DIMPLE MANOJ SANGHVI,MUMBAI vs. DCIT-CC-(1)(1), AHMEDABAD, AHMEDABAD

आदेश/ORDER PER BENCH:- These cross appeals are filed by the Assessee and Revenue as against the separate appellate orders dated 17-05- 2024; 16-05-2024; 24-04-2024; 19-04-2024 and 30-05-2024 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of separate assessment orders passed under sections 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the respective assessee’s and assessment years 2012-13 to 2017-18 and 2021-22. Since common issues of search and disallowances/additions are involved in all these appeals, for the sake convenience the same are disposed of by this common order.

ITA Nos.1302 to 1307/Ahd/2024 [Dept. Appeals] in the case of Babulal Mishrimal Sanghavi 2. The assessee is an individual and filed his original return of income under section 139 of the Act for the Asst. Year 2012-13 on 16.07.2012 declaring total income of Rs.5,47,290/- and the same was processed u/s 143(1) of the Act accepting the returned income.

2.1. A search and seizure action u/s.132 of the Act was carried out on 23.11.2021 in the case of "Ratnamani Group" and its key associates. During the search and seizure action, the premise of Shri. Prakash M. Sanghvi key person of the Ratnamani Group was covered u/s.132 of the Act and incriminating documents in the form of diaries with hand-written noting of cash transactions were found and seized as Annexure A-1 to A-14. During the course of search, statement of Sh. Prakash M. Sanghvi was recorded and he

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admitted that the diaries are books of accounts maintained by him regarding cash transactions made by him to other persons/entities and also admitted these cash transactions are not recorded in the regular books of accounts. On examination of these diaries, it was observed that the assessee had involved in the cash transactions with Sh. Prakash M. Sanghvi.

2.2. Since, documents in form of diaries which were found and seized from the residential premise of the main person of the Ratnamani Group, Sh. Prakash M. Sanghvi, pertains to the assessee and information contained therein relate to the assessee, notice u/s.148 of the Act was issued on 02.02.2023 after getting prior approval from the Competent Authority. Further, the assessee has raised various objection vide letter dated 07.04.2023 and the same were disposed off by the Ld AO vide order dated 28.04.2023.

2.3. In response to the notice u/s. 148 of the Act, the assessee filed the return of income for the Asst. Year 2012-13 on 23.02.2023 declaring total income Rs.5,47,290/-. Thereafter, notice u/s.143(2) of the Act was issued through ITBA Portal on 15.05.2023 after considering the replies filed by the assessee, the Ld AO held as follows:

“… 5.1. Irrespective of the fact as to whether the diary entries belong to Shri Prakash Sanghvi, in the capacity of an individual or his father's HUF, it is clear that the assessee has received interest on his capital. Thus, considering the seized material in its entirety, the nature of the transaction is held as loan transactions. Further, it is seen from the ledger that amount of Rs. 6,61,31,487/- is recorded as interest income of the assessee on the page no. 16 of the diary (A-3) Therefore, it is clear that the entry noting in

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the diary, pertaining to Babulal M. Sanghvi, is his unaccounted interest income of Rs. 6.61,31,487/-. 5.2 Interest Income: Thus, in view of the above and after careful consideration of reply of the assessee and material available on record, the argument of the assessee is not found satisfactory and acceptable. Hence, the entry mentioned in the above mentioned diary of Rs.6,61,31,487/- is treated as accrued interest income from other source u/s 56 of the Act of the assessee and is added to his total income. The assessee has concealed the particulars of income, therefore, penalty proceedings u/s.271(1)(c) r.w.s. 274 of the Act is being initiated separately for concealment of income.” 2.4. Thus, the AO made additions for six assessment years in the case of the Babulal Mishrimal Sanghavi on account interest income u/s. 56 of the Act as under:

Assessment Addition u/s. 56 of the Act towards Years Unaccounted Interest Income 2012-13 6,61,31,487 2013-14 7,55,27,009 2014-15 5,71,98,317 2015-16 3,31,99,278 2016-17 3,52,63,725 2017-18 2,96,14,647

a. The AO has referred to the statement of Shri Prakash M. Sanghvi wherein he has admitted that the seized diaries were maintained by him.

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b. The submissions of Shri Prakash M. Sanghvi that the noting in the seized diaries belonged to the joint family were discussed and not accepted by the AO.

C. The AO has reconciled some bank transactions of other family members with noting in the seized diaries.

d. Finally the AO concluded that the assessee has received interest income and made addition in the assessee’s case.

3.1. Ld CIT[A] considered the submissions, various details filed by the assessee and the assessment orders passed by the AO in the case of Shri Prakash M. Sanghvi wherein the very same addition of interest appearing in the ledger 'Babulalji Singhvi' is already taxed in his hands and therefore directed the AO to delete the same in the hands of the assessee herein Babulal Mishrimal Sanghavi by observing as follows:

“… 5.3. I have carefully considered the submissions made by the appellant and the reasons given by the AO in the assessment order In the assessment order the AO has held the ledger 'Babulalji Singhvi' as pertaining to the appellant. There are regular transactions of debit and credit under the ledger Babulalji Singhvi and interest in the said ledger is added by the AO in the hands of appellant for the year being the interest received on capital. 5.4. The appellant has contended that the ledger Babulalji Singhvi does not belong to him and has filed detailed written submissions supporting his claim. The appellant has submitted that the ledger on the basis of which addition is made in the case of the appellant has the nomenclature 'Babulalji Singhvi Gandhidham' whereas his name is Babulal Mishrilal Sanghvi and not Singhvi. Further, the appellant has submitted that he is residing in Ahmedabad and has no connection whatsoever with Gandhidham. Also, he has submitted that he is a member of Mishrimal Nathmal Sanghvi and the accounts of all the members are maintained in the seized diaries in serial order according to the age of the brothers: He has submitted that his ledger is maintained under the name 'BMS’ which are his initials. He has

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submitted that the AO has grossly erred in treating the above ledger in the name "Babulaljı Singhvi Gandhidham' as pertaining to him and making huge additions in his case. 5.5. The appellant has further submitted that the interest recorded in the said ledger is expense in the hands of the said 'Babulalji Singhvi as it is on the credit side in the said ledger and income in the hands of Prakash M. Sanghvi. The appellant has submitted that the said entry was an expense entry for Babulalji Singhvi and on the other side, the said entry was income in the hands of Shri Prakash M. Sanghvi. The appellant submitted copies of ledger Babulalji Singhvi as appearing in the diaries seized from the residence of Shri Prakash M. Sanghvi 5.6. The appellant has stated that the said entry for interest is already added as income in the case of Shri Prakash M. Sanghvi. The appellant has submitted details from the assessment order of Shri Prakash M. Sanghvi wherein addition on account of Accrued Interest is made in the case of Shri Prakash M. Sanghvi. The appellant has stated that interest appearing in the ledger Babulalji Singhvi is already considered as Income in the case of Shri Prakash M. Sanghvi. The appellant provided copy of assessment order of Shri Prakash M. Sanghvi in support of his submissions. He has submitted that adding the same again in the hands of the appellant would result in double addition of the same income. 5.7. I have considered the assessment order passed by the AO and the submissions filed by the appellant. It is seen from the ledger "Babulalji Singhvi submitted by the appellant that the entry of interest is appearing on the right hand side of the ledger representing expense in the hands of 'Babulalji Singhvi and income in the hands of Shri Prakash M. Sanghvi. It is also seen from the assessment order passed by the AO in the case of Shri Prakash M. Sanghvi that addition of interest appearing in the ledger 'Babulalji Singhvi' is already made by the AO. 5.8. It is also a fact that the said entries are journal entries and no actual payment of interest has been made. Therefore, the addition was made in the hand of Shri Prakash M. Sanghvi on account of accrued/notional interest. Since, the said entry was accrued/ notional interest, therefore, the same cannot be added in the hands of the appellant as income. Therefore, the AO is directed to delete the addition made. Thus, the ground of appeal no. 4 is allowed.”

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1) "In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.6,61,31,487/- u/s.56 of the Income tax Act on account of unaccounted accrued interest income from other source. 2) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal."

4.1. Ld CIT-DR, Shri Alpesh Parmar appearing for the Revenue supported the orders passed by the Assessing Officer and requested to confirm the addition made u/s.56 of the Act on account of unaccounted accrued interest as ‘income from other sources’.

