AMAR KUMAR AGARWAL,KOLKATA vs. D.C.I.T., CC - 4(3),, KOLKATA

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ITSSA 88/KOL/2025Status: DisposedITAT Kolkata18 December 2025AY 2019-202018 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals for both the assessee and the Revenue, finding the reasons to be bonafide and genuine. Regarding the addition under Section 69A, the Tribunal held that the impounded documents were not found from the assessee's premises, nor did they bear his name, signature, or handwriting. Consequently, these documents were considered 'dumb documents' and did not fall within the purview of Section 69A. The Tribunal also noted that the presumption under Section 292C of the Act could not be applied as the documents were not found from the assessee. Therefore, the addition made by the AO and sustained by the CIT(A) under Section 69A was set aside, and the AO was directed to delete the addition. On the issue of estimating profit on alleged undisclosed battery sales, the Tribunal, while acknowledging that the CIT(A) had rightly identified the receipts as unrecorded battery sales, modified the GP rate directed by the CIT(A) from 12.5% to 10%. However, since the primary addition under Section 69A was deleted, the grounds related to the GP rate became infructuous. The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeals.

What were the facts?

These are cross-appeals filed by the assessee, Amar Kumar Agarwal, and the Revenue against the orders of the Commissioner of Income-tax (Appeals) for Assessment Years (AYs) 2017-18 to 2021-22. The assessee's appeals were delayed by 93 days, which the Tribunal condoned. The Revenue's appeals were delayed by 10 and 2 days, also condoned by the Tribunal. The core dispute revolves around the addition of undisclosed receipts from battery sales. The Assessing Officer (AO) treated unaccounted cash receipts aggregating to ₹17,64,58,253/- as undisclosed sales and added the entire amount as unexplained money under Section 69A of the Income Tax Act, 1961, after allowing a small portion offered by the assessee. The CIT(A) directed the application of a Gross Profit (GP) rate of 12.5% on these receipts.

What were the issues?

1. Whether the Tribunal has jurisdiction to entertain the assessee's appeals, which are barred by limitation, and if so, whether the delay should be condoned? (Mixed law and fact, relying on general principles of condonation of delay). 2. Whether the Tribunal has jurisdiction to entertain the Revenue's appeals, which are barred by limitation, and if so, whether the delay should be condoned? (Mixed law and fact, relying on general principles of condonation of delay). 3. Whether the addition of ₹17,64,58,253/- as undisclosed/unaccounted sales under Section 69A of the Act, based on impounded documents not found from the assessee's premises, is justified? (Mixed law and fact, turning on Section 69A). 4. Whether the CIT(A) erred in directing the application of a Gross Profit (GP) rate of 12.5% on alleged undisclosed receipts from battery sales, when the AO had treated the entire receipts as unexplained money under Section 69A? (Mixed law and fact, turning on Section 69A and principles of profit estimation). Assessee's Contentions: - The delay in filing appeals was for bonafide and genuine reasons. - The impounded documents were not found from the assessee's premises, did not bear his name or signature, and were not in his handwriting. Therefore, Section 69A is not applicable. - The documents are 'dumb documents' and do not fall within the purview of Section 69A. - The presumption under Section 292C of the Act cannot be taken against the assessee as the documents were not found from him. - The CIT(A) erred in estimating profit at 12.5% on alleged undisclosed receipts, as the AO had treated the entire receipts as unexplained money. Revenue's Contentions: - The reasons for delay in filing appeals were due to administrative approvals. - The AO correctly treated the unaccounted cash receipts as undisclosed sales and added them under Section 69A. - The CIT(A) rightly applied a GP rate of 12.5% to estimate the profit on these undisclosed sales.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 44AD,Section 69A,Section 292C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Siddarth Jhajharia, AR
For Respondent: shri Raja Sengupta &
Hearing: 16.10.2025Pronounced: 18.12.2025

Per Rajesh Kumar, AM:

These Cross appeals of assessee and of the Revenue are against the orders of the Commissioner of Income-tax (Appeals) Kolkata- 27,(hereinafter referred to as the “Ld. CIT(A)”] for the AYs 2017-18 to 2021-22.

A.Y. 2017-18 IT(SS)A No. 86/KOL/2025(Assessee’s appeal) 4. The issue raised in ground no.1 in IT(SS)A No.86/KOL/2025 is against the order of ld. CIT (A) estimating the income by directing the application of gross profit rate on the alleged undisclosed receipts from sale of batteries at the rate of 12.5% as against the gross profit offered by the assessee at 8%.

