RANJIT KUMAR LADHA,SOUTH DELHI vs. DCIT-CC-5(2), MUMBAI, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICAIL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.7833 to 7840 & 7955/MUM/2025 (AY: 2015-16 to 2019-20 & 2021-22 to 2023-24 & 2020-21) Ranjit Kumar Ladha, 37, Malviya vs. DCIT-CC-5(2), MUMBAI, Kautilya Nagar, Sadhna Enclave New Delhi, Bhavan, Mumbai-400051. Malviya Nagar, Malviya Nagar, Delhi-110017. PAN/GIR No: ABAPL7896G (Appellant) (Respondent) Assessee by Mr. Mani Jain, Adv. Revenue by Shri Umashankar Prasad (CIT DR) Date of Hearing 12.05.2026 Date of Pronouncement 19.06.2026 O R D E R PER BENCH:

These appeals filed by the assessee emanate from the common order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of Income-tax (Appeals)-53, Mumbai [in short, ‘CIT(A)’], dated 26.09.2025 for the assessment years (AY) 2015-16 to 2019-20 & 2021-22 to 2023- 24 & 2020-21. Since the facts and grounds are similar, with the consent of both parties, the appeals were clubbed and heard together and a common order is being passed for the sake of convenience and brevity. ITA No.7834/Mum/2025 (AY: 2016-17) is taken as the “lead case.” 2. The grounds of appeal raised by the assessee in ITA No.7834/Mum/2025

(AY: 2016-17) are as under:

“Reopening of the assessment u/s 147:- 1. On the facts and circumstances of the Appellant's case and in law, the Ld. CIT (A) erred in confirming the action of the Id. A.O in reopening the 1 case of the appellant which is bad in law, without jurisdiction and deserves to be quashed.

Addition on account of cash loan transactions:-

Addition of commission income

(AY: 2015-16) are as under:

“Reopening of the assessment u/s 147

Addition of commission income

(AY: 2017-18) are as under:

“Reopening of the assessment u/s 147

Addition on account of cash loan transactions:

Addition of commission income

(AY: 2018-19) are as under:

“Reopening of the assessment u/s 147-

Addition on account of cash loan transactions:-

Addition of commission income

(AY: 2019-20) are as under:

“Reopening of the assessment u/s 147

Addition on account of cash loan transactions:-

Addition of commission income

(AY: 2021-22) are as under:

“Reopening of the assessment u/s 147:

Addition on account of cash loan transactions:-

Addition of commission income

(AY: 2022-23) are as under:

“Reopening of the assessment u/s 147:-

Addition on account of cash loan transactions :-

Addition of commission income

(AY: 2023-24) are as under:

“Addition on account of cash loan transactions

Addition of commission income:

(AY: 2020-21) are as under:

“Reopening of the assessment u/s 147

Addition of commission income

ITA No.7834/Mum/2025 (AY: 2016-17)

the AY 2016-17 on 16.10.2016 declaring total income of Rs.12,51,820/-. A search

and seizure operation u/s 132 of the Act was carried out in case of Polycab India

Ltd. and related entitles on 22.12.2023. The case of the assessee was also covered

under action u/s 132 of the Act. Subsequently, notice u/s 148 of the Act was

issued to the assessee on 14.11.2024; in response to which, assessee filed return

on 03.12.2024 declaring the same total income of Rs.12,51,820/-. During the said

search and seizure operation, some incriminating materials were found and

seized from the premises of Polycab India Ltd., its promotors and distributors such

as Sunrise group, Tegh Cables Pvt. Ltd. etc. The statement of the assessee was

recorded u/s 132(4) of the Act and he explained that his company VYU Industries

Pvt. Ltd. buys raw material (copper) from Polycab India Ltd. and manufactures

copper enameled wires and sells them as Polycab wires, for which it pays royalty

to Polycab. It was noted that the assessee is a close friend of the promotor of

Polycab (Shri Inder Jaisinghani) and had indulged in unaccounted cash

transactions. Such transactions were recorded in the parallel Tally maintained

under the name “Ka”, which was seized from the premises of Sunrise group. The

Tally contained the cash transactions of Sunrise group and its key persons (Mohanlal Pahuja, Vijay Pahuja, Rajeev Dhiravani and Rupesh Dihravani) with

