ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(3), AHMEDABAD vs. DHAVAL TELI, AHMEDABAD
What did the Tribunal hold?
The Tribunal addressed the issue concerning the addition of Rs. 9,06,00,210/- related to the Kadambari Plotting Scheme. The AO had made this addition based on specific seized documents (Pages 27-28 of Annexure A/3) without considering other contemporaneous documents. The CIT(A) had found that these documents, when read together with Pages 48-49 of Annexure A/1, represented different stages of the same transaction: the purchase and subsequent sale of land at Nasmed. The CIT(A) accepted the assessee's explanation, supported by Google Maps and the chronological sequence of payments and receipts, that 'Kadambari' was a plotting scheme developed on the purchased land. The CIT(A) also noted that the cash transactions and profits were incorporated in the unaccounted cash book and offered to tax. The Tribunal agreed with the CIT(A)'s reasoning that seized documents cannot be read selectively. Since the Revenue did not provide independent evidence to show the properties were distinct, the Tribunal upheld the CIT(A)'s deletion of the addition of Rs. 9,06,00,210/- made under Section 69. The grounds raised by the Revenue on this issue were dismissed. The judgment mentions that the appeals were partly allowed for statistical purposes, indicating that other issues might have been decided differently or were not detailed in the provided excerpt.
What were the facts?
The Revenue filed appeals against the orders of the CIT(A) for Assessment Years 2015-16, 2017-18, 2018-19, and 2020-21. These appeals stem from a search action under Section 132 of the Income Tax Act conducted on October 15, 2019, which covered the assessee, Dhaval Teli, a land broker and real estate developer. Proceedings under Section 153A were initiated. During the search, documents indicating undisclosed cash advances for property purchases, undisclosed investments, interest income, brokerage income, and cash profits were seized. The assessee prepared a cash book incorporating these unaccounted transactions. For AY 2015-16, the Assessing Officer (AO) added Rs. 1,12,50,000/- as undisclosed capital shown in the cash book, along with other additions based on seized documents. The assessment was completed under Section 153A at a total income of Rs. 3,62,44,310/-. The CIT(A) partly allowed the assessee's appeal.
What were the issues?
1. Whether the CIT(A) erred in disregarding the evidentiary value of seized documents under Section 132(4A) of the Income Tax Act, 1961, which presumes correctness of entries unless rebutted? 2. Whether the CIT(A) erred in not appreciating that the assessee failed to discharge the burden of proof under Section 69 by providing only a reconstructed cash book without primary documentary evidence? 3. Whether the CIT(A) erred in deleting the addition of Rs. 70,50,000/- when the assessee failed to provide credible evidence for alleged refund and profit, leading to a presumption of concealment under Section 69? 4. Whether the CIT(A) erred in accepting a reconstructed cash book prepared post-search, unsupported by corroborative evidence, over the seized material? 5. Whether the CIT(A) erred in not giving full cognizance to the assessee's statement under Section 132(4) admitting cash payments and not appreciating the lack of credible evidence for refund and profit claims? 6. Whether the CIT(A) erred in deleting additions despite the assessee failing to produce corroborative evidence for retraction of admission under Section 132(4)? 7. Whether the CIT(A) erred in holding that the date of agreement to sell (31.03.2011) prevails over the date of registration (07.04.2014) for invoking Section 56(2)(vii)(b)? Assessee's Contention (implied from Revenue's grounds): The assessee relied on a reconstructed cash book and statements made under Section 132(4) to explain transactions, including alleged refunds and profits from land deals. The assessee also argued that the date of agreement to sell should prevail over the date of registration for Section 56(2)(vii)(b). Revenue's Contention: The Revenue argued that the CIT(A) disregarded the evidentiary value of seized documents, that the assessee failed to discharge the burden of proof under Section 69 with a reconstructed cash book, that the assessee did not provide credible evidence for refunds/profits, that the reconstructed cash book should not override seized material, that admissions under Section 132(4) were not properly considered, and that the date of registration, not the agreement date, should govern Section 56(2)(vii)(b).
Which sections of the Income-tax Act were involved?
Section 132,Section 132(4),Section 132(4A),Section 153A,Section 69,Section 56(2)(vii)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
Consolidated Appeals (2)
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
The appeals in IT(SS)A No. 185, 186 & 187/Ahd/2024 are filed by the Revenue against the separate orders of Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred as the “CIT(A)”], dated 30.10.2024 for the Assessment Years (A.Y.) 2015-16, 2017-18 and 2018- 19 respectively. The appeal in IT(SS)A No. 4/Ahd/2025 is also filed by the Revenue against the order of CIT(A)-12, Ahmedabad, dated 11.12.2024 for the A.Y.2020-21.
As the issues involved in these four appeals are identical and some of the issues are inter-connected, all the matters were heard together and are being disposed of vide this common order for the sake of convenience. We will first take up the appeal for the A.Y. 2015-16.
IT(SS)A No. 185/Ahd/2024 : A.Y 2015-16
The brief facts of the case are that the assessee is a leading land broker in and around Ahmedabad city and apart from brokerage business he is also engaged in real estate business of sale/purchase of land/plots and development of residential buildings. A search action u/s. 132 of the Act, was carried out in the case of land broker and financial group on
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 3 15.10.2019 and the residence as well as office premise of the assessee was also covered in the search operation. Pursuant to the search, proceedings u/s. 153A of the Act were initiated in the case of the assessee. During search, various incriminating documents in the form of physical papers, digital images, whatsapp chats and various other transactions pertaining to A.Y. 2013-14 to 2020-21, having notings of undisclosed cash advances towards purchase of immovable properties, undisclosed investment in land, undisclosed interest income, brokerage income, cash profit on trading of land etc. were found and seized. Based on the notings of unaccounted cash payment and unaccounted cash receipts recorded in the seized documents, the assessee had prepared a cash book for A.Y 2013-14 to 2020-21, wherein all unaccounted cash receipts and cash payments were incorporated. For the current year, the assessee had shown undisclosed capital of Rs. 1,12,50,000/- in cash book which was added to the income of the assessee by the AO. Further, certain other additions were also made on the basis of the entries appearing in the seized documents. The assessment was completed u/s. 153A of the Act on 14.07.2021 at total income of Rs. 3,62,44,310/-.
Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.
Now the Revenue is in appeal before us. The following grounds have been taken in this appeal:
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 4
"The Ld. CIT(A) erred in law by disregarding the evidentiary value of seized documents under Section 132(4A) of the Income Tax Act, 1961, which presumes the correctness of entries in such documents unless rebutted by credible evidence." 2. "The Ld. CIT(A) has erred in law and facts in not fully appreciating that the assessee has not adequately discharged the burden of proof under Section 69 of the Income Tax Act by providing only a reconstructed cash book without primary documentary evidence such as cancelled agreements, confirmations, or bank records to substantiate unexplained cash transactions." 3. The Ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 70,50,000 made by the A.O. even when the assessee failed to provide credible evidence to support the alleged refund of Rs. 73,00,000 and the profit of Rs. 5,00,000, lending to a presumption of concealment under Section 69" 4. The Ld. CIT(A) has erred in law to accept reconstructed cash book, prepared post-search and unsupported by corroborative evidence and further providing precedence over the seized material thus undermining evidentiary value of the incriminating material seized during search proceedings. 5. The Ld. CIT (A) has erred in law and fact by not taking full and proper cognize of the statement of the assessee recorded under Section 132(4) of the Income Tax Act, in which the assessee admitted to making cash payments for land transactions and has not fully appreciate that the assesse has not furnished any credible evidence supporting the claims of refund and profit from the cancellation of the land deal" 6. The Ld. CIT(A) has erred in deleting the addition despite the assessee failing to produce any corroborative evidence to support the retraction of the admission made under Section 132(4) regarding unexplained cash payments." 7. The Ld CIT(A) also failed to appreciate that the assessee has not fully discharged the burden of proof placed on him under Section 69 of the Income Tax Act to explain the cash transactions noted in seized documents and corroborate the claims made during the statement recorded under Section 132(4) by furnishing independent substantial evidence" 8. The Ld. CIT(A) has erred in lato by accepting the assessee's unsubstantiated claim of a refund of Rs. 78,00,000/- (including Rs.73,00,000/- paid by the assessee and Rs.5,00,000/on account of profit from cancelled land deal) from farmers despite the lack of documentary evidence and the conflicting admission made under Section 132(4)" 9. The Ld. CIT(A) has erred in accepting the reconstructed cash book prepared post-search as evidence of the assessee and allowed the recast cashbook to override the direct admission made under Section 132(4) regarding cash payments for land transactions, especially when no independent corroborative evidence supports the reconstructed entries."
