustainable. Section 69C can be invoked only where the assessee has incurred expenditure and offers no explanation about the source of such expenditure or the explanation offered is not satisfactory. In the present case, the cash payments recorded

32 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal in the diary are not expenditure incurred by the assessee. They are payments or deliveries made to other persons in the course of cash transportation activity. The source of such payments is the cash received from other persons and recorded in the very same diaries. Therefore, once the source of cash payments is available from the cash receipts themselves, the same amount cannot again be treated as unexplained expenditure. The learned counsel submitted that the Assessing Officer has, in effect, taxed both sides of the same movement, namely cash received and cash delivered, which leads to double addition and distortion of the real nature of the transaction. 44. It was further submitted that it is not even the case of the Revenue that Rs.184,03,58,935/- represents expenditure incurred by the assessee for his own purposes. The entries merely show cash given, cash delivered or cash paid to identified persons. Such delivery of cash in the course of Angadia activity cannot be equated with expenditure. According to the assessee, “payment” and “expenditure” are not synonymous for the purpose of section 69C. Every outgoing of money is not expenditure; expenditure connotes an amount spent by the assessee for some purpose of his own. Here, the assessee was merely passing on cash received from one party to another. Therefore, section 69C has no application. Reliance was placed on CIT v. Golani Brothers [2017] 85 taxmann.com 355 (Bombay HC), Kailash Ramavatar Goenka v. ACIT, ACIT v. Sankalp IN and The

33 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Estate Investment Company Pvt. Ltd. v. DCIT in support of the proposition that when source of payment is explained or when the same represents movement of money already considered, separate addition under section 69C is impermissible. 45. Without prejudice, the learned counsel submitted that the statements of the associates recorded during search were recorded under tremendous pressure and therefore cannot be relied upon in isolation. It was pointed out that in response to Question Nos.103 and 104, the assessee had stated that he was mentally and physically tired and that he and his employees were deprived of sleep for five days. According to the assessee, the circumstances in which statements were recorded resulted in retractions by associates, which were also placed in the paper book. It was submitted that such statements, particularly where they are not supported by independent corroborative evidence, cannot form the sole foundation for making huge additions in the hands of the assessee. Reliance was placed on CIT v. M.P. Scrap Traders, DCIT v. Premsons and CIT v. S. Khader Khan & Sons. 46. The learned counsel then submitted, without prejudice to the primary contention that neither the receipts nor the payments can be taxed in gross, that the learned CIT(A) having accepted the nature of activity as cash transportation business, erred in estimating profit at 5% of the aggregate of cash receipts and cash payments. According to the assessee,

34 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal the estimation of 5% is wholly ad hoc, arbitrary and without any factual or commercial basis. The learned CIT(A) has not cited any comparable case, market practice, seized material or independent evidence to show that a person engaged in Angadia services earns profit at 5% of cash receipts and again 5% of cash payments. It was submitted that by applying 5% on both sides of the transaction, the learned CIT(A) has in substance estimated profit on the same transaction twice. The activity of cash transportation consists of one composite transaction, namely collection of cash from one location and delivery to another location. Commission is earned only once on completion of the entire transaction and not separately on receipt and then again on payment. 47. The learned counsel submitted that the assessee was charging Rs.175 per Rs.1 lakh transported, which works out to 0.175% of the value of cash transaction. This, according to him, is commercially realistic and in line with the nature of the activity. No prudent person would pay 5% merely for collecting cash and another 5% for delivering the same cash, which effectively results in 10% of the amount being treated as profit for transportation of cash. Such rate, according to the assessee, defies commercial reality. If Rs.100 is collected from one person and delivered to another, the learned CIT(A)’s computation effectively assumes earning of Rs.5 on collection and Rs.5 on delivery, aggregating to Rs.10, which is commercially absurd in the context of cash transportation

35 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal activity. It was thus submitted that even if some income is to be estimated, the same can only be reasonable commission income and not an arbitrary percentage of gross receipts and gross payments. 48. It was further submitted that the assessee also incurred expenses in connection with the cash transportation activity, such as fuel, drivers, travel, vehicles and safety arrangements. Certain expenses such as Nagpur trip expenses were also recorded in the seized material, including entries of Rs.1,17,000/-, Rs.58,500/-, Rs.39,000/- , Rs.78,000/-, Rs.58,500/- and Rs.19,500/-. Therefore, even commission receipts cannot be treated as pure profit without considering corresponding expenditure. The assessee submitted that ultimately only real income can be brought to tax and not gross movement of funds. Reliance was placed on the decision of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383. 49. The learned counsel placed strong reliance on the decision of the coordinate bench in Dikesh Mehta v. DCIT, wherein in the context of Angadia type money transfer transactions, the Tribunal held that the entire transaction value cannot be treated as income and only commission income can be brought to tax. In that case, commission was estimated at 0.30% on the value of money transfer transactions. Reliance was also placed on Patel Somabhai Kanchanlal & Co. v. DCIT and Kaushik Pravinchandra Gohil v. AO, where similar principles were applied. Thus, without

36 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal prejudice to the assessee’s primary submissions, it was contended that addition, if any, should be restricted to commission income at Rs.175 per Rs.1 lakh, or such reasonable percentage as may be considered appropriate, on the higher of cash receipt or cash payment, and not on both sides of the same transaction. 50. The learned counsel also dealt with the written submissions filed by the learned CIT-DR. He submitted that the Departmental Representative has contended that the theory of Angadia services was propounded by the assessee only during assessment proceedings and was not stated during search. According to the assessee, this contention is factually incorrect because Shri Deepak Singh, in his answers to Question Nos.10, 11 and 12, had categorically explained during the search itself that he accepted cash from one party and handed over the same to another as per directions. Further, Shri Ravi Agrawal, in response to Question No.163 in his statement during search, also stated that the cash was not his cash and belonged to various persons who sought his assistance for handling cash. Thus, the nature of services was explained during the search itself and the subsequent submission that the activity was Angadia service is merely a legal and commercial characterization of the same factual position. 51. It was further submitted that the learned CIT-DR has attempted to describe the entries in the notebooks, diaries and loose papers as relating to builder financing, cash loans,

37 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal interest earned, bogus billing of software services, dabba trading, renovation expenses, personal expenses, payments against bogus billing and other transactions. The assessee submitted that such submissions travel beyond the assessment order and cannot be used to improve the case of the Assessing Officer. It was submitted that separate additions on issues such as builder financing, bogus billing, dabba trading and other alleged activities have already been made in the hands of respective companies and individuals of the group and are being contested separately. Therefore, the same entries or same cash movement cannot again be added in the hands of the assessee merely by assigning them a different colour in appellate proceedings. If the Department itself alleges that certain cash belongs to particular group entities or particular business activities, then addition, if any, has to be examined in the hands of the relevant assessee and not entirely in the hands of Shri Ravi Agrawal. 52. With regard to cash inflow entries tabulated by the learned CIT-DR, the assessee submitted that entries alleged to be relating to builders actually represent amounts received from various builders for transportation of their cash on commission basis and hence fall within the assessee’s Angadia activity. With regard to entries alleged as cash received on account of bogus billing, it was submitted that the allegation is self-contradictory because the Department’s case elsewhere is that amounts were received through banking channels against invoices and cash was allegedly

38 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal paid against bogus bills; therefore, alleging cash receipt on account of bogus billing is contrary to the Department’s own stand. With regard to entries involving Amit Jalan and other persons, it was submitted that the learned CIT-DR has not explained the real nature of the transactions and therefore the only reasonable inference remains that they pertain to transportation of cash. 53. In relation to cash outflow entries, the assessee submitted that entries relating to office renovation and flat renovation expenses, if any, were expenses incurred out of receipts from the Angadia activity and cannot justify taxing the entire gross cash movement. Entries relating to payments made to Smt. Amita Agrawal were explained as cash delivered by Shri Deepak Singh at the assessee’s residence on instructions for onward delivery to various parties relating to Angadia business, though certain amounts may have also been received at home for personal expenses. With regard to entries relating to Teesta Retail Pvt. Ltd. and alleged debentures, it was submitted that the dates mentioned do not correspond with the dates of issue of debentures by the group company and, in some instances, no dates are mentioned at all. Hence, the allegation is based on assumption and surmise. Similarly, entries alleged to be relating to bogus billing, interest on cash loan and share trading were also submitted to be part of cash transportation entries unless independently established otherwise. The assessee thus contended that the Department’s attempt to

39 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal recharacterize these entries does not displace the consistent and coherent explanation emerging from the seized material itself. 54. The learned CIT-DR, per contra, strongly relied upon the assessment order and submitted that the seized diaries, loose papers and note books clearly contained entries of cash receipts and cash payments of huge magnitude. According to him, once such entries were found during search and were admittedly maintained by Shri Deepak Singh, who was connected with the assessee and his group, the onus was on the assessee to explain the source and nature thereof with supporting evidence. It was submitted that the assessee had never disclosed any income from Angadia business in the return of income, nor was such business disclosed during regular assessment proceedings. The learned CIT-DR argued that the learned CIT(A) erred in accepting the theory of Angadia services and in restricting the addition to only 5% of the aggregate cash receipts and cash payments. According to him, the entries represent unaccounted cash transactions and since the assessee failed to establish the source of cash receipts and the nature of cash payments, the Assessing Officer was justified in making additions under sections 69A and 69C. 55. The learned CIT-DR further submitted that the diaries and loose papers were not dumb documents but detailed records of cash inflow and outflow maintained in the handwriting of Shri Deepak Singh. The entries were

