LAXMANBHAI TEJABHAI AHIR,GANDHIDHAM V. ACIT, CENTRAL CIRCLE-1, RAJKOT, RAJKOT

ITSSA 3/RJT/2023

AI Insights

The case involves multiple appeals by both the Revenue and the assessee, Laxmanbhai Tejabhai Ahir, against the orders of the Learned Commissioner of Income Tax (Appeals) arising from separate assessment orders under section 153A r.w.s. 143(3) of the Income Tax Act, 1961. The appeals were consolidated due to common issues and heard together. The main legal issues revolved around the estimation of unaccounted income and the application of such income to various properties and investments. The Tribunal examined the evidence, including seized documents and the financial transactions recorded therein, to determine the legitimacy of the additions made by the assessing officer and the CIT(A). The Tribunal's decision involved a detailed analysis of the legal principles governing unaccounted income, the burden of proof, and the rights of cross-examination in the context of income tax assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38957 (ITAT-RAJKOT)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Other Referred Cases: Commissioner of Customs Vs. Indian Oil Corporation Ltd., DCIT vs. Surendra Salt Traders, ITO vs. Inderjeet Prop. Super Salt Industries, Kantilal& Bros v. Asstt. CIT, State of J&K Vs. Bakshi Gulam Mohd., CIT vs. Indrajit Singh Suri, GTC Industries Ltd. v. ACIT, Motilal Padampat Udyog Ltd. v. C.I.T., Andaman Timber Industries vs. Commissioner of Central Excise, T. Devasahaya Nadar V. CIT, K. K. Verma v. CIT, CIT vs. Kuber Fibers Pvt. Limited
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA; LD
• Assessee Lawyers: MEHUL RANPURA; LD
• Keywords: Set aside; Business income; Question of law; Corroborative evidences; Unexplained investment; Income from undisclosed sources; Document seized; Documents seized; Tax effect; Capital receipt; Gift; Principle of natural justice; Search and seizure; Loose papers; Opportunity of cross examination; Audi alteram partem
• Section: 142(1); 143(2); 201; 64; 48; 153A; 43; 22; 44AD; 13; 139; 73; 37; 40(a)(ia); 72; 20

Judgement Text

" आयकरअपीलȣयअͬधकरण,राजकोटÛयायपीठ, राजकोट। IN THE INCOMETAXAPPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER And SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./IT(SS)A No.01 & 02/RJT/2023 Assessment Year: (2017 – 18 &2019 – 20) (Hybrid Hearing) The DCIT, Central Circle – 1, Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 Vs. Shri. Laxmanbhai Tejabhai Ahir, Office No. 11814, Sahil Apartment, Sector – 09, Plot No. 18, Gandhidham, Kutch, Gujarat - 370201 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ADFPA0362H (Assessee) (Respondent) IT(SS)A No. 03, 04, 05, 06, 07, 08, 09, 10, 11/RJT/2023 Assessment Year: (2013-14 to 2021-22) (Hybrid Hearing) Shri. Laxmanbhai Tejabhai Ahir, Office No. 11814, Sahil Apartment, Sector – 09, Plot No. 18, Gandhidham, Kutch, Gujarat - 370201 Vs. The DCIT, Central Circle – 1, Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ADFPA0362H (Assessee) (Respondent) आयकरअपीलसं./IT(SS)A No.14 /RJT/ 2023 Assessment Year: (2017-18) (Hybrid Hearing) Adarsh Tiwari, DCIT, Central Circle – 1, Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 Vs. Smt. Monghiben Tejabhai Ahir, Tejabhai Tower Office No. 201, Plot No. 08, Sector No. 09, Gandhidham, Kutch - 360001 Page | 2 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ADFPA0358R (Assessee) (Respondent) Assessee by Shri Mehul Ranpura, Ld. AR Respondent by Shri Sanjay Punglia, Ld. CIT (DR) Date of Hearing 31/ 12/2024 & 01/01/2025 Date of Pronouncement 30 /01 /2025 आदेश / O R D E R PER BENCH This is bunch of eleven appeals, consisting two appeals filed by the Revenue, Viz: in IT(SS)A 1/Rjt/2023 for assessment year (AY)2017-18 and in IT(SS)A 2/Rjt/2023, for assessment year(AY) 2019-20, and remaining nine appeals are filed by the assessee. All the appeals of Revenue and Assessee, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals) [ in brief, “Ld. CIT(A)”], which in turn arise out of separate assessment orders, passed by the Assessing Officer under section 153A r.w.s. 143 (3) of the Income Tax Act 1961, (hereinafter referred to as “the Act”). 2. Since, the issues involved in all these appeals are common and identical, therefore, we have clubbed these appeals and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. At the outset, the Learned Counsel for the assessee, informs the Bench, that the assessee, does not wish to press the following appeals: (i).IT(SS)A 3/Rjt/2023 for assessment year 2013-14. (ii).IT(SS)A 4/Rjt/2023 for assessment year 2014-15. 4.We have heard both the parties. The Learned DR for the Revenue, does not raise any objection, if the above two appeals, are dismissed by the Bench, as not Page | 3 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 pressed. Accordingly, we dismiss, the appeals in IT(SS)A 3/Rjt/2023 for assessment year 2013-14 andIT(SS)A 4/Rjt/2023 for assessment year 2014-15, as not pressed. 5. The Ld. Counsel for the assessee, also pointed out that following two appeals filed by the Revenue, come under the ambit of tax effect. (i)IT(SS)A No. 01/Rjt/2023 for Assessment Year 2017-18. (ii).IT(SS)A No. 02/Rjt/2023 for Assessment Year 2019-20. The ld Counsel further submitted that recently the CBDT has issued a Circular, vide Circular No. 09/2024, dated 17.09.2024, and according to the said circular, these two appeals of the revenue are not maintainable, in the eye of law. The ld. Counsel for the assessee, also submitted the computation, showing tax effect, in respect of these two appeals, before the Bench. 6. On the other hand, Ld. DR for the Revenue, submitted before us, a calculation made by the assessing officer, showing tax effect in these appeals, and also stated that department should be given liberty to recall the order of the Tribunal, at a later stage, if the department finds that tax effect is more than the monetary limit prescribed in the circular of CBDT. 7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. The Ld. DR, on behalf of the revenue, submitted the computation of total tax effect, in these two appeals, which are reproduced as follows: Page | 4 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 9. Recently the CBDT has issued Circular No. 09/2024 dated 17.09.2024, whereby the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been increased as measure for reducing Litigation. The revised monetary limits laid down in para-2 of this Circular are as follows: 1. Before Appellate Tribunal Rs. 60,00,000/- 2. Before High Court Rs. 2,00,00,000/- 3. Before Supreme Court Rs. 5,00,00,000/- 10. In the present case, the tax effect by the revenue is less than Rs.60,00,000/-. Though these appeals had been filed by the revenue on 24/01/2023 and were within the monetary limit in the form of tax effect for filing appeals before Tribunal, in view of the recent Circular of CBDT, even such appeals will be governed by the new monetary limits laid down in the CBDT Circular No.09/2024 referred to above. Page | 5 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 11. It is a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed by the Apex Court in the case of Commissioner of Customs Vs. Indian Oil Corporation Ltd. reported in 267 ITR 272 wherein their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. The appeal under consideration has certainly been filed contrary to the Circular issued by the CBDT Circular No. 09/2024 dated 17.09.2024. 12. In the event, the Revenue finds at a later point of time that the tax effect in these appeals are more than Rs.60 lakhs or despite low tax effect, the appeals of the revenue are maintainable, the revenue is at liberty to move this Tribunal for recalling of this order. 13. In view of the above, we hold that these appeals filed by the Department, against the impugned orders of the Ld. CIT(A), are contrary to the policy decision of the Department and as such these two appeals filed by the Department in IT(SS)A No. 01 & 02 /Rjt/2023, are dismissed in limine. 14. In the result, the appeals of the Revenue in ITA No. 01 & 02/Rjt/2023, are dismissed. 15.Now we shall adjudicate the remaining seven appeal of the assessee in IT(SS)A-05,06,07,08,09,10,11/RJT/2023. In order to adjudicate these appeals, we have taken lead case in IT(SS)A-05/RJT/2023, for assessment year(A.Y.) 2015-16. Page | 6 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 16. Since in these seven appeals, assessee has raised different grounds of appeal and multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Assessee. We find that most of the grounds raised by the Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the Assessee. With this background, we summarize and concise the grounds raised by the Assessee as follows: (i).The Ld. CIT(A) erred on facts as also in law in confirming addition of Rs. 1,48,31,588/- out of total addition Rs. 2,92,54,571/- made by estimating profit on alleged unaccounted sales/turnover of other persons. The addition confirmed is totally unjustified and uncalled for and may kindly be directed to be deleted ( This ground of appeal is raised by the assessee in IT(SS)A-05, 06,07,08,09,10,11/RJT/2023. (ii)The Ld. CIT(A) erred on facts as also in law in making the addition of Rs. 1,00,00,000/- on account of alleged credits/cash receipt on sale of Bhadreshwar Land. The addition made is totally unjustified and uncalled for and may kindly be directed to be deleted.( This ground of appeal is raised by the assessee in IT(SS)A-05/RJT/2023) (iii).The Ld. CIT(A) erred in facts as also in law confirming addition of Rs. 4,18,20,000/- made on account of alleged unexplained investment in land at Meghpar Kumbhardi. The addition confirmed is totally unjustified and may kindly be directed to be deleted( This ground of appeal is raised by the assessee in IT(SS)A-05/RJT/2023) (iv).The Ld. CIT(A) erred on facts as also in law confirming the addition of Rs. 10,00,000/- out of total addition of Rs. 1,11,00,000/- made on account of alleged unexplained investment in properties and gold. The addition confirmed is totally unjustified and uncalled for and may kindly be deleted. (This ground of appeal is by the assessee in IT(SS)A-08,09,10,11/RJT/2023). Page | 7 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Facts of the assessee`s case: 17. The assessee, before us, is an individual and carrying out business in the name of proprietorship concern M/s. Vibrant Salts. During the year under consideration the assessee not filed its return of income u/s 139 of the Act. A search was conducted at the premises of the assessee and hid family members situated on 10.11.2020 at four premises of the assessee situated at following address, Viz; (i),Plot no. 74, Radha Krishna, Sector 1, Gandhidham [annexure A – 1 was seized.], (ii). Shop No. 201 & 202, Tejabhai Tower, Nr. UCO Bank, Gandhidham, (iii).Plot No. 11, Sector 2, Gandhidham, [annexure A -1, to A – 5 was seized.] (iv) BBZ – S6, Zanda Chowk, Gandhidham, Kutch [ Annexure A-1 to A-55 was seized]. During the course of search at the business premise of the assessee, situated at Shop No. 201 & 202, Tejabhai Tower, Nr. UCO Bank, Gandhidham, various note-books and loose papers were seized as Annexure A-1 to A – 66. Further, digital data was also seized and inventoried as A – 67. Further, a prohibition order was also placed at the office of the assessee and then revoked later. During the process of revocation of the PO order, 59 Annexure were seized and inventoried as B – 42 and C – 17. In search action various incriminating documents pertaining to the assessee and his family was seized. Therefore, proceedings u/s 153A of the Act, was initiated in the case of the assessee. The assessee filed its return of income against notice u/s 153A of the Act, on 15.12.2021, declaring income of Rs. 0/-. There after notice u/s 143(2) of the Act, was issued on 19.01.2022. The assessee was requested to furnish relevant information u/s 142(1) of the Act, on 03.12.2021 and 20.01.2022. In response to the same, the assessee furnished its reply on 23.02.2022. The assessee was thereafter issued a show- cause notice on 23.02.2022 and 24.03.2022. In response to these notices, the assessee submitted relevant documents and evidences, and its reply before the assessing officer. Page | 8 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 18. The assessing officer, then after, discussed the Modus Operandi of the Assessee`s group and stated that the assessee and his family comprises of:(i.) Monghiben T. Ahir (Prop. Teja Mema Salt Works and Mother of the assessee), (ii).Shamji Teja Ahir (Prop. Shyam Salt Farm, Hari Trading Co. & Brother of the assessee), (iii)Laxman Teja Ahir, (iv).Harish Teja Ahir (brother of the assessee). (v)Bharat T. Ahir (brother of the assessee).The assessee practices business of salt manufacturing and trading along with his family members. Further, the accounts of all the business concerns of the assessee and his family members are maintained together at Shop No. 201 & 202, Tejabhai Tower, Nr. UCO Bank, Gandhidham. In this regard, on perusal of the Annexure seized from the premise of the assessee situated at Shop No. 201 & 202, Tejabhai Tower, Nr. UCO Bank, Gandhidham following inferences can be drawn. (i).During the course of search, three note books were seized as Annexure A–33, A–62,& A–64, which contains ledger account of various customers namely Balaji Salt Pvt. Ltd. Balaji Treaders, Dadi Impex P. Ltd., Ankur Chemfood Ltd, Ahir Salt & Allied Products Pvt Ltd., Indobrine industries, Shree Chemfood Pvt Ltd, Western India Seabrine Pvt Ltd, Arya Translogistics etc. (ii)These documents & ledger accounts reflect transactions related to sales of raw-salt by the assessee. The salt sales reported in the concerned documents not only belong to assessee but also belongs to the business concerns of the assessee family members. Further, the impugned documents also contain information of the salt sale of the business concerns, which are owned by some other third persons or agariyas. (iii)There has been instances in the whereby it has been observed that the assessee has entered into Joint Venture with any agaries whereby they practice salt, manufacturing and trading on their land. Thus, the presence of names and transactions pertaining to agarias in the sales registers seized are result of such transactions. Page | 9 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 (vi)These seized diaries also reflect the quantity of goods sold, rate at which sold, name of purchaser, name of seller etc, and on the basis of these details, transaction between specific purchaser & seller can be identifiable. For example, page no. 6 of annexure A–33 is reproduced by the assessing officer, in his assessment order. 