GNP CONSULTANCY AND SOLUTIONS PRIVATE LIMITED,NARIMAN POINT, MUMBAI vs. DCIT, CIRCLE 6(1), MUMBAI, MUMBAI

The assessee filed the return of income for AY 2022-23 on 30.09.2022 declaring a total income of Rs. 29,95,97,768/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. A search under section 132 of the Income Tax Act, 1961 (the Act) on 23.09.2021 was conducted in which M/s. GNP Consultancy & Solutions Pvt. Ltd.

The CIT(A) on further appeals gave partial relief to the assessee. Both the assessee and the Revenue are in appeal before the Tribunal Against the order of the CIT(A). The grounds raised by the Revenue and the assessee are as given below:

ii. "Whether on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in deleting the addition of unaccounted business M/s. GNP Consultancy & Solutions Pvt. Ltd.

iii. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing the deduction of expenses of Rs. 4,49,32,144/- without appreciating the fact that the assessee had not specified in its statement recorded before the DDIT(Inv.) u/s. 132(4) that expenses through vouchers are application of funds out of undisclosed receipts and also no details in respect of vouchers had been furnished such as name, PAN of the parties to whom payments were made and also ignoring the fact that the cases of Hon'ble High Courts on which reliance was placed by the Ld. CIT(A) are distinguishable on facts?"

iv. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing the claim of expenses @ 30% out of unaccounted business receipts offered without appreciating the fact that the assessee has not submitted any documentary evidences that 30% of the expenses were incurred for the earning of such income and no evidence was submitted by the assessee regarding the claim of expenses?"

1) On the facts of the case, in law and under the circumstances, the Learned CIT (Appeal)-Central erred in confirming the addition of Rs. 15,75,000/- u/s 37 (1) of Income Tax Act by observing that assessee has not used the said premises for business purpose.”

During the course of search at the residential premises of Shri Kaustab Latke an image was retrieved from the Whatsapp message. Based on the said Whatsapp message received from Mr. Pradip Uday Dahale who is the broker of M/s. GNP Consultancy & Solutions Pvt. Ltd.

The ld. AR submitted that the issue is covered by the decision of the Co- ordinate Bench in assessee's own case for AY 2021-22 where the Tribunal has confirmed the decision of the CIT(A). The ld. AR further submitted that for the year under consideration, the AO has made the balance amount as mentioned in the same Whatsapp message and therefore the decisions of the Co-ordinate Bench is applicable for the year under consideration also.

The ld. DR on the other hand vehemently argued that the reason for the broker sending the WhatsApp messages to the assessee is not explained. The ld DR further argued that if the amounts stated in the message do not pertain to the assessee then why the same is sent to the assessee and this factor is not examined by the CIT(A). Accordingly the ld DR supported the order of the AO. M/s. GNP Consultancy & Solutions Pvt. Ltd.

We heard the parties and perused the material on record. We notice that the Co-ordinate Bench while considering the issue of addition based on the Whatsapp messages in assessee's own case (ITA No. 3110 and 2547/Mum/2023 dated 20.03.2024) has held that “66. Ground number 8 of the appeal is with respect to the deletion of addition of ₹ 130,993,119 and further ground number 9 relates to the same issue wherein the same seized document is dealt with.

The facts relating to the issue shows that during search proceedings certain images were retrieved from the mobile phone of Mr. Kaustubh latke , promoters of the GNP group, which relates to the on money received against the services provided to various clients for allotment of TTC cluster and AARUL cluster. It is the claim of learned AO that assessee has received ₹ 46.54 crores out of which ₹ 35.95 crores has already been received by the assessee through various brokers. Seized document shows that there is a tabulated sheet mentioning the name of eight brokers in the first column, in the second column rate is mentioned at ₹ 30 lakhs to 15 lakhs, in column number 3 the number of cases related to each of the broker is mentioned. The total of that column shows that there are 282 transactions. The total receivable broker Wise was mentioned in column number four wherein the total amount receivable is mentioned at ₹ 46.54 crores, in column number five total sum received of each of the broker is mentioned in the total of such column is ₹ 359,490,500/- and in the subsequent column is outstanding balance of each of the broker and the total of such outstanding sum is ₹ 95,206,500/-. Another mage was also found wherein the name of four brokers are mentioned showing total of ₹ 16.24 crores as amount received till date and further the name of the brokers is mentioned against them amount received is mentioned. At third message was also found wherein against the name of broker certain figures are mentioned. During search the AO questioned the director who claimed that these are the amounts directly paid by the buyers to Maharashtra industrial development Corporation (MIDC) and those are made through cheque. The director also provided listed of units handled by each of the broker. In post search proceedings, director of the company accepted that the assessee has received ₹ 1 lakh per plot as its service fees for total 281 clients. He submitted that two hundred clients are handled by him for AARUL cluster and 81 clients are handled by him for TTC cluster. He submitted that these incomes are offered in assessment year 2020 – 21 and 2021 – 22. The learned assessing officer noted that from the image it is apparent that a sum of ₹ 13 lakhs to ₹ 18.60 lakhs per plot was received or receivable. According to that, M/s. GNP Consultancy & Solutions Pvt. Ltd.

The learned CIT – A dealt with this issue as per ground number 5 of his order. The learned CIT – A deleted the addition for the following reasons:- i. Assessee is in the business of providing consultancy services in the field of industrial setup in MIDC. M/s. GNP Consultancy & Solutions Pvt. Ltd.

The learned AO is aggrieved and is in appeal before us against the deletion of the above sum. The learned CIT DR vehemently supported the order of the learned assessing officer. He submits that there is no reference of the rates submitted in the seized document of ₹ 15 lakhs to ₹ 13 lakhs stated in the seized documents. Therefore, this aspect has not at all been considered. He extensively referred to the seized document as well as the finding of the learned assessing officer.

The learned authorized representative specifically referred to the seized document placed at page number 556 of the paper book. It was stated that the brokerage is not added to the total income of the assessee, but the total sale price is added to the total income of the assessee. He submits that as the land belongs to the MIDC and not to the assessee the sale price cannot be considered as income of the assessee. Therefore, according to him it is not the income of the assessee. He submitted that the assessee has already disclosed the consultancy charges of ₹ 1 lakh per unit for 281 units therefore the learned CIT – A is correct in deleting the addition.

We have carefully considered the rival contention and perused the orders of the lower authorities. During search WhatsApp image was found from the mobile phone. The WhatsApp image is an excel sheet where the name of various brokers, the rate of the land, number of cases handled by each of the broker and amount receivable for the transaction and total amount received until date along with the outstanding balance is mentioned. The explanation of the assessee is that the name of the broker is mentioned who have dealt with in purchasing the land by the clients brought in by broker for MIDC allotment. Thus, on careful perusal of the document it is apparent that there are seven brokers who have brought in 282 clients. Out of these 282 clients, one client is directly brought in by the assessee. Therefore, the brokers in turn have brought 281 clients. For all these clients the total amount receivable for allotment of land is ₹ 46.54 crores, out of which ₹ 35.95 crores is received and balance of ₹ 9.52 crores is outstanding. The assessee has charged fees of ₹ 1 lakh per unit for 281 units sold through all these brokers for which occupation certificate is received and possession is granted to those parties. The explanation of the assessee before the AO was same, such statement was also M/s. GNP Consultancy & Solutions Pvt. Ltd.

The AO made the addition of Rs. 22,84,97,381/- based on the same Whatsapp message basis which a similar addition was made for AY 2021-22 (refer page 3 of AO's order). Therefore, there is merit in the submissions that the issue is covered by the decision of the Co-ordinate Bench in assessee's own case for AY 2021-22. Respectfully following the above decision, we hold that there is no infirmity in the order of the CIT(A). Grounds raised by the revenue in this regard are dismissed.

The AO made various additions under section 69C of the Act to the tune of Rs.4,49,32,144 as unexplained. The AO in this regard relied on the Whatapp messages, excel sheet contained in pen drive seized. The CIT(A) has deleted the addition based on the submissions and the evidences submitted by the assessee. The main contention of the ld AR in this regard is that the expenditure incurred has M/s. GNP Consultancy & Solutions Pvt. Ltd.

The ld AR further submitted that the similar additions made by the AO in AY 2021-22 were deleted by the CIT(A) and the coordinate bench has upheld the order of the CIT(A). It is also submitted by the ld AR that the department has not preferred further appeal against the order of the Tribunal. Accordingly the ld AR argued that the findings of coordinate bench in AY 2021-222 is applicable for the year under consideration also.

The Ld DR on the other hand argued that the addition made under section 69C is subsumed in the undisclosed expenses declared during the course of search is not substantiated by the assessee with any evidence and therefore the AO has correctly made the addition. M/s. GNP Consultancy & Solutions Pvt. Ltd.

