DY COMMISSIONER OF INCOME TAX, MUMBAI vs. ASHRAY HOUSING, MUMBAI

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ITA 6098/MUM/2025Status: DisposedITAT Mumbai16 April 2026AY 2014-159 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to delete the additions, finding no corroborative evidence beyond the retracted statement of an employee. The cross-objection regarding deemed rent was partly allowed by the CIT(A) and the Tribunal found no reason to interfere.

What were the facts?

The Revenue appealed against the deletion of additions made by the Assessing Officer (AO) concerning alleged bogus purchases, based on an employee's retracted statement and an excel sheet. The CIT(A) had deleted these additions, relying on a previous Tribunal order concerning a promoter.

What were the issues?

Whether additions based solely on a retracted statement and an excel sheet are sustainable without corroborative evidence. Whether deemed rent should be calculated proportionally when occupancy is partial.

Which sections of the Income-tax Act were involved?

Section 132,Section 133A,Section 131,Section 133(6),Section 23(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI

Before: JUSTICE (RETD.) C V BHADANG & SHRI GIRISH AGRAWAL

For Appellant: Shri Rakesh Joshi
For Respondent: Shri Rajesh Kumar Yadav
Hearing: 25.03.2025Pronounced: 16.04.2026

Heard together (4 matters)

ITA NOS.6151 /MUM/2025
CO No.342/Mum/2025
ITA NOS.6096/MUM/2025
CO No.326/Mum/2025

Read from the judgment's own cause title. This page is filed under one of them.

PER JUSTICE (RETD.) C V BHADANG :

These appeals by the Revenue and Cross Objections by the assessee pertain to two entities namely Ashray Housing and Ashray Investment belonging to Ashray group of companies. They involve connected questions of law and facts. As such they are being disposed off by this common order.

3 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing

2.

The details of the appeals are as under –

(I) Appeals filed by Ashray Investment :-

Sr. ITA No. / CO No. Returned Assessment Addition/ CIT(A) Remarks No. Income Order Dated disallowance order by AO Dated (i) ITA No.6151/Mum/2025 Nil 30.12.2019 5,13,705/- 14.07.2025 Deleted by with CIT(A) CO No.342/Mum/2025 (A.Y. 2013-14) (ii) ITA No.6152/Mum/2025 45,820 30.12.2019 25,89,308/- 14.07.2025 Deleted by with CIT(A) CO No.343/Mum/2025 (A.Y. 2015-16) (iii) ITA No.6153/Mum/2025 29,73,080 30.12.2019 1,74,15,946 14.07.2025 3 additions with by AO, only CO No.1/Mum/2026 two (A.Y. 2016-17) challenged- all deleted by CIT(A)

(II) Appeals filed by Ashray Housing:- Sr. ITA No. / CO No. Returned Assessment Addition/ CIT(A) Remarks No. Income Order disallowance order Dated by AO Dated (i) ITA No.6096/Mum/2025 NIL 30.12.2019 12,77,641/- 17.07.2025 Deleted by with CIT(A) CO No.326/Mum/2025 (A.Y.2012-13) (ii) ITA No.6097/Mum/2025 1,52,00,000 30.12.2019 10,10,392/- 17.07.2025 Deleted by with CIT(A) CO No.327/Mum/2025 (A.Y.2013-14) (iii) ITA No.6098/Mum/2025 7,74,120/- 30.12.2019 57,82,865/- 14.07.2025 Deleted by with CIT(A) CO No.328/Mum/2025 (A.Y.2014-15) (iv) ITA No.6099/Mum/2025 7,58,71,630/- 30.12.2019 4,97,94,150/- 14.07.2025 Deleted by with CIT(A) CO No.329/Mum/2025 (A.Y.2015-16) (v) ITA No.6154/Mum/2025 7,13,99,300/- 30.12.2019 1,38,63,743/- 14.07.2025 Partly with allowed by CO No.330/Mum/2025 CIT(A) (A.Y.2016-17)

4 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing

3.

