DCIT CENTRAL CIRCLE - 6(1), MUMBAI vs. GNP CONSULTANCY AND SOLUTIONS PRIVATE LIMITED, THANE

The learned assessing officer in ITA number 3110/M/2023 has raised following grounds of appeal: –

“1. Whether, on the facts and in the circumstances of the case the Learned CIT (A) erred in deleting additions of Rs. 8,28,903/- on account of unexplained opening balance of cash by stating that the same is out of unaccounted business receipts disclosed by the assessee when the assessee did not submit such details and failed to substantiate its claims with any supporting documents during the assessment proceedings?

Assessee M/s GNP consultancy and solutions private limited has raised following grounds of appeal in ITA number 2547/M/2023: –

Assessee filed its return of income under section 139 (1) of the Act on 15/3/2022 at a total income of ₹ 92,782,814/- which was revised on same date at the total income of ₹ 121,592,714/–.

A search u/s 132 of the Act was conducted on 23/9/2021 and various premises were covered. The assessee was also covered under the search. Based on documents seized, assessee group disclosed additional income of Rs 26.34 crores as per letter dated 11/2/2022.

Case of the assessee was subsequently centralized to the charge of the AO. The case was selected for compulsory scrutiny and notice under section 143 (2) of the act was issued on 30/6/2022 and the notice under section 142 (1) of the act was also issued on same day. The assessee submitted details and subsequently the assessment order was passed by the learned assessing officer under section 143 (3) of the act on 31/12/2022 determining the total income of the assessee at ₹ 711,957,005/–. The

Assessee, aggrieved with assessment order preferred an appeal, which was decided on 2/6/2023 deleting the additions partly, and therefore both the parties are in appeal before us.

Ld. AR filed a three-volume paper book, chart of the issues that was considered while deciding cross appeals.

First, we deal with the appeal filed by the learned AO, which has almost ten effective grounds.

The first ground of appeal is with respect to the addition of ₹ 8,28,903/– deleted by the learned CIT – A . Ld. AO made it on account of unexplained opening balance of cash by stating that the same is out of unaccounted business receipts disclosed by the assessee when the assessee did not submit such details and failed to substantiate it claim with any supporting documents during the assessment proceedings.

This aspect has been dealt with by the learned AO in paragraph number 6 wherein the unaccounted business

Content of the seized document can be summarized as under :-

During assessment proceedings, the assessee was required to provide explanation of each entry along with the name, permanent account number and address of the parties involved. The documentary evidence in support of the claim were also asked. The assessee submitted that a sum of ₹ 23,055,400/- as reflecting in the evidence is (i) consisting of internal transfers of Rs 73,84,000/- ; (ii) consultancy fees received as income from plot and cluster consultancy. It further stated that out of the above sum ₹ 5,202,500/- and ₹ 2,450,000/- has been declared as consultancy income of the assessee for assessment year 2021 – 22 and 2022 – 23

Assessee filed detailed letter dated 09/09/2022 and 30/12/2022 where in it is submitted that :-

After considering the explanation of the assessee, the learned assessing officer rejected the same and made an addition of ₹ 12,586,500/– which was the receipts pertaining to the year under consideration. Further opening balance of ₹ 828,903/– was also added. Thus, the total addition of ₹ 13,415,403/– was made to the total income of the assessee as unaccounted business income. Further from the said document, a sum of ₹ 13,030,409/- is also considered as an unexplained

Thus, the learned AO made the addition for the year of (1) of sum of ₹ 12,586,500/- being the receipt (2) expenditure of ₹ 13,030,409 under section 69C of the act and (3) addition of ₹ 828,903/– opening balance therein.

These additions were challenged before the learned CIT – A as per ground number 7 before him. The learned CIT – A appreciated from the seized documents; it is inferred that there is an opening balance for assessment year 2021 – 22 (financial year 2020 – 21) of ₹ 828,903/–. The total receipts are shown of ₹ 13,415,403 for financial year 2020 – 21 and ₹ 1,40,68,904 financial years 2021 – 22 totalling to ₹ 23,055,400. Out of the total receipts the MIDC plot consultancy charges of ₹ 4,227,500 for financial year 2020 – 21 and ₹ 2,250,000 for financial year 2021 – 22 totalling to ₹ 6,477,500/– and further cluster consultancy fees of ₹ 975,004 financial year 2020 – 21 and Rs. 2 lakhs for financial year 2021 – 22 totalling to ₹ 1,175,000/– has been offered by the assessee as net income after claiming expenses at the rate of 30% thereon in his statement under section 132 (4) as well as in the return of income. He further held that there are internal transfer of funds from one office or branch of the assessee to the other office and branch of the assessee which is an internal movement of fund from one office to another office out of the source of the business receipts Page 17 of 108