We heard the parties and perused the material on record. The coordinate bench in assessee's own while considering the issue of additions made by the AO under section 69C has held that –

Ground number 6 is with respect to the deletion of the addition under section 69C of the act of ₹ 54,830,909/–. Ground number 7 of the appeal is also connected to ground number 6. 054. The addition of ₹ 54,830,909 comprises of several additions made by the learned assessing officer during assessment proceedings. These are described hereinafter.

During search, a pen drive was found from the employee of the company wherein it was found that that there are internal cash transfers, opening balances and the receipts mentioned in the sheet and the expenses. In paragraph number 6 of the assessment order, it is discussed. This is also discussed while deciding ground number 1 of the appeal of the AO. In the said document opening balance of ₹ 828903/– and total deposits of ₹ 23,055,400 and the total payments of ₹ 23,822,348/– were disclosed. When confronted the assessee submitted that the total deposits of ₹ 23,055,400/- is pertaining to the internal transfers, consultancy fees received and income from consultancy of clusters. Apart from the internal transfers, it was further stated that some of ₹ 5,202,500/- and ₹ 2,450,000/– has already been disclosed as consultancy income for the respective assessment years. With respect to the opening balance, the assessee submitted that it is part of the disclosure already made. With respect to the various expenses, it was submitted that such expenses should be granted to the assessee as a deduction. The learned AO disbelieved and made an addition of Rs 130,30,409/- as an unexplained expenditure under section 69C of the act.

Similarly, statement was found for the period from 11/3/2021 to 16/3/2021 during search which disclose the opening balance of ₹ 162,451,306/–, total receipts of ₹ 97,228,748/– and the total payments of Rs. 195,66,500/–. This was the document, which was found from the mobile of the director of the assessee wherein WhatsApp message was sent by Mr. Sailesh Patil to the director. The content of this document has already been dealt with by us in the order earlier. The learned assessing officer made an addition of opening balance, unaccounted receipt and made an addition of unexplained expenditure of ₹ 19,566,500/- as per paragraph number 7.6 of the assessment order. M/s. GNP Consultancy & Solutions Pvt. Ltd.

An addition of ₹ 50 lakhs was made under section 69C of the act based on WhatsApp message photo retrieved from the mobile of the director of the company wherein a cash statement dated 22/6/ 2020 was found wherein the opening balance of ₹ 13.41 crores, receipt of ₹ 329,500 and unaccounted expenditure of ₹ 50 lakh/– was mentioned. The learned assessing officer made an addition of the opening balance of ₹ 13.41 crores, the addition of receipt of ₹ 3.29 lakhs and further the addition of ₹ 50 lakhs of the unexplained expenditure. This has been dealt with in paragraph number 8.4 of the assessment order.

An addition of ₹ 157,000/- was made under section 69C of the act wherein during search document was found which contained of various payments and receipts. The assessee was questioned under section 142 (1) to provide the details of the income contained in the document of ₹ 1 lakh and the expenditure of ₹ 157,000/– . The assessee failed to explain and therefore the learned assessing officer over and above making the addition of ₹ 1 lakh as unaccounted business income made the addition of ₹ 157,000/- as unexplained expenses under section 69C of the act. This is as per Para number 9.3 of the assessment order.

Further, during search, backup of mobile phones was found of the director of the company. Digital evidence and images of it were retrieved from mobile phone. In that mobile phone, there were images of various cash vouchers. These were further confronted to the director of the company. The total sum of ₹ 3,692,100/- was confronted in fifteen such images to the director. Director of the company denied the statement stating that there is no signature in the any of the vouchers. The statement of the executive assistant to the directors explained that she used to send these vouchers for the approval and the director was to approve the same over the WhatsApp chat. The AO agreed that though there is no physical signature of the director of the company however same have been approved by the director as confirmed by the executive assistant it was found that several such approvals were found amounting to ₹ 6,683,600/–. These vouchers were pertaining to four different financial years. For financial year 2020 – 21 such sum of ₹ 5 lakhs, the learned assessing officer questioned the assessee, assessee denied stating that payments have been made against these vouchers are unsigned. The learned assessing officer rejected the explanation and made an addition of ₹ 5 lakhs as per paragraph number 11.8 of the assessment order.

During search the WhatsApp chat of the directors from iPhone 12 pro- was retrieved wherein some unaccounted transactions were found. The assessee was questioned as per question number 97 of the statement of the M/s. GNP Consultancy & Solutions Pvt. Ltd.