The assessees Ashray Investment & Ashray Housing had filed their return of income for the relevant assessment years which were processed under section 143(1) of the Income Tax Act, 1961 (‘Act’ for short). It appears that subsequently, the cases were picked up for scrutiny. There was a search and survey action under section 132 / 133A of the Act carried out on 06.10.2017 in the case of Sunshine Group, M/s. Sabari Developers LLP and M/s. Evergreen Enterprises and other related entities and their key persons. There is a subsequent search action under section 132 of the Act carried out on 18.12.2017 in the case of Ashray group of companies at their offices and residences of the promoters. The entities are engaged in the business of investments and as builders and developers.

4.

It appears that during the course of search, statement of Mr. Deepak Padia, an employee of the assessee, was recorded under Section.131 of the Act, wherein, he disclosed that there were certain purchases made from M/s. Hetal Enterprises which were bogus / non-genuine in nature. It was revealed that the payment in respect of such purchases is made by cheque and the sellers have returned the amount in cash, after deducting a commission @7%. During the course of search there was an excel sheet recovered from the e-mail account of Mr. Deepak Padia containing a folder named ‘Deepak’ with the subject as “Ashray documents” and “Ashray exps”. Mr. Deepak Padia retracted his statement by filing an Affidavit dated 07.11.2019. The ld. AO did not accept the retraction on the ground that Mr. Deepak Padia, being an employee working in the group, could be easily influenced to withdraw / retract the statement, in order to protect the interest of the assessees. The record discloses that the opportunity of cross examination of Mr. Deepak Padia was also granted to the

5 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing assessees which also the ld. AO found to be self-serving, in nature. The AO by separate assessment orders, all dated 30.12.2019 had made impugned additions, as set out above.

5.

Feeling aggrieved, the respondents challenged the same before the ld. CIT(A). The ld. CIT(A) has noticed that Mr. Bharat Girdharilal Rughani, is one of the promoters of the Ashray group. A similar addition was made in respect of Mr. Bharat Girdharilal Rughani on the basis of statement of Mr. Deepak Padia, recorded during the course of search proceedings and the recovery of excel files found in his e-mail. However, that addition was deleted by the ld. CIT(A) on the ground that there was no evidence to link the seized material with the additions in the case of the Mr. Bharat Girdharilal Rughani, which order has been confirmed by this Tribunal vide order dated 31.10.2023 in ITA No.1511 to 1517/Mum/2023. Placing reliance on the said decision, the ld. CIT(A) has deleted the addition.

6.

The ld. CIT(A) also found that the appellant in order to substantiate the genuineness of the purchases had submitted the documentary evidence of the confirmation from the vendors, copies of invoices / delivery challans and the bank statements furnished by the vendor parties. The ld. CIT(A) found that the ld. AO was not justified in drawing adverse inference on account of the fact that the parties had not responded to the notice issued under section 133(6) of the Act. The appeals thus, came to be allowed. These orders passed by the ld. CIT(A) deleting the additions are subject matter of challenge in the appeals filed by the Revenue.

7.

The ground on which the cross objections are filed by the assessees in all the appeals, except CO No. 330/Mum/2025 arising out of ITA No. 6154/Mum/2025 is as under :-

“1. On the facts and circumstances of the case as well as in law, the Learned Assessing officer as well as the Learned CIT(A) has erred in not appreciating the

6 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing fact that there were no incriminating documents, relating to the assessee, seized during the course of search.”

8.

The ground on which cross objection is filed in CO No. 330/Mum/2025 arising out of ITA No. 6154/Mum/2025 is as under :-

“1. On the facts and circumstances of the case, the Learned Assessing Officer as well as Learned CIT(A) has erred in not appreciating the fact that the flat which was allotted to third party and advance received in books, cannot be considered for computing deemed rent u/s 23(1) of the Income Tax Act, 1961.

9.

We have heard parties at length and gone through the record.

10.

At the outset, it is necessary to note that the assessees having succeeded throughout before the ld. CIT(A), there was no occasion for filing any cross objection on the ground as reproduced in para 7 above. It is only when the assessee partly fails to obtain any relief before the ld. CIT(A) that filing cross objection is warranted. Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 is clear in this regard which reads as under:-

“27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.”