40 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal supported by statement recorded during search and therefore constituted incriminating material. He submitted that the assessee cannot avoid the consequences of such seized material merely by describing the activity as Angadia services without producing cogent evidence of commission structure, customer confirmations, books of account or independent proof showing that the cash belonged to third parties. It was further submitted that the learned CIT(A), having accepted that the business was undisclosed, ought not to have restricted addition to an estimated percentage, more particularly when the assessee himself had not disclosed such income either in the return of income or during post-search proceedings. The learned CIT-DR thus prayed that the order of the Assessing Officer be restored. 56. We have heard the rival submissions and have perused the assessment order, the impugned order of the learned CIT(A), the seized material referred to before us, the statements recorded during search proceedings and the detailed submissions filed by both sides. The aforesaid narration records only the relevant grounds, factual background and rival submissions on the issue of addition of Rs.197,39,54,122/- under section 69A and Rs.184,03,58,935/- under section 69C. Our findings and adjudication on the merits of the rival claims shall be recorded separately hereinafter. 57. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the

41 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal learned CIT(A), the seized diaries, loose papers and note books referred to during the course of hearing, as well as the statements of Shri Deepak Singh and other persons recorded during search proceedings. The controversy before us arises from the addition of Rs.197,39,54,122/- made by the Assessing Officer under section 69A treating the cash receipts recorded in the seized diaries as unexplained money belonging to the assessee and further addition of Rs.184,03,58,935/- under section 69C treating the cash payments recorded therein as unexplained expenditure. The learned CIT(A), while rejecting the approach of the Assessing Officer in taxing the gross receipts and gross payments, held that the seized material indicated undisclosed cash transportation or Angadia-type activity and accordingly estimated income at 5% of the aggregate of receipts and payments, thereby sustaining addition of Rs.19,07,10,652/-. Both the Revenue and the assessee are aggrieved by the said finding.

42 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal delivering the same to another person on instructions received from Shri Ravi Agrawal, Shri Sanket Khemuka and Smt. Monica Khemuka. In response to Question Nos.10 and 11, he specifically stated that he used to accept cash from parties and hand over the same to the persons directed by Ravi Agrawal or Monica madam. He further explained that for identifying the correct person, small denomination currency note numbers were shared through WhatsApp and after completion of the transaction he used to report the same to the concerned persons. In response to Question Nos.14 and 16, he stated that vehicles were used for transportation of cash. Further, in Question No.28, he explained that the seized note books and loose papers contained details of day-to-day cash receipts, cash deliveries, opening balances and closing balances maintained by him.

43 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal movement of cash and not generation of income or ownership of money by the assessee. Significantly, the statement of Shri Deepak Singh nowhere states that the entire cash belonged to the assessee. On the contrary, the consistent narration is that cash was being collected from one person and delivered to another on instructions received from various persons connected with the group.

44 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal contact particulars of various persons from whom cash was allegedly received or to whom it was delivered. Even in response to Question No.42, Shri Deepak Singh furnished names and mobile numbers of several such persons. Once the seized material itself disclosed the source and destination of cash movement, it was incumbent upon the Assessing Officer, if he intended to reject the explanation of the assessee, to conduct independent enquiry from such persons and establish that the explanation of cash transportation was false or sham. However, no such exercise has been carried out. The Assessing Officer has simply proceeded to treat the entire cash movement as unexplained money belonging to the assessee without discharging the primary burden of establishing ownership.

45 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal activity was in the nature of Angadia or cash transportation service.

46 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal or discharge of any liability by the assessee out of the said amounts. The expression “expenditure” used in section 69C cannot be stretched to include every cash outflow irrespective of its true nature. In the factual context emerging from the seized material, the cash payments merely constitute the second limb of the same transaction of transportation and delivery of cash.

47 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal basis of material and reasoning actually brought on record. Mere suspicion or inferential interpretation of isolated entries, without supporting evidence establishing ownership or income generation, cannot justify taxing the entire gross cash movement under deeming provisions.

48 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal referred to various entries of Nagpur trip expenses and related transportation costs recorded in the seized material. In absence of any contrary material brought by the Revenue, the explanation furnished by the assessee appears far more consistent with the nature of activity reflected in the seized material than the arbitrary estimation adopted by the learned CIT(A).

49 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal payments, because both represent the same movement of funds and commission is earned only once upon completion of the transaction.

50 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal receipts of Rs.197,39,54,122/- are higher, the commission income shall be computed at 0.175% thereof. The balance addition sustained by the learned CIT(A) is directed to be deleted.

51 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal by the assessee from builder financing activity. The learned CIT(A), deleted the entire addition of Rs.2,78,82,000/- made by the AO on account of alleged cash returned by the builders to the assessee by holding that the said cash was assessee’s own money which was received back. However, Ld. CIT(A) upheld the addition of Rs.48,26,384/- which was added u/s 69A of the Act and also addition of Rs.2,31,46,262/- in respect of alleged interest received in cash by the assessee. The Revenue is aggrieved by the deletion of addition of Rs.2,78,82,000/-, whereas the assessee is aggrieved by the addition of Rs.48,26,384/- and Rs.2,31,46,262/- confirmed by the Ld. CIT(A). 75. The Revenue has raised the following grounds in ITA No.4946/Mum/2025:– ―5. Whether on the facts and in the circumstances of the case, the learned CIT(A) is justified in deleting the addition of Rs.2,78,82,000/- made 69A of the Act as the excess amount paid by the assessee to the builder (i.e. Finance amount — Agreement amount) has been returned to the assessee in cash and the same is not recorded in the books and hence the same is unexplained money of the assessee u/s 69A of the Act.?‖

52 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal same has not been found disclosed in the regular books of accounts. The Appellant submit that it has purchased various properties during the year under consideration, transactions for purchase of property are duly recorded in his books of accounts. The Appellant have not paid any cash to the builders as alleged by the AO and addition of Rs.48,26,384/- made by the AO merely on the basis of assumption, surmises and conjecture without there being supporting documents/corroborative and cogent material on record; hence on the facts and circumstances of the case and in law, additions made by the AO u/s 69A r.w.s. 115BBE of the Act shall be deleted (b) Without Prejudice to above, the CIT(A) erred in confirming addition of Rs.48,26,384/- made by the AO u/s 69A r.w.s. 115BBE of the Act without appreciating that no money, bullion. Jewellery etc of any kind belonging to the Appellant were found during the course of search and seizure action and hence provision of section 69A r.w.s. 115BBE of the Act has no application in his case and addition made by the AO shall be deleted. (c) The CIT(A) erred in confirming addition of Rs.2,31,46,262/- made by the AO as alleged interest income earned by the Appellant in cash against the finance provided to builders. The Appellant submit that he has made investment in properties and not earned any interest income in cash or otherwise which is not recorded in his books of accounts as alleged by the AO. The AO made the impugned addition merely on the basis of assumption. surmises and conjecture without there being supporting documents/corroborative and cogent material on record; hence on the facts and circumstances of the case and in law, additions made by the AO shall be deleted. (d) The CIT(A) erred in confirming the above additions made by the AO merely on the basis of statement recorded during the course of search action, without appreciating that those statements were recorded under threat, coercion and duress; hence on the facts and circumstance of the case of Appellant and in law, the statements recorded during search action have

53 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal no evidentiary value and no addition can be made in case of Appellant by relying upon such statements. (e) The CIT(A) erred in confirming above additions made by the AO by merely relying upon the alleged whattsapp chats, digital data etc found during the course of search and seizure action, which have no evidentiary value. (f) The CIT(A) erred in confirming the action of AO in assessing alleged interest income earned of Rs.2,31,46,262/- by the Appellant in cash against the finance provided to builders as unexplained expenditure u/s 69C of the Act while computing Taxable income in the body of the assessment order at para 10 as against assessed undisclosed income. Your Appellant submit that alleged interest income has been assessed as undisclosed income by the AO; however, while computing taxable income at Para 10 of the assessment order the AO has considered the same as unexplained expenditure u/s 69C of the Act and computed tax accordingly. Hence the AO shall be directed to compute the tax on the alleged undisclosed income of Rs 2,31,46,262/- at normal applicable rate.‖

54 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal course of search on Varsha Chavan, and statement of Varsha Chavan was recorded in respect of the same.

55 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal cash. On such alleged loan, the Appellant receives interest in cash. 79. Pursuant to the said statement recorded of Varsha Chavan as well as the sheets and WhatsApp chats found, a notice dated October 22, 2024 under section 142(1) of the Act was issued to the Assessee seeking explanation for the same. The Assessee, vide its letter dated January 13, 2025, furnished its reply with respect to the said allegation. The Assessee in his reply has thoroughly explained that the Assessee purchases properties from distressed builders at a discounted rate, and the consideration for purchase of the said properties is through banking channels and duly accounted in his books of accounts, and the allegations of earning or paying interest in cash is devoid of any merit. Subsequently, a show cause notice dated January 24, 2025 was issued on the Assessee, proposing an addition of Rs. 2,55,58,000/- as cash returned to the Assessee, and Rs. 6,57,98,984/- as cash paid by the Assessee to the builders. The Assessing Officer further proposed an addition of Rs. 6,82,84,467/- as interest received by the Assessee in cash. The Assessee furnished its reply to the said show cause notice vide his letter dated February 01, 2025. However, the said explanation of the Assessee was held unacceptable by the Assessing Officer, and noted that in respect of 23 properties, the purchase price was Rs.15,97,27,000/- whereas the finance amount was Rs.13,18,45,000/-, and the difference of Rs.2,78,82,000/- was cash received back by the

56 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Assessee and the same was added under section 69A of the Act. In respect of one property, the finance amount was Rs. 19,43,26,384/-whereas the assessee paid Rs.18,95,00,000/- for purchase of that property, and thus, the amount of Rs.48,26,384/- was paid to the builders in cash, which was added under 69C of the Act. The Assessing Officer further made an addition of Rs.2,31,46,262/- in respect of interest received in cash. 80. Aggrieved by the said assessment order, the Assessee filed an appeal before the CIT(A). The CIT(A), vide the order dated April 15, 2025, deleted the addition of Rs.2,78,82,000/- under section 69A of the Act on the ground that the said sum was Assessee’s own money that was received back. However, the CIT(A) upheld the addition of Rs.48,26,384/- which was added under 69C of the Act, and also upheld the addition of Rs.2,31,46,262/- in respect of alleged interest received in cash by the Assessee. Aggrieved by the said order, the Assessee as well as the Revenue are in the present appeals before this hon’ble Tribunal. 81. The counsel of the assessee has manyfold arguments. He firstly argued that all transactions were genuine property purchases through banking channels, duly recorded in the books, with stamp duty paid and agreements executed as outright sale deeds. These properties were disclosed as investments, and capital gains on their sale have been accepted by the department. Once the department has taxed capital gains, it cannot recharacterize the same transactions

57 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal as financing arrangements. Therefore, additions under sections 69A and 69C are fundamentally unsustainable. 82. Secondly, the allegation of the AO is that ₹2,78,82,000 was cash returned to the assessee. The counsel of the assessee argued that this sum originated from the very cheque payments made by the assessee for property purchases. Since section 69A applies only when the source of funds is unexplained, and here the source is clearly explained and accepted by the AO himself, the addition cannot stand. For this proposition, the learned counsel relied on series of judicial precedents, CIT v. Golani Brothers [2017] 85 taxmann.com 355 (Bombay HC), Kailash Ramavatar Goenka v. ACIT [IT(SS)A Nos: 1/Ahd/2023 & Ors., dated January 10, 2025] (Ahmedabad – Trib.), ACIT v. Sankalp IN [IT(SS)A Nos. 45 to 48/Ahd/2022, dated January 31, 2025] (Ahmedabad – Trib.). 83. Thirdly he argued that no unaccounted cash was found during search, which is a prerequisite for invoking section 69A; hence, section 69A of the Act has no application here. To buttress the submission, the counsel relied on various judicial precedents, Patoa Brothers v. CIT [1982] 133 ITR 672 (Gauhati HC), CIT v. Ravi Kumar [2007] 294 ITR 78 (Punjab & Haryana HC), Mahadhan AgriTech Limited v. ACIT [ITA No.2227/Mum/2024 & Ors., dated July 24, 2025] (Mumbai – Trib.).

58 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 84. Fourthly, the AO added ₹48,26,384 under section 69C, alleging cash payment to builders. The learned counsel contends that even if such cash was paid, its source was explained as being from cash received in other transactions. More importantly, section 69C applies to unexplained “expenditure.” Here, the alleged cash payment was part of property consideration, not an expenditure in the Assessee’s business. Since neither the AO nor Revenue has treated it as expenditure, the addition under section 69C is legally untenable. 85. Lastly for the addition of the interest, the learned counsel submitted that the AO treated ₹2,31,46,262 as cash interest received at 18–24% per annum. This is a misinterpretation as returns were embedded in capital appreciation from properties purchased at a 30-50% discount. Gains were offered to tax as capital gains, and taxing them again as interest would amount to double taxation. Statements of intermediaries like Arun Gupta confirm that properties were purchased, but do not establish cash interest payments. He further points out that the AO’s theory is commercially absurd as no builder would agree to pay both a steep discount and high cash interest, as it would make financing prohibitively costly. In essence, the Assessee’s arguments are that (i) property purchases were genuine and accepted as investments, (ii) sources of alleged cash flows were explained, (iii) section 69C does not apply as there was no “expenditure,” (iv) alleged interest was actually capital

59 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal appreciation already taxed, and (v) the AO’s theory leads to commercial absurdity and double taxation. 86. On the contrary, the learned DR argued that the group would purchase unsold flats or properties from financially distressed builders. These purchases were not intended as genuine investments but as collateral for financing. The agreement value was paid through banking channels, but the difference between the registered value and the finance amount was allegedly returned in cash by the builder. The term sheets and statements indicate that interest was charged at 24% per annum, often collected in cash or disguised as rent agreements when occupancy certificates were available. Builders were required to pay 3 –12 months of interest upfront, again largely in cash. Furthermore, Varsha Chavan (Arun Gupta Advisors Pvt. Ltd.) has confirmed her role as mediator between builders and Monica Khemka, sharing excel sheets detailing deal values, cash components, and agreement values. Arun Gupta has explained that he arranged financing through Ravi Agrawal’s group, with properties purchased at a haircut of 30–50% of market value. He admitted commission was taken in cash. Naveen Agrawal has stated that builders returned the cash differential and interest in cash, and that he prepared ledgers showing agreement values, finance amounts, and receivables. Monica Khemka has confirmed that she coordinated financing, prepared excel sheets, and directed associates to collect cash from builders. She admitted

60 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal receiving cash from builders like Lodha Group and Bhanushali Builders, with portions earmarked as interest and the rest belonging to Ravi Agrawal. Ravi Agrawal himself in his statement has acknowledged the financing model, builders approached through agents, properties purchased at steep discounts, and returns expected in the range of 18– 24%, often settled in cash. Various digital evidences have been found during the course of search action such as whatsApp chats and excel sheets showing deal values, cash components, and instructions for cash delivery, screenshots of conversations where cash amounts were acknowledged and directed to be entered in ledgers, statements confirming receipt of cash and its allocation between interest and principal. In essence, the Revenue’s case is that builder financing was a structured business activity, disguised as property purchases, with systematic cash flows (both differential amounts and interest) outside the books. The seized term sheets, excel files, WhatsApp chats, and corroborative statements from associates are presented as evidence that this was not mere investment activity but a deliberate mechanism for generating unaccounted income. 87. In rebuttal to the Departmental Representative’s submissions, the Assessee’s counsel made two detailed arguments. First, he challenged the reliance on diary entries of Shri Deepak Singh, which the DR claimed reflected builder financing transactions. The counsel explained that the diary was primarily maintained for Angadia services (informal cash

61 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal transfer arrangements), and it was entirely possible that builders approached the Assessee for such services. Therefore, linking those entries to builder financing was incorrect and misleading. The counsel emphasized that the diary did not establish any nexus with the alleged builder financing activities. Second, the counsel highlighted the inconsistency in the Revenue’s approach. On one hand, the same amounts were being attributed to Angadia services, while on the other, they were being treated as builder financing receipts. This contradictory stance, described as “approbation and reprobation,” was argued to be bad in law. The counsel pointed out that such inconsistency showed the Revenue itself was unsure of how the transactions were taxable, which meant the additions were based on assumptions, conjectures, and surmises rather than concrete evidence. On this basis, the Assessee submitted that the additions made by the AO deserved to be deleted and set aside. 88. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the seized material relied upon by the Assessing Officer and the statements referred to during the course of proceedings in relation to the additions made towards alleged builder financing transactions. The Assessing Officer, on the basis of certain loose papers and entries found during search proceedings, inferred that the assessee had entered into financing transactions with

62 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal various builders involving cash movement and interest components. On this basis, the Assessing Officer made addition of Rs.2,78,82,000/- treating the same as alleged cash returned by builders to the assessee under section 69A. Further addition of Rs.48,26,384/- was made treating alleged cash paid to builders as unexplained money under section 69A and an addition of Rs.2,31,46,262/- was made towards alleged interest income earned from such financing activity. The learned CIT(A), after examining the seized material and surrounding facts, deleted the addition of Rs.2,78,82,000/- while sustaining the addition of Rs.48,26,384/- and the corresponding interest income addition of Rs.2,31,46,262/-.

63 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal the assessee. The Assessing Officer, however, proceeded to tax the alleged returned cash once again under section 69A without demonstrating generation of any independent unexplained asset, investment or income. Such an approach results in repetitive taxation of the same alleged flow of money and overlooks the intrinsic nature of the transaction itself.

64 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal properties under the alleged builder financing and said payment is part of sale consideration of property purchased. In view of the above, provision of section 69C does not apply and assessee deserve relief. To that extent, order of learned CIT(A) is modified.

91.1 Insofar as the addition of Rs.2,31,46,262/- toward interest income is concerned we find the force in the argument of assessee that the assessee has made investment in properties, (both under construction and in ready possession) for capital appreciation and earning rental income. The assessee has earned rental income of Rs.4,50,0000 in respect of shop no. Shop No.1, Wing B&C, W.E. Highway, Malad to M/s. Sai Enterprise (ready possession) and offered rental income as Income from House Property and assessed accordingly for the year under consideration. It is further submitted that he has also sold two office premises (i.e. part of office on Ground floor and 1st Floor) for aggregate sale consideration of Rs. 10,11,83,000/- and offered short term capital gain of Rs. 1,68,73,734/- for the year under consideration and accepted by the Assessing officer. The above fact, substantiate the claim of assessee that he acquires immovable properties for capital appreciation and earning rental income and not earning interest income on alleged builder finance activity. The assessee deserve relief in the

65 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal respect of addition of above addition and to that extent order of learned CIT(A) is modified.

66 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal statement of Shri. Mohd. Israil Shaikh recorded on u/s 132(4) Of the Act? 7. Whether. on the facts and in the circumstances of the case, the learned CIT(A) is justified in deleting the addition made by the Addition of Rs. 12,42,740/- without considering that Shri. Mohd. Israil Shaikh recorded on oath u/s 132(4) of the Act has stated that after execution of sale deed when measurement of land was done, there were mismatch in dimensions of the land and it was mutually agreed to cancel the sale deed and the amount was returned. ?”