various entities and individuals. The AO issued show-cause notice to the assessee

and after reproducing the statements of Shri Mohanlal Pahuja, the assessee, Shri

Kalpesh Kumbhar (accountant of Sunrise, who maintained the parallel tally “Ka”)

and Shri Vijay Pahuja, where it was admitted that the entries in the tally “Ka” were

maintained in a camouflaged manner and the actual amount was 100 times more

than the entry in the “Ka”. Similarly, the years in the “Ka” were 11 years preceding

the actual financial year. The unaccounted cash transactions were found in the

ledgers namely “Ranjit Seth”, “Ranjit Seth New” and “Ranjit Seth Loan”. The

credits in the tally “Ka” were liabilities of Mohanlal Pahuja and hence were cash

loans taken by him from the assessee, Shri Ranjit Ladha. Similarly, the debits in

tally “Ka” were cash loans taken by Shri Ranjit Ladha from Shri Mohanlal Pahuja.

The AO issued show cause notice to the assessee and after considering the reply

including retraction of the earlier statement, held that the assessee had not

explained source of cash loan transactions and the consequent interest payments.

Hence, he added cash loans of Rs.4,50,00,000/- given to Shri Mohanlal Pahuja as

unexplained u/s 69A of the Act.

11.1 The AO also observed that interest was paid and received on the aforesaid

cash loan transactions and, accordingly, computed unaccounted interest income

and interest expenditure from the entries recorded in the impugned ledger. For the subject AY, the unexplained interest income was Rs.62,466/-, which was

added to the total income.

11.2 The AO observed that the other two accounts namely “Ranjit Seth” and

“Ranjit Seth New” contain details of cash sale and purchase transactions. On the

basis of assessee’s plea that commission income was earned from facilitating the

cash transactions for the Sunrise group, the AO added 1% of such transactions

instead of 0.10% to 0.15%, as contended by the assessee. The cash commission

on debit and credit entries were Rs.49,32,235/- and Rs.48,66,500/- respectively.

Therefore, the total undisclosed cash commission earned by the assessee was

Rs.97,98,735/-, which was added to the total income.

The appellant challenged validity of reopening as well as merits of the case. The

CIT(A) has passed a common order for all the years under present appeal by taking

AY 2016-17 as the “lead year.” The CIT(A) has dismissed all 5 grounds relating to

reopening of assessment u/s 147 of the Act and validity of notice u/s 148 of the

Act by a speaking and detailed order. He also confirmed the additions made by

AO by holding that the ledger accounts titled "Ranjit Seth", "Ranjit Seth Loan" and

"Ranjit Seth New", found in the seized tally data, were identified by the promoters

and key persons of the SP group as belonging to the appellant. He further noted

that appellant, in his statement recorded during the course of the search proceedings, had also accepted the transactions reflected in the said ledger

accounts. The CIT(A) also observed that the appellant had explained the coded

entries appearing in the ledger accounts and that the impugned ledger accounts

contained systematic and detailed records of transactions. He further held that

the contents of the ledger accounts stood corroborated by the statements of the

persons who were managing and maintaining the tally data. He also observed that

the contents of the ledger accounts also stood corroborated by the statement of

the appellant himself.

12.1 The CIT(A) rejected the contention of the appellant that the ledger

accounts did not belong to him. Accordingly, the CIT(A) treated the seized ledger

accounts as reliable evidence against the appellant. He also rejected the

subsequent retractions filed by the appellant and other concerned persons.

According to the CIT(A), the retractions were made after a considerable lapse of

time and were not supported by any convincing or corroborative material.

12.2 Accordingly, CIT(A) held that peak balance reflected in the ledger accounts

are rightly treated as unexplained money under section 69A of the Act. He further

upheld the additions made on account of alleged interest income and interest

expenditure. According to the CIT(A), the ledger accounts recorded the charging

as well as payment of interest in respect of the alleged cash loan transactions. The

CIT(A) observed that AO had quantified such interest on the basis of the entries appearing in the seized records. Accordingly, the additions on account of interest

income and interest expenditure were held to be justified.

12.3 Regarding the estimation of commission income @1% on cash sale and

purchase transactions, the CIT(A) upheld the decision made by the AO by

observing that the commission income @1% on such transactions was based on

market practices followed by commission agents.

12.4 The alternative plea of telescoping raised by the appellant was also

rejected by the CIT(A). The CIT(A) observed that the appellant had denied the

existence of the alleged cash loan transactions. Accordingly, all the additions

made by the AO on account of peak credit, interest income and interest

expenditure were confirmed.

Tribunal. Ground Nos. 1 to 5 are against the reopening of assessment u/s 147 of

the Act. Grounds Nos. 6 to 9 are in respect of addition on account of cash loan

transactions. Ground Nos. 10 to 12 are against the addition of commission

income.

jurisdictional issues regarding reopening of assessment u/s 147 of the Act. The

appellant has also challenged the validity of reopening the assessment u/s 147

and notice u/s 148 of the Act. In this case, a search and seizure operation u/s 132

of the Act was undertaken on 22.12.2023 in case of the assessee together with 21 the cases of Polycab India Ltd. group. Subsequently, the case was reopened u/s

147 of the Act by issue of notice dated 14.11.2024. We find that the assessee has

raised similar grounds (5 grounds) before the CIT(A). The CIT(A) has dismissed the

grounds by deciding as under:

“5.2 Decision for Ground no.1- 5.2.1 I have considered the submission of the assessee. The assessee has stated that AO has reopened the reassessment proceedings merely based on the information received without own application of mind. I find that the AO has reopened the assessment proceedings based on the search action carried u/s 132 of the Act. As per explanation 2 to section 148 as it stood at the relevant point of time, where an action u/s 132 has been initiated, it shall be deemed that AO has an information which suggest that the income chargeable to tax has escaped assessment in the case of an assessee. In the present case, since a search action was initiated on 22.12.2023, the notice issued u/s 148 is valid. Therefore, I do not find any merit in the argument of the assessee. Accordingly, ground of the appeal is Dismissed. …….. 6.2 Decision for Ground no. 2- I have considered facts of the case and submission of the assessee. The assessee has submitted that the present reopening has been made beyond 3 years as per section 149 (1) (b) and therefore, it needs to adhere to the conditions prescribed therein. As per the appellant, the said conditions are not fulfilled in the present case. I find that the said clause stipulates that the reopening can be made in case the income escaped in represented by an asset, expenditure or entries in the books of accounts. I found that information/evidences and the quantum of transactions available with the AO suggests that the AO has in possession books of account or other documents or evidence which reveal that the income, represented in the form of entries in books of account, has escaped assessment amounts to fifty lakh rupees or more in the relevant assessment year which clearly falls under the clause (b) of section 149(1). I do not find merit in the submission of the assessee. Hence, the reopening made by the AO is justified as per clause (b) to section 149(1) of the IT Act.

Accordingly, ground of the appeal is Dismissed. ……… 7.2 Decision for Ground no.3- I have considered facts of the case and submission of the assessee. The assessee has stated that the reopening has been made in violation to the first proviso to section 149(1) of the Act since the assessment u/s 153A could not have been made since there is no incriminating material to support the escapement of income as alleged by AO. I have considered the argument of the assessee. The first proviso to section 149(1) stipulates that no assessment would be reopened if the same could not be made prior to the amendment in Finance Act 2021. I find that search action was initiated on 23.12.2023 based on which cases can be reopened as per the provisions of section 153A for the years beyond 3 years as provided under clause (b) of section 149(1). The AO has referred various incriminating material in the form of statements, seized material etc. in the assessment order. Accordingly, I do not agree with the argument of the assessee. Thus, the Ground no.3 is dismissed. ……… 8.2 Decision for Ground no.4: I have considered facts of the case and submission of the assessee. The assessee has contended that the approval given by CCIT for reopening the case is without proper application of mind. On perusal of the reasons recorded by the AO and approval granted by the Id. CCIT, it seen that the entire proposal of reopening and the reasons recorded by the Assessing Officer were placed before the CCIT, who, upon perusal of the same, recorded his satisfaction that it was a fit case for issuance of notice u/s 148 of the ITA Act. Further, Annexure enclosed by the CCIT along with approval u/s 151 of the IT Act is as under- ……. Moreover, I find that in his remarks, the CCIT has stated that he had analysed the information and upon perusal, he was satisfied and was of the considered opinion that it was a fit case for issuance of notice u/s 148. Thus, the Id. CCIT has applied his mind while granting the approval u/s 151 of the Act. Accordingly, ground no. 4 of the appeal is Dismissed. ………. 9.2 Decision for Ground no.5- I have considered facts of the case and submission of the assessee. The assessee has contended that the approval given by JCIT u/s 148B is mechanical in nature. On perusal of the assessment order, it is clear that 23 the assessment order has been passed after proper approval from JCIT as per the CBDT guidelines. The assessee has failed to show as how the approval is mechanical in nature. Accordingly, I do not find any merit in the argument of the appellant. Thus, ground no. 5 of the appeal is Dismissed.”

14.1 The Ld. AR of the appellant has relied on the grounds of appeal but he has

not made any oral or written submission in support of the grounds of appeal

pertaining to the validity of reopening during the course of hearing before the

Tribunal. He has also not argued as to how the decisions of the CIT(A) on various

grounds are not correct, either on facts or law. We find that the CIT(A) has duly

appreciated the facts of the case and the relevant provision of the Act before

deciding the issue. We do not find any infirmity in the said order, which we

confirm. Accordingly, ground Nos. 1 to 5 are dismissed.

The facts of the case have been discussed at para 11 of this order and hence not

repeated here. The Ld. AR has strongly contested the finding of the AO and the

CIT(A). He submitted that the impugned addition has been made on the basis of

the statements of SP group personnel and the ledger entries appearing in the tally

data "Ka" seized from the premises of the SP group.

A simultaneous search action was also carried out in the case of the appellant.

However, in the said action, no corroborative material whatsoever has been found

from the premises of the appellant to support the allegation of unaccounted cash loan transactions. He also contended that the appellant has no knowledge of the

manner in which the SP group maintained its records or the methodology

adopted by it for recording transactions through coded entries. Accordingly, such

third-party records cannot be relied upon against the appellant in the absence of independent corroborative evidence.

15.1 The Ld. AR submitted that the statements of Shri Mohanlal Pahuja, Shri

Vijay Pahuja and the appellant himself were subsequently retracted by way of

duly sworn affidavits. In the said affidavits, it was specifically stated that the

statements had been recorded under pressure and did not correctly reflect the

true facts of the case. The copy of the said retractions is placed on record by the

Ld. AR. Moreover, on perusal of the statement referred to by ld. AO in the

assessment order, it is nowhere stated by Shri Mohanlal Pahuja that he has

entered into cash loan transactions on interest with the appellant. He has merely

explained the codes which were mentioned in the said tally data. The Ld. AR

submitted that in the affidavit, Shri Mohanlal Pahuja specifically disputed that the

codes explained in the statement were incorrect and such were never stated by

the appellant. This clearly means that AO’s allegation that “Ranjit Seth” means

“Ranjit Laddha” is incorrect. There is no other document which shows that Shri

Ranjit Seth relates to Shri Ranjit Laddha, which was found from the search action

from the appellant. The Ld. AR also submitted that the statement of Shri Vijay

Pahuja has also been retracted by him. In the absence of any corroborative evidences, it is unjustified to treat the ledger namely ‘Ranjit Seth Loan’ as

belonging to the appellant.

15.2 The Ld. AR also submitted that the statement made by the appellant, Shri

Ranjit Laddha, during the course of search action, has also been retraced by him

subsequent to the search. He has produced copy of the said retraction statement.

The assessee has clearly stated therein that he had never admitted of indulging

into cash loan transactions. Moreover, no single corroborative evidence was

found from the premises of assessee to prove any transaction with Sunrise group

or its directors.

15.3 According to Ld. AR, even if the statement of the appellant is considered,

it may be noted that he has stated that the total cash loan aggregated to Rs.7 to

8 crores and it was maximum of Rs.25 lakhs at any given point of time. This is in

clear contradiction with the working computed by AO based on the ledger ‘Ranjit

Seth Loan’ wherein the maximum peak balance is almost Rs.7.49 Crores.

15.4 The Ld. AR contended that a simultaneous search action was also carried

out in the case of the appellant. However, not a single evidence was found which

could corroborate the findings of the ld. AO. Accordingly, it is submitted that the

appellant has not entered in to any cash transaction with Shri Pahuja and any

other person.

15.5 Without prejudice to the above, the Ld. AR stated that the concerned

ledger ‘Ranjit Seth Loan’, relied upon by the AO, nowhere reflects any cash loan transactions. There is no systematic noting of any interest calculation as has been

alleged by AO. It is unknown as to how the AO has derived interest rate @7.6%

since the ledger do not contain any such interest entries or calculation. The Ld.

AR submitted that the seized material found needs to be considered as complete

and no extrapolation can be done. There is no corroboration of any such receipt

or payment of interest with Shri Ranjit Laddha, which is either found from the

appellant’s premise or other searcher premises.

15.6 The Ld. AR also submitted that when all the persons have subsequently

retracted their statements through duly sworn affidavits, therefore, in the

absence of any independent corroborative evidence supporting the allegation, no

addition can be sustained merely on the basis of such retracted statements. The

AO nevertheless continued to place reliance upon the original statements without

bringing any material on record to disprove the contents of the retraction

affidavits. The impugned ledger accounts, which are the sole basis for making

additions, were found and seized from the premises of a third party and not from

the possession or control of the appellant. Accordingly, the statutory

presumptions available u/s 132(4A) and 292C of the Act are not available against

the appellant. Moreover, the department has not been able to establish any

business link between the appellant and SP group which would support such

transaction. In the appellant’s case, absence of such corroboration is glaring since

a search action was also carried out in the case of the appellant at the same time.

In this regard, the Ld. AR placed reliance on the recent decision of ITAT, Mumbai

in the case of Banpreetsingh Suriendersingh Atal and others in ITA No. ITA No.

8832 to 8834/Mum/2025 & Ors. dated 11.05.2026, wherein based on the tally

data found from the SP group coupled with statement of the promoters of SP

group as well as the said assessee, AO had made addition in the case of the

assessee. After considering the submission and arguments of the assessee, ITAT

held that no addition can be made purely based on the third party data in the

absence of any corroboration. The Ld. AR submitted that since identical situation

has been dealt with by the Hon’ble ITAT, wherein the addition made in the

absence of corroboration and based on third party data has been deleted, the

impugned addition by the AO may be deleted.

He submitted that incriminating material was found and seized from the premises

of Sunrise group where in tally data named “Ka”, there were ledgers titled “Ranjit

Seth Loan”, “Ranjit Seth” and “Ranjit Seth New”. In their statements record u/s

132(4) of the Act, Shri Vijay Pahuja and Shri Mohanlal Pahuja identified these

ledgers as relating to transactions undertaken with the appellant. The AO has

clearly mentioned that the subsequent retractions after long gap are not valid and

has rightly made the addition. The case relied upon by the Ld. AR in case of

Banpreetsingh Surindersingh Atal (supra) is not identical because it was not a

search case. He has taken us through the orders of AO and CIT(A) and submitted that the findings are reasonable and logical having regard to the incriminating

materials found and seized during the search proceedings and the statements

recorded during the same proceedings.

also gone through the relevant seized material and the statements referred to and

relied upon by the lower authorities. We have also gone through the retraction

statements and the affidavits filed by the appellant, Shri Mohanlal Pahuja, Shri

Vijay Pahuja and Shri Kalpesh Kumbhar. The ld. AR has submitted that the addition

has been made on the basis of the impugned ledger accounts seized from the

premises of a third party. Hence, the statutory presumptions available u/s 132(4A)

and 292C of the Act are not available against the assessee. The department has

also not been able to establish any business link between the assessee and SP

group. He submitted that no addition can be made based on third party evidence

in absence of any corroborative evidence. Further, the statements have been

retracted by all persons for which affidavits have been duly filed and placed on

record. We find that similar issue had come up for consideration before the

coordinate Bench of this Tribunal in the case of Banpreetsingh Surindersingh Atal

(supra), where based on the same tally data found from the SP group coupled

with statements of the promoters of SP group as well as the said assessee, AO had

made addition in the case of the assessee of commission. After considering the

submission and arguments of the assessee, ITAT held that no addition can be made purely based on the third-party data in the absence of any corroboration.

The relevant portion of the decision is reproduced hereunder for ready reference

and clarity:

“15. We have heard the rival submissions of the parties, carefully perused the orders of the authorities below, and meticulously evaluated the relevant material placed on record. The core issue for our consideration is whether the addition made in the hands of the assessee on account of alleged commission income can be legally sustained solely on the basis of bedrock of retracted confessional statements of the assessee and third parties during the course of search proceedings and the material seized from third parties, in the absence of any independent corroborative evidence to substantiate the actual exchange of such commission.

15.1 The Assessing Officer has proceeded on the premise that the assessee facilitated accommodation entries and earned commission therefrom at specified rates. Upon a careful examination of the factual matrix, it is evident that the entire edifice of the Revenue's case rests upon (i) the statements recorded under Section 132(4) of the Act from the key personnel of the Sunrise Group namely, Shri Vijay Pahuja, Shri Jaydeep Mahajani, and others-as well as the statement of the assessee himself (i) certain tally' data and WhatsApp' communications found during the course of search at the premises of third parties.

15.2 The Ld. CIT(A) has heavily relied upon the parallel tally data retrieved from the premises of a third party (the Sunrise Group and certain WhatsApp chats to corroborate the retracted statements. However, upon a careful examination of the record, we find that neither the so-called parallel Tally' data nor the WhatsApp communications, as referred to by the Revenue, contain any specific or direct evidence indicating that the assessee had, in fact, received commission income. the Revenue consider said WhatsApp chat as the primary corroborative material, but those chats reveals absolutely no whisper of any commission being charged by the assessee or paid by the Sunrise Group. While the tally data and chats might loosely indicate certain business transactions, they nowhere indicate, either expressly or by necessary implication, the crystallization, quantification, or actual payment of a 1% commission. In other words, the foundational requirement of corroborative evidence establishing receipt of income is conspicuously absent. In order to establish from the existence of third-party tally data to the conclusion that the assessee earned a specific percentage of cash commission, requires an unbroken chain of evidentiary links, which the Revenue has utterly failed to forge. 15.3 The reliance placed by the Revenue on the statements recorded during search proceedings also does not advance its case. It is a matter of undisputed record that all the aforesaid statements were subsequently retracted by means of sworn affidavits, wherein the deponents unequivocally alleged that the initial admissions were obtained under duress and coercion during the search proceedings.

15.4 It is well settled in law that a statement recorded under Section 132(4) of the Act, though relevant, cannot by itself constitute conclusive evidence unless it is supported by independent and cogent material. When a statement is retracted, the burden shifts heavily onto the Revenue to independently corroborate the contents of the retracted confession with cogent, unimpeachable documentary evidence. In the present case, not only have such statements been subsequently retracted, but the Revenue has also failed to bring on record any substantive material to corroborate the contents of such statements.

15.5 We must also advert to the binding administrative guidelines issued by the Central Board of Direct Taxes (CBDT). The Board, taking serious cognizance of the arbitrary practice of extracting confessions during search and survey operations, has issued categorical instructions-including Circular F.No. 286/98/2013-IT (Inv. II) deprecating the practice of obtaining confessional statements without unearthing independent corroborative material. The administrative mandate – aligns seamlessly with the judicial consensus: a confession, standing alone and unsupported by corroborative documentary evidence, cannot form the sole legal basis for an addition, more so when such confession has been validly retracted. The assessing authorities are legally obligated to base their conclusions on tangible evidence gathered during the search, not merely on the oral, retracted testimony of the assessee or third parties.

15.6 It is a cardinal principle of taxation jurisprudence that no addition can be sustained on the basis of surmises, conjectures, or uncorroborated statements. The burden lies upon the Revenue to establish, by cogent and credible evidence, that the assessee has earned income which has escaped assessment. Suspicion, however strong, cannot take the place of proof. The Hon'ble Apex Court has consistently held that no addition can be sustained merely on the basis of third- party documents without granting the assessee a proper opportunity for cross- examination, nor can retracted statements be used as a primary weapon of assessment without independent validation.

15.7 In the present case, we find that the addition has been made merely on the basis of alleged admissions and third-party statements, without any independent corroboration in the form of documentary evidence. the Revenue has failed to bring or record any cash trail, bank entry, or definitive documentary proof to establish that the sum of Rs. 7,04,188/- was actually received by the assessee. cash trail, or any material demonstrating actual receipt of commission by the assessee. Such an approach, in our considered view, is unsustainable in law. 31 15.8 In background of the aforesaid factual and legal matrix, we are of the considered view that the authorities below fundamentally erred in making and sustaining the impugned addition. The addition is based on surmises, uncorroborated third-party data, and retracted statements, which fail to pass the muster of judicial scrutiny. Accordingly, we hold that the addition made in the hands of the assessee on account of alleged commission income is devoid of any evidentiary foundation and cannot be sustained. Resultantly, the addition of Rs. 7,04,188/- made by the Assessing Officer and sustained by the Ld. CIT(A) is hereby deleted. Accordingly, Ground Nos. 5 to 8 raised by the assessee are allowed.”

17.1 The facts of the present appeal are similar to the facts of the above case.

The revenue has not been able to distinguish the decision either on facts or on

law. Hence, following the above decision, the addition made by the AO and

sustained by the CIT(A) is deleted. Accordingly, the ground Nos.6 to 9 are allowed.

cash commission. The AO has added undisclosed commission income @1% of the

credit and debit entries recorded in the ledgers namely “Ranjit Seth” and “Ranjit

Seth New”. These ledger accounts were found in the tally data “Ka” found from

the premises of the Sunrise group. The total addition made was Rs.97,98,735/-

for the subject year. Relying upon the statements of key personnel of the SP group

and the decoded entries in the Tally data, the AO held that the transactions

recorded in the aforesaid ledgers belonged to the appellant. The AO observed

that the ledger "Ranjit Seth Loan" contained cash loan transactions. However, the

AO accepted that the ledgers "Ranjit Seth" and "Ranjit Seth New" are related to

cash sale and purchase transactions and not loan transactions. According to the AO, the transactions recorded in the ledgers "Ranjit Seth" and "Ranjit Seth New"

represented unaccounted trading transactions carried out outside the regular

books of account. The AO further noted that the appellant had stated that such

transactions were arranged by him on behalf of the Sunrise group and that he

earned undisclosed commission for facilitating the same. Based on the above, the

AO concluded that the appellant had earned commission income from the cash

trading transactions recorded in the aforesaid ledgers. The AO worked out the

total value of transactions recorded in the two ledgers and noted that the

aggregate debit entries amounted to Rs.119.61 crore, whereas the aggregate

credit entries amounted to Rs.120.17 crore. The appellant contended that

commission income, if any, should be estimated at 0.10% to 0.15% of the

transaction value. However, the AO rejected the said contention. According to the

AO, the material found during the search proceedings and prevailing market

practices showed that commission in such transactions was generally earned at

the rate of 1%. Hence, the AO estimated commission income at 1% of both the

debit and credit entries recorded in the ledgers "Ranjit Seth" and "Ranjit Seth

New". Based on the aforesaid estimation, the AO computed year-wise

undisclosed commission income and brought the same to tax in the hands of the

appellant. The additions made by the AO for the subject AY 2016-17 was

Rs.97,98,735/-.

The CIT(A) observed that during the course of search proceedings conducted in

the case of the SP Group, ledger accounts titled "Ranjit Seth" and "Ranjit Seth

New" were found in the seized tally data. Relying upon the findings recorded by

him while adjudicating the issue relating to the alleged cash loan transactions, the

CIT(A) held that the aforesaid ledger accounts belonged to the appellant. The

CIT(A) further held that the transactions recorded in the said ledger accounts

represented unaccounted cash sale and purchase transactions undertaken by the

appellant. According to the CIT(A), the appellant had already acknowledged the

transactions recorded in the ledger accounts in his statement recorded during the

course of the search proceedings. On the basis of the aforesaid observations, the

CIT(A) rejected the contention of the appellant that the impugned ledger

accounts did not belong to him. The CIT(A) further noted that the appellant had

failed to furnish any satisfactory explanation regarding the debit and credit entries

appearing in the said ledger accounts. The CIT(A), therefore, upheld findings of

AO in treating debit and credit entries recorded in the ledger accounts as

representing unaccounted trading transactions carried on by the appellant

outside the regular books of account. With regard to the quantum of addition,

the CIT(A) upheld the action of the ld. AO in estimating commission income at the

rate of 1% of the transactions reflected in the ledger accounts. The CIT(A)

observed that the rate adopted by the AO was in line with the prevailing market practices followed by commission agents engaged in similar activities.

Accordingly, the CIT(A) rejected the contention of the appellant that the commission rate should be restricted to 0.1%.

Tribunal. The ld. AR submitted that the facts of the present issue are similar to the

issue discussed in respect of cash loan in earlier grounds. The findings of the

search and statement relied upon by AO are also identical. The ld. AR submitted

that the statement recorded by the promoters of the SP group have been

retracted. Further, the statement of the appellant has also been retracted by him.

The affidavits recorded by the various persons have also been placed on record.

Therefore, the reliance placed on the statement is not correct.

20.1 The Ld. AR also submitted that in the assessment order, the AO has

considered the ledgers namely ‘Ranjit Seth’ and ‘Ranjit Seth New’ as belonging to

the appellant wherein the transaction of cash trading of SP group has been

recorded for which the appellant has received commission. The Ld. AR reiterated

that the said ledger accounts do not pertain to the appellant. No incriminating

material evidencing any cash trading activity carried on by the appellant was

found from the appellant's premises during the course of the search proceedings.

Accordingly, the addition lacks any direct evidentiary support against the

appellant. Further, the ledger accounts relied upon by the ld. AO were found and

seized from the premises of a third party and not from the possession or control of the appellant. Accordingly, no presumption u/s 132(4A) or 292C of the Act can

be drawn against the appellant in respect of such documents.

20.2 The Ld. AR submitted that even otherwise the allegation of receipt of

commission income is nowhere borne out either from the statement of

promoters or the appellant recorded during the search action. The seized ledger

relied upon by the AO also do not contain any such calculation of commission

@1% as alleged by the AO. Further, no corroborative evidences showing receipt

of commission by the appellant was found either from the appellant’s premises

or SP group premises. Therefore, the addition of estimated commission in the

hands of the appellant is not correct.

20.3 The Ld. AR also submitted that it is settled principle of law that additions

cannot be made solely on the basis of documents found from third parties unless

the contents thereof are independently corroborated by reliable evidence. In the

present case, no such corroborative material has been brought on record by the

Revenue. The Ld. AR also relied on the decision of the ITAT, Mumbai in the case of

Banpreetsingh Suriendersingh Atal and others (supra), where the AO had made

addition based on the tally data found from the SP group coupled with statements

of the promoters of SP group as well as the said assessee. After considering the

arguments of the assessee, ITAT held that no addition can be made purely based

on the third-party data in the absence of any corroboration. Accordingly, in light of the above discussion and decision of coordinate bench, the entire addition

made by AO and sustained by the CIT(A) deserves to be deleted.

also deliberated on the decision relied upon by the Ld. AR i.e. Banpreetsingh

Suriendersingh Atal and others (supra). The basis for making the impugned

addition on account of commission is the parallel tally “Ka” found and seized from

the premises of Sunrise group and the statements taken on oath of Shri Mohanlal

Pahuja, Shri Vijay Pahuja, Shri Kalpesh Kumbhar and the assessee. We find that

addition of cash loans was also made in case of assessee based on the same seized

ledgers in parallel tally “Ka”. Following the decision of the co-ordinate Bench in

case of Banpreetsingh Suriendersingh Atal and others (supra), the addition was

deleted vide para 17 and 17.1 of this order. The Ld. CIT DR has not been able to

distinguish the decision of the Tribunal either on fact or on law. Therefore,

following the above decision, the addition made by the AO and confirmed by the

CIT(A) is deleted. Accordingly, the ground No. 10 to 12 are allowed.

ITA Nos. 7833, 7835 to 7840 and 7955/Mum/2025 (AYs: 2015-16, 2017-18 to 2019-20 & 2021-22 to 2023-24 & 2020-21)

appeals for assessment years 2015-16, 2017-18 to 2019-20 & 2021-22 to 2023-24

& 2020-21 are similar to the grounds and factual situation of the case for AY 2016-

17; therefore, the findings given in the appeal for AY 2016-17 in ITA

No.7834/Mum/2025 (supra) shall apply mutatis mutandis to the assessment

years 2015-16, 2017-18 to 2019-20 & 2021-22 to 2023-24 & 2020-21. The appeals

are, accordingly, partly allowed.

Order is pronounced on 19.06.2026.

Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER

*Aniket Chand; Sr. PS MUMBAI Date: 19.06.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order

Assistant Registrar ITAT, MUMBAI