In other words, when the final order is in favour of the assessee, the assessee can support that order not only on the grounds which have found favour with the First Appellate Authority, but on other grounds also, without filing any cross objection. We have noticed several such instances wherein, such cross objections which are otherwise not necessary are filed which unnecessarily burdens the Tribunal and creates avoidable complications. We say so only to put the record straight. This would govern the cross objections except CO No. 33/Mum/2025 arising out of ITA No. 6154/Mum/2025.

7 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing 11. Coming to the merits of the appeals, as noticed earlier, a similar addition made in respect of one of the promoters Mr. Bharat Girdharilal Rughani, on the basis of statement of Mr. Deepak Padia has been deleted by the ld. CIT(A) which order has been confirmed in appeal by Co-ordinate Bench of the Tribunal in ITA No.1511 to 1517/Mum/2023 dated 31.10.2023. A specific query was made to the ld. CIT DR as to whether the matter is carried any further. It was informed that an appeal has been filed. We have gone through the order passed by this Tribunal in the case of Mr. Bharat Girdharilal Rughani for assessment years 2012-13 to 2018-19. This Tribunal has found that the liability cannot be fastened on the only basis of the statement of Mr. Deepak Padia without any corroborative evidence. This Tribunal has also found that there is no incriminating evidence which has been albeit against the assessee Mr. Bharat Girdharilal Rughani in that case from the material seized in the premises of Mr. Nilesh Bharani. It can thus be seen that at present there is an order of the Co-ordinate Bench which has not found favour with a similar addition made, based on the statement of Mr. Deepak Padia and recovery of certain excel sheets from his e-mail ID. This Tribunal has found that the impugned addition could not have been made merely on the basis of the statement of a third party which has also been retracted. In the given circumstances, we are in respectful agreement with the finding recorded by the co- ordinate Bench. The appeals filed by the Revenue must fail. In the circumstances, it is not necessary to dilate any further.

12.

Insofar as CO No. 330/Mum/2025 is concerned, it would appear that the assessee (cross objector) had raised in all eight grounds before the ld. CIT(A), out of which ground no. 1 was regarding the deemed rent (DLOP). Ground nos. 2 to 7 were pertaining to the impugned additions made on account of alleged bogus purchases while ground no. 8 was regarding the challenge by the assessee claiming that there was no incriminating evidence unearthed during the search proceedings as against the assessee.

8 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing 13. Ld. CIT(A) has allowed ground nos. 2 to 7 while ground no. 8 regarding the alleged absence of any incriminating evidence has been dismissed. The grounds on which Cross Objection No. 330/Mum/2025 is filed, as reproduced above, would show that it relates to addition made regarding the deemed rent (DLOP), i.e. ground no. 1 before the ld. CIT(A). The reasoning articulated by the ld. CIT(A) in this regard, to the extent relevant, as contained in para 8.11 of the order, is reproduced as under :-

“8.11 Accordingly, the claim of the appellant is found to be reasonable on facts. Further, in view of the above referred judicial pronouncements, I am of the opinion that the notional rent in the instant case should be calculated proportionally i.e. For 293 days, being the number of days for which OC had been received during the year. Furthermore, the said notional rent should be computed as the Municipal Letable Value or 2% of the Closing Stock of unsold flats, whichever is less.”

The ld. CIT(A) has thus partly allowed ground no. 1. Upon hearing the parties, we do not find any reason to interfere with the same. Thus, CO No. 330/Mum/2025 is liable to be dismissed.

14.

In that view of the matter, the appeals filed by the Revenue are dismissed. The Cross Objection No. 330/Mum/2025 is dismissed and all other Cross objections are disposed of as infructuous.

Order pronounced in the open court on 16.04.2026.

Sd/- Sd/- [GIRISH AGRAWAL] [JUSTICE (RETD.) C V BHADANG] ACCOUNTANT MEMBER PRESIDENT

Mumbai, Dated : 16 April, 2026

Karuna, Sr.PS

9 ITA No. 6151/Mum/2025 and others Ashray Investment & Ashray Housing Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The PCIT, Mumbai 4. The CIT 5. The DR, ‘G’ Bench, ITAT, Mumbai

//True Copy// BY ORDER

(Assistant Registrar) Income Tax Appellate Tribunal, Mumbai

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