KAMALKUMAR RAMKUMAR AGRAWAL,AHMEDABAD vs. THE DY.CIT, CIRCLE-2(1)(1), AHMEDABAD

In passing the impugned order dated 16-05-2023 and CIT(A] confirmed the same vide order dated 06-10-2025 by solely relying on the information from the search and has not done any independent inquiry to arrive at a conclusion that the income of the assessee has escaped assessment.

In initiating proceedings solely based on excel sheet, which lacks any corroborative material or signature which was found during search in the premises of a third party which lacks any valid basis for assuming the existence of a transaction between the assessee and developer. Hence, additions made based on dumb document being illegal, may kindly be deleted.

The brief facts of the case are that the assessee, Shri Kamalkumar Ramkumar Agarwal, filed his return of income for Assessment Year 2016- 17 declaring a total income of Rs.15,26,480/-. Subsequently, the case was reopened under section 148 of the Income-tax Act, 1961 ("the Act") on the basis of information received from the Investigation Wing pursuant to a search action under section 132 of the Act carried out on 11.04.2017 in the case of Navratna Organisers and Developers Pvt. Ltd. (NODPL), a real estate developer. The Assessing Officer reopened the case of the assessee on the basis of information stating that the assessee had paid on-money in cash for the purchase of a residential unit from NODPL. During the reassessment proceedings, the Assessing Officer noted that during the search in the case of the Navratna group, certain incriminating digital evidence in the form of an Excel sheet was recovered from a laptop seized from Shri Murlidhar Marutibhai Trivedi, who was found to be a key person coordinating sales and cash components of transactions in the Kalhaar Blues and Greens project. The Excel sheet contained unit-wise details such as area, land price, construction cost, amounts received by cheque and amounts received in cash, recorded in coded form by omitting zeros. The Assessing Officer further observed that NODPL, during post-search proceedings, furnished purchaser-wise details which corroborated the seized Excel data and also admitted before the Income Tax Settlement Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 4– Commission that on-money had been received in cash on sale of villas in the said project.

On decoding and correlating the seized Excel data with the registered sale deed of the assessee dated 23.03.2016 for Unit No. 248 in Kalhaar Blues and Greens, the Assessing Officer was of the view that the actual total value of the unit was Rs.1,68,21,000/-, whereas the registered sale deed reflected a consideration of only Rs.1,11,60,500/-. The Assessing Officer treated the differential amount of Rs.56,60,500/- as on- money paid by the assessee in cash. The assessee denied having paid any cash and submitted copies of the booking agreement dated 21.09.2010, conveyance deed, ledger confirmation from the developer and ledger accounts showing payments by cheque. However, as per the Assessing Officer, the assessee did not produce any bank statements and did not furnish any evidence to rebut the seized material. Accordingly, the Assessing Officer treated the amount of Rs.56,60,500/- as unexplained investment under section 69 of the Act and added the same to the income of the assessee, thereby assessing the total income at Rs.71,86,980/-. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act.

The Commissioner of Income-tax (Appeals), after considering the assessment order, material on record and the submissions of the assessee, upheld the reopening of the assessment. The CIT(Appeals) held that the information emanating from the search in the case of NODPL constituted tangible material justifying reopening under section 147 and that section 153C was not applicable as the seized documents did not belong to the assessee but were recovered from a third party. On the issue of reliance on the seized Excel sheet, the CIT(Appeals) observed that the Excel data was a structured and detailed record which, upon decoding, exactly matched the particulars of the assessee’s registered purchase, and therefore could Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 6– not be treated as a dumb document. The CIT(Appeals) further held that the presumption under sections 132(4A) and 292C of the Act applied and that the assessee failed to rebut the same with any cogent evidence. The contention regarding denial of cross-examination was rejected on the ground that the addition was primarily based on documentary evidence corroborated by post-search disclosures of the developer group and that absence of cross-examination did not vitiate the assessment.

