HUKAMRAJ G RANKA HUF,MUMBAI vs. INCOME TAX OFFICER 19(1)(5), PIRAMAL CHAMBER

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: SMC BEFORE HON’BLESHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 9386/MUM/2025 AND ITA 9387/MUM/2025 निर्धारणवर्ा/Assmt. Year:2020-21 and 2022-23) Permanent Account Number: AADHH9346F CIT(APPEALS), NATIONAL HUKAMRAJ G RANKA HUF FACELESS APPEAL 6, 1ST FLOOR, DR QUARTERS, CENTRE (NFAC), DELHI BHARAT NAGAR, GRANT Vs. ROAD, MUMBAI (प्रत्यर्थीRespondent) (अपीलार्थीAppellant)

निर्धाऩितीद्वधिध/Assessee represented by: Shri Satish Mody, Advocate िधजस्विद्वधिध/Revenue represented by: Shri Ujjwal Kumar, Sr. DR

सुिवधईकीतधिीख/Date of conclusion of hearing: 12.03.2026 घोषणधकीतधिीख/Date of pronouncement: 05.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals filed by the assessee are against the order of ld. CIT(A)/National Faceless Appeal Centre (NFAC), Delhivide DIN: ITBA/NFAC/S/250/2025-26/1082562732(1)and ITBA/NFAC/S/250/ 2025-26/1082014388(1) dated 13.11.2025 and 27.10.2025, respectively, passed against thereassessment order by ld. Income Tax Officer Ward 19(1)(5) u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 26.03.2025 for the Assessment Years 2020-21 and 2022-23, respectively. 1

A. ITA 9386/MUM/2025

i. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in completing the assessment under Section 147 of the Income-tax Act, 1961, as the notice under Section 148 was issued by the Jurisdictional Assessing Officer instead of the National Faceless Assessment Centre (NFAC), in violation of the mandatory procedure prescribed under Section 151A of the Act read with CBDT Notification No. 18/2022 dated 29.03.2022. ii. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in making an addition of Rs. 5,49,809/- under Section 69A of the Act by treating the same as unexplained money, without appreciating that the alleged sales were duly recorded in the regular books of account, supported by bank statements, GST returns, and contemporaneous documentary evidence. B. ITA 9387/MUM/2025 i. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in completing the assessment under Section 147 of the Income-tax Act, 1961, as the notice under Section 148 was issued by the Jurisdictional Assessing Officer instead of theNational Faceless Assessment Centre (NFAC), in violation of the mandatory procedure prescribed under Section 151A of the Act read with CBDT Notification No. 18/2022 dated 29.03.2022. ii. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in making an addition of Rs. 2,55,024/- under Section 69A of the Act by treating the same as unexplained money, without appreciating that the alleged sales were duly recorded in the regular books of account, supported by bank statements, GST returns, and contemporaneous documentary evidence. 2.1. Issues raised by the assessee in both the appeals are identical except for variation in the quantum. Accordingly, both the appeals are

taken up together for adjudication by passing this consolidated order. In both the appeals, ground no. 01 raised by the assessee on the jurisdictional aspect is not pressed. Accordingly, ground no. 1 in both the appeals is dismissed as not pressed.

2.2. Ground no. 2 in both the appeals deal with the merit of the case in respect of addition made under section 69A by treating it as unexplained money for the alleged sales made by the assessee. We take up appeal for A.Y. 2020-21 as the lead case to draw the facts for the purpose of our observation and finding which shall apply mutatis mutandisto the other appeal for A.Y. 2022-23.

3.1. Subsequently, a search and seizure action under section 132 was conducted on 24.11.2022 in the case of Mani Ram Balwant Rai Group. Based on information allegedly emanating from the said search, proceedings were initiated against the assessee. Pursuant thereto, a notice under section 148 dated 28.03.2024 was issuedon the allegation that assessee had made unaccounted sales of Rs. 5,49,809/-, during the relevant previous year.

3.2. During the reassessment proceedings, assessee categorically submitted that it had made sales of cosmetics and other beauty products to Mani Ram Balwant Rai & Sons Group, and that all such sales were duly recorded in its regular books of account. It further submitted that all payments against such sales were received through banking channels; these transactions were duly reflected in GST returns filed for the relevant period. Supporting documentary evidences including bank statements, ledger accounts, sales register, and purchase register were furnished and placed on record before the Assessing Officer.

3.3. Assessee specifically contended that the alleged transactions could not be treated as unexplained, as the same were fully verifiable from the regular books of account and statutory records maintained in the normal course of business. However, the Assessing Officer, without properly appreciating the submissions and documentary evidence furnished, completed the reassessment by assessing the total income at Rs. 7,82,190/-. Ld. Assessing Officer made an addition of Rs. 5,49,809/- by invoking Section 69A treating the same as unexplained money, primarily relying upon alleged third-party electronic material, without granting the assessee an effective opportunity to confront or rebut the same. Aggrieved by the reassessment order, it preferred an appeal before the ld. CIT(A) which was dismissed upholding the addition made.

b. Further, the assessee is surprised to receive 'this show cause notice mentioning as unaccounted sales, as assessee denies and has not carried out such transactions and the assessee was never appraised of this issue by way of providing copies of the statements of third parties and material relied upon for such re-opening of the assessment and theproposed addition. Further assessee is not a jeweler as mentioned in the notice of reopening.

