DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, JAIPUR V. NIRANJAN PATIDAR, NEEMUCH

ITA 438/JPR/2025

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT (A), which had deleted an addition made by the Assessing Officer (AO) to the income of Niranjan Patidar for the assessment year 2018-19. The addition of Rs. 86,98,250 was initially made on the grounds that it represented unexplained cash payments made by Patidar to Sh. Mahesh Gupta. However, both the CIT (A) and the Tribunal found that these transactions were part of a fund managed by Sh. Mahesh Gupta and were not the assessee's undisclosed income. The Tribunal's decision was influenced by the fact that similar entries had been considered in the peak credit method in the assessment of Sh. Mahesh Gupta, and the cash was essentially returned to him, indicating it was not an income of Patidar.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779717 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 21-03-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: TARUN MITTAL
• Keywords: Opportunity of being heard; Business expenditure; Question of law; Income from undisclosed sources; Peak credit; Documents seized; Bogus purchase; Principle of natural justice; Search and seizure; Loose papers; Competent authority; Opportunity of cross examination; Bogus
• Section: 142(1); 153A; 131; 139; 37(1)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh xxu xks;y] ys[kk lnL;] ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 438/JPR/2025 fu/kZkj.k o\"kZ@Assessment Years : 2018-19 Deputy Commissioner of Income Tax, Central Circle-3, Jaipur. cuke Vs. Niranjan Patidar 1, Begeecha No.-46A, Opp. Rajeev Nagar, Neemuch,- Madhya Pradesh. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AARPP5601M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Tarun Mittal, C.A. jktLo dh vksjls@Revenue by : Mrs. Anita Rinesh, JCIT, Sr. DR lquokbZ dh rkjh[k@Date of Hearing :20/08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 13/10/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the Revenue against the order of ld. CIT (Appeals), Jaipur-4, Jaipur dated 10.01.2025 passed under section 250 of the Income Tax Act, 1961, for the assessment year 2018-19. 2. The Revenue has raised the following grounds of appeal :- “1. Whether on the facts and in circumstances of the case, the ld. CIT (A) is justified in deleting the addition of Rs. 86,98,205/- made on account of unexplained payment made to Shri Mahesh Gupta disregarding the fact that this figure was mentioned in Printed from counselvise.com 2 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. the transactions entered in EXCEL Sheet which was entered in tally files with name “GROUP FUND”. 2. The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing.” 3. The brief facts of the case are that the assessee is an Individual. The assessee has e-filed his original return of income on 03.07.2018 for the assessment year 2018-19 declaring total income of Rs. 8,53,510/-. A search and seizure action was carried out on 23.01.2019 in the case of Gupta Group (Gunesh Group), Jaipur to which the assessee belongs. As a result of search, various assets/books of account and documents were found and seized as per annexure prepared during the course of search. Accordingly, after obtaining ofapproval from the competent authority, notice under section 153C of the Income Tax Act, 1961 was issued on 16.02.2021 and duly served upon the assessee. In compliance to the notice under section 153C, return of income was e-filed on 11.04.2021 for the AY 2018-19 declaring total income of Rs. 8,53,510/-. Thereafter, notice under section 143(2) of the IT Act, 1961 was issued on 15.04.2021 which was duly served upon the assessee. Notice under section 142(1) was issued on 12.04.2021 along with questionnaire and annexure requiring certain details/information, which was duly served upon the assessee. In response to the said notice, the assessee submitted reply on e-filing portal. On perusal of ledger account of Shri Niranjan Patidar extracted from tally files, it was noticed that the assessee had paid Rs. 86,98,250/- in cash to Group Printed from counselvise.com 3 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. Fund during the financial year 2017-18 relevant to assessment year 2018-19. The AO vide questionnaire dated 12.04.2021, asked the assessee to explain why the amount of Rs. 86,98,250/- should not be added to his total income treating it as undisclosed income. In response to the said questionnaire, the assessee filed his reply on 19.04.2021 which is reproduced hereunder :- “ I am rendering only professional services to Gupta Group and no business or other type of transactions is there with Gupta Group. Employees of Shri Mahesh Gupta on his instruction