67 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Sangamner to Umang of Rs. 9,36,751/- has been refunded to them by Umang. 96. The Assessing Officer in the show cause notice has observed that the transaction of Mohd. Israil Sheikh and his group concerns with Assessee and his group concerns for purchase of land and unsecured loans in the name of M/s Sangamner Loni Infrastructure Pvt. Ltd are nothing but an arrangement for obtaining unsecured loan of Rs.8,00,00,000/- by Mohd. Israil Shaikh. The Assessing Officer sought explanation from the Assessee as to why the interest amount to be paid in cash to Assessee by Israil Shaikh shall not be added to the total income of the Assessee. In response, the Assessee submitted that he have purchased Agriculture land for Rs 1.80 Cr from Mohd. Ismail Shaikh and same is duly accounted in his books of accounts. Further Umang has provided a loan and offered due interest. Since the interest income of Rs.5,59,182/- for the year under consideration has been accounted by Umang on loan provided of Rs.6,20,00,000/- to Sangamner. The Assessee denied of receiving any interest amount in cash from Mohd. Ismail Shaikh and submitted that no addition is called for in his case. However, the AO did not accept the contention of the Assessee and made addition of Rs.12,42,740/- [i.e.21% of Rs.8,00,00,000/- for 27 days] as alleged interest income earned by the Assessee in cash against purchase of property of Rs.1,80,00,000/- from Mohd. Israil Shaikh and loan of Rs.6,20,00,000/- given by M/s Umang Trading Private

68 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Limited to M/s Sangamner Loni Infrastructure Pvt. Ltd alleging both the transactions as finance provided by Assessee. However, on appeal, the Ld. CIT(A) deleted the impugned addition made by the AO. 97. The counsel submitted that the assessee merely purchased agricultural land from Mohd Israil Shaikh for ₹1,80,00,000 duly recorded in the balance sheet under fixed assets. The said agreement was duly registered and stamp duty was also paid which has been capitalized with the land cost in the books. This was purely a transaction of purchase of land; hence, the question of receiving any interest income thereon is beyond any imagination. Moreover, the purchase of land is a separate transaction than the transaction of Mohd Israil Shaikh of taking the loan from Umang. This transaction was independent of the loan of ₹6,20,00,000 advanced by Umang to Sangamner, which was separately accounted in Umang’s books. Umang had already recognized interest at 12% per annum, offered it to tax, and even refunded excess interest. This fact was accepted in the assessment order. Therefore, since the assessee neither advanced the loan to Mohd. Israil Shaikh nor charged interest, the addition of interest at 21% per annum in the assessee’s hands was without basis and deserved deletion. 98. The counsel argued that the AO’s allegation of builder financing and interest income was based only on snapshots and assumptions in the show cause notice. In reality, Sangamner repaid the loan to Umang in April 2023, but the

69 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Assessee continued to hold ownership of the land purchased for ₹1,80,00,000 and never resold it to Sangamner, which disproves the AO’s theory of a financing arrangement. 99. The learned counsel further argued that no statement or evidence suggested that the assessee received interest in cash from Mohd Israil Shaikh or Sangamner. Even Mohd Israil Shaikh confirmed only the borrowing from Umang at 12% interest, not any payment to the assessee. Thus, the addition of ₹12,42,740 as alleged interest income was argued to be baseless, unsupported by evidence, and liable to be deleted. In conclusion, the counsel maintained that the transaction was a genuine property purchase by the assessee, while the loan and interest were entirely in Umang’s domain, and therefore the addition in the assessee’s case was unsustainable and rightly deleted by the CIT(A). 100. On the contrary, the learned DR argued that as per agreement, interest has to be paid @12% on sum of Rs 6.2 crores but as per Whatsapp chat with Monica Khemuka, it was 21%. Since part payment of interest has been paid through banking channels. Thus, differential amount was paid in cash. Further, Israel Sheikh itself accepted the sale transaction of land was cancelled and Rs 1.78 crore was refunded back. Therefore, AO has rightly added interest on account of loan and land transaction.

70 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal learned CIT(A), the seized material and the relevant entries relied upon by the Assessing Officer in support of the addition made towards alleged interest income from Shri Mohd. Israil Shaikh. The Assessing Officer, on the basis of certain seized notings and entries found during the course of search proceedings, inferred that the assessee had advanced funds to Shri Mohd. Israil Shaikh and had earned interest thereon which was not disclosed in the return of income. Accordingly, the addition was made treating the same as undisclosed interest income of the assessee. The learned CIT(A), after examining the seized material and the explanation furnished by the assessee, deleted the addition.

71 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal between Stamp Duty Value and Agreement Value of property being 1301, Balaji Arcade purchased by the Appellant from Shree Developers The Appellant submit that the above property purchased by Appellant is an under-construction property and purchase consideration paid by Appellant represents the actual Fair Market Value of the property on the date of purchase, and hence on the facts and circumstances of the case of the Appellant and in law addition of Rs.20,72,100/- made by the AO shall be deleted (b) Without Prejudice to above, on the facts and circumstances of the case of the Appellant and in law, the CIT(A) erred in confirming the action of AO in making addition of Rs.20.72,100/- u/s 56(2)(x)(b) of the Act without referring the valuation of the property to Department Valuation Officer as per 3rd Proviso to section 56(2)(x) r.w.s. 50C(2) of the Act. The Appellant submit that the AO shall be directed to refer the valuation of the property to Department Valuation Officer to determine the Fair Market Value of the property. (c) Without Prejudice to above, the CIT(A) erred in confirming the action of AO in making the impugned addition without appreciating that once the transactions for purchase of properties are treated as finance transactions, then no addition u/s 56(2)(x)(b) of the Act can be made in Appellant's case; hence, additions made by the AO of Rs.20,72,100/- u/s 56(2)(x)(b) of the Act is contrary to the additions made by him for treating the transaction as finance transaction.”

72 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal was asked to explain as to why an amount of Rs.20,72,100/- being the difference between the stamp duty value and agreement value shall not be added as income of the Appellant u/s 56(2)(x)(b) of the Act 105. In response thereto, the Assessee explained that the property is purchased in a building which was under construction on the date of purchase, and explained its contentions, but the Assessing Officer made an addition of Rs. 20,72,100/- and the same was upheld by the CIT(A). Aggrieved, the Assessee is in appeal before your Honour on the above grounds. 106. The learned counsel for the Assessee submitted that the purchase of flat No. 1301, Balaji Arcade, Wadala, Mumbai, was a genuine transaction for ₹1,18,00,000, duly recorded in the books, while the Stamp Duty Value (SDV) was ₹1,38,72,100. He argued that SDV is determined by the state government based on circle rates applicable to completed projects ready for habitation, whereas the Assessee’s purchase was of an under-construction property. Since under-construction projects naturally attract lower prices due to risks of delay, non-completion, or denial of occupation certificate, the SDV of a completed project cannot be compared to such transactions. On this basis, the addition of ₹20,72,100 under section 56(2)(x)(b) was said to be excessive and unsustainable. Without prejudice, the counsel further submitted that if the Revenue insists on applying section 56(2)(x)(b), the Assessing Officer should be directed to obtain

73 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal an independent valuation report. Only such a report, reflecting the actual market value of the under-construction property, can form the basis of adjudication. He emphasized that reliance solely on circle rates without considering project status and associated risks leads to inflated valuation and unjustified addition. Accordingly, the Assessee prayed for deletion of the addition or, alternatively, for adjudication based on a proper valuation report. 107. The DR on the above issue relied on the order of AO and learned CIT(A) for making addition under section 56(2)(x) of the Act.

74 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 108.1 Upon a careful appreciation of the material available before us, we do not find any infirmity in the conclusion arrived at by the learned CIT(A). The provisions of section 56(2)(x) specifically provide that where an immovable property is received for a consideration lower than the stamp duty value and the difference exceeds the prescribed limit, the differential amount becomes chargeable to tax in the hands of the purchaser. In the present case, the Assessing Officer has adopted the value determined by the stamp valuation authority and computed the difference accordingly. The assessee has not brought any cogent material on record to demonstrate that the stamp duty valuation adopted by the authorities was erroneous, excessive or otherwise liable to be disregarded in terms of the provisions of the Act.

108.2 No valuation report of an approved valuer, no comparable sale instance, no objection before the stamp valuation authority and no independent material has been placed before us to justify deviation from the stamp duty value adopted by the lower authorities. The assessee has also not demonstrated existence of any peculiar feature or exceptional circumstance affecting the valuation of the property so as to warrant interference with the statutory valuation adopted under the Act. Thus, once the conditions contemplated under section 56(2)(x) stood satisfied and the assessee failed to rebut the stamp duty

75 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal valuation with supporting evidence, the differential amount was rightly brought to tax.

108.3 The learned CIT(A), in our considered opinion, has correctly appreciated the factual and legal position while sustaining the addition of Rs.20,72,100/- under section 56(2)(x). We do not find any perversity or factual infirmity in the findings recorded by the learned CIT(A). Accordingly, the addition sustained by the learned CIT(A) is upheld and the ground raised by the assessee on this issue stands dismissed.

76 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal of the Act stating that there is no evidence that the assessee has received the amount of Rs. 1.50 crore from Sudam and while doing so whether the Ld.CIT(A) has failed to consider that incriminating material in the form of whatsapp chats show that the assessee was involved in cash movements and the assessee has failed to prove with supporting documents that the transaction to collect cash from sudam has not been executed?‖ 112. The assessee, in Cross Objection No.262/Mum/2025, has raised the following ground:– “1. (a) The Commissioner of Income Tax(Appeals) – 54, Mumbai [‗the CIT(A)‘] failed to appreciate that the AO erred in making addition of Rs.1,50,00,000/- u/s 69A r.w.s. 115BBE of the Act and addition of Rs.4,91,00,000/- u/s 69 r.w.s. 115BBE of the Act without appreciating that no money, bullion, Jewellery etc of any kind belonging to the Appellant were found during the course of search and seizure action and hence provision of section 69A r.w.s. 115BBE and 69 r.w.s. 115BBE of the Act has no application in its case. (b) The CIT(A) failed to appreciate that the AO erred in making impugned addition of Rs.1,50,00,000/- and Rs.4,91,00,000/- respectively by merely relying upon the alleged WhatsApp chats/digital data etc found during the course of search and seizure action, which have no evidentiary value.” 113. The facts in brief, insofar as relevant to the present addition of Rs. 1,50,00,000/- under section 69A of the Act are that a search was conducted in case of Ravi Agrawal group on May 10, 2023 under section 132 of the Act, pursuant to which a search was also conducted at the residence of one Shri Sanket Khemuka. During the course of search, a WhatsApp chat between Shri Sanket Khemuka and the Assessee was found. In the statement recorded under section 132(4) of the Act, Shri Sanket Khemuka has purportedly stated that the Assessee asked him to collect Rs.