4.1. The facts in brief are that the assessee is a key person of Agarwal group. A search action u/s 132 of the Act was conducted on the Agrwal group on 25.09.2020 at the residential and business

A.Y. Income chargeable u/s Income now shown Unexplained money chargeable to 69A of the Act u/s 69A in the ITR on tax u/s 69A of the Act, now further this score is excluded added back to the total income of the assessee 2017-18 ₹9,250 ₹740 ₹8510 2018-19 ₹98,32,796 ₹7,86,812 ₹90,45,984 2019-20 ₹7,34,07,220/- ₹58,72,578/- ₹6,75,34,642/- 2020-21 ₹8,83,29,212/- ₹70,66,337/- ₹8,12,62,875/- 2021-22 ₹48,79,775/- ₹3,90,382/- u/s 44AD ₹44,89,393/- Total ₹17,64,58,253/- ₹1,41,16,849/- ₹16,27,31,786/-

4.3. In the appellate proceedings, the ld. CIT (A) partly allowed the appeal of the assessee after taking into consideration the submissions and contentions of the assessee by directing the AO to apply a G.P. rate of 12.50 % by observing and holding as under:-

“Discussion and decision:- 8.2.1. I have perused the assessment order as well as the submission of the assessee. On perusal of the same, it is observed that during the year under consideration, the assessee had earned undisclosed receipts from local battery sale of Rs. 9250/- and incorporated the same as unaccounted cash receipt in his original cash flow statement submitted before the AO. Actually, the fact is that the AO had noticed from impounded evidences marked as 'AWF/01 to AWF/18' and seized material marked AGH/14 and AGR/03 that unaccounted cash receipts were aggregating to Rs. 17,64,58,253/- for the AY 2017-18 to AY 2021-22 and unaccounted income, at 8%, comes to Rs.1,41,16.660/ During the assessment proceedings, the assessee had accepted that such unaccounted cash receipts was derived from 'out of book' sales of local battery and admitted profit 8% of the receipts. The receipts booked for the AY 2017-18 was Rs.9250/- and offered income 8% which comes to Rs.740/-.However, the AO had rejected the aforesaid claim of the assessee and added the total receipts of Rs.9250/- as unaccounted cash receipts from unaccounted sales u/s 69A of the Act. The AO reduced the additional income already offered 8% on the said undisclosed receipts by the assessee. 8.2.3. As mentioned in the above paras that the assessee had filed a revised unaccounted cash flow statement in the appellate proceedings in which the assessee excluded the undisclosed cash receipts pertaining to his undisclosed Local battery business and offered it separately. The AO did not consider the fact that as the said business receipt in cash had already been owned up by the assessee as undisclosed sale of battery. Further, the AO could not bring any cogent material on record to prove and substantiate the assessee had not earned his unaccounted receipts from sale of battery, The AO had failed to bring any corroborative evidence on record, to prove his allegation that the said cash receipt of Rs.17,64,58,253/- for the AY 2017-18 to AY 2021-22 was not the assessee's undisclosed business receipt of local battery business rather comes from different unexplained sources i.e., undisclosed cash receipt from the building project 'Aurora Water front or any other source. Hence, the contention of the AO that total cash receipt from the said battery business is unexplained money u/s 69A of the Act in the hands of the assessee is not acceptable. 8.2.4. Additionally, the stand of the AO was also not accepted since the assessee had himself admitted the fact that these purported cash entries were sourced from his

5.

The issue raised in ground no.2 is against the order of ld. CIT (A) not allowing/ considering the profits derived from undisclosed sales of batteries as application in the cash flow statement while calculating the peak credit by the ld. CIT (A) and accordingly, the ld. CIT (A) should be directed to amend or change that accordingly.

5.1. We have heard the rival contentions and perused the materials on records including the appellate order. We find that the , though we have partly allowed the ground no. 1 by modifying the appellate

6.

The issue raised in ground no.3 in is against the order of ld. CIT (A) not directing the AO to treat the profit from sale of batteries as business receipt and consequently not subjecting the same to tax u/s 115BBE of the Act.

6.1. The issue raised in this ground is consequential to ground no. 1 wherein is we have already modified the order of learned CIT(A) on the issue of income on the recorded batteries sales by directing the AO to assess the income @ 10%. Since we have accepted that the fact that the only business the assessee had is trading in batteries. The learned CIT(A) has also accepted the unrecorded batteries sale and directed the AO to apply 12.50% GP rate to estimate and assess the income which we have reduced to 10%. Since this is undisputed that the income estimated by applying GP s from business of sale of batteries, the normal tax rate has to be applied and not the special rate as provided u/s 115BBE of the Act, Consequently the ground no. 3 is allowed.

7.

The appeal of the assessee is partly allowed. A.Y. 2018-19 to 2020-21 IT(SS)A Nos. 87 to 89 (Assessee’s appeal) 8. The issue raised in ground nos. 1, 2 & 3 in IT(SS)A Nos. 87 to 89 & 2007/KOL/2025 are similar to one as decided by us in ground nos.1,2 & 3 in ITA No. 86/KOL/2025 for A.Y. 2017-18. Accordingly,

For A.Y. 2021-22 ITA No. 2007/KOL/2025 (Assessee’s appeal)

9.

The issue raised in ground no. 4 to 10 in ITA No. 2007/KOL/2025 for A.Y. 2021-22 in this appeal is against the confirmation of addition of ₹51,57,830/- by the ld. CIT (A) as made by the ld. AO on account of undisclosed jewellery.

9.1. The facts in brief are that during the course of search jewellery ornaments / silver items were found in the possession of the assessee and his family which were valued by the departmental valuation officer. The ld. AO noted that the purchases of jewellery for aggregating sum of ₹51,57,830/- as per the entries in the seized documents Mark AGR-2 have been sourced from the outside books and so, unexplained cash receipt from unverifiable sources. Therefore, it falls within the ambit of the Section 69B of the Act. Accordingly, the same was added as unexplained investment u/s 69B of the Act read with section 155BBE of the Act in the hands of the assessee.

9.2. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO on this issue by observing and holding as under:-

“9.2.1. I have perused the assessment order as well as submission of the assessee and observed that during the search and seizure operation in the case of assessee, jewellery ornaments and silver items were found in possession of Smt. Aditi Agarwal (wife of the assessee). These jewellery and silver items were valued by the Department Valuer as under: Name Valuation made/ Inventory Weight Jewellery found ₹22,54,552/- 367.760gm Jewellery seized - -

1.

Ashok Chaddha – 202 Taxman 395 (Del) 2. Suresh Bansal, ITA 833/Del/2017 dt 0.05.2018 3. Tara Devi Goenka-122 ITR (T) 14 (Kol AT) 9.4. Consequently, we set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition. The ground no. 4 to 10 are allowed.

10.

The issue raised in ground no.11 in ITA No. 2007/KOL/2025 for A.Y. 2021-22, is against the confirmation of addition of ₹17,10,340/- by the ld. CIT (A) as made by the ld. AO towards cash found at the residence of the appellant u/s 69 read with section 115BBE of the Act.

10.1. The facts in brief are that the ld. AO noted that during the assessment proceedings, the assessee did not maintain any cash book of account. Further, the ld. AO noted that no entries of cash payment to the assessee by any group concerns is found on the date of search or immediately prior to this and also the return filed by the assessee from 2015-16 to 2018-19, also do not sustained the unaccounted cash. Accordingly, cash of ₹17,16,340/- was added u/s 69A of the Act as unexplained money.

10.2. The ld. CIT (A) confirmed the order of the ld. AO on this issue by observing and holding as under:-

“10.2.1. I have perused the assessment order as well as submission of the assessee and observed that during the search and seizure operation in the case of assessee, cash of Rs. 17,60,340/- was found and out of this, amount of Rs. 15,00,000/- has been seized. In the course of assessment proceeding, it was explained by the assessee that these cash pertained to the group concerns/entity/companies lying with the assessee in the capacity of director/key person of the Agarwal group. However, the AO

For A.Y. 2017-18 ITA No. 1496/KOL/2025 (Revenue’s appeal) 11. The issue raised by the Revenue in ground of appeals is against the order of learned. CIT(A) deleting the addition to partly deleting the addition to the tune of Rs. 1,15,06,726/- by applying peak theory as gains the addition of Rs. 3,57,73,732/- (cash Loan Rs. 3,12,00,000/- plus Interest Rs. 45,73,732/-) made by the AO.