delivered the cash first and then same is taken back at his instruction. I am keeping and delivering the cash in the capacity of trustee and not for any other purpose. Shri Mahesh Gupta is his statement has also confirmed this fact and also considered the entire transaction in his Group exposures and paid the tax accordingly. Thus cash payment as stated in the notice at Rs. 86,98,250/- is paid out of the cash sent by Shri Mahesh Gupta and not from my own. Shri Mahesh Gupta has also confirmed this fact in his statement and thus requested to please consider the same and oblige.” The reply of the assessee has been examined by the AO but could not found it satisfactory. Accordingly, the AO computed the total income of the assessee at Rs. 95,51,760/- by making an addition of Rs. 86,98,250/- vide his assessment order dated 05.05.2021 for the assessment year under consideration. The assessee being aggrieved by the order of AO, filed an appeal before the ld. CIT (A), who after considering the facts of the case and written submissions of the assessee, deleted the addition in the hands of the assessee and thereby allowed the appeal. Printed from counselvise.com 4 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. Now, aggrieved by the order of the ld. CIT (A), the revenue has come in appeal before the Tribunal on the grounds reproduced herein above. 4. On the other hand, the ld. DR relied on the orders of the lower authorities. 5. At the time of hearing before us, the ld. AR of the assessee submitted his written submission as under :- “ May it please your Honors, Brief facts of the case are that assesse is an individual Chartered Accountant having its office at Neemuch. A search and seizure action carried out on 23.1.2019 in the case of Gupta Group (Gunesh Group), Jaipur,which has its office at Neemuch also and to whom assessee provides professional services. As a result of search, various loose papers, valuables and computer hard discs and pen drives were seized by the department from various places which include the business as well as residential premises of Sh. Mahesh Gupta, key person as well as fromits employees. Similarly, various diaries and pen drives were found from the residence of Shri Sunil Kumar Sharma, accountant of Gupta Group, wherein many transactions/ entries were entered in Excel Sheet and Tally files namely “Group Fund”. As certain entries in the name of assessee were also found noted in such “Group Fund” as “Received from N.Patidar Ji”, it was inferred that assessee had paid cash amounting to Rs. 86,98,250/- to Sh. Mahesh Gupta and sum of such entries were added in the hands of assessee as his undisclosed income. Aggrieved of the additions so made, assessee has preferred an appeal before ld. CIT(A), wherein ld. CIT(A) after considering the submission of assessee, allowed the appeal of assessee. Aggrieved by the order of the ld. CIT(A), department has preferred an appeal before the Hon’ble Bench. Departmental Grounds of Appeal No. 1 to 3: In all these grounds of appeal, department has challenged the action of ld. CIT(A) in deleting the additions made by ld. AO by alleging entries found noted in Tally group Fund as “Receipts” from “N. Patidar Ji” as cash paid by assessee to Sh. Mahesh Gupta. Printed from counselvise.com 5 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. Brief facts of the grounds as stated above are that during the course of search at Gupta Group,various documents/loose papers were found from the possession of various individuals including employees of the group, which inter alia includedcertain diaries,containing details of cash loans received and given as well as other entries of rotation of funds, which belonged to different business / entities of the Gupta Group. As stated above, on the basis of certain entries found in “Tally Group fund” in the name of assessee, his case was also centralized and notices were issued u/s 153C. In response to such notices, assessee furnished Returns of Income. During the course of assessment proceedings, it was explained by assessee that Sh. Mahesh Gupta was running business from Vikram Cements, Khor which is 15 kms from Neemuch and Shambhupura Distt., which is approx. 