Thus, learned CIT – A deleted the above addition of ₹ 7,384,000 holding that:-

The learned departmental representative vehemently supported the order of the learned assessing officer and challenges the deletion of the addition holding that deletion is incorrect. He referred to the assessment order at page number 9 wherein the addition has been discussed by the learned assessing officer and Para number 9.5 of the order of the learned CIT – A for reasons given by him deleting the above addition. He further stated that.

Coming to ground number 2, with respect to the addition of ₹ 7,384,000, he submits that the learned CIT – A has deleted the addition considering that it is out of total disclosure, and it is an internal transfer from one branch to another branch. He submits that.

The learned authorized representative in reply referred to page number 1026 of the paper book and submitted that.

We have carefully considered the rival contention and perused the orders of the lower authorities. Ground number 1 is with respect to the deletion of addition of ₹ 8.28 lakhs as an opening balance in the seized documents and a sum of ₹ 73.80 lakhs being internal Page 26 of 108

Accordingly, we uphold the order of the learned CIT – A in deleting the addition of ₹ 8,28903/– of the opening balance in the seized documents. Ground number 1 of the appeal is dismissed.

Coming to ground number 2, which has two parts (1) addition of ₹ 73.84 lakhs and (2) further addition deleted of ₹ 50 lakhs on account of transfer of cash? The part of the addition of ground number [2] amounting to ₹ 73.84 lakhs has already been discussed while deciding ground number [1] of the appeal. The addition deleted by the learned CIT – A cannot be found fault with because Page 29 of 108

The second part of ground number 2 of appeal of the learned assessing officer is with respect to the deletion of ₹ 50 lakhs. Ground number 3, 4 are also based on the

An interesting fact has emerged during search on the assessee where a photo was retrieved from the WhatsApp chat between the director of the company and one Mr. Shailesh Patil. This document is sent by Mr. Patil to the director. statement of the directors was recorded on oath under section 132 (4) of the act on 23/9/2021 wherein after explaining some of the transaction he failed to give any explanation stating that he is not able to recall details of such transaction. Ongoing through the said evidence, it was noted that it is a document for the period between 11/3/2021 – 16/3/2021 where the opening balance of ₹ 16.24/– crores, total receipt of ₹ 97,200,000/– and payment of ₹ 19,566,500/– is mentioned. The assessee was asked to provide the details of explanation of each entry along with the name, permanent account number and address of the parties involved along with the documentary evidence. The assessee submitted that that the above document belongs to Mr. Patil and that only some of the transactions are pertaining to the assessee. Statement of Mr. Patil was also recorded by the learned assessing officer who also made similar claim but failed to substantiate the transactions. Mr. Patil categorically accepted that the evidence was prepared by him as he is an Angadia, however, he could not identify even a single

Assessee challenged the same before the learned CIT – A with respect to total addition of ₹ 259,680,054/– as per ground number 8 of the appeal [Para 10] of the appellate order. The total amount of the addition is tabulated as under:-

The learned CIT – A categorically noted that the above document is received by the director of the assessee, Mr. Kaustubh Latke from mobile number saved as Mr. Sailesh Patil – 2. During search the director of the assessee was questioned on this document as per question number 80/81 of 132 (4) statement dated 23/9/2021 wherein 25 transactions are found to be recorded. Out of 25 transactions, explanation of 15 transactions was that Mr. Latke does not remember the details of the transaction. Similarly, statement of Mr. Girish Pawar was also recorded under section 132 (4) on 23/9/2021 and in reply to question number 179 he also stated that Mr. Sailesh Patil is an Angadia providing services for movement of cash to the assessee and its group of unaccounted cash generated from construction and consultancy business. Further, in reply to question number 19 – 21 of the statement recorded of Mr. Girish Narayan Pawar at Embassy Centre Nariman point he clarified that Mr. Patil is a businessman working in Kalyan and has carried out Angadia services for movement of cash transaction. The learned CIT – A noted that opening balance of ₹ 162,451,306 is depicted in the document sent by Mr. Patil to the director. Out of the above Page 34 of 108

The learned CIT – A has categorically held that transaction that has not been owned up by the group, but which has been owned by on the other hand by Mr. Sailesh Patil cannot be the basis of addition in the hands of the assessee. Accordingly based on the various entries categorized he held that :-

On the same facts the learned AO has also challenged ground number 3 stating that the whole transaction should have been added in the hands of the assessee as neither Mr. Sailesh Patil nor Mr. Latke could identify any other party other than the assessee. The ground number 3 did not challenge the deletion of any amount of addition by the learned CIT – A but in principle the addition is challenged. The tax effects stated against that ground is Rs. Nil . Page 39 of 108

The learned CIT DR collectively argued ground number 2, 3 and 4. He also collectively argued the addition confirmed by the learned CIT – A against which the assessee is in appeal. Such additions are of ₹ 85 lakhs and ₹ 510 lakhs.

He referred to the document found during search from mobile phone of the director of the company a document that was sent by Mr. Sailesh Patil. He submits that except the assessee, neither the director Nor Mr. Patel could explain to whom other transactions belongs to. He further stated that why an Angadia will send the details of the other parties to the assessee. He further referred to the statement wherein 25 different entries were found of receipt of cash and payment of cash. Therefore, the whole transaction belongs to the assessee only. He further stated that assessee did not deny that not all the Page 40 of 108

He further stated that the reference to the cheque to the different transaction and one is cash, and another is bank and therefore they cannot be related. He further referred to a transaction of ₹ 3 crores at serial number 19 of such documents which is found to be the consultancy cheque received in cash from Mr. Prashant Nilawar for sale of land in Pune, which is confirmed by Mr. Kaustubh and further cheque of ₹ 3 crore placed at page number 1021 pertains to different transaction and therefore they cannot be considered the same transaction because of the reason that why one would give a cash through Angadia and also a bank cheque of the identical amount. This was his argument with respect to the addition of ₹ 510 lakhs made by the learned assessing officer confirmed by the learned CIT – A against which the assessee is in appeal.

The learned authorized representative submitted that Mr. Sailesh Patil is engaged in the business of Angadia. He referred to page number 104 of the order of the learned CIT – A. He further stated that in the assessment proceedings under section 143 (3) of the act passed in the hands of Mr. Sailesh Patil on 10/7/2023 his business is accepted, and he has owned the transactions. He further stated that the learned assessing officer has stated that all the transaction mentioned in the document sent by WhatsApp by Mr. Sailesh Patil to the director of the company belongs to the company. He submits that this finding is without any basis. He stated that it is for Mr. Sailesh Patil to identify who are the other parties other than the assessee. If Mr. Sailesh Patil does not say that all these transactions are pertaining to the assessee, the learned assessing officer has merely drawn adverse inference. Naturally, the document has been sent by Mr.

Coming to second part of ground number 2 of the appeal wherein an addition deleted by the learned CIT – A of ₹ 50 lakhs on account of internal transfer is contested by revenue, he submitted that ₹ 50 lakhs is on account of entry number 8 dated 12 March 2021. He submitted that there is a transfer from Nariman point office of ₹ 50 lakhs in Cash through Mr. Sailesh Patil to another branch. Therefore, there cannot be any income therein. He also referred to paragraph number 10.15 of the order of the learned CIT – A wherein it is mentioned that the learned CIT – A has also accepted that it is an internal movement of fund from one office place to another office place of the assessee through Angadia. Therefore, it cannot be the income in absence of any other evidence available with revenue.

On the issue of ground number 4 of the appeal wherein the learned CIT – A has deleted the addition of ₹ 33 lakhs and ₹ 350,000. He submitted that at serial number 22 on 16 March 2021 a sum of ₹ 33 lakhs is received by the assessee. This amount has been offered by the assessee in the return of group concern M/s Ganadhish. He further referred that another sum of ₹ 350,000 mentioned at serial number 6 wherein on 12 March 2021 the assessee has received ₹ 350,000. He submits that Page 43 of 108

The second limb of ground number 2 is with respect to the addition deleted by the learned CIT – A on account of internal transfer of cash. This addition entry number 8 dated 12 March 2021 where there is a document that shows that there is a transfer of ₹ 50 lakhs from Nariman point office. The claim of the assessee is that this money has been transferred from Nariman point office in cash by the Angadia Mr. Sailesh Patil. Thus, the claim is that it cannot be the income when the money is transferred from one office to another office. The learned CIT – A in paragraph number 10.15 has deleted the addition holding that this is an internal movement of funds made by the assessee from one office to the another office and therefore it does not have the characteristics of income as it is evident that assessee is operating at various places such as Nariman point, Mahape, Thane , Dombivli and Kalyan . The learned assessing officer also did not dispute the above fact. Therefore, we confirm the order of the learned CIT – A in deleting addition of ₹ 50 lakhs being internal transfer of funds from one office to another office of the assessee. Accordingly, ground number 2 of the appeal of the AO is dismissed.