Thus, the total addition under section 69C of the act is cumulatively of all such transactions totalling to ₹ 54,830,909/- was made.

All these additions were challenged before the learned CIT – A as per ground number 13 before him which has been dealt with in paragraph number 15 of the order. The learned CIT – A noted that assessee has offered the income at the rate of 70% of gross business receipts as additional income after claiming estimated expenses deduction of 30% under section 132 (4) of the act. As per estimation made by the assessee it has presumed that all unaccounted expenditure incurred for earning the income are subsumed in that income so offered and therefore no separate claim of expenditure has been made by the assessee and therefore no separate addition should be made of unaccounted expenditure incurred by the assessee. The assessee submitted these details of such expenditure in the paper book filed, and in the return of income assessee offered that income. During assessment proceedings, the learned assessing officer made a separate addition of ₹ 5.48 crores. The learned CIT – A was requested to consider the argument that assessee has already disclosed the income however has not claimed any such expenditure and therefore no disallowance/separate addition can be made and secondly the addition made by the learned assessing officer has been subsumed in 30% of the total business receipts. The learned CIT – A held that once the receipt has already been taxed, the application of such income in the form of expenditure could not be once again added to the total income of the assessee. He further held that when learned assessing officer has believed the business receipts as per seized documents, the expenditure also has to be believed and therefore the net income is to be estimated and no separate addition is required to be made under section 69C of the act as held by the honourable Bombay High Court in case of Golani Bros (2017) 85 taxmann.com 355 (Bom). Similar view has also been taken by the honourable Delhi High Court M/s. GNP Consultancy & Solutions Pvt. Ltd.

The learned departmental representative vehemently supported the order of the learned assessing officer and submitted that when each of the document, the income has been added separately, the expenditure which has also been stated in the same documents are also required to be adjusted under section 69C of the act. Argument of the learned departmental representative is that all this expenditure is unexplained expenditure and are not received so the logic given by the learned CIT – A in deleting the addition is incorrect. He further submitted that section 69C bars any deduction in the act. He submitted that the proviso is clear on this account.

The learned authorized representative supported the order of the learned CIT appeal. He further referred to the several judicial precedents and the binding judicial precedents of the honourable Bombay High Court in case of Golani Bros (supra). He submits that assessee has already offered the gross income less 30% expenditure, AO has also taxed the income in the seized documents, in the same document there is reference of expenditure, therefore, it is unfair for the revenue to only tax the income and do not give any credit for expenditure already incurred. He submits that assessee has not claimed any expenditure specifically. In view of this, his argument was that it would amount to double disallowance/addition.

We have carefully considered the rival contention and perused the orders of the lower authorities. Looking to all the additions, it is apparent that the learned assessing officer from the statement has investigated the opening balances stated in that particular document and the receipt. The learned assessing officer has made addition of the opening balance as well as the receipt as undisclosed income of the assessee. When in the same document there are references of the expenditure, the learned assessing officer has further added such expenditure under section 69C of the act. It is apparent that only the net addition is required to be made arising out of the seized documents. If the approach of the learned assessing officer is accepted, it will result into the addition of the income as well as the addition of expenditure under section 69C of the act. The learned CIT – A has also relied upon the M/s. GNP Consultancy & Solutions Pvt. Ltd.

From the perusal of the above findings it is clear that the basis of making additions made for AY 2021-22 are identical to the additions by the AO for the year under consideration. The coordinate bench while confirming the relief given by the assessee has held that when the net income offered by the assessee, addition towards unexplained expenditure once again cannot be made. Further the coordinate bench has held that the disclosure of undisclosed income is the source for the expenditure and therefore it is the net income that needs to be taxed. The Tribunal also did not find any infirmity in the reliance placed by the CIT(A) in the decision of Hon'ble Bombay High Court in the case of Golani Bros (supra). During the course of hearing, the revenue did not bring any new material on record to controvert the findings of the Tribunal. In view of these discussions and M/s. GNP Consultancy & Solutions Pvt. Ltd.

The Assessee had offered consultancy receipts at 70% of the gross receipts thereby claiming 30% as expenses for earning the said receipts without making any separate claim for expenses though evidences of expenditure were also found along with the evidences of receipts discovered at the time of search. The AO held that the Assessee has claimed expenses at 30% without any supporting evidences such as the names, addresses, PAN of the parties to whom the payments are made etc. Accordingly the AO made an addition of Rs. 3,54,05,400/- being claimed @ 30% of the unaccounted receipts disclosed of Rs. 11,80,18,000/- under section 69C of the Act. The CIT(A) deleted the addition by holding that since the AO has duly considered the entire receipts found as business receipts u/s 28 of the Act, deduction of expenditure has to be granted and net income is to be estimated. Accordingly the CIT(A) held that separate addition in respect of unexplained expenditure cannot be made where source is duly accepted as out of business receipts.

