SHRI PERCY KEKU SHROFF,GURGAON, HARYANA vs. THE DEPUTY COMMISSIONER OF INCOME TAX,, NEW DELHI

This assessee’s appeal for Assessment Year: 2020-21, arises against the Commissioner of Income Tax, (Appeals)-27, New Delhi [in short, the CIT(A)”], New Delhi DIN and Order No. ITBA/APL/M/250/2025-26/1082695096(1), dated 10.11.2025 involving proceedings under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’).

Heard both the parties. Case file perused.

2 I.T.A. No. 2310/Del/2026 2. It transpires during the course of hearing that the assessee/appellant is aggrieved against both the learned lower authorities’ respective assessment and lower appellate findings holding him to have made on money payments of Rs.6.10 lakhs which forms the sole subject matter of the tribunal’s apt adjudication in the instant case.

“4. Appellate Decision 4.1 Since all the grounds of appeal relate to single addition amounting to Rs.6,10,000/- on account of cash expenditure hence, all the grounds of appeal are hereby adjudicated altogether as under. 4.2 The assessee is an individual person, he filed his return of income for A.Y. 2020- 21 on 27.02.2021 with declaring income of Rs. 25,32,200/-. 4.2 A Search & seizure operation u/s 132 of the Income Tax Act, 1961 was conducted on M/s Alsorg Interiors India Ltd. on 09.02.2022. During the aforesaid search operation, various incriminating documents in the form of Excel Workbook, WhatsApp chat were found in the soft data seized during the search which showed that M/s Alsorg Interiors was routinely engaged in out-of-books cash sales of furniture and providing of interior designing services to its various clients over various years. 4.3 During the search operations, the statement of the Directors and key persons of M/s Alsorg Interiors were recorded under oath u/s 132(4), 'wherein they accepted that their company was engaged in out- of-books cash sales to its various clients. The practice has been adopted by these company in active

3 I.T.A. No. 2310/Del/2026 collusion with its clients, inter-alia helping M/s Alsorg Interiors to suppress its sales profit to deflate its income taxes while allowing its clients to route their undisclosed cash income.

4.4 Further, during the aforesaid search proceedings the digital back up of the phones of Shri Sunny Kaul and Shri Ashok Kumar Nayak (both are employees of M/s Alsorg Interiors) and Shri Sajal Lamba have been taken. Upon analyzed by the AO, the digital data of these phones, WhatsApp chats related to the assessee, had been found. The Ld. AO perused of these WhatsApp chats, and it was noted that Shri Sajal Lamba, Shri Sunny Kaul and Shri Ashok Kumar sharing details of payments made by the assessee.

4.5 During the course of assessment proceedings in the case of M/s Alsorg Interiors, the said company submitted its bank statement. The Ld. AO perused the same, and confirmed that the said contents of the said WhatsApp chats are related to the assessee i.e., Shri Percy Keku Shroff.

4.6 Subsequently, proceedings u/s 147 in the case of the assessee were initiated by the AO with the approval of the specified authority, by issuing and serving a notice u/s 148 of the Act dated 31.03.2023, requesting the assessee to file his return of income u/s 148 within 30 days of the service of the said notice. In response to the notice u/s 148, the assessee had filed his return of income on 07.07.2023 with declaring total income of Rs. 24,52,010/-. Subsequently, notice u/s 143(2) of the Act was issued by the AO on 12.07.2023, intimating the assessee that his case has been opened for reassessment.

4.7 On perusal of the Whatsapp chats, the following key points was observed by the Ld. AO:-

4.8. The AO vide notice dated 15.12.2023 excerpts of the WhatsApp chats was provided to the assessee and especially asked to justify the cash payments made to M/s Alsorg interiors. In response to the said notice, the assessee vide reply dated 17.02.2024 has submitted that no cash payment has been made to the said entity; which was not found tenable to the AO. Further, a show cause notice was issued by the AO to the assessee on 23.02.2024. In response of the show cause notice the assessee filed its reply on 29.02.2024, the same was not found tenable to the AO. Accordingly, Ld AO added Rs.6,10,000/- being cash expenditure during the AY to the income of the appellant.

4 I.T.A. No. 2310/Del/2026 4.9. Further the appellant during the appellate proceedings has submitted that it had already disclosed it total income while filing the ITR, further it submitted that it did not have any source of income in cash during the year, so the question of cash expenditure does not arise. Further the appellant has contended that in the impugned order there is no addition other that the addition of Rs 6,10,000/- which is wrongly and erroneously made, on account of alleged cash payments made by the Appellant, solely on the basis of third party whatsapp chat to which the Appellant was not participant and that too without even confronting the parties who authored the whatsapp chap to determine the true context, intent, meaning and reference as mentioned in the said messages.

4.10. Furthermore, the appellant has contended that the Ld Assessing Officer grossly erred in holding that the banking transactions are proved to genuine, cash transaction on the same excel sheet shared through whatsapp chat in the name of the company, are also true. So far as there is no cash transaction reflected in the excel sheet of the company as also all banking transactions more specifically banking transactions of Rs 7,00,000, Rs 5,00,000 and Rs 264,396 on 25.08.2018, 20.03.2019 and 20.07.2019 respectively appearing in the excel sheets are not shown in the shared whatsapp chat. Therefore, it is evidently clear that Whatsapp chat and excel sheets are completely different documents. It is further submitted that the Ld. Assessing Officer deliberately concealed the fact of recording of statements of director and key persons on oath under section 132(4) solely with an objective to devoid the Appellant, of an opportunity to verify the correctness of the statement made against the Appellant and further to cross examine the person making such statement, in order to support his case and such deliberate acts of the Ld. Assessing Officer are bad in law, unjust and grossly failed to satisfy the basic tenets of natural justice.