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 5
The Ld. CIT(A) has erred in law and facts by deleting the addition of Rs.1,24,81,420 made under Section 56(2) (vii)(b) of the Act, despite the sale deed being executed and registered on 07.04.2014, a date clearly falling within the effective period of the provision, which became applicable from 01.04.2013?" 11. The Ld. CIT(A) erred in law in holding that the date of agreement to sell (31.03.2011) prevails over the date of registration (07.04.2014) for the purpose of invoking Section 56(2)(vii)(b), contrary to the settled principle that the date of registration governs the applicability of provisions related to stamp duty valuation?" 12. The Ld. CIT(A) has erred in failing to appreciate that the burden of proving the correctness of the reported property value lies on the assessee, and in the absence of sufficient evidence to corroborate the valuation as per the agreement to sell, the addition under Section 56(2)(vi) (b) was rightly made by the Assessing Officer?" 13. The Ld. CIT(A) has erred in lato by misinterpreting the legislative intent of Section 56(2)(vi)(b), which was introduced to curb underreporting of property values and tax evasion, by giving precedence to an agreement dated prior to the enactment of the provision, even though the final transaction and registered deed was executed after its applicability?" 14. The Ld. CIT(A)'s has erred in law and facts by placing reliance on the agreement date instead of the registration date is inconsistent with established judicial precedents, which hold that the registration date is the critical dute for determining the applicability of provisions related to immovable property transactions?" 15. The Ld. CIT(A) has erred in applying the saving clause of Section 56(2) (vii) (b), which allows consideration as per the agreement to sell, without verifying whether substantial payment was made by the assessee before the introduction of the said provision?" 16. The Ld. CIT(A) has erred in overlooking the substantial discrepancy between the reported consideration (Rs.1,51,69,600) and the stamp duty value (Rs.2,76,51,020), which warrants the application of Section 56(2)(vii)(b) to prevent tax evasion through undervaluation of property?" 17. The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal Cancellation of land deal and refund of advance:
Shri R P Rastogi, the Ld. CIT-DR, submitted that the Ground Nos. 1 to 9 taken by the Revenue pertain to addition of Rs. 70,50,000/- on
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 6 account of unexplained investments. He explained that in the course of search, a loose paper was found and seized from the office premise of the assessee as per Annexure A-4, containing 39 pages. The Ld. CIT-DR has drawn out attention to copy of the Page No. 38 of the seized document reproduced at page No. 4 of the assessment order and explained that this page recorded cash transactions relating to investment in land at Sadra Village. In his statement recorded u/s 131 of the Act after the search on 15/11/2019, the assessee had admitted that the entries in this page pertained to the purchase of Sadra land that he and one Shital Shah had paid cash of Rs. 73 lakh towards purchase of land at Sadra village. The assessee had, however, claimed before the AO in the course of assessment proceeding that the deal for this land was cancelled and the entire amount was received back on 10.12.2012 along with profit of Rs. 5,00,000/-. Accordingly, the assessee had recorded cash receipt of Rs. 78,00,000/- in his cash book in respect of cancellation of Sadra land deal. The Ld. CIT-DR submitted that identical plea of cancellation of land deals was taken by the assessee in other years as well. He explained that the AO had rejected the contention of the assessee for cancellation of this deal and receipt of the amount for the following reasons:
(i) The assessee had failed to identify the persons to whom the cash was allegedly paid or from whom it was received back. (ii) No documentary evidence such as a cancelled banakhat, confirmations from land owner(s), documentary evidence or any other contemporaneous record evidencing cancellation of the deal or refund of cash was furnished. (iii) The affidavit of the alleged broker and the copy of the 7/12 extract were held to be insufficient to establish that the stated land
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 7 deals were cancelled or that the cash had actually been refunded to the assessee. (iv) The seized document itself contained only entries of cash payments and did not record any return of money. (v) The AO had noted that there was no explanation or documentary evidence justifying the alleged profit of Rs. 5 lakh on the cancelled transaction. (vi) The assessee had adopted a similar explanation of cancellation and refund in respect of several other land transactions reflected in the seized material, which, according to the AO, indicated an afterthought devised to explain subsequent cash availability, as no statement regarding cancellation of land deals was made by the assessee in his statements recorded pursuant to the search.
6.1 The Ld. CIT-DR submitted that the AO had rightly held that the cash book could be accepted only to the extent that its entries were corroborated by the seized material or independent evidence. Accordingly, the alleged receipt of Rs. 73 lakh on 10.12.2012 was treated as non-genuine and ignored while determining the cash balance, as the same was neither corroborated by the seized material nor any independent evidence in this respect was brought on record. After eliminating the aforesaid receipt from the cash book, the AO had concluded that sufficient cash was not available to explain investments/payments made during the current year. Accordingly, the AO had treated the total payment of Rs.70,50,000/- made during the year as unexplained investments due to shortfall (negative cash balance). The Ld.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 8 CIT-DR submitted that in view of the specific findings as given by the AO, the Ld. CIT(A) was not correct in deleting the addition.
Per contra, Shri Parin Shah, the Ld. AR of the assessee submitted that the investment of Rs. 73,00,000/- was made by the assessee in the earlier financial year 2012-13. In the assessment proceeding for A.Y. 2013-14, the unexplained capital introduction of Rs. 73,00,000/- in Sadra land was already added to income by the AO, which was not challenged by the assessee. The assessee had explained in the A.Y. 2013-14 that this deal was cancelled and the assessee had earned profit of Rs. 5,00,000/- which was also accepted by the AO in the A.Y. 2013-14. According to Ld. AR, having made the addition of Rs. 73,00,000/- on account of unexplained capital in the preceding year and accepting Rs. 5,00,000/- on account of profit on cancellation of deal in the A.Y. 2013-14, the AO was not correct in disbelieving the cash refund of Rs. 73,00,000/- on cancellation of this deal. He submitted that the action of the AO in making addition for profit of Rs. 5,00,000/- on cancellation of this deal in the A.Y 2013-14 but disbelieving the cash refund of Rs. 73,00,000/-, was self-contradictory. The Ld. AR, therefore, submitted that the Ld. CIT(A) had rightly allowed relief to the assessee. He strongly supported the order of the ld. CIT(A).
We have carefully considered the rival submissions and the material available on record. The moot issue to be decided here is whether the learned CIT(A) was justified in directing the recasting of the assessee's cash book by accepting the alleged cash receipt of Rs.73,00,000/- on cancellation of the Sadra land transaction and, consequently, deleting the addition of Rs.70,50,000/- made by the AO u/s 69 of the Act. The
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 9 undisputed facts are that during the course of search, Page No.38 of Annexure A/3 was seized from the possession of the assessee. The said seized document records cash payments aggregating to Rs.73,00,000/- in F.Y. 2012-13 towards the proposed purchase of land situated at Sadra Village. In his statement recorded u/s 131 of the Act, the assessee had admitted that the seized document pertained to the said land transaction. Thus, the existence of the cash payments recorded in the seized document stands duly established. The assessee subsequently contended before the AO that this transaction didn’t materialize because of encroachment over the land; that the amount of Rs.73,00,000/- advanced in cash was returned by the land owners through a broker; and that he also received a profit of Rs.5,00,000/-. This explanation was sought to be supported by entries made in the cash book prepared after the search, an affidavit of the broker, copies of Form No.7/12 and photographs of the land.
In our considered opinion, the learned CIT(A) had erred in accepting the aforesaid explanation of the assessee in the absence of any cogent and independent evidence. A document found during the course of search constitutes contemporaneous evidence of the transactions recorded therein and carries substantial evidentiary value. The seized document in the present case records only the cash payments. There is no material found during the search indicating that the transaction was subsequently cancelled or that the cash advanced had been refunded. Therefore, the burden was squarely upon the assessee to establish the subsequent events by reliable and independent evidence. The material relied upon by the assessee falls short of discharging this burden. The entries in the cash book are admittedly self-generated entries prepared by the assessee after
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 10 the search and cannot, by themselves, override the evidentiary value of the seized document. Similarly, the affidavit of the broker is only a self- serving piece of evidence. It is not supported by any documentary record such as a cancellation agreement, cancellation of Banakhat, acknowledgment of receipt of cash, confirmation from the land owners, books of account of the recipients or any other independent material evidencing the alleged refund of Rs.73,00,000/-. The Form No.7/12 merely establishes that the land continued to remain in the names of the original owners. That circumstance may indicate that the sale was not completed; however, it does not lead to the inevitable conclusion that the cash allegedly paid was in fact refunded. Likewise, the photographs of the land only depict the physical condition of the property and do not establish either cancellation of the transaction or repayment of the money. The assessee had made advance payment on 6 different occasions during the period from 15th May 2012 to 18th August 2012 and it is difficult to believe that he kept on making these payments without ascertaining the status of the land and verifying about the encroachment over it. It is also apposite to note that the refund amount was not recorded anywhere by the assessee, while he had been meticulously recorded each and every incidence of payment.
The principal reasoning adopted by the learned CIT(A) is that since the AO had accepted the offer of Rs.5,00,000/- as undisclosed profit arising from the Sadra land transaction, he necessarily accepted the cancellation of the transaction and, therefore, ought to have accepted the refund of Rs.73,00,000/- as well. We are unable to agree with this reasoning. The receipt of profit and the receipt of refund are distinct and independent factual events. Even assuming that the transaction was
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 11 cancelled, the assessee was still required to establish, by credible evidence, that the principal amount advanced in cash was actually received back. Such a fact cannot be inferred merely because the assessee disclosed an additional amount of Rs.5,00,000/- as profit. The factum of earning of this profit was nowhere recorded in the seized documents. The offer of Rs.5,00,000/- was accepted by the AO on the basis of the assessee's own admission. However, an admission regarding receipt of profit cannot automatically be treated as proof of receipt of the principal amount, particularly when the seized document does not record such refund and there is no independent corroborative evidence in support thereof.
It is well settled that when an assessee seeks to explain an incriminating seized document by pleading subsequent events, the burden lies entirely upon him to establish such subsequent events through satisfactory evidence. Mere probabilities, presumptions or self-serving explanations cannot displace the evidentiary value of the seized material. In the present case, except for his own explanation and the affidavit of the broker, the assessee has failed to produce any legally acceptable evidence proving that the amount of Rs.73,00,000/- was actually returned. The affidavit of the broker too was a self-serving document and not acceptable evidence, as the name of the broker is nowhere appearing in the seized document. Thus, the onus cast upon the assessee to establish the receipt of refund amount remained undischarged. The learned CIT(A), in directing the recasting of the cash book, has proceeded primarily on inference rather than evidence. Once the very receipt of Rs.73,00,000/- is not established by independent material, there was no justification for restoring the said amount to the cash balance merely because the
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 12 transaction did not culminate in transfer of the property. Even the property details were not appearing in the seized document and, therefore, the reliance of the assessee on Form No.7/12 was unfounded. Consequently, the recasting of the cash book lacks factual foundation.
A significant feature of the present case is that the assessee had advanced an identical explanation in respect of all the land transactions reflected in the seized materials (which will be discussed in the subsequent appeals), that every land transaction was cancelled and the cash advances were refunded. Such a uniform explanation, unsupported by any independent evidence in respect of any transaction, lacks credibility. Had the transactions in fact been cancelled and the substantial cash advances returned, some contemporaneous record or corroborative evidence would certainly have existed. The complete absence of any such material renders the explanation inherently improbable. The AO had rightly held that the plea of cancellation and cash refund was raised only during the assessment proceedings and was an afterthought. In the absence of any corroborative evidence, the explanation clearly assumes the character of an afterthought devised merely to neutralise the evidentiary value of the seized documents. The learned CIT(A) has granted relief solely on the basis of unsubstantiated explanation, which is contrary to settled principles governing appreciation of evidence in search assessments. It is a settled proposition that a mere explanation, unaccompanied by supporting evidence, cannot displace the evidentiary value of incriminating documents found during search. Where the assessee admits the seized documents but seeks to avoid their legal consequences by pleading subsequent events, the onus lies entirely upon
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 13 the assessee to establish such subsequent events through reliable evidence. In the present case, that burden has not been discharged.
In view of the above facts, the Assessing Officer was fully justified in rejecting the assessee's contention that the land deals were cancelled and that the cash advances were refunded. The finding recorded by the learned CIT(A), granting relief on the basis of an unsubstantiated and unsupported explanation, cannot be sustained. The AO was correct in rejecting the alleged receipt entry of Rs.73,00,000/- shown in the cash book. As a natural consequence, the cash balance available with the assessee stood reduced and the payments aggregating to Rs.70,50,000/- made on 23.09.2014 remained unsupported by any satisfactory source. The assessee has not brought any other material on record explaining the source of these payments. Accordingly, the AO had rightly treated the said payments as unexplained investment u/s 69 of the Act.
In view of the foregoing discussion, we hold that the learned CIT(A) was not justified in deleting the addition merely on presumptive reasoning without there being any independent evidence establishing the alleged refund of Rs.73,00,000/-. We, therefore, set aside the order of the learned CIT(A) on this issue and restore the addition as made by the AO. Accordingly, the addition of Rs.70,50,000/- made u/s 69 of the Income- tax Act, 1961 is upheld. The grounds raised by the Revenue are allowed.
Addition for Jantri Value difference:
Ground No. 10 to 16 pertain to addition of Rs. 1,24,81,420/- u/s. 56(2)(vii)(b) of the Act. The Ld. CIT-DR submitted that as per ITS data the
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 14 assessee had purchased an immovable property on 07.04.2014 for a consideration of Rs.1,51,69,600/- but on the basis of the stamp duty payment, the jantri value of the property was Rs. 2,76,51,020/-. Therefore, the AO had made addition for the difference of Rs. 1,24,81,420/- u/s. 56(2)(vii)(b) of the Act. The Ld. CIT-DR submitted that the addition made by the AO was in accordance with the provisions of the Act and the Ld. CIT(A) was not correct in deleting the addition.
Per contra, Shri Parin Shah, the Ld. AR of the assessee submitted that in the present case the agreement to sale was executed on 30.03.2011 and majority payment was made by assessee prior to 30.03.2011. He explained that almost the entire sale consideration was paid through banking channels before the execution of the agreement and only the balance amount of Rs.1,69,600/-, along with TDS, was paid at the time of registration. Further that the agreement to sell reflected the consideration of Rs.1,51,69,600/-, which corresponded to the prevailing Jantri value as on 31.03.2011. The Ld. AR submitted that under the circumstances, the AO was not correct in applying the Jantri rate of 2014. He further submitted that the provision of section 56(2)(vii)(b) was amended w.e.f. 01.04.2014 and Ld. CIT(A) had rightly held that this amended provision was not applicable to the agreement of sale executed much earlier on 31.03.2011. He, therefore, strongly supported the order of the Ld. CIT(A).
We have considered the rival submissions. The issue to be decided here is whether the AO was justified in invoking the provisions of section 56(2)(vii)(b) of the Act by adopting the stamp duty value prevailing on the date of registration of the sale deed, despite the fact that the agreement
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 15 to sell had been executed much prior thereto and substantial consideration had already been paid through banking channels. The undisputed facts are that the assessee had entered into an agreement to sell dated 31.03.2011 for purchase of the immovable property for a total consideration of Rs.1,51,69,600/-. It is also not in dispute that out of the total consideration, a sum of Rs.1.50 crore was paid by the assessee through banking channels before execution of the agreement and only the balance amount of Rs.1,69,600/-, together with applicable TDS, was paid at the time of registration of the sale deed on 07.04.2014. The AO had invoked the provisions of section 56(2)(vii)(b) by adopting the stamp duty valuation prevailing on the date of registration and treated the difference between the stamp duty value and the stated consideration as income of the assessee from other sources. The learned CIT(A), after examining the documentary evidence, found that the agreement to sell was executed on 31.03.2011 and that almost the entire consideration had been paid through account payee banking transactions in pursuance of the said agreement. These factual findings have not been controverted by the Revenue by bringing any material on record to establish either that the agreement was not genuine or that the payments were not made on the dates claimed by the assessee.
The provision of section 56(2)(vii)(b) was amended with effect from 01.04.2014 to bring within its ambit cases where immovable property is acquired for inadequate consideration. Simultaneously, the Legislature inserted the proviso stipulating that where the date of the agreement fixing the consideration and the date of registration are different, the stamp duty value as on the date of the agreement shall be adopted, provided that the whole or part of the consideration has been paid by a mode other than
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 16 cash on or before the date of the agreement. The object behind the proviso is to protect genuine transactions where the parties had fixed the consideration under an earlier agreement and substantial payments had already been made through banking channels. Thus, the legislative intent is to ensure that a purchaser is not prejudiced merely because registration of the conveyance takes place at a later point of time when the stamp duty valuation has undergone revision. In the present case, the conditions prescribed in the proviso stand fully satisfied. The agreement to sell was executed on 31.03.2011 and almost the entire consideration was admittedly paid through banking channels prior to the execution of the agreement. The delay in execution of the registered sale deed cannot alter the character of a transaction that had substantially crystallized in the year 2011. The learned CIT(A) has rightly observed that the Jantri value prevailing in the year 2011 broadly corresponded with the agreed sale consideration. Therefore, applying the enhanced Jantri value prevailing in the year 2014 to a transaction substantially concluded in 2011 would defeat the very purpose of the statutory proviso. We don’t find any infirmity in the order of the learned CIT(A) on this issue. The learned CIT(A) has correctly appreciated both the facts and the applicable legal provisions in holding that the provisions of section 56(2)(vii)(b) are not attracted to the facts of the present case. Accordingly, the decision of the learned CIT(A) deleting the addition made under section 56(2)(vii)(b) is upheld. The grounds taken by the Revenue are dismissed.
In the result, the appeal of the Revenue is partly allowed.
IT(SS)A No. 186/Ahd/2024: A.Y. 2017-18
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 17
The Ground taken by the Revenue in this appeal are as under:
"The learned CIT(A) erred in relying on the reconstructed cash book prepared by the assessee post-search, which was not supported by independent corroborative evidence or authentic documentation, thereby contravening the principles of evidence under the Income Tax Act, 1961." 2. The learned CIT(A) failed to properly apply the burden of proof under Section 69 of the Income Tax Act, 1961, by accepting the self-prepared cash book of the assessee despite the absence of credible documentary evidence to substantiate the sources of cash inflows. 3. The deletion of the addition of Rs. 1,39,96,730/ by the learned CIT(A) was erroneous as it overlooked the lack of contemporaneous evidence or legal documentation supporting the assessee's claim of a refund of Rs. 73,00,000/- and the unreliability of the reconstructed cass book prepared after the search." 4. The learned CIT(A) failed to appreciate that the original cash book reflected a negative cash balance, and the reconstructed cash book prepared after the search could not address the absence of funds to justify the unexplained payments identified in the seized material" 5. The learned CIT(A) erred in disregarding the modified cash book prepared by the Assessing Officer, which accurately reflected the absence of funds and unexplained sources for payments of Rs. 1,39,96,730/-, while incorrectly dismissing minor computational errors as irrelevant to the substantive issue of unaccounted payments." 6. The deletion of Rs. 55,00,000/- under Section 69A of the Income Tax Act, 1961, by the learned CIT(A) τρas erroneous as the assessee failed to provide independent corroborative evidence to substantiate the genuineness of transactions recorded in the seized material" 7. The learned CIT(A) improperly shifted the burden of proof onto the Assessing Officer, contrary to the statutory mandate under Section 69A of the Income Tax Act, which requires the assessee to substantiate the source of unexplained cash receipts/payments with corroborative evidence" 8. The Ld. CIT has erred in law and facts by accepting the post-search cash book as valid evidence which was erroneous, given the significant discrepancies between the reconstructed cash book and the seized material, which raised serious doubts about its authenticity and credibility." 9. The learned CIT(A) failed to properly appreciate the evidentiary value of the seized material under Section 132 of the Income Tax Act, 1961 and erred in disregarding this material in favor of explanations unsubstantiated by independent evidence."
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 18
The learned CIT(A) erred in deleting the addition of Rs. 55,00,000/- under Section 63A of the Income Tax Act, 1961, despite the assessee's failure to produce independent corroborative evidence to substantiate cash transactions recorded in the seized material." 11. The learned CIT(A) erred in allowing the assessee's appeal and deleting the addition of Rs. 55,00,000/- without adhering to judicial precedents that place the burden of proving the genuineness of transactions on the assessee, particularly in the absence of independent corroborative evidence." 12. The learned CIT(A) erred in deleting the addition of Rs. 55,00,000/- by relying on the post-search cash book, which was prepared after the search and could not be reconciled with the seized documents." 13. The learned CIT(A) failed to consider the contradictory statements made by the assessee and the absence of independent credible evidence to substantiate the genuineness of transactions, which justified the Assessing Officer's treatment of Rs. 15,00,000/- as unexplained investment under Section 69A of the Income Tax Act, 1961." 14. The deletion of Rs. 15,00,000/- under Section 69A by the learned CIT(A) was erroneous as it relied solely on the self-prepared cash book of the assessee without independent verification of the seized documents or corroborating evidence." 15. The learned CIT(A) erred in deleting the addition of Rs. 15,00,000/- under Section 69A, despite valid grounds presented by the Assessing Officer to treat the cash transactions as unexplained due to the lack of independent evidence and the contradictory statements of the assessce." 16. The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal."
