THE DCIT, CENTRAL CIRCLE-2(2), AHMEDABAD vs. SHALIGRAM INFRA PROJECTS LLP , AHMEDABAD

03.08.2021 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as “CIT(A)”] in case of A.Y. 2015-16 and A.Y. 2016-17 and two separate orders dated 03.08.2021 relating to A.Y. 2017-18 and A.Y. 2018-19. These orders are arising out of the assessment orders passed under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] relating to the Asst. Years 2015-16 to 2018-19. Since common issue is involved in all these appeals, for the sake of convenience the same are disposed by this common order.

3.1 During the course of search action, the office premises of the assessee M/s. Shaligram Infra Projects LLP was also covered u/s.132 of the Act and consequent to search action, a notice u/s.153A of the Act was issued on 30/01/2019 through ITBA and served upon the assessee. In response the assessee filed its return of income on 22/08/2019 declaring total income at Rs. Nil/-. It is not out of place to mention that the original return of income for A.Y. 2015-16 was filed on 28/09/2015 under section 139(1) declaring total income at Rs. Nil/- Thereafter, the assessment order was passed on 28-11-2017 determining total income at Rs.Nil.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 3 3.2 During the course of assessment proceeding, it was noticed that the assessee had undertaken the project “Shaligram Plush" for which the assessee has purchased 32 plots including 28 bungalows and four vacant plots from the members of M/s Raj Villa Co-op Housing Society Ltd known as “Sajahajanand Bungalow”. Evidences collected during the course of search action shows that M/s. Raj Villa Co. Op. Housing Society Ltd has passed resolution no. 03 (Tharav) dated 15-07-2014 that the Society shortlisted the assessee as the potential buyer of the said 28 bungalows with land and 4 vacant plots for their proposed multi-story residential project namely “Shaligram Plush" by the assessee.

3.3 Shri Ashwin B. Dudhat was owner/residing in Bunglow No. 13 of Sahajanad Bunglow whereas his brothers namely, Bharatbhai B Dudhat and Dharmendra B Dudhat were also the owners of Bunglow/Plot No. 16 & 27 in the society. The incriminating documents namely Page Nos. 58 & 60 of Annexure-A/1, found and seized from the residence of one of the members of Raj Villa Co-op. Housing Society Ltd. Shri Ashwin B Dudhat shows that he, along with his two brothers, who were members of the said society having rights over Bunglow/plot Nos. 13,16 and 27 (vacant plot), received on-money payment from the assessee in consideration to their relinquishment of rights on the said plots/bungalows admeasuring total of 893 sq yard [Bungalow No 13 = 303 Sq mtr = 362.38 sq yard, Bungalow No 16 = 217 sq mtr= 260 sq yard, Plot No 27= 228 sq mtr= 273 sq yard]. In the page no 58, total area of land and bungalows sold by Shri Ashwin B Dudhat and his brothers and the on-money component of sale consideration has been shown 893 sq yards and Rs.66,521/-per sq yard.

3.4 After analysing seized materials, Revenue appointed Special Audit u/s.142(2A) of the Act and obtained Special Audit Report from M/s Talati & Talati LLP. Special Audit Report has also commented that the assessee has involved in various transactions and entries pertaining to unaccounted investment in Immovable Property being Land and building in AY-2015-16 and 2016-17. Year wise detailed breakup of payment/ investment and The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 4 reference of seized incriminating material, on the basis of which the Special Auditor calculated such out of books investment to the extent of Rs.60,85,42,590/- the on-money payment based on the entire area of the scheme. This amount was bifurcated as follows: Asst. Year Amount in Rs. 2015-16 7,09,1 1,386 2016-17 53,76,31,204 Total 60,85,42,590 3.5 Accordingly, the assessee was requested to show cause as to why suitable adverse inference should not be drawn in assessee's case vide notice dated 04-11-2019. In response the assessee filed a detailed reply objecting the report given by Special Auditor and basis of seized material the conclusion arrived by the Special Auditor is absolutely incorrect and beyond the provisions of law and without valid materials in hand. The AO was not satisfied with the reply given by the assessee and thereby the AO estimated that the assessee has purchased the entire society with land by paying on-money of Rs.66,521/Sq yard and added as addition Rs.7,09,11,366/- relating to the A.Y. 2015-16 and addition Rs.53,76,22,722/- relating to the A.Y. 2016-17 in the hands of the assessee.

3.6 In addition to this, on the basis of Special Auditor’s report, the Assessing Officer observed that the assessee paid interest on unsecured loan to related parties. The Assessing Officer concluded that the rate of interest is excessive (15%) than the prevailing rate of 12%. The Assessing Officer estimate such disallowable excessive interest and issued show cause notice to the assessee as to why this excess amount of Rs.9,11,436/- should not be disallowed. The assessee contested the said disallowance stating that the Special Auditor overlooked that the assessee had actually paid 12.35% p.a. on secured loans to SBI and as the disputed loans were unsecured, the 15% interest cannot be considered excessive. The AO held that the assessee’s explanation was not acceptable, since the excess interest was paid to related parties covered u/s 40A(2)(b). In the absence of any cogent

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 5 reason or business expediency for paying higher interest, the AO disallowed the said interest for each assessment year as follows – Assessment Year Disallowance (Rs.) 2015–16 44,525 2016–17 21,337 2017–18 4,83,874 2018–19 3,61,700 Total 9,11,436 3.7 The assessee preferred appeal before the CIT(A) against the orders of Assessing officer. In the appellate proceedings, the assessee raised multiple grounds, both legal and on merits. It was contended that the assessment was bad in law since the additions were made on the basis of documents seized from third parties, and in such circumstances, the correct course would have been to invoke the provisions of section 153C instead of section 153A. The assessee further submitted that the additions made by the Assessing Officer were wholly based on loose papers seized from the premises of third parties, which did not bear the signatures of the assessee, and no corroborative evidence was brought on record. It was also urged that no cross-examination of the third parties, from whose premises such documents were seized, was provided despite specific request, and therefore, the addition was vitiated for violation of principles of natural justice. On merits, the assessee denied having paid any “on-money” in respect of purchase of plots and bungalows from Raj Villa Co-operative Housing Society and also objected to the small disallowances of interest made under section 40A(2)(b).