19. Thereafter, assessing officer, discussed in his assessment order, the incriminating documents, pertaining to investment in Land and Gold. The assessing officer noticed that during the course of search, at the business and residential premises of the assessee, various documents were seized, which reflected investment made by the assessee and his family concerns in immovable and movable properties. The documents seized revealed that the assessee and his family members has made following investments: (i).During the course of search, at assessee's office premises, situated at Teja Mama Tower, a note-book was seized, as Annexure A-29. On page no. 48 & 50 of the said seized note-book, transactions related to cash payment made for purchase of property at Sector-2 from Babu Bhima Humbal of Rs. 36,00,000/- (11,00,000 + 25,00,000) is mentioned. (ii)During the course of search at assessee's office premises situated at Teja Mama Tower, certain documents were seized at page no. 82 of A-39, page no. 51 of A- 29, page no. 56 of A-29, wherein, transaction related to cash payment made for purchase of property at Shikarpur of Rs. 28,50,000/- (2,50,000 + 2,00,000 + 24,00,000) is mentioned. (iii).During the course of search at assessee's office premises situated at Teja Mama Tower, certain documents were seized at page no. 75 of A-52, page no. 184 of A-39 and Page no. 8 of A-39, wherein, transaction related to cash payment made for purchase of property at Vill. Nani Chirai of Rs. 18,33,000/-(10,00,000 + 5,00,000 + 3,33,000) is mentioned. Page | 10 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 (iv). Further, the abstract of on money transactions appearing from Annexure A- 37 to A-66 seized from business premise of the assessee in the name of the assessee or his family members are produced below for ready reference: Description of Seized Document FY Sum of Amount (Annexure A-36, Page 17, 67 to 69, 82) 2017-18 2000000 (Annexure A-52, Page 73 to 75, 125) 2018-19 6333000 (Annexure A-41, Page 8, 184, 198) (Rs.5,00,000 transaction not included rest 15 lacs included) 2019-20 2000000 (Annexure A-39, Page 57, 79 to 81, 131) 2020-21 1300000 (Annexure A-36, Page 17, 67 to 69, 82) 2017-18 6350000 Grand Total 41232074 20. (i)Further, evidence cash payment made of Rs. 4,18,20,000/- to Vimal Jain for land at Meghpar Kumbhardi is found at Page No. 23 to 33 of Annexure A/4 and page no. 13 of Annexure A/30. The impugned land has actually been purchased by Smt. Monghiben Teja Ahir (mother of assessee) at document value of Rs. 14,50,000/- on 03.07.2014. (ii)During the course of search at assessee's premises, a document was seized at page no. 8 of Annexure A/30 containing handwritten transactions related to payment made to Jayrambhai and Devabhai aggregating to Rs. 60,30,000/- for land purchase at Kulpara is mentioned. Page | 11 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 (iii)During the course of search at assessee's premises, certain documents were seized at page nos. 11 to 15 of Annexure A/4 which contains handwritten ledgers containing details of cash paid to Babubhai through/by various persons. It is seen that calculations are made for land admeasuring 21911 acre. The transactions seem to be carried out for purchase of such land. The Names of family members of the assessee are also appearing on the transaction sheets. The total payment made is of Rs. 1,81,28,298/- in cash. (iv)During the course of search at assessee premises, certain documents were seized at page nos. 53 & 60 of Annexure A/29 as per which assessee has made illegal cash expense for Khavda Land Deal of Rs. 11,00,000/-. (v) During the course of search, documents seized at page no. 73 of Annexure A/29 and page no. 48 of Annexure A/15 reflects cash payment made of Rs. 18,00,000/- for some land at Survey No. 320 in Varshamedi Village. It is seen from revenue records that said land was purchased by Hari ShamjiAhir (Khatariya) in 2009 for consideration of Rs. 23,27,000/-. (vi) Evidences of on-money cash payment in purchase of land at Survey No. 227 & 229 of Shikarpur village in Bhachau Talka were found in handwritten cash books seized at page no. 32, 65, 40, 41, 43 of Annexure A/29. Total amount of cash payment as per these seized documents comes to Rs. 18,80,000/-. On perusal of revenue records, both the plots are purchased in the name of Bharatbhai Tejabhai Ahir for consideration of Rs. 400000/-Shamjibhai Tejabhai Ahir for consideration of Rs. 244000/- during FY 2020-21. (v) On perusal of the transactions in Pg 4, 6, 7 of A-6, Pg 43, 62, 76, 79 of A-29, it appears that payment of Rs.1,07,46,300/- is made for purchase of Shikarpur land (vi) On page no. 33 & 78 of Annexure A/29, details of cash paid for purchase of Varun karkhana have been found recorded in the cash books seized. It is seen that Page | 12 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Rs. 1000000/- have been paid to ShriTrikambhaiVassanbhai in cash for purchase of such land. (vii) During the search at office premises, a notebook was found and seized as Annexure-A/30. On perusal of the same, it is seen that the same contains record of cash payments/ receipts in form of on-money cash in land deal, unsecured loans and interest cash. On page no. 12 of Annexure A/30, cash payment of Rs. 6,00,000/- made for purchase of KadolKarkhana is found. (viii).On perusal of Page 18 and 19 of A-22 and Page 14 and 15 of A-30, it is noticed that the assessee has made huge cash payment to Shri Mahesh Punj for land transaction amounting to Rs. 1,50,00,000/-, which pertain to Bhadreshwar and Rs. 10,00,000/- which pertain to Bharapar. (ix) Another transaction in land deal worth Rs. 600000 during the FY 2012-13 is found recorded on page 4 of the Annexure A/30. Similarly, transaction of cash payment of Rs. 410000/- and Rs. 340000/- for property at Kadol land and Rata Talav land respectively is found at page no. 6 & 7 of Annexure A/30. (x).Kadol Land Rs. 1,74,50,000/- as per page no. 50 of Annecure A-5 from your premise. (xi) During the course of search, various documents were seized related to cash payment made for purchase of Gold,Jewellery, which is tabulated as under: Annexure No. Pg No. Amount of investment A-36 63 10,00,000 A-39 71 2,37,000 A-29 46 1,00,000 Page | 13 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 21. About unsecured cash loans, the assessing officer on verification of the cash book ledger seized from the premise of the assessee, noticed that the assessee is also in receipt of unsecured cash loans from entities viz. Shri Mahesh Punj, Shri Pankaj Khavda, Shri Paresh Sanghvi, Shri Rahul Dangar etc. On perusal of the above documents, the assessing officer observed thatassessee has borrowed and repaid loan on various occasions. As per assessing officer, the summary of loan borrowed by the assessee, as determinable from the seized documents are produced below: (i)Loan Transaction from Shri Pankaj Khavda: FY Cash Loan Receipt Cash Loan Repayment 2013-14 13550000 11969000 2014-15 72150000 57086875 2017-18 1140000 1000000 2018-19 845000 150000 2019-20 2800000 3390000 Transaction where year is not discernible 79485000 73595875 TOTAL 169970000 147191750 (ii)Loan Transaction from Shri Mahesh Punj: Page | 14 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 FY Cash Loan Receipt Cash Loan Repayment 2013-14 25,00,000 0 2014-15 1,07,00,000 0 2019-20 0 10,00,000 TOTAL 1,32,00,000 10,00,000 (iii)Loan Transaction from Shri Rahul Dangar: FY Sum of Cash receipt Sum of Cash payment 2019-20 2,00,000 - 2020-21 20,00,000 18,19,800 Total 22,00,000 18,19,800 Further, on page no. 9 & 10 of Annexure A/30, it was noted by the assessing officer, that cash loan of Rs. 100000/- is taken by the assessee on 1/2/2013 from Hamir Bapa Kidana of which monthly interest of Rs. 1500/- is paid. It seems to assessing officer that interest @1.5% per month is charged. On perusal of page no. 11 of Annexure A/30, it was noticed that repayment of cash loan taken (of Rs. 2440000) is made by assessee during the FY 2012-13 to Shri Amitbhai Anjar. The assessee repaid two installments i.e. Rs. 500000 on 13/8/12 and Rs. 700000 on 15/9/12.Further, during the search at business premises, a ledger statement showing transactions with one Paresh Sanghvi is seized at page no. 3 of Annexure A/30. As appears in the seized document, cash payments of Rs. 3,00,000/- and Rs. 5,00,000/- are made during the FY 2013-14 to one Sh. Paresh Sanghvi. Page | 15 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Another page containing cash transactions with Paresh Sanghvi is seized at page no. 19 of Annexure A/30, as per which cash amounting to Rs. 800000/- has been paid to Paresh Sanghvi during the FY 2013-14 (Rs. 5,00,000/-) and FY 2014-15 (Rs.3,00,000/-). Further, these cash loans also find its entry in the seized cash book. 22. About unaccounted expenses, the assessing officer noticed that the consideration received by the assessee on sales of salt, may be via cash or in bank. The cash is thereafter withdrawn and applied for various business purposes, investment, short term loan forwarding etc. The source of cash is also cash loans taken by the assessee and cash sales made by the assessee. The cash so received is also seen in the unaccounted cash book seized from the business premise of the assessee. On verification of the cash book seized from the premise of the assessee, following summary was drawn by the assessing officer. FY Cash Receipt Cash Utilization 2013-14 78251500 68651960 2014-15 214044475 196404555 2017-18 67272275 70979600 2018-19 198584018 126236943 2019-20 51511469 70119519 2020-21 101999540 118297510 (blank) 1110000 690000 Total 712773277 651380087 Page | 16 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Further, few of the major cash transaction made by the assessee are as follows: Page | 17 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Page | 18 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Page | 19 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Therefore, assessing officer observed that the assessee has made several unaccounted expenses in cash like diesel expenses, labour expenses, electricity expenses, matikaam expenses etc. Page | 20 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 23. During the course of assessment proceedings, the assessee was confronted all these documents and was requested to furnish explanation regarding the seized documents. 24. In response, the assessee, submitted written submissions before the assessing officer and stated that various documents and accounting records found from Shop No. 201 are belonging to various friends, relatives & known persons from our community etc, who comes from their village (Nani Chirai) and engaged in the business of salt production and trading in small scale. The assessee explained before the assessing officer that these persons do not have their permanent office in Gandhidham City and thus, the assessee used to allow them to operate from their office to carry out their day-to-day administrative and accounting related work / activities. Further, assessee stated that he has acted as a facilitator for salt farmers and traders to provide them infrastructure, know how, laborers and make them capable of producing good quality of raw salt / production. The assessee has also canalized entire sales and monitor the recovery and make payment of direct and indirect expense related to the business of such small Traders. Being a Surpanch of the village, Nani Chirai, the assessee has accommodated and facilitated many farmers and salt producers / traders, in facilitating and helping them in selling their raw salt and managed their day-to-day business affairs since they are not conversant with the banking, finance, man-power management, sales / distribution of salt etc. Further as, the assessee was dealing with the illiterate and uneducated salt-farmers/free lancers, who are not well versed with the accounting/banking and other administrative work, therefore assessee has helped them in maintaining account of transactions and carry out formalities on their behalf. Therefore, their group accountant has maintained common noting of inflow and out flow of funds, sales and has prepared memoranda books like cash book, ledger etc, as per his understanding upon instructions from assessee and his family members. Here, it is also pertinent to mention that the transactions carried Page | 21 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 out by in the proprietary concerns of Smt. Monghiben Ahir and Shri Shamjibhai Ahir were also included in the common accounts maintained by accountant and as such, the transactions recorded in the seized documents are common hotchpotch, i.e., three proprietary concerns of family members and other individual salt works belonging to small traders. 25. However, the assessing officer, rejected the above reply of the assessee and observed that the assessee and his family members are carrying on business in with small traders/agarias. The assessee obtained lease of land for salt production in names of various small traders/agarias and then practiced business for his benefit on such land. Therefore, the assessing officer rejected the reply of the assessee on account of the following reasons: (i).During the course of search proceedings when the assessee was questioned that whether business proceedings of any other concerned is executed from that premise, then, he categorically denied the same. (ii). Here, it can be seen that the assessee has not disclosed that books of accounts of other small traders/agariyas, which were also maintained at concerned premise. However, failure to disclose the same proves that the assessee was carrying on business in the name of such small traders/agariyas which he intentionally did not want to disclose. (iii)Further, it is necessary to understand that how the books of the assessee are being kept in order to understand the intent of the assessee. It can be seen that there is a common sales register for all the sales carried out by the family business of the assessee and that of the small traders/agarias. (iv).⁠The assessee used to maintain a common cash book for his family business and business of small traders/ angaria. It can be seen that the angaria use to make Page | 22 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 cash withdrawal from his bank accounts and then the same were debited in a common cash book. (v)It is also noteworthy that the cash book of the assessee has entries whereby it can be seen that the cash withdrawal by the small traders/angarias was brought into cash book and then was subsequently utilized by the assessee or his family for their personal expenses or investment. The assessee or his family members would have never utilized such cash for his personal benefit or investment if he would have been custodian of such cash. (vi)Meticulous perusal of the cash book seized from the premise of the assessee will prove that the assessee is also maintaining the record of bank balance of various angarias. Further, any cash withdrawal from the bank of the angarias is also reflected in the cash book. This also proves that the assessee was carrying out business on behalf of the small traders/ angaria for his personal benefit. (v).The assessee was specifically questioned with regard the address of premise from where business activities were carried upon. He unequivocally said T. M. Towers, Shop No. 201. However, when the assessee was questioned regarding his registered office as per website \"tmsalt.com\" is Shop No. 202, the was unable to explain the same. 26. Therefore, the assessing officer observed that the maintenance of the accounts by the assessee and his family members are hotchpotch whereby separation of the same conclusively in the hands of definite person is impossible. The maintenance of common sales book, cash book etc, for all the business of the family members also makes it difficult to identify that whether the cash receipt is from sale from which entity. The profit from sales of salts on behalf of independent traders, cannot be assigned to any person individually. Therefore, the profit component from the same needs to be considered in hands of the assessee. Based on the above Page | 23 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 facts, the assessing officer observed that income derived from the business of such small traders/ angariya`s must be added in the hands of the assessee or his family members. 