35 kms from Neemuch. It was submitted that assessee was providing only professional services to Gunesh Group andthere was no other transaction of any nature with the said group. It was submitted that entries in the Group Fund were appearing as some times, employees of Sh. Mahesh Gupta had delivered cash to him for keeping the same with him, which was subsequently taken back as and when required as per his instructions. Thus, actually entries found noted in Tally Group Fund of regarding “cash receipt” from assessee, represented cash belonging to Sh. Mahesh Gupta group only, which was delivered by his staff for safe custody and which was taken back by them after some time and thus cash was kept just for some duration as trusteeand returned back. In this regard, kind attention of your goodself is invited to statements of Sh. Mahesh Gupta recorded on oath on 07.06.2019, wherein he was asked to explain the reason of accepting cash from N.Patidar (Relevant extracts reproduced): Ikz’u 13 Jh ,u- ifVnkj us tks uxn jde vkidks izkIr gqbZ gS og fdl fy, izkIr gqbZ gS ;g crk, mRRkj eq>s esjs O;kikj ds fy, tSls&tSls jde dh t:jr iMrh Fkh esa muds uxnh ysrk jgrk Fkk ;g uxnh esjs }kjk gh iwoZ esa mUgsa nh xbZ Fkh tc&tc t:jr iMrh xbZ esa muls uxnh ysrk jgkA Thus, Sh. Mahesh Gupta has clearly accepted that he had kept his funds with the assessee, Sh. Niranjan Patidar, which was taken back as and when required. These facts were duly explained before ld.AO vide letter filed on 03.04.2021 however, such explanation was not accepted by ld.AO and addition was made. With this background, it is submitted that basically, “Tally Group Fund” was prepared by Sh. Sunil Sharma, the accountant of the Gunesh group as a whole. He was maintaining memoranda books in the form of loose diaries, which was entered into the accounting software ‘Tally’ under the title as ‘Group Fund’. Printed from counselvise.com 6 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. Entries were recorded in the said Tally software on the basis of part information available with the accountant in the form of memoranda accounting entries related to business affairs and rotation of cash funds related to various group companies/firms/ individuals (of Gupta Group)which was entered in unsystematic, incomplete and scattered manner having no direct/ precise linking is recorded. The entire rotation of funds as noted in “Tally Group Fund” was done on the instructions of Sh. Mahesh Gupta. As stated above, during the course of search at various premises covered under the Gupta Group, including the residential premises of Shri Sunil Kumar Sharma, various loose papers and documents were found and seized which were listed in terms of the panchnama prepared as on the date of search. These papers contained the receipts and payments of cash on various dates which was handled by Shri Sunil Kumar Sharma who is working on the instructions of the Sh. Mahesh Gupta Jaipur. Since he has recorded the part / incomplete transaction of cash which have been carried out through him or came to his knowledge and he was neither aware of the source nor of the application thereof, he noted the name of person from whom he received the cash or the name of the person as per the directions of the Sh. Mahesh Gupta. Likewise the name of recipient is noted as per the knowledge / information available with him irrespective of the actual source of the funds. The contents of entries in these seized papers / documents do not indicate as to which concern it relates to and thus the entries in these loose papers and computer data are memoranda in the nature and apparently done for some short term memorandum purpose. As, all the entries contained in the said loose papers found from the possession of Shri Sunil Kumar Sharma are in his own handwriting and were recorded in memoranda form with incomplete names or particulars; most of the records and papers cannot be co-related with each other, as they do not have any co-relating link to compute total income of assesse. Moreover generation of income and application thereof may not be in the same concern/person. It is submitted that the diaries and computer pen drive/ hard disc found during the course of search contained not only the details of cash loans received but also its rotation and as submitted above, also contain the movement of cash through Shri Sunil Kumar sharma including the cash withdrawals from the bank accounts of the sub-contractors (whom Sh. Mahesh Gupta had appointed during the course of his transportation business,trusted persons and which is admitted as being introduced by the Sh. Mahesh Gupta for being reducing his actual income). Thus, after considering all such documentsas a whole, the peak balance of undisclosed income was computed in the case of Sh. Mahesh Gupta. Printed from counselvise.com 7 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. It is therefore submitted that all the entries, on the basis of which addition was made in the hands of assessee were actually belonging to Sh. Mahesh Gupta and were duly considered while computing peak balance of Tally Group Fund. In fact, during the course of assessment proceedings in the case of Sh. Mahesh Gupta, ld.AO vide query letter dated 18.1.2021 bearing DIN & Notice No. ITBA/AST/F/142(1)/2020-21/1029868127(1)(attached with this submission) raised specific query regarding cash transactions