DCIT, CC-II, NOIDA, NOIDA V. SURJEET SINGH, NOIDA

ITA 3578/DEL/2025

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which partly allowed the assessee's appeal concerning additions made by the Assessing Officer (AO) under section 69A of the Income Tax Act, 1961. The AO had made several additions based on unaccounted cash and income from property dealings, following a search and seizure operation. The CIT(A) reduced some of these additions, applying the principle of telescoping. The Tribunal upheld the CIT(A)'s decision, agreeing that the unaccounted income and the unexplained cash found during the search could be adjusted against each other, and only the net amount should be taxed.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839274 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2022-2023
• Appeal Filed On: 29-05-2025
• Other Referred Cases: CIT vs. Smt. P. K. Noorjahan, Mahabir Prasad Rungta vs. Commissioner of Income-tax (Appeals), Ranchi, Anantharam Veersinghalah & Co. vs. Commissioner of Income-tax, Principal Commissioner of Income-tax vs. Aliasgar Anvarali Varteji, Smt. Ganigara Rekha Venugopal vs. ACIT, Smt. Sanjeet Kanwar vs. ITO, Vinod Bhandari vs. Principal Commissioner of Income-tax (1), Indore
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: ROHIT KAPOOR; VIR SAIN AGGARWAL
• Keywords: Set aside; Business income; Corroborative evidences; Unexplained investment; Income from undisclosed sources; Document seized; Documents seized; Gift; Principle of natural justice; TDS; Search and seizure
• Section: 147; 143(3); 142(1); 132; 68; 69; 133A

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’ NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No. 3578/DEL/2025 (AYR 2022-23) DCIT, CC-II, NOIDA VS. SURJEET SINGH, ARTO COMPLEX, 2ND FLOOR, C-10, SECTOR-20, SECTOR-33, NOIDA NOIDA ROOM NO. 807, 8TH FLOOR, CIVIC CENTRE, MINTO ROAD, NEW DELHI – 110 002 (PAN: ACYPS5468G) (APPELLANT) (RESPONDENT) Assessee by : Sh.Rohit Kapoor, Adv. & Sh. Vir Sain Aggarwal, Adv. Revenue by : Ms.Suman Malik, CIT DR Date of Hearing 05.02.2026 Date of Pronouncement 20.02.2026 ORDER PER MAHAVIR SINGH, VP: This appeal filed by the Revenue is arising out of the Ld. CIT(A)-3, Noida in Appeal No. CIT(Appeals), Noida-3/10033/2021-22 dated 12.3.2025. Assessment was framed by the DCIT, CC-II, Noida for the AY 2022-23 u/s. 147 of the Income Tax Act, 1961 (hereinafter referred as the Act) vide order dated 14.2.2024. 2. The Revenue has raised the following grounds:- i) Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by AO of Rs. 99,88,390 out of total addition of Rs. 1,43,32,390/- u/s. 69A of the Act by applying the principle of telescoping, without establishing a clear and direct nexus Printed from counselvise.com 2 between the alleged unaccounted income determined by the Ld. CIT(A) and the specific cash seized during the search. ii) Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3 has erred in calculating the commission income from property dealing business at Rs. 35,79,000/- by applying rate of 4% on sum of Rs. 8,94,75,000/- mentioned in the seized incriminating documents and sustaining the addition to that extent, without appreciating the fact that the assessee failed to substantiate with documentary evidences that he has carried out the business of property dealing. Hence, decision of Ld. CIT(A) determining the unaccounted business income to the extent of Rs. 35,79,000 and sustaining the addition that that extent is not justifiable being based on surmises and conjecture. iii) Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 50,15,000 on account of unexplained cash found during the search, disregarding the fact that the assessee failed to discharge the onus cast upon him to explain the nature and source of the amount seized during the search. Merely re- characterizing the unexplained cash as ‘income’ without verification, does not absolve the assessee from statutory liability. iv) Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not upholding the entire addition of Rs. 1,43,32,290/- made in the assessment order u/s. 69A since the assessee failed to reconcile the seized cash as well as unexplained earning mentioned on incriminating documents found during the search, with consistent, credible and documentary evidences of disclosed source of income. 3. The brief facts of the case are that the assessee is a proprietorship concern and is mainly engaged in real estate business of buying, selling and renting of properties. As per AO, the assessee was a non-filer and had not filed any return of income during the year. A search and seizure operation u/s 132 of the Act was Printed from counselvise.com 3 conducted on 15.02.2022 in the case of M/s SD Properties. During the search proceedings, various incriminating documents were seized from the business and residential premises which suggested the escapement of income for the year under consideration. Further, AO noted that cash amounting to Rs. 32,70,000/- was seized from possession of Sh. Surjeet Singh at his residence (2nd Floor, A- 714, Sector-19Nolda). Further, as per AO, cash of Rs. 17,45,000/- was seized from the premises of SD Properties of which Sh. Surjeet Singh is the proprietor. In view of the above the case was selected for scrutiny by issuing notice u/s 142(1) of the Act after obtaining the approval of the specified authority. In response thereof, the assessee has filed return of income on 22.11.2023 declaring total income of Rs. 19,57,710/-.Further, during the course of the assessment proceedings, the assessee was given several opportunities to present his case and in response the assessee filed submission which were not found acceptable by the AO. Also, during the search operation, a total cash amounting to Rs. 50,15,000/- was seized from the possession of the