ACIT CC1 NASHIK, NASHIK vs. VILAS RASIKLAL SHAH, NASHIK

PER BENCH:

ITA Nos.3032/PUN/2025, 3033/PUN/2025, 3059/PUN/2025 & 3058/PUN/2025 filed by the assessee and ITA Nos.3285/PUN/2025, 3286/PUN/2025, 3287/PUN/2025 & 3288/PUN/2025 filed by the Revenue are cross appeals and are directed against the separate orders dated 31.10.2025 of the Ld. CIT(A), Pune-12 relating to assessment years as mentioned above. ITA No.3034/PUN/2025 filed by the assessee is directed against the order dated 31.10.2025 of the Ld. CIT(A), Pune-12 relating to assessment year 2020-21. Since common issues are involved in all these appeals, therefore, these appeals were heard together and are being disposed of by this common order for the sake of convenience.

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the assessee was also covered. In response to notice u/s 148 dated 28.03.2024 the assessee filed his objections vide letter dated 10.05.2024 and requested for reasons for satisfaction and copy of approval granted by the PCIT, Central, Nagpur. The Assessing Officer disposed of the said application vide order dated 24.05.2024 requesting the assessee to file return of income in response to the notice u/s 148 of the Act dated 28.03.2024 so as to enable him to provide the desired documents. The assessee thereafter filed his return of income on 25.06.2024 in response to notice u/s 148 of the Act declaring total income of Rs.1,89,75,410/-. On the basis of the request of the assessee the Assessing Officer supplied the desired documents/information. Subsequently notice u/s 143(2) of the Act was issued and served on the assessee. Thereafter notice u/s 142(1) of the Act along with a questionnaire was also issued and served on the assessee in response to which the assessee filed certain details.

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Pr.CIT-1, Mumbai dated 06.06.2023 is without DIN, (3) jurisdiction to issue notice u/s 148 was outside faceless mechanism, (4) the Assessing Officer cannot proceed with the assessment by issue of notice u/s 143(2) before disposing of the objections raised, (5) search is illegal since the jurisdiction over the assessee lies with the CCIT, Nashik and (6) the office premises at 3rd floor, Abhayankar Towers, MG Road, Nashik searched by party No.YO-1(1) by search team is registered in the name of Shri S.C. Pawar, Advocate and the office premises at Anandvalli, Behind Petrol Pump, Near Makaloo Hotel, Gangapur Road, Nashik searched by party No.YO-2 by search team are third party premises and are neither owned by the assessee nor by any of the entities of the ‘Viraj group’. Accordingly, the findings of incriminating documents found and seized from the office premises of ‘Viraj Group’ is incorrect. However, the Assessing Officer rejected all the above objections raised by the assessee.

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stated in his statement recorded u/s 132(4) of the Act that the documents found from the premises YO-2 are related to the entities of Viraj group and its key is handed over to him on instruction of Shri Karan R Shah and Shri Vilas R. Shah. He had further stated that the entries in the documents are entered on the instruction of Shri Karan Rajendra Shah and Shri Vilas Rasiklal Shah, directors and key persons of the entities of Viraj group. According to the Assessing Officer, what is self evident by admission of party need not be verified. He, therefore, rejected the argument of the assessee that the additions cannot be based on incriminating documents found from the third party premises not belonging to the assessee.

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mechanical and perfunctory without independent application of mind to the reasons recorded by the AO. 4. The learned CIT(A) further erred in law and on facts in sustaining the reassessment proceedings by incorrectly interpreting the definition and requirement of an 'asset’ under the Explanation to Section 149(1)(b) of the Act. 4.1. The learned CIT(A) erred in holding that "cash in hand" evidenced merely by entries in seized cash books automatically constitutes a qualifying 'asset' for the purpose of invoking the extended limitation period under Section 149(1)(b). 4.2. The lower authorities erred by deeming the entire quantum of transactions as an 'asset without demonstrating the existence of a real, tangible, and identifiable existing asset as strictly required by the statute. 5. The learned CIT(A) erred in not applying the mandatory faceless mechanism notified under Section 151A read with Section 144B to the issuance of all notices under Section 148, as required by law 6. The mandatory approval under Section 148B was given mechanically and without application of mind, failing to follow jurisdictional High Court precedents, making the entire assessment order invalid and void ab initio. 7. The learned CIT(A) has erred in law and facts in the addition made on account of on-money on sale of plots/land to the extent of Rs.51,21,400/- for AY 2014-15 as business income of the appellant. 8. The learned CIT(A) erred in confirming additions based on material seized from a third-party premises not in the appellant's possession or control, as confirmed by an affidavit from the owner. This renders the statutory presumption under Section 292C/132(4A) of the Act inapplicable to the appellant, making the additions in the individual assessment unsustainable. 9. The learned CIT(A) erred in confirming the additions based on uncorroborated statements recorded under Section 132(4). These statements, made strictly in the capacity of a company Director, were obtained under duress and formally retracted within the reasonable timeframe, thus lacking any legal basis for an addition in the appellant's individual assessment. A retracted statement, without independent and concrete corroborative evidence, cannot be the basis for any addition to income. 10. The learned CIT(A) erred in confirming the additions in the appellant's individual capacity. The statements and seized documents pertain to the 'Viraj Group' generally and the appellant's role as a director, failing to

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specifically pinpoint or corroborate any transaction as belonging to the appellant's separate individual business capacity. 11. The AO and learned CIT(A) failed to bring on record any corroborating evidence found at the directors' residences or from third-party confirmations (affidavits from buyers) to link the HCB entries specifically to the appellant's individual real estate business/capacity. 12. The learned CIT(A) erred in confirming additions that are unsustainable in law, as the order is based on a selective appreciation of evidence. By relying solely on the HCB not sourced from multiple data and while ignoring the totality of material on record, including contradictory seized material (Annexure-B-Party No. YO-01A Loose Paper Bundle No 20- hereinafter referred to as "Item No. 20") and non-corroborating third-party evidence of affidavits and Section 131 statements, the impugned additions are rendered arbitrary and liable to be deleted 13. The learned CIT(A) erred in sustaining additions related to alleged on- money entries without the department definitively establishing the movement of cash, identifying the ultimate recipient of funds, or providing corroborative evidence of actual transactions. 14. The learned CIT(A) erred by sustaining significant additions of alleged unaccounted income without a corresponding finding of any unaccounted asset, investment, or cash found in the possession of the assessee group during the search operation itself. 15. The learned CIT(A) erred in confirming the alleged receipt of Rs.3,01,25,867/- as on-money receipts. The learned CIT(A) erred in relying exclusively on the HCB/DCB (Digitised extracted Data from HCB) data and arbitrarily ignoring substantial discrepancies and contradictions present within other seized materials (e.g., Item No. 20 data) 16. The learned CIT(A) erred in law and on facts by arbitrarily determining the net profit rate at an excessive 17% of the unaccounted cash receipts without sufficient justification or comparable data specific to the real estate business. 17. The learned CIT(A) erred in law and facts by estimating 17% of the alleged on-money receipts as income, while fundamentally failing to appreciate that the same Hand Written Cash Book (HCB) contained entries for payments made relating to the acquisition/development of the plots/lands during the year under consideration. 18. The learned CIT(A) erred in not accepting the actual profit earned by the assessee from the alleged unaccounted receipts made out of the sale of plots/lands, determined after meeting all expenses including payments for

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land purchases and other necessary development costs incurred for the sale of plots/lands during the year under consideration. 19. Without prejudice to the primary grounds, the learned CIT(A) erred in confirming the assessment in the appellant's individual hands. The income should have been assessed in the hands of M/s Viraj Estates Pvt. Ltd. by computing a single, unified peak credit for all relevant years under the correct head of income (Profits and Gains from Business or Profession'), instead of treating the incremental peak as income under the stringent provisions of Section 69A/115BBE PRAYER It is most humbly prayed that the Hon'ble Income Tax Appellate Tribunal may be pleased to quash the assessment order and further prayed to delete the addition of Rs.51,21,400/-towards net profit on on-money receipts made for the AY 2014-15 in the order of Commissioner of Income Tax, (Appeals).