27.On perusal of all the documents seized from the premises, during the course of search, the assessing officer observed that the total sales made by the assessee on behalf of his family and the small traders are Rs. 176,43,46,383/-. Further, the sales as per seized data can also be bifurcated on the basis of a small traders/angariya or business concern responsible for such sales. 28. The assessing officer also noticed that return of income has been filed by many small traders/angariya for several Assessment Years. The sales reported in such return of income by the small traders/angariya are inclusive of the sales as identified in the seized sales register Annexure A-33, A-62 and A-64. Therefore, there were 5 types of issues that were considered by the assessing officer and respective additions were made issue -wise, which are as follows: 29. Issue Nomber-1 The assessing officer noticed that sales register contains sale transaction by the business concern of the family members of the assessee viz. M/s T.M. Ahir Salt, M/s Shyam Salt Farm, M/s Hari Trading Co. Etc. The sales as per seized documents which pertain to such entities have been bifurcated year- wise and entity -wise. The assessing officer observed that the sales reported in the Income Tax Return (ITR) of the family business entities are suppressed. The table highlighting the suppressed sales is produced by the assessing officer as follows: Page | 24 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Sr. No. Name of Entity A.Y. Sales as per the ITR filed for the F.Y. 20 % of the Excess Sales as per Seized Material 20 % of the Excess Sales as per Seized Material 1 Bharat Ahir (Prop BharatTrading Company) 2014-15 0 1562175 3,12,435 2 Bharat Ahir (Prop Bharat Trading Company) 2015-16 0 5661677 11,32,335.4 3 Vibrant Salts 2016-17 59,30,556 6375000 12,75,000 4 Vibrant Salts 2017-18 35,37,171 3651071 7,30,214.2 Total Here it is pertinent to mention that a comparative analysis of the salt manufacturers and sellers in and around Gandhidham was made. The Net Profit in the business of salt trading and manufacturing is around 5-7%. However, as the assessee has entered into several unaccounted transactions, like diesel expenses, electricity expenses, labour expenses, borewell expenses, transportation expenses etc. The same must also have been brought into the books of the assessee. Further, considering violation of Section 37 of the Act, and section 40(a)(ia) of the Act, the net profit @ 20% is estimated in the hands of the assessee for such transactions. Further, profit percentage of 20% has been estimated on the basis of the fact that the assessee on behalf of small traders/ angaria must have made unaccounted purchases from grey market. This would have led to profit of at least 20% because of several statutory compliances, being not complied by the assessee. Further, reliance is placed on the decision of Hon'ble Gujarat High Court in the case M/s Vijay Proteins. Therefore, the addition of 20% of suppressed sales is made in the income of the assessee for suppressed sales in the respective years to the tune of Rs.11,32,335/-. Page | 25 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 30. Issue Number-2 The assessing officer observed that the sales register contains names of the small traders/angarias, who has filed return of income during any concerned assessment years. Further, the sales reported by such a small traders/angarias, in their return of income filed for the concerned year is more than the sales as per seized documents. The list of such Agariyas, along with the details of sales reported in the ITR, sales as per seized data, Gross Profit % on the sales reported in the ITR ( as per assessing officer) is as under: Sr. No. Name of Entity F.Y Sales as per the ITR filed for the F.Y. Sales as per seized data for the F.Y. Profit % on the sales reported in the ITR (10%-8% Profit) Sales reported as per seized data 1 Dhanbahadur Mohanlal Thapa 2014-15 29,75,250 29,75,189 8.00% 59,503.78 2 Ganpati Salt Work (Prop. Hamir Samat Jaru) 2014-15 59,14,371 59,14,371 8.00% 1,18,287.42 3 MularamNangaram 2014-15 30,97,586 30,97,586 8.00% 61,951.72 4 Vasta PochaKhatariya 2014-15 55,39,230 55,39,230 8.00% 1,10,784.00 Total for AY 2015-16 3,50,526.00 Here, it is pertinent to mention that though full or part amount of the sales made in the name of different small traders/angariyas by the assessee is being reported in the ITRs of the respective, small traders/agariyas, the benefit of basic exemption limit and other deductions available to all those, Page | 26 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 small traders/angariyas, individually is being accrued to the assessee, which would not have been possible otherwise. Therefore, the addition is made in the hands of the assessee to extent of difference between 10% and profit% of the sales as per seized data. Addition= (10% - 8%Profit%) * Sales reported as per seized data Therefore, the addition made on this account for the assessment year 2015–16was to the tune of Rs.3,50,526/-. 31. Issue Number-3 The assessing officer observed that the sales register contains names of such small traders/angarias, who have filed return of income during any concerned assessment years but the sales reported by such small traders/angarias, in their return of income filed for the concerned year, is less than the sales as per seized documents. The list of such small traders/Agariyas along with the details of sales reported in the ITR, sales as per seized data, Gross Profit % on the sales reported in the ITR is as under: Page | 27 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Here, it is pertinent to mention that full amount of the sales made in the name of different small traders/angariyas by the assessee is not being reported in the ITRs of the respective, small traders/angariyas. Therefore, the assessee has suppressed sales which need to be brought to tax @ 20%. Profit percentage of 20% has been estimated on the basis of the fact that the assessee on behalf of a small traders/ Page | 28 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 angaria must have made unaccounted purchases from grey market. This would have led to profit of at least 20% because of several statutory compliances being not complied by the assessee. Further, reliance is placed on the decision of Hon'ble Gujarat High Court in the case M/s Vijay Proteins. Addition: 20% * (Sales as per Seized Material - Sales as per ITR) Here, it is pertinent to mention that the part amount of the sales made in the name of different, small traders/angariyas by the assessee is being reported in the ITRs of the respective small traders/angariyas. The benefit of basic exemption limit and other deductions available to all those small traders/agariyas individually is being accrued to the assessee which would not have been possible otherwise. Therefore, the addition is made in the hands of the assessee to extent of difference between 15% and profit% of the sales as per ITR. Addition= (10% - Profit%) * Sales reported as per ITR Therefore, addition made by the assessing officer for assessment year 2015-16, on this account, was to the tune of Rs. 28,44,199/-. 32. Issue Number-4 The assessing officer noticed that sales register also contains names of such small traders/angarias who has not filed return in the concerned year but has carried out sales as per seized data. It may be contended that such sales may have not been reported due to tax slab exemption for the concerned year, but the same is not acceptable as the business is carried on by the assessee on behalf such smart traders/angarias. Had assessee reported such income he would have paid taxed on such transactions. The list of such small traders/Agariyas who has not filed return in any concerned year along with the details of sales reported in the ITR, Page | 29 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 sales as per seized data, Gross Profit % on the sales reported in the ITR is as under: Name of the Agaria F.Y Sales as per seized data 20% of the Undisclosed sales Ajay Enterprise 2014-15 59,82,663 11,96,532.6 Bharat Hamir Khatariya 2014-15 27,95,235 559047 Bharat Shambhu Zer 2014-15 40,05,169 801033.8 Bharat Vasta Khatariya 2014-15 57,36,349 1147269.8 Bhima Naran Khatariya 2014-15 54,55,103 1091020.6 Bijal Duda Zaru 2014-15 30,35,758 607151.6 Deep Trading Co. (Prop. Bharat ShamjiKhatariya) 2014-15 54,74,540 1094908 Dhiraj Babu Khatariya 2014-15 30,56,570 611314 Harish Hamir Khatariya 2014-15 39,88,879 797775.8 IndubhaManubha Jadeja 2014-15 29,75,429 595085.8 Kana Khima Khatariya 2014-15 51,97,257 1039451.4 Kana Ramji Ayar 2014-15 59,68,343 1193668.6 Khima Sava Ahir 2014-15 46,89,345 937869 Kirna Khima Ahir Salt Works 2014-15 32,24,108 644821.6 Mahadev Trading Co. (Prop. Mahadeva Dhama Dangar) 2014-15 59,70,761 1194152.2 Manji Shambhu Zer 2014-15 29,48,811 589762.2 Parit Umar Daud 2014-15 32,60,808 652161.6 RavjiGagu Zer 2014-15 58,37,112 1167422.4 Ravji Kanji Khatariya Salt Works 2014-15 46,97,920 939584 Page | 30 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Ravji Vela Myatra 2014-15 58,63,897 1172779.4 Samji Deva Ahir Salt Works 2014-15 34,80,920 696184 Samji Khima Khatariya 2014-15 29,07,101 581420.2 Shambhu RandhirKhatariya 2014-15 31,48,770 629754 Shambhu Salt Supply (Prop. Shambhu Vera Jer) 2014-15 58,48,208 1169641.6 Shivam Enterprise (Prop. Shankar BadhaMarand) 2014-15 48,78,170 975634 TagaramBhikharamChodhary 2014-15 82,03,223 1640644.6 23726089.8 Here, it is pertinent to mention that full amount of the sales made in the name of different Small traders/angariyas by the assessee is not being reported in the ITRs of the respective small traders/agariyas. Therefore, the assessee has suppressed sales which need to be brought to tax @ 20%. The Profit percentage of 20% has been estimated on the basis of the fact that the assessee on behalf of angaria must have made unaccounted purchases from grey market. This would have led to profit of at least 20% because of several statutory compliances being not complied by the assessee. Further, reliance is placed on the decision of Hon'ble Gujarat High Court in the case M/s Vijay Proteins. Addition: 20% * (Sales as per Seized Material) Therefore, the addition made on this account for assessment year 2015–16 was to the tune of Rs. 2,37,26,089/- Page | 31 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 33. Issue Number-5 The assessing officer noticed that the sales register also contains several transactions in cash which are not reported in any of the return of income of either family concerns of the assessee or angarias. The cash sales found in the seized document are as follows – FY Cash Sales 20% of sales 2013-14 0 0 2014-15 60,07,098 12,01,420 2015-16 37,63,200 7,52,640 2016-17 1,00,71,502 20,14,300 2017-18 1,47,09,900 29,41,980 2018-19 1,15,55,785 23,11,157 2019-20 0 - 2020-21 0 - 9221497 Here, it is pertinent to mention that full amount of the sales is not being reported in the ITRs of the respective agariyas. Therefore, the assessee has suppressed sales which need to be brought to tax @ 20%. The Profit percentage of 20% has been estimated on the basis of the fact that the assessee must have made unaccounted purchases from grey market. This would have led to profit of at least 20 % because of several statutory compliances being not complied by the assessee. Further, assessing officer relied on the decision of Hon'ble Gujarat High Court in the case M/s Vijay Proteins. Addition: 20% * (Sales as per Seized Material) Page | 32 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Therefore, the addition made on this account assessment year 2015–16 was to the tune of Rs. 12,01,420/-. 34.Application of the Unaccounted Income Determined Above:The assessing officer noticed that there are various investments made by the assessee for himself and his family, which is application of unaccounted income determined, above, the list of these investments are produced below. Description of Property Allegation Amount AY Plot No. 43, Sector-1, Gandhidham Unaccounted investment 36,00,000 2021-22 Survey No. 227, Shikarpur, Bhachau. Unaccounted investment 28,50,000 2021-22 Nani Chirai Land Unaccounted investment 3,33,000 2019-20 Nani Chirai Land Unaccounted investment 15,00,000 2020-21 MeghparKumbhardi Land Unaccounted investment 4,18,20,000 2015-16 Fujlpara / Kulpara Land Unaccounted investment 30,00,000 2013-14 Fujlpara / Kulpara Land Unaccounted investment 30,30,000 2014-15 Khavda Land Unaccounted investment 11,00,000 2021-22 Kadol Land Unaccounted investment 1,10,00,000 2019-20 Kadol Land Unaccounted investment 64,50,000 2020-21 Survey No. 320, Varshamedi Unaccounted investment 18,00,000 2021-22 Survey No. 227 & 229, Shikarpur Unaccounted investment 1,07,46,300 2021-22 Survey No. 227 & 229, Shikarpur Unaccounted investment 18,80,000 2021-22 Varun Karkhana (10 Acre Plot) Unaccounted investment 10,00,000 2021-22 Kadol New Karkhana Purchase Unaccounted investment 2,00,000 2013-14 Kadol New Karkhana Purchase Unaccounted investment 4,00,000 2014-15 Bhadresnwar Land Unaccounted investment 1,00,00,000 2015-16 Bhadreshwar Land Unaccounted investment 50,00,000 2014-15 Page | 33 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Bharatpar Land Unaccounted investment 10,00,000 2014-15 Luni 10 Acre Plot 3 Unaccounted investment 6,00,000 2013-14 Kandol Land - Baba Bhima Dangar Unaccounted investment 4,10,000 2013-14 Rata Talav Land Unaccounted investment 3,40,000 2014-15 Partnership with Kana Patel Unaccounted investment 50,00,000 2019-20 Dartnership with ShivjibhaiAhir Unaccounted investment 7,82,000 2015-16 Partnership with BharwaadDevabhai Unaccounted investment 60,00,000 2015-16 Partnership with ShivjibhaiAhir Unaccounted investment 17,50,000 2018-19 Partnership with Devabhai Unaccounted investment 7,00,000 2014-15 Babubhai/ Amrutgiri Unaccounted investment 1,15,94,149 2013-14 Babubhai/ Amrutgiri Unaccounted investment 8,30,000 2014-15 Babubhai/ Amrutgiri Unaccounted investment 2,62,101 2015-16 Gold Investment Unaccounted investment 10,00,000 2018-19 Gold Investment Unaccounted investment 3,37,000 2020-21 Various Miscellaneos Transaction Unaccounted investment 8350000 2018-19 144664550 Therefore, the unaccounted income generated as per above discussion has been applied in the form of investment in land and gold to the tune of Rs. 14,46,64,550/-. The same is also established from the fact that unaccounted investments discussed above are entered in the seized cash book maintained by the assessee. One to one linkage of the cash receipt can be seen with, the unaccounted investments. Therefore, if the receipts of the assessee have been taxed, then its application should be telescoped. In this regard reliance is placed on decision of Kantilal& Bros v. Asstt. CIT [1995] 52 ITD 412 (Pune) where it was held that- \"It would be contrary to the canons of law to tax the same amount twice, i.e., as borrowings and as cost of assets. The borrowings were utilised to acquire the assets. Once the contention of the assessee, that the amount as reflected in the 'seized paper1 Page | 34 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 represented borrowings of the assessee, was accepted, it would be proper to presume that such amount was utilised for the acquisition of assets found at the time of search.\" Findings of the assessing officer 35. Thereafter, the assessing officer made a Summary of Income and Application and the addition made in the case of the assessee along with its application is tabulated below: FY AY Income Loan Total Application Addition Surplus Application Income 2012-13 2013-14 - - - 1,58,04,149 1,58,04,149 - 2013-14 2014-15 1,01,68,496 55,00,000 1,56,68,496 1,13,00,000 1,01,68,496 43,68,496 2014-15 2015-16 2,92,54,571 2,56,63,125 5,49,17,696 5,88,64,101 2,92,54,571 4,22,092 2015-16 2016-17 1,20,33,062 - 1,20,33,062 - 1,20,33,062 1,24,55,153 2016-17 2017-18 2,03,16,665 - 2,03,16,665 - 2,03,16,665 3,27,71,818 2017-18 2018-19 1,22,97,118 - 1,22,97,118 1,11,00,000 1,22,97,118 3,39,68,936 20 IB-19 2019-20 3,46,76,030 - 3,46,76,030 1,63,33,000 3,46,76,030 5,23,11,966 2019-20 2020-21 64,98,107 - 64,98,107 82,87,000 64,98,107 5,05,23,073 2020-21 2021-22 4563695.95 0 45,63,696 2,29,76,300 45,63,696 3,21,10,469 Total 12,98,07,745 3,11,63,125 16,09,70,870 14,46,64,550 14,56,11,894 Therefore, the assessing officer, made addition, in the hands of the assessee, for the assessment year 2015–16, to the tune of Rs.2,92,54,571/-. Findings of the Learned CIT (A) 36. Aggrieved by the order of the assessing officer, the assessee, carried the matter in appeal before the ld CIT(A), who has partly deleted the addition made by the assessing officer. The assessing officer has identified five issues and made Page | 35 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 the addition under the head of five issues. The ld CIT(A) had reduced the addition made by the assessing officer, by and large, from 20% to 10%. In respect of Issue No.1 which pertain to seized material containing entries of Salt sales by the assessee and his family members, but sales as per ITR filed, is less than sales as per seized material. The assessing officer estimated profit @ 20% on differential sales. The ld CIT(A) estimated profit @ 10% on differential sales of Rs. 62,20,021/-. In respect of Issue No.2, which pertain to seized material containing entries of Salt Sales by the third parties (Agariya) and sales as per seized material matches with the ITR filed by those third parties. The assessing officer estimated profit @10% on sales as per seized material less profit already declared by third parties in their ITR. The ld CIT(A) endorsed the view taken by assessing officer. In respect of Issue No.3, which pertain to seized material containing entries of Salt Sales by the third parties (Agariya) and sales as per seized material is more than the Sales declared in ITR filed by those third parties. The assessing officer estimated profit @ 10% on sales to the extent of such sales declared in ITR less profit already declared by third parties in their ITR. For excess sales in seized material, the assessing officer estimated profit @ 20% in the hands of the assessee. The ld CIT(A) has estimated profit @ 10% on total sales as per seized material and given credit of profit already declared by third parties in their ITR. In respect of Issue No.4, which pertain to seized material containing entries of Salt Sales by the third parties (Agariya), but no return of income filed by those third parties. The assessing officer estimated profit @ 20% on unaccounted sales in the hands of the assessee. The ld. CIT(A) has estimated profit 10%,on unaccounted sales. In respect of Issue No.5, which pertain to seized material containing entries of Salt Sales in cash, but seller is not identifiable. The assessing officer estimated profit @ 20% on unaccounted sales in the hands of the assessee. The ld. CIT(A) has estimated profit @ 10%on unaccounted sales. Over and above, the ld. CIT(A) has also enhanced the assessment in respect of uncounted investment/ application for investment, vis-a vis, unaccounted income. Page | 36 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 37. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. Arguments of Learned Counsel for the assessee. 38. Learned Counsel for the assessee submitted that, first of all, during the search and seizure proceedings, the assessing officer did not find any incriminating material, whatever documents seized by the search team were already on record. The Ld. Counsel stated that the assessing officer noted that there were unrecorded sales by the assessee. However, the assessing officer failed to point out with documentary evidences that for which year the unrecorded sales were made by the assessee. The assessee is engaged in salt manufacturing activity along with other family members, hence, there were other family Business units, which were already producing the salt, and therefore, the accountant of the assessee has also produced affidavit stating that the documents seized were pertaining to other persons and not relating to the assessee. Since the documents seized by the Department clearly stated that income pertains to other persons, therefore, no addition should be made in the hands of the assessee. Despite of these facts, the assessing officer made the addition at the rate of 20% of undisclosed sales, however, the Ld. CIT(A) reduced it up to 10% of the undisclosed sales. Where the income pertains to other person then there is no question to make addition in the hands of the assessee in respect of undisclosed sales. With respect to the angadia income, the ld. Counsel stated that various anagadias were assessed to tax separately, and these angadias were offered taxes on their income, therefore, their income should not be taxable in the hands of the assessee. The ld. Counsel, therefore stated that the addition made by the assessing officer under the major five issues, needs deletion. Besides, on appeal, by the assessee, before the Ld. CIT)A), the Ld. CIT(A) has enhanced the assessment, without providing adequate opportunity to the assessee of being heard. At least, undisclosed cash Sales, may be assessed in the hands of the assessee, at the rate of 8%, and other Page | 37 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 additions made by the assessing officer under the four major issues, which pertain to Angadia, therefore, addition should not be made in the hands of the assessee. 39. Alternatively, and without prejudice to the above, the ld. Counsel further stated that telescoping benefit in respect of application of undisclosed income has not been given properly to the assessee, therefore, the telescoping benefit, provided by the ld. CIT(A) needs to be rectified by this Tribunal. Therefore, the Ld. Counsel for the assessee contended that the addition made by the assessing officer should be deleted. Arguments of Learned DR for the Revenue 40. On the other hand, the Ld. DR for the Revenue submitted that the assessee had admitted during the search and seizure proceedings that he was running business along with family business and moreover, there were common sale registers and common cash book maintained for the entire family members and small traders/ angadia, therefore, it is difficult to segregate that which income pertains to other persons, and which part of the income pertain to assessee. Therefore, the assessing officer made the addition in the hands of assessee, in respect of a small traders/ angadia, in order to protect the interest of Revenue, therefore, the addition made by the assessing officer in the hands of the assessee may be sustained. Thus, Ld. DR reiterated that the assessee has been benefited by the common expenses and common income, by maintaining these common books of accounts and registers/ diaries etc, though, out of these common income and expenses, some income and expenses pertain to other small traders/ angadia, however, the facts remain that it is difficult for the assessing officer, to identify and to separate the expenses and income, which belong to a small traders/ angadia, moreover, these small traders/ angadia were closely associated with the assessee. Therefore, assessing officer has rightly made the addition in the hands Page | 38 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 of the assessee. The Ld. DR further pointed out that since cash sales has not been recorded, at all, in the books of accounts, therefore, the Ld. CIT(A) has passed reasoned order stating that there should be addition in the hands of the assessee between the range 8% to 10%, however, the ld CIT(A) sustained the addition at the rate of 10% in respect of cash sales. Therefore, the Ld. DR pointed out that the assessing officer has identified five major issues and the Ld. CIT(A) has deleted the addition partly in respect of these five major issues, therefore, the Ld. DR stated that whatever addition sustained by the Ld. CIT(A) in respect of the five issues, (identified by the assessing officer), should be sustained in the hands of the assessee and no further relief should be granted to the assessee. 41. The Ld. DR for the Revenue further submitted in respect of the enhancement of assessment made by the ld. CIT(A) and he pointed out that ld. CIT(A) has Co- terminus power, as that of the assessing officer, therefore ld. CIT(A) may enhance the assessment, provided the facts are already on record. In this respect, ld. DR argued that some of the investments and application of income were not properly identified by the assessing officer, although the assessing officer narrated the facts in the assessment order, but did not make the addition in respect of some investments/ undisclosed income, therefore ld. CIT(A) has rightly enhanced the assessment of the assessee. 42. In rejoinder, the Ld. Counsel for the assessee submitted that the sales has already been recorded in the hands of the Angadia and for that purpose, the Ld. Counsel for the assessee, took us through paper book page no.11 to 84 and stated that estimation of profit made by the assessing officer and the Ld. CIT(A) should be re-looked, as the profit on sales, in this business, is ranging between 1.25% to 5%. Therefore, the addition sustained by the Ld. CIT(A) at the rate of 10% is highly exorbitant and not acceptable even in making the estimation of profit. The Page | 39 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Ld. Counsel submitted that in respect of jewellery found, the assessee has failed to provide evidence, therefore, he agreed that the addition on account of jewellery should be sustained. At the end, the Ld. Counsel again reiterated that telescopic benefit should be given to the assessee and after giving telescopic benefit, net addition, if any, may be made in the hands of the assessee. The Ld. Counsel has explained the position before the Bench assessment year- wise and stated that there was no corroborative evidence in the hands of the Revenue authorities to sustain the addition in the hands of the assessee, in respect of small traders/ angadia, who are different business entities, therefore, the income of these small traders/ Angadi should not be taxable in the hands of the assessee, just because the assessing officer failed to separate the income and expenditure, out of the common cashbook/ diaries, thus, the assessing officer ought to have separated the income and expenditure from these common cashbook/ diaries and than respective income should be assessed in the hands of the assessee, as well as, in the hands of the small traders/ angadia, which the assessing officer has failed to do so, therefore addition on account of income which belongs to these small traders/ angadia should not be taxable in the hands of the assessee. The ld. Counsel pointed out that right income should be taxable in the hands of the right person, therefore, unnecessary income/ expenditure, which were assessed in the hands of the assessee, which belongs to small traders/ angadia, should be deleted in the hands of the assessee. Analysis and conclusion 43. We have heard both the parties and perused the material available on record. Since all the grounds of appeal raised by the assessee, are interrelated and mix, therefore, we shall adjudicate all the summarized grounds raised by the assessee together. Page | 40 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 44. Issue No.1: We note that the seized material found during the search and seizure proceedings are containing entries of salt sales made by the assessee, and his family members but the sales shown, as per the income-tax returns, filed by respective family members, are less than the seized material, therefore, the assessing officer estimated the profit at 20% on differential sales, on account of suppressed sale, and the Ld. CIT(A) has re-estimated the profit at the rate of 10% on the differential sales. For better appreciation of the facts, the findings of the ld. CIT(A), pertaining to issue No.1, is reproduced below: “(i) Issue - 1 In this scenario, the assessing officer has estimated profit at 20% of the excess amount of sales in the seized documents then the sales as per ITRs filed by the assessee and his family members. However, as the assessing officer himself has accepted the net profit of 8% on the sales declared by the assessee in ITR and also by keeping in view the provision of section 44AD, the assessing officer is directed to estimate the profit at 10%, which works out to Rs. 5,66,168/- (56,61,677 x 10%). Thus, out of the addition of Rs.11,32,335/- made by the assessing officer, the addition to the extent of Rs.5,66,168/- is confirmed and balance addition of Rs.5,66,167/- is directed to be deleted. It is seen that while making addition under similar issue (Issue-1) in AY 2016-17 and 2017-18, the assessing officer erroneously taken profit @ 20% on total amount of sales as per seized documents, rather to take profit on excess amount of sales in seized documents than sales declared in ITR. Therefore, considering the above finding, additions confirmed under Issue-1 of the assessment order is summarized as under: A.Y. Sales as per seized material Sales as per ITR Differential Sales Estimated unaccounted profit (10%) Addition confirmed 2015-16 56,61,677 - 56,61,677 5,66,168 2016-17 63,75,000 59,30,556 4,44,444 44,444 2017-18 36,51,071 35,37,171 1,13,900 11,390 . Page | 41 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 45. After hearing both the parties, we find that the assessing officer estimated profit at 20% of the excess amount of sales in the seized documents then the sales as per ITRs filed by the assessee and his family members. The Ld. CIT(A), while deciding the appeal of the assessee observed that the assessing officer himself accepted the net profit of 8% of sales declared by the assessee in ITR and therefore, keeping in view of the provision of section 44AD of the Act, he restricted the addition to the extent of estimated profit at 10% on differential sales. It is observed that Ld. CIT(A), in para 19.4 of the order cited case laws of (i) DCIT vs. Surendra Salt Traders ITA No. 1492/Kol/2010 and (ii) ITO vs. Inderjeet Prop. Super Salt Industries ITA No. 4176/Del/2012, wherein, profit from salt manufacturing business is estimated at 5% and 1.25% respectively. Therefore, considering the profitability ratio in salt trading business as well as accepted ratio of 6% to 8%, as per provision of Section 44AD of the I.T. Act, it is fair and reasonable to estimate the net profit at the rate of 8% on differential sales found recorded in the seized documents. We find that profit estimation, made by the ld CIT(A) is little bit on higher side. The respective family members have filed their return of income and disclosed the sales in their return of income, which were not considered by the assessing officer. No doubt, the ld CIT(A) has considered the same, although the profit has been re-estimated on higher side by the ld. CIT(A). Therefore, as far as the issue no.1 is concerned, we are of the view that the reasonable estimation of profit would be 8% instead of 10% on the differential sales. Therefore, so far the issue number one is concerned, we direct the assessing officer to estimate the profit at the rate of 8% on the differential sales, in the respective assessment years, as per the table given below: A.Y. Sales as per seized material Sales as per ITR Differential Sales Estimated unaccounted profit (8%) Page | 42 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 2015-16 56,61,677 - 56,61,677 4,52,934 2016-17 63,75,000 59,30,556 4,44,444 35,556 2017-18 36,51,071 35,37,171 1,13,900 9,112 Total - - 62,20,021 4,97,602 Thus, issue No.1 is partly allowed. 46. Issue No.2: So far as the Issue No.2 is concerned, we find that the seized material containing entries of salt sales by the third party, small traders/ angadia and sales as per the seized material matches with the ITR filed by these third- parties. The assessing officer made addition of total differential sales, that is, difference between 8% declared by the small traders/ angadia, and 10%. On appeal, by the assessee, the ld CIT(A) confirmed the action of the assessing officer observing as follows: “(ii) Issue-2 In this scenario, the assessing officer has estimated the profit at the rate of 10% on the sales recorded in the seized documents, which has already been offered for tax purpose in the ITRs filed by Agariyas. The assessing officer given credit of the profit percentage already declared in ITRs i.e., 8% to 8.25% filed by Agariyas and addition is made for the balance amount of profit i.e., around 2%. Here, income estimated by the assessing officer in the hands of the assessee sounds reasonable. As held earlier, the assessee has entered into joint venture or partnership with Agariyas and in this process, he must have benefitted financially. Therefore, considering the overall net profit of 10% earned in the business activities carried out by these Agariyas, addition made in the hands of the assessee for balance amount of profit is confirmed.Therefore, the addition made by assessing officer of Rs.3,50,526/- is confirmed. Considering the above finding, additions confirmed under Issue-2 of the assessment order is summarized as under: Page | 43 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 A.Y. Sales as per seized material Estimated Unaccounted Income being 10% -profit declared in ITR 2015-16 1,75,26,376 3,50,526 2016-17 2,35,07,430 4,70,142 2017-18 2,17,23,684 4,34,470 2018-19 7,36,12,435 14,72,232 2019-20 12,03,87,800 23,31,600 2020-21 11,21,91,726 20,91,773 2021-22 7,04,92,509 14,20,718 47. We find that the assessing officer estimated the profit at the rate of 10% on sales as per the seized material, after deducting profit already declared by third parties, small traders/ angadia at the rate of 8%, in their income tax returns. We find that in Issue No.2, respective profits were already declared by the small traders/ angadia. We find that these small traders/ angadia, filed their return of income, however, Sales reported by such small traders/ angadia, in their respective return of income are more than the sales as per seized documents. It means, the small traders/ angadia have shown more sales in their respective return of income and offered for taxation. Since these small traders/ angadia have shown more sales in their return of income, as compared to sales found by the search team, in the seized material, therefore, Ld. Counsel argued before us, that considering these facts, no addition should be made in the hands of the assessee and in the hands of these small traders/ angadia. 48. However, we are of the view that these small traders/ angadia are associated with the assessee, therefore 2% profit should be estimated in the hands of the assessee, on undisclosed sale, as a commission income. We note that assessing Page | 44 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 officer has considered the entries of sales recorded in seized material which has already been offered to tax in the ITR filed by the various salt farmers or traders (referred as \"Agariya\"). The AO stated that since the sales entries found recorded in the documents seized from the possession of the assessee, unaccounted income from such sales has to be taxed in the hands of the assessee. The AO estimated the total profit on such sales at the rate of 10% and after considering the profit already offered to tax in the ITR filed by relevant parties (Agariya), he made balance amount of addition in the hands of the assessee. In an appeal, Ld. CIT(A) endorsed the view taken by the AO. The Ld. Council reiterated the contention taken before the AO and Ld. CIT(A) that relevant entries of sales in the seized documents pertain to the sale of salt made by different salt farmers or traders (Agariyas) in their personal capacity and consideration towards such sales has been received by such Agariyas in their bank accounts. It was also submitted that all such Agariyas (discussed in Issue 2) have filed ITR and sales made by them as per seized documents are entirely offered to tax by them. The Ld. Council also submitted that during the course of assessment proceeding as well as before CIT(A), the assessee has submitted confirmations, affidavits, sale bills, ITRs, bank statements etc. of Agariyas as per which it is proved that the sales are actually made by the Agariyas and they are sole beneficiaries of profit / income earned from such sales, which in fact declared by them in their return of income. The Ld. Counsel also stated that being a Surpunch of Village Nani Chirai, the assessee has just helped the small salt fanners being Agariyas by acting as a conduit so that they can sale their goods at reasonable price, but due to having common accountant, he has kept records of such hotchpotch transaction, which leads to the controversy. We note that since the documents containing transactions related to sales, realization of sale proceeds, expenditure incurred etc. are found from the premises of the assessee, it cannot be said that the assessee has not derived any benefit or advantage from such Page | 45 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 transactions. On the other hand, it is also true that when relevant sales as per seized documents and corresponding income from such sales have already been declared by the Agariya in their ITR, the AO cannot make any addition on account of differential profit in the hands of the assessee. In other words, from single transaction, there cannot be two profit elements assessed to tax in different hands. Hon'ble Supreme Court in case of ITO vs. Ch. Atchaiah [TS-5044-SC- 1995-O], has held that the AO must tax the right amount in the hands of right person. Thus, only a person who is liable to be taxed as per the Act can be made to pay tax and the AO cannot shift this burden on some other person. 49. It is also an undisputed fact that sales (as per Issue 2) recorded in seized documents are related to sale of salt by third parties being Agariyas and the said fact is evident from various supporting documents such as (i) ITR filed by Agariya, (ii) Bank Statement of Agariya, (iii) Confirmation and Affidavits of Agariya, (iv) confirmation of buyers etc. Therefore, action of the AO and Ld. CIT(A) in making addition in the hands of the assessee on account of difference between the profit estimated (10%) and profit declared by Agariya in their ITR cannot be sustained. However, we note that the assessee himself in his submission before Ld. CIT(A) contended that he had acted as a conduit or mediator between the salt farmers / Agariya and salt purchaser companies. In that case, it cannot be said that the assessee has not taken any benefit or advantage by acting as a conduit or mediator. Therefore, it is fair and reasonable to estimate the commission income earned by the assessee at the rate of 2% of total amount of sales recorded in seized documents, which is mention in the table given below: A.Y. Sales as per seized material Estimated commission income being 2% 2015-16 1,75,26,376 3,50,528 2016-17 235,07,430 4,70,149 Page | 46 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 2017-18 2,35,07,430 4,34,474 2018-19 7,36,12,435 14,72,249 2019-20 12.03:87,800 24,07,756 2020-21 11,21,91,726 22,43,835 2021-22 7,04,92,509 14,09,850 Total 43,94,41,960 87,88,839 Therefore, we direct the assessing officer to make addition @ 2% , as stated in Table above. Therefore, issue No.2 is partly allowed. 50. Issue No.3: So far as issue no.3 is concerned, the seized material containing the entries of salt sales by the third-party angadia and sales as per the seized material is more than the sales declared in the income tax return filed by these third-party. The AO made bifurcation of sales recorded in the seized documents in two parts. The first part reflects such sales in the seized documents which are matched with the ITRs filed by the respective Agariyas and on such sales, the AO has estimated the profit at the rate of 10% less the profit already declared in ITR. The second part reflects sales in the seized documents which are over and above the sales declared in ITRs filed by the Agariyas, but such sales are made through normal banking channel and consideration has been received in the bank account of Agariyas. On this portion, the AO estimated profit at the rate of 20%. The Ld. CIT(A) in the appellate order reduced the addition made by the AO by estimating the net profit at 10%. The addition made under this Issue is similar to the addition made in Issue-2(supra) and therefore, considering the decision given in above Issue-2 (supra), based on these facts, no addition should be made in the hands of the assessee. However, to plug the leakage of the revenue, it is fair and reasonable to estimate the commission income earned by the assessee at the rate of 2% of total amount of sales recorded in seized documents as follows: Page | 47 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 A.Y. Sales as per seized documents Estimated commission income being 2% of sales 2015-16 1,97,96,071 3,95,921 2016-17 28,63,348 57,267 2017-18 1,11,63,359 2,23,267 2018-19 24,61,363 49,227 2019-20 1,13,54,336 2,27,087 2020-21 4,86,65,455 9,73,309 2021-22 92,33,173 1,84,663 Total 10,55,37,105 21,10,742 Therefore, we direct the assessing officer, to make the addition in the hands of the assessee, in the respective years, as per the above table. Therefore, issue No.3 is partly allowed. 51. Issue No.-4 The assessing officer has noted that though sales recorded in the seized documents pertains to third parties, being Agariyas, such parties have not filed ITRs and hence, income from such sales has not been taxed. The AO estimated the profit at 20% on such sales in the hands of the assessee. The Ld. CIT(A) in the appellate order reduced the addition by estimating the profit at 10% on sales recorded in the seized documents. 52. The ld Counsel stated that as mentioned in Issue 2 (supra), the sale of salt has actually been made by third parties, being salt farmers and consideration towards such sales has also been credited to the bank account of such salt farmers. Therefore, there is no sense in estimating profit on such sales in the hands of the assessee. As stated by the assessee in his written submission before Ld. CIT(A) that the salt farmers may not have filed their ITRs as their taxable income may Page | 48 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 below the basic exemption limit. Therefore, merely the correct taxable persons/entities have not filed the ITR by whatsoever reasons, income from such sales cannot be taxed in the hands of the assessee. 53. However, ld. DR for the revenue relied on the findings of the assessing officer. We have heard about the parties. Considering the facts narrated in assessment order, we find that it is fair and reasonable to estimate the commission income earned by the assessee at the rate of 2% of total amount of sales recorded in seized documents, as per the table below: Α.Υ. Sales as per seized documents Estimated commission income being 2% of sales 2015-16 11,86,30,449 23,72,609 2016-17 4,48,13,049 8,96,261 2017-18 7,92,63,498 15,85,270 2018-19 3,69,53,164 7,39,063 2019-20 14,30,07,740 28,60,155 2020-21 - - 2021-22 64,81,714 1,29,634 Total 42,91,49,614 85,82,992 Therefore, to plug the leakage of the revenue, we direct the assessing officer to estimate commission at the rate of 2% on sales as per the seized material. Therefore, issue No.4 is partly allowed. 54. Issue No.-5 So far as issue no.5 is concerned, the seized material containing entries of salt sales done by unidentified sellers and this income has not been disclosed by anyone. We find that Ld. assessing officer has estimated profit 20% on undisclosed sales in the hands of the assessee and Ld. CIT(A) has reduced it to 10%. Therefore, as far as the issue no.5 is concerned, we note that the reasonable estimation of profit would be 8% relying on the provision of section 44AD of the Act. We find that the addition made under this Issue is similar to the Page | 49 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 addition made in Issue-1(supra) therefore, considering the decision given in above Issue-1, the assessing officer is directed to restrict the addition by estimating the profit at the rate of 8% of such sales, as per table given below: Α.