On merits of the addition under section 69 of the Act, the CIT(Appeals) held that the substantial difference between the actual value of the unit as per seized material and the registered consideration clearly established payment of on-money in cash. Applying the test of human probabilities and relying on judicial precedents, the CIT(Appeals) confirmed that the Assessing Officer was justified in treating the differential amount of Rs.56,60,500/- as unexplained investment. The plea that the addition related to an earlier year was rejected by holding that the relevant year for taxation was the year in which the conveyance deed was executed and the investment crystallised. However, on the issue of joint ownership, the CIT(Appeals) observed that if the same on-money had already been taxed in the hands of the assessee’s wife to the extent of her 50% share, the Assessing Officer should verify the records and restrict the addition in the assessee’s hands accordingly to avoid double taxation. Subject to this limited verification, the appeal of the assessee was dismissed. Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 7– 8. The assessee is in appeal before us against the order passed by the Commissioner of Income-tax (Appeals) dismissing the appeal of the assessee.

Before us, at the outset, the Counsel for the assessee submitted that the shall not be pressing for Ground Nos. 1, 2, 4, 5, 8, 9, 10 and 11. Accordingly, these grounds are being dismissed as not pressed. Further, the Counsel for the assessee reiterated the arguments taken before the Ld. CIT(A) and also placed reliance on various case laws in support of his contention.

In response, Ld. DR placed reliance on the observations made by CIT(Appeals) in the appellate order.

We have heard the rival contentions and perused the material on record.

We have carefully considered the rival submissions, perused the material available on record and examined the judicial precedents relied upon. We find that the entire addition of Rs.56,60,500/- made under section 69 of the Act is founded solely on an Excel sheet seized from a third party, namely an employee/key person of the builder group, without there being any independent, cogent and corroborative material to establish that the assessee had in fact paid any on-money in cash. It is an undisputed position that the said Excel sheet does not bear the name or signature of the assessee, nor does it record any direct acknowledgment of cash Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 8– payment by the assessee. The Assessing Officer has not brought on record any evidence such as cash withdrawals, statements of the assessee, confirmation of receipt of cash from the assessee, or any document linking the assessee with the alleged cash payment. The entire addition is thus based on third-party material and presumptions, without independent verification. We further observe that there was no reference of any cheque payment by the assessee in the excel sheet and therefore, there is no basis of correlate the cash payments mentioned in the excel sheet with the payments made by the assessee.

We are of the considered view that reliance placed on the alleged admission of the developer group before the Income Tax Settlement Commission cannot, by itself, be a conclusive proof that the assessee paid on-money. An admission by one party cannot automatically fasten tax liability on another party, unless the Revenue establishes, by positive evidence, that the assessee was a party to such undisclosed transaction. Further, the statements recorded during search, which are sought to be relied upon, were not furnished in full to the assessee and no opportunity of cross-examination was granted, thereby violating the principles of natural justice. It is well settled that any material used against an assessee must be confronted to him and he must be afforded a fair opportunity to rebut the same.

In this regard, we find that the issue is squarely covered in favour of the assessee by the decision of the Ahmedabad Bench of the Tribunal in Divyesh Bhupendra Desai v. Principal Commissioner of Income Shri Kamalkumar Ramkumar Agrawal vs. DCIT Asst. Year –2016-17 - 9– Tax, Ahmedabad-1, order dated 29.08.2024, wherein, on identical facts arising out of the same search action in the Navratna Group and based on similar Excel-sheet data, the Tribunal held that in the absence of any specific incriminating material directly evidencing payment of on-money by the assessee, no adverse inference could be drawn. The Tribunal, after detailed examination, allowed the appeal of the assessee. For ready reference, paragraph 7 and 8 of the said decision is reproduced below for ready reference:

We further note that the above view stands fortified by the judgment of the Hon’ble Gujarat High Court in Principal Commissioner of Income Tax v. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, wherein it has been held that mere entries in an unsigned Excel sheet recovered from a third party, without any corroborative material and without establishing actual payment by the assessee, cannot be made the sole basis for making additions in the hands of the assessee.

Respectfully following the aforesaid decision of the Ahmedabad Bench of the Tribunal and the binding ratio laid down by the Hon’ble Gujarat High Court, and in the absence of any independent and reliable evidence to establish that the assessee had paid on-money in cash, we hold that the addition of Rs.56,60,500/- made under section 69 of the Act is unsustainable in law. Consequently, the addition is directed to be deleted. In view of our decision on merits, the other grounds raised by the assessee become academic and do not require separate adjudication.