entered into with Shri Niranjan Patidar, which reads as under: 16. During the post-search proceedings, on perusal of cash books of various years under Group Fund, it has been noticed that you have paid Rs.3,80,728/- in F.Y. 2010-11, Rs.10,165/- in F.Y. 2011-12, Rs.11,83,837/- in F.Y. 2012-13, Rs.14,289/- in F.Y. 2013-14, Rs.7,66,110/- in F.Y. 2014-15, Rs.10,35,270/- in F.Y. 2015-16, Rs.10,00,000/- in F.Y. 2016-17, Rs.86,98,250/- in F.Y. 2017-18, Rs.31,00,850/- in F.Y. 2018-19 totalling to Rs.1,61,89,499/- in cash to Shri N. Patidar. As statements recorded on oath u/s 131 of the Income-tax Act, 1961 dated 07.06.2019, you were asked about cash payment/received to/from various persons. In reply to each question you have stated that you had given cash to persons which have been received back by you. But you have failed to provide name of any of such person, therefore, considering the fact that the identity of persons not disclosed and also considering the fact that for various names you admitted to be your undisclosed income which was either given to them in cash on earlier occasion or wrongly entered in their names by the accountant, it can be presumed that the entire cash received from various persons may be your undisclosed income. As per your statement, you have given this amount to Shri N. Patidar in cash out of your undisclosed income. Thus this cash amounting to Rs.1,61,89,499/- is your unexplained income. Therefore, please explain why the amount Rs. 3,80,728/- for A.Y. 2011-12, Rs.10,165/- for A.Y. 2012-13, Rs.11,83,837/- for A.Y. 2013-14, Rs.14,289/- for A.Y. 2014-15, Rs.7,66,110/- for A.Y. 2015-16, Rs.10,35,270/- for A.Y. 2016-17, Rs.10,00,000/- for A.Y. 2017-18, Rs.86,98,250/- for A.Y. 2018-19, Rs.31,00,850/- for A.Y. 2019-20 may not be added to your total income treating as your undisclosed income.” During the course of assessment proceedings, it was explainedbefore ld.AO in the case of Sh. Mahesh Gupta that “Cash Book”has been prepared after incorporating all the entries found noted in the hard disk/pen drives etc. found with Sh. Sunil Sharma and Sh. Manoj Gupta, employees of the Group. In fact, after examining the same, ld.AO accepted such peak working, which has been made part of the assessment orders of relevant Assessment Years as Annexure “A” (APB37-57). It is thus apparent that, all the entries for which addition is made in the hands of Printed from counselvise.com 8 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. assessee have been duly considered in the case of Sh. Mahesh Gupta. Details of yearwise addition made by ld.AO and references of such entries in the Assessment orders of Sh, Mahesh Gupta for the year under consideration are tabulated hereunder for the sake of convenience: S.No Date Particulars Amount APB Page 1 22/07/2017 N.Patedar Ji 20,00,000.00 42 2 20/09/2017 N.Patedar Ji 7,00,000.00 45 3 29/01/2018 N.Patedar Ji 5,00,000.00 53 4 30/01/2018 N.Patedar Ji 8,00,000.00 53 5 01/02/2018 N.Patedar Ji 20,00,000.00 53 6 09/02/2018 N.Patedar Ji 15,00,000.00 54 7 12/03/2018 N.Patedar Ji 11,98,250.00 55 86,98,250.00 In view of above, it is clear that entries alleged to be related to Cash payment by assessee to Sh. Mahesh Gupta, actually represent undisclosed income of Sh. Mahesh Gupta and all such entries have been duly considered while computing peak balance, which has been ultimately considered while offering additional income in the hands of Sh. Mahesh Gupta (APB15-26)and has been duly considered by ld.AO himself in the case of Sh. Mahesh Gupta. It is thus submitted that addition made by ld.AO in the case of assessee tantamounts to double addition and deserves to be deleted. At this juncture, kind attention of your goodself is invited to the statements of Sh. Mahesh Gupta as recorded on 25.1.2019 u/s 132(4) (relevant extracts reproduced) Ikz’u 41 d`Ik;k crk,W afd Jh lquhy 'kekZ dkSu gS vkSj vkils fd;k laca/k gSaA mRrj Jh lquhy 'kekZ esjs Employee gS tksfd esjs O;olk; ds uxnh vkSj Bank laca/kh dk;Z ns[krs gSaA iz’u 42 Jh lquhy 'kekZ ds ;gkW afoHkkxh; lpZ ds nkSjku dqN Diaries feyh Fkh ftudks Annexures 5 ds Exhibit 1 ls 79 uke fn;k x;k ftlds ckjsa esa mUgksaus crk;k fd og og bles avkids funsZ’kkuqlkj dh xbZ Transaction dh Receipts rFkk Payments fy[krs gS vkSj vkids dgus ij gh mUgksaus budks vius ikl j[kk FkkA bl ckjs es aeSa vkidks muds c;ku fn[kk jgk gWwA bl ckjs esa vkidk D;k dguk gSaA mRrj eSaus Jh lquhy 'kekZ ds c;ku ns[k fy, gS ftlesa muls iz’u 22 vkSj mlds ckn ds iz’uks es abu Mk;fj;ksa ds ckjs esa iwNk x;k FkkA eSA muds c;kuksa ls iwjh rjg lger gwWA og esjs dgus ij gh Printed from counselvise.com 9 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. bu Mk;fj;ks aesa Receipt vkSj Paments ds Details Maintain djrs FksA ijUr qeSa dguk pkgrk gWwfd bu Exhibits 1 ls 79 dh Mk;fj;ks aesa lHkh Receipts vkSj Payments Unaccounted ugh gS] dbZ Transaction recorded ftudk eSa ckn esa viuh daiuh ds ys[kk iwLrdksa ls feyku djk nwaxk vkSj tks Unaccounted Transaction gS mudk lacaf/kr o\"kksZes avk;dj tek djok nwaxkA Similarly, in statements dated 18.02.2019 recorded u/s 131 also, Sh. Mahesh Gupta has categorically accepted that transactions/entries found noted in various loose papers, diaries, registers, hard disks, pen drives and mobile chats etc. as found from the residence of his employees Sh. Sunil Sharma, Sh. Mukesh Sharma, Sh. Manoj Gupta, Sh. Basant Marolia, Sh. Vishnu Kumar Solanki and Sh. Ashok Kumar Ameta etc. pertained to Sh. Mahesh Gupta and his companies and he was answerable for such transactions. Relevant extracts of statements dated 18.2.2019: Ikz’u 14 vki dh dEifu;ksa o deZpkfj;ksa ij fnukad 23-01-2019 dks ryk’kh o tCrh dh dk;Zokgh ds nkSjku lHkh deZpkfj;ksa ftuesa Jh lquhy 'kekZ] Jh eqds’k dqekj] Jh eukst xqIrk] Jh calr ljksfy;k] Jh fo\".kq dqekj lksaydh o Jh v’kksd dqekj vkesBk ds ?kjks aesa Mk;fj;kWa] Loose Papers, Registers, Hard disc, Pan/Drives o Mobile Chats feys gS ftUgs afoHkkx }kjk tCr fd;k x;k gSAbu lHkh O;fDr;ksa us vius c;kuks aesa dgk gS fd Mk;fj;ks aLoose Papers, Registers, Hard disc, Pan/Drives o Mobile Chats esa tksHkh Transaction/Entries ntZ gS os Hkh Jh egs’k xqIrk o mudh dEifu;ksa ls lacaf/kr gSAd`Ik;k bl ckjsa esa Li\"V djs afd D;k mUgksaus tks dgk oks lgh gSaA mRrj 14 th gkW avf/kdka’krg] bu lHkh Mk;fj;ks Loose Papers, Registers, Hard disc, Pan/Drives o Mobile Chats o esjh dEifu;ksa ls gh lacaf/kr gSA buesa ;fn mudk Lo;a dk dksbZ Personal Data gqvk rks eSa mldks vius vki crk nwaxk vU;Fkk ;s lHkh esjs ls gh lacaf/kr gS vkSj buds fy, esjh gh tokcnkjh gSaA Thereafter, during the course of assessment proceedings of Sh. Mahesh Gupta, gave an affidavit dated 20.04.2021 (APB09-14) before ld.AO wherein he accepted that, while computing his additional undisclosed income, he prepared an Income/Application statement, wherein all the documents/ papers found at various places belonging to his business associates/ companies were incorporated. Relevant extracts of such affidavit are as under: Thus, Shri Mahesh Gupta admitted that entries/transactions found noted in documents/ papers found with Sh. Sunil Sharma were incorporated by him while computing his additional income. Copy of such affidavit of Sh. Mahesh Gupta was supplied by assessee to the AO during his assessment proceedings, however, ld.AO disregarded the submission of assessee by stating that name of assessee Printed from counselvise.com 10 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. was not mentioned in such affidavit. In this regard, it is submitted that ld.AO has not interpreted the affidavit in its true sense as it was stated that “That while working out the additional undisclosed income in my case, I had prepared an Income/ Application statement wherein all the documents/ papers found as a result of search at various places belonging to my business associates/ companies of following persons/ concerns stood incorporated.” Going further, in the table reproduced in the affidavit, “Names of persons/concerns from whose possession the documents were seized” are mentioned. It is thus evident that affidavit does not mentions names of parties, to whom entries found in documents pertained to and rather states names of parties from whose possession the documents were seized and which duly mentions the name of Sh. Sunil Kumar Sharma, from whose residence data containing “Tally group fund” was found containing the name of assessee. It is also submitted that ld. CIT(A) also adjudicated on the objection raised by the ld. AO thatAssessee name is not mentioned in the affidavit of Shri Mahesh Gupta, wherein ld. CIT(A) agree with the assessee contention as stated above and held that ld. AO mis appreciated about the names mentioned in the affidavit. Relevant operating para at Page 25 of Assessment order is reproduced as under— “On perusal of the material placed on record, on perusal of the affidavit furnished by Shri Mahesh Gupta and on perusal of the same the argument of the ld. AR is found to be correct that ld. AO mis-appreciated about the names mentioned in affidavit whereas Sh. Mahesh Gupta had owned up the transactions in data found from the premises of Sh. Sunil Sharma from which the impugned addition has been made. “ Without prejudice to above it is therefore submitted that cash shown to have been paid by assessee to Sh. Mahesh Gupta pertained to Sh. Mahesh Gupta and was considered by him while computing undisclosed income. Therefore addition made in the hands of assessee on the basis of such documents tantamounts to double addition and deserves to be deleted. Furthermore during the course of appellate proceedings, ld. CIT(A) sought confirmation