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Facts
The Revenue appealed against the order of the CIT(A) who deleted additions made by the Assessing Officer. These additions pertained to unexplained money under Section 69A, interest on unsecured loans, and ad-hoc additions. The additions were based on seized documents and digital data from third parties following a search.
Held
The Tribunal held that the Assessing Officer failed to establish ownership and provide direct or corroborative evidence linking the seized documents to the assessee. The additions were found to be based on guesswork and unsupported assumptions, and in some cases, led to double taxation. The CIT(A)'s decision to delete the additions was upheld.
Key Issues
Whether the additions made by the AO under Section 69A and for interest income were based on sufficient evidence and whether the deletions by CIT(A) were justified.
Sections Cited
69A, 132, 143(3), 132(4A), 292C, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
(Assessment Year: 2022-23) The Deputy Commissioner of Riddhesh Girishbhai Bhandari, Vs. Income Tax, 201, Panchshil Residency, Circle 1(1), Near Panchshill Bus Stand, Ahmedabad. Usmanpura, Ahmedabad-13. [PAN :AEMPB8415 J] (Appellant) .. (Respondent) Appellant by : Shri RP Rastogi, CIT- DR Respondent by: Shri Anil Kshatriya with Shri Alay Anil Kshatriya, ARs Date of Hearing 13.08.2025 Date of Pronouncement 24.09.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Revenue against the order dated 21.02.2025 passed by the Learned Commissioner of Income Tax (Appeals)- 11, Ahmedabad, (‘Ld. CIT(A)’ in short), under Section 250 of the Income-Tax Act, 1961 (‘the Act’ in short), relating to the Assessment Year 2022-23.
The Revenue has raised the following grounds:-
1. "In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 1,47,31,479/-u/s.69A of the Act being unexplained money without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO". 2. "The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 4,79,773/- made by the AO on account of interest received from unsecured loan of Rs. 1,47,31,479/- given to the entity M/s Astron Paper & Board Mill Ltd. and it's related persons.
3. "In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 2,16,50,000/-u/s.69A of the Act being unexplained money without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO". to 975/Ahd/2025 DCIT Vs. Riddhesh G Bhandari Asst. Years : 2016-17, 2018-19 & 2022-23 - 2–
4. "The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.4,33,738/ made by the AO on account of commission income of the assessee.”
3. The brief facts of the case for the year under consideration are that the assessee filed his return of income on 27.12.2022 declaring total income at Rs.9,58,66,580/-. A search u/s 132 of the Act was carried out on 26.05.2022 in the case of AGL Group and its key associates and also the residential premises of the assessee culminating in assessment u/s 143(3) determining the total income at Rs.13,31,61,570/- with the following additions:- (i) u/s. 69A of the Act on account of unsecured loan - Rs.1,47,31,479/- advance (ii) Interest on unsecured loan/advances - Rs. 4,79,773/- (iii) u/s 69A on the basis of digital data/doc. - Rs.2,16,50,000/- (iv) Ad-hoc addition - Rs. 4,33,738/-
4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A) who deleted all the aforesaid additions.
5. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal.
6. Before us, the Ld. DR relied upon the order of the Assessing Officer and on the other hand, the Ld. AR supported the order of the Ld. CIT(A).
Addition u/s. 69A on account of unsecured loan - Rs.1,47,31,479/- Interest on unsecured loan/advances - Rs. 4,79,773/-
During the search, certain digital evidence including a WhatsApp message titled “ASTRON INT A” from the mobile phone of Shri Ramakant Patel and a document from the residence of Shri Karsanbhai Patel were found and relied upon by the Assessing Officer to make additions in the assessee’s case. The Assessing Officer held that the assessee had advanced an unsecured loan of Rs. 1,47,31,379/- and charged interest of Rs. 4,79,773/-, to 975/Ahd/2025 DCIT Vs. Riddhesh G Bhandari Asst. Years : 2016-17, 2018-19 & 2022-23 - 3– treating it as unexplained money under Section 69A of the Act. The Ld. CIT (A) held that there was no direct or corroborative evidence to link the seized documents with the assessee and that mere similarity of names was not sufficient to stablish any connection with him. Therefore, the Ld. CIT(A) held that as the primary onus to prove ownership was not discharged by the Assessing Officer, the addition of Rs. 1,47,31,379/- and interest of Rs. 4,79,773/- was not sustainable and deleted.
7.1 We have considered the submissions of both parties and carefully perused the records, including the assessment order and the detailed findings of the CIT(A). The sole basis for the addition is a WhatsApp message and a loose sheet, neither of which was found from the possession of the assessee. In the present case, the Assessing Officer failed to bring any direct or corroborative evidence on record to establish that the assessee is the owner of the said amount. The assessee has categorically denied any involvement, and no statements from Shri Ramakant Patel or Shri Karsanbhai Patel linking the transaction to the assessee have been placed on record. We find that, as rightly observed by the Ld. CIT(A), the Assessing Officer’s action of taxing the same transaction in the hands of both the assessee and M/s Astron Paper & Board Mill Ltd. makes the addition untenable and violative of the principle against double taxation. The Assessing Officer, in our opinion, failed to discharge the initial onus cast under Section 69A of the Act, which mandates that the Revenue must first establish that the assessee is the actual owner of the alleged unexplained money. In the absence of any credible or corroborative evidence establishing ownership, the burden of proof could not have been legitimately shifted to the assessee. Therefore, we are of the view that the addition is based only on guesswork and unsupported assumptions. We, therefore, find no reason to interfere with the order of the Ld. CIT(A) in this regard. to 975/Ahd/2025 DCIT Vs. Riddhesh G Bhandari Asst. Years : 2016-17, 2018-19 & 2022-23 - 4– Addition u/s 69A on the basis of digital data/docs - Rs.2,16,50,000/-
The Assessing Officer made an addition of Rs.2,16,50,000/- u/s 69A based on documents and digital data seized from third parties, specifically an Excel file titled “General new” and handwritten diaries found with AGL Group personnel. The assessee contended that the Excel file was neither shared during assessment nor contained his name, and that the bank transactions referenced therein did not relate to him. Statements relied upon by the Assessing Officer, particularly that of Shri Maitresh Mehta, were later retracted, and the assessee was denied cross-examination despite formal request. The seized documents were unsigned, lacked dates or corroborative evidence, and did not prove any link to the assessee. The Ld. CIT(A) held that the presumption u/s 132(4A) and 292C was not applicable since the documents were not found in the assessee’s possession, and that the Assessing Officer failed to establish ownership. The material shows that there is an entry of Rs. 1 crore six times through cheques on 29.09.2021. The Revenue has not brought any details of evidentiary value even with regard to the Rs.1 crore cheque purportedly issued by the assessee. The entries of two amounts of Rs.50 lakhs each for the date 01.10.2021 was also in the file and the name of the assessee was not appearing as not mentioned. The A.O. has not made any additions for the alleged two aggregate sums of Rs.5,52,96,471/-and Rs.4,19,63,836/- narrated against the case of the assessee or other Girish Bhandari Group persons. The A.O. has neither explained the other aggregate sums as appearing against the name of such person in the same file under the head "24" of Rs.5,52,96,471/-, and under the head "simple" of Rs. 4,19,63,836/- and Rs.96,81,000/- nor correlated and matched with the screenshot of Maitresh Mehta. Thus, the A.O. has partly and selectively used one part of the document to substantiate his findings that the said excel file is matching with the snapshot of Mr. Mehta by to 975/Ahd/2025 DCIT Vs. Riddhesh G Bhandari Asst. Years : 2016-17, 2018-19 & 2022-23 - 5– completely ignoring or suppressing the effect of the other sums. It is settled law that a document has to be read as a whole and not in bits and pieces. No complete money trail is established by bringing cogent, reliable evidence on record much less any money trail establishing that the assessee has indeed given such money and in return has received such interest. The observation of A.O. that the same is clearly matching with screenshot produced in para-5 of the assessment order, but the fact on record goes to disprove this finding as at least two entries of Rs 50 lakhs each stated to have been dated 01.10.2021 are not at all appearing on this date in the relied document seized from Mr.Mehta. The conclusion drawn as to that there was corroborative evidence is factually wrong and disprove.
8.1 In this background, it is difficult to comprehend and understand to whom i.e, which existing legal person, an amount of Rs.2 crore as alleged was paid by the assessee as noted in the relied page from the diary of Kanubhai Mistry, the cash handler of AGL Group and which such person has paid the alleged interest of Rs. 16,50,000/- to the assessee. Thus, on overall appreciation of the fact of the case as discussed above, we are inclined to agree with the decision of the Ld. CIT(A).
Addition of Rs.4,33,738/- on ad hoc basis.
As per record, the assessee has been carrying on business of Angadia service and has declared commission income of Rs.55,703/- in his return of income for the year under consideration. Thus, the income of Rs.55,703/- having already declared in the return of income to that extent, it is double taxation in the hands of the assessee. The Ld. CIT(A) noted that the assessee has duly furnished complete details of sender and receiver of money in his angadia business, the income from said business is taxable as business income only and not as income from other sources. The assessee has also to 975/Ahd/2025 DCIT Vs. Riddhesh G Bhandari Asst. Years : 2016-17, 2018-19 & 2022-23 - 6– claimed that the addition is made on ad hoc basis and in facts of circumstances of case where he has unambiguously stated that he charges commission @Rs. 50/- per lac there was no case for revenue to assume to 0.5% of total amount, i.e., @ Rs. 500/- per lac (0.5% of Rs.1,00,000). The Ld. CIT(A) noted that no material or evidence has been brought on record by the Assessing officer which prove that the assessee has charged commission @Rs.500/- per lac as against agreed amount @ Rs.50/- per lac. The addition made by Assessing Officer merely on surmises and presumptions is not tenable. Therefore, we decline to interfere with the order of the Ld. CIT(A).
In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open Court on 24.09.2025.