77 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 1,50,00,000/- from one Sudam. A show cause notice dated June 13, 2024 was issued to the Assessee seeking explanation for the same. In response to the said allegation, the Assessee, vide his submissions dated August 26, 2024, stated that to the best of his knowledge, the said transaction was not executed/undertaken due to unavoidable circumstances, and therefore, no adverse inference may be drawn against the Assessee. 114. The Assessing Officer issued a show cause notice dated September 17, 2024 proposing an addition of Rs.1,50,00,000/- stating that the Assessee has not brought any supporting evidence in respect of his contention that the transaction was not executed. In response to the said notice, the Assessee vide his submissions dated September 25, 2024, raised his objections to the said addition and stated that no incriminating material has been found and reiterated his stand that the transaction was not executed. 115. The Assessee, without prejudice, submitted that the said transaction may be treated as one of transportation of cash business, i.e. Angadia services, for which he earns a commission of Rs. 175 per rupees one lakh, and the same may be considered in making an addition. The Assessing Officer, however, made an addition of Rs. 1,50,00,000/- under section 69A of the Act. Aggrieved, the Assessee filed an appeal before the CIT(A). The CIT(A), after perusing the documents and evidences on record, came to the conclusion that there is no corroborative evidence to support the content

78 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal of WhatsApp chat that amount of Rs. 1,50,00,000/- was received by the Assessee from Shri Sudam, and accordingly deleted the entire addition. Aggrieved, the Revenue has filed an appeal and assessee filed the cross objection before the Tribunal on the stated grounds. 116. The learned counsel argued that the addition of ₹1,50,00,000 was based solely on a WhatsApp chat and the statement of Shri Sanket Khemuka, without any corroborative evidence. The WhatsApp message did not establish that cash was received or paid, and at best reflected a proposed transaction that never materialized. Even Sanket Khemuka’s statement merely explained the meaning of the message but did not confirm any cash exchange. Reliance solely on unverified digital communication is impermissible, and several judicial precedents support that such electronic records cannot be the sole basis for addition. The learned counsel for the assessee relied on various judgments Mahadhan AgriTech Limited v. ACIT [ITA No.2227/Mum/2024 & Ors., dated July 24, 2025] (Mumbai – Trib.), ACIT Vs. Prashant Prakash Nilawar [ITA No.5689/Mum/2024](ITAT Mumbai), ACIT Vs. Anan Jaikumar Jain 218 TTJ 813 (Mumbai – Trib.), A. Johnkumar Vs. DCIT 220 TTJ 187 (Chennai – Trib.), Atul Tantia Vs. DCIT [ITA No.492/Kol/2021] (Kolkata – Trib.), Designer Point (India) P. Ltd Vs. ACIT [ITA No.2517/Del/2022] (Delhi– Trib.), DCIT Vs. Classic Marble Co. (P) Ltd 38 NYPTTJ 1274 (Mumbai – Trib.), Vetrivel

79 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Minerals Vs. ACIT 437 ITR 178 (Madras HC), Simtools (P) Ltd Vs. DCIT 219 TTJ 887 (Mumbai – Trib.), Simtools (P) Ltd Vs. DCIT 36 NYPTTJ 1463 (Mumbai – Trib.), Niyaz Sea Foods Vs. DCIT 38 NYPTTJ 1067 (Banglore – Trib.). The counsel emphasized that section 69A requires the assessee to be found as the “owner” of unexplained money. In this case, no cash was found in possession of the Assessee during search, nor was there evidence linking him to ownership of the alleged sum. The AO failed to conduct any enquiry into the other person named in the chat. Since ownership was neither established nor evidenced, the addition under section 69A was argued to be unsustainable. The counsel submitted that the AO’s reasoning that the Assessee failed to explain how the transaction did not occur was flawed. The alleged sum was not recorded in the diary of Shri Deepak Singh, who maintained records of cash movements, showing the transaction never took place. Asking the Assessee to prove a negative is against basic rules of evidence and impermissible in law. Hence, the addition cannot be sustained on such grounds. It was reiterated that no unaccounted cash or valuable article was found in the Assessee’s possession during search. Since the foundational requirement of section 69A was not met, the addition of ₹1,50,00,000 was wholly unwarranted. Reliance was placed on judicial precedents where additions were deleted in similar circumstances. Finally, without prejudice, the counsel submitted that even if the transaction were assumed to have occurred, it related to Angadia cash transportation services. In such a case, only a

80 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal nominal commission (₹175 per lakh) could be considered as income, not the entire ₹1,50,00,000. 117. On the contrary, the learned DR argued that the AO made this addition under section 69A of the Income Tax Act, treating it as unexplained cash. The basis was a WhatsApp chat and statement of Shri Sanket Khemuka, which referred to collect cash of ₹1.50 crores. The DR argued that the WhatsApp message, along with Sanket Khemuka’s explanation, clearly indicated that the Assessee has collected cash. The DR emphasized that the Assessee failed to provide any credible explanation or evidence to rebut the seized digital communication. Therefore, the DR maintained that the AO was correct in making the addition of ₹1.50 crores. 118. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the WhatsApp chats relied upon by the Assessing Officer and the surrounding material placed on record in support of the addition of Rs.1.50 crore made under section 69A of the Act. The Assessing Officer proceeded to make the impugned addition primarily on the basis of certain WhatsApp communications exchanged between Shri Sanket Khemuka and one assessee, from which an inference was drawn that cash amounting to Rs.1.50 crore belonged to the assessee and represented unexplained money liable to be taxed under section 69A. The learned CIT(A), after appreciating the contents of the

81 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal chats and examining the surrounding circumstances, deleted the addition.

118.1 Upon a careful examination of the material available on record, we find ourselves in agreement with the conclusion reached by the learned CIT(A). At the outset, it is pertinent to note that section 69A can be invoked only where the assessee is found to be the owner of money, bullion, jewellery or other valuable article and fails to offer satisfactory explanation regarding the nature and source thereof. Thus, ownership of the alleged money is the foundational requirement for invoking the deeming fiction contained in section 69A. In the present case, except for certain WhatsApp exchanges containing references to cash transactions, no independent material has been brought on record to establish that the alleged amount of Rs.1.50 crore actually belonged to the assessee. Admittedly, no corresponding cash was found from the possession of the assessee during the course of search proceedings. No seized document, diary, ledger, cash trail, bank trail or any corroborative material evidencing ownership, possession or beneficial entitlement of the assessee over the said amount has been brought on record by the Revenue.

118.2 Further, the WhatsApp chats relied upon by the Assessing Officer, by themselves, do not conclusively establish ownership of unexplained money in the hands of

82 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal the assessee. The Assessing Officer has drawn adverse inference merely on the basis of references contained in the chats without conducting any further enquiry to establish the precise nature of the transaction, the actual movement of funds or the nexus of the assessee with the alleged cash. No material has been brought on record to show that the alleged cash transaction ultimately culminated in acquisition, possession or ownership of money by the assessee. In absence of supporting corroborative evidence, isolated WhatsApp chats cannot automatically be elevated to conclusive proof of ownership of unexplained money.

118.3 The learned CIT(A), in our considered opinion, has correctly appreciated the evidentiary limitations of the material relied upon by the Assessing Officer. Suspicion, however strong, cannot substitute legally sustainable evidence, particularly while invoking a deeming provision such as section 69A. Once no independent corroborative material exists establishing ownership of the alleged cash in the hands of the assessee, the addition could not have been sustained merely on the basis of WhatsApp exchanges. Accordingly, we find no infirmity in the order of the learned CIT(A) deleting the addition of Rs.1.50 crore and the grounds raised by the Revenue on this issue stand dismissed.

83 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 119. We shall now deal with the next issue relating to the additions of Rs.4,91,00,000/- on the basis of WhatsApp Chat found from the mobile of Shri Deepak Singh wherein a picture of Gold biscuits was sent by Shri Deepal Singh to one Bhupesh. The AO made the addition of Rs.4,91,00,000/- in the hands of assessee as unexplained investment u/s 69 of the Act. The learned CIT(A), deleted the addition of Rs.4,91,00,000/- holding that there is no corroborative evidence to support the impugned addition. The Revenue is aggrieved by the deletion of addition of Rs.4,91,00,000/- and has come up in appeal, whereas the assessee has filed the cross objection on the ground that no money, bullion, jewellery etc of any kind belonging to the assessee were found during the course of search and seizure action and hence provisions of section 69 has no application. 120. The Revenue has raised the following grounds in ITA No.4945/Mum/2025:– “6. Whether on the facts and the in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs. 4,91,00,000/- u/s 69 of the Act holding the statement of Deepak Singh is contradictory and there is no corroborative evidence found during the search to support the statement of Shri Deepak Singh and while doing so whether the Ld.CIT(A) has failed to consider that there are incriminating material in the form of whatsapp chat and the assessee has failed to provide any documentary evidences about the source and nature of the investment?