assessee. Out of the total cash seizure of Rs. 50,15,000/- and amount of Rs. 32,70,000/- was seized from the residence of Sh.Surjeet Singh (2nd floor, A-714, Sector-19. Noida) and cash of Rs. 17,45,000/- wasthe possession was seized from the premises of M/s. S.D. Properties of which Sh. Surjeet Singh is the proprietor. AO during the course of the search and post search proceedings, was enquired multiple time about the sources of the impugned cash. As per AO,in the sworn statement recorded on 15.02.2022, the assessee had stated out of the cash of Rs. 32,70,000/- seized from the residence of the assessee, Rs. 22,00,000/- was from the income accumulated from chit fund and the rest was sourced from commission from property sales. In order to verify the claims and assertions of the assessee, specific questions were asked from the assessee regarding the source of the seized cash being the chit fund during the assessment proceedings vide the notices u/s 142(1) dated 27.10.2023 and 13.11.2023. Printed from counselvise.com 4 3.1 Further, AO noted that with respect to the remainder amount of Rs. 10,70,000/- the assesseee had stated in his sworn statement dated 15.02.2022, the amount had arisen on account of sale and purchase of immovable properties. In order to verify the claims and assertions of the assessee, specific questions were asked from the assessee regarding the source of the seized cash being the sale of properties during the assessment proceedings vide the notices u/s 142(1) dated 27.10.2023 and13.11.2023. The assessee failed to file his reply to the aforementioned notices u/s 142(1). However, considering the principle of natural justice, the assessee was provided with one final opportunity vide show cause notice dated 06.12.2023. He could not produce any supporting evidence to justify his statement even when he was repeatedly asked to do so vide several notices issued under section 142(1) of the Act, he changed his stance by concocting a different explanation. As per AO, this shows that the assessee has no credible explanation to offer and the sources of the impugned cash remain unexplained. Further, with respect to the cash amounting to Rs. 32,70,000/- the assessee has submitted that out of this, Rs. 22,00,000/- are the rental receipts of assessee’s father and mother’s rental income, Rs. 4,49,350/- is the cash in hand of the wife of the assessee, Rs. 1,49,650/-belongs to the assessee's son Suryadeep Singh accumulated from relative's gift on functions and Rs. 4,71,000/- is the cash in hand of the business of assessee. However as per AO, the replies of the assessee are devoid of substance and are unsubstantiated. AO noted that the assessee has failed to provide any documentary evidence like vouchers or cash memo regarding the receipt of rent. Further, as per AO, the assessee submitted that the cash amounting to Rs. 4,49,350/-ne cash in hand of the assessee's spouse. AO further noted that the assessee's wife Mrs. Nitty Kaur is in teaching profession for more than 20 years and receiving tuition receipts. However, the assessee has not submitted any documentary evidence regarding the same except the acknowledgement of the return of income during the year under consideration. The assessee has further submitted that the cash amounting to Rs. 1,49,650/- Printed from counselvise.com 5 belongs to the major son of the assessee Sh.Suryadeep Singh which was received as gift from relatives on the Turban Ceremony held at the residence of the assessee. However, the documents submitted by the assessee do not in anyway justify the explanation provided by the assessee regarding the sources of the impugned seized cash amounting to Rs. 1,49,650/- and therefore, the explanation provided by the assessee is not found to be satisfactory and the cash amount of Rs. 1,49,650/-remained unexplained. The assessee further submitted that the cash amounting to Rs. 4,71,000/- is the cash in hand of the business of the assessee. The assessee has submitted a document informa ttitled cash book as supporting document for the same where the assessee has shown the Commission payments received as the source of the same. However, the sources of the impugned cash seized are not verifiable from the documents submitted by the assessee and therefore the source of this cash remained unexplained. With respect to the balance cash amounting to Rs. 17,45,000/-, the assessee has submitted that the aforementioned cash does not belong to the asessee but Sh. Pankaj Rawat. However, the assessee has failed to provide any documentary evidence with respect to the same. AO in this light, has observed that the impugned seized cash amounting to Rs. 17,45,000/- remained unexplained and in view of the facts and circumstances, the cash amounting to Rs. 50,15,000/- seized from the residential and office premises of the assessee during the search and seizure proceedings is being added to the total income of the assessee as unexplained money under section 69A r.w.s. 115BBE of the Act. Further, during the course of the search proceedings, several incriminating documents were also seized from the possession of the assessee. The assessee has not submitted any corroborative primary evidence to substantiate his explanation with respect to various seized documents. Therefore, AO noted that amounts of Rs. 2,48,000/-, Rs. 44,00,000/-, Rs. 29,06,500, Rs. 16,61,000/- and Rs. 1,01,890/- income of the assessee for the year under respectively were added to the consideration as unexplained money u/s 69A r.w.s. 115BBE of the Act on the basis of various seized documents as Printed from counselvise.com 6 mentioned in the assessment order considering the transactions as unexplained money of the assessee. Aggrieved, assessee preferred appeal before the CIT(A), who vide his order has partly allowed the appeal of the assessee by observing as under:- “Additions based on seized documents BK 3 page 56, BK 9 page 18 and 19 It needs to emphasized in the beginning that the assessee is a property dealer and the said fact has been acknowledged by the AO in the assessment order that the assessee is mainly engaged in real estate business of buying and selling of properties. The AO while analyzing the above documents has ascribed the transactions to the assessee and made additions accoringly. The AO has not commented upon the fact that the cheque transactions mentioned in the seized documents are not figuring in the bank account statements of the assessee. Moreover, if the assessee had himself purchased/sold the properties arising out of the notings in the seized documents, then evidences regarding sale and purchase of property in the name of assessee or his family members should have surfaced during the search or during the assessment proceedings, which is not the case. The contentions of the appellant that the documents carry no value are also not acceptable for the reason that the assessee is into the business of property dealing and the notings in the seized documents clearly are of the nature where property deals are being effected for other persons. Section 292C of the Act clearly provides that the ownership of a seized document lies with the person from whom it has been seized. It shall be appropriate if the complete value of transactions mentioned in the seized documents is calculated and appropriate rate of commission (assessee being a property dealer) is applied. Perusal of the analysis done by the AO reveals that a total of Rs. 8,94,75,000/- is mentioned on the seized documents if all the receipts and payments are taken into account as referred to in the assessment order. In the business of property dealing, 2% is the average commission charged by the property dealer from either of the parties. Accordingly, 4% commission rate can be applied to the total value of transaction mentioned in the seized documents. The money earned by the assessee from his unaccounted business of property dealing accordingly comes to Rs. 35,79,000 (4% of Rs. 8,94,75,000). Hence, addition to the extent of Rs. 35,79,000/- is sustained on account of the seized documents mentioned above being unaccounted business income of the assessee. Printed from counselvise.com 7 Addition based on seized documents LP 2 page 130 and LP 2 page 178, An addition of Rs. 1,01,890/- and Rs. 2,48,000/- has been made by the AO on account of above documents. Perusal of the document LP 2 page 130 reveals that apart from cash transactions, some figures relating to electricity reimbursement are also mentioned. The said document does not appear to pertain to the property business of the assessee. Neither the appellant has been able to explain the nature of transactions in the said documents. Similarly, the transactions mentioned on LP 2 page 178 appear to be receipt of cash from various persons. The appellant has stated that the said cash pertains to rental receipts of his parents, though no documentary evidence in support of the same has been provided. The Hon'ble Supreme Court in the case of CIT vs. Smt. P. K. Noorjahan reported at [1999] 237 ITR 570 has held that if, the assessee's explanation regarding the source of investment is not found to be satisfactory, the AO has the discretion to treat such investment as assessee's income. The Hon'ble High Court of Jharkhand in the case of Mahabir Prasad Rungta vs. Commissioner of Income-tax (Appeals), Ranchi reported at [2014] 43 taxmann.com 328 (Jharkhand), held as under: “Pursuant to a search of assessee's premises, Assessing Officer made an addition on ground of undisclosed income on basis of loose sheets seized during search - Whether loose sheets seized during search sometimes contain valuable information and thus those are to be regarded as ‘documents' within meaning of section 1586(b) - Held, yes - Whether there is presumption raised under section 132(4A) regarding documents seized and in light of such presumption, assessee ought to have produced other documents to disprove entries made in loose sheets - Held, yes - Whether since assessee had not adduced any rebuttal evidence to show that entries made in diary/loose sheets were not income in hands of assessee, addition upheld by Commissioner (Appeals) and Tribunal were justified - Held, yes” From the above judgments, it is clear that once there is adequate documentary proof available showing the receipts of cash, the assessee cannot be allowed to go scot free with respect to alleged unaccounted cash receipts. Also, Section 292C as amended by Finance Act, 2008 conveys as under: Printed from counselvise.com 8 “Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in he course of a search u/s 132 (w.e.f. 01.10.1975), or survey u/s 133A (w.e.f. 01.06.2002), it may, in any proceeding under this Act, be presumed— i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; ii) that the contents of such books of account and other documents are true; and iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]” The provisions of Section 292C make it very clear that the incriminating material belongs to the assessee and the contents of the document are true. In view of above discussion and facts of the case, as the documents are clear that cash has been earned by the appellant, the additions made by the AO amounting to Rs. 3,49,890/- on the basis of above documents is sustained u/s 69A. Cash seizure of Rs. 50,15,000/- The contentions of the appellant on the issue of cash seizure have been examined. The assessee has submitted during the assessment proceedings a cash book wherein the source of cash amounting to Rs. 4,71,000/- has been ascribed to the commission income of the assessee. The AO has disregarded