from Shri Mahesh Gupta, to which Shri Mahesh Gupta confirmed that the cash stated to have been paid by appellant to Sh. Mahesh Gupta, actually belonged to Sh. Mahesh Gupta and was delivered by his employees to appellant, which was subsequently taken back and thus cash was kept by appellant for some period as trustee vide reply dated 02.01.2025. Thus ld. CIT(A) after considering the submission made and evidence adduced by assessee deleted the addition in the hands of assessee by stating that issue of addition in the year under appeal is to be Printed from counselvise.com 11 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. considered in the hands of Shri Mahesh Gupta (which already forming part of peak working of Shri Mahesh Gupta and same is also accepted by ld. AO). It is further submitted that during the course of assessment proceedings, assessee categorically requested before ld.AO that since the documents were seized from the various premises of Gupta Group behind the back of assessee nor the copies thereof were supplied to the assessee and therefore no reliance could be placed upon them without providing copies thereof to the assessee and affording him with opportunity of being heard. During the course of assessment proceedings, assessee requested before ld.AO that an opportunity to confront Sh. Mahesh Gupta may please be allowed prior to making additions, however, despite of there being dire necessity of cross examination, the same was not provided to the assessee Hon’ble Apex court in the case of CCE Vs. Andaman Timber Industries, (324) ELT 641 has held as under: “6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for Printed from counselvise.com 12 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above.” CIT vs Odeon Builders (P.) Ltd [2019] 110 taxmann.com 64 (SC) Hon’ble Supreme Court held that if the addition was based on third party information gathered by Investigation wing then addition cannot be made unless such information is provided to the assessee and opportunity of cross examination is provided more so when assessee placed on record all the evidences. The relevant findings are as under: Headnote: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Whether no substantial question of law arose from impugned order of Tribunal - Held, yes [Para 4] [In favour of assessee] (403 ITR 183)Sunita Dhadda, order dt 28.03.2018 SLP (SC) The ratio laid down by Hon’ble Rajasthan High Court and also Hon’ble ITAT, Jaipur Bench as below was upheld: “Their Lordships ADARSH KUMAR GOEL and ROHINTON FALL NARIMAN Ji.- dismissed the Department's special leave petition against judgment dated July 31, 2017, of the Jaipur Bench of the Rajasthan High Court in D.-B,L_TA. No. 197 of 2012 whereby the High Court held that the Tribunal was justified in deleting Printed from counselvise.com 13 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. the addition of Rs. 4,07,00,000 of \"on money\" said to have been received with respect to subject land of the assessee holding that the question what was the price of the land at the relevant time, was a pure question of fact and that unless it was established on record by the Department, that as a matter of fact, the consideration did pass to the seller from the purchaser, the Department had no right to make any additions, especially since none of the witnesses were examined before the Assessing Officer, and the assessee did not have any opportunity to cross-examine them” [Emphasis Supplied] It is thus submitted that ld.AO completed the assessment without affording assessee with opportunity to confront Sh. Mahesh Gupta, which is against the principles of natural justice and additions so made deserve to be deleted. In view of above, it is submitted that ld. CIT(A) rightly deleted the additions made by ld. AO in the case of assessee on the basis of documents found and seized at the premises of Sh. Mahesh Gupta as: 1. Cash stated to have been paid by assessee to Sh. Mahesh Gupta, actually belonged to Sh. Mahesh Gupta and was delivered by his employees to assessee, which was subsequently taken back and thus cash was kept by assessee for some period as trustee. 2. Fact narrated at Sr no.1 above, has been confirmed by Sh. Mahesh Gupta in his statement recorded on oath as well as in confirmation as sought by ld. CIT(A) during the course of appellate proceeding and thus carry vital evidentiary value. 