84 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 121. The assessee has also raised grounds in its Cross Objection in CO No.262/Mum/2025 which read as under:– “1. (a) The Commissioner of Income Tax(Appeals) – 54, Mumbai [‗the CIT(A)‘] failed to appreciate that the AO erred in making addition of Rs.1,50,00,000/- u/s 69A r.w.s. 115BBE of the Act and addition of Rs.4,91,00,000/- u/s 69 r.w.s. 115BBE of the Act without appreciating that no money, bullion, Jewellery etc of any kind belonging to the Appellant were found during the course of search and seizure action and hence provision of section 69A r.w.s. 115BBE and 69 r.w.s. 115BBE of the Act has no application in its case. (b) The CIT(A) failed to appreciate that the AO erred in making impugned addition of Rs.1,50,00,000/- and Rs.4,91,00,000/- respectively by merely relying upon the alleged WhatsApp chats/digital data etc found during the course of search and seizure action, which have no evidentiary value.”

85 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 123. The Assessing Officer issued a show cause notice dated September 17, 2024 proposing an addition of Rs. 4,91,00,000/- (Rs. 49,100 per 10 grams * 10 kgs). In response to the said notice, the Assessee vide his submissions dated September 25, 2024, raised his objections to the said addition and stated that no incriminating material has been found nor has any gold been found. 124. The Assessee, without prejudice, submitted that the said transaction may be treated as one of transportation of cash business, i.e. Angadia services. The Assessing Officer, however, made an addition of Rs.4,91,00,000/- under section 69 of the Act. Aggrieved, the Assessee filed an appeal before the CIT(A). The CIT(A), after perusing the documents and evidences on record, came to the conclusion that there is no corroborative evidence to support the addition of Rs.4,91,00,000/- and held that the statement of Shri Deepak Singh is contradictory, and accordingly deleted the entire addition. Aggrieved, the Revenue has filed an appeal and assessee filed Cross Objection before the Tribunal on the stated grounds. 125. The counsel argued that the addition of ₹ 4,91,00,000 was made solely on the basis of WhatsApp chats and the statement of Shri Deepak Singh, without any corroborative evidence. The WhatsApp messages only contained photos of gold biscuits, with no indication that the Assessee had purchased, received, or owned them. Such digital communication, without independent corroboration, cannot

86 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal be treated as incriminating material. The statement of Shri Deepak Singh itself was contradictory as he admitted that gold was received from Bhupesh and handed over to someone else, which shows the gold did not belong to the Assessee. Hence, neither the chats nor the statement can justify the addition. The counsel emphasized that section 69 applies only when the assessee is found to be the “owner” of unexplained money or valuables. In this case, no gold biscuits were found in the Assessee’s possession during search, nor was there evidence linking him to ownership. Since ownership was not established, the addition under section 69 was argued to be unsustainable. It was reiterated that no unaccounted cash or gold was found during the search. The foundational requirement of section 69 that the assessee be found in possession of unexplained assets was not met. Therefore, the addition of ₹ 4,91,00,000 was wholly unwarranted. Finally, without prejudice, the counsel submitted that even if the transaction were assumed to have occurred, the gold biscuits belonged to third parties and the Assessee merely provided Angadia (transportation) services. In such a case, only the commission earned for transportation could be considered as income, not the entire value of the gold. On these grounds, the counsel urged that the addition under section 69 be deleted in full. 126. On the contrary, the learned DR submitted that the AO made this addition under section 69 of the Income Tax Act as unexplained Investment. The basis for the addition was

87 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal statements and seized materials linking the transaction to assessee. The DR argued that the seized evidence (including WhatsApp chats, notings, and corroborative statements of associates) clearly established that the Assessee was involved in unaccounted dealings. The DR emphasized that the Assessee failed to provide any satisfactory explanation or documentary proof to rebut the findings. Therefore, the DR maintained that the addition of ₹4.91 crore was rightly made by the AO and deserved to be upheld.

88 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Rs.4,91,00,000/- by adopting the rate of Rs.49,100/- per 10 grams for 10 kilograms of gold.

127.1 The assessee, in reply dated 25.09.2024, specifically objected to the proposed addition on the ground that no gold biscuits or any valuable article were found or seized from the possession of the assessee during the course of search and that there was no corroborative material to establish ownership of the alleged gold in the hands of the assessee. It was further submitted that except for the WhatsApp image and the statement of Shri Deepak Singh, there was no evidence of purchase, possession, ownership, delivery or movement of gold by the assessee. The assessee also contended, without prejudice, that even assuming such transaction existed, the material at best reflected transportation or handling activity and not ownership of gold by the assessee.

127.2 Upon a careful appreciation of the material available on record, we find substantial force in the contention of the assessee. The issue involved herein is substantially similar to the addition of Rs.1.50 crore dealt with by us in the preceding ground, wherein addition under section 69 of the Act was sought to be made merely on the basis of WhatsApp chats without independent corroborative evidence. In the present case also, except for a photograph of alleged gold biscuits found in the WhatsApp

89 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal communication and the statement of Shri Deepak Singh, there is absolutely no corroborative material brought on record by the Revenue to establish ownership of 10 kilograms of gold in the hands of the assessee. Admittedly, no gold biscuits or valuable article corresponding to the alleged quantity of gold were found from the assessee during search proceedings. No bill, voucher, delivery record, stock register, transport document, payment evidence or any contemporaneous material has been brought on record evidencing acquisition or ownership of the gold by the assessee.

127.3 Even the statement of Shri Deepak Singh, as relied upon by the Assessing Officer, does not conclusively establish ownership of the gold in the hands of the assessee. The statement merely records that Bhupesh had sent 10 kilograms of gold and the same was handed over to a concerned person. Thus, the statement itself does not unequivocally state that the gold belonged to the assessee. Section 69 can be invoked only where the assessee is found to be the owner of money, bullion, jewellery or other valuable article and fails to satisfactorily explain the nature and source thereof. In the present case, the very first requirement, namely ownership of the alleged gold in the hands of the assessee, has not been established by the Revenue through cogent material.

90 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 127.4 The learned CIT(A), therefore, in our considered opinion, has correctly appreciated the evidentiary deficiencies in the case of the Revenue while deleting the addition. Mere WhatsApp communication containing a photograph, without recovery of gold and without corroborative evidence establishing ownership, cannot by itself sustain a serious addition of Rs.4,91,00,000/- under section 69. Accordingly, following the reasoning already given by us while deleting the addition of Rs.1.50 crore based on uncorroborated WhatsApp chats, and having regard to the fact that no gold or valuable article was found from the possession of the assessee and ownership thereof has not been established, we uphold the order of the learned CIT(A) deleting the addition of Rs.4,91,00,000/-. Thus, the grounds raised by the Revenue on this issue stand dismissed.

91 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal cash paid as unexplained expenditure u/s 69C of the Act. The learned CIT(A) confirmed the entire addition made by the AO. Aggrieved by the additions made by the AO and confirmed by the Ld.CIT(A), the assessee has come up in appeal before the Tribunal. 129. The Assessee has raised the following grounds in ITA No.3559/Mum/2025:– “1(a) The Commissioner of Income Tax(Appeals) - 54. Mumbai [CIT(A)] erred in confirming the action of AO inmaking addition of Rs.5,53,30,040/- (AED 27.66.502) as unexplained money u/s 69A r.w.s. I I5BBE of the Act on account of alleged cash received by the Appellant as per mobile data/WhatsApp chats found from the mobile of Pratik Sangpal. The Appellant submits that he has not received any cash as alleged by the AO and the addition of Rs.5,53,30,040/- is made by the AO merely on the basis of assumption, surmises and conjecture without there being supporting documents/corroborative and cogent material on record; hence on the facts and circumstances of the case and in law. additions made by the AO u/s 69A r.w.s. 1I5BBE of the Act shall be deleted. (b) The CIT(A) erred in confirming the action of AO in holding that altenatively cash payment of Rs.5,53,69,665/- (AED 27.68,483) shall be liable to be taxed as unexplained expenditure u/s 69C r.w.s. I I 5BBE of the Act. The Appellant submits that he has not made any cash payment as alleged by the AO and the impugned additions are made by the AO merely on the basis of assumption. surmises and conjecture without there being supporting documents/corroborative and cogent material on record: hence on the facts and circumstances of the case and in law. no additions cane be made u/s 69C r.w.s. I I5BBE of the Act.

92 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal (c) The CIT(A) erred in confirming the action of AO in making various additions mentioned hereinabove merely on the basis of statement of third party recorded during the course of search action. without allowing cross examination of such parties and such statements are also been retracted by those parties hence on the facts and circumstance of the case of Appellant and in law. the statements made by third party have no evidentiary value and no addition can be made in case of Appellant by relying upon such statements. (d) The CIT(A) erred in confirming the action of AO in making various additions mentioned hereinabove by merely relying upon the alleged WhatsApp chats, digital data etc found during the course of search and seizure action. which have no evidentiary value.”

93 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 131. The Assessing Officer issued a show cause notice dated September 17, 2024 proposing an addition of Rs.5,53,30,040/- (AED 27,66,502) u/s 69A of the Act and Rs.5,53,69,665/- (AED 27,68,483) u/s 69C of the Act stating that the Assessee has failed to explain source of the said receipts. In response to the said notice, the Assessee vide his submissions dated September 25, 2024, raised his objections to the said addition and submitted that the evidence on record makes it clear that Shri Pratik Sangpal was an employee of M/s SSB Accounting belonging to Mr. Jagdish Raimalani, and the Assessee has nothing to do with the said transactions. 132. The assessee further submitted without prejudice basis that the payments of Rs. 5,53,69,665/- (AED 27,68,483) would be out of receipts of Rs. 5,53,30,040/- (AED 27,66,502), and hence the source stands explained. The Assessing Officer, however, made an addition of Rs. 5,53,30,040/- (AED 27,66,502) u/s 69A of the Act and Rs. 5,53,69,665/- (AED 27,68,483) u/s 69C of the Act. Aggrieved, the Assessee filed an appeal before the CIT(A). The CIT(A) upheld the addition made by the Assessing Officer. Aggrieved, the Assessee has filed an appeal before the Tribunal on the stated grounds. 133. The learned counsel submitted that Shri Pratik Sangpal left the Ravi Agarwal group in 2015 and worked in Dubai with M/s SSB Accounting and Book Keeping until January 2023. He only rejoined the Assessee’s group in April 2023.