11.1. The facts in brief are that during the course of search, certain incriminating documents marked as AGH02, AGH04, AGH05, AGH08, AGH10, AGH11, AGH13, AGH14, AGH15 and AGH16 were seized from the office premises at B-2/2, 2nd Floor, Gillander House, 8 N.S. Road Kolkata-1. Similarly, the documents marked as AGR-2 and AGR-3, were seized from other premises at HB-165, Salt Lake City, Kolkata. The ld. AO noted that certain cash transactions were

2017-18 Ajay - 1729726 AGH-02 Das babu 2500000 48500 AGH-02 Dinesh Khaitan 23400000 171680 AGH-02 Dolan Majumdar 81411 AGH-02 RK Saraf 40,00,000 11,12,054 AGH-02 Saikat Roy 18861 AGH-02 Vishnu Poddar 1300000 AGH-02 Fufaji 1344000 AGH-13 Dipakkedia 67500 AGH-13 Total 31200000 4573732 11.2. The assessee submitted before the ld. AO that these are the cash transactions entered into by the assessee which represented the cash loans received and repaid out of the profit generated from unaccounted business receipts from sale of batteries. The ld. AO added the entire amount of loan along with interest as unexplained money u/s 69A of the Act totaling to ₹3,57,73,732/-, comprising principal amount of ₹3,12,00,000/- as cash loan plus interest thereon ₹45,73,732/-.

11.3. The ld. CIT (A) in the appellate proceedings partly allowed the appeal of the assessee by directing the ld. AO to consider PEAK amount during the financial year which comes to ₹1,15,06,726/-, thereby confirming the addition of ₹2,42,67,006/- by observing and holding as under:-.

“ 7.3.4. During the impugned assessment year cash received from various sources is Rs. 3,12,00,000/-, cash paid in the form of interest of Rs. 45,73,732/- to various persons. Besides interest payments, there are lots of other payments also such as 'Repayment of loan, 'purchase of cap', 'loan given', 'Jewellery & Ornaments' etc. After deduction of the said expenses including the interests payment from the total receipt during the year, the closing balance of cash shown by the assessee was Rs.2,51,69,181/- for the AY 2017-18 and opening balance was Rs. 1,08,96,083/- but the peak of credit was Rs. 3,51,63,089/-. The cash payments are met from the cash receipts which are established in the cash flow statement filed by the assessee for all

11.5. In the present case, the documents were seized at most, in our opinion, these documents are dumb documents and the theory of the ld. CIT (A) on making the addition on the PEAK balance appears

“1. CBI vs. V.C. Shukla (1998) taxmann.com 2155 (SC) 2. Common cause V. U.O.I 394 ITR 220 (SC) 3. PCIT Vs. UmeshIshrani (2019) 108 taxmann.com 437 (Bom) 4. K.P. Varghese V. ITO 131 ITR 597 (SC) 5. S.P. Goyal V.DCIT (2002) 82 ITD 85 (Mumbai AT)” 11.6. Moreover, the presumption as provided in Section 292C of the Act cannot be taken against the assessee as these documents were not found from the assessee but from the associate concerns and that the presumption is to be drawn in respect of impugned transactions in the hands of the person from whose possession or control the books of accounts/ documents, etc. were found. Even the presumption u/s 292C of the Act is rebuttable when the assessee proved that he has not done any such transactions even in respect of such transactions as were contained in the loose paper which were found during the course of search. This was held by the Hon'ble Delhi High Court in case of PCIT Vs. Delco India (P.) ltd. reported in (2016) 67 taxmann.com 357 (Delhi). Accordingly, we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition as sustained by the ld. CIT (A). The ground no. 1 is dismissed.

12.

The issue raised in ground no. 2 to 7 is against the order of learned CIT(A) treating the unaccounted cash receipts as unaccounted batteries sales and applying GP rate of 12.50% by overlooking the fact that there was no evidences of purchase of batteries as against

13.

Since we have already upheld the findings of learned CIT(A) on this issue that unaccounted cash receipts are in facts unrecorded batteries sales but modified the direction of the learned CIT(A) by reducing the GP rate to 10%. Consequently, the grounds no 2 to 7 become infructuous and are dismissed.

For A.Ys. 2018-19, 2020-21, 2021-22, 2019-2020 ITA Nos. 1496 to 1499& 1440/KOL/2025 (Revenue’s appeal) 14. The issues raised in the revenue’s appeals are similar to ones as decided by us in IT No. 1496/KOL/2025 A.Y. 2017-18 in Revenue’s appeal. Accordingly, our decision would, mutatis mutandis, apply to these appeals of revenue in ITA Nos. 1497 to 1499 & 1440/KOL/2025 as well. Hence, the appeals of the revenue are dismissed.

15.

In the result, the appeals of the assessee are partly allowed and appeals of the Revenue are dismissed.

Order pronounced in the open court on 18.12.2025.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 18.12.2025 Sudip Sarkar, Sr.PS

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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