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any further inquiries, nor dealt with the assessee's submissions in the assessment order.

5.1. Further the ledger in several years reads as "Babulalji Singhvi Gandhidham" thereby indicating that the ledger refers to some other Babulalji Singhvi residing at Gandhidham and not the assessee. It may be noted that the assessee stays in Ahmedabad and has no place of residence in Gandhidham.

5.2. It is further submitted that another ledger in the name of the assessee viz. "BMS" was appearing in the seized diaries of Shri Prakash M. Sanghvi which contained transactions related to the assessee. The above ledger was maintained in respect of all six brothers in sequential manner, as per the age of each brother. Thus, neither the assessee nor Shri Prakash M. Sanghvi has stated during the course of search that the ledger "Babulalji Singhvi" pertains to the assessee.

5.3. In fact, on perusal of answer to Q. No. 7 of statement of Shri Prakash M. Sanghvi recorded u/s. 132(4) of the Act, wherein he was asked about the ledger "Babulalji Singhvi, Gandhidham" and he has stated that the mobile number of the said Babulalji Singhvi, Gandhidham will be available in his mobile phone. Further, in the same statement recorded, when it refers to page no. 23 of seized diary Annexure A-3 wherein ledger of "Vimla Pavan Sanghvi" is maintained, he categorically states that Vimla Pavan Sanghvi is his brother's wife. If the ledger "Babulalji Singhvi, Gandhidham" pertained to his brother, he would have in similar manner clarified that it is his brother's (assesse's) ledger. (Paper Book Page no. 136

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and English translation on Page no. 177). The above submissions of the assessee have not been dealt with either by the AO or by the CIT (A) and no finding has been given in respect of the same. Thus, Ld AR submitted that the transactions noted in the ledgers "Babulal Singhvi" do not pertain to the assessee.

Interest noted in the Ledger is Expense and not Income

5.4. Ld AR further submitted that the interest amount noted in the said ledger is on the right side of the ledger representing Receipts/Income in the hands of Shri Prakash M Sanghvi. The said amount represents expenditure in the case of the said "Babulalji Singhvi". The seized diaries are maintained in Gujarati system of accounting and therefore the interest amount was correctly treated as income in the case of Shri Prakash M. Sanghvi.

Double addition - Interest income already added in the case of Shri Prakash M. Sanghvi

5.5. The interest amount noted in the said ledger is treated as interest income in the hands of Shri Prakash M. Sanghvi [herein after referred as PMS] and the AO has already made addition in respect of the same in the case of Shri Prakash M. Sanghvi. Therefore, the same cannot be interest income in the case of the assessee and the same represents interest expenditure in the assessee's case which cannot be taxed u/s. 56 of the Act.

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addition in the case of the assessee/BMS, since Co-ordinate Bench of this Tribunal in the case of Prakash Misrimal Sanghvi -Vs.- DCIT in ITA Nos.1138 to 1146/Ahd/2024 vide order dated 18-02-2025 [wherein JM is the co-author] discussed in detail and held that where no principle was recovered from parties over a long period of time, the entry for notional interest cannot be held as accrued and considered as ‘real income’, specially when the AO had already made addition for the actual interest received was separately credited in the seized diaries under “Shree Vyaj Khate” and following the cash system of accounting, no addition could have been made in respect of notional entries on the basis of mercantile system of accounting. We, therefore, do not find any reason to interfere with the findings and the decision of the Ld. CIT(A) on this issue. Further, when the interest actually realized by the Prakash Misrimal Sanghvi was already taxed following the cash system of accounting, no addition could have been made in respect of notional interest on accrual basis. We, therefore, do not find anything wrong with the findings and the decision of the Ld. CIT(A) on this issue by observing as follows:

“… 80. The first ground taken by the Revenue is against deletion of addition of Rs.16,39,02,055/- on account of accrued interest. In the seized diaries, the assessee had recorded entries for accrued interest in respect of sarafi as well as trading accounts. The AO had considered the net accrued interest of Rs.16,39,02,055/- as income of the assessee following the mercantile system of accounting and accordingly made the addition. In the first appeal, the Ld. CIT(A) had deleted the addition by holding that the entries for accrued interest were only notional entries and that no

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income had accrued to the assessee. Aggrieved with the order of the Ld. CIT(A) on this issue, the Revenue is in appeal before us. ……………………………. 83. We have carefully considered the rival submissions. It is found from the assessment order that the AO had not given any reason for making the addition for accrued interest, which were only notional in nature. In the course of statement recorded during search, the assessee had explained that other than cheque entries which were recorded in the books of accounts, the cash transactions appearing in the seized diaries were not accounted for. Following the cash system of accounting, the AO had already made addition for the interest received during the year as noted in the seized diaries. When the addition for interest received were already made following the cash system accounting, the AO had not explained as to why addition was made also for accrued/notional interest. Indisputably, the addition on the basis of cash system as well as on the basis of mercantile system, will result in double taxation. It is found that the Ld. CIT(A) has correctly appreciated the facts of the case and given relief to the assessee in this respect. The finding recorded by the Ld. CIT(A) is found to be as under: “10.5 I have carefully considered the submissions made by the appellant and the assessment order passed by the AO. The appellant has made entries related to interest across all types of account which can be broadly categorized as under. a. Interest provided in accounts that represent transactions related to land. b. Interest provided in accounts that represent transactions related to family members. C. Interest provided in accounts that represent transactions related to parties wherein there is no debit/credit transaction is reflected over long period except the interest entry passed by the Appellant.

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10.6 So far as entries of interest passed by the appellant in category a) above is concerned, I find there is merit in contentions raised by the Appellant. After the land is purchased, no one provides/pays interest thereon. It is the assumption of the Assessing Officer that such interest provided on land was pursuant to terms of agreement or that transaction related to trading of land. AO has not referred to any such agreements found or seized during the search proceedings. Further, after the purchase of land, there is no evidence which would show that the seller of the land had any outstanding balance pending on which any interest was paid/payable by the seller to the appellant. A perusal of the seized ledgers. reproduced by the appellant in his submission(supra) of Hasmukhbhai Gadhecha Ambapur Land account and P. K. Surendra Jamin account basically represent the cost of land plus interest provided. In such Jamin / land accounts there is no third party payer who is paying interest or who would pay any interest at a future date and thus, the entry for accrual of interest remains notional only and not real. Further, after having acquired land, it is unheard of if one provides any interest thereon. Therefore, the contention of the appellant has force that the interest has been provided to ascertain whether on sale of such land in the future, the profit equivalent to interest is earned or not. Thus, such interest entry does not reflect the real interest earned. The Assessing Officer has adopted 35% profit on all the credits in such Jamin accounts in the assessment order. Now it is interesting that while doing so, the Assessing Officer has also applied the 35% profit rate on such interest entry also. The Assessing Officer has not even excluded such interest credits while estimating profit from Jamin trading thus resulting into double additions. Therefore, in respect of the interest charged on such land transaction accounts, the entry passed is notional and such notional income cannot be considered as 'income' under the Act. 10.7. So far as entries of interest passed by the appellant in category (b) above is concerned, it is the case of the appellant that he maintained the diary for members of his family and carried on ancestral sarafi business. In order to face the contingency of future dispute, the Appellant made entries of interest on

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notional basis with aim that the share due to each member of the family could be easily ascertained taking into account the inflation that will cover the cost of holding over the period. In the facts and circumstances of the case, that the explanation offered by the Appellant that the interest provided in the seized diaries was notional appears to correct. Taking into account overall practice followed for many years, it appears that the Appellant has tendency to provide for cost of inflation in respect of amounts payable to the family members over a period of time so that each member can get his due unpaid share with adequate compensation. The members who withdraw the amounts will have lesser amount due to them whereas the members who do not withdraw any amount would be duly rewarded with compensatory interest for not flushing out the funds from the family. Obviously, those who withdraw funds will receive lesser interest and if they overdraw, they would be charged interest for overdrawing the amount. This appears to be rational consistent approach adopted by the Appellant and it is apparent from the noting’s made in seized diaries. The Assessing Officer has not doubted the credit/debit balances of members of the Appellant's family appearing in the seized diaries. The Assessing Officer has in the cases of various family members accepted the fact that such interest has not been paid by the appellant nor received by such family members and the same reflects like journal entries. In the assessment order for A. Y. 2013-14 in the case of appellant's son Jigar P. Sanghvi (the appeal for which pending and being disposed off separately), the Assessing Officer has stated as follows: "3.1.2 The assessee has submitted that the ledger is a notional ledger where accounts were maintained by Sh. Prakash M. Sanghvi. The assessee has also drawn attention towards the submission made by Sh. Prakash M. Sanghvi, during the course of his on-going assessment proceedings. It is to be noted that Sh. Prakash M. Sanghvi has stated that these are notional interest entries. However, the contention has not been accepted by this office. There is no basis to treat these entries as notional. On perusal of the ledger, it can be clearly seen that it has opening / closing balance and it computes the interest at the end of the year which is aggregated to the closing balance carried forward to

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the next year as opening balance. Even if the assessee contends that no cash transaction has taken place, it is still undisputed that the interest reflects a journal entry as per accrual method of accounting and the same constitutes income in the hands of the assessee." 10.8 In can be seen from the above that the AO has accepted the fact that interest in the account of family members is accrued from year to year and not paid. The AO has not referred to any seized documents evidencing that such interest was actually paid to the family members by the appellant. Therefore, notional interest charged to the members of the family cannot be considered as income of the Appellant. 10.9 So far as entries of interest passed by the appellant in category c) above is concerned, the AO has stated that as per the mercantile system of accounting, the interest is considered as income of the assessee from his sarafi business. The AO has not referred to any seized documents evidencing the fact that any party has actually paid any interest to the Appellant as per the interest reflected in the seized material. The appellant has consistently stated that the appellant has followed cash system of accounting. Under law, the appellant has a choice to adopt mercantile system of accounting or cash system of accounting. The AO cannot impose mercantile system of accounting.” 84. In the seized diaries, notional interest entries were passed on the debit side as well as on credit side in the ledger accounts without there being a corresponding entry in the interest account. Further, the actual interest received was separately credited in the seized diaries under the head “Shree Vyaj Khate”. Thus, there was duplication of interest in the seized diaries. The notional interest recorded in the seized diaries pertained to transactions related to land trading, related to family members and also to other parties. The ld. CIT(A) has analyzed the nature of the notional interest in respect of these three categories in detail and given a categorical finding as to why the notional interest as recorded in the seized diaries cannot be subjected to tax. The Revenue has been unable to controvert the findings as recorded by the ld. CIT(A).

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addition could have been made in respect of notional entries on the basis of mercantile system of accounting. We, therefore, do not find any reason to interfere with the findings and the decision of the ld. CIT(A) on this issue. 87. It was held by the Hon’ble Supreme Court in the case of CIT vs. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC), that income tax cannot be levied on hypothetical income. To reproduce from the said order: "Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a 'hypothetical income', which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." In the present case also, there was neither accrual nor receipt of interest income even though an entry to the effect of notional interest was made in the seized diaries. Under the circumstances, the income cannot be said to have resulted in this case. And if income doesn’t result at all, there cannot be a tax; even though in book-keeping, an entry is made about a hypothetical income, which doesn’t materialize. 88. The Hon’ble Supreme Court has held in the case of Excel Industries Ltd. (supra) that income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then can it be said that, for the purposes of taxability, the income is not hypothetical and it has really accrued to the assessee. The Hon’ble Supreme Court in that case, had laid down the following three tests to determine whether the income had actually accrued or not: i. Whether the income accrued to the assessee is real or hypothetical,

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ii. Whether there is a corresponding liability of the other party to pass on the benefit/pay the amount to the assessee, and iii. The probability or improbability of realization of the benefit by the assessee considered from a realistic and practical point of view. When we apply the above three yardsticks, we find that no real income had accrued to the assessee. In the present case, there was no corresponding liability of the other parties to pay the notional interest as recorded in the seized diaries. The entries for notional interest were carried forward from year-to-year and there was no real accrual. The probability of realization of the notional interest income was totally uncertain. What has really accrued to the assessee has to be found out from the point of view of ‘real income’ taking the probability or improbability of realization in a realistic manner and dovetailing of these factors together. It was held by Hon’ble Supreme Court in the case of UCO Bank v. CIT (104 taxman 547) (SC) that transferring the doubtful debt to an interest suspension account and not treating it as profit until actually received, was in accordance with accounting practice. The interest pertaining to doubtful loans was not considered as real income in the year in which it accrued, but only when it was realized. From the facts as discussed by the ld. CIT(A) in detail in his order, we don’t find any real income accruing to the assessee. Further, when the interest actually realized by the assessee was already taxed following the cash system of accounting, no addition could have been made in respect of notional interest on accrual basis. We, therefore, do not find anything wrong with the findings and the decision of the Ld. CIT(A) on this issue. The deletion of addition therefore, upheld. The ground taken by the Revenue is dismissed.”

6.1. Ld AR for the assessee also placed on record, pursuant to the order by this Tribunal, the various additions amounting to Rs.189.84 crores confirmed in the hands of Sri. Prakash Misrimal Sanghavi for the various Asst. years 2013-14 to 2021-22 are as follows:

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6.2. Thus we have no hesitation in confirming the orders passed by Ld CIT[A] deleting the addition made in the hands of the assessee/BMS, since already additions were made in the hands of Sri. Prakash Misrimal Sanghavi for the various Asst. years 2013-14 to 2021-22. Therefore, taxing the same income again in the hands of the assessee would result in double taxation, which is impermissible. Thus, the Ground of appeal raised by the Revenue is devoid of merits and liable to be dismissed.

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assessee. The above ledger was maintained in respect of all six brothers in sequential manner, as per the age of each brother. Thus, neither the assessee nor PMS has stated during the course of search that the ledger "Babulalji Singhvi, Gandhidham" pertains to the assessee. Person from Gandhidham is "Babulalji Singhvi" whereas the assessee is “Babulal Mishrimal Sanghavi” thus both are two different persons. It is seen that the Ld AO neither carried any further inquiries nor dealt with the assessee's submissions in the assessment order. However, perusal of answer to Qn. No. 7 of statement of Shri Prakash M. Sanghvi recorded u/s.132(4) of the Act, wherein he was asked about the ledger "Babulalji Singhvi, Gandhidham" and PMS has stated that the mobile number of the said Babulalji Singhvi, Gandhidham will be available in his mobile phone. Further, in the same statement recorded, when it refers to page no. 23 of seized diary Annexure A-3 wherein ledger of "Vimla Pavan Sanghvi" is maintained, PMS categorically states that Vimla Pavan Sanghvi is his brother's wife. If the ledger "Babulalji Singhvi, Gandhidham" pertained to his brother, he would have in similar manner clarified that it is his brother's (assesse's) ledger. Therefore, it is relevant to reproduce the Question No.7 recorded u/s.132[4] of the Act as follows:

“… Qn. 7. I am drawing your attention to the Mahaveer Green Diary found from your house having written page 1 to 75, inventorized as Annexure A/13. At page 16 thereof, there is an account of Babulalji Singhvi, Gandhidham. Please explain about the same in detail. Ans. Sir, on the left side of such diary (Annex.A/1 to A/14), there is mention of the cash received by me, having coded entry of date et. Sir, diaries Annexure A/1 to A/14 and other papers are in my hand writing, coded style. For example, if I have received Rs.50,00,000, or is repaid, then, I have written 50000.00. I have done

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entry of almost all the amounts in my diaries in such a way. Then, in last, I made total of receipts and payments and draw balance. Sir, account of Babulalji Singhvi, Gandhindham is at page 16 and his mobile number will be available from my mobile phone. Sir, after the amount and date, I have written A.A., A.B. Paras, Dipak etc. which means how I received such amount. It is its short information. A.A. means Angadia Ahmedabad, A.B. means Angadiya Bombay (Mumbai) and After Ahmedabad A, there is mention of name which means through which person/Angadia, the amount received from Ahmedabad. Sir, diaries note books annexure A/1 to A/14contains accounts of different persons and they are ledgers for the period from 01.04.2009 to 31.3.2021. Where I gave the amount by way of loan, then, on the right side, mention of time period together with calculation of interest etc. is made. Sir, in every ledger, there will be opening balance, transactions during the year, closing balance, entry thereof in my own hand writing. Sir, most of the persons with whom I have entered into transaction, details whereof are at annexure A/1 to A/14 diaries/note books, I am knowing such persons personally and you can obtain the mobile number of such persons from the phone book of my mobile phone. At page 23 of A/3, ledger of Vimla Pavan Sanghvi is given. Phone number of Vimla Pavan Sanghvi is same in my phone. She is the wife of my brother. Sir, I want to say one thing more that certain are not the loan transaction Details thereof will be presented by me before your office in few days. Sir, there are certain transactions relating to property transactions too.”

7.1. The above submissions of the assessee have not been dealt with either by the Ld AO or by the Ld CIT(A) and no finding has been given in respect of the same. Thus, we hereby held that the transactions noted in the ledgers "Babulal Singhvi" do not pertain to the assessee. The name in the seized document is different; the location mentioned is Gandhidham whereas the assessee is based and resides at Ahmedabad; a separate ledger in the name “BMS” exists for the assessee and the statement recorded u/s.132(4) does not identify the impugned ledger with the assessee. In the absence of any corroborative material, such presumption cannot be

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 22 Babulal M Sanghavi and Ors.

sustained. Therefore, we hold that the seized document neither belongs to nor pertains to the assessee.

ITA Nos.1376 to 1381/Ahd/2024 [Assessee Appeals] in the case of Dimple Manoj Sanghvi for the Asst. Years. 2013-14 to 2017-18 & 2021-22. 9. The assessee/Dimple Manoj Sanghvi [hereinafter referred as DMS] is an individual and has filed her original return of income for the Asst. Year 2013-14 on 31.07.2013 disclosing total income at Rs.1,75,040/- and the same was processed u/s.143(1) of the Act and accepting the returned income.

9.1. A search action u/s.132 of the Act was carried out in the case of Shri Prakash M. Sanghvi [PMS] and his family members and group companies including the assessee/DMS on 23.11.2021. During the course of search, several diaries containing details of transactions carried out on behalf of the joint family were found and seized. These diaries seized from the residence of PMS contained ledgers under the name "Dimple Manoj New A/c.” and "Dimple M. Sanghvi". Based on the aforementioned ledger in the seized diaries. The AO calculated year-wise negative peak by treating the receipts in the ledger as money given by the Assessee/ DMS to Shri Prakash M. Sanghvi and the payments in the ledger as money given by PMS to DMS the assessee. Thereafter, the AO arrived at incremental peak year-wise by giving set-off for addition of negative peak made in earlier years. Thus, the AO made the

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 23 Babulal M Sanghavi and Ors.

addition by adopting year-wise net negative incremental peak calculated on the basis of entries appearing in the ledgers "Dimple Manoj New A/c.” and "Dimple M. Sanghvi" and added on account of unexplained expenses u/s. 69C of the Act as under:

Assessment Addition u/s. 69C of the Act Years Unexplained Expenses 2013-14 27,00,000 2014-15 12,00,000 2015-16 19,50,000 2016-17 7,10,000 2017-18 9,66,000 2021-22 19,80,000

“….5.3 I have carefully considered the submissions made by the appellant and the reasons given by the AO in the assessment order. In the assessment order the AO has held the ledgers 'Dimple Manoj New A/c' and 'Dimple M Sanghvi A/c' as pertaining to the appellant. There are regular transactions of debit and credit under the ledgers and net addition of Rs.33,50,000/- is made by the AO in the hands of appellant for the year being the net negative incremental peak for the year. 5.4 The appellant has contended that the entries in the said ledgers 'Dimple Manoj New A/c' and 'Dimple M Sanghvi A/c' contained payments which were made on behalf of her husband, Shri Manoj Sanghvi and has filed detailed written submissions before me with respect to the same. The appellant has tried to explain in her

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 24 Babulal M Sanghavi and Ors.

submissions that certain times money was given to Shri Prakash M. Sanghvi on behalf of her husband Shri Manoj Sanghvi and hence to keep record of how the money was returned, the amounts have been noted in her name in the diaries of Shri Prakash M. Sanghvi 5.5. To substantiate her claim, the appellant has submitted working of the net negative incremental peak after considering the receipts in her name and the payments shown in the name of her husband Shri Manoj Sanghvi in the seized diaries. The appellant submitted that over the years, payments were routed through her and whatever receipts are noted in the seized diaries are much less compared to the amounts actually debited in her husband's name viz Shri Manoj Sanghvi. 5.6 She has reproduced submission filed by Shri Prakash M. Sanghvi in the course of his assessment wherein he has stated that the ledger accounts of nuclear family have been merged into the account of the head of such nuclear family. He has also submitted that accounts in different names of family member is noted because receipts or payments might have been done by there and just for recollection, the same is entered in names of different family members of the nuclear families. 5.7 The appellant has also made submissions that the AO has not considered the debit and credit entries for the previous year, i.e. A.Y. 2011-12 while calculating net negative Incremental peak for A.Y. 2012-13. It is observed that the assessment for FY 2010-11 relevant to A.Y.2011-12 was time barred and therefore the income for the said year is not brought to tax even though diary for the said year is seized. Since income of the said year is not taxed, benefit of telescoping cannot be granted to the appellant. 5.8 After considering the submissions made by the appellant and the assessment order, it is seen that the appellant has nowhere denied that the entries in the said ledger did not belong to her. She has accepted that payments have been made by her and it has been done regularly as can be seen from the ledger. Further, the stand of the appellant that the payments are made on behalf of Shri Manoj Sanghvi is not acceptable. As per the seized diaries, Shri Prakash M. Sanghvi has maintained separate accounts for all family members. There is a separate account pertaining to Shri Manoj Sanghvi. Thus, each account is considered as independent. The ledgers named 'Dimple Manoj New A/c' and 'Dimple M Sanghvi A/c' are separate accounts and cannot be merged with the ledger of Shri Manoj Sanghvi. 5.9 The appellant has made transactions of debit and credit and net addition based on incremental peak working of Rs.33,50,000/- has been made by the AO in the hands of appellant. The appellant has not

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 25 Babulal M Sanghavi and Ors.

been able to establish the source of such transactions. Therefore, I concur with the view taken by the AO and addition made on account of net negative incremental peak. 5.10 In view of the above factual matrix, the addition made by the AO for Rs.33,50,000/- is upheld and hence, confirmed. Thus, the ground of appeal no. 4 is dismissed.” 11. Aggrieved against the appellate order the Assessee/Dimple Manoj Sanghvi is in appeal in ITA No.1376/Ahd/2024 for A.Y. 2013-14 [identical is the Grounds for other Asst. years 2014-15 to 2017-18, except change in figures of disallowance] raising the following Grounds of Appeal:

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 26 Babulal M Sanghavi and Ors.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 27 Babulal M Sanghavi and Ors.

13.1. The details of amounts withdrawn by PMS were already submitted during the course of hearing. The withdrawals by PMS are more than sufficient to cover the amounts returned by the assessee/DMS. In view of the above facts, Ld AR requested that telescoping benefit may kindly be granted in respect of the alleged transactions, as the withdrawals made by PMS and given to the assessee/DMS for safe keeping and returned by the assessee represent the amounts recorded in her ledger as follows:

Details of amounts withdrawn by Shri Prakash M. Sanghvi. as per the seized diaries Financial Annexure Page No. Withdrawals Cumulative Year No. (Rs.) Withdrawals (Rs.) 2009-10 A-l 53 19,24,263 19,24,263 2010-11 A-2 52 29,58,750 48,83,013 2011-12 A-3 45 31,22,442 80,05,455 2012-13 A-4 70 36,30,937 1,16,36,392 2013-14 A-5 56 54,20,710 1,70,57,102 2014-15 A-6 73 38,36,520 2,08,92,622 2015-16 A-7 74 42,48,327 2,51,41,949 2016-17 A-8 77 58,63,243 3,10,05,192 2017-18 A-9 66 53,35,115 3,63,40,307 2018-19 A-10 70 60,42,728 4,23,83,035 2019-20 A-11 59 1,76,87,758 6,00,70,793 2020-21 A-12 61 71,76,261 6,72,47,054 Total 6,72,47,054

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 28 Babulal M Sanghavi and Ors.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 29 Babulal M Sanghavi and Ors.

15.1. In the result the appeals filed by the assessee in ITA Nos.1376 to 1381/Ahd/2024 for the Asst. Years 2013-14 to 2017-18 and 2021-22 are allowed for statistical purpose.