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.

Ground number 4 is with respect to the deletion of addition of ₹ 33 lakhs and ₹ 350,000 on the ground that it pertains to the transaction of other concerns of the assessee group. The learned CIT – A has categorically directed the learned assessing officer to delete the above Page 49 of 108

Ground number 5 is with respect to the addition of opening cash balance of ₹ 13.41 crores deleted by the learned CIT – A where the AO submits that assessee has failed to substantiate its claim with any documentary evidence that the opening balance and the receipts were out of the unaccounted income disclosed by the assessee.

The facts as culled out from Para no 8 of the assessment order relating to this ground show that during search photo of a document was received from the mobile phone of the director Mr. Kaustubh Latke. He was confronted in his statement under section 132 (4) of the act on 23/9/2021 wherein he stated that various columns are the amounts paid and received by the group entities in cash and the transactions are unaccounted in the books of account of the assessee company. Therefore, the learned assessing officer issued a notice under section 142 (1) of the act on 5/8/2022 and assessee was asked to explain the document with documentary evidence. Assessee submitted on 9/9/2022 that assessee has already declared the income of ₹ Rs. 329,500/- as Page 51 of 108

When the matter reached before the learned CIT – A it was submitted that the assessee is in the business of construction as a builder developer and rendering consultancy services as a group. During the search WhatsApp image was extracted from the mobile phone of the director of the company. The director of the company was questioned. It was stated that documents contain the details of cash balance available with the group at various offices branches out of its unaccounted business receipts. Assessee also submitted that in 132 (4) statement of the assessee that assessee has already disclosed unaccounted business receipts of the assessee

The learned AO is aggrieved with the deletion of the same. The learned departmental representative stated that that there is no reason to subsume the addition of ₹ 13.41 crores in the total disclosure made by the assessee. He submits that ld. CIT (A) has factually incorrectly held that the disclosure subsumes the above addition. Therefore, the only grievance of the learned CIT – DR is that the learned CIT – A has given the benefit to the assessee of the already disclosed income for the purpose of opening balance in the seized document without any evidence.

The learned authorized representative submitted that the above sum of ₹ 13.41 crores is added by the learned assessing officer to the total income of the assessee because it has been stated to be a balance available at various branches of the assessee. He referred to page number 44 of the paper book and page number 1162 of the paper book where the complete disclosure made by the assessee has been shown. He further stated that the opening date in the excel sheet is 27/8/2020 and therefore it cannot be said that on that date this is the income of the assessee. It was further stated that it is not the annual statement but daily cash statement of the various branches. Based on this the assessee has already Page 60 of 108

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.

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

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,

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. Page 67 of 108

During search the WhatsApp chat of the directors from iPhone 12 pro-was retrieved wherein some unaccounted

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 Page 69 of 108

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 Page 71 of 108

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

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 Page 74 of 108

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:-

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

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 confirmed by the broker, the land transferred to the

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

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

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

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

Now we come to the appeal filed by the assessee.

Ground number 1 of the appeal of the assessee is challenging the assessment order on legal ground, it was not pressed, and therefore it is dismissed.

Ground number 2 of the appeal is with respect to the addition of ₹ 85 lakhs and ₹ 5.10 crores confirmed by the learned CIT – A while deciding ground number two and three of the appeal of the revenue. The addition relates to ground number eight raised before the learned CIT – A which has been dealt with in paragraph number 10. The ground before the learned CIT – A was of addition of the alleged business receipts of ₹ 25.97 crores based on loose paper found. During search WhatsApp image was found from the mobile phone of the director Mr. Kaustubh latke containing the name of the Sailesh Patil – 2. It is a chat between Mr. Sailesh Patil and director of the assessee company. The chat has been sent by Sri Page 86 of 108

The learned CIT – A has dealt with this issue in paragraph number 10.17 wherein it has been mentioned that assessee contended before him that the above sum of ₹ 5.10 crores has already been recorded in the books of accounts of the assessee. Such submissions were placed on 15/11/2022 and 30/12/2022 before the assessing officer, which was not considered. The learned CIT – A look that the statement recorded of the director of the assessee company under section 132 (4) recorded on 23/9/2021 wherein for the transaction the director of the assessee company has given explanation. With respect to the first transaction dated 13 March 2021 of Rs 2.10 crores it is stated by the director that cash is received but he does not remember the details of the payer. With respect to the second entry of 15 March 2021 of ₹ 3 crores he specifically says that this is a consultancy charges received in cash from Mr. Prashant in respect of sale of land in Pune. The learned CIT – A

Another sum of ₹ 85 lakhs was also confirmed wherein it was found that there are three entries dated 12th March 21 and 15th March 21 of ₹ 20 lakhs, 40 lakhs and ₹ 25 lakhs respectively totalling to ₹ 85 lakhs. The answer given by the director during statement recorded under section 132 (4) with respect to the sum of 20 lakhs is that it is a consultancy charges received in cash from the agent Mr. Umang Jain. With respect to the sum of ₹ 40 lakhs on 15 March 2021, it was stated that these payments were received in cash, but he does not recall the exact details. With respect to another payment of ₹ 25 lakhs on 15 March 2021 is given the same explanation

Assessee is in appeal before us on this issue. With respect to the addition of ₹ 85 lakhs the assessee submitted that the statement belongs to Mr. Sailesh Patil who sent that particular message to the director of the assessee and therefore based on that document, the addition cannot be made in the hands of the assessee. It was further stated that Sailesh Patil has owned this transaction and therefore as assessment order in the hands of Mr. Sailesh Patil has already been passed, this addition cannot be made in the hands of the assessee. Alternatively, it was further argued that if the addition is sustained in the hands of the assessee the respective

The learned CIT DR vehemently supported the order of the learned CIT – A and stated that there is no explanation given by the assessee during assessment proceedings and merely stated that the document belongs to Mr. Sailesh Patil. It was further stated that in the hands of the Sailesh Patil only the commission income of Angadia charges is added. Further the assessee has given a categorical answer during search under section 132 (4) of the act that the money has been received by the assessee and therefore now the assessee cannot escape from the taxation of the same. He further stated that as the assessee has not owned up this income, there is no question of granting any benefit of expenditure at all from such income.

We have carefully considered the rival contention and perused the orders of the lower authorities. We find that on 12 March 2021 the assessee has received a sum of ₹ 20 lakhs from one Mr. Umang Jain which has been confirmed in the 132 (4) statement of the director of the assessee that this sum is a consultancy charges received in cash from that particular agent. There is no evidence that such income has not been received by the assessee. Merely because Mr. Sailesh Patil who is an Angadia has been assessed on the above sum, albeit on commission Page 90 of 108

With respect to the addition of ₹ 40 lakhs and ₹ 20 lakhs received on 15 March 2021 where the assessee has stated that these payments were received in cash but he does not recall the exact details, and the learned CIT – A has confirmed the addition merely on the basis of the statement of the director of the company recorded under section 132 (4) of the act and further the statement of Angadia Mr. Sailesh Patil. In fact, Mr. Sailesh Patil is the right person to inform to whom this money belongs to. Because he is the person who has given this money to the assessee which has been confirmed by the director in his statement. If the income does not belong to anybody else, it will necessarily become the income of the assessee who received it. However, during statement recorded of Mr. Sailesh Patil, no such specific questions

The third issue is with respect to the addition in the hands of the assessee of two entries totalling to ₹ 5.10 crores. The first entry is dated 13 March 2021 of Rs 2.10 crores being amount received for Sukhakarta cluster. In 132 (4) statement director of the assessee stated that he does not remember the details of the payer. Therefore, this argument is similar to the addition of ₹ 65 lakhs from the said document of Mr. Sailesh Patil.

The learned authorized representative referred to page number 1150 of the paper book stated that assessee has explained that this amount is a collected by Sailesh Patil from Sukhkarta general engineering private limited on Page 92 of 108

The learned departmental representative vehemently supported the order of the learned assessing officer and the learned CIT – A state in that the WhatsApp message of Mr. Sailesh Patil relates to cash transaction only and

On careful consideration of above facts, it is apparent that the learned assessing officer and the learned CIT – A has made the addition to the total income of the assessee considering the same as cash received from Mr. Sailesh Patil by the assessee. Both the lower authorities have not dealt with the above explanation, which is placed at page number 1150 of the paper book and placed before the investigation wing. The learned lower authorities have also not carried out any enquiry whether the above amount is receipt of cash by the assessee or as stated by the assessee in the above explanation. Assessee has produced the copy of cheque of Indian overseas Bank bearing check number 673807 dated 13/3/2021 issued by Sukhakarta general engineering cluster private limited in favour of Deputy Chief accounts officer, MIDC as a proof that the above transaction is a cheque transaction. The letter dated 13 March 2021 issued by that company to the assessee was also produced wherein the issue of the cheque is stated that it is an earnest money deposit for premium of CFC plot

The next entry is dated 15 March 2021 of ₹ 3 crores wherein the name of the party is mentioned as Nilawar and when the statement of the director is recorded under section 132 (4) he submitted that it is a consultancy charges received in cash from Mr. Prashant Nilawar in respect of sale of land in Pune. Therefore, the addition was made by the learned assessing officer in the hands of the assessee. The learned CIT – A has also confirmed the same. Before the lower authorities' assessee submitted (paper book page number 1131) that consultancy income is part of the total receipt of ₹ 3.24 crores accounted in the regular books of account during the financial year 2020 – 21. Therefore, the claim of the learned authorized representative is that the above sum has already been offered for taxation in the books of accounts. This is also the explanation given at the time of

Assessee has claimed before us that that assessee has provided consultancy services to M/s Rucha Consultancy LLP. The copy of the account of that party is placed at page number 1022 of the paper book. According to that Ledger account, it is apparent that assessee has recorded the consultancy income of ₹ 32,496,316/– from the above party. Towards the above payment the assessee has received a cheque of ₹ 3 crores being cheque number 529754 of Nanded merchants cooperative bank Ltd , Nanded dated 15 March 2021 of ₹ 3 crores. Photocopy of cheque is placed at page number 1021 of the paper book. It is the claim of the assessee that the WhatsApp of Mr. Sailesh Patil refers to this transaction. The facts of this transaction are identical to the facts of the case where the addition of Rs 2.10 crores is

Accordingly, ground number two of the appeal is allowed with above direction.

Ground number 3 of the appeal is with respect to the addition of ₹ 5,132,900/- comprising of three amounts (1) sum of ₹ 2,672,900/-, (2) ₹ 380,000/- and (3) ₹ 2,080,000/-. All of these are treated as unaccounted cash receipts of the assessee. The fact of the case shows that that the learned assessing officer based on the images of the diaries found from the WhatsApp image of Mr. Kaustubh latke has made the above addition.

The amount of addition of ₹ 2,672,900 is concerned, it pertains to the transaction of the assessee carried out by one Mr. Rajesh saboo on account of purchase of 5.345 acres of land where the assessee was supposed to get remuneration of ₹ 500,000 per acre. It is the submission of the assessee that the above transaction has not at all materialized and this was merely a proposal with a rough working of the total probable price. The learned

The learned authorized representative referred to the document, which is at page number 20 of the assessment order. He submits that that assessee was supposed to get the professional fees of ₹ 5 lakhs per acre on the registration of the document. The transactions have not been completed by the parties as it did not materialize, assessee also did not get any fees. Therefore, the above amount cannot be added in the hands of the assessee.

The learned CIT DR vehemently supported the orders of the lower authorities and submitted that both the lower authorities have rejected this contention because there is a mention of amount 'paid' in the seized documents. He further submits that there is no evidence placed by the assessee before any of the lower authorities that the above transaction did not materialize. Therefore, the above addition is correctly made.

The second addition is related to ₹ 380,000 of cash receipt as business income. As per Para number 12.4 of the assessment order, the document found from the WhatsApp chat is stimulated. According to that chat it is found that total cash involved in the deal is ₹ 3,995,000/– out of the total cash amount shri Umang Jain has given ₹ 10 lakhs as an advance and expected to give ₹ 2,995,000/–. There is further instruction to pay ₹ 2,615,000/– out of this transaction to Shri Thackeray. From the above cash movement, the learned assessing officer found that out of the total cash transaction ₹ 380,000/– being difference of ₹ 2,995,000 and ₹ 2,650,000 is the GNP charges, which are unaccounted cash receipt of the assessee. During assessment proceedings, the assessee claimed that these are merely proposals, but the learned assessing officer has categorically noted that as Mr. Umang Jain has given ₹ 10 lakhs, it shows that the transaction has already taken place. On appeal before the learned CIT – A he confirmed the same.