Ground No. 1 to 5 pertain to addition of Rs. 1,39,96,730/- on account of unexplained payments. Shri R P Rastogi, the Ld. CIT-DR, submitted that the assessee had made total investment of Rs. 1,39,96,730/- during the current year in respect of different properties, payments for which were made in cash. The AO had noticed that after nullifying the alleged receipt of Rs. 73,00,000/- in respect of Sadra land, as discussed in the order of the A.Y. 2015-16, there was negative cash balance in the cash book and the assessee did not have sufficient cash balance to make payment of Rs. 1,39,96,730/-. Therefore, the AO had
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 19 treated the entire cash payment of Rs. 1,39,96,730/- as unexplained and added to income. The Ld. CIT-DR submitted that considering the specific findings of the AO, the Ld. CIT(A) was not correct in holding that there was no negative cash balance in the cash book and in deleting the addition.
Per contra, Shri Parin Shah, the Ld. AR of the assessee, while supporting the order of the Ld. CIT(A), submitted that the AO had made an arithmetical mistake in the working of cash balance. After making addition of Rs. 70.50 lakhs in A.Y. 2015-16, the closing cash balance should have been taken as Nil. However, the AO had continued with negative cash balance of (-) Rs.70,50,000/-. The Ld. AR explained that this issue is interlinked with the decision in respect of cash receipt of Rs. 73,00,000/- on 10.12.2012 with respect to cancellation of Sadra land deal, involved in the earlier year. He submitted that the ld. CIT(A) had allowed relief to the assessee on proper appreciation of facts of the case. He, therefore, strongly supported the order of Ld. CIT(A).
We have carefully considered the rival submissions and perused the material available on record. The Assessing Officer observed that the assessee had made cash investments aggregating to Rs.1,39,96,730/- during the year towards acquisition of different immovable properties. According to the AO, after disregarding the alleged cash receipt of Rs.73,00,000/- claimed to have been received on cancellation of the Sadra land transaction, the assessee did not have sufficient cash balance to explain the aforesaid cash investments. On that basis, the entire amount of Rs.1,39,96,730/- was treated as unexplained investment and
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 20 added to the income of the assessee. The learned CIT(A), however, deleted the addition by holding that there was no negative cash balance in the cash book and accepted the assessee's explanation regarding availability of cash. The learned Departmental Representative has submitted that the finding of the CIT(A) is contrary to the factual position emerging from the cash book after excluding the alleged receipt of Rs.73,00,000/-. On the other hand, the learned Authorised Representative has contended that while giving effect to the addition made in A.Y. 2015-16, the AO committed an arithmetical error by carrying forward a negative cash balance of (-) Rs.70,50,000/-. According to him, once the addition of Rs.70.50 lakh was made in A.Y. 2015-16, the closing cash balance ought to have been taken at Nil and not as a negative figure. It was further submitted that the issue is intrinsically linked with the treatment of the alleged cash receipt of Rs.73,00,000/- arising from cancellation of the Sadra land transaction.
As already discussed earlier, while adjudicating the appeal for A.Y. 2015-16, the claim of the assessee regarding receipt of Rs.73,00,000/- on account of cancellation of the Sadra land transaction has already been rejected and the action of the AO on that issue has been upheld. Consequently, the alleged receipt of Rs.73,00,000/- cannot form part of the available cash balance for the year under consideration. At the same time, merit is found in the contention of the learned AR that the AO appears to have committed an arithmetical error in carrying forward the cash balance. Once the alleged receipt of Rs.73,00,000/- has been excluded in the earlier year, the consequential working of the closing cash balance requires proper re-computation. Further, the addition made in the earlier year cannot simultaneously result in the continuation of a negative
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 21 opening cash balance without examining the correct consequential effect. Thus, while the rejection of the alleged receipt of Rs.73,00,000/- stands concluded against the assessee, the computation of the cash balance for the year under consideration requires fresh verification. Under the circumstances, the issue cannot be decided merely on the basis of the existing computation adopted either by the Assessing Officer or by the learned CIT(A). The correct cash flow and cash balance, after giving effect to the findings recorded in A.Y. 2015-16 and after rectifying any arithmetical mistakes, need to be worked out afresh. Thereafter, it shall be examined whether, on the basis of such recomputed cash balance, the assessee had sufficient explained cash to make the impugned investments of Rs.1,39,96,730/-.
Accordingly, in the interest of justice, the impugned order of the learned CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer. The AO shall recompute the cash balance after giving due effect to the findings recorded in A.Y. 2015-16 regarding the non-acceptance of the alleged receipt of Rs.73,00,000/-, rectify any arithmetical errors in the cash flow computation, and thereafter decide the issue afresh in accordance with law after affording the assessee a reasonable opportunity of being heard. The grounds taken by the Revenue are allowed for statistical purpose.
Ground No. 6 to 12 pertain to addition of Rs. 55,00,000/- in respect of cash amount received from one Shri Nilesh Gajera. The Ld. CIT-DR explained that from page No. 27 of seized document Annexure A-1, seized from the premises of M/s. Shaival Properties Pvt. Ltd., it transpired that the assessee had received an amount of Rs. 55,00,000/- from one
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 22 Shri Nilesh Gajera on account of sale of office. The assessee in his statement recorded u/s. 131 of the Act on 04.11.2019 had admitted that the transaction recorded in this seized document was in respect of sale of office to Shri Nilesh Gajera. In the course of assessment proceeding, however, the assessee had contended that the amount appearing in this seized document represented financial help given to Shri Nilesh Gajera to purchase an office and as the deal did not materialize, the amount was returned back. The Ld. CIT-DR submitted that the explanation given by the assessee during the assessment proceeding was clearly an afterthought and was rightly rejected by the AO. He, therefore, supported the addition of Rs. 55,00,000/- made by the AO on the basis of the entries appearing in the seized document.
Per contra, Shri Parin Shah, the Ld. AR submitted that since the amount of Rs. 55,00,000/- was received by the assessee, the AO was not correct in holding that the source of this amount was unexplained. He contended that as per the seized documents a sum of Rs. 35,00,000/- was received on 26.02.2016 whereas the AO had made addition of Rs. 55,00,000/-. He further submitted that the AO did not make any inquiry from the said Shri Nilesh Gajera regarding the nature of this transaction and, therefore, the Ld. CIT(A) had rightly deleted the addition after considering the totality of facts.
We have considered the rival submissions. The page No. 27 of the seized document, on the basis of which this addition has been made, is reproduced as page-5 of the assessment order. The Ld. CIT(A) has analysed the entries appearing at this page in his order as under:
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 23 “7.3. On carefully perusal of page no 27, it is observed that all the notings of cash transaction of cash payments and cash receipts are recorded under the name of 'Nilesh Gajara A/c. and at the top left, the amount of Rs. 35 lakhs are indicated as "Baki." Directly beneath this, there is a reference to "23" (coded for 23 lakhs) associated with "Manish" and "12" (coded for 12 lakhs) associated with "Dhaval". On the right-hand side of the page, it is noted that an entry reads, "55 lakhs Dhaval no havalo". All transactions have been recorded under the account name 'Nilesh Gajara A/c.' In the Desi Nama accounting system, the left-hand column is labeled 'Jama' (credit), while the right-hand column is labeled 'Udhar' (debit). All cash transaction entries have been meticulously maintained in accordance with this accounting system. It is relevant to mention here that during the course of post search proceedings, the statement of the appellant was recorded u/s 131 of the Act on 14.11.2019 and in Ans. to Q 3, he stated categorically that the transaction recorded in page no.27 is related to the cash receipts and transaction of Rs 35 lakhs on account of sale of office to Sh. Nilesh Gajera. ..
It is thus, evident that the total amount of transaction as per this page was Rs. 55,00,000/- and an amount of Rs. 35,00,000/- was outstanding as on 31.05.2016. The outstanding amount of Rs. 35,00,000/- was received in two instalments of Rs. 23,00,000/- and Rs. 12,00,000/-. The assessee had admitted in the course of his statement recorded on 14.11.2019 that cash of Rs. 35,00,000/- was received on account of sale of office to Shri Nilesh Gajera. However, as per the entries in this document, the total sale consideration was Rs. 55,00,000/- and the outstanding balance as on 31.05.2016 was Rs. 35,00,000/-, which was received subsequently in two instalments. In the course of assessment, however, the assessee had contended he had made cash advance of Rs. 55,00,000/- to Shri Nilesh Gajera, which was subsequently received back. According to the assessee the receipts and payments were made on the following dates:
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 24 Cash book entry date Page Head of ledger Amount (Rs.) (related to point No. 21 ) Reference
31/05/2016 27 Payment 35,00,000
22/06/2016 27 Receipt 35,00,000
28/08/2016 18 Payment 15,00,000
03/09/2015 18 Payment 5,00,000
15/04/2018 15 Receipt 20,00,000
The explanation as given by the assessee doesn’t tally with the entries appearing in the seized documents. There was no payment of Rs. 35,00,000/- on 31.05.2016, rather the entry in the seized document for this date was for outstanding amount only. Similarly, the receipts claimed to be received by the assessee on 22.06.2016 and 15.04.2018 were also not appearing in the seized documents. Therefore, the AO had rightly rejected the explanation of the assessee, which was nothing but concocted evidence without any supporting material. The Ld. CIT(A) was not correct in deleting the addition on the ground that no inquiry was made by the AO from Shri Nilesh Gajera, in respect of the explanation as given in the course of assessment. In fact, the assessee did not furnish any confirmation of Nilesh Gajera explaining the nature of transactions. Under the circumstances, no inquiry was called for by the AO. At the same time,
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 25 the AO was also not correct in holding the source of Rs. 55,00,000/- received by the assessee from Shri Nilesh Gajera, as unexplained. The source of this amount was required to be explained by Shri Nilesh Gajera and not by the assessee. As explained by the assessee, this amount was received on account of sale of office, which was not recorded in the books of accounts. Therefore, only the profit element derived on sale of office could have been subjected to tax. The Ld. CIT(A) was not correct in deleting the entire addition without taking into account the profit derived by the assessee in this unaccounted sale transaction made by the assessee. The AO is, therefore, directed to work out the profit out of this unaccounted sale transaction by applying profit rate of 15%. Accordingly, the ground taken by the Revenue is partly allowed.