ITA Nos.1265 & 1266/Ahd/2024 for A.Yrs. 2017-18 & 2018-19 by Shri Mahendra Sanghvi Legal heir of Chunilal Mishrimal Sanghvi and Revenue Appeal in ITA No. 1224/Ahd/ 2024 for A.Y. 2018-19 16. A search action u/s. 132 was carried out in the case of Shri Prakash M. Sanghvi and Ratnamani group including the assessee Shri Mahendra Sanghvi legal heir of Chunilal Mishrimal Sanghvi [herein after referred as CMS] on 23.11.2021. The assessee is the eldest brother of the family consisting of six brothers. During the assessment proceedings

a. The AO has referred to the statement of Shri Vijay Chunilal Sanghvi, assessee's son, wherein he has admitted that the seized paper contains the details of cash loan transaction.

b. On top of page nos. 1 & 8 of Annexure A, the name of the assessee was written, thus it is clear that the entry noting on page nos. 1 & 8 of Annexure A-1, pertain to the assessee.

c. Finally the AO concluded that the assessee has received interest income and made addition in the assessee’s case for interest as well under the head income from other source. The A.O. made the following additions based on the said seized papers.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 30 Babulal M Sanghavi and Ors.

“… 38.1 The AO has made addition on account of Unexplained Investment u/s 69 of the Act and interest income u/s 56 of the Act noted in the loose papers seized from premises at Blossom. The AO has rejected the submissions of the appellant that the papers do not pertain to him. The AO has relied on the statement of Vijay Chunilal Sanghvi, son of the appellant, from whose premises the loose papers were found and seized. Shri Vijay Chunilal Sanghvi has admitted in his statement recorded during the course of search that the seized papers contain details of cash transactions. The AO has also reproduced the relevant portion from the statement of Shri Vijay Chunilal Sanghvi. Also, the name of the appellant is mentioned on the seized pages which establishes that the appellant has entered into cash transactions. … … … … 38.3. I have considered the assessment order passed by the AO and submissions filed by the appellant. Perusal of statement of appellant's son Vijay Chunilal Sanghvi clearly evidences that cash loan has been given by the appellant, the source of which remains unexplained. I, therefore, concur with the findings of the AO. The appellant cannot simply deny that the notings pertain to him in view of the statement of appellant's son which confirms the notings made on the seized pages.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 31 Babulal M Sanghavi and Ors.

It is clear that the seized pages contain the details of unaccounted transactions carried out by the appellant. The seized pages also contain working of interest on such cash loan given by the appellant. The appellant has not explained the source of such unaccounted transactions. Therefore, the addition made by the AO u/s.69 on account of unexplained investment and u/s.56 in respect of interest earned on such unaccounted investment is hereby confirmed. Thus, the grounds of appeal no. 5 & 6 are dismissed.”

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 32 Babulal M Sanghavi and Ors.

18.1. Ld AR Shri Vijay Mehta appearing for the assessee submitted that the assessee is NOT Pressing Ground Nos.1, 2, 6 & 7 on the jurisdiction of assessment, recording the same Ground Nos. 1, 2, 6 & 7 are dismissed.

18.2. In respect of other grounds namely addition of Rs.4 lakhs appearing on Page 1 of Annexure A-1, it can be seen that the amount of Rs.4 lakhs represents the opening balance as on 01.04.2016, hence the said addition cannot be made in the year under consideration i.e. F.Y. 2016-17 relevant to A. Y. 2017-18. In respect of addition of Rs.1,00,000 appearing on Page 8 of Annexure A-1, it can be seen that the date is mentioned as 09.06.2018 and hence the same do not pertain to A.Y. 2017-18. Thus, the said addition of Rs.1,00,000 also cannot be made in the year under consideration i.e. F.Y. 2016-17 relevant to A.Y.2017-18.

18.3. Further, on perusal of the seized papers, it can be verified that interest of only Rs.34,800 pertains to F. Y. 2016-17 relevant to A.Y.2017-18 and not the total amount of Rs.96,990. Thus, addition on account of interest, if any, should be made only for Rs.34,800

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 33 Babulal M Sanghavi and Ors.

being interest pertaining to the year under consideration. It may be noted that the page only contains calculation of interest and there is no material or evidence establishing that the interest has been received by the assessee/CMS. 18.4. As regards Rs. 4,00,000 appearing on Page 1 of Annexure A- 1, it is submitted that the same represents the opening balance as on 01.04.2017, hence addition cannot be made for the same in the year under consideration i.e. F.Y. 2017-18 relevant for A.Y. 2018- 19. It may be noted that the amount of Rs.4,00,000 is also appearing as opening balance as on 01.04.2016 for which the AO has made addition in the previous year as well i.e. A. Y. 2017-18. Thus, the AO has made additions in multiple years for the opening balance appearing in the seized page.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 34 Babulal M Sanghavi and Ors.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 35 Babulal M Sanghavi and Ors.

8 The Appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal. 22. Ld AR Shri Vijay Mehta appearing for the assessee submitted that the assessee is NOT Pressing Ground Nos.1, 2, 6 & 7 on the jurisdiction of assessment, recording the same Ground Nos. 1, 2, 6 & 7 are dismissed.

1) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.3,84,67,578/ made by A.O. u/s. 69C r.w.s. 115BBE of the Act on account of unexplained expenses.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 36 Babulal M Sanghavi and Ors.

27.1. Without prejudice to above, the AO has accepted assessee's submission of making addition on the basis of incremental negative peak balance in all the years from A. Y. 2012-13 to 2020-21 (except A.Y. 2018-19). Accordingly, for A.Y. 2018-19 as well, the AO should have adopted consistent approach and made addition on the basis of incremental negative peak balance. In fact, the working of incremental negative peak balance for all the years from A.Y. 2012- 13 to 2020-21 has been given by the AO in the assessment orders

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for A.Y. 2012-13 to 2017-18, 2019-20 and 2020-21. Accordingly, the addition, if any should have been made only for the incremental negative peak for A.Y. 2018-19 which is worked out by the AO at Rs. 22,11,440/-.

27.2. In any case, addition in respect of ledger "Chunibhai Technomast" is made in the case of Shri Prakash M. Sanghvi and the said ledger is treated as unexplained cash credit and added u/s 68 of the Act. Making addition again in the case of the assessee would amount to double addition. The above ledger has been added by the AO as unexplained cash credit in the case of Shri PMS thereby implying that the ledger do not pertain to the assessee. If the AO was of the view that the ledger pertains to the assessee, the addition for the same would have been made only in the assessee's case and not in the case of Shri PMS as unexplained cash credit.

27.3. It is therefore submitted that the AO has made additions in the case of various family members of Shri PMS for ledgers appearing in their names in the seized diaries. Further, such additions are also made in the case of Shri PMS on protective basis by the AO. [Page no. 69 of the assessment order in the case of Shri PMS]. If the AO was of the opinion that the ledger belonged to the assessee, i.e. Shri Prakash M. Sanghvi's brother, he would have made addition for the same on protective basis in the case of Shri PMS in the same manner as he has done for other family members. However, the AO has added the above ledger on substantive basis in the case of Shri PMS and that too as unexplained cash credit thereby confirming that the ledger do not pertain to the appellant.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 38 Babulal M Sanghavi and Ors.

28.1. On the contrary, it is an admitted position that another ledger specifically in the name of the assessee (“CMS”) is also found in the same seized material, which contains transactions relatable to the assessee. This lends support to the contention that where the entries actually pertain to the assessee, they have been distinctly recorded, and therefore, the impugned ledger cannot be automatically attributed to the assessee without supporting evidence.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 39 Babulal M Sanghavi and Ors.

belongs to the assessee, the addition ought not to have been made substantively in the hands of Shri PMS. At best, in such a situation, a protective addition could have been made. The action of the AO in making a substantive addition in the hands of Shri PMS clearly indicates that the Revenue itself has treated the impugned ledger as belonging to Shri PMS. Consequently, making a parallel addition in the hands of the present assessee leads to an impermissible situation of double addition of the same income, which cannot be sustained in law. This contradiction in the stand of the Revenue goes to the root of the matter and renders the impugned addition unsustainable. In the absence of any independent evidence establishing that the transactions recorded in the “Chunibhai Technomast” ledger pertain to the assessee, the addition made purely on presumption cannot be upheld.