3.8 The learned CIT(A), after considering the material on record, held that the entire addition made by the Assessing Officer under section 69B towards unexplained investment in land was unsustainable. He observed that the documents relied upon by the Assessing Officer were not seized from the assessee but from the premises of third parties, namely Shri

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 6 Ashwin B. Dudhat and others. In such a situation, the proceedings ought to have been taken under section 153C and not under section 153A. The learned CIT(A) further held that, in the case of a searched person, additions under section 153A can be made only on the basis of incriminating material found during the course of search in that person’s case, and in the absence of such material, no addition is warranted. He also found merit in the assessee’s grievance that no cross-examination was afforded in respect of the alleged recipients of on-money, which rendered the addition contrary to the settled principles of natural justice.

3.9 As regards the disallowance of interest under section 40A(2)(b), the learned CIT(A) held that the same was without justification. He noted that the Assessing Officer had merely applied a benchmark rate on the basis of the Special Auditor’s observation, without demonstrating how the payment made to related parties was excessive or unreasonable having regard to the market conditions or business needs of the assessee.

3.10 In conclusion, the learned CIT(A) deleted both the substantive addition under section 69B and the disallowances under section 40A(2)(b), and allowed the assessee’s appeals in full for both assessment years.

1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the additions made by the AO in the order u/s 153A r.w.s 143(3) on legal grounds that the additions should have been made u/s 153C, without appreciating the fact that provisions of section 153C empowers the Assessing Officer to assess or re-assess the income of the person other than searched person, but the assessee being searched person was squarely covered under section 153A 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 7 u/s 132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act.

3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re- assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material.

4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec. 153A and sec. 153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003.

5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC).

6. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating the decisions of Hon'ble Delhi High court in the case of CIT Vs Anil Kumar Bhatia (211 Taxman 453, 352 ITR (493)] & Kerala High Court in the case of E.N. Gopakumar vs. Commissioner of Income-tax (Central) (2016) 75 Taxmann.com 215 (ker.) wherein Courts held that assessments in a search case can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132.

7. 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.7,09,11,386/- made on account of unexplained investment in land u/s 69B of the I.T. Act, 1961.

8. 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.44,525/- made on account of disallowance of interest u/s 40A(2)(b) of the I.T. Act, 1961.

9. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 8

10. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.

5.2 Revenue’s appeal in IT(SS)A No. 195/Ahd/2021 (A.Y. 2016-17):

5.3 The grounds raised in this appeal are identical to those urged by the Revenue in IT(SS)A No. 194/Ahd/2021 for A.Y. 2015–16, except for the difference in the quantum of additions involved.

6. During the course of hearing before us the learned Departmental Representative (DR) supported the order of the Assessing Officer. He reiterated the facts as set out in the assessment order and submitted that the CIT(A) erred in law and on facts in deleting the additions. He argued that the assessee was a searched person and, therefore, the assessments were correctly framed under section 153A, and the CIT(A) wrongly imported the requirement of section 153C. He further contended that there is no statutory restriction in section 153A confining additions only to incriminating material. The DR further contended that the seized papers along with the Special Auditor’s findings and statement of Ashwinibhai Babubhai Dudhat recorded on 07.03.2018 constituted sufficient corroborative evidence. It was submitted that the AO had rightly made the substantive addition under section 69B on account of unexplained investment in land and disallowance under section 40A(2)(b), and the order of the AO deserved to be restored.

7.1 The AR also drew attention to the observation of the CIT(A) that in case any seized material found in the course of search pertains to a person other than the person searched, assessment has to be framed under section 153C after recording the requisite satisfaction. In the present case, no such satisfaction was recorded and no proceedings under section 153C were initiated. Thus, the AO was not justified in invoking section 153A to make additions in the hands of the assessee on the basis of third-party documents.

7.2 The AR relied on various judicial precedents where the decisions of the Hon’ble jurisdictional High Court including CIT v. Saumya Construction Pvt. Ltd., as well as CIT v. Kabul Chawla (Delhi High Court) were cited, wherein it has been consistently held that in respect of completed assessments, additions under section 153A can be made only on the basis of incriminating material found during search in the case of the assessee. In absence of such material, the completed assessment is to be reiterated. The AR primarily relied on the following decisions of Co-ordinate Bench: i. Prafulkumar Virajbhai Kachhadia in IT(SS)A No.34/Ahd/2021 ii. Kamalesh P. Savaliya in IT(SS)A No. 35/Ahd/2021 iii. Gopalbhai Mavjibhai Patel in IT(SS)A No. 141,143 & 144/Ahd/2021 7.3 On the merits of the addition, it was submitted that the AO had made a sweeping extrapolation by presuming that since Shri Ashwin Dudhat had allegedly received on-money, all other members of the society must also have received similar on-money from the assessee. This assumption was wholly unfounded, unsupported by any evidence, and contrary to replies of other members examined by the AO. Even the Special Auditor’s comments

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 10 could not form a basis for addition, as the role of an auditor is only to make observations and not to direct additions.

9.2 On the other hand, section 153C of the Act applies in a situation where, during the course of a search on one person, the Assessing Officer is satisfied that money, bullion, jewellery or documents seized actually pertain to another person, who was not subjected to search. In such a case, the law requires the Assessing Officer of the person searched to hand over such seized material to the Assessing Officer of that other person, who will then proceed against that other person under section 153A. Thus, section 153C is intended to cover “a person other than the person referred to in section 153A.”

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 11

10.1 Further, section 153A empowers the Assessing Officer to assess or reassess the “total income” of the assessee for the relevant assessment years, but such power is conditioned upon the existence of incriminating material unearthed during the course of search. In the context of completed assessments, additions can be sustained only where there is incriminating material found as a result of the search operation.

10.2 In the facts before us, the Assessing Officer has relied on loose papers seized from the premises of Shri Ashwin Dudhat, who was part of the same group search, and the seized material was stated to pertain to the assessee. Since the assessee was itself a searched person, the Assessing Officer was competent to consider such material in the course of proceedings under section 153A, and the requirement of section 153C was not attracted. The interpretation adopted by the ld. CIT(A), that such material could only be utilized through section 153C, is therefore not in consonance with the scheme of the Act.

Accordingly, we hold that to the extent the ld. CIT(A) excluded the impugned documents from the purview of section 153A assessments on the ground that they were seized from a third party, his conclusion cannot be The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 13 upheld. The Revenue’s grounds on this legal aspect are therefore found to be valid and hence allowed.

12.3 According to CIT(A), additions cannot be sustained in the assessee’s hands unless based on incriminating documents found during search at assessee’s premises. This reasoning, in essence, goes to the root of whether the seized papers were linked to the assessee or not. On examination of record, it emerges that the Assessing Officer did not bring on record any such document seized from assessee’s premises to directly evidence unaccounted consideration.

12.4 The CIT(A) further records that the seized annexures at assessee’s premises (A-1 to A-8) were not of incriminating nature. The only material referred by the AO to make addition was page nos. 58 and 60 seized from a third party (Mr. Ashwin Dudhat). It is a fact borne out from the assessment order that these pages were not recovered from assessee. The Assessing Officer nevertheless extrapolated these entries to the assessee’s transactions.

12.5 The CIT(A) has emphasised that the relevant assessment years were already completed when search took place and, therefore, any addition had to be anchored in specific seized incriminating evidence. Since no such The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 14 document was shown to be found from assessee, the conclusion was that AO exceeded the permissible scope.

12.6 The CIT(A) analyses the seized pages themselves and notes that the contents did not name the assessee or show any receipt/payment by it. The AO’s reliance was described as inconsistent, since even he treated the papers as relating to transactions of Ashwin Dudhat and his brothers. The contemporaneous statement of Mr. Dudhat confirmed that the papers were only a comparison between himself and his brothers. This factual position diminishes the evidentiary value of the papers against assessee. The AO had also conducted some independent verification with other society members, but the replies did not establish receipt of any unaccounted consideration from the assessee. Importantly, Mr. Dudhat was never confronted again to confirm any linkage with assessee, nor was cross-examination given. Thus, the addition rests on assumption rather than corroborated material. Importantly, even as per Mr. Dudhat’s sworn statement, the disputed pages related to his family’s transactions and calculation of loans and interest, not to assessee. In absence of contrary evidence, the AO’s theory of universal on-money payment by assessee is speculative. The CIT(A) ultimately finds that the loose sheets could not be used to conclude receipt of unaccounted payments by assessee. He stresses that additions must flow from evidence pertaining to the assessee; otherwise, they remain dehors the record.

12.7 On an overall appraisal of the assessment order and the appellate findings, it emerges that the Assessing Officer has not referred to or relied upon any incriminating material found and seized from the premises of the assessee during the course of search. As correctly noted by the CIT(A) in para 7.61, even in the assessment framed under section 153A there is no reference to such incriminating material and the entire addition rests on third-party papers. Further, as observed in para 7.62, the search was conducted at a stage when the assessments for the relevant years had already attained finality and were not pending, and therefore the The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 15 proceedings were not abated. The CIT(A) placed reliance on the judgement of Jurisdictional High Court in case of CIT Vs. Saumya Construction Pvt Ltd. (Tax Appeal No.24 of 2016) where it was held that in the absence of incriminating material found during search, the Assessing Officer cannot make additions under section 153A for completed/unabated assessments. 12.8 At this stage we also note that the assessee has placed reliance on recent orders of the Co-ordinate Benches of this Tribunal in group cases arising out of the very same search action. In the case of Prafulkumar Virjibhai Kachhadia (IT(SS)A No. 34/Ahd/2021, order dated 21.12.2022), the Co-ordinate Bench deleted an addition of on-money alleged on the basis of pages 58 and 60 seized from the residence of Shri Ashwin B. Dudhat, observing that the seized documents did not contain any reference to the assessee and that the addition was made purely on assumptions without corroborating incriminating material in the assessee’s case. Similarly, in Gopalbhai Mavjibhai Patel (IT(SS)A Nos. 141, 143, 144, 147, 148 & 149/Ahd/2021, order dated 25.04.2025), the Bench held that additions under section 69 based on extrapolation from seized papers belonging to Shri Ashwin B. Dudhat were not sustainable, as no document was seized from the assessee and no independent evidence of unaccounted consideration was brought on record. These decisions, rendered on substantially identical facts within the same group search, reinforce the principle that third-party loose papers without direct nexus cannot justify additions under section 69B in the assessee’s hands.

12.9 We also note that the grounds raised by the Revenue on merits are framed in very generic terms without elaborating the precise error in the findings of the ld. CIT(A). Further, during the course of hearing, the ld. DR did not advance any specific or detailed arguments to assail the findings on merits. In these circumstances, our scope of adjudication on this ground is necessarily confined to the contentions argued before us, and more particularly to those assessment years where the assessments had already attained finality as on the date of search.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 16

In such circumstances, the addition of Rs. 7,09,11,386/- for A.Y. 2015-16 and Rs.53,76,31,204/- for A.Y. 2016-17 under section 69B cannot be sustained. This ground of the Revenue is dismissed.

13.1 During the course of assessment proceedings, the Assessing Officer disallowed the differential interest paid to related parties by restricting the allowable rate to 12% as against 15% actually paid by the assessee. The basis of such disallowance was that, according to the AO, the assessee failed to demonstrate any commercial expediency or special circumstance justifying the higher rate.

13.2 The ld. CIT(A) deleted the disallowance on two counts. First, he observed that the assessment year under appeal was a completed/unabated year on the date of search. In terms of section 153A, no addition can be made in such completed years unless it is based on incriminating material found during the course of search. The disallowance made by the AO admittedly arose from “verification of details on record” and not from any seized material. Hence, in law, the disallowance was outside the permissible scope of assessment under section 153A.

13.3 Secondly, the ld. CIT(A) examined the matter on merits and found that the AO had not brought on record any external benchmark, comparable cases, or evidence to show that 15% interest paid by the assessee was excessive or unreasonable vis-à-vis market conditions. The mere assertion that 12% was “fair and reasonable” was unsupported by any cogent material. In absence of such evidence and considering that the statutory precondition under section 40A(2) is that the AO must demonstrate that the payment is excessive or unreasonable having regard to the fair market value of the services or legitimate needs of business, the disallowance could not be sustained even on merits.

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15.1 Common facts are such that a search and survey action under sections 132 and 133A of the Income-tax Act, 1961 was carried out on 06.03.2018 and subsequent dates in the cases of “SSS Group”, comprising Sangani Group, Satyam Group and Shaligram Group. These groups, though having diverse business interests, are prominently engaged in the real estate sector in and around Ahmedabad, where they have undertaken development of multi-storey residential and commercial projects, bungalows, villas and plotted schemes. The residence of the assessee, M/s. Shaligram Infra Projects LLP, PAN: ACPFS7047A, was also covered in the search. Pursuant to the centralisation order dated 23.04.2018 of the Principal Commissioner of Income Tax-3, Ahmedabad, the assessments were framed by Central Circle-2(2), Ahmedabad.

15.2 The assessee had originally filed its returns under section 139(1) declaring total income of Rs.1,74,14,770 for A.Y. 2017–18 and Rs.4,73,08,150 for A.Y. 2018–19. Consequent to notice under section 153A, fresh returns were filed declaring the same income. During assessment proceedings, the Assessing Officer invoked section 142(2A) and directed a special audit through M/s Talati & Talati LLP, who furnished their report. Relying on seized material, statements recorded during search, and the special auditor’s findings, the AO made various additions in both years. The assessee’s detailed replies were filed and considered but not accepted.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 18 15.3 The principal addition in both years was in respect of alleged “on- money” received on sale of flats in the project “Shaligram Plush”. The AO relied upon (i) the statement of Shri Vasant Maganbhai Patel admitting cash payment of Rs. 39 lakh in the purchase of Flat No. A/604, supported by a handwritten note; (ii) loose papers seized from Shri Viral K. Patel showing a difference of Rs. 50 lakh in Flat No. A/302; and (iii) statement of Shri Chunilal Baldevram Jani admitting on-money of Rs. 10 lakh in another project “Shaligram Lakeview”. On this basis, it was concluded that only 2/3rd of actual consideration was recorded in the books, while 1/3rd was received in cash as on-money. This was further confirmed in the special auditor’s report.

15.4 In A.Y. 2018–19, apart from the on-money addition, the AO also relied on seized Annexure A/5 containing notings of investments in land at Ambli, Kathwada and Hanspura, which were partly corroborated by digital data seized from another group entity. It was held that unrecorded investment of Rs. 4.20 crore existed in Ambli land, while Rs. 1.36 crore relating to Kathwada and Hanspura was also unrecorded. Further, page 39 of Annexure A/5 recorded receipt of Rs. 1 crore from Shri K.P. Sangvi, Surat, which was not reflected in the books and remained unexplained.

15.5 In addition, in both years, disallowance of interest under section 40A(2)(b) was made on the ground that the assessee had paid interest at 15% to related parties while to others it had paid only 9%–12%. Treating 12% as fair, the AO disallowed the excess 3%.

15.6 Tabulated summary of additions is given below:

A.Y. Nature of Basis of Addition Amount Addition (Rs.) Unaccounted Statements of Vasant 9,65,73,000 2017–18 revenue from Maganbhai Patel and Chunilal sales (on-money) Jani, seized paper (Viral K. u/s 69A Patel), and special auditor’s report showing 1/3rd of The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 19 consideration received in cash in project “Shaligram Plush” Disallowance of Interest @15% paid to related 4,83,874 interest u/s parties vs. 9–12% to others; 40A(2)(b) excess 3% disallowed Unaccounted Same basis as A.Y. 2017–18; 23,76,60,875 revenue from average 1/3rd of sales treated sales (on-money) as cash u/s 69A Unexplained Seized Annexure A/5 (pages 4,20,00,000 investment in 28–29), corroborated by digital Ambli land u/s data showing higher 69B investment Unexplained Same Annexure A/5 showing 1,36,00,000 2018–19 investment in coded figures; not recorded in Kathwada & books Hanspura land u/s 69 Unexplained Page 39 of Annexure A/5 1,00,00,000 money received recording Rs. 1 crore receipt; from K.P. Sangvi, no explanation or confirmation Surat u/s 69A provided Disallowance of Interest @15% paid to related 3,61,700 interest u/s parties vs. 9–12% to others; 40A(2)(b) excess 3% disallowed 15.7 The assessee preferred appeals before CIT(A) against the orders of Assessing Officer In case of A.Y. 2017-18 and A.Y. 2018-19. The ld. CIT(A) carefully examined the seized documents, statements recorded, special audit report, and the detailed submissions of the assessee for both years. It was observed that the Assessing Officer had extrapolated certain instances of alleged on-money receipts found in seized papers and statements and applied them to the entire turnover of the projects “Shaligram Plush” and “Shaligram Lakeview”. The CIT(A) held that such blanket extrapolation was unjustified but at the same time, it was not possible to ignore the fact that The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 20 incriminating materials and corroborating statements did indicate existence of cash components in certain sales.

15.8 The CIT(A) also examined the seized loose papers found from the residence of Shri Viral K. Patel (Annexure A/3), which recorded the agreement value of Flat No. A/302 at Rs.1,48,50,000/-, whereas the registered deed reflected only Rs.98,50,000/-. The difference of Rs.50,00,000/- was affirmed by Shri Viral Patel as on-money, and he also made a disclosure to this effect (para 7.41). At the same time, the assessee pointed out that Shri Viral Patel was from Satyam Group, not connected with the assessee’s business operations, and had himself confirmed by way of letter that the seized noting contained a typographical error. It was also contended that the Assessing Officer adopted a selective approach, relying on a stray document and third-party statement of Shri Vasant M. Patel, who was not a party to the transaction and whose deposition suffered from inherent defects such as miscalculation of area, inconsistent rates, and lack of booking agreement. The assessee further argued that the theory of extrapolation adopted by the auditor and the Assessing Officer was legally impermissible, that units were sold at different rates depending on timing, progress of construction and customisation, and that the AO had ignored the statement of the key group person, Shri Ramesh Antala, which showed that units could be sold both at premium and discounted prices.

15.9 The CIT(A), after analysing these rival positions, noted that during search, on-money of Rs.39,00,000/- was found in respect of Flat No. A/604 based on buyer’s statement and supporting papers, thereby establishing that on-money was indeed received in the assessee’s project Shaligram Plush. The AO, however, extrapolated this by applying 1/3rd of the turnover, thereby estimating additions of Rs.9,65,73,000/- for AY 2017-18 and Rs.23,76,60,875/- for AY 2018-19 (para 7.52). The CIT(A) observed that taxing gross receipts as undisclosed income was impermissible in law and contrary to the “real income” theory, as held by various Courts. From the P&L account, it was seen that the assessee had already declared a net profit

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 21 rate of 9.02% in AY 2017-18 and 9.95% in AY 2018-19, which was higher than group concerns in comparable circumstances.

15.10 Accordingly, balancing the incriminating material indicating existence of on-money with the legal position that only real income could be taxed, the CIT(A) held that it would be fair and reasonable to estimate the profit at 12% of the on-money receipts, treating the same as business income and not under sections 68/69A. He also clarified that consequently, the special rate of section 115BBE would not apply. The computation was tabulated as under: Assessment On-Money extrapolated by Income estimated Year AO (Rs.) @12% (Rs.) 2017–18 9,65,73,000/- 1,15,88,760/- 2018–19 23,76,60,875/- 2,85,19,305/- Total 33,42,33,875/- 4,01,08,065/-

Accordingly, additions were sustained to the extent of Rs.1,15,88,760/- for A.Y. 2017–18 and Rs.2,85,19,305/- for A.Y. 2018–19, while deleting the balance additions of Rs.8,49,84,240/- and Rs.20,91,41,570/- respectively.

15.1 Regarding Interest Disallowance u/s 40A(2)(b), the CIT(A) noted that the Assessing Officer, while completing the assessment u/s 143(3) r.w.s. 153A, had disallowed interest under section 40A(2)(b) of the Act purely on the basis of the observations of the special auditor. The AO held that the assessee had paid interest at 15% to related parties, whereas interest to unrelated parties was paid at 9% to 12%, and therefore the excess 3% was disallowable. The details of such interest, as reproduced by the AO, reflected an overall disallowance of Rs. 9,11,436/-.

15.2 In response, the assessee submitted that the benchmarking at 12% adopted by the auditor and AO was arbitrary, as even secured loans availed from State Bank of India carried an effective rate of 12.35%. Considering

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 22 the higher compliance burden and collateral requirements for bank borrowings, it was argued that interest at 15% on unsecured loans from related parties could not be regarded as excessive, particularly when such loans were advanced without security and formalities.