Υ. Sales as per seized material Estimated Unaccounted income being 8% on sales 2015-16 60,07,098 4,80,568 2016-17 37,63,200 3,01,056 2017-18 1,00,71,502 8,05,720 2018-19 1,47,09,900 11,76,792 2019-20 1,15,55,785 9,24,463 2020-21 - - 2021-22 - - Total 4,61,07,485 36,88,599 Therefore, issue No.4 is partly allowed. 55. In view of the above discussion, the total addition confirmed towards the unaccounted business income estimated as per Issue-1 to Issue-5, is summarized as under: Α.Υ. Issue-1 Issue-2 Issue-3 Issue-4 Issue-5 Total 2015-16 4,52,934 3,50,528 3,95,921 23,72,609 4,80,568 40,52,560 2016-17 35,556 4,70,149 57,267 8,96,261 3,01,056 17,60,288 2017-18 9,112 4,34,474 2,23,267 15,85,270 8,05,720 30,57,843 2018-19 - 14,72,249 49.227 7,39,063 11,76,792 34,37,331 2019-20 - 24,07,756 2,27,087 28,60,155 9,24,463 64,19,460 2020-21 - 22,43,835 9,73,309 - - 32,17,144 2021-22 - 14,09,850 1,84,663 1,29,634 - 17,24,148 Total 4,97,602 87,88,839 21,10,742 85,82,992 36,88,599 2,36,68,774 56. Summary of year-wise addition made by the AO, addition confirmed by Ld. CIT(A) and to the addition sustained by us, as per the above tables are as under: Page | 50 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Α.Υ. Addition of unaccounted income as per assessment order Addition confirmed by CIT(A) Addition confirmed by us 2015-16 2,92,54,571 1,48,31,588 40,52,560 2016-17 1,20,33,062 56,58,546 17,60,288 2017-18 2,03,16,665 1,00,74,499 30,57,843 2018-19 1,22,97,118 68,84,674 34,37,331 2019-20 3,46,76,030 1,85,50,434 64,19,460 2020-21 64,98,107 45,90,869 32,17,144 2021-22 45,63,695 29,92,206 17,24,148 Total 11,96,39,248 6,35,82,816 2,36,68,774 We note that AO at para 6.1 of the assessment order stated that documents seized during the search reflects investment made by the assessee and his family concerns in movable and immovable properties. The AO given list of such investment in para 12.1 of the order as per which total investment worked out by the AO is of Rs. 14,46,64,550/- in AY 2013-14 to 2021-22. In the appeal filed by the assessee, the Ld. CIT(A) partly confirmed the unaccounted investment/income in the following properties, which is the subject matter of these appeals: Α.Υ. Description of Property Unaccounted Investment (Rs.) 2015-16 Meghpar Kumbhardi Land 4,18,20,000 Bhadreshwar Land (Note-1) 1,00,00,000 Total AY 2015-16 5,18,20,000 2018-19 Investment in Gold 10,00,000 Total AY 2018-19 10,00,000 2019-20 Nani Chirai Land 3,33,000 Misc. Transactions 63,33,000 Total AY 2019-20 66,66,000 2020-21 Nani Chirai Land 15,00,000 Investment in Gold 3,37,000 Misc. Transactions 20,00,000 Total AY 2020-21 38,37,000 Page | 51 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 2021-22 Plot No. 43, Sector-1, Gandhidham 36,00,000 Survey No. 227, Shikarpur, Bhachau 28,50,000 Survey No. 227 & 229, Shikarpur 1,07,46,300 Survey No. 227 & 229, Shikarpur 18,80,000 Khada Land 11,00,000 Survey No. 320, Varshamedi 18,00,000 Misc. Transactions 13,00,000 Total AY 2021-22 2,32,76,300 The ld. CIT(A), treated as assessee's unaccounted income from sale of property, in respect of Bhadreshwar Land of Rs. 1,00,00,000/-. 57. So far as the above unaccounted investment confirmed by Ld. CIT(A), the Ld. Counsel of the assessee reiterated his submission and contention made before lower authorities, whereas Ld. CIT(DR) relied on the order of the AO and Ld. CIT(A). We have also perused the summary of the arguments prepared by the Ld. Counsel of the assessee and filed before the Bench at the time of hearing. After considering the relevant seized documents in respect of each properties, as discussed by the AO in the assessment order, we adjudicate the issue of investments in land and Gold etc., in the following paras of this order: 58. About Meghpar Kumbhardi Land-A.Y. 2015-16-Rs.4,18,20,000/-, the AO stated that the evidence of cash payment made of Rs. 4,18,20,000/- to Vimal Jain for land at Meghpar Kumbhardi, is found at page no. 23 to 33 of Annexure A/4 and page no. 13 of Annexure A/30. The said land is actually purchased by the assessee's mother Smt. Monghiben Tejabhai Ahir at document value of Rs. 14,50,000/- on 03.07.2014. The Ld. Counsel for the assessee, in the paper book filed on 09.12.2024, furnished copies of relevant seized documents and summary as to how the figure of Rs. 4,18,20,000/- worked out by the AO on the basis of such seized documents. The Ld. Counsel of the assessee submitted that the land at Village Meghpar Kumbhardi has been purchased by the assessee's mother Smt. Page | 52 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 Monghiben Tejabhai Ahir for the consideration of Rs. 14,50,000/- and there is no unaccounted cash payment involved. It was submitted that unaccounted investment in land worked out by the AO is on the basis of various cash payment vouchers which reflects name of Vipulbhai /Vimalbhai. However, the assessee has not purchased the said land from any persons named in the cash vouchers and signature on alleged cash vouchers are not matching with the signature of seller in the registered sale deed. The Ld. Counsel further stated that entries in the note- book at page no. 13 of Annexure A/30 contains only four entries aggregating to Rs. 1,47,00,000/-, out of which, first two entries having aggregate amount of Rs. 47,00,000/-,pertains to AY 2014-15 (which is outside the assessment period). Also, noting in the title of the page is \"Vimal Jain, Gandhidham\", who has nothing to do with the land purchased by assessee's mother Smt. Monghiben Ahir from Devdanbhai Naranbhai Agariya. On this ground, The Ld Counsel contended that there is no correlation of the seized documents with the actual land purchase transaction made by Smt. Monghiben Tejabhai Ahir. On careful verification of the cash payment vouchers seized as per page nos. 23 to 33 of Annexure A/4, it is seen that these vouchers are issued by \"Shri Teja Mama Ahir Salt Works\" and the same appears to have been signed by persons named \"Vipulbhai\", \"Sanjaybhai\". It is undisputed fact that the land under question has not been purchased by Smt. Monghiben Tejabhai Ahir from any of these persons. Further, neither AO nor Ld. CIT(A) has given any finding on the issuer of the voucher i.e., \"Shri Teja Mama Ahir Salt Works\". Therefore, neither the name of issuer of voucher, name of recipients mentioned in vouchers (Vipulbhai or Sanjaybhai) nor the description of land conclusively proves that the assessee has made on-money payment for purchase of land in question. On the other hand, a note-book page seized at page no. 13 of Annexure A/30 contains consecutive entries under the heading \"Meghpar Kumbhardi\", total of which comes to Rs. 1,47,00,000/-. Therefore, if the assessee would have actually made cash payment as per the cash payment vouchers, then the amount mentioned in such vouchers should have also Page | 53 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 been reflected in this notebook. Since, the note-book contains only four entries, which are up to the date 23.06.2014 whereas the registered document is executed on 03.07.2014, it can safely be held that other entries in cash payment vouchers (some of which are after the date of purchase document), which are not related to the impugned land purchase. In view of the above, total amount as per the seized notebook page no. 13 of Annexure A/30 should be treated as unaccounted investment, out of which, the sum of Rs. 1,00,00,000/- pertains to the AY 2015- 16. Hence, we confirm the addition on account of unaccounted investment in this property, to the extent of Rs. 1,00,00,000/-, subject to application of income out of unaccounted income. 59. About Bhadreshwar Land-A.Y. 2015-16-Rs.1,00,00,000/-, the AO at item no. 14 of para 6.1 of the assessment order for AY 2014-15 stated that on perusal of page 14 and 15 of Annexure A-30, it is noticed that the assessee has made huge cash payment to Shri Mahesh Punj for land transactions amounting to Rs. 1,50,00,000/- for land at Bhadreshwar, out of which, amount of Rs. 1,00,00,000/- pertains to AY 2015-16. In the first appeal, Ld. CIT(A) at para 21.6 of the order observed that on verification of relevant seized document, it is seen that entries are on receipts side and not the payment side. On this ground, the Ld. CIT(A) confirmed the addition made by the AO of Rs. 1,00,00,000/- by treating the same as unaccounted receipts of the appellant as against unaccounted investment considered by the AO. The Ld. Counsel of the assessee in the paper book filed on 09.12.2024 furnished copy of The relevant seized document. Ld. Counsel of the appellant submitted that the appellant or his family members have not purchased or sold any such land at Village Bhadreshwar. Entry in seized document does not contain any reference of survey number or location of property, but heading of the document is \"Mahesh Punj\" and \"Bhadreshwar Jamin\", under which, various transactions are Page | 54 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 mentioned. The document is not signed by any person and no agreement or deed evidencing purchase of property by the appellant or his family member found during the search. The Ld. Counsel stated that merely because of description of some property found recorded in seized document, the same cannot be treated as unaccounted investment of assessee in absence of any other corroborative evidence. The Ld. Counsel relied on the decision of co-ordinate bench in the case of Jashubhai Vaghasiya in ITA No. 56/Rjt/2017. On the other hand, Ld. DR relied on the finding of Assessing Officer. We have perused the seized document and also considered the contentions of the appellant and also taken into consideration decision of co-ordinated bench in the case of Jasubhai Vaghasiya in ITA No. 56/RJT/2017. The seized document contains heading \"Mahesh Punj\" / \"Bhadreshwar Jamin\" with certain random entries with the date. The document is not signed by any person. Therefore, only on the basis of this document, it cannot be conclusively proved that the appellant has purchased or sold the said property and the transactions in the seized paper related to property transaction The AO analyzed the seized document and stated that the appellant has made unaccounted investment in land, while the CIT(A) observed that the land in question transferred by the appellant and he received unaccounted consideration However, none of the authorities have tried to find out whether the appellant was actually owner or beneficiary of the said property. As per the records, there are no revenue records of Bhadreshwar Land in the name of the appellant or his family members. Even, the AO or CIT(A) has not brought anything on record regarding the owner of the land. transferor/transferee, location of land etc. Therefore, in absence of any connection of the appellant with the land in question, no adverse inference should be drawn. Hence, addition made by Ld. CIT(A) towards unaccounted receipts is directed to be deleted. Page | 55 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 60. About investment in gold, the AO at item no. 13 of para 6.1 of the assessment order for AY 2015-16 stated that during the course of search, various documents were seized related to cash payment made for purchase of gold jewellery, which is tabulated as under: Annexure Page No. Amount AY A – 36 63 10,00,000 2018-19 A – 39 71 2,37,000 2020-21 A – 29 46 1,00,000 2020-21 The AO considered the above investment in Gold Jewellery as appellant's unaccounted investment, out of undisclosed business income assessed. In the first appeal, Ld. CIT(A) has confirmed the action of the AO. The Ld. Counsel contended that the AO on the basis of random entry picked from the seized cash book alleged that the appellant has made cash payment for purchase of Gold, but in fact, he has not purchased such Gold Jewellery. The appellant further submitted purchasing that during the course of search, no corresponding document or bill evidencing purchasing of Gold Jewellery has been found Ld. Counsel also stated that the AO and Ld. CIT(A) misinterpreted the narration written in the seized notebook as payment made related to Gold purchase, which in fact, represents that the payment has been made for certain business related transactions and therefore, the same has been taken care in the estimation of profit from salt trading activities. Ed. Count also submitted that whatever gold jewellery found during the search has been reconciled with the wealth-tax return and books of account of family members and the AO has not made any adverse inference on this count. On verification of the relevant seized documents i.e, entries recorded in cash book, it is apparently visible that cash outflow has been made with narration that the payment made to Riddhi Siddhi Jewellers for purchase of Gold Jewellery. Further, in the same cash book seized, there are also entries of cash inflow from Page | 56 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 salt trading activities, from which, income has been estimated in the hands of the appellant. Therefore, it can safely be held that the appellant has made unaccounted cash payment for purchase of Gold Jewellery out of unaccounted income from salt trading activities available with him. Therefore, adverse out of unaccounted drawn by the AO is confirmed. Therefore, addition made by the AO on account of Gold investment is hereby confirmed. 61. About the Nani Chirai land, the AO on item no. 3 of para 6.1 of the assessment order for AY 2015-16 stated that certain documents seized from the office premises of the appellant contains transactions related to cash payment made for purchase of property at Village Nani Chirai of Rs 18,33,000/-. Out of this, amount of cash payment of Rs 3,33,000/- falls in AY 2019-20 and Rs. 15,00,000/- (10,00,000+ 5,00,000) falls in AY 2020-21 The AO considered the above unaccounted investment in the hands of the appellant subject to application out of the assessed unaccounted income. The Ld. CIT(A) has confirmed the action of the AO on this count. Before the Bench, Ld. Counsel for the assessee submitted that the appellant or his family members have not owned or purchased any such property at Nani Chirai and therefore, there is no question of treating unaccounted investment of the appellant. It is submitted that transactions in seized documents are hotchpotch transactions related to the appellant as well as various other parties being Agariyas due to common accountant and therefore, each entries with narration containing reference of immovable property cannot be treated as appellant's investment. The Ld. Counsel stated that when the AO himself accepted that seized cash books includes transactions of third parties / Agariyas, he cannot made addition in the hands of the appellant in respect of all entries where property description is found. In fact, there are no revenue records in the name of appellant Page | 57 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 or his family members for the property hard. On the other hand, Ld. DR relied on the findings of the assessing officer. It is an undisputed fact that there are no revenue records in the name of the appellant or his family members available for the impugned land. Neither the AO nor Ld. CIT(A) have tried to find out whether the appellant was actually owner or beneficiary of the said property. Even, the AO or CIT(A) has not brought anything on record regarding the actual owner of the land, transferor/transferee, location of land etc. Therefore, in absence of any connection of the appellant with the land in question, no adverse inference should be drawn. Hence, the AO is directed to delete the addition of Rs. 3,33,000/- in AY 2019-20 and Rs. 15,00,000/- in AY 2020-21 from the application of income. 62. About miscellaneous property transactions, the AO at item no. 4 of para 6.1 of the assessment order for AY 2015-16 stated that the abstract of on-money transactions are appearing at various places in the documents seized from the appellant's premises at Annexure A-37 to A-66. Out of transactions tabulated by the AO as per various seized documents, certain transactions remained to be taken into consideration while passing the assessment order. The Ld. CIT(A) in para 21.13 of the appellate order observed that the AO skipped the following transactions while making the final addition as per para 12.1 of the assessment order and consequently, Ld. CIT(A) has considered the same as unaccounted investment of the appellant subject to the application of income. Seized document AY Amount Annexure A-52, Page 73 to 75 and 125 2019-20 63,33,000 Annexure A-41, Page 8, 184, 198 2020-21 20,00,000 Annexure A-39, Page 57, 79 to 81, 131 2021-22 13,00,000 Total 96,33,000 Page | 58 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 However, during the appeal proceeding, Ld. Counsel for the assessee furnished the detailed break-up of the above-stated transactions and also submitted copies of relevant seized documents, which is summarized as under: Sr. No. Description of property Seized document reference AY Amount 1. Shikarpur Jamin Rahim Karim (Naran Kana) Annexure A/52 Pg. 73 & 74 2019-20 50,00,000 2. Hardevsinh Jadeja Jamin Annexure A/52 Pg. 125 2019-20 10,00,000 3. Nani Chirai Annexure A/52-Pg. 75 2019-20 3,33,000 4. Nani Chirai Annexure A/41-Pg. 8 2020-21 10,00,000 5. Nani Chirai Annexure A/41 Pg 184 2020-21 5,00,000 6. Nani Chirai Annexure A/39-Pg. 57 2021-22 2,50,000 7. Gevarchand Gor Dholera Jamin Kharidi Pete Annexure A/41 Pg. 198 020-21 5,00,000 8. Shikarpur Annexure A/39 – Pg. 131 2020-21 10,50,000 Total 96,33,000 The ld. Counsel for the furnished clarification in respect of each properties with reference to relevant seized documents. On verification of relevant seized documents, findings in the order of AO and Ld. CIT(A) and arguments of the Ld. Counsel and Ld. CIT(DR), it is noted by us for each land as follows: (i) Shikarpur Land: The Ld. CIT(A) at para 21.9 of the order observed that the appellant's family member namely Bharatbhai Tejabhai Ahir and Meet Shamjibhai Ahir have purchased the land at Village Shikarpur (Sr. No. 1 of above table). Therefore, there is live link or nexus of the entry noting in the seized documents viz-a-viz execution of actual transaction. Therefore, amount of Rs. 50,00,000/- is to be treated as appellant's unaccounted investment out of undisclosed business income. (ii) Hardevsinh Jadeja Jamin: Page | 59 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 The AO and Ld. CIT(A) has not brought anything on record to prove that the impugned property has been purchased by the appellant or his family members. There are no revenue records available in the name of appellant or his family members for such property and apart from entry in seized document, there is no other corroborative evidence which proves the appellant's investment in property. Therefore, it cannot be said that the appellant has made unaccounted investment in property and hence, addition made on this property (subject to application) is deleted. (iii) Nani Chirai: Entry of Rs. 3,33,000/-, Rs. 10,00,000/- and Rs. 5,00,000/- (Sr. No 3, 4 & 5) dated 23/07/2018, 04/06/2019 and 21/01/2020 with remarks \"Nani Chirai Land\" has already been considered by the AO while making addition of Rs. 18,33,000/- in respect of such land. Therefore, observation of the Ld. CIT(A) that the AO has skipped this figure while passing the assessment order is not correct. It is seen that the Ld. CIT(A) has considered these documents twice i.e., one under the head of \"Nani Chirai Land\" and second under the head of \"Misc. Transactions, which leads to the duplication Therefore, addition made under the head of \"Misc. Transactions for this property is deleted. Even otherwise, as held in para 55 supra that the appellant or his family members have not purchased land at Nani Chirai and no such revenue records available in the domain. Therefore, addition of unaccounted investment for such property cannot be survived and hence, the same is deleted. (iv) Ghevarchand Gor Dholera Jamin Kharidi the AO and Ld. CIT(A) has not brought anything on record to prove that the impugned property has been purchased by the appellant or his family members. There are no revenue records available in the name of appellant or his family members for such property and apart from entry in seized document, there is no Page | 60 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 other corroborative evidence which proves the appellant's investment in property. Therefore, it cannot be said that the appellant has made unaccounted investment in property and hence, addition made on this property (subject to application) is deleted. (v) Shikarpur Land: The Ld. Counsel of the appellant invited our attention to the fact that entry of Rs. 10,50,000/-on page no. 131 of Annexure A/39 (Paper Book Page No 132) contains narration as \"Shikarpur Washery Khetar Survey no 227 & 229 Pete\" This land is purchased by appellant's brother Shri Bharatbhai Tejabhai Ahir and nephew Shri Meet Shamjibhai Ahir and amount of Rs. 10,50,000/- is duplicated at page no. 65 of Annexure A/29 (paper book page no. 151), which has already been taken into consideration by the AO while making separate addition of Shikarpur Property. On verification of summary of duplication entries in seized documents furnished by the Ld. Counsel as per paper book page no 140, it is seen that entry of Rs 10,50,000/-categorized as \"Misc. Transactions\" has already been taken into account while making addition under the head of \"Shikarpur Land\" Therefore, the addition of Rs. 10,50,000/- is being deleted being duplication. 63. About the Plot No. 43, Sector-1, Gandhidham, the AO at item no 1 of para 6.1 of the assessment order for AY 2015-16 stated that page no. 48 & 50 of note- book seized from the office premises of the appellant at Annexure A-29 contains transactions related to cash payment made of Rs. 36,00,000/-(11,00,000+ 25,00,000) for purchase of property at Sector-2 from Babu Bhima Humbal. The AO treated such cash payment as appellant's unaccounted investment out of undisclosed assessed income. Page | 61 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 The Ld. CIT(A) at para 21.9 of the order observed that the property being Plot No. 43, Sector 1. Gandhidham has been purchased by the appellant and therefore, noting of cash payment made for such property as per seized documents are tangible evidence against the appellant. The Ld. Counsel submitted that the property under consideration was purchased by the appellant for the consideration of Rs. 1,26,00,000/-, which was entirely paid through cheque and the purchase deed of the said property was registered in FY 2021-22. So far as entries in cash book, Ld. Counsel submitted that the said cash payment may have been made to broker for temporary period, which has been received back to the appellant at the time making payment through cheque. On this ground, it is contended that there is no case of any unexplained investment as such. We don't find any force in the argument of the Ld. Counsel. The seized document clearly reflects the cash payment made for purchase of property, which is undoubtedly purchased by the appellant. Further, the appellant could not produce any evidence that cash payment made earlier has been flown back to him subsequently at the time of making cheque payment. Therefore, we note that appellant has made cash payment of Rs. 36,00,000/- for purchase of property which is over and above the document value of property. Therefore, action of the AO in treating the unexplained investment is confirmed, subject to application out of undisclosed income. 64. About Shikarpur Land-Survey No.227 and 229, the AO made addition in respect of this property at various places as under: Item No. of para 6.1 of asst. order Description of land Amount 2 Shikarpur 28,50,000 6 Shikarpur Survey No. 227 & 229 18,80,000 7 Shikarpur Land 1,07,46,300 Page | 62 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 The AO and Ld. CIT(A) both observed that the land in question has actually purchased by the family members of the appellant and therefore, cash payment made as per seized documents is to be treated as appellant's unaccounted investment out of undisclosed assessed income. Before us, Ld. Counsel for the assessee submitted that the property under consideration was purchased by his brother Shri Bharatbhai Tejabhai Ahir and nephew Shri Meet Shamjibhai Ahir and entire amount for purchase of property was paid through banking channel. The Ld. Counsel also submitted that Shikarpur is a village in Bhachau Taluka of Kutch district, which contains various salt harvesting pans Note book seized as Annexure-12 reflects transactions related to salt production taken and production expenses came out in respect of salt pan / Agariya situated at Village Shikarpur Therefore, entries in seized documents are not related to any investment in land, but the same is in the nature of business related expenses i.e, General expense, Pump repairing, Karkhana Kharch, Spare Parts etc., which is taken care in estimation of net profit in salt trading activities. The above plea of the Ld. Counsel is not acceptable as entries in the seized documents clearly shows the investment in property, which is undisputedly purchased by the family members of the appellant. Therefore, it is clear that the appellant has made cash payment over and above the registered document value for purchase of property However, the Ld. Counsel of the appellant drawn our attention to the fact that the AO and Ld. CIT(A) did not consider the duplication entries in various documents, which lead to the higher auditioned Counsel submitted chart showing duplication entries and after eliminating such duplication, total amount of cash payment works out to Rs 95,66,300/- Therefore, the AO is directed to restrict the amount of unaccounted investment accordingly. Therefore, addition of Rs. 95,66,300/- is confirmed. Page | 63 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 65. About Khavda Land, the AO at item no 4 of para 6.1 of the assessment order stated that page no. 53 & 60 of Annexure A-29 contains transaction related to illegal cash expense for Khavda Land Deal of Rs. 11,00,000/- and therefore, the same is treated as appellant's application of unaccounted income. The Ld. CIT(A) observed that the appellant has not submitted any details of this land and therefore, he confirmed the action of the AO. Before us, Ld. Counsel for the assessee submitted that the appellant or his family members have not purchased any land in Khavda or nearby area. The allegation of the AO is simply on the basis of entries of cash payment recorded in the common and hotchpotch cash book, which also contains transactions related to expenses incurred in respect of third parties being Agariyas. Ld. Counsel submitted that the AO himself accepted that seized cash books contains transactions of third parties / Agariyas and therefore, when there is no evidence on record as to actual purchase of property by the appellant, the AO erred on making addition in the hands of the appellant. We note that it is an undisputed fact that there are no revenue records in the name of the appellant or his family members available for the impugned land. Neither the AO nor Ld. CIT(A) have tried to find out whether the appellant was actually owner or beneficiary of the said property Even, the AO or CIT(A) has not brought anything on record regarding the actual owner of the land, transferor/transferee, location of land etc. Therefore, in absence of any connection of the appellant with the land in question, no adverse inference should be drawn Further, narration in the seized document reflects the payment made towards the expenses, which cannot be attributed to the investment in land. Therefore, the AO is directed to delete the addition of Rs 11,00,000/- from the application of income. Page | 64 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 66. About survey number 320, Varshamedi, the AO at item no 5 of Para 6.1 of the assessment order stated that documents seized at page no. 73 of Annexure A- 29 and page no. 48 of Annexure A-15 reflects the cash payment made of Rs. 18,00,000/- for some land at Survey No 320 in Varshamedi Village, which as per revenue records purchased by Hari Shamji Ahir (Khatarnya) in year 2009 for consideration of Rs 23,27,000/- The AD added the sum of Rs 18,00,000/- in the hands of the appellant as application out of undisclosed income. Ld. CIT(A) at para 21.9 of the order observed that relative of the assessee has purchased the said property and therefore, he confirmed the action of the AD on this account. before us, Ld. Counsel for the assessee submitted that the appellant or his family members have not purchased this property, but the property has actually been purchased by one Agariya namely Shri Haribhai Shamjibhai Ahir (Khatariya) on 15/10/2009 and thereafter, there is no change in ownership The Lo Counsel has also submitted the photocopies of revenue records in support of his contention. On the other hand, Ld. DR relied on the findings of the assessing officer. We note that neither the AO nor CIT(A) that brought anything on record which proves that the appellant or his family members have purchased the property It is on record that the property was purchased by one Shri Haribhai Shamjibhai Ahir (Khatariya) in year 2009 and thereafter, there is no change in the ownership. Therefore, it cannot be said that the appellant has made unexplained investment in the property. Therefore, on this ground, the AO is directed to delete the addition of Rs. 18,00,000/- from application of income. 67. In view of the above discussion following addition on account of investment in various properties is hereby confirmed subject to the availability of source of fund in form of unaccounted business income estimated. Page | 65 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 AY Description of Property Unaccounted investment confirmed 2015-16 Meghpar Kumbhardi Land 1,00,00,000 2018-19 Gold Investment 10,00,000 2019-20 Shikarpur (Misc. Transaction) 50,00,000 2020-21 Gold Investment 3,37,000 2021-22 Plot No. 43, Sector-1, Gandhidham 36,00,000 2021-22 Shikarpur Survey No. 227, 229 95,66,300 Total 2,95,03,300 68. The AO and Ld. CIT(A) while working out the total addition of unaccounted income for each year has made the cash flow summary showing unaccounted income earned and application of such income and accordingly, higher among two has been considered for the addition subject to availability of earlier year's accumulated surplus fund. Therefore, considering the findings given in the above paras, final amount of addition in each year is summarized as under: AY Addition of unaccounted income as per para 54 Addition of income is unaccounted investment para 64 Addition excess application than the surplus income Total addition confirmed by us 1 2 3 4 5 = 2 + 4 2015-16 40,52,560 1,00,00,000 59,47,440 1,00,00,000 2016-17 17,60,288 - - 17,60,288 2017-18 30,57,843 - - 30,57,843 2018-19 34,37,331 10,00,000 - 34,37,331 2019-20 64,19,460 50,00,000 - 64,19,460 2020-21 32,17,144 3,37,000 - 32,17,144 2021-22 17,24,148 1,31,66,300 17,24,148 Total 2,36,68,774 2,95,03,300 59,47,440 2,96,16,214 Page | 66 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 69. Therefore, Assessing Officer is directed to confirm the addition in the hands of the assessee, in the respective assessment years, as per the addition sustained by us in the above chart year vise. As we have made it clear at the beginning that issue involved in these appeals of assessees are inter-connected and mix, therefore, we have adjudicated all the summarized grounds of appeal of the assessee for assessment years 2015-16 to AY 2021-22 together. Therefore, all the appeal filed by the assessee are allowed partly to the extent indicated above. 70. In the result, all appeals filed by the assessee are allowed partly, to the extent indicated above. 71. Now we shall take the appeal of Revenue in IT(SS)A-14/RJT/2023 in case of Monghiben Tejabhai Ahir, wherein grounds raised by the revenue are as under: 1. On the facts and in the circumstances of the case and in law, learned Commissioner (Appeals) erred in ignoring the facts that the seized documents referred by the assessing officer in the present order were not considered in assessment of Shri Shamjibhai S Kangad. The assessee has advanced loan and received interest from the Neelkanth Group. 2. On the facts and on the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the facts that the assessee has given advance cash loan of Rs. 1,00,00,000/- and the assessee could not explain the source of cash advance of Rs. 1,00,00,000/-with supporting documentary evidences. 3. Assessing officer on the facts and in the circumstances of the case and in law, has duly investigated and applied his mind on the report of the DDIT, Investigation Wing and after satisfying himself framed the assessment on the basis of cogent material and relevant evidence on record. 4. On the facts and in the circumstances of the case and in law, learned Commissioner (Appeals) erred in ignoring the facts that the seized documents referred by the assessing officer in the present order were not considered in assessment of Shri Shamjibhai S Kangad. The assessee has advanced loan and received interest from the Neelkanth Group. 5. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) ought to have upheld the order of the assessing officer. 6.It is therefore, prayed that the order of the learned Commissioner (Appeals) be set aside and that of the A.O. be restored to the above extent. Page | 67 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 72. The facts necessary for disposal of the appeals are stated in brief.During the course of search at the premises of one Shri Naran B. Maheshwari, a tally data (account software) file in the pen drive was seized, which contained financial transactions of Neelkanth Group. The file was named as \"For CA Student from 1-4-2010 - 31-3-2017\". As per the assessment order, the transactions as per seized digital data are transactions executed by Neelkanth Group which is unaccounted. In the said seized pen drive, name of Monghiben Tejabhai Ahir is appearing which revealed that the assessee had given loan in cash to Neelkanth Group of Rs. 1,00,00,000/- during the year under consideration and this loan fetched rate of interest at 1% per month. Accordingly, the assessing officer had made addition of Rs. 1,00,00,000/-, as unaccounted money in the hands of the assessee being cash loan given to Neelkanth Group and also made addition of interest income earned at Rs. 12,00,000/- in cash. 73. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the addition made by the assessing officer, therefore revenue is in appeal before us. 74. We have carefully considered the facts of the case, the submission of the Learned Counsel for the assessee and ld. DR for the Revenue and evidences on record. The Ld. CIT(DR) for the revenue, on behalf of the revenue argued that Ld. CIT(A) did not consider the seized documents referred by the assessing officer. During the course of business, the assessee had advanced a loan and received interest from Neelkanth Group. During the search in the premises of Neelkanth Group a pen drive was seized containing various accounts which were noticed by assessing officer, as an incriminating material. The Ld. CIT(DR) Page | 68 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 pointed that the assessee had given advance cash loan of Rs. 1,00,00,000/- and assessee during the assessment proceedings could not explain the source of the cash and assessee has also not produced supporting evidences in support of her claim. The ld. DR further stated that seized documents referred by the assessing officer in his order, were not considered in assessment of Shri Shamjibhai S Kangad. The assessing officer has duly investigated and applied his mind on the report of the DDIT, Investigation Wing and after satisfying himself framed the assessment on the basis of cogent material and relevant evidence on record. About the addition of income of interest, the Ld. CIT(DR) submitted that findings of the Ld. CIT(A) were wrong. Therefore, the addition made by the assessing officer may sustained. 75. On the other hand, the Ld. Counsel for the assessee submitted that documents which were found during the search, the separate addition was made in the hands of Neelkanth Group, by the assessing officer. Therefore, based on the same amount, which is taxed in the hands of other person, no addition should be made in the hands of the assessee. The Ld. Counsel also stated that not a single document was found in relation to the assessee and seized documents referred by the assessing officer were related to Shamjibhai Sadhabhai Kangad. Therefore, the addition, if any, to be made, then it should be made in the hands of Shamjibhai Sadhabhai Kangad and not in the hand’s assessee, under consideration. No cross- examination opportunity was provided to assessee as the impugned documents were found from the possession of a third person viz., Shri Naran B. Maheshwari, particularly when Shri Naran B Maheshwari had denied to have made recording of the alleged tally data in pen drive. Therefore, Ld. Counsel for the assessee defended the order passed by the Ld. CIT(A) and also relied on the judgement of Hon’ble Supreme Court in the case of CBI Vs. V. C. Shukla (1998) 3 SSC 410. Hence, ld. Counsel stated that no addition should be made in hands of the Page | 69 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 assessee, in respect of documents found during the course of search at the premises of the Neelkanth Group which pertains to other assessee. Therefore, for the purpose of assessment in the hands of the assessee, particularly these documents, which were never related to the assessee are ‘Dump Documents’. The Ld. Counsel for the assessee also relied on the Judgement of the Co-ordinate Bench of ITAT Rajkot in the case of Jasubhai Arjanbhai Vaghasia in IT(SS)A. 55 to 57/RJT/2017where the Bench held as follows: “11.With the assistance of the Id representatives, we have gone through the record carefully. A perusal of impugned order would indicate that both the ld. Revenue authorities have unnecessarily made a mountain out of a molehill. The assessing officer has interpolated documents with assumptions and presumptions. Right from very beginning the assessee has been contending that these are rough jottings to discuss for some proposed transaction. These are estimated purchases and sale price. The transaction had never materialized. It was also pointed out that the rate written in the alleged seized paper was Rs.2.21 lakhs towards purchase price and Rs.2.71 lakhs towards sale price. The Id.assessing officer has added two more \"0\" to both these figures. When the assessee has pointed out this fact to the Id.CIT(A) that no such transaction has taken place, then the 1d.CIT(A) put a blame on the assessee that the assessee should prove that no such transaction has taken place. It is pertinent to observe that the assessing officer has to charge tax from assessee. It was upon him to demonstrate that taxable income was available in the hands of the assessee. It is not the other way round that the assessee has to prove that he has no taxable income. The Id.CIT(A) has expected the assessee to do so. The moment the assessee has pointed out that no such transaction has taken place, first course for the assessing officer to identify the land, which was being discussed in this paper, to identify vendee and vendor; whether any transaction has taken place pertaining to some other land also. This could be easily verified from the office of sub-registrar of the village where sale deeds are being executed. The assessing officer thereafter ought to have identified price of the land in the area which could be determined on the basis of circle rate notified by the State Government for charging stamp duty. No doubt paper was found from the possession of the assessee. It was containing certain jotting, but firstly the assessing officer has taken a sum of Rs.2.21 lakhs as \"22.11 lakhs\". He multiplied the figure ten times, and thereafter assumed execution of the transaction. The assessee was contending that this was rough jotting for discussion with regard to some prospective transaction, but transaction has never materialized, as assumed by the assessing officer. Now, it is for the Revenue to first establish that transaction was materialized and consideration has exchanged hand. At the time of hearing, the ld.DR contended that sometime certain deals are materialized orally on the basis of promises and mediator would not come in the papers. We agree that this could happen, but Department has to identify vendor and vendee and whether the assessee has played role of mediator or not. No such evidence was collected by the department, therefore, on an analysis of the record, we are of the view that no addition deserves to be made in the hands of the assessee. Department failed to collect evidence for harping a belief Page | 70 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 that the assessee has earned unaccounted commission income of Rs.3.00 crores. We allow this ground of appeal and delete the impugned addition.” 76. We have considered submissions of both the parties. We find that entries in the impugned seized data are recorded from 01.04.2010 where transactions mainly of credit of interest and occasional withdrawals till 31.03.2017, are recorded. However, this data is silent as to whom the alleged deposit/loan was given and by whom, the alleged payment of interest is made. Therefore, the document is 'dump document' as the document/data is not signed or witnessed by any person. The data found from Shri Naran B. Maheshwari's pen drive is voluminous and scattered and in reply to question no. 57, Shri Mihir Kangad (one of the key members of the Neelkanth group) had clarified that various entries recorded in seized data are under different heading/grouping such as various cash receipts towards unaccounted income are incorrectly showing under the heading of Loan in dummy name. Thus, the entries recorded in the seized data under the heading of \"Loan\" is not correct and the assessee's name might have been entered in the seized data for the reasons best known to author of the seized data. The assessee also relied upon various judicial pronouncements including the decision of the Hon'ble Supreme Court in the case of CBI v. V.C. Shukla [1998] 3 SCC410.We also find that no cross-examination opportunity was provided to assessee as the impugned documents were found from the possession of a third person viz., Shri Naran B. Maheshwari, particularly when Shri Naran B Maheshwari had denied to have made recording of the alleged tally data in pen drive. For that reliance is placed upon the decision of the Hon'ble Supreme Court of India in the case of Andaman Timber Industries vs. Commissioner of Central Excise in Civil Appeal No. 4228 of 2006 and upon the decision of the Hon'ble High Court of Gujarat in the case of CIT vs. Indrajit Singh Suri [2013] 33 taxmann.com 281. Page | 71 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 77. The assessee also submitted before the ld. CIT(A) that this issue has already been considered in the assessment proceeding of founder and key personnel of Neelkanth Group, viz., Shamjibhai Sadhabhai Kangad. The assessee quoted para 9.1 of the assessment order of Shamjibhai Sadhabhai Kangad dated 31.03.2022 for multiple assessment years, which is as under. \"9.1 From the above salient points, it can be inferred that the entries made in tally data are intermingled and in some instances inseparable. Considering the aforementioned modus operandi, it is impossible to assign a person to each and every entry of the tally data. For example, the loans, interest, personal expenses, and investments cannot be assigned to any person / entity as discussed above.\" While finalizing the assessment of Shamjibhai Sadhabhai Kangad, the assessing officer had accepted that the grouping/mapping in the data is not correct and therefore, he himself had re-casted the entire data/entries and made addition in the case of Shri Shamjibhai Sadhabhai Kangad (Head of Neelkanth Group), wherein, the assessing officer had considered various cash receipts/payments grouped under the head of \"Unsecured Loan\" as income of Shri Shamjibhai Kangad. This has been done after allowing rotation (inflow and outflow) of funds and also after considering unaccounted income earned by him. In the said re- casted data, the entries in the impugned ledger account are classified as rotation of the unaccounted income of Neelkanth Group/Shamjibhai Kangad. After considering these, rotation of funds and after recasting the entire entries of the seized pen drive, the assessing officer had made addition of unaccounted income in the hands of Shamjibhai Sadhabhai Kangad. Besides, while recasting the entries, the assessing officer had treated the loans as the income of Shamjibhai Sadhabhai Kangad. After considering the entries of the seized pen drive, after recasting the same, and after considering the rotation of funds, final addition is made out at Rs.3,17,68,709/- has been confirmed in the case of Shamjibhai Sadhabhai Kangad. This addition included the loans received by him from Page | 72 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 various persons (including the assessee) as