DEPUTY COMMISSIONER OF INCOME TAX, MUMBAI vs. HETAL NITIN SHAH, MUMBAI

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ITA 6032/MUM/2025Status: DisposedITAT Mumbai23 September 2026AY 2019-20208 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s action in restricting the addition to ₹2,46,000/- and granting relief of ₹2,44,14,000/-. The Tribunal found that the assessment order did not demonstrate the basis for decoding the diary entries by suppressing the last two digits. No statement or material was referred to that established Late Shri Nitin R. Shah followed such a method. This was significant as the author of the diary was unavailable. The statements of Shri Ketan R. Shah and Smt. Hetal Nitin Shah, who both denied the use of coded language by the deceased, further weakened the Revenue's case. The Tribunal noted that the Revenue's learned DR fairly conceded that there was no statement on record explaining the methodology adopted by the AO. The mere presence of figures in the diary could not justify an arbitrary multiplication by 100 without supporting material. The CIT(A) had correctly distinguished between the actual figures and the enhanced figures derived from an assumed coding mechanism, which lacked corroborative material. The appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue is in appeal against the order of the CIT(A)-53, Mumbai, which deleted an addition of ₹2,44,14,000/-. The addition was made by the DCIT-CC-5(3), Mumbai, under section 153A read with section 263 of the Income-tax Act, 1961, for Assessment Year 2019-20. The addition was based on entries found in a pocket diary seized during a search action on the premises of Late Shri Nitin R. Shah. The Assessing Officer (AO) treated these entries as coded transactions, suppressing the last two digits, and added ₹2,46,60,000/- as unrecorded cash transactions under section 69A. The assessee is Hetal Nitin Shah, the legal heir of Late Shri Nitin Shah. The assessment proceedings were continued against her after Shri Nitin Shah's death.

What were the issues?

1. Whether the Tribunal had to decide if the Assessing Officer's addition of ₹2,46,60,000/- based on diary entries, interpreted as coded transactions with suppressed last two digits, was justified. Assessee's contentions: The assessee argued that there was no material to establish that the diary entries were coded. No cash was found or seized. The diary belonged to Late Shri Nitin R. Shah, and since he had expired, the alleged method of coding could not be explained by him. Shri Ketan R. Shah, brother of the deceased, stated that Late Shri Nitin Shah never wrote amounts in codes and the figures appeared to be absolute. Smt. Hetal Nitin Shah also confirmed her husband never wrote in coded language. The AO's conclusion was based solely on an assumption. Revenue's contentions: The Revenue supported the AO's order, submitting that the nature and manner of recording amounts in the diary justified the AO's conclusion that the last two digits were suppressed. Therefore, the entire addition of ₹2,46,60,000/- should be sustained.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 263,Section 69A,Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL

For Respondent: Shri Neelkanth Khandelwal, CA
Pronounced: 23.09.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: E BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 6032/MUM/2025 (िनधा�रण वष�/Assessment Year: 2019-2020) Deputy Commissioner of Income Tax Hetal Nitin Shah Room No.429, 4th Floor, (legal heir of Late Shri Nitin Kautilya Bhavan, BKC, Shah) Mumbai-400051, Maharashtra 91, Nandalaya Hatkesh CHS, Vs. NS Road No.6, JVPD Scheme Mumbai-400056, Maharashtra

अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AADPS5476M

अपीलाथ� �ारा/Appellant represented by: Smt. Amrita Singh, CIT DR ��थ� �ारा/Respondent represented by: Shri Neelkanth Khandelwal, CA

सुनवाई की तारीख / Date of conclusion of hearing: 01.07.2026 घोषणा की तारीख / Date of pronouncement: 23.09.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by Revenue is against the order of the ld. CIT(A)- 53, Mumbai vide No. ITBA/APL/S/250/2025-26/1079103199(1) dated 30.07.2025, passed against the assessment order by DCIT- CC - 5(3), Mumbai, u/s. 153A r.w.s.263 of the Income-tax Act, 1961 (‘the Act’) dated 31. 12.2024, for Assessment Year 2019-20.

2.

Ground of appeal raised by the Revenue is as under:

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 The learned CIT(A) has deleted the addition of ₹2,44,14,000/- made 1) by the AO, merely on the ground that the Assessing Officer had not provided basis for treating the diary entries as coded transactions. 3. Brief facts of the case are that a search and seizure action under section 132 of the Act was conducted in the case of RPS Group on 06.11.2019. The residential premises of Late Shri Nitin R. Shah were also covered. During the course of search, a pocket diary was found and seized. At the time of search, Shri Nitin R. Shah was out of India. The diary was confronted to his mother Smt. Diwali Ben Rajmal Shah who confirmed that the diary belonged to her son and was maintained by him. Subsequently, Shri Ketan R. Shah, younger brother of Late Shri Nitin R. Shah, also confirmed that the diary belonged to him and that the entries were made by him. During the course of assessment proceedings, Shri Nitin R. Shah had unfortunately expired on 30.05.2021. The fact of his death and the details of his legal heir had been intimated to the Department vide letter dated 24.09.2021. The assessment proceedings were thereafter continued in the name of his legal heir Smt. Hetal Nitin Shah. The assessment was ultimately framed under section 153A r.w.s. 263 of the Act on 31.12.2024.

3.1. The issue before us relates to the addition made by the ld. Assessing Officer on the basis of the entries recorded in the seized diary. According to the ld. Assessing Officer, the entries were recorded in coded form wherein the last two digits were suppressed. An example given by the ld. Assessing Officer was an entry of “18,500.00” which according to him represented an actual amount of Rs.18,50,000/-. On this basis, the ld. Assessing Officer treated the entries as representing unrecorded cash transactions and made addition of Rs.2,46,60,000/- under section 69A of the Act.

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 3.2. The entries considered by the ld. Assessing Officer are reproduced below: No. of No. of Debit Date Debit (Rs.) Credit Credit (Rs.) Entries Entries 11.06.2018 2 18,500.00 9 18,500.00 Monday 12.06.2018 3 22,820.00 4 22,820.00 Tuesday 13.06.2018 2 71,000.00 3 71,000.00 Wednesday 18.06.2018 4 12,380.00 4 12,380.00 Monday 19.06.2018 2 19,400.00 4 19,400.00 Tuesday 20.06.2018 4 91,000.00 7 91,000.00 Wednesday 12.07.2018 1 11,500.00 2 11,500.00 Total 2,46,600.00 2,46,600.00

3.3. Ld. Assessing Officer proceeded on the basis that the figures appearing in the diary were to be multiplied by 100. According to him, the resulting amount represented receipts which were not recorded in the books of account. The addition was accordingly made under section 69A of the Act.

4.

Before the ld. CIT(A), it was submitted that there was no material to establish that the entries in the diary were coded. It was also submitted that no cash was found or seized from the residential premises during the search. It was further submitted that the diary admittedly belonged to Late Shri Nitin R. Shah and the entries were in his handwriting. Since he had expired, the alleged method of coding could not be explained by him. During the appellate proceedings, the statement of Shri Ketan R. Shah recorded on 21.09.2021 was also brought on record. The relevant portion of Question No.20 and its reply

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 have been reproduced by the ld. CIT(A) at page 10 of his order. The same is reproduced as under: “Q.20 On going through the diary, it appears that the value of noting's is coded in such form that the actual value is lesser by two digits. Ans. Sir, I have no idea of the above, as far as my knowledge goes my brother Late Shri Nitin Shah never used to write amounts in codes. From perusal of the diary my impression is that figures are absolute in numbers. I don't understand as to how your honour has come to conclusion that these noting's are in code numbers and that too in such a form that the values mentioned in the diary are lesser by 2 digits then the actual figures. It has already been accepted that the diary belongs to Late Nitin Shah”

4.1. Smt. Hetal Nitin Shah was also examined under section 131 of the Act on 17.12.2024. In reply to Question No.15, she confirmed that the credit entries in the diary were made by her husband Late Shri Nitin R. Shah. At the same time, she stated that her late husband never used to write in coded language. Ld. Assessing Officer however held that no satisfactory explanation was furnished regarding the entries and proceeded to make the impugned addition.

4.2. Ld. CIT(A), after considering the material on record, noted that there was no reference to any statement of Late Shri Nitin R. Shah explaining that the figures in the diary were coded. He further noted that Shri Ketan R. Shah had specifically stated that his brother never used to write amounts in code and that the figures in the diary were absolute numbers. The ld. CIT(A) also took note of the statement of Smt. Hetal Nitin Shah wherein she confirmed the entries but stated that her husband never used to write in coded language. Ld. CIT(A) thereafter recorded that the assessment order did not provide any basis to justify the conclusion that the entries were in code language or that two digits had been deliberately omitted. At the same time, he noted that an amount of Rs.2,46,000/- stood credited in the name of the respondent in the diary and that the respondent could not establish whether such amount was recorded in the books of account. On this basis, ld. CIT(A)

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 restricted the addition to Rs.2,46,000/- and granted relief of Rs.2,44,14,000/-. Aggrieved, Revenue is in appeal before the Tribunal.

5.

Before us, ld. CIT DR supported the order of ld. Assessing Officer. It was submitted that the diary was admittedly maintained by Late Shri Nitin R. Shah and the entries therein were made by him. According to ld. DR, the nature of entries and the manner in which the amounts were recorded justified the conclusion of ld. Assessing Officer that the last two digits had been suppressed. It was therefore submitted that the entire addition of Rs.2,46,60,000/- ought to be sustained.

6.

On the other hand, ld. Counsel for the assessee supported the order of the ld. CIT(A). It was submitted that the Revenue had not brought any material to establish the alleged mechanism of coding. It was submitted that the conclusion of the ld. Assessing Officer was based only on an assumption that the figures appearing in the diary were to be multiplied by 100. It was further submitted that there was no statement of Late Shri Nitin R. Shah explaining such methodology. It was also pointed out that Shri Ketan R. Shah had specifically denied that Late Shri Nitin R. Shah used to write amounts in code. It was therefore submitted that there was no basis for the Revenue to seek restoration of the addition to the extent of Rs.2,44,14,000/-.

7.

We have heard the rival submissions and perused the material available on record. The issue before us is limited to the extent of addition which could be made on the basis of the entries found in the seized diary. There is no dispute on the basic fact that the diary belonged to Late Shri Nitin R. Shah and that the entries therein were made by him. The dispute is regarding the interpretation of the figures appearing in the diary. Ld. Assessing Officer has proceeded on the premise that

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 the figures appearing in the diary represent amounts after suppression of the last two digits. Thus, the figure of Rs.18,500/- has been treated as Rs.18,50,000/-. However, we find that the assessment order does not demonstrate the basis on which this particular method of decoding was adopted. No statement or other material has been referred to which establishes that Late Shri Nitin R. Shah was following such a method while making entries in the diary. This aspect assumes significance since the author of the diary was no longer available during the assessment proceedings. The statement of Shri Ketan R. Shah recorded on 21.09.2021 is also relevant. In response to Question No.20, he specifically stated that Late Shri Nitin R. Shah never used to write amounts in codes and that the figures in the diary appeared to be absolute numbers. The relevant portion has been reproduced by the ld. CIT(A) in his order. We also note that Smt. Hetal Nitin Shah in her statement recorded under section 131 of the Act on 17.12.2024 confirmed that the entries in the diary were made by her late husband. She also stated that he never used to write in coded language. Thus, the material brought on record does not establish the alleged methodology of suppression of two digits.

7.1. During the course of hearing before us, ld. DR also fairly submitted that there is no statement on record which explains the methodology adopted by the ld. Assessing Officer for treating the figures appearing in the diary as amounts after suppression of two digits. In our considered view, the mere presence of figures in the diary cannot by itself justify an arbitrary multiplication of the amounts by 100. For such an interpretation, there has to be some material showing that the figures were in fact recorded in such coded form. The assessment order does not bring such material on record.

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 7.2. We also find that ld. CIT(A) has not deleted the entire addition. He has examined the actual entries appearing in the diary and has sustained the amount of Rs.2,46,000/- which stood credited in the name of the respondent. Thus, ld. CIT(A) has accepted the evidentiary value of the diary to that limited extent while not accepting the further inference that the figures were to be multiplied by 100. This approach of ld. CIT(A) is based on the distinction between the actual figures appearing in the seized material and the enhanced figures arrived at by applying an assumed coding mechanism. The latter inference has not been supported by any independent corroborative material. We therefore find no infirmity in the finding of the ld. CIT(A) that the basis for treating the entries as coded figures and for multiplying them by 100 was not established. Revenue has also not brought before us any material to controvert the specific finding of ld. CIT(A) on this aspect.

7.3. We accordingly uphold the action of the ld. CIT(A) in restricting the addition to Rs.2,46,000/- and granting relief of Rs.2,44,14,000/- out of the addition of Rs.2,46,60,000/- made by the ld. Assessing Officer. Ground raised by the Revenue is dismissed.

8.

Before parting, we note that the assessee has moved an application dated 07.01.2026 under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 (the ITAT Rules), in order to support the order of the ld. CIT(A) by raising a legal proposition for which no new facts are to be brought on record. The legal proposition reads as under: “The assessing officer erred in framing an assessment order dated 31.12.2024 in the name of the respondent, pursuant to order under Section 263 dated 15.03.2024, inasmuch as the original assessment order dated 30.09.2021 was itself invalid and bad in law as the same was framed in the name of a deceased person, Mr. Nitin R. Shah, the husband of respondent, it is submitted that the impugned order dated 31.12.2024 is framed pursuant to an invalid order and hence is bad in law and needs to be quashed in toto.”

ITA 6032/Mum/2025 Hetal Nitin Shah (legal heir of Late Shri Nitin Shah) Assessment Year 2019-20 8.1. On the above legal proposition raised by the assessee in view of Rule 27 of the ITAT Rules, it is to be noted that the appeal of the revenue has been dismissed on the merits of the case by upholding the findings arrived at by the learned CIT(A). Accordingly, the said legal proposition raised by the assessee is left open and not adjudicated upon.

9.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 23 September, 2026.

Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member Accountant Member Dated: 23 September, 2026 MP, Sr. PS Copy to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai

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