94 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Therefore, any cash notings or data found on his mobile during the intervening period cannot be linked to the Assessee. Since he was not an employee of the group when the alleged transactions occurred, the addition of ₹5,53,30,040 under section 69A was argued to be unsustainable. The counsel pointed out that Pratik Sangpal’s statements themselves show that the sums referred to belonged to third parties such as Jagdish Raimalani, Khanjan Bhaiya, Jeetu Bajaj, Rajiv Jhunjhunwala, and DXB Jigar CN. The transactions were merely transfers between these persons and did not involve the Assessee. Since the money did not belong to or received by the Assessee, the additions under section 69A and section 69C were argued to be baseless. Counsel argued that the alleged expenditure of ₹5,53,69,665 under section 69C was said to be payments made by the Assessee. However, the source of these payments was the very sums already added under section 69A. Treating both as separate additions would amount to double taxation of the same amount. Since the source was explained, the addition under section 69C should be deleted. 134. The DR argued that the seized mobile data and statements clearly showed large-scale unaccounted transactions in AED. Even though the Assessee claimed that Pratik Sangpal was not his employee during the relevant period, the DR emphasized that the statements and notings directly linked the transactions to the Assessee’s directions. The DR maintained that the AO was justified in treating

95 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal these as unexplained money and expenditure in the Assessee’s hands as income. The DR submitted that the notings showed receipt of AED from certain persons and onward payments to others, often involving third parties. The DR highlighted that Pratik Sangpal himself admitted in his statement that some of these transactions were carried out as per the Assessee’s instructions. The DR argued that this established the nexus between the Assessee and the unaccounted AED dealings. The CIT(A) has confirmed the addition made by the AO in absence of any explanation from the assessee. The DR defended this approach by stating that existence of unaccounted AED transactions was undeniable. The Assessee had argued that the transactions belonged to third parties and not to him. The DR countered that the pattern of entries, corroborative statements, and directions attributed to the Assessee showed that he was indeed involved. Therefore, the DR urged the Tribunal to uphold the additions sustained by the CIT(A). 135. The counsel noted that the Departmental Representative relied on Pratik Sangpal’s statements to justify the additions. However, the Assessee had already addressed these points, showing that the transactions involved third parties and not the Assessee. Therefore, the DR’s submissions did not alter the position that the additions were unsustainable. On these grounds, the counsel urged that both additions under sections 69A and 69C be deleted.

96 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 136. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the seized material and the relevant entries relied upon by the Assessing Officer in support of the additions of Rs.5,53,30,040/- under section 69A and Rs.5,53,69,665/- under section 69C relating to alleged AED transactions. The Assessing Officer, on the basis of certain seized loose papers and notings found during the course of search proceedings, proceeded to treat the alleged cash receipts as unexplained money under section 69A and the corresponding cash payments as unexplained expenditure under section 69C. The learned CIT(A), after examining the nature of the entries and the surrounding circumstances, granted relief to the assessee by appreciating that the receipts and payments formed part of the same stream of transactions and could not independently be subjected to tax in the manner done by the Assessing Officer.

136.1 Upon a careful appreciation of the material available on record, we find that the controversy involved herein is substantially similar in nature to the issue already adjudicated by us in relation to the alleged Angadia/cash transportation activity dealt with in preceding paragraphs. Here also, the seized material reflects corresponding entries of receipts and payments forming part of the same flow of funds. The Assessing Officer, however, has

97 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal proceeded to separately tax the receipt side under section 69A and the payment side under section 69C without establishing ownership of the money in the hands of the assessee or independent expenditure incurred by the assessee out of unexplained sources. No material has been brought on record to show that the assessee was owner of the entire receipts recorded in the seized material. Similarly, no evidence has been brought on record to demonstrate that the corresponding payments represented expenditure incurred by the assessee for acquisition of any asset, investment or personal obligation.

136.2 We find considerable force in the assessee’s contention that once the source of payments is traceable to the receipts recorded in the same seized material, the corresponding payments cannot again be independently brought to tax under section 69C. The Assessing Officer, in effect, has sought to tax both sides of the same transaction, resulting in duplication of addition. Such an approach is contrary to the intrinsic nature of the entries reflected in the seized material itself. The learned CIT(A), in our considered opinion, has correctly appreciated this factual position while granting relief to the assessee.

98 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal relating to cash transportation/Angadia activity, we are of the considered opinion that the additions made by the Assessing Officer under sections 69A and 69C in relation to AED transactions could not have been sustained in the manner done in the assessment order. The corresponding receipts and payments reflected in the seized material formed part of the same integrated flow of funds and, in absence of cogent evidence establishing ownership of unexplained money or independent unexplained expenditure in the hands of the assessee, separate additions on both sides were not justified. Accordingly, we find no infirmity in the relief granted by the learned CIT(A) on this issue and the grounds raised by the Revenue stand dismissed. Further it is seen from the cash book noting maintained by Pratik Sangpal that a net payment made to assessee is AED15,000 (i.e paid on 11.10.2021 AED 25000 plus on 13.10.2021 AED50,000 minus received AED 60000 on 20.10.2021). Accordingly, addition is restricted to the amount received to AED 15000 (equivalent to Rs 3,00,000) u/s 69A of the Act.

99 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal The Ld. CIT(A) deleted the impugned addition which is challenged by the revenue before the Tribunal. 139. The Revenue has raised the following grounds in ITA No.4945/Mum/2025:– “7. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in deleting the addition of Rs. 5,71,508/- made u/s 69C of the Act without considering that the findings of the AO was based on the findings of search and corroborated by the statements of Shri. Ravindra Maloo and Shri. Ajay Kejriwal and Shri. Ajay Kejriwal the director of Choice Equity Broking Pvt Ltd., in his statement recorded on oath has admitted that the major transactions are done in scripts of Infibeam Avenues Limited & Vakrangee Pvt Ltd and the traders have done trading activities for synchronized trades and profit booking?”

100 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal statements identical to that of the addition of Rs.1,80,448/- for the assessment year 2023-24. 141. The learned counsel of the assessee submitted that the addition of Rs. 5,71,508/- for the assessment year 2022-23 is on account of allegations and statements identical to that of the addition of Rs. 1,80,448/- for the assessment year 2023-24. The Assessee therefore relies on his contentions and propositions in respect of the said addition which has been made by under (I) for assessment year 2023-24 above.

101 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal

142.1 The assessee has consistently disputed the very basis of the addition and has contended that Shri Ravindra Maloo himself was an experienced person engaged in stock broking and securities market activities for several years and that the investments were made by him in his own capacity. It was further contended that except for the uncorroborated statement of Shri Ravindra Maloo, there was no material whatsoever brought on record to establish actual payment of interest by the assessee. No seized document, ledger, cash trail, bank entry, WhatsApp communication, receipt or any contemporaneous evidence evidencing payment of interest has been found either from the premises of the assessee or from Shri Ravindra Maloo. The assessee had also specifically objected that no opportunity of cross- examination of Shri Ravindra Maloo was afforded despite the statement being used adversely against him.

142.2 Upon a careful appreciation of the material available on record, we find that the present addition suffers from the very same factual and legal infirmities which weighed with us while deleting the corresponding addition in Assessment Year 2023-24. The Assessing Officer has proceeded purely on assumptions without bringing any independent corroborative material establishing actual incurring of expenditure by the assessee. Section 69C

102 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal presupposes existence of expenditure incurred by the assessee and such foundational fact cannot be presumed merely on the basis of an untested third-party statement unsupported by any corroborative evidence. Even the statement of Shri Ravindra Maloo, when read as a whole, does not conclusively establish that the investments belonged to the assessee or that the assessee had undertaken any legally enforceable obligation to pay interest thereon.

142.3 Further, the Assessing Officer has selectively relied upon portions of the statement without carrying out any independent enquiry to establish which investments, if any, were actually made on behalf of the assessee and which represented independent investments of Shri Ravindra Maloo himself. No material has been brought on record demonstrating the basis of computation of alleged interest, the period for which such interest was allegedly payable or the mode and manner of payment thereof. Thus, the addition remains purely inferential and conjectural in nature.

142.4 Accordingly, following the detailed reasoning and findings already recorded by us while adjudicating the identical issue for Assessment Year 2023-24, and having regard to the absence of corroborative evidence establishing actual payment of interest by the assessee, we

103 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal are of the considered opinion that the addition of Rs.5,71,508/- made under section 69C is unsustainable both on facts and in law. The learned CIT(A), therefore, was justified in deleting the addition. Consequently, the grounds raised by the Revenue on this issue stand dismissed.

104 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal made out of such receipts could not again be treated as unexplained expenditure under section 69C. 144. The Revenue has raised the following grounds in ITA No.4945/Mum/2025:– ―3. Whether, on the facts and in the circumstances of the case, the learned CIT(A) has erred in restricting the addition of Rs. 19,51,01,055/- u/s 69A and addition of Rs. 17,67,50,999/- u/s 69C to Rs. 1,85,92,602/- (being 5% of total payments and receipts 19,51,01,055 + 17,67,50,999), by holding that the assessee is engaged in angadia services and has only earned profit from the cash movements and while doing so whether the Ld. CIT(A) failed to consider that the assessee has never disclosed any income from angadia business neither in the return of income nor during the search nor during the post search proceedings? 4. Whether, on the facts and in the circumstances of the case, the learned CIT(A) has erred in restricting the addition of Rs. 19,51,01,055/- u/s 69A and addition of Rs. 17,67,50,999/- u/s 69C to Rs. 1,85,92,602/- (being 5% of total payments and receipts 19,51,01,055 + 17,67,50,999), without considering the fact that the entries of cash payments and receipts are evident from the materials seized during the search action, the onus of proving the source of the same falls upon the Assessee. Therefore, once the assessee failed to explain the source of cash receipts/payments along with supporting evidences, the income from such receipts/payments remains unexplained in the hands of the assessee.? 145. The assessee, in Cross Objection No.262/Mum/2025, has raised the following ground:– “3. On the facts and circumstances of the case of the Appellant and in law, the CIT(A) failed to appreciate that the AO erred in making addition of Rs.17,67,50,999/- as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act without appreciating that the source of cash payment is from the cash receipts found and recorded in loose paper/note pad of

105 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Deepak Singh and once the cash receipt of Rs.19,51,01,055/- is added as unexplained money u/s 69A of the Act then cash payment of Rs.17,67,50,999/- which are made out of cash received again cannot be termed and added as unexplained expenditure u/s 69C r.w.s. 115BBE of the Act.‖ 146. The assessee has also raised grounds in its own appeal in ITA No.3559/Mum/2025 against the addition sustained by the learned CIT(A), which read as under:– ―2. (a) The CIT(A)erred in confirming the estimated addition of Rs.1,85,92,6021- being 5% of total turnover of cash received of Rs.19,51,01,055/- and cash payment of Rs.17,67,50,999/- as per loose papers/diaries/note book found from the premises of Deepak Singh, as profit from undisclosed business of cash transportation (i.e. Angadia Service),as against commission/collection charges ofRs.175 per one lac received by the Appellant for facilitating transportation/movement of cash from one place to another. The Appellant submit that he has facilitated transportation/movement of cash from one place to another (i.e. Angadia Service) and have received commission/collection charges ofRs.175 per one lac and hence additions on account of commission/collection charges shall be restricted to Rs.l75 per lacs as against addition at 5% of total turnover of cash received and cash payment confirmed by the CIT(A). (b) The CIT(A) erred in confirming addition of Rs.1,85,92,602/- being 5% of 'total turnover of cash received and cash paid' without appreciating that activity of receipt and payment is one transaction and commission/collection charges is received only once on the execution of complete transaction i.e. receipt of cash from one location and payments of cash to another location and hence addition confirmed by the CIT(A) at 5% on both cash received and cash paid is unjustified and same shall be restricted to 5% on the complete transaction i.e. either cash received or cash paid. (c) Without prejudice to above. the addition made by the CIT(A) by estimating the profit from undisclosed business of cash

106 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal transportation (i.e.Angadia Service) at 5% of total tumover of cash received and cash paid is excessive and unjustified; and on the facts and circumstances of the case of the Appellant and in law same shall be reduced.‖ 147. The relevant facts, in brief, are that during the course of search action carried out in the case of the assessee, at the address being 301/302, Karm Sankalp Building, Opp. Rajawadi Garden, Ghatkopar East, Mumbai, the statement of Shri Deepak Singh, who was alleged to be the cash handler of Ravi Agrawal Group, was recorded. During the course of search, several loose papers, diaries and note books, stated to be in the handwriting of Shri Deepak Singh, were found. In his statement, Shri Deepak Singh explained the nature of dealings recorded therein as relating to movement of cash, namely cash being collected from one person and delivered to another person as per instructions received from the assessee as well as from Shri Sanket Khemuka and Smt. Monica Khemuka. He further stated that the said loose papers, note pads and diaries were sent to Shri Khemraj Parate, accountant, for records and accounting purposes. Pursuant to above facts notice were sent to the asseessee during the assessment proceeding and subsequently culminating into an addition of Rs. 19,51,01,055/- as unexplained money under section 69A of the Act and Rs. 17,67,50,999/- as unexplained expenditure under section 69C of the Act. The Assessee filed an appeal to CIT(A), and the CIT(A) restricted the said addition to Rs.1,85.92,602/- (being 5% of total receipts an payments 19,51,01,055+17,67,50,999) for the assessment year 2022-

107 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal 23 is on account of allegations and statements identical to that of the addition of Rs.197,39,54,122/- u/s 69A and Rs.184,03,58,935/- u/s 69C of the Act for the assessment year 2023-24. 148. The learned counsel for the Assessee submitted that the additions made for A.Y. 2022-23 were identical in nature to those made for A.Y. 2023-24, and therefore the same arguments and propositions apply. The counsel argued that the Assessing Officer had made additions of ₹19,51,01,055 under section 69A (unexplained money) and ₹17,67,50,999 under section 69C (unexplained expenditure). The CIT(A) restricted these to 5% of the total receipts and payments, i.e., ₹1,85,92,602. However, the basis of these additions was the same set of allegations, WhatsApp chats, and statements relied upon in A.Y. 2023-24. Since the Assessee had already demonstrated that such material was not incriminating, lacked corroboration, and did not establish ownership or receipt of funds, the same reasoning applies here. The counsel reiterated that the WhatsApp chats and statements relied upon by the AO were inconclusive, contradictory, and did not prove that the Assessee owned or received the alleged sums. No cash or valuables were found during search. Therefore, the additions under sections 69A and 69C for A.Y. 2022-23 should also be deleted, just as argued for A.Y. 2023-24. In conclusion, the Assessee requested that the Tribunal apply the same reasoning and delete the restricted addition of ₹1,85,92,602, as it arises from identical

108 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal allegations and evidence already addressed in detail for the subsequent year. 149. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), the seized diaries, loose papers and statements referred to by the lower authorities in relation to the additions of Rs.19.51 crore made under section 69A and Rs.17.67 crore made under section 69C for Assessment Year 2022-23. The controversy involved in the present ground is substantially identical to the issue already adjudicated by us while dealing with the additions of Rs.197,39,54,122/- under section 69A and Rs.184,03,58,935/- under section 69C for Assessment Year 2023-24. Here also, the additions have been made on the basis of entries recorded in the seized diaries and loose papers maintained by Shri Deepak Singh, which according to the Assessing Officer represented unexplained cash receipts and unexplained cash payments belonging to the assessee. 149.1. The assessee, throughout the assessment and appellate proceedings, has consistently explained that the entries reflected movement and transportation of cash from one person to another in the nature of Angadia or cash transportation activity and that the assessee merely facilitated such movement for commission or collection charges. It was specifically pointed out that the seized material itself contained corresponding entries of cash received and cash delivered and that the names and

109 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal particulars of persons from whom cash was collected and to whom cash was delivered were recorded in the diaries. The assessee thus contended that the material reflected movement of cash belonging to third parties and not ownership of cash in the hands of the assessee. 149.2 Upon a careful appreciation of the seized material and the statements of Shri Deepak Singh, we find that the controversy involved herein is identical in principle to the issue already adjudicated by us in earlier paragraphs. The seized entries reflect corresponding inflow and outflow of cash and the material itself indicates collection and delivery of cash on instructions received from various persons connected with the group. No physical cash corresponding to the impugned additions was found from the possession of the assessee. Further, no independent material has been brought on record by the Revenue to establish ownership of the entire cash receipts in the hands of the assessee. The Assessing Officer has proceeded merely on the basis that the assessee was involved in handling or facilitating movement of cash and has therefore treated the entire receipts as unexplained money and the corresponding payments as unexplained expenditure. 149.3 As already held by us while adjudicating the similar issue for Assessment Year 2023-24, mere handling or transportation of cash cannot automatically lead to the conclusion that the assessee was owner thereof for the purpose of section 69A. Likewise, corresponding delivery of

110 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal such cash cannot automatically constitute unexplained expenditure under section 69C when the source thereof is embedded in the receipts themselves. The Assessing Officer, in effect, has sought to tax both sides of the same movement of funds separately, resulting in duplication of addition. Such an approach is contrary to the intrinsic nature of the transactions reflected in the seized material. 149.4 Further, we have already held in earlier paragraphs that once the nature of activity is accepted as cash transportation or Angadia-type activity, only the commission element embedded therein can be subjected to tax and not the gross value of cash handled. The same reasoning squarely applies to the present assessment year as well. Accordingly, following our detailed findings and reasoning given while adjudicating the identical issue for Assessment Year 2023-24, we hold that the additions made under sections 69A and 69C in the present assessment year also cannot be sustained in the manner done by the Assessing Officer. Consequently, the additions are directed to be restricted only to reasonable commission income in line with the directions already given by us in the earlier year. The grounds raised by the Revenue are accordingly dismissed and the grounds raised by the assessee stand partly allowed in terms indicated hereinabove. 150. In the result, the appeals filed by the Revenue are partly allowed in the manner indicated hereinabove and the appeals filed by the assessee are partly allowed. The

111 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal cross objections filed by the assessee are treated as partly allowed for statistical and legal purposes in terms of our findings recorded on the respective issues. The additions made under sections 69A and 69C in relation to alleged cash transportation/Angadia activity are directed to be restricted only to commission income in the manner directed by us. The additions made purely on the basis of uncorroborated WhatsApp chats and unsupported third-party statements, without independent evidentiary material establishing ownership or actual incurring of expenditure, stand deleted. The additions sustained by the learned CIT(A) on the basis of specific entries and corroborative material relating to financing and interest transactions are allowed by us. Accordingly, all the appeals and cross objections are disposed of in the aforesaid terms. Order pronounced on 4th August, 2026.

Sd/- Sd/- (ARUN KHODPIA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 04/08/2026 KARUNA, sr.ps

112 ITA No.3559/Mum/2025 and others Ravi Omprakash Agrawal Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,

(Asstt. Registrar) ITAT, Mumbai