3. Entries found in Tally Group Fund, including the entries in the name of assessee were duly considered while computing peak balance in the case of Sh. Mahesh Gupta, which was duly considered while computing additional undisclosed income. Thus addition made again in the hands of assessee on the basis of same entries, tantamounts to double addition; 4. Assessment of assessee as well as Sh. Mahesh Gupta has been completed by same assessing officer and ld. AO has accepted the Peak Theory in the case of Sh. Mahesh Gupta and has made such Peak working as part of Assessment Order as “Annexure A” (APB37-57)wherein the entries on which additions has been made in assessee’s case are included. On this very peak working, the additional income has been worked out by Sh. Mahesh Gupta and offered for tax. Hence any adverse view in the hands of assessee would tantamount to double taxation. It is therefore submitted that the addition so made by the Ld. AO deserves to be deleted. Printed from counselvise.com 14 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. 5. Facts narrated at Sr. No. 3 above were confirmed by Sh. Mahesh Gupta in his statements recorded during search as well as post search proceedings and again by furnishing affidavit during assessment proceedings, whereby it is accepted that Sh. Mahesh Gupta Ji is answerable to all the entries/transactions found noted in “Tally Group Fund” as found from Sh. Sunil Sharma. 6. Without prejudice to about it is submitted that addition has been made by ld.AO without providing necessary information/documents relied upon for making addition and without even providing opportunity of cross examination, which is against the principle of natural justice. Thus, looking into facts & circumstances of the case decision of ld. CIT(A) in deleting the addition in the hands of assessee deserves to be upheld.” The ld. AR further submitted the compilation of Paper Book in support of his case as under :- S. No. Particulars Page No. 1 Copy of Acknowledgement of Return of Income & Computation filed u/s 139 of the Act. 01-03 2 Copy of Acknowledgement of Return of Income filed u/s 153C of the Act. 04 3 Copy of reply dated 23.04.2021 filed during assessment proceedings 05-08 4 Copy of reply filed on 03.05.2021 along with Affidavit of Mahesh Gupta 09-14 5 Copy of reply filed in case of Sh. Mahesh Gupta offering additional income on the basis of peak working 15-26 6 Copy of Assessment order along with Annexure ‘A’ for A.Y. 2018-19 in case of Sh. Mahesh Gupta 27-57 7 Copy of Writ5ten submission submitted before ld. CIT (A) during Appellate proceedings 58-70 6. We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities. The revenue has challenged action Printed from counselvise.com 15 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. of the ld. CIT (A) in deleting the addition made by the AO on the ground that certain entries found noted in Tally group Fund as “Receipts” from “N. Patidar Ji” as cash paid by assessee to Shri Mahesh Gupta. At the outset, in this regard, the ld. A/R of the assessee invited the attention of the Bench to the statement recorded on oath of Shri Mahesh Gupta on 07.06.2019 wherein in reply to Q. No. 13, he specifically accepted that the money received from assessee Shri Niranjan Patidar was actually his own money which was earlier kept with him on various occasions. Shri Mahesh Gupta averred that whenever for business purposes needed money, he used to take it from the assessee out of his own funds which he had given prior to the receipt of the money from N. Patidar. In connection with all the transactions as contained in various hard disk, pen-drives and on various loose papers found during search, Shri Mahesh Gupta had given an Affidavit on oath dated 20.04.2021 accepting all such transactions. About non- mentioning of the name of the assessee Niranjan Patidar in the Affidavit, the ld. A/R submitted that Shri Mahesh Gupta has mentioned in his Affidavit on oath dated 20.04.2021 that he had prepared an income/application statement wherein all the documents/papers found as a result of search at various places belonging to his business associate/companies of the following persons/concerns stood incorporated.In the table given below in the Affidavit the heading is “Names of Persons/Concerns from whose possession the documents were seized”. The ld. Printed from counselvise.com 16 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. AR submitted that as no documents were seized from the premises of assessee Shri N. Patidar, which needed to be considered by Shri Mahesh Gupta and accordingly his name is not appearing in the Affidavit. On the other hand, this affidavit is actually specifying that documents seized from the persons/concerns as mentioned in the table given in the affidavit, has been considered and owned up by Shri Mahesh Gupta group while working out additional income. The ld. AR explained that the AO was under the mistaken belief that this list in the affidavit contains the name of persons whose unaccounted income has been owned up by Shri Mahesh Gupta, as seen from above details. 