15.3 The CIT(A), after considering the submissions, observed that the AO had neither provided comparative market data nor established that 15% was excessive in the facts of the case. The prevailing market rate of interest on unsecured borrowings could not be disregarded, and the marginal difference over the bank rate of 12.35% could not, by itself, justify a disallowance. Since no cogent material was brought on record by the AO to demonstrate excessiveness within the meaning of section 40A(2)(b), the CIT(A) held that the disallowance was not sustainable. Accordingly, the entire addition totalling to Rs.9,11,436/- made on this account, for respective assessment years, was deleted, and the ground of appeal was allowed.

15.4 For the A.Y. 2018-19, the CIT(A) also decided on the grounds relating to undisclosed investment in land and alleged unexplained receipts. The related facts are such that during the search action u/s 132 at Shaligram House, certain papers contained in Annexure A-5 running into 56 pages were seized. The assessee itself confirmed, vide letter dated 09.12.2019, that the transactions appearing therein pertained to it, leaving no dispute as to the authenticity or ownership of the seized documents. On examination of pages 28, 29 and 39 of Annexure A-5, the AO had concluded that these notings reflected investments in lands situated at Kathwada, Hanshpur and Ambli. The notings used figures such as “80, 56, 70” which, when read with corroborating digital data seized from another group person, were interpreted to mean Rs. 80 lakh, Rs. 56 lakh and Rs. 70 lakh respectively. Thus, according to the AO, the assessee had invested Rs. 2.06 crore in these lands, which was not recorded in its regular books. Further, on perusal of assessee’s ledger, it was found that while Rs. 3 crore advance against Ambli land was recorded in November 2017, an additional Rs. 70

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 23 lakh reflected in seized notings was not recorded. Likewise, Rs. 80 lakh for Kathwada and Rs. 56 lakh for Hanshpur were also not reflected in the books. The AO accordingly invoked section 69B to add Rs. 4.20 crore for undisclosed investment in Ambli and section 69 to add Rs. 1.36 crore for Kathwada and Hanshpur.

16.1 Separately, page 39 of Annexure A-5 recorded coded entries of “100”, corresponding to Rs. 1 crore received from one K.P. Sangvi, Surat, on 28.12.2017. This was not found in assessee’s books, and the assessee failed to offer any credible explanation or confirmation. The CIT(A), therefore, upheld the AO’s addition of Rs. 1 crore under section 69A for unexplained money received.

16.2 At the same time, the assessee argued before the CIT(A) that such investments and receipts should be telescoped against the estimated undisclosed income from on-money on sales already worked out in the appellate order, to avoid double taxation of the same funds. The CIT(A) accepted this contention in principle. He noted that the estimated undisclosed profit from on-money for both A.Ys. 2017–18 and 2018–19 aggregated to Rs. 4,01,08,065/-, which would be available as a source of investment. Against the total unexplained investments/payments of Rs.6.56 crore (Rs. 4.20 crore u/s 69B, Rs. 1.36 crore u/s 69, and Rs. 1.00 crore u/s 69A), the telescoping adjustment was granted. Consequently, the The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 24 balance amount of Rs.2,54,91,935/- was sustained as net addition on account of undisclosed investments and payments.

196/Ahd/2021 IT(SS)A 291/Ahd/2021 relating to the Asst.year 2017-18 and 2018-19.

1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the additions made by the AO in the order u/s 153A r.w.s 143(3) on legal grounds that the additions should have been made u/s 153C, without appreciating the fact that provisions of section 153C empowers the Assessing Officer to assess or re-assess the income of the person other than searched person, but the assessee being searched person was squarely covered under section 153A

2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s 132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act.

3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re- assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material.

4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec. 153A and sec. 153BI specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003.

5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 25 intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC).

7. 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.8,49,84,240/- the amount is made on account of unexplained investment in land u/s 69B of the I.T. Act, 1961.

8. 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.44,525/- made on account of disallowance of interest u/s 40A(2)(b) of the I.T. Act, 1961.

9. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.

10. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 18.1 Revenue’s Grounds in 291/Ahd/2021

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in estimating the undisclosed profit/income on the on-money receipts at Rs.2,85,19,305/- and deleting the balance addition of Rs.20,91,41,570/- made u/s 69A r.w.s. 115BBE of the I.T. Act, 1961.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that estimated unaccounted income of on money of Rs.4,01,08,065/- (Rs.2,85,19,305 for A.Y.2018-19 + Rs.1,1d,88,760 for A.Y.2017-18) is telescoped against the undisclosed investment/payment of Rs.6,56,00,000/-.

3. On the facts and ill the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.3,61,000/- made on account of disallowance of interest u/s 40A(2)(b) of the I.T. Act, 1961 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 18.2 Assessee’s Grounds in 167/Ahd/2021 – A.Y. 2017-18

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 26

2. Ld. CIT (A) erred in law and on facts in upholding dual contention of AO as on one side AO state that "The Taxation and other laws (Relaxation of certain provisions) Ordinance, 2020” is not applicable and on other hand AO used extended time limit for passing Assessment Order as per the ordinance. Tax Effect: N.A. being a technical ground.

3. Ld. CIT (A) ought to have restricted addition of profit margin of alleged on money to 8% as per various judicial precedents available or in alternative profit margin shall be restricted to net profit ratio declared by appellant. It be held so now. Tax Effect: Being alternative contention of main ground of appeal on which relief granted by CIT (A) Your appellant craves leave to add, amend, alter, edit, delete, modify, or change all or any of the grounds of appeal before the appeal is heard and decided.

18.3 Assessee’s Grounds in 233/Ahd/2021 – A.Y. 2018-19 1. The order passed by AO is bad in law and required to be quashed as barred by limitation as same has been passed beyond time- period mention as per provision of section 153B applicable for relevant period. Tax Effect: N.A. being a technical ground.

2. Ld. CIT (A) erred in law and on facts in upholding dual contention of AO as on one side AO state that "The Taxation and other laws (Relaxation of certain provisions) Ordinance, 2020” is not applicable and on other hand AO used extended time limit for passing Assessment Order as per the ordinance. Tax Effect: N.A. being a technical ground.

3. Ld. CIT (A) ought to have restricted addition of profit margin of alleged on money to 8% as per various judicial precedents available or in alternative profit margin shall be restricted to net profit ratio declared by appellant. It be held so now. Tax Effect: Being alternative contention of main ground of appeal

on which relief granted by CIT (A)

4. (A) Ld. CIT (A) erred in law and on facts in confirming addition of Rs. 4,20,00,000/- for Ambli Land (u/s 69B), Rs. 80,00,000/- for Kathwada land(u/s 69). Rs. 56,00,000/- for Hanshpura land (u/s 69) and Rs.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 27

1,00,00,000/-(u/s 69A) received form K P Sanghvi by invoking section 69/69A/69B of the Act on the basis of rough nottings and jottings which is not in hand writing of any of the key person and also extrapolated the nottings and jottings presuming same has been in coded form. The addition made by AO and confirmed by CIT (A) is merely based on dumb documents and on conjectures and surmises and required to be deleted. It be so held now. (B) Ld. CIT (A) erred in law and on facts in confirming Rs. 2,54,91,935/- (Addition of Rs. 6,56,00,000/- in Ground # 4 above Less Rs. 4,01,08,065/- after allowing telescoping of on-money receipts earned in A.Y. 17-18 & A.Y. 18-19) ignoring fact that addition of Rs. 6,56,00,000/- are based on dumb documents / rough jottings which does not have any evidentiary value. Tax Effect: Rs. 89,07,901/- Your appellant craves leave to add, amend, alter, edit, delete, modify, or change all or any of the grounds of appeal before the appeal is heard and decided.

18.4 It is pertinent to note that the Revenue has raised Grounds No. 1 to 6 in IT(SS)A Nos. 196/Ahd/2021 and 291/Ahd/2021 relating to the interplay of sections 153A and 153C of the Act, and the scope of additions in respect of incriminating material. We have already dealt with these legal grounds in detail while adjudicating the Revenue’s appeals for A.Ys. 2015- 16 and 2016-17 in IT(SS)A Nos. 194 & 195/Ahd/2021. For the reasons recorded therein, and following our findings in those years, Grounds No. 1 to 6 raised by the Revenue in the present appeals are also decided against the Revenue. We, therefore, confine ourselves hereafter to the remaining grounds on merits concerning the additions/disallowances for A.Ys. 2017- 18 and 2018-19.

18.5 Before we proceed to examine the issues on merits, it is noted that the assessee has raised certain legal grounds challenging the validity of the assessments on the basis of limitation under section 153B of the Act and the applicability of the “Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.” However, at the time of hearing, the learned Authorised Representative did not press these grounds and no arguments were advanced. Accordingly, these grounds are treated as not pressed and dismissed.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 28 18.6 We note that identical grounds of the Revenue challenging the deletion of disallowance of interest under section 40A(2)(b) were raised in its appeals for A.Ys. 2015–16 and 2016–17. While disposing of those appeals, we have already held that the Assessing Officer had not brought on record any cogent evidence or comparative analysis to establish that the rate of 15% paid to related parties was excessive or unreasonable having regard to market conditions, particularly when the assessee was itself paying 12.35% on secured loans from a scheduled bank. Following the same reasoning and applying the ratio consistently, the grounds of the Revenue on this issue for A.Ys. 2017–18 and 2018–19 are also dismissed.

19.1 Grounds relating to on-money receipts (Revenue’s Ground No. 7 in A.Y. 2017-18 and Ground No.1 in A.Y. 2018-19) (Assessee’s Ground No. 3 in both assessment years.)

19.2 The next set of grounds raised by both the Revenue and the assessee pertain to the core issue of on-money receipts and their tax treatment. For A.Y. 2017–18, the Revenue has challenged the deletion of addition of Rs.8,49,84,240/- made under section 69B on account of alleged unexplained investment in land (Revenue Ground No. 7), while the assessee in its Ground No. 3 has contended that the learned CIT(A) erred in applying a profit rate of 12% on the estimated on-money receipts instead of restricting the addition to 8% or alternatively to the net profit rate declared (9.02%).

For A.Y. 2018–19, the Revenue has challenged the action of the learned CIT(A) in restricting the addition to Rs. 2,85,19,305/- being 12% of the estimated on-money receipts and deleting the balance addition of Rs.20,91,41,570/- made under section 69A (Revenue Ground No. 1), while the assessee in its Ground No. 3 has similarly urged that the addition

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 29 should be further restricted to 8% or at best to the net profit rate of 9.95% declared in the books.

19.3 The Revenue has assailed the orders of the CIT(A) on the ground that the Assessing Officer had rightly made additions under sections 69A/69B by extrapolating on-money payments based on seized documents, third- party statements and the Special Audit Report. According to the AO, the assessee was systematically receiving on-money averaging about one-third of the actual consideration in the Shaligram Plush project and other schemes, corroborated by seized papers from Shri Viral K. Patel and statements of Shri Vasant Maganbhai Patel. It was argued that the CIT(A) erred in restricting the additions to 12% of turnover by treating the receipts as business income, instead of confirming the entire additions made under sections 69A/69B. The Departmental Representative further emphasised that the seized papers, statement of buyers, and circumstantial evidence were sufficient to sustain the full additions, and CIT(A) wrongly telescoped or reduced them.

21.1 The AR further stated that even assuming without admitting that some on-money was received, the same was part of business turnover and could only yield taxable profit element, not the gross receipt. The assessee contended that profit should be estimated at 8% of such receipts, or in the The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 30 alternative, at the actual net profit rate disclosed in the books (9.02% for A.Y. 2017–18 and 9.95% for A.Y. 2018–19). The AR placed reliance on decisions of Co-ordinate Bench in case of Greenfield Reality P. Ltd. [IT(SS)A No. 289,290,291 and 292/Ahd/2018] and Robin Ramavtar Goenka in IT(SS)A No. 46/Ahd/2023 where the addition was restricted to profit percentage. In some cases it was restricted to 8% and in some cases it is 13%.

22.1 Balancing these considerations, we concur with the approach of the CIT(A) in estimating income at 12% of the alleged on-money receipts, having regard to the NP rate of 9%–10% already disclosed by the assessee and margins in this line of business. The assessee’s plea to restrict it further to 8% or the exact NP rate cannot be accepted, as the estimate of 12% is reasonable in the facts and circumstances and also factors in the element of unrecorded cash transactions. At the same time, the Revenue’s plea to restore the full additions under sections 69A/69B cannot be sustained.

22.2 Accordingly, for A.Y. 2017–18 and A.Y. 2018–19, the additions sustained by the CIT(A) of Rs.1,15,88,760/- and Rs.2,85,19,305/- respectively are upheld, and the cross grounds raised by both parties are dismissed.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 31

23.1 During the course of search at Shaligram House on 06.03.2018, certain incriminating papers were found and seized as Annexure A-5 (56 pages). Vide letter dated 09.12.2019, the assessee confirmed that the transactions appearing therein pertained to it. On perusal of pages 28, 29 and 39 of Annexure A-5, it was noticed that the assessee had made investments in lands at Kathwada, Hanshpura and Ambli, recorded in coded figures “80, 56 and 70” which in fact represented Rs. 80,00,000/-, Rs. 56,00,000/- and Rs. 70,00,000/- respectively. This was corroborated with digital data seized from the residence of Shri Sandeep Andani (key person), wherein investment in Ambli land was noted at Rs. 3.50 crore. On comparison with assessee’s ledger, advances of Rs. 3.00 crore towards Ambli land were found recorded, but the balance Rs. 70 lakh remained outside the books. Thus, the Assessing Officer held that the assessee had made unaccounted investment of Rs. 4.20 crore in Ambli land. Similarly, the notings revealed Rs. 80 lakh in Kathwada land and Rs. 56 lakh in Hanshpura land, not reflected in regular books. Further, page 39 of the seized diary reflected a receipt of Rs. 1,00,00,000/- from Shri K.P. Sanghvi of Surat, noted as “50 + 50 = 100”, which was also not recorded in the books. In absence of any confirmation or explanation, the Assessing Officer treated it as unexplained money under section 69A.

23.2 Before CIT(A) The assessee denied any undisclosed investments, contending that the seized papers were mere rough notings of a broker, not in the handwriting of any partner, and unsupported by corroborative evidence. It was further urged that the alleged cash receipt of Rs. 1 crore from Shri K.P. Sanghvi was unsubstantiated, and, in any case, any such additions ought to be telescoped against income already taxed on on-money receipts.

23.3 The CIT(A) held that the seized notings and corroborative digital data clearly established that the assessee had made undisclosed investments in The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 32 Ambli, Kathwada and Hanshpura lands as well as received unaccounted cash from Shri K.P. Sanghvi. He confirmed the total additions of Rs.6,56,00,000/- (Rs. 4.20 crore u/s 69B, Rs. 80 lakh + Rs. 56 lakh u/s 69, and Rs. 1 crore u/s 69A). However, he accepted the assessee’s plea for telescoping. Referring to his own estimation of income on on-money receipts at 12% (Rs. 1.15 crore for A.Y. 2017–18 and Rs. 2.85 crore for A.Y. 2018– 19, aggregating Rs. 4.01 crore), the CIT(A) held that such undisclosed profit would have been available for the assessee’s investments. Accordingly, he telescoped Rs.4.01 crore against the additions of Rs.6.56 crore and confirmed only the balance Rs. 2,54,91,935/- as undisclosed investment.

The DCIT, Cent.Cir.Vs.Shaligram Infra Projects LLP (6 Appeals) 33 double taxation of the SAme income in different hands or under different heads.

25.1 We therefore find no infirmity in the order of the CIT(A) in restricting the addition to Rs.2,54,91,935/- and granting relief for the balance. The Revenue’s challenge to deletion of the larger addition as well as the assessee’s grievance against the sustenance of Rs.2.54 crore are both rejected.

i) the Assessee’s appeal for Asst.Year.2017-18 is dismissed, while that of the assessment years 2018-19 is partly allowed; ii) all the Revenue’s appeals are partly allowed.

Order pronounced in the Court on 8th September, 2025 at Ahmedabad.