29.1. Even otherwise, we find that in the preceding and succeeding assessment years, the AO himself has adopted the method of taxing only the incremental negative peak balance arising from similar entries. There is no justification for deviation from such consistent approach in the present asst year 2018-19. However, in view of our finding that the very basis of addition fails, this aspect is rendered academic. In view of the foregoing discussion, we hold that the addition made in the hands of the assessee based on the “Chunibhai Technomast” ledger is unsustainable. Thus,the ground raised by the Revenue is devoid of merits and dismissed.

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 40 Babulal M Sanghavi and Ors.

ITA No.1346/Ahd/2024 for A.Y. 2021-22 by Revenue in the case of Ratnamani Techno Casts Pvt. Ltd.

31.1. The AO has made addition on account of entries reflected in ledger "CFS Technomast” appearing in the diaries seized from the residence of Shri Prakash Sanghvi. The AO has made addition on account of total debits and credits appearing in the ledger ‘CFS Technomast’. The AO has gathered that Chunial Fojaj Sanghyi is one of Director in Ratnamani Techno Casts Pvt Ltd which is also one of entity of Ratanamani Group and also Chinilal Fojaji Sanghvi would in short be CFS which is written on page no. 12 of Annexure A 12 on the basis of which addition is made by the A.O.

31.2. The AO has stated that assessee company has not furnished any reply/explanation for these cash transactions recorded in the

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 41 Babulal M Sanghavi and Ors.

diary (Annexure A- 12). Thus, the Ld AO presumed that the assessee company has nothing to say and held that the assessee has entered into cash transactions with Shri Prakash M Sanghvi. The AO further contended that the assessee is duty bound to discharge the onus to explain the exact nature of transactions with Shri Prakash M Sanghvi and the source of investment capital thereof with corroborative evidence. The assessee has failed to explain the same, therefore, the Ld AO held that the entry notings in the diary, pertains to Ratnamani Techno Casts Pvt. Ltd. and held that the amounts noted in the ledger are unaccounted income of Rs.2,05,76,695/- and unaccounted expenses of Rs.3,54,66,297/-of the assessee company.

“… 5.4 The appellant has made detailed submissions before me in this regard The appellant has submitted that the ledger CFS Technofast on the basis of which addition is made in the hands of the company can by no stretch of imagination mean Ratnamani Techno Casts Private Limited The appellant has contended that the ledger does not belong to them The appellant has also submitted that no evidence has been found to substantiate that the company has received or paid any amount in cash The appellant submitted that the AO has made the entire addition on the basis of conjectures and surmises and there is no corroborative material whatsoever evidencing that the above ledger pertains to the Company. 5.5 The appellant has submitted that similar ledgers by the name of 'Chunibhai Technomast /CFS Technomast/CFS Techno cast were found in the seized diaries for other assessment years and all the ledgers are same. The appellant submitted that the closing balance of such ledger is carried forward as the opening balance in the subsequent year though the ledger name is different in different assessment years. The

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 42 Babulal M Sanghavi and Ors.

appellant submitted that for A Y. 2012-13 to 2020-21, the addition on account of the above ledgers is made in the case of Shri Chunilal Mishormal Sanghvi. Further, for A. Y 2021-22, the addition on account of the said ledger is made in the case of the appellant. The appellant submitted that the AO has made addition for the same ledger in different assesses in different years 5.6. The appellant also pointed out that the AO had made addition for the abovementioned ledgers in the case of Prakash M Sanghvi as well The appellant thus submitted that such addition in the case of Shri Prakash M Sanghvi as well as in the case of Shri Chunilal M. Sanghvi/ Appellant has resulted in double addition of the same amount. 5.7. The appeal in the case of Shri Prakash M Sanghvi has been decided by the undersigned and order dated 28.03.2024 has been passed in the appeal in the case of Shri Prakash M. Sanghvi, the undersigned has confirmed the addition made by the AO for the entries in the ledger 'Chunibhal Technomast/CFS Technomast /CFS Technocast for AY. 2013-14 to 2021-22. The appeal in the case of Shri Chunilal M. Sanghvi has also been decided by the undersigned and order dated 24.04.2024 has been passed. In the said appeal the undersigned has held that the ledger Chunibhai Technomast/CFS Technomast /CFS Technocast pertains to Shri Prakash M. Sanghvi and double addition made in the case of Shri Chunilal M Sanghvi has been deleted by the undersigned for AY s 2012-13 to 2020-21 5.8. Therefore, the view taken while disposing off the appeals in the case of Shri Chunilai M. Sanghvi and Shri Prakash M. Sanghvi will be applicable to the appellant's case as well. The entries appearing in the said ledger CFS Technofast have already been decided by the undersigned as belonging to Prakash M. Sanghvi. The addition on account of the said ledger has already been confirmed by the undersigned while passing appellate order for A Y 2021-22 in the case of Prakash M. Sanghvi If the addition is also confirmed in the hands of the appellant, the same would amount to double taxation of the same income Following the principle of consistency, the addition for ledger CFS Technomast as being already confirmed in the hands of Shri Prakash M. Sanghvi, is required to be deleted in the appellant's case Thus, the addition on account of Unexplained Income and Expenditure u/s 69A & 89C of the Act is hereby deleted in the case of the appellant company Thus, the grounds of appeal no. 2 & 3 are allowed.” 33. Aggrieved against the appellate order the Revenue is in appeal in ITA No.1346/Ahd/2024 for A.Y. 2021-22 as follows:

I.TA Nos.1202 to1307//Ahd/2024 and ors. A.Yrs. 2012-13 to 2021-22 43 Babulal M Sanghavi and Ors.

1) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.2,05,76,695/- u/s.69 r.w.s. 115BBE of the Act on account of unexplained and unaccounted income. 2) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 3,84,68,297/- made by the A.O. u/s 69C r.w.s.115BBE of the Act on account of unexplained expenses. 3). "The Revenue craves leave to add/alter/amends and/or substitute any or all of the grounds of appeal." 33.1. Ld CIT-DR, Shri Alpesh Parmar appearing for the Revenue supported the order passed by the Assessing Officer and requested to confirm the addition made under section 69 and 69C rws 115BBE of the Act.

34.1. At the outset, it is submitted that the AO has failed to establish with corroborative evidence that the ledger noted in the seized diaries of Shri Prakash M. Sanghvi belonged to the assessee. The AO has made the addition in the assessee’s case merely on the basis of presumption without bringing on record any material or evidence to prove that the transactions in the said ledgers pertain to the assessee. It is further submitted that additions in respect of ledger "Chunibhai Technomast” was made by AO in case of Chunilal Sanghvi for A. Y. 2012-13 to 2020-21. Further, addition in respect of the same ledger "Chunibhai Technomast" was made by the AO in the case of Shri Prakash M. Sanghvi also treating the said ledger as unexplained cash credit in A. Y. 2012-13 to 2020-21.

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34.2. Thus, it is submitted that the transactions noted in the ledgers "Chunibhai Technomast" do not pertain to the assessee and the AO has held the same to be unexplained cash credits in the case of Shri Prakash M. Sanghvi. Further the addition made by the AO in the case of Shri Prakash M. Sanghvi has been upheld by Ld CIT (A) as well as ITAT and thus the matter has attained finality in the case of Shri Prakash M. Sanghvi.

34.3. Without prejudice to above, the AO has accepted in A.Y. 2012-13 to 2020-21 in the case of Shri Chunilal Sanghvi that addition should be made on the basis of incremental negative peak balance in all the years. Accordingly, for A.Y. 2021-22 as well, the AO should have adopted consistent approach and addition, if any, should have been made on the basis of incremental negative peak balance. The incremental negative peak balance for A. Y. 2021-22 as per the working submitted before the AO in the case of Shri Prakash M. Sanghvi is NIL and therefore no addition is required to be made in the year under consideration. In any case, addition in respect of ledger "Chunibhai Technomast" is made in the case of Shri Prakash M. Sanghvi for A. Y. 2012-13 to 2020-21 and the said ledger is treated as unexplained cash credit and added u/s. 68 of the Act. Making addition again in the case of the assessee company would amount to double addition.

34.4. It may be noted that the above ledger has been added by the AO as unexplained cash credit in the case of Shri Prakash M. Sanghvi thereby implying that the ledger do not pertain to the assessee. If the AO was of the view that the ledger pertains to the

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assessee, the addition for the same would have been made only in the assessee's case and not in the case of Shri Prakash M. Sanghvi as unexplained cash credit. Therefore it is submitted that the AO has made additions in the case of various family members of Shri Prakash M. Sanghvi for ledgers appearing in their names in the seized diaries. Further, such additions are also made in the case of Shri Prakash M. Sanghvi on protective basis by the AO. [Page no. 69 of the assessment order in the case of Shri Prakash M. Sanghvi. Thus, if the AO was of the opinion that the ledger belonged to the appellant, he would have made addition for the same on protective basis in the case of Shri Prakash M. Sanghvi in the same manner as he has done for other family members. However, the AO has added the above ledger on substantive basis in the case of Shri Prakash M. Sanghvi and that too as unexplained cash credit thereby confirming that the ledger do not pertain to the assessee.

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with the assessee. In the present case, such nexus is conspicuously absent, and the addition rests purely on presumption.

35.1. We further note that the very same ledger has been subjected to addition in multiple hands. In particular, the AO has treated the entries in the said ledger as unexplained cash credit under section 68 in the hands of Shri PMS on a substantive basis for various assessment years, and such addition has been upheld by the Ld. CIT(A) as well as by the Tribunal. Thus, the issue, insofar as ownership of the said income is concerned, has attained finality in the case of Shri PMS, which are dealt in paragraph 6 to 6.2 of this order. In this factual background, making a parallel addition in the hands of the present assessee in respect of the same ledger leads to an impermissible situation of double taxation of the same income. Once the Revenue has taken a definitive stand by making a substantive addition in the hands of Shri PMS, it is not open to it to contend, in the same breath, that the very same income belongs to the assessee. Such contradictory stands cannot be sustained in law.

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assessee. This inconsistency in the approach of the Assessing Officer further weakens the case of the Revenue.

36.1. Even otherwise, we note that in the preceding and subsequent assessment years, the Ld AO has adopted the method of bringing to tax only the incremental negative peak balance arising from similar entries. The principle of consistency demands that the same approach be followed in the year under consideration as well. It is brought on record that the incremental peak for the relevant year works out to Nil, and therefore, even on this count, no addition would survive. However, in view of our finding that the very basis of the addition fails, this aspect is only of academic relevance. In view of the foregoing discussion, we hold that the Assessing Officer was not justified in making the impugned addition in the hands of the assessee based on the “Chunibhai Technomast” ledger. The addition is accordingly liable to be deleted and the Grounds raised by the Revenue is devoid of merits and liable to be dismissed.

ITA No.1225/Ahd/2024 for A.Y. 2021-22 by Revenue in the case of Tulsi Corp.

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consisting of handwritten diaries, containing noting related to unaccounted cash transactions, were seized and marked as Annexure A-1 to A-12. The seized material revealed that Shri PMS had engaged in the business of land trading, ancestral 'sarafi' business and other trading activities like shares, etc. During the course of the search, statement of Shri PMS was recorded u/s. 132 of the Act wherein he had admitted that the cash transactions reflected in the seized material were maintained/written by him and not recorded in the regular books of account. These transactions, related to various entities of Ratnamani Group, were recorded in seized diaries on single entry method of accounting. The assessee firm filed its return of income u/s.139(1) of the Act for the A.Y.2021-22 on 29-12-2021 declaring total income of Rs.16,47,560/-.

38.1. The Ld AO completed the assessment based on the material available on record vide assessment order dated 27.03.2022 passed u/s. 143(3) of the Act determining total income of the assessee at Rs. 25,95,21,351/- by making following additions:-

i) Addition of Rs.25,70,00,000/- as unexplained and unaccounted investment u/s.69 of the Act in respect of construction of industrial shed on land bearing survey no. 252 let out to Hitachi. ii) Addition of Rs.3,90,000/- on account of unexplained and unaccounted cash receipts u/s.69A of the Act in respect of transactions made for survey no. 252 as per seized diary. iii) Addition of Rs.6,91,130/- in respect to mismatch noticed in rental income as per lease agreements and rental income shown in the return of income.

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“… 6.3. I have carefully considered the submissions filed by the appellant and the assessment order passed by the AO. I notice that entries made in the seized material (i.e. page 45 of diary seized as annexure A-12 and other pages relied upon by the AO) are in coded form. These entries are rightly decoded by the AO based on the explanation offered by Shri Prakash Mishrimal Sanghvi in his statements recorded. Hence, the figure of Rs.25,70,00,000/- referred in the assessment order is rightly decoded by the AO. 6.4 Further, the entries found in the seized diaries cannot be considered as notional entries as has been contended by various entities of Ratnamani Group. Therefore, I agree with the stand taken by the AO that income must be determined on the basis of seized material. However, for this purpose, entire seized material available on record needs to be taken into account. It is well settled that the AO is required to take into account entire seized material and addition is required to be made after considering such material in whole. 6.5 I find merit in the argument of the appellant that the AO could not have made addition u/s.69 of the Act because the source of investment stands explained in the seized diaries itself. In fact, this proposition was accepted by the AO in respect of other related entities of Ratnamani Group to which the Appellant belongs. In the case of Shri Manoj Prakash Sanghvi wherein under similar circumstances, the AO did not make any addition u/s. 69 of the Act in respect of ledger of 'Manoj a/c' appearing in seized diary. It is the case of the Appellant that the unaccounted payments reflected in the seized material also contains the source thereof. 6.6 It is undisputed fact that the AO, after taking into account the explanation offered by Shri Prakash Mishrimal Sanghvi, has completed the assessment in the case of Shri Prakash Mishrimal Sanghvi. It is undisputed that the entries in the seized diaries are not exclusively maintained of any specific assessee but entries belonging to various entities of the Ratnamani Group have been maintained on single entry basis. There is intermingling of funds and income. Therefore, one has to look in a wholistic manner and take into account entire material before computing income based on seized material. It cannot be denied that unaccounted income has been used for making unaccounted investment as can be clearly deciphered from the seized diaries itself.

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6.7 The AO has attempted to verify the construction cost by making enquiries with the contractor party and details related to bills, etc. have been provided by the party. However, the party did not respond to the query of the AO related to low rate agreed between the parties. It is the case of the appellant that unaccounted cash paid, if any, is sourced from the unaccounted income shown in the seized diaries written by Shri Prakash Sanghvi for the entire group entities. 6.8 There is sufficient evidence in the seized material itself to show that the cash payments recorded in the seized diaries are sourced from the unaccounted income recorded in the seized diaries. The AO made addition in A. Y. 2021-22 in the case of Shri Manoj Prakash Sanghvi in respect of payments reflected under ledger 'Manoj A/c' in the seized diaries. Thereafter, in all the other years viz. A. Y. 2012-13 to 2020-21, the AO accepted the submissions of Shri Manoj Prakash Sanghvi that the source of payments recorded under the ledger 'Manoj A/c' is also recorded in the seized diaries. 6.9 Similar addition was made by the AO in respect of source of payments in the case of several other family members in A. Y. 2021- 22 wherein ledger account in their names were appearing in the seized diaries. However, in other assessment years of these family members, the AO has accepted this contention that the source of payments is reflected in the seized diaries itself and has been examined by the AO in the case of Shri Prakash Mishrimal Sanghvi. The AO thus did not make any addition in respect of source of payments in the case of these other family members in other assessment years. A detailed chart of the same has been submitted wherein addition was made by the AO in A.Y.2021-22 but not in other assessment years. … … … … … It is seen from the chart that the AO has already accepted the submissions of the appellant that the source of these unaccounted payments is reflected in the seized diaries and examined in the case of Shri Prakash Mishrimal Sanghvi in the case of several family members in various assessment years. 6.10 In view of the above factual matrix of the case, the AO is directed to delete this addition of Rs.25,70,00,000/-. Thus, the ground of appeal no. 2 is allowed. … … … … … … 7.3. I have considered the submissions made by the appellant. I find merit in the arguments made by the appellant. Perusal of the ledger

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account found in the seized material clearly shows that it is the return of stamp duty amount paid earlier. The payments are far more than the receipts noted in the said ledger and thus the submission of the appellant that the source of the receipt is out of the payments made earlier merits consideration. Therefore, the source of receipt being explained, addition cannot be made u/s.69A of the Act. … … … … … … 8.3. I have carefully considered the submission of the appellant. The appellant had placed relevant material before the AO but the same was not taken into account by the AO while completing the assessment. The appellant had filed confirmations and other details which clearly show that the appellant has offered to tax actual rent received. It is well settled that notional rent cannot be added to the income of an assessee. The confirmations and even the TDS details clearly establish that the Appellant has not earned differential rent as held by the AO. No person would pay rent if property handed over is not fit for occupation. The Lessees have confirmed the rent actually paid by them and the same is offered to tax by the Appellant. 8.4. In view of the above factual matrix of the case, the AO is directed to delete the addition of Rs.6,91,130/-. Thus, the ground of appeal no.4 is allowed.”

1) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.25,70,00,000/- u/s.69 r.w.s. 115BBE of the Act on account of unexplained and unaccounted investment without considering seized material as detailed by A.O. in assessment order." 2) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 3,90,000/- u/s 69A r.w. s.115BBE of the Act on account of unexplained an unaccounted cash receipts." 3) "In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.6,91,130/- on account of income from house property as during assessment proceedings no documentary proof to substantiate that the properties were not ready to use even after executing rent/lease

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agreement nor submitted any amended rent/lease agreement which could justify the explanation was submitted by the 4). "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal." 40.1. Ld CIT-DR, Shri Alpesh Parmar appearing for the Revenue supported the order passed by the Assessing Officer and requested to confirm the additions made thereon.

41.1. Regarding Ground No.1, the deletion of addition of Rs.25.7 crores u/s.69 r.w.s. 115BBE of the Act on account of unexplained and unaccounted investment. The source of the unaccounted cash payments is duly recorded in the seized diaries itself and examined in the course of assessment proceedings in the case of Shri Prakash M. Sanghvi. Cash book of Shri Prakash M. Sanghvi prepared based on seized diaries for the period 25.05.2020 to 31.10.2020 is submitted to evidence source of payments is duly reflected in the seized diaries itself. This cash book was submitted before the AO in the course of assessment proceedings in the case of Shri PMS.

41.2. The AO in the case of various other assessee’s of the group has already accepted the submissions made in respect of the source of payments. Based on those submissions, the AO has not made any addition in respect of such payments and source of such payments in the case of those assessees and hence, on similar lines, no addition is required to be made in appellant's case as well.

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In support of the above, following documents are enclosed in the Paper Book: a. Assessment order in the case of Shri Manoj Prakash Sanghvi for A. Y. 2012-13 wherein it can be observed that no addition in respect of source of payments noted in the seized diaries is being made. b. Notices issued in the case of Shri Manoj Prakash Sanghvi for A. Y. 2012-13. c. Common reply filed by Shri Manoj Prakash Sanghvi for A. Υ. 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2019-20 and 2020-21. d. List of other assessees along with relevant assessment year details wherein similar notices were issued and additions were not made in respect of source of payments. 41.3. Accordingly, it is submitted that no addition in respect of the source of payments should be made in the appellant's case since the source of such payments is duly reflected in the seized diaries itself and considered and examined in the case of Shri Prakash M. Sanghvi.

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covering the relevant period, was furnished before the AO in the case of Shri PMS, wherein the sources of the impugned cash payments have been duly recorded and explained. The Revenue has not controverted this factual position by bringing any material on record to demonstrate that the said explanation has been found to be false or unreliable.

42.1. We further note that in the cases of other group assessees, arising out of the very same search and based on the same seized material, the AO has accepted the explanation regarding source of such cash payments and has not made any addition on this count. Copies of assessment orders and supporting documents placed on record substantiate this position. In such circumstances, adopting a different yardstick in the present case, without bringing any distinguishing feature on record, would be contrary to the settled Principle of Consistency and Uniformity in tax proceedings. It is also pertinent to observe that once the source of the impugned cash payments stands explained and examined in the case of Shri PMS, the same cannot again be treated as unexplained in the hands of the present assessee, in the absence of any independent incriminating material establishing that the assessee has made such investments out of undisclosed sources. The addition, as made, results in taxing the same stream of transactions in multiple hands, which is impermissible in law. 42.2. Thus, the provisions of section 69 can be invoked only where the assessee is found to have made investments which are not recorded in the books of account and for which no satisfactory explanation is offered. In the present case, the explanation

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regarding source emanates from the very seized material relied upon by the Revenue, and the same has already been subjected to verification in the case of the person from whom such material was seized. In the absence of any adverse finding against such explanation, the preconditions for invoking section 69 are not satisfied. In view of the foregoing facts and circumstances, we are of the considered view that the AO was not justified in making the addition of ₹25.70 crores under section 69 read with section 115BBE of the Act. Accordingly, the addition is deleted, and Ground No. 1 raised by the Revenue is devoid of merits and hereby dismissed.

b. The source of the receipt is out of payments made earlier and therefore the source being explained, addition cannot be made u/s. 69A of the Act.

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The provisions of section 69A are attracted only where the assessee is found to be the owner of money not recorded in the books of account and fails to offer a satisfactory explanation about the nature and source thereof. In the present case, the explanation regarding source emanates from the seized material itself and has not been found to be false or untenable.

45.1. We find that the Ld. CIT(A), after appreciating these facts, has rightly held that the impugned receipt is merely a return of earlier outgoings and, therefore, cannot be treated as unexplained money. The Revenue has not brought any material on record to rebut this factual finding. In view of the above, we see no infirmity in the order of the Ld. CIT(A) deleting the addition of ₹3,90,000 made under section 69A read with section 115BBE of the Act. Accordingly, Ground No. 2 raised by the Revenue is dismissed.

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Matrix Housewares 15.08.2020 1,87,749 14,08,117 11,26,494 2,81,630 Private Limited (7.5 months) Total 2,28,99,854 2,22,08,724 6,91,130

a. The appellant had placed relevant material before the AO to establish that the lessee have paid rent for the period when the property was actually available for occupation and not for the effective period mentioned in the lease agreements. b. The appellant had filed confirmations and other details to show that actual rent received was offered for taxation. C. The confirmations and TDS details clearly established that no differential rent had been earned and no person would pay the rent if the property handed over is not fit for occupation. d. The lessee have also confirmed the amount of actual rent paid by them which is offered to tax by the appellant. Accordingly, the addition was deleted by the Hon'ble CIT(A).

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offered for taxation in the Return of Income. Further, the premises were not handed over to the lessee as per the period mentioned in the lease agreements as they were not ready and fit for occupation. The premises were handed over at a later date and therefore rent was received only from the date the premises were handed over to the Lessee. The Lessees have paid rent only from the period the leased premises were handed over to them which fact has been confirmed by them in the confirmation letters and the actual rent is reflected in the ledger accounts and Form 26AS which reflects the TDS deducted by the lessees on the rent paid. Thus, the addition of Rs.6,91,130 made under the head Income from House Property requires to be deleted.

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The Revenue has not brought any material on record to demonstrate that the assessee has received any amount over and above what has been disclosed in the return of income.

49.1. It is a settled proposition that income under the head “House Property” is to be assessed based on real income and not on hypothetical accruals divorced from facts. Where the property was not ready for use and possession was not handed over, the question of accrual of rent for such period does not arise. No person can be expected to pay rent for a property which is not fit for occupation. The evidences placed on record substantiate that rent has been received only from the date of actual handing over of the premises. We find that the Ld. CIT(A), after considering these evidences, has rightly concluded that there was no suppression of rental income and that the difference computed by the Assessing Officer is merely on account of adopting the lease period mechanically without appreciating the factual position. In view of the above facts and circumstances, we see no infirmity in the order of the Ld. CIT(A) in deleting the addition of ₹6,91,130. Accordingly, Ground No. 3 raised by the Revenue is dismissed.

Order pronounced in the open court on 29-04-2026 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : TRUE COPY Dated 29/04/2026

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आदेश की �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद

Strengthened preparation & delivery of orders in the ITAT 1) Date of dictation /04/2026 2) Date on which the typed draft is placed before the Dictating /04/2026 Member & Other Member 3) Date on which the approved draft comes to the Sr. P.S./P.S. /04/2026 4) Date on which the fair order is placed before the Dictating /04/2026 Member for pronouncement 5) Date on which the fair order comes back to the Sr. P.S./P.S. 30 /04/2026 6) Date on which the file goes to the Bench Clerk 30/04s/2026 7) Date on which the file goes the Head Clerk 8) Date on which the file goes to the Assistant Registrar for signature on the order 9) Date of Dispatch of the order