the said cash book in para 11 of the assessment order without giving justifiable reasons for the same. The copy of cash book is reproduced below for ready reference:- Printed from counselvise.com 9 Once the assessee had available cash in hand of Rs. 4,71,000/- as per the cash book, the benefit of the same should have been given to the assessee. Similarly, the appellant has stated that cash of Rs. 5,99,000/- can be ascribed as pin money of his wife and gifts received on various functions of his son. The assessee has also stated that his wife is providing tuition to student and regularly earns income from there. It is a normal practice in Indian families that women of the house keep cash in hand as in their personal savings. In various appellate judgments, the Hon'ble Courts have also held a similar view. The Hon'ble High Court of Delhi in the case of Ashok Chadha vs. ITO [2011] 14 taxman.com 57 had the following issue for adjudication: “During a search of assessee’s residential premises, 906.900 gms jewellery was found from assessee. I he Assessee was married 25 years back and jewellery was received by his wife in form of ‘streedhan’ or on other occasions.TheAssessing Officer accepted only 400 gms of jewellery and treated 506.900 gms of jewellery as unexplained and, accordingly, made addition u/s 69A. Whether it is justified?” Printed from counselvise.com 10 The Hon'ble High Court in its order made following observations: “Collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of streedhan or on other occasions is not an abnormality and therefore, Assessing Officer was unjustified in treating only 400 gms as ‘reasonable’ and treating remaining jewellery as ‘unexplained. Therefore, addition made was deleted.” From the above judgment, it is clear that the Hon'ble Courts have endorsed the view that the ladies in a house do have personal savings maintained over a number of years and reasonable benefit of the same should be allowed to them. Keeping in view the status of the family of the assessee, a benefit to the extent of Rs. 2,00,000/- can be given on account of savings of his wife and money received on account of gifts from relatives on functions of his son. As far as the contentions of the appellant that money to the extent of Rs. 22,00,000/- is out of the saved rental receipts of parents, the same cannot be accepted as it is not possible to save money as cash in hand since FY 2013-14 as has been projected by the appellant. Moreover, demonetization also happened during FY 2016-17 and any available cash in hand in currency denomination of Rs. 500/- and Rs. 1,000/-should have been deposited in the bank accounts. The. cash flow statement of rental receipts since FY 2013-14 does not take into account this critical factor. Hence, the above contentions of the appellant are not acceptable. Further, the appellant has stated that the cash of Rs. 17,45,000/- belongs to Sh. Pankaj Rawat. It needs to be emphasized that the cash was seized from the assessee and the assessee has failed during the assessment proceedings to provide any documentary evidence to prove that the cash belonged to Sh. Pankaj Rawat. In view of the discussion carried out above cash can be considered explained only to the extent of Rs. 6,71,000/-. The unexplained cash accordingly is Rs. 43,44,000/-. Telescoping The appellant has stated that in case the transactions in the seized documents are considered as pertain to the assessee then benefit of telescoping should be given as far as the cash seizure is concern. Printed from counselvise.com 11 Telescoping is a technique by which the real income of an assessee is to be determined. The real income is subject to tax under the Income-tax Act, for example if in a search, assets of Rs 10 lakhs were found and assessee disclosed Rs 10 lakhs in his return against notice under section 153A, then it is telescoping of the assets found viz a viz the income disclosed. Therefore, assuming or accepting that the application of this income has been made into assets is called telescoping. For example, there may be a case where there is an unexplained income of an assessee in the first part of a year and also a corresponding unexplained investment or expenditure of somewhat similar amount in the later part of the year, in such case unless there is evidence to the contrary, it may be treated that the unexplained investment has been made out of the unexplained income. Thus, in such case instead of adding both the unexplained income as well as unexplained investment/expenditure to the income of the assessee, it would be wise to add one of them, as both represent only one income. In simple words and as applied in the tax law, telescoping means identifying an income and its application, so that ultimately tax is levied either only on the income or only on its application. In other words, in case where an assessee has certain undisclosed income and also certain undisclosed investments/expenditure, then it could be reasonably presumed that the undisclosed investments/expenditure have been sourced out of the undisclosed income, so that only the income may be taxed or only the investment may be taxed and not both, in the hands of the assessee under the provisions of the Act. The said theory which is judicially accepted in the case of Anantharam Veersinghalah & Co. v. CIT (1980) 123 ITR 457 (SC), is in effect, a theory of inference (CIT v. S. Nelliappan (1967) 66 ITR 722 (SC) which is applied in order to avoid taxing the same income twice - once on earning and then on utilizing /expending it. On the issue of telescoping, the Hon'ble Supreme Court of India in the case of of Anantharam Veersinghalah & Co. vs. Commissioner of Income-tax reported at [1980] 123 ITR 457 (SC) has held as under: The taxing authority in each case must consider whether unexplained cash deficits and cash credits can be reasonably attributed to a pre-existing fund of concealed profits or they Printed from counselvise.com 12 are reasonably explained by the reference to concealed income earned in that very year and in each case, true nature of cash deficit and cash credit must be ascertained from an overall consideration of the particular facts and circumstances of case - Held, yes - Whether since Tribunal confined its finding only to fact that an intangible addition had been added to assessee's book profits in earlier years and that a part of that amount remained available to assessee thereafter, and did not consider other relevant facts and circumstances of case, such a finding could not be upheld and was rightly set aside by High Court - Held, yes” Further, in the judgment of Hon'ble High Court of Gujarat in the case of Principal Commissioner of Income-tax vs. Aliasgar Anvarali Varteji reported at [2018] 96 taxmann.com231 (Gujarat) it has been held as under: “Where entire unaccounted income found during search was offered as part of overall disclosure and negative balance in books of account was on account of payment made out of said unaccounted income, assessee could not be denied benefit of telescoping of original disclosure” Further, in the judgment of Ld. ITAT Bangalore Bench SMC-A in the case of Smt. Ganigara Rekha Venugopal vs. ACIT reported at [2023] 149 taxmann.com 186 (Bangalore - Trib., it has en held as under: “When an income is taxed/addition is made to taxable income in an earlier year, assessee may claim that income arising in subsequent year/subsequent period is sourced out of income taxed earlier” Further in the judgment of Ld. ITAT Amritsar Bench SMC in the case of Smt. Sanjeet Kanwar vs. ITO reported at [2022] 143 taxmann.com [2022] 143 taxmann.com 266 (Amritsar - Trib.)., it has been held as under: “Where AO made additions under section 69 on ground that cash deposited in account was more than total turnover declared by assessee, since assessee furnished bank statements which showed that there were deposits and withdrawals of almost equal amounts and AO failed to give any findings regarding said withdrawals, assessee deserved to get benefit of telescoping and thus, addition was unjustified” Further, in the judgment of Ld. ITAT Indore Bench in the case of Vinod Bhandari vs. Principal Commissioner of Income-tax Printed from counselvise.com 13 (1), Indore reported at [2020] 116 taxmann.com264 (Indore - Trib.), it has been held as under: “Where there was a direct nexus of cash so received on maturity of hundis with cash deposited in bank account, assessee was entitled for telescoping benefit of income surrendered during year to cash deposited in bank account and, thus, addition under section 68 made by Assessing Officer in hand of assessee was to be deleted” From the discussion above it is seen that the assessee has earned a cash of Rs. 35,79,000/- as business income from property dealing, Rs. 2,48,000/- and Rs. 1,01,890/- from unaccounted cash receipts (as per seized documents). The total available cash with the assessee comes to Rs. 39,28,890/. Similarly, the unaccounted cash found from the possession of the assessee is Rs. 43,44,000/-. As per the principles of telescoping the unaccounted cash found has to be adjusted against the unaccounted cash earned by the assessee as both income and its application cannot be taxed simultaneously. Hence, the cash income of the assessee to the extent of rs. 39,28,890/- is adjusted against the cash found of Rs. 43,44,000/-. Accordingly, cash of Rs. 4,15,110/- is found to be excess over and above the cash earned by the assessee. Hence addition of cash found is sustained to the extent of Rs. 4,15,110/-. To sum up addition of Rs. 35,79,000/- is sustained with respect to the unaccounted business income. Addition of Rs. 2,48,000/- and Rs. l,01,890/-is sustained u/s 69A on account of notings on the seized documents. Also the addition with respect to excess cash to the extent of Rs. 4,15,110/- is sustained u/s 69A. In the result, the appeal is partly allowed.” 4. Aggrieved, the Revenue is in appeal before the Tribunal. 5. At the time of hearing, Ld. DR relied upon the order of the Assessing Officer and stated that Ld. CIT(A) has erred in deleting the addition made by AO of Rs. 99,88,390 out of total addition of Rs. 1,43,32,390/- u/s. 69A of the Act by applying the principle of telescoping, without establishing a clear and direct nexus between the alleged unaccounted income determined by the Ld. CIT(A) and the specific cash seized during the search. She further submitted that Ld. Printed from counselvise.com 14 CIT(A) has also erred in calculating the commission income from property dealing business at Rs. 35,79,000/- by applying rate of 4% on sum of Rs. 8,94,75,000/- mentioned in the seized incriminating documents and sustaining the addition to that extent, without appreciating the fact that the assessee failed to substantiate with documentary evidences that he has carried out the business of property dealing. Hence, decision of Ld. CIT(A) determining the unaccounted business income to the extent of Rs. 35,79,000 and sustaining the addition that that extent is not justifiable being based on surmises and conjecture. It was further submitted that Ld.CIT(A) has erred in deleting the addition of Rs. 50,15,000 on account of unexplained cash found during the search, disregarding the fact that the assessee failed to discharge the onus cast upon him to explain the nature and source of the amount seized during the search. Merely re- characterizing the unexplained cash as ‘income’ without verification, does not absolve the assessee from statutory liability. In view of above, she requested to set aside the order of the Ld. CIT(A) and uphold the action of the AO. 5. Per contra, Ld. AR has relied upon the order of the CIT(A). 6. We have heard the rival contentions and perused the records. We find that in the instant case, search u/s. 132 was conducted on 15.2.2022 in the case of SD Properties and assessment proceedings were completed u/s. 143(3) for the year under consideration. It is noticed that Cash amounting to Rs. 32,70,000/- was seized from the assessee at the residence and Rs. 17,45,000/- was seized from the office premises. Various documents were also seized during the course of search. During the course of statement recorded at the time of search the assessee stated that Rs. 22,00,000/- was income accumulated from the business of Chit Fund and rest was sourced from commission from property sales. The AO asked the assessee to provide details of the Chit Fund and sale of properties to justify his contentions. The assessee during the assessment proceedings submitted that the cash of Rs. 32,70,000/- seized from the residence belongs to his deceased father and mother (Rs. 22,00,000/-), wife (Rs. 4,49,350), Printed from counselvise.com 15 son (Rs. 1,49,650/-) and SD Properties (Rs. 4,71,000/-). Further the assessee stated during the assessment proceedings that cash of Rs. 17,45,000/- from the office premises belongs to one Pankaj Rawat who had come for a property deal. Further the assessee stated that the cash of Rs. 22,00,000/- ascribed to the parents was the accumulated cash of the rent received by them over many years since 2013-14. The AO treated the total cash of Rs. 50,15,000/- as unexplained and added the same to the income of the assessee. Further the AO made an addition of Rs. 2,48,000/- on basis of seized documents LP 2 page 178 wherein date wise monthly receipt of money from some persons namely Anuj, Manis and Wasim is mentioned. The AO treated the said receipt as unexplained income u/s 69A whereas the assessee stated that the said income emanated out of the rental income of the parents of the assessee. Further the AO made additions of Rs. 44,00,000/-, Rs. 29,06,500/- and Rs.16,61,000/- on account of seized documents i.e. BK 3 page 56, BK 9 page 18 and BK 9 page 19 respectively. The AO in the assessment order tabulated the transactions mentioned in the documents cited above and calculated the value of the cash transaction on the various documents and added the same to the income of the assessee as already mentioned above. During the assessment proceedings the appellant stated that the documents are merely rough calculations and the same do not carry much value. The assessee further stated during the assessment proceedings that the cheque of Rs. 15,00,000/- mentioned on page 56 of BK 3 does not appear in any bank account of the assessee. Similarly for documents BK 9 page 18, the assessee stated during the assessment proceedings that the said notings are rough calculations and the transactions never happened. The assessee also stated that the cheque transaction of Rs. 5,00,000/- was never transacted in the bank accounts of the assessee. Similarly for documents BK 9 page 19 the assessee stated that the notings are rough calculations and even in this document the cheque of Rs. 5,00,000/- was never routed through the bank accounts of the assessee. The AO disregarded the above contentions of the assesse and proceeded Printed from counselvise.com 16 to make addition as discussed above. Further the AO made an addition of Rs. 1,01,890/- on account of seized documents LP 2 page 130. The assessee stated that the said notings are rough calculations and do not pertain to the assessee. 6.1 We note that during the appellate proceedings the assessee reiterated the submissions filed before the AO. The assessee further stated that the additions made on the basis of seized documents are unwanted for the reason that the details of cheque amounts, TDS etc. are not a part of the bank account statements of the assessee. The assessee further stated that even if the said documents are considered as genuine, then they can only be considered as part of the property dealing business of the assessee. The assessee further stated that in such a scenario benefit of the cash arising from the property transactions should be available to the assessee viz-a-viz the cash seized. 6.2 As regards, additions based on seized documents BK 3 page 56, BK 9 page 18 and 19 is concerned, we find that the assessee is a property dealer and the said fact has been acknowledged by the AO in the assessment order that the assessee is mainly engaged in real estate business of buying and selling of properties. The AO while analyzing the above documents has ascribed the transactions to the assessee and made additions accordingly. The AO has not commented upon the fact that the cheque transactions mentioned in the seized documents are not figuring in the bank account statements of the assessee. Moreover, if the assessee had himself purchased/sold the properties arising out of the notings in the seized documents, then evidences regarding sale and purchase of property in the name of assessee or his family members should have surfaced during the search or during the assessment proceedings, which is not the case. The contentions of the assessee that the documents carry no value are also not acceptable for the reason that the assessee is into the business of property dealing and the notings in the seized documents clearly are of the nature where property deals are being effected for other persons. Section 292C of the Act clearly provides that the Printed from counselvise.com 17 ownership of a seized document lies with the person from whom it has been seized. It shall be appropriate if the complete value of transactions mentioned in the seized documents is calculated and appropriate rate of commission (assessee being a property dealer) is applied. Perusal of the analysis done by the AO reveals that a total of Rs. 8,94,75,000/- is mentioned on the seized documents if all the receipts and payments are taken into account as referred to in the assessment order. In the business of property dealing, 2% is the average commission charged by the property dealer from either of the parties. Accordingly, 4% commission rate was rightly applied to the total value of transaction mentioned in the seized documents. The money earned by the assessee from his unaccounted business of property dealing accordingly comes to Rs. 35,79,000 (4% of Rs. 8,94,75,000). Hence, addition to the extent of Rs. 35,79,000/- was rightly sustained on account of the seized documents mentioned above being unaccounted business income of the assessee. 