Grounds raised by the Revenue in ITA No.3285/PUN/2025 1. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in restricting the addition on account of unaccounted on-money receipts to 17% of the such receipts, instead of confirming the entire unaccounted on-money receipts of Rs.3,01,25,867/- added by the Assessing Officer, despite the assessee having failed to establish, with evidence, any corresponding expenditure relatable to such receipts. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in restricting the addition on account of unaccounted on- money receipts to 17%, without appreciating the fact that the receipts of on-money in cash received by the assessee are over and above the registered sale consideration of plots/lands sold and thus the entire on- money should be assessed as such as undisclosed income rather than adopting estimation and reducing 83% as expenses, more so when the assessee already claimed expenditure in Profit and loss account which may amount to allowing double deduction for expenses. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition solely relying on the assessee's submission, without appreciating that assessee has already taken deduction for all the expenses in profit and loss account and on-money receipts are hidden income of assessee received over and above the recorded sales and thus allowing any expenses from these unaccounted income on estimated basis without any evidence for incurring such expenses is devoid of any rationale.

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specific factual matrices, and are not binding precedents for regular assessment proceedings under the Act. (e) In the cases of Prime Developers and similar ITAT decisions, the facts are that in those cases, seized material specifically evidenced unaccounted expenditure, whereas in the instant case of assessee, the assessee failed to establish nexus, quantification or allocation of any such expenses against the on-money receipts taxed. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not relying upon the decision of the Hon'ble Jurisdictional Bombay High Court in the case of Ramesh Babulal Shah vs CIT(2015) 53 taxmann.com 277 (Bombay), wherein the Hon'ble Court affirmed that entire receipts are taxable without embarking upon any enquiry into profit margin, embedded income or allowable expenditure in such on-money receipts cases. 9. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not relying upon the decision of the Hon'ble ITAT, Pune in the case of Uday Jawahar Kotnis vs ITO, Ward-13(2), Pune in ITA No.01/PUN/2024, wherein the Hon'ble Tribunal explicitly held that in the absence of any cogent expenditure incurred for earning such on-money, the entire amount received was liable to be brought to tax in full, and when the assessee failed to discharge the burden of proof cast upon him. 10. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that if at all any evidences for expenses are produced for reducing from unaccounted on-money receipts, it would only entail disallowance u/s 40A(3) as most of them would invariably be in cash and would also be violative of Section 269SS/Section 269ST and that is why the assessee has not produced the details and evidences for arriving at net on-money income, and under these facts and circumstances, assessing the net profit after allowing 83% as expenses without any evidence would render the provisions of sections 40A(3)/26988/269ST into nullity and redundant and therefore such assumption of estimation of profit @17% in an arbitrary manner without any evidence would be antithetical to law. 11. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing a premium to tax evaders who do not account their income and expenses in a proper manner for obvious reasons, over an honest assessee who records all transactions in book, as had the assessee accounted its on-money receipts and cash expenses in its book properly, the expenses would have invariably been disallowed u/s 40A(3). 12. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that assuming the net on-money income as arrived at by estimating @17% on unaccounted on-money receipts as correct without corroborative and contemporaneous evidence would be

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playing into the hands of the assessee ignoring the position of law that would entail in view of the above grounds. 13. The appellant craves leave to add, alter, amend or modify any of the above grounds of appeal at or before the time of hearing.

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(iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more.” 45. Since the Assessing Officer in the instant case has in his possession the books of account or other documents or evidence which reveal that the income chargeable to tax represented in the form of an entry or entries in the books of account which has escaped assessment amounts to or is likely to amount to Rs.50 lakhs or more, therefore, this ground raised by the assessee is liable to be dismissed. We accordingly dismiss the ground No.4 raised by the assessee.”

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No.3001/PUN/2025 for assessment year 2014-15. We have already decided this issue and dismissed the same vide order of even date by observing as under: “61. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case during the course of assessment proceedings has objected before the Assessing Officer that no addition can be made on the basis of incriminating documents found from the third party premises i.e. the office premises at 3rd Floor, Abhyankar Tower, MG Road, Nashik and the office premises at Anandvalli, Behind Petrol Pump, Near Makaloo Hotel, Gangapur Road, Nashik. It was contended that these premises are neither owned by the assessee nor any of the entities of the Viraj group and therefore, the addition cannot be made on the basis of incriminating material found during the search at these premises which are third party premises. However, we find the Assessing Officer had categorically rejected these objections made by the assessee. He has held that the directors of the Viraj group of cases namely Shri Karan Rajendra Shah and a member of Viraj family and the key person who looks after overall administration work, accounts, financial transactions, banking etc. in his answers to Q.Nos.10, 11, 12, 30, 31 and 33 recorded on oath u/s 132(4) of the Act on 24.04.2023 has accepted that the premises YO-1(1) and YO-2 are rented by the Viraj group where books of account of Viraj group companies / entities are kept. Further, Shri Rohit Manilal Shah in his statement recorded u/s 132(4) of the Act had stated that the documents found from the premises YO-2 are related to the entities of the Viraj group and its key is handed over to him on instruction of Shri Karan R. Shah and Shri Vilas R. Shah. Shri Rohit Manilal Shah, another key person had stated that the entries in the documents are entered on the instruction of Shri Karan Rajendra Shah and Shri Vilas Rasiklal Shah, directors and key persons of the entities of Viraj group. It is also an admitted fact that the seized documents found from the above two premises contain notings in respect of withdrawals made from the regular bank account of the Viraj group including the assessee. Since a part of the seized documents is matching with the accounted transactions recorded in the books of the assessee, therefore, we find merit in the argument of the Ld.CIT-DR that it is logical inference that the other part would also belong to the assessee and its group. Therefore, it is apparent that the seized documents / materials are related to the assessee and its group. We further find the assessee and the group during search and post-search proceedings had accepted and deciphered the seized documents and on-money receipts. The assessee had helped in creation of the Digital Cash Book (DCB), has duly correlated noting / entries in seized records with the survey nos, names of the buyers, etc. Under these circumstances, it cannot be accepted that the seized documents do not relate to Viraj group on the ground that the two premises referred hereinabove are not owned by them. Merely because the ownership of the two premises referred hereinabove are of third parties, the possession and control thereof was exclusively with Viraj group and duly accepted by the key persons of the group during the course of search action and statement recorded

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u/s 132(4) of the Act. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) in upholding the action of the Assessing Officer in making various additions on the basis of the seized documents found from the above two premises. The ground No.8 is accordingly dismissed.”

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Exp’ entries, the unidentified entries and all alleged on-money receipt and payment entries relating to plots, lands, flats and shops. No entry shall be excluded or maintained in a separate pool. 2) The unified common peak must legally crystalize entirely in the hands of the present assessee which according to the Revenue is the flagship company. No separate addition on the basis of the entries found in the DCB / HCB is to be made in the hands of any of the entities / individuals of the Viraj group and the entire peak addition is to be made in the hands of the present assessee i.e. Viraj Estates (P) Ltd. 3) Since the seized HCB is a continuous record containing entries prior to the assessment years in question, therefore, the Assessing Officer is directed to compute the peak balance as on the last date of assessment year 2013-14. This closing peak of assessment year 2013-14 shall be brought forward and applied as opening peak balance for the computation of peak for assessment year 2014-15. 4) The Assessing Officer shall calculate the running daily cash balance by using the single consolidated ledger. The peak credit for any given assessment year shall be the highest unexplained possible balance reached during the specific financial year. 5) To prevent double taxation of the same rotating funds, the Assessing Officer shall tax only the incremental peak of that particular year. 6) Since all entries are now directed to be subsumed within the unified peak computation, the Assessing Officer is explicitly directed to delete all separate additions made u/s 69A regarding the ‘V A/c’ entries as well as all additions made on gross basis which has been estimated by the Ld. CIT(A) at 17% for plots and land and 15% for flats / shops on alleged on-money receipt. The separate peak computed by the Assessing Officer/the Ld. CIT(A) is directed to be deleted in view of the unified peak theory discussed above.”

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Order pronounced in the open Court on 27th May, 2026.

Sd/- Sd/- (VINAY BHAMORE) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 27th May, 2026 GCVSR Gajjala Chinna Digitally signed by Gajjala Chinna Venkata Subba Reddy Venkata Subba Reddy Date: 2026.05.29 15:12:44 +05'30' आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant; प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune ग र्ड फ ईल / Guard file. 5. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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S.No. Details Date Initials Designation 1 Draft dictated on 11.05.2026 Sr. PS/PS 2 Draft placed before author Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Office 9 Superintendent 10 Date on which file goes to the A.R. 11 Date of Dispatch of order