c. Mere relying on the whatsapp chats statement of a third person i.e. Sh, Aman Batra cannot form the basis to treat the said amount as unaccounted sales. Also, there is no other corroborative evidence supporting the contention of your good office. The assessee has not been provided with the documents relied upon in the said notice. You are required to provide the copies of above- mentioned documents, which your good office have failed to provide along with the notice. d. The assessee reserves its right to cross-examine the concerned persons who have given such statements, which are relied upon by the Department. e. Thus, no adverse inference can be drawn in respect of the assessee to treat the said amount as unaccounted sales based on the information without: i. Furnishing copies each of the statement duly recorded by the authority of such persons stating that the transactions entered into by the assessee are unaccounted sales to enable the assessee to submit its response considering the them? ii. The corroborative evidence/ documents found during the search implicating the assessee. iii. Opportunity for cross-examination of such persons is given to the assessee. f. Thus, no addition can be made by your good office without verification of facts and any corroborative evidence. The very act of proposing to add the said amount is baseless, bad in law and unjustified action. 3. Without prejudice to the above stated facts we would like to submit as under: 3.1 During the relevant AY the assessee has done trading activity in cosmetic and other beauty goods. 4.1. From the above, it is noted that ld. AO has proceeded based on the information received by him from the office of ACIT Central Circle- 3, Ludhiana in respect of a search and seizer action conducted on Mani Ram Balwant Rai Group on 24.11.2022.Based on this search and seizer action in the case of unrelated party, ld. AO noted that assessee had made unaccounted sales through its proprietary concern in the name of style of M/s Padmavati Collection. For this, he placed reliance on various evidences in the form of whatsapp chats, ledgers, etc. found from the mobile device of one Shri Aman Batra which

indicated that Shri Aman Batra interacted with the assessee. In this regard ld. AO noted from the whatsapp chats of Shri Aman Batra with the contact „Mumbai Padmavati Jeweler‟ to draw the inference that assessee who is the proprietor of M/s Padmavati Collection had entered into certain transactions of cash purchases and made cash payment to the assessee. He accordingly called for information from the assessee in this regard to explain the case. After considering the submissions made by the assessee whereby it was denied altogether of any such transaction undertaken by it, ld. AO concluded to make the addition representing unaccounted sales by treating it as unexplained money.

4.2. As already noted above from the written submission made by the assessee,specific requests were made to supply the documents relied upon by the ld. AO and to give opportunity of cross examination of the concerned personswhose statements have been relied upon to draw such an adverse inference.

CIT(A) did not agree with the same and sustained the addition so made by the ld. AO.

5.1. In respect of the various requests made by the assessee for supply of materials relied upon by the ld. AO and cross examination opportunity, he adversely noted that assessee neither requested for nor produced any counter evidence, disproving the presence of his trade name, PAN and transaction details in the seized material. Aggrieved, assessee is in appeal before Tribunal.

6.1. Further, according to him,whatsapp chats which forms the very basis for the impugned additions have no evidentiary value unless the mandatory conditions prescribed under section 65B(4) of the Indian Evidence Act, 1872 are fulfilled. According to him, any electronic evidence is inadmissible in absence of a valid certificate under 65B(4) specifying the device particulars and authentication details. Thus, reliance placed by the ld. AO on such unverified screenshots, allegedly

obtained from a third party i.e. Shri Aman Batra without corroborative material or authentication is not tenable and is unreliable.

6.2. He also referred to the show cause notice dated 06.03.2025 issued by the ld. AO wherein request for granting opportunity for cross examination was declined by stating that ‘cross examination is not a matter of right and depends upon facts of each case’ and that ‘there is no need to provide cross examination when sufficient documentary evidence exist’.Reliance in this regard was placed on the decision of Hon‟ble Supreme Court in the case of Andaman Timber Industries v. CCE (2015) 62 taxmann.com 3 (SC).

6.3. He further relied on certain decisions of coordinate bench wherein similar issues were dealt with wherein additions made were deleted. These are:

i. DCIT v. Nirav Dhiren Shah (2025) 180 taxmann.com 370 (Mum) ii. Rucha Consultancy LLP v. DCIT (2025) 174 taxmann.com 2021 (Mum) iii. Arti Garg v. DCIT in ITA no. 3143/Del/2025 dated 14.01.2026 iv. Designers Point (India) (P) Limited v. ACIT in ITA no. 2517/Del/2022 dated 06.09.2024

6.4. In all the aforesaid judicial precedents, common finding is that where the Assessing Officer makes addition under section 69A for sale transaction based on whatsapp chats without corroborative evidences on receipt of cash as alleged, the addition so made are to be deleted. In these judicial precedents, the aforesaid contentions raised by the assessee on evidentiary value of whatsapp chats and screenshots being electronic evidence to which section 65B(4) of the Evidence Act,

1872 applies, has been dealt with. Also,aspect relating to non-supply of material, copies of statement of the third party and non-granting of opportunity for cross examination of the third party have been dealt with so asto draw the conclusion that no addition is called for in absence of corroborative independent evidenceand where no physical cash was found with the assessee in respect of whatsapp chat.

Order pronounced in the open court on 05.06.2026

Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Ankit, PS Mumbai Dated: 05.06.2026 Copy to:

HUKAMRAJ G RANKA HUF 6, 1ST FLOOR, DR QUARTERS, 1 BHARAT NAGAR, GRANT ROAD, MUMBAI

2 CIT(APPEALS), NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE