KALPESH DATTATRAY KUMBHAR,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, MUMBAI

Since the issues raised in these appeals are similar and pertain to the same assessee, they have been clubbed together, heard together, and a consolidated order is being passed.

At the very outset, I noticed that in all the above assessment years, the assessments of the assessee were reopened and the respective notices for reopening under Section 148 of the Act were challenged by the assessee before the Hon’ble Bombay High Court in Writ Petition No. 26991 of 2025, in the case titled Kalpesh Dattatray vs. ACIT. The Hon’ble High Court, vide its order dated 08.09.2025, set aside the notices issued under Section 148 of the Act in the case of the assessee along with all other proceedings/orders emanating therefrom. The operative portion of the order of the Hon’ble High Court is contained in Para 5-10 and the same is reproduced herein below:

Since the impugned notices under Section 148 and all other proceedings/orders emanating therefrom have already been set aside and quashed, the present appeals arising out of the orders of the Ld. CIT(A), which are based on the reassessment orders passed in pursuance of the impugned notices under Section 148 of the Act, have become infructuous.

The Hon’ble High Court in Writ Petition No. 26991 of 2025 has categorically directed to set aside the notices under Section 148 and all the proceedings/orders emanating therefrom in respect of all the above three assessment years, i.e., 2020-21, 2021-22, and 2022-23.

Thus, these appeals stand dismissed as infructuous.

However, I make it clear that in case, at any later stage, the order of the Hon’ble High Court is reversed by the Hon’ble Supreme Court, then, in that eventuality, the assessee shall be at liberty to apply for recall of the present order for getting the appeals decided on merits in accordance with law.

All the grounds raised by the assessee are interrelated and interconnected and relate to challenging the order of the Ld. CIT(A) in confirming the action of the AO in upholding the addition of Rs. 6,56,200/- in the hands of the assessee on account of cash salary. Therefore, I have decided to adjudicate these grounds through the present consolidated order.

After hearing the counsel of both the parties, perusing the material placed on record, the judgments cited before me, and the orders passed by the revenue authorities, I find that a search and seizure action was undertaken in the case of M/s. Polycab India Ltd. and related concerns. Along with the company, some of the distributors of the company were also covered in the action dated 22.11.2023. The assessee, namely Kalpesh Dattatray, was working as an Account Manager with SP Electro Solutions Private Limited, and therefore, the residence of the assessee was also covered under the action under Section 132 of the Act. During the course of search, a statement of the assessee was recorded, based on which it was found that the assessee had received cash salary in various years. However, the assessee retracted the said statement made during the course of search.

However, the Ld. CIT(A) was of the view that, according to the tally data found during the course of search in the case of SP Group, wherein the assessee himself was an employee, the said ledger account showed transactions relating to cash salary payments to the assessee and the same is reproduced herein below:

I have gone through the contents of the said ledger account. From the said contents, it is clear that all the entries in the said ledger represent journal entries, and there is no proof of actual payment having been made to the assessee. Even in the said ledger, there is no mention of any payment being made to the assessee.

Even otherwise, the sole basis for making the addition is the statement recorded from the assessee. However, since the assessee himself has withdrawn/retracted the said statement, in the absence of any other corroborative material, no addition was warranted.

Thus, considering these facts, I direct the AO to delete the impugned addition. Accordingly, the grounds raised by the assessee stand allowed.

In the result, the appeal filed by the assessee stands allowed.