We heard the parties and perused the material on record. We notice that the AO has made a similar disallowance for AY 2021-22 which was deleted by the CIT(A). We further notice that the revenue preferred an appeal before the coordinate bench against the order of CIT(A) and the coordinate bench while upholding the order of CIT(A) has held that – M/s. GNP Consultancy & Solutions Pvt. Ltd.

Ground number 10 is with respect to the direction of the learned CIT – A of allowing the claim of the assessee of expenses at the rate of 30% out of unaccounted business receipts offered. The claim of the assessing officer is that the learned CIT – A has failed to consider that assessee has not submitted any documentary evidence that the 30% of the expenses were incurred by it for earning of such income. In addition, in absence of any evidence, such claim cannot be entertained.

This issue came up before the learned CIT – A as per ground number 14 of the appeal wherein the assessee claimed that out of the gross income offered for taxation, 30% of such income should be granted as a deduction on ad hoc basis to the assessee for the expenditure incurred for earning such income. The fact shows that during search numerousevidence of unaccounted business receipts and expenditure were found which were not recorded in the books of accounts of the assessee. In the statement recorded of the director, he has accepted and owned various unaccounted business receipts. Assessee offered 70% of such income as net income during statement recorded under section 132 (4) of the act. It was also explained by letter dated 11/2/2022 claiming that the net income is to be estimated based on the evidence found. It was also claimed by the assessee that during search itself, various documents were found which itself shows that there is various expenditure incurred by the assessee for earning that income. The learned assessing officer rejected such claim and did not give any reason that why the claim of the assessee of net income offered should be rejected. The learned CIT – A found that the AO has made the addition of the entire gross receipts without allowing any claim of the expenditure such evidenceis available in the recorded statement and seized documents. It is the claim of the assessee that the gross income offered by the assessee for taxation is ₹ 71,577,000/- out of which 30% of the expenses should be granted as deduction and net income of ₹ 50,103,900/- can only be taxed. Before the learned CIT – A several arguments were raised stating that even direct evidence correlating the expenditure may not be available but reasonable estimate based on the seized documents should be made. Several judicial precedents were also pressed into service. The learned CIT – A examined details of net income offered by the assessee in the return of income filed were furnished by the assessee. Ongoing through the above details, it was noticed that the assessee has offered that income from consultancy business in the audited books of accounts for the period assessment year 2017 – 18 till 2022 – 23 in the range of 28% to 62% and average net profit of all the years amounting to 53% as against the net income offered by the assessee at the rate of 70%. Further on perusal of the unaccounted gross receipts and the unaccounted expenditure for which evidences were found in the seized documents during the course of search which has been owned up by the M/s. GNP Consultancy & Solutions Pvt. Ltd.

Learned AO is aggrieved with the same and is in appeal. The learned CIT DR vehemently supported the order of the learned assessing officer and submitted that no such expenditure can be granted as deduction on estimated basis in the absence of any expenditure incurred wholly and exclusively for earning of such income.

The learned authorized representative vehemently supported the order of the learned CIT – A.

We have carefully considered the rival contention and perused the orders of the lower authorities. We find that in paragraph number 16.7 of the appellate order the learned CIT – A has categorically noted that assessee has incurred expenditure in its regular business at the rate of 28% to 62% and average net profit for all the years' amounts to 53% of the gross receipts. Further in the seized documents, unaccounted receipts were found of ₹ 23.67 crores and unaccounted expenditure was found at ₹ 7.19 crores which is almost 30.03% of the unaccounted receipts and therefore the claim of the assessee is reasonable and can be accepted that the gross receipts 30% of deduction should be allowed for the expenditure incurred by the assessee. Accordingly, we do not find any infirmity in the order of the learned CIT – A which is based on the financial statements of the assessee for past year as well as based on evidence found during search in the seized material. Accordingly, ground number 10 of the appeal of the AO is dismissed.

In the result, appeal filed by the learned AO is dismissed.