6.3 As regards Addition based on seized documents LP 2 page 130 and LP 2 page 178, is concerned, an addition of Rs. 1,01,890/- and Rs. 2,48,000/- has been made by the AO on account of above documents. Perusal of the document LP 2 page 130 reveals that apart from cash transactions, some figures relating to electricity reimbursement are also mentioned. The said document does not appear to pertain to the property business of the assessee. Neither the assessee has been able to explain the nature of transactions in the said documents. Similarly, the transactions mentioned on LP 2 page 178 appear to be receipt of cash from various persons. The assessee has stated that the said cash pertains to rental receipts of his parents, though no documentary evidence in support of the same has been provided. 6.4 We further note that the Hon'ble Supreme Court in the case of CIT vs. Smt. P. K. Noorjahan reported at [1999] 237 ITR 570 held that if, the assessee's Printed from counselvise.com 18 explanation regarding the source of investment is not found to be satisfactory, the AO has the discretion to treat such investment as assessee's income. 6.5 We further note that the Hon'ble High Court of Jharkhand in the case of Mahabir Prasad Rungta vs. Commissioner of Income-tax (Appeals), Ranchi reported at [2014] 43 taxmann.com 328 (Jharkhand), held as under: “Pursuant to a search of assessee's premises, Assessing Officer made an addition on ground of undisclosed income on basis of loose sheets seized during search - Whether loose sheets seized during search sometimes contain valuable information and thus those are to be regarded as ‘documents' within meaning of section 158B(b) - Held, yes - Whether there is presumption raised under section 132(4A) regarding documents seized and in light of such presumption, assessee ought to have produced other documents to disprove entries made in loose sheets - Held, yes - Whether since assessee had not adduced any rebuttal evidence to show that entries made in diary/loose sheets were not income in hands of assessee, addition upheld by Commissioner (Appeals) and Tribunal were justified - Held, yes” 6.5.1 In view of the aforesaid judgements, it is abundantly clear that once there is adequate documentary proof available showing the receipts of cash, the assessee cannot be allowed to go scot free with respect to alleged unaccounted cash receipts. 6.6 Also the provisions of Section 292C make it very clear that the incriminating material belongs to the assessee and the contents of the document are true. In view of above discussion and facts of the case, as the documents are clear that cash has been earned by the assessee, the additions made by the AO amounting to Rs. 3,49,890/- on the basis of above documents was rightly sustained u/s 69 of the Act, which does not need any interference on our part, hence, we uphold the same; . 6.7 As regards Cash seizure of Rs. 50,15,000/- is concerned, we find that the contentions of the assessee on the issue of cash seizure have been examined. The assessee has submitted during the assessment proceedings a cash book wherein the source of cash amounting to Rs. 4,71,000/- has been ascribed to the Printed from counselvise.com 19 commission income of the assessee. The AO has disregarded the said cash book in para 11 of the assessment order without giving justifiable reasons for the same. Once the assessee had available cash in hand of Rs. 4,71,000/- as per the cash book, the benefit of the same should have been given to the assessee. 6.8 Similarly, the assessee has stated that cash of Rs. 5,99,000/- can be ascribed as pin money of his wife and gifts received on various functions of his son. The assessee has also stated that his wife is providing tuition to student and regularly earns income from there. It is a normal practice in Indian families that women of the house keep cash in hand as in their personal savings. 6.9 We note that in several judgments, the Hon'ble Courts have also held a similar view. The Hon'ble High Court of Delhi in the case of Ashok Chadha vs. ITO [2011] 14 taxman.com 57 had the following issue for adjudication: “During a search of assessee’s residential premises, 906.900 gms jewellery was found from assessee. I he Assessee was married 25 years back and jewellery was received by his wife in form of ‘streedhan’ or on other occasions.TheAssessing Officer accepted only 400 gms of jewellery and treated 506.900 gms of jewellery as unexplained and, accordingly, made addition u/s 69A. Whether it is justified?” Hon'ble High Court in its order made following observations: “Collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of streedhan or on other occasions is not an abnormality and therefore, Assessing Officer was unjustified in treating only 400 gms as ‘reasonable’ and treating remaining jewellery as ‘unexplained. Therefore, addition made was deleted.” 6.9.1 On bare perusal of the aforesaid judgemnt, it is abundantly clear that the Hon'ble Courts have endorsed the view that the ladies in a house do have personal savings maintained over a number of years and reasonable benefit of the Printed from counselvise.com 20 same should be allowed to them. Keeping in view the status of the family of the assessee, Ld. CIT(A) rightly observed that a benefit to the extent of Rs. 2,00,000/- can be given on account of savings of his wife and money received on account of gifts from relatives on functions of his son. 6.10 As far as the contentions of the assessee that money to the extent of Rs. 22,00,000/- is out of the saved rental receipts of parents, the same cannot be accepted as it is not possible to save money as cash in hand since FY 2013-14 as has been projected by the assessee. Moreover, demonetization also happened during FY 2016-17 and any available cash in hand in currency denomination of Rs. 500/- and Rs. 1,000/- should have been deposited in the bank accounts. The. cash flow statement of rental receipts since FY 2013-14 does not take into account this critical factor. Hence, the above contentions of the assessee were rightly rejected by the Ld. CIT(A). 6.11 Further, the assessee stated that the cash of Rs. 17,45,000/- belongs to Sh. Pankaj Rawat. The cash was seized from the assessee and the assessee has failed during the assessment proceedings to provide any documentary evidence to prove that the cash belonged to Sh. Pankaj Rawat. In view of the discussion carried out above, Ld. CIT(A) correctly held that cash can be considered explained only to the extent of Rs. 6,71,000/-. The unexplained cash accordingly is Rs. 43,44,000/-. 6.12 We note that Ld. CIT(A) has adopted the telescopic theory which means identifying an income and its application, so that ultimately tax is levied either only on the income or only on its application. In other words, in case where an assessee has certain undisclosed income and also certain undisclosed investments/expenditure, then it could be reasonably presumed that the undisclosed investments / expenditure have been sourced out of the undisclosed income, so that only the income may be taxed or only the investment may be taxed and not both, in the hands of the assessee under the provisions of the Act. Printed from counselvise.com 21 6.13 It is noted that on the issue of telescoping theory, the Hon'ble Supreme Court of India in the case of Anantharam Veersinghalah & Co. vs. Commissioner of Income-tax reported at [1980] 123 ITR 457 (SC) has held as under: “The taxing authority in each case must consider whether unexplained cash deficits and cash credits can be reasonably attributed to a pre-existing fund of concealed profits or they are reasonably explained by the reference to concealed income earned in that very year and in each case, true nature of cash deficit and cash credit must be ascertained from an overall consideration of the particular facts and circumstances of case - Held, yes - Whether since Tribunal confined its finding only to fact that an intangible addition had been added to assessee's book profits in earlier years and that a part of that amount remained available to assessee thereafter, and did not consider other relevant facts and circumstances of case, such a finding could not be upheld and was rightly set aside by High Court - Held, yes” 6.14 Further, in the judgment of Hon'ble High Court of Gujarat in the case of Principal Commissioner of Income-tax vs. Aliasgar Anvarali Varteji reported at [2018] 96 taxmann.com231 (Gujarat) it has been held as under: “Where entire unaccounted income found during search was offered as part of overall disclosure and negative balance in books of account was on account of payment made out of said unaccounted income, assessee could not be denied benefit of telescoping of original disclosure” 7. In the background of the aforesaid detailed discussions and respectfully following the precedents as cited above, we are of the considered view that Ld. CIT(A) has rightly observed that the assessee has earned a cash of Rs. 35,79,000/- as business income from property dealing, Rs. 2,48,000/- and Rs. 1,01,890/- from unaccounted cash receipts (as per seized documents). Thus, the total available cash with the assessee comes to Rs. 39,28,890/. Similarly, the unaccounted cash found from the possession of the assessee was Rs. 43,44,000/-. As per the principles of telescoping Ld, CIT(A) has rightly observed that the unaccounted cash found has to be adjusted against the unaccounted cash earned by the assessee as both income and its application cannot be taxed Printed from counselvise.com 22 simultaneously. Hence, the cash income of the assessee to the extent of Rs. 39,28,890/- was rightly adjusted against the cash found of Rs. 43,44,000/-. Accordingly, cash of Rs. 4,15,110/- was found to be excess over and above the cash earned by the assessee. Hence addition of cash found was rightly sustained to the extent of Rs. 4,15,110/-. 7.1 In view of the aforesaid factual matrix, the addition of Rs. 35,79,000/- was rightly sustained by the Ld. CIT(A) with respect to the unaccounted business income and addition of Rs. 2,48,000/- & Rs. l,01,890/- was also correctly sustained u/s 69A on account of notings on the seized documents. Also the addition with respect to excess cash to the extent of Rs. 4,15,110/- was rightly sustained u/s 69A by the Ld. CIT(A). In view of above, we do not find any infirmity in the order of the Ld. CIT(A) on the issues in dispute and therefore, we affirm the findings of the Ld. CIT(A) by rejecting the grounds raised by the Revenue. 8. In the result, the Revenue’s appeal is dismissed. Order pronounced in the Open Court on 20.02.2026. Sd/- Sd/- (AMITABH SHUKLA) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnaggar Date: 20-02-2026 Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT Assistant Registrar, ITAT, Delhi Benches Printed from counselvise.com "