Ground No. 13 to 15 pertain to addition of Rs. 15,00,000/- on account of unexplained investment. The Ld. CIT-DR submitted that this addition was made on the basis of entries appearing at page No. 26 of the seized document Annexure A-1. The assessee had explained that he had received cash of Rs. 15,00,000/- from one Shri Munir vora, who was prospective customer for Unali land and the same was returned back as the deal did not materialize. However, no evidence in this regard was brought on record by the assessee. Therefore, the AO had considered the amount of Rs.15,00,000/- received from one Shri Munir Vora as unexplained and added to income.
Per contra, Shri Parin Shah, the Ld. AR submitted that as per seized document the amount was received from Shri Munir Vora. Therefore, the
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 26 AO was not correct in treating the same as unexplained in the hands of the assessee. He relied upon the order of the Ld. CIT(A) on this issue.
We have considered the rival submissions. The Ld. CIT(A) has allowed relief to the assessee by giving the following findings:
“8.3. On perusal of notings recorded on page no.26, it is observed that all the financial transactions have been noted under the name of "Munir Vora A/c and beneath it on the left hand side is written "total 30 chukvana Unali Farm buy back A/c" and on the right hand side is written 15 (coded for 15lakhs) cash. Dt. 26.5 rokda apya". The term 'rokda apya, written alongside the amount of Rs. 15,00,000/-, is in Gujarati, and it translates to cash given. This noting is self-explanatory, indicating that a payment of Rs. 15,00,000/- has been made by the appellant. In addition to the above, it is pertinent to note that all notings of cash receipts and payments have been recorded under the account name 'Munir Vora A/c Entries of cash receipts and cash payments have been meticulously maintained in accordance with the Desinama accounting system. Moreover, the appellant has shown all the entries of cash receipts and cash payments of the seized material has been shown in his unaccounted cash book prepared by him. Since the appellant has shown the payment and receipts related to Sh. Münir Vora in the cash book, the addition of Rs.15,00,000/- made by the AO is hereby deleted. Accordingly, grounds of appeal nos.8 & 9 are allowed.
The Revenue has been unable to controvert the findings of the Ld. CIT(A). As per seized documents, a sum of Rs. 15,00,000/- was received from one Shri Munir Vora. Therefore, the AO was not correct in treating the amount as unexplained in the hands of the assessee. From the entries appearing in the seized documents, it is evident that the transaction pertained to buy-back account and the sum of Rs. 15,00,000/- received by the assessee was subsequently returned back. Therefore, as rightly held by the Ld. CIT(A), no addition was called for on the basis of the transactions recorded in this seized document. The findings of the Ld. CIT(A) on this issue is upheld and the grounds taken by the Revenue are dismissed.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 27
In the result, the appeal of the Revenue is partly allowed.
IT(SS)A No. 187/Ahd/2024: AY2018-19
The Grounds taken by the Revenue in this appeal are as under:
"That the Ld. CIT(A) erred in deleting the addition of Rs. 91,48,910/- made by the A.O. under Section 69 of the Income Tax Act, 1961, by failing to appreciate that the assessee did not provide credible or substantive evidence, such as cancelled agreements, confirmations from counterparties, or any other independent documentation, to substantiate the source of the unexplained cash payments for land transactions." 2. "That the Ld. CIT(A) erred in relying on a reconstructed cash book prepared by the assessee post-search operations, which was neither contemporaneous nor part of the assessee's regular accounting records, and further overlooked glaring discrepancies, including mathematical errors, making the cash book unreliable and devoid of independent corroborative evidence." 3. "That the Lil. CIT(A) failed to appreciate that the onus to explain and substantiate the source of unaccounted cash transactions rested entirely with the assessee. The inability of the assessee to produce reliable and independent evidence to validate the cash payments discovered during the search operation clearly justified the addition of Rs.91,48,910/-under Section 69 of the Income Tax Act." 4. "That the Ld. CIT(A) erred in disregarding the direct evidence available in the seized materials, which clearly indicated the presence of unexplained cash transactions. By accepting the reconstructed cash book without conducting any independent verification or scrutiny, the Ld. CIT(A) rendered the findings flawed mid legally unsustainable." 5. "That the Ld. CIT(A) deleted the addition under Section 69 without properly applying the established principles of burden of proof. The Ld. CIT(A) failed to recognize that the assessee did hot discharge the statutory onus of proving the genuineness of the cash transactions or the source of funds used for the land transactions, thus warranting the addition made by the AO." 6. "That the Lil CIT(A) failed to correctly apply the provisions of Section 69 of the Income Tax Act, which mandate that any unexplained investment, such as the land transactions identified in the seized materials, must be treated as income unless adequately explained through credible, independent evidence
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 28
or documentation. The absence of such evidence rendered the addition of Rs.91,48,910/- justified." 7. "That the Ld. CIT(A) erred in deleting the addition of Rs.2,00,000/- under Section 69 of the Income Tax Act by relying solely on a reconstructed cash book prepared from the seized documents, twhich lacked independent corroborative evidence. The assessee also failed to establish the genuineness of the transaction or the purported return of funds, making the deletion of the addition improper and unjustified." 8 "That the Ld. CIT(A) failed to consider binding judicial precedents, which unequivocally hold that in cases of unexplained investments or expenditures, the amounts must be treated as unexplained income under Section 69 when the assessee is unable to proviile satisfactory and credible evidence to substantiate the transactions." 9. "That the Ld. CIT(A) erred in dismissing the evidentiary value of the seized documents, which included a specific entry regarding a cheque payment of Rs.2,00,000/-, and in allowing the appeal despite the assessee's failure to provide independent evidence substantiating the claim of deal cancellation or the return of funds." 10. That the Ld. CIT(A) overlooked the critical fact that the reconstructed cash book relied upon by the assessee was not part of the regular accounting records maintained prior to the search operation. This reconstructed cash book, created solely to explain the seized materials post-facto, could not be treated as credible evidence to rebut the direct evidence of unexplained transactions obtained during the search." 11. "That the Ld. CIT(A) improperly shifted the burden of proof onto the Assessing Officer ("AO"), despite the settled legal principle that the primary onus to explain unexplained transactions under Section 69 lies on the assessee. The failure of the assessee to furnish sufficient evidence to establish the genuineness of the Rs.2,00,000/- transaction, warranted the confirmation of the addition made by the AO." 12. The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal." 37. Ground Nos. 1 to 6 pertain to addition of Rs. 91,48,910/- on account of unexplained investment/advance. The Ld. CIT-DR explained that the AO had made this addition for the reason that the source of payment for total investment/payments of Rs. 91,48,910/- made during the year was unexplained due to non-availability of funds in the modified cash book on the dates when these payments were made. He explained
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 29 that the negative cash balance had arisen due to non-acceptance of return of receipt amounting to Rs. 73,00,000/- on cancellation of Sadra land deal. Further, the AO also did not accept the return of cash receipts on cancellation of the following land deals during the year:
Date Name of the land Cash Receipt (Rs)
07.03.2017 Rancharda village survey 16,50,000/- No. 656
30.05.2017 Chhala land 3,50,000/-
31.05.2017 Chekhlarani land 2,00,000/-
Total 22,00,000/-
The Ld. CIT-DR submitted that the Ld. CIT(A) was not correct in accepting the return of the above cash receipts in the absence of any entry appearing in this regard in the seized documents. Further, no evidence in the form of cancelled banakhat, confirmation of the land holder or any other corroborative documentary evidence was brought on record by the assessee.
Per contra, Shri Parin Shah, the Ld. AR strongly supported the order of the Ld. CIT(A) on this issue.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 30 39. We have considered the rival submissions. The Assessing Officer made the addition on the ground that the source of cash payments aggregating to Rs.91,48,910/-, made towards various investments/properties during the year, remained unexplained as the modified cash book did not reflect sufficient cash balance on the respective dates of such payments. According to the AO, the deficit in cash balance primarily arose on account of the non-acceptance of the assessee's claim of receipt of Rs.73,00,000/- allegedly received on cancellation of the Sadra land transaction. Besides the said amount, the Assessing Officer also rejected the assessee's claim of having received cash refunds on cancellation of three other land transactions during the relevant previous year, as the alleged receipts were not supported by any contemporaneous evidence. The learned CIT(A), however, accepted the assessee's explanation and treated the aforesaid cash receipts as available for explaining the impugned investments. In our considered view, the approach adopted by the learned CIT(A) is not sustainable. The alleged cash receipts on account of cancellation of land transactions are not borne out by the seized material. The seized documents, while recording the payment of cash advances, do not contain any corresponding entries evidencing cancellation of the transactions or receipt of the alleged cash refunds. Moreover, the assessee failed to produce any independent and reliable evidence, such as cancelled Banakhat (agreement to sell), confirmations from the respective land owners, receipts acknowledging repayment, any correspondence or any other corroborative documentary material to substantiate that the transactions were in fact cancelled and the cash advances were refunded.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 31 40. The acceptance of such claims merely on the basis of the assessee's oral explanation, without any supporting evidence, is contrary to the settled principles governing appreciation of evidence in search assessments. Once incriminating seized documents establish payment of cash advances, the burden squarely lies upon the assessee to establish, by cogent and credible evidence, the subsequent cancellation of the transactions and actual receipt of cash refunds. In the absence of any such evidence, the explanation cannot be accepted. The addition of Rs. 91,48,910/- is on account of negative cash balance as worked out by the AO. While adjudicating the appeal for A.Y. 2015-16, the claim of the assessee regarding receipt of Rs.73,00,000/- on account of cancellation of the Sadra land transaction has already been rejected and the action of the AO on that issue has been upheld. Therefore, the direction of the Ld. CIT(A) to consider the availability of Rs. 73,00,000/- on cancellation of Sadra land deal, is reversed.