We notice that the coordinate bench has upheld the order of CIT(A) on the ground that the past financial statements as examined by the CIT(A) and the seized materials supports the claim that the expenditure incurred by the assessee is around 30% . For the year under consideration the revenue did not submit any evidence to support that the said percentage cannot be applied for the year under consideration also. Therefore in the absence of any contrary material being brought on record we M/s. GNP Consultancy & Solutions Pvt. Ltd.

During the year the Assessee had incurred certain expenditure in respect of rent paid at Rs.1,75,000 per month and the same is claimed as expenditure under section 37(1). It is submitted by the assessee before the AO that the said premises were residential premises being used by the assessee for its business purposes and the Director himself was present in the premises at the time of search. However the AO did not accept the submissions of the assessee and held that no supporting evidence has been provided by assessee that said premises have been used for business purpose except for merely stating that same has been used as a guest house for their business purpose. Accordingly the amount of rent was disallowed on the ground that the same is personal expense and cannot be allowed u/s 37(1). Before the CIT(A), the assessee submitted that the rent is paid to Mrs. Shivika Garg is paid by cheque and duly recorded in regular books of accounts and that no evidence is found during the search that these expenses are not genuine. The CIT(A) confirmed the addition for want of evidence in support of the claim,

Before us the ld AR submitted that the expenditure incurred is not personal in nature and that the said premises are used by the Director for his residence. Therefore the ld AR submitted that there is no question of making an addition in the hands of the Assessee. M/s. GNP Consultancy & Solutions Pvt. Ltd.

The ld DR submitted that the addition is made since the assessee has not submitted any evidence to support the claim that the rent is paid towards the premises that is used for business purposes.

In result the appeal of the revenue and the appeal of the assessee are dismissed.

The revenue and the assessee raised the following grounds of appeal:

1) On the facts of the case, in law and under the circumstances, the Learned CIT (Appeal)-Central erred in confirming the addition in the hands of assessee of Rs. 33,20,000/- on the basis of loose papers admittedly belonging to and owned up by third party.

2) Alternatively, even if it is presumed that expenditure is belongs to assessee, no addition u/s 69C can be made when the assessee has sufficient source which is duly taxed u/s 28 of Act and the same is duly accepted by AO & CIT(A), hence no addition can be made u/s 69C of the act.

Ground No.1 in revenue's appeal and Ground No.1 in Revenue's appeal are considered together. Facts pertaining to the issues contended are that during the M/s. GNP Consultancy & Solutions Pvt. Ltd.

Aggrieved the assessee preferred further appeal before the CIT(A) where the assessee submitted that –

The CIT(A) after considering all the facts, relied on the order dated 20.03.2024 of the Hon'ble ITAT in ITA Nos. 3110 & 2547/Mum/2023 and stated that the Hon'ble ITAT has upheld the findings of CIT(A) and held that no addition is required to be made on this ground as the document found and the transactions contained therein had been duly owned up by Sh. Shailesh Patil. The CIT(A) however confirmed the disallowance of Rs.33,20,000/- on the ground that while M/s. GNP Consultancy & Solutions Pvt. Ltd.

With regard to the ground raised by the revenue, the ld AR submitted that the issue is covered by the decision of the coordinate bench in assessee's own case for AY 2021-22 and that the CIT(A) has correctly given relief to the assessee by relying on the same. With regard to the addition confirmed by the CIT(A) to the tune of Rs.33,20,000/- the ld AR made the following submission –

We heard the parties and perused the material on record. We notice that the coordinate bench in the appeal for AY 2021-22, has considered the issue additions made based on statement of Mr. Shailesh Patil and held that –

Ground number 3 of the appeal is with respect to the finding of the learned CIT – A that the transaction appearing in the image of the document retrieved from the mobile phone of Mr. Kaustubh Latke Director of the assessee company during the course of search belongs to Sri Sailesh Patil without appreciating the fact that Sri Sailesh Patil could not identify even a single party other than the assessee in the said document and he could not substantiate his claim with any supporting documents. In paragraph number 7 M/s. GNP Consultancy & Solutions Pvt. Ltd.

The learned CIT – A was categorically submitted that WhatsApp image was found was received from mobile numbers of Mr. Sailesh Patil – 2 that clearly show that it belongs to him and not to the assessee company. In 132(4) statements of the director of the assessee Mr. Girish Pawar he has categorically stated that Mr. Sailesh Patil is a trusted associate who used to help in movement of cash received and paid in the construction business of the assessee. On the issue of various entries found therein, the director of the company identified some of the entries and stated that only Mr. Sailesh Patil who has sent this message would be able to show to whom it belongs. It was further stated that the Mr. Sailesh Patil is not the employee of the assessee. On the several entries, the director of the assessee also stated that in the assessment, assessee has offered the income with respect to the same. The summons under section 131 was issued to Mr. Sailesh Patil, his statement was recorded. He stated that.

Therefore, we do not find any infirmity in order of learned CIT – A in holding so. Accordingly, ground number 3 of the appeal is dismissed.

The coordinate bench held the issue in favour of the assessee for the reason that nothing is brought on record to show why the document does not belong to Mr. Sailesh Patil who originated the message and sent to the assessee director. For the year under consideration also, the revenue has not submitted any evidence to substantiate the claim the amounts mentioned in the message belongs to the M/s. GNP Consultancy & Solutions Pvt. Ltd.

Now coming to the ground 1 of the assessee, we notice that the CIT(A) has confirmed the addition based on the statement of Mr. Sailesh Patil who has stated that the amounts belonged to GNP group. However from the perusal of the statement made by Mr. Sailesh Patil basis which the CIT(A) we notice that statement is vague such "to the best of my knowledge the transaction belongs to GNP". We also notice that the director of the assessee has stated that these entries do not belong to GNP group. Since the assessee cannot be asked to prove a negative fact, the revenue in our view should have made the addition based on some evidence and not based merely on the statement of Mr. Sailesh Patil. Therefore in our considered view, the ratio laid down by the coordinate bench in AY 2021-22 that the addition based on mere statement without any evidence is not sustainable, is applicable to the impugned additions also. Therefore we hold that the CIT(A) is not correct in confirming the addition to the tune of Rs.33,20,000 based on the statement alone without bringing any evidence to support the said claim. Accordingly we direct the AO to delete the addition made in this regard. Ground No.1 of the assessee is allowed.

Ground No.3 & 4 of the revenue is with regard to the relief given by the CIT(A) towards the addition made towards unexplained expenditure under section 69C of the Act. The assessee submitted before the AO that the impugned expenses are subsumed in the net income offered at 80% offered during the course of search and that when the income is accepted, the AO cannot deny the expenses claimed M/s. GNP Consultancy & Solutions Pvt. Ltd.

We heard the parties and perused the material on record. From the perusal of the facts pertaining to the additions made under section 69C we notice that the same is similar to additions made in AY 2021-22. The contention of the assessee is that the undisclosed expenditure added under section 69C is already part of the net income offered during the course of search. We have while deciding the similar issue for 2022-23 (refer our findings in the earlier part of this order) have placed reliance on the findings of the coordinate bench in AY 2021-22. i.e. The coordinate bench while confirming the relief given by the assessee has held that when the net income offered by the assessee, addition towards unexplained expenditure once again cannot be made. Further the coordinate bench has held that the disclosure of undisclosed income is the source for the expenditure and therefore it is the net income that needs to be taxed. During the course hearing the revenue did not bring any material on record for us to decide otherwise. Therefore respectfully following the decision of the coordinate bench we hold that there is no infirmity in the order of CIT(A) in giving relief to the assessee towards the addition made under section 69C of the Act. These grounds of the revenue are dismissed. M/s. GNP Consultancy & Solutions Pvt. Ltd.

Ground No.4 of the revenue is regarding the disallowance of the claim of expenses @ 30% out of unaccounted business receipts offered by the Assessee. We have considered a similar issue for AY 2022-23 and by placing reliance on the findings of the coordinate bench for AY 2021-22 upheld the order of CIT(A) giving relief to the assessee. Since the facts are identical, we are of the view that our decision in AY 2022-23 is mutatis mutandis applicable to AY 2020-21 also. Further the revenue did not bring anything on record for the year under consideration to controvert the findings of coordinate bench in earlier years. Accordingly we see no reason to interfere with the decision of the coordinate bench. This ground of the revenue is dismissed.

In result the appeal of the revenue is dismissed and the appeal of the assessee is allowed.

The revenue raised the following grounds of appeal:

"Whether on the facts and in the circumstances of the case and in law the Ed CIT(A) erred in deleting the additions made u/s 69 C of Rs. 4,48,76,650/- without appreciating the fact that these expenses were not recorded in the books of accounts?" M/s. GNP Consultancy & Solutions Pvt. Ltd.

"Whether on the facts and in the circumstances of the case and in law the Ld CIT(A) erred in deleting the additions made u/s 69 C of Rs. 4,48,76,650/- without appreciating the fact that the assessee had not submitted any details of bills/vouchers the nature of expenses and also had not submitted any evidences regarding the source of funds for the expenses?"

The appellant craves to leave, to add, to amend and/or to alter any of the ground of appeal if need be.”

Ground No.1 is towards the additions of Rs. 87,30,000/- pertaining to on money collection. During the search, an image was found from the Samsung Mobile Phone of Mr. Kaustub Latke, Director of the Assessee which contained an excel sheet. It is seen from the said images that these are pictures taken of running ledger maintained in excel sheet. In response, Mr. Kaustub Latke replied that the transactions were both cash and in cheque but he did not have the exact details of those transactions. Further, he replied that he will furnish the same later on. In post-search proceedings, a date-wise explanation of said excel sheet was submitted to DDIT as well as to AO during the assessment proceedings. The AO made addition towards certain entries found in the message for the reason that there is no mention of either the buyer name or unit no in the narration of these entries and that the name mentioned in the narration is completely different from the buyer names as claimed by the assessee. Therefore, The AO did not accept the the claim of the assessee and made the addition. The assessee contended before the CIT(A) that these entries do not belong to the assessee but another group entity M/s.Roshini Enterprises and that the said entity has already offered the same is offered the amount to tax during AY 2018-19 during the search proceedings. The CIT(A) deleted the addition after examining the claim of the assessee based on the documentary evidences submitted. M/s. GNP Consultancy & Solutions Pvt. Ltd.

We heard the parties and perused the material on record. The ld AR submitted that the coordinate bench while considering a similar issue in the case of another group entity DCIT vs M/S.GNP Realty LLP (ITA No.3105/2023 dated 29.05.2024) has held that – 9. Though the Revenue Department has claimed in the grounds of appeal that offer of additional income by M/s. GNP Consultancy & Solutions Pvt. Ltd. was not accepted by the AO and corresponding amount was reduced while passing the assessment order in the case of M/s. GNP Consultancy & Solutions Pvt. Ltd. for the A.Y. 2021-22 as evident from the computation of income. Further, the said income of Rs.2.75 crores was not accepted by the AO in the case of M/s. GNP Consultancy & Solutions Pvt. Ltd. and therefore the addition was made in the case of assessee. However, before us no such facts and/or documents were produced or demonstrated to strengthen this contention. As per Article 265 of the Constitution of India “no tax shall be levied or collected except by authority of law”. It is also the mandate of the law that the income offered cannot be taxed twice. As in this case, the income of Rs.2.75 crores may be rightly or wrongly by the sister concern of the assessee, has already been offered and even has also been considered and accepted by the Revenue Department as verified by the Ld. Commissioner as observed in impugned order, therefore the addition under challenge, if sustained, will amount to double taxation, which is not permissible at all.

We notice that in the above decision, the ratio basis which the coordinate bench upheld the decision of the CIT(A) is that same income cannot be twice and that the income offered to tax in the hands of one entity cannot be taxed again in another entity unless the revenue is able to substantiate that the income added is different. The facts in assessee's case is also similar wherein the CIT(A) has M/s. GNP Consultancy & Solutions Pvt. Ltd.

Ground No.2 & 3 of the department, pertains to CIT(A) deleting the addition made towards unexplained expenditure under section 69C of the Act. We in this regard notice that the CIT(A) gave relief to the assessee by holding that since the AO has duly considered the entire receipts found as business receipts u/s 28 of the Act, deduction of expenditure has to be granted and net income is to be estimated as discussed above and therefore separate addition in respect of unexplained expenditure cannot be made. Reliance in this regard was placed by the CIT(A) on the order of the Hon'ble Tribunal in the case of the assessee for earlier year. From the perusal of the facts pertaining to the issue and the findings of the CIT(A) we notice that the impugned addition under section 69C of the Act is identical to the similar additions made for AY 2021-22 and AY 2022-23. We have on the similar issue for AY 2022-23 have held that there is no infirmity in the order of CIT(A) by placing reliance on the ratio laid down by the coordinate bench for AY 2021-22 in assessee's case. For the year under consideration, nothing is brought on record for us to take a different view pertaining to the impugned issue. Therefore respectfully following the decision of the coordinate bench in assessee's M/s. GNP Consultancy & Solutions Pvt. Ltd.

In result appeal of the revenue is dismissed.

In result, appeals filed by Revenue for AY 2018-19, AY 2020-21 & AY 2022-23 are dismissed. The appeal of the assessee for AY 2020-21 is allowed and appeal of the assessee for AY 2022-23 is dismissed.