4.11 I have perused the submission of the appellant as well as abovementioned contentions. It is observed from the material available on record that the appellant has availed the services from the Alsorg Interior Ltd. Further during the search proceedings various incriminating documents such as Whatsapp chat excel sheets were found and seized. The employees and Director of the company have accepted to receive some component in cash out of total sales. Further, the seized material which is Whatsapp chat is between the employees of the Alsorg Interiors, not any random third person. Further name of the appellant and location of the Flat has also been specifically mentioned in the Whatsapp chat. Further Bank Transactions as well as cash transactions both are mentioned in whats app chat and Bank Transactions has been verified from the Bank Statements of Alsorg Interiors Ltd.

4.12. In such circumstances, which strongly suggest that appellant has made cash expenditure, the initial onus was on the appellant to disclose the source of such cash expenditure. Appellant is merely making baseless claims without any supporting documentary evidences. Further with regard to the appellant's contention that some of the excel sheet bank transaction has not been part of Whatsapp chat. This contention devoid of any merit it may be possible that the other bank transactions, which are not mentioned in whatsapp chat, pertains to some other day and might have discussed somewhere else. The fact that Bank Transaction, which are mentioned in whats app chat, has been originally taken place cannot be denied as evident from Bank Statements.

4.13. Further, with regard to the appellant’s contention of cross examination it is hereby mentioned Further, with respect to give opportunity for cross examination, it is pertinent to mention that

5 I.T.A. No. 2310/Del/2026 statement of key persons of Alsorg Interior has been recorded under oath u/s 132(4) of the Act wherein they had explained the content of the excel sheet & Whatsapp chat and admitted that the appellant has accepted part consideration in cash. The appellant denied to have any transactions and to have paid any cash and stated that no cross examination was provided. Right to cross-examine flows from the principles of Natural Justice that evidence may not be read against a party until the same has not been subjected to cross- examination or at least an opportunity has not been given for cross examination. Thus, the provisions of section 138 of Indian Evidence Act are not only a technical rule but it is a rule of essential justice.

4.14. As a general rule, the right of cross-examination should be given to the appellant to uphold the principle of natural justice under the Income Tax proceedings. However, it is also a settled position of law that the technical rules of Indian Evidence Act are not applicable to Income-tax proceedings. Further, according to Section 56 of the Indian Evidence Act, 1872, the facts of which the Court will take judicial notice need not be proved. Simply put, any judicially noticeable fact does not require to be proven before the Court. This position, therefore, is required to be understood in the light of the facts of the case. In this case, a search and seizure action had taken place which unearthed several incriminating documents. Based on these documents, a statement on oath was recorded under section 132 [4] of the Act. It is settled position of law that the statement recorded during the Search & Seizure action u/s 132(4) has substantial evidentiary value. Therefore, the evidence so gathered is judicially noticeable. Accordingly, as per section 56 of the India Evidence Act, there is no legal requirement for providing further opportunities to the appellant. Accordingly, the contention of the appellant is legally untenable.

4.15. Further, requirement of opportunities for cross- examination is to ascertain the real facts. Then it goes back to ascertain who has the primary onus to establish or bring out the facts, especially in proceedings relating to Search and Seizure action. Further, in a Search and Seizure case, Section 132(4A) of the Act creates a presumption that all the books of accounts, documents and valuables found during the search belongs to person found in possession or control of such items and the contents thereof are true and properly stamped. Basically, it provides the presumptions of ownership of books of accounts, documents, assets found during the course of Search. Accordingly, in respect of the details found out/ascertained during the Search in the case of the appellant, the presumption is against the appellant. In brief, under Section 132(4A), presumption, albeit rebuttable, is that, the books of account and other documents belong to the person searched, the contents are true and accurate, the signatures and attestations on documents are genuine. Accordingly, as per section 132(4A) of the Act, the burden is on the appellant on whose case the Search action has taken place to establish that the presumptions are untrue. However, apparently, the appellant has not discharged the onus. Accordingly, the Department is not duty bound to provide the cross examination as the burden is not on the Department. Hence, the contention of not providing cross-examination by the Department is misleading and accordingly, dismissed.

4.16. In view of the facts discussed in abovementioned paras, I am of the considered opinion that appellant has failed explain the source of cash expenditure incurred during the year. Hence, the addition made by Ld. AO amounting to Rs.6,10,000/- us 69A of the Act is hereby confirmed and all the grounds of appeal are hereby dismissed.”

6 I.T.A. No. 2310/Del/2026 5. This assessee’s appeal is dismissed.

Order pronounced in the open court as on 02.06.2026

Sd/- (SATBEER SINGH GODARA) JUDICIAL MEMBER Dated 15th July, 2026 *GP/Sr.PS* Copy of the order forwarded to: (1) Appellant: (2) Respondent: (3) CIT (4) CIT (Appeals) (5) DR, I.T.A.T. Assistant Registrar