The assessee had contended that he had received total amount of Rs. 22,00,000/- during the year on cancellation of three other land deals. From the images seized from mobile phone of the assessee it transpires that the assessee had made total advance of Rs. 16.50 lakhs to one Shri Dashrathbhai A. Patel in 10 instalments during the period from 08.04.2016 to 14.02.2017. According to the assessee, this amount was received back on 07.03.2017. However, no such entry for receiving back of the amount on 07.03.2017 was appearing in the seized document. The contention of the assessee that this advance was made for purchase of land under survey No. 656 is also not found corroborated by the entry in the seized documents as no such survey no. is found referred anywhere in the seized
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 32 document. The explanation of the assessee that the deal was cancelled due to acquisition of the said land by the government is also not found convincing. It is difficult to believe that the assessee kept on making payments from 08.04.2016 to 14.02.2017 without inquiring about the status of the land and suddenly the land was acquired by the government within three weeks of last payment by the assessee. Similarly, for refund of Rs. 3.5 lakhs and 2 lakhs on cancellation of Chhala land and Chekhlarani land also, no such entry is appearing in the seized document. The seized document records only cash payments and no corresponding entry negating or reversal of the payments is found either in the seized material or in any other contemporaneous record. The assessee has merely contended that amounts were subsequently returned which remains unsupported by any independent or corroborative evidence such as receipts, or confirmations of the corresponding parties. In view of these specific facts and the reasons as already discussed on the identical issue in the appeal of earlier years, we hold that the Ld. CIT(A) was not correct in accepting the return of Rs. 22,00,000/- on account of cancellation of three land deals.
The correct cash flow and cash balance, after giving effect to the findings recorded in A.Y. 2015-16 and after rectifying any arithmetical mistake, need to be worked out afresh. Accordingly, in the interest of justice, the impugned order of the learned CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer. The AO shall recompute the cash balance after giving due effect to the findings recorded in A.Y. 2015-16 regarding the non-acceptance of the alleged receipt of Rs.73,00,000/-, rectify arithmetical errors in the cash flow
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 33 computation, take into account the directions given in the other earlier years and thereafter decide the issue afresh in accordance with law after affording the assessee a reasonable opportunity of being heard. The AO will also exclude the cash receipt of Rs. 22,00,000/- on cancellation of three land deals made during the year. The issue of addition in respect of unexplained investments during the year should be decided on the basis of the re-worked cash balance. The grounds taken by the Revenue are allowed for statistical purpose.
Ground No. 7 to 11 pertain to addition of Rs. 2 lakhs on account of unexplained investment. From page No. 8 of Annexure A-1, it transpired that the assessee had made payment of Rs. 2 lakh by cheque towards Chekhlarani land. In the absence of any supporting evidence towards payment of Rs. 2 lakhs by cheque, the AO had treated this amount as unexplained investment.
We have heard the Ld. CIT-DR and Ld. AR on this issue. When the entry recorded in the seized document was Rs. 2 lakh by cheque, we fail to understand as to how this was considered as unexplained investment by the AO. Any payment by cheque is duly reflected in the bank statement and also recorded in the books of accounts. It is not the case of the AO that the bank account to which this cheque was drawn was not disclosed to the Department. The AO has also did not verify whether the payment made by this cheque was actually encashed. As the payment by cheque could not have been considered as unexplained investment, the Ld. CIT(A) had rightly deleted the addition. Accordingly, the grounds taken by the Revenue are dismissed.
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In the result, the appeal of the Revenue is partly allowed for statistical purpose.
IT(SS)A No. 4/Ahd/2025: A.Y. 2020-21
The Grounds taken by the Revenue in this appeal are as under:
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.3,12,86,063/ made by the A.O. under Section 69 of the Income Tax Act, 1961, and not appreciating that the assessee did not provide credible or substantive evidence, such as cancelled agreements, confirmations from counterparties, or any other independent documentation, to substantiate the source of the unexplained cash payments for land transactions." 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on a reconstructed cash book prepared by the assessee post-search operations, which was neither contemporaneous nor part of the assessee's regular accounting records, and further overlooked glaring discrepancies, including mathematical errors, making the cash book unreliable and devoid of independent corroborative evidence." 3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the onus to explain and substantiate the source of unaccounted cash transactions rested entirely with the assessee. The inability of the assessee to produce reliable and independent evidence to validate the cash payments discovered during the search operation clearly justified the addition of Rs. 3,12,86,063/-under Section 69 of the Income Tax Act." 4. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in disregarding the direct evidence available in the seized materials, which clearly indicated the presence of unexplained cash transactions. By accepting the reconstructed cash book without conducting any independent verification or scrutiny, the Ld. CIT(A) rendered the findings flawed and legally unsustainable." 5. "That the Ld. CIT(A) deleted the addition under Section 69 without properly applying the established principles of burden of proof and failed to
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 35
recognize that the assessee did not discharge the statutory onus of proving the genuineness of the cash transactions or the source of funds used for the land transactions, thus warranting the addition made by the AO."
"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) hasfailed to correctly apply the provisions of Section 69 of the Income Tax Act, which mandate that any unexplained investment, such as the land transactions identified in the seized materials, must be treated as income unless adequately explained through credible, independent evidence or documentation and the absence of such evidence rendered the addition of Rs. 3,12,86,063/- justified."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.50,12,021/- made by the A.O. under Section 69 of the Income Tax Act, 1961, and not appreciating that the assessee had failed to furnish any independent evidence to corroborate hus contentions with regards to the transactions found in the seized material and mainly relied upon the cash book prepared during the course of the assessment proceedings to accommodate his unexplained transactions and to color his unaccounted and unexplained transactions as accounted transactions and make them to appear as explained transactions with the assessee and the inability of the assessee to produce reliable and independent evidence to validate the cash payments discovered during the search operation clearly justified the addition of Rs. `50,12,021/- u/s. 69 of the IT Act.
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred deleting the addition of Rs.4.56.51,500/- made by the A.O. under Section 69A of the Income Tax Ac 1961, by failing to appreciate that the assessee had failed to provide any credible evidence or satisfactory explanation regarding the origin of Rs. 4,56,51,500/- [Rs. 4,76,51,500/- (-) Rs. 20,00,000/-1.
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that in the statement recorded on 15.10.2019, the assessee was questioned (Questions 13 to 25) about the source of the seized amount and the assessee had not provided satisfactory explanation, nor any documents was presented to establish the accounted and explained source of the fund."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) haserred in ignoring that, the cash book contains numerous
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 36
inconsistencies when compared to the transactions recorded in the seized material and many of the entries in the cash book are either unsupported or insufficiently documented and thus, this reconstructed cash book cannot be relied upon."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.25,00,000/- made by the A.O. under Section 69A of the Income Tax Act. 1961, by failing to appreciate that the transactions recorded in incriminating documents were related to cash payment of Rs. 25 lakh made to Somaji Danaji Thakor and Udaji Punjaji for land transactions at Survey Nos. 99 and 100 in Unali."
That the Ld. CIT(A) deleted the addition under Section 69A without properly applying the established principles of burden of proof and failed to recognize that the assessee did not discharge the statutory onus of proving the genuineness of the cash transactions or the source of funds used for the land transactions, thus warranting the addition made by the AO."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.9,06,00,210/- made by the A.O. under Section 69 of the Income Tax Act 1961, by failing to appreciate that the transactions mentioned in pages 27 and 28 of Annexure-A/3 was related to the Kadambari Plotting Scheme, covering 7.710 square yards at a rate of Rs. 11.751 per square yard, with a total land cost of Rs. 9,06,00,210/- and the same had been confirmed by Shri Dhaval A. Teli in his statement recorded u/s. 131 of the IT Act on 15.11.2019."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that, the assessee attempted to link the transactions recorded in Annexure-A/3 with those on Pages 48 and 49 of Annexure-A/1, which had been seized from the Brooklyn Office but this interpretation was not supported by the facts and was inconsistent with the details recorded in the seized noting and the assessee had failed to provide any credible evidence to reconcile these discrepancies."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) had failed to appreciate critical issue of the temporal gap between the purchases and sale transactions as recorded in the seized documents e.g pages 48 and 49 of Annexure A/1 indicate that payments for the purchases of the land were made between February 7, 2018, and June 4, 2018, while the receipts for the sale of land in pages 27 and 28 of Annexure A/3 were recorded beginning February 2, 2019, this creates a temporal gap of over a
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 37
year, directly contradicting the assessee's claim that the purchase and sale were part of a single transaction
That the Ld. CIT(A) deleted the addition under Section 69 without properly applying the established principles of burden of proof and failed to recognize that the assessee did not discharge the statutory onus of proving the genuineness of the cash transactions or the source of funds used for the land transactions, thus warranting the addition made by the AO"
The learned CIT(A) failed to properly appreciate the evidentiary value of the seized material seized under Section 132 of the Income Tax Act, 1961 and also erred in disregarding this material in favor of explanations unsubstantiated by independent evidence."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) had failed to consider the legal precedents, including the decision ofthe Hon'ble High Court in CIT v. S.R.K. Suryanarayan (80 ITR 692) who held that proximity, without corroborative evidence, cannot substantiate a claim that transactions involving different properties are connected and the assessee had not presented any additional evidence linking the two transactions, making their reliance on geographical proximity irrelevant"
Further, In the judgment pronounced by the Hon'ble Supreme Court in CIT v. P.K. Noorjahan (237 ITR 570) and CIT v. P.R.S. Somasundaram (254 ITR 593) held that discrepancies in recorded amounts, when unexplained, warrant additions under section 69 of the IT Act."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) had failed to consider the legal precedents, including the decision of the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More (1971) and Sumati Dayal Vs. CIT (1995) wherein it is held that unexplained entries in seized documents can be treated as unexplained income if not substantiated by satisfactory evidence and that evidence must be assessed in the context of human conduct and probabilities and in Sumati Dayal, it was stated that transactions that appear to be unconventional or unexplainable should raise suspicion of concealment or understatement of Income."
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) had failed to consider the legal precedents, including the decision of the Court in Chuharmal v. CIT (1988), in which the Court reaffirmed that seized documents carry evidentiary weight and place the onus on the assessee to explain the source of income or expenditure reflected therein and
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 38
the burden of proof, in such cases, shifts to the assessee when seized documents indicate unexplained or dubious cash transactions and these rulings firmly establish the principle that it is the responsibility of the assessee to provide satisfactory evidence to explain any discrepancies or unexplamed entries, particularly when documents seized by the authorities suggest potential tax evasion." 23. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) had failed to consider the legal precedents, including the decision of the Hon'ble Supreme Court, in Kale Khan Mohammad Hanif V. CIT (1963) 50 ITR 1 (SC), wherein the court held that unexplained entries in the books of accounts or other evidence are liable to be taxed under Section 69 of the Income Tax Act unless the assessee satisfactorily explains their source and in this case, the assessee had failed to establish the genuineness of his claims." 24. The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal" 47. Ground Nos. 1 to 6 pertain to addition of Rs. 3,12,86,063/- in respect of unexplained/advance/expenses. The Ld. CIT-DR explained that this addition was made for the reason that no funds were available in the cash book on the dates on which these expenses, as detailed in para 5.12 of the assessment order, were incurred. He explained that the assessee had contended that a sum of Rs. 7,27,59,000/- was received back by the assessee on the cancellation of the following land deals.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 39
The Ld. CIT-DR submitted that as per various seized documents, details of cash advances made by the assessee for purchase of different parcels of land as mentioned above, were found in respect of each of these land transactions. The assessee had admitted having made the cash payments but had contended before the AO that the proposed transactions were subsequently cancelled due to defective title, dispute among land owners and for other reasons and that the cash advances were refunded. According to the assessee the payments and subsequent receipts of the advances were duly reflected in the cash book prepared by the assessee. The Ld. CIT-DR submitted that the explanation of the assessee was rightly rejected by the AO, as this was mere an afterthought at the assessment stage and neither such explanation was given at the time of recording of statement during search nor any evidence for refund of amounts was found in the course of search. Therefore, the AO had
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 40 rightly rejected the refund of advance and had excluded the entries for such refund entries from the cash book, which had resulted in a negative cash balance. Consequently, the source of subsequent payments, advances, expenditures, aggregating to Rs. 3,12,86,063/- had remained unexplained due to negative cash balance in the cash book. He submitted that the Ld. CIT(A) was not correct in deleting the addition and that his decision was based on incorrect appreciation of facts of the case.
Per contra, Shri Parin Shah, the Ld. AR strongly supported the order of the Ld. CIT(A). He submitted that the assessee was engaged in the business of land brokerage and land trading, where it was common practice for cash to be entrusted to broker. The assessee had brought on record, the confirmation of the broker who had refunded the cash amounts on cancellation of the land deals. He further submitted that from copy of Form No. 7/12, brought on record, it was evident that the pieces of land for which advance was given, was not transferred in the name of the assessee. He further submitted that the AO did not make any inquiry in respect of the evidences brought on the record in the course of assessment proceeding in the form of affidavit of broker to disprove the assessee’s explanation. According to the Ld. AR there was no negative cash balance after taking into account the amount refunded to the assessee on cancellation of land deals.
We have considered the rival submissions and gone through the evidence as brought on record in the assessment order. The moot issue to be decided is whether the AO was justified in treating the investments, advances and expenditure aggregating to Rs.3,12,86,063/- as
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 41 unexplained on account of insufficiency of cash balance, or whether the learned CIT(A) was justified in deleting the addition after accepting the assessee's claim that the cash advances made in respect of various land transactions had been refunded on cancellation of the deals. It is an admitted position that the seized documents record cash advances made by the assessee towards acquisition of various parcels of land. It is equally undisputed that none of the seized documents records either cancellation of the transactions or refund of the advances. The entries showing receipt of cash on cancellation of the transactions were introduced by the assessee while preparing the cash book subsequent to the search. Therefore, the initial burden squarely rested upon the assessee to establish, by cogent and contemporaneous evidence, that the advances were actually refunded. The fact that the assessee had made advance for purchase of different pieces of land was not disputed by the assessee. The assessee had contended before the AO that all these land transactions were cancelled and the amounts were refunded back. However, the amount alleged to be received back by the assessee is not recorded in any of the seized documents. The assessee had prepared the cash book on the basis of the entries recorded in the seized material and also the refund of advances, which were not part of seized material. Thus, the dispute essentially revolves around correctness of the unaccounted cash book prepared by the assessee and consequently the availability of cash balance for explaining various investments, advances and expenditure made during the year.
The Assessing Officer had rejected the contention of the assessee regard refund of advances on the ground that the assessee had failed to
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 42 produce documentary evidence such as cancellation agreement, confirmation from the land owners or any other independent evidence, establishing that the advance was actually refunded. On excluding such receipt entries in the cash book, the AO had arrived at a negative cash balance and had, therefore, held that subsequent payments aggregating to Rs. 3,12,86,063/- represented unexplained investments liable to be taxed u/s 69 of the Act. On the other hand, the Ld. CIT(A) accepted the assessee’s explanation in respect of most of the refund transactions.
We have already discussed the identical issue in the appeal of earlier years and the findings given in those years is applicable to this year as well. The principal reasoning adopted by the learned CIT(A) is that since the ownership of the lands never stood transferred in favour of the assessee or subsequently came to vest in third parties, the inevitable inference is that the transactions had failed and the advances must have been refunded. In our considered opinion, such inference is legally unsustainable.
As already mentioned earlier, the land details were not available in the seized documents. Therefore, it couldn’t have been ascertained with certainty as to for which parcel of land the advances were given by the assessee. The assessee was a land broker and the possibility of the properties, for which advance was made, being disposed of without getting them transferred in the name of the assessee, couldn’t have been ruled out. The contention of the assessee regarding cancellation of all the thirteen land transactions, during the year itself, was too far-fetched and could not have been accepted in the absence of any evidence in this respect in the seized documents. Further, the fact that a proposed
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 43 transaction did not culminate in transfer of ownership merely establishes that the sale was not officially completed. It does not necessarily follow that the entire advance paid by the proposed purchaser was refunded. Cancellation of a transaction and refund of the consideration are two distinct events. The former does not automatically establish the latter. Consequently, the mere absence of transfer of ownership cannot be treated as proof of receipt of cash by the assessee. The question whether the money was actually returned or not is an independent question of fact requiring independent evidence. Revenue records like Form No. 7/12 may establish ownership of land, but they do not establish refund of cash paid in connection with an aborted transaction. The copies of Form No.7/12 relied upon by the learned CIT(A) merely establish the ownership position of the respective lands. Such revenue records neither record nor certify the refund of cash advances. Therefore, these documents have no evidentiary value in establishing the payment or receipt of cash by the assessee.
The learned CIT(A) has also placed substantial reliance upon affidavits furnished by the brokers. However, it is pertinent to note that the seized documents themselves do not indicate that the payments were made to the concerned brokers. The affidavits filed by the brokers constitute only a piece of evidence. The evidentiary value of the affidavits is required to be tested in the light of surrounding circumstances and independent verification. Merely because an affidavit has been filed cannot lead to an automatic acceptance of the transaction, particularly when the transactions involve substantial cash payments running into several crores of rupees and when the seized documents themselves do not specifically record that the payments were entrusted to the concerned
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 44 brokers. The affidavits are not supported by any contemporaneous documentary evidence such as receipts acknowledging repayment, settlement deeds, books of account maintained by the brokers, correspondence regarding cancellation, or confirmations from the landowners. In absence of such independent corroboration, the affidavits by themselves cannot be regarded as sufficient proof of refund of substantial cash amounts running into several crores of rupees. The appellate authority is required to adjudicate the issue on the basis of legally admissible and reliable evidence. The absence of enquiry by the Assessing Officer does not dispense with the assessee's obligation to discharge the burden cast upon him under the Act.
The learned CIT(A) has further observed that the modified cash book prepared by the Assessing Officer suffered from computational errors in carrying forward negative cash balances after making additions in earlier years. Even assuming that certain computational mistakes existed, the same would not by itself establish that the disputed refund entries were genuine. Unless the correctness of every disputed receipt is first established, preparation of a revised cash book cannot lead to a correct determination of the available cash balance. Therefore, the foundation adopted by the learned CIT(A) for recasting the cash book itself is found to be unsustainable.
The availability of cash balance is entirely dependent upon the genuineness of the disputed receipt entries. Once the evidence regarding refund of advances is found to be inconclusive, the cash book prepared by incorporating such disputed receipts cannot be accepted. Consequently, the conclusion drawn by the learned CIT(A) that sufficient
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 45 cash balance existed for explaining the subsequent investments and expenditure, cannot be sustained.
We are, therefore, unable to uphold the findings recorded by the learned CIT(A). The learned CIT(A) accepted the assessee's explanation on the basis of presumptions and circumstantial material which, in our considered opinion, is insufficient to conclusively establish actual receipt of cash by the assessee. The order of the learned CIT(A), therefore, suffers from improper appreciation of evidence and cannot be sustained.
Accordingly, the order of the learned CIT(A) deleting the addition of Rs.3,12,86,063/- is set aside. The correct cash flow and cash balance, after giving effect to the findings recorded in the earlier years including rectifying the arithmetical mistakes, need to be worked out afresh. Accordingly, in the interest of justice, the impugned order of the learned CIT(A) on this issue is set aside and the matter is restored to the file of the Assessing Officer. The AO shall recompute the cash balance after giving due effect to the findings given by us in the earlier years and also the findings as given above for this year; and thereafter decide the issue afresh in accordance with law after affording the assessee a reasonable opportunity of being heard. The issue of addition in respect of unexplained investments during the year should be decided on the basis of the re- worked cash balance. The grounds taken by the Revenue are allowed for statistical purpose.
Ground Nos. 7 and 8 pertain to addition of Rs. 50,12,021/- made by the AO as unexplained investment due to negative balance as on 15.10.2019. We have heard the Ld. CIT(A) and LD. AR on this issue. The AO had arrived at negative cash balance of Rs. 50,12,021/- as on
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 46 15.10.2019 after excluding the cash receipts claimed by the assessee having been received on cancellation of land transactions relating to 13 properties. On this basis the AO had treated the negative cash balance as representing unexplained investment/payments. The Ld. CIT(A) had noted that the negative cash balance in the modified cash book was not only due to AO’s rejection of the cash receipts entries but was also due to arithmetic and computational error committed while recasting the cash book. According to the Ld. CIT(A) after accepting the assessee’s explanations regarding refund of cash on cancellation of land deals and after correcting the computational errors, the unaccounted cash book was required to be re-casted and on such a recasting no negative cash balance remained during the year and, therefore, the Ld. CIT(A) had deleted the addition as made by the AO. As already discussed earlier, the matter regarding the refund of cash on cancellation of land deals has been decided against the assessee and the matter has been set aside to the file of the AO for preparation of cash book afresh. Since the cash book of the assessee is required to be re-casted, this issue is also required to be set aside to the file of AO. The AO should re-adjudicate this issue after recasting the cash book and after allowing an opportunity of being heard to the assessee. The grounds taken by the Revenue are allowed for statistical purpose.
Ground number 9 to 11 pertain to addition of Rs. 4,56,51,500/- in respect of unexplained cash seized during the search. In the course of search, a cash of Rs. 4,76,51,500/- was found from the residential premises of the assessee. According to the assessee the closing balance of cash in hand as on 14.10.2019 was Rs. 7,27,46,979/-. The AO had,
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 47 however, rejected this cash balance and considered only the amount of Rs. 20,00,000/- on account unaccounted cash disclosed in the ITR for A.Y. 2020-21. Therefore, he had made addition for balance amount of Rs. 4,56,51,500 and treated the same as unexplained cash. According to the AO, the cash book reflected negative cash balance after excluding the cash receipts relating to cancelled land transactions. On the other hand, the Ld. CIT(A) had accepted the cash receipts relating to cancelled land transactions and after rectifying the arithmetical errors in the modified cash book, had concluded that there was no negative cash balance. According to him, the cash balance as on date of search was sufficient to explain the seized cash of Rs. 4,76,51,500/- found in the course of search. Therefore, he had deleted the addition.
We have heard the Ld. CIT(A) and Ld. AR. The decision of the AO as well as the Ld. CIT(A) on this issue is based on the re-casted cash book, wherein the cash receipt relating to cancelled land transaction was excluded by the AO but was accepted and included by the Ld. CIT(A). Since, the issue of preparation of correct cash book has been set aside to the file of the AO, the present issue can be adjudicated only after the recasting of the cash book. Therefore, this issue is also set aside to the file of the AO for fresh adjudication after first preparing the correct cash book and ascertaining the availability of cash on the date of search. The grounds taken by the Revenue are allowed for statistical purpose.
Ground No. 12 and 13 pertain to deletion of the addition of Rs. 25,00,000/- in respect of alleged unaccounted brokerage. The facts emerging from the record are that the Assessing Officer made the
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 48 impugned addition on the basis of a seized image found in the assessee's mobile phone containing certain notings relating to Unali land bearing Survey Nos. 99 and 100 (corresponding to old Survey Nos. 126 and 127). According to the AO, the said noting represented unaccounted brokerage of Rs.25,00,000 earned by the assessee, and such inference was drawn primarily on the basis of the statement recorded from the assessee during the post-search proceedings. The learned CIT(A), however, deleted the addition after examining the material on record. It has been recorded that throughout the assessment proceedings the assessee consistently explained that the seized image was only a WhatsApp message received from another broker indicating that some other person had paid Rs.25,00,000 to Somaji Danaji and Udaji Pujaji towards purchase of the said land. It was further explained that neither the assessee's name figured in the seized image nor was there any evidence to indicate that the assessee had either made the payment or received any brokerage in connection with the transaction. The learned CIT(A) has also noticed that the AO himself accepted the assessee's explanation regarding cash payments aggregating to Rs.78.09 lakh made through Mahendrabhai Prajapati (Patel) towards acquisition of Unali Survey No. 126, and such payments stood duly recorded in the cash book prepared from the seized material. Once the Assessing Officer had accepted these cash payments relating to the very same land transaction, the learned CIT(A) found it inherently improbable that there was yet another independent payment of Rs.25 lakhs to Somaji Danaji and Udaji Pujaji in respect of the same transaction.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 49 62. We have heard the Ld. CIT-DR and Ld. AR on this issue. We find that the learned CIT(A) has correctly pointed out the inconsistency in the stand adopted by the Assessing Officer. While the assessment order initially suggested that the amount of Rs.25,00,000 represented cash payment towards acquisition of land, the AO ultimately treated the same as unaccounted brokerage income without carrying out any independent enquiry to ascertain the true character of the transaction. No enquiry was conducted from the alleged recipients of the amount, nor was any evidence brought on record to establish that the assessee had in fact paid Rs.25,00,000/- or had earned brokerage of an equivalent amount. Apart from the seized image, which admittedly does not contain the name of the assessee, there is no corroborative material linking the impugned amount with the assessee. It is well settled that an addition cannot be sustained merely on the basis of suspicion or conjecture. A loose paper or an electronic noting, without independent corroboration establishing its authorship, authenticity and nexus with the assessee, cannot by itself constitute sufficient evidence for making an addition, particularly when the assessee has offered a plausible explanation and the Revenue has failed to disprove the same through any independent investigation.
In the present case, the Revenue has not pointed out any infirmity in the factual findings recorded by the learned CIT(A). The acceptance by the Assessing Officer of the cash payments of Rs.78.09 lakh relating to the same land transaction further lends support to the conclusion reached by the learned CIT(A) that the impugned noting could not simultaneously be treated as a separate payment or as brokerage income in the hands of the assessee without any supporting evidence. Accordingly, we find no
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 50 reason to interfere with the order of the learned CIT(A) deleting the addition of Rs.25,00,000/-. The order of the learned CIT(A) on this issue is affirmed, and the grounds raised by the Revenue stand dismissed.
The Ground Nos. 14 to 23 relate to the deletion of the addition of Rs.9,06,00,210/- made by the Assessing Officer under section 69 of the Act on account of alleged unexplained investment in the Kadambari Plotting Scheme. We have heard the Ld. CIT-DR and the Ld. AR on this issue. The Assessing Officer made the impugned addition on the basis of the notings contained on Pages 27 and 28 of Annexure A/3 seized during the course of search. According to the AO, the said notings represented unexplained investment made by the assessee in the Kadambari Plotting Scheme. The explanation of the assessee that these pages were required to be read together with Pages 48 and 49 of Annexure A/1, which represented the purchase of the same land, was rejected on the ground that the two sets of documents related to different transactions. The learned CIT(A), after examining the seized material in its entirety, found that the approach adopted by the AO was not borne out from the record. It has been recorded that Pages 48 and 49 of Annexure A/1 reflected payments aggregating to Rs.4.16 crore, comprising Rs.3.00 crore paid in cash and Rs.1.16 crore by cheque, towards the purchase of land situated at Nasmed. On the other hand, Pages 27 and 28 of Annexure A/3 recorded receipts aggregating to Rs.5.00 crore, comprising Rs.3.75 crore in cash and Rs.1.25 crore by cheque, received on the sale of the same land under the Kadambari Scheme. On a conjoint reading of the seized documents, the learned CIT(A) concluded that the two sets of notings represented different stages of the same transaction, namely, the
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 51 purchase and subsequent sale of the same parcel of land and, therefore, could not be read in isolation.
The learned CIT(A) has further observed that the assessee substantiated the nexus between the two documents by producing the Google Map demonstrating the geographical proximity of the Kadambari Scheme to Nasmed village. The material on record supported the assessee's explanation that "Kadambari" was the plotting scheme developed on the land purchased at Nasmed. The chronological sequence of the transactions also lends support to the explanation furnished by the assessee. The purchase payments were recorded during the period from February 2018 to June 2018, whereas the sale receipts were reflected during the period from February 2019 to October 2019. Such sequence is wholly consistent with the normal course of acquisition, development and subsequent sale of land. The learned CIT(A) has also accepted the assessee's explanation that the transaction was undertaken jointly with Shitalbhai and Shashikantbhai (Bhuralal), wherein the land was purchased for Rs.4.16 crore and subsequently sold for Rs.5.00 crore. The resultant profit was shared amongst the three participants. It has further been found as a matter of fact that the cash payments towards purchase as well as the cash receipts from sale stood incorporated in the unaccounted cash book prepared from the seized material. The resultant profit/commission arising from the transaction had also been offered to tax by the respective partners. These factual findings have not been controverted by the Revenue by bringing any material on record.
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 52 66. We find that the Assessing Officer had proceeded to make the addition merely on the basis of the notings appearing on Pages 27 and 28 of Annexure A/3 without appreciating the seized material as a whole. The settled principle is that seized documents cannot be read selectively or in isolation when other contemporaneous documents forming part of the same seized record explain the true nature of the transaction. The Revenue has not conducted any independent enquiry nor brought any corroborative evidence to establish that the land referred to in the Kadambari Scheme and the land situated at Nasmed were two distinct and independent properties. In the absence of any such material, the conclusion drawn by the Assessing Officer that the assessee had made an unexplained investment of Rs.9,06,00,210/- remains unsupported.
Once the seized documents are read harmoniously, as rightly done by the learned CIT(A), they clearly evidence only the purchase and subsequent sale of the same parcel of land. The corresponding cash transactions already stand reflected in the unaccounted cash book, and the profit arising therefrom has admittedly been offered to tax. In such circumstances, there is no basis for treating the figures appearing in the seized documents as constituting a fresh unexplained investment liable to addition under section 69 of the Act.
The Revenue has not pointed out any infirmity in the factual findings recorded by the learned CIT(A) nor has it brought any material to dislodge the conclusion that the seized documents relate to a single integrated transaction. We, therefore, find ourselves in agreement with the reasoning and conclusion arrived at by the learned CIT(A). Accordingly, we uphold
IT(SS)A Nos. 185 to 187/Ahd/2024 & 4/Ahd/2025 Dhaval Teli Vs ACIT, AY- 2015-16, 2017-18, 2018-19 & 2020-21 53
the order of the learned CIT(A) deleting the addition of Rs.9,06,00,210/- made u/s 69 of the Act. The grounds raised by the Revenue are dismissed.
In the result, the appeal of the Revenue is partly allowed for statistical purpose.
In the final result, all the appeals of the Revenue are partly allowed.
Order pronounced in the Court on 27/07/2026 at Ahmedabad.
Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 27th July, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file.
आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार
पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद
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