6.1 On perusal of the first appellate order, we find that while adjudicating on the objections raised by the AO that name of the assessee was not mentioned in the Affidavit of Shri Mahesh Gupta, the ld. CIT (A) agreed with the assessee’s contention as stated above and held that the AO mis-appreciated about the names mentioned in the affidavit. Further, the ld. CIT (A) while deciding the matter, has observed at pages 25 to 30 of his order as under :- “ On perusal of the material placed on record, on perusal of the affidavit furnished by Shri Mahesh Gupta and on perusal of the same the argument of the ld. AR is found to be correct that ld.AO mis-appreciated about the names mentioned in affidavit whereas Sh. Mahesh Gupta had owned up the transactions in data found from the premises of Sh. Sunil Sharma from which the impugned addition has been made. In this regard the extract of the affidavit is as under : “ 4. That while working out the additional undisclosed income in my case, I had prepared an Income/Application statement wherein all the documents / Printed from counselvise.com 17 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. papers found as a result of search at various places belonging to my business associates / companies of following persons/concerns stood incorporated : S.No. Name of Persons/concerns from whose possession the documents were seized 1. Gunesh India (P) Ltd. 2. Mahesh Gupta 3. Bela Gupta 4. Sidhharth Garg 5. Manoj Kumar Gupta 6. Vishnu Kumar Solanki 7. Ashok Kumar Ameta 8. Basant Morolia 9. Mukesh Kumar Rai 10. Subhash Sharma 11. Sunil Kumar Sharma 5. That no adverse inference be drawn on the basis of the entries contained in the documents as tabulated above in the assessment orders to be completed in the case of the persons / concerns as stated above more particularly the trusted persons who were appointed as sub-contractors in M/s. Gunesh (India) Pvt. Ltd. and in whose cases action u/s 153A has been initiated. 6. That this affidavit is given in continuation to my previous letter filed before your goodself, wherein the additional income is admitted and offers for tax. Deponent VERIFICATION I, Mahesh Gupta, the above named deponent state on oath that whatever is stated above is true and correct to the best of my knowledge and belief. Nothing has been concealed. So help me GOD. Deponent ” Further it is seen that in the assessment order of Shri Mahesh Gupta, the ld. AO has gone through the peak fund working furnished by the ld. AR while working out undisclosed income of the group so owned up by Shri Mahesh Gupta and has broadly accepted such peak working, which has been made part of the assessment order for the relevant assessment year as Annexure ‘A’, copies of which submitted in the paper book of the Printed from counselvise.com 18 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. present appellant before me. From perusal of these annexures, it is seen that ld. AR has highlighted the entries related to Shri N. Patidar (the appellant) in respective years. The year-wise total of these entries as mentioned in the written submission, for different years, which has been included while preparing ‘peak fund’ working for arriving at the additional income so offered by Shri Mahesh Gupta in its own case, is same for which addition has been made in the case of appellant in respective years. Further, the claim of the appellant is confirmed by Sh. Mahesh Gupta vide submission filed on 02.01.2025 in his own appeal proceedings that the cash stated to have been paid by appellant to Sh. Mahesh Gupta, actually belonged to Sh. Mahesh Gupta and was delivered by his employees to appellant, which was subsequently taken back and thus cash was kept by appellant for some period as trustee. Thus addition regarding giving of cash to the appellant (which was given back by the appellant to Sh. Mahesh Gupta and which is the issue of addition in the order under appeal) is to be considered in the hands of Sh. Mahesh Gupta and the same is not liable to be sustained in the hands of the appellant. In view of this finding, the impugned addition is hereby directed to be deleted. 7. In view of the aforesaid discussions and in the entirety of facts and circumstances of the case, we find no infirmity in the order of the ld. CIT (A) which we sustain. The addition is rightly deleted. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 13/10/2025. Sd/- Sd/- ¼ xxu xks;y ½ ¼MkWa-,l-lhrky{eh½ (GAGAM GOYAL) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 19/10/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- DCIT, Central Circle-3, Jaipur. 2. izR;FkhZ@ The Respondent- Niranjan Patidar, Meemuch (M.P.) Printed from counselvise.com 19 ITA No. 438/JPR/2025 Niranjan Patidar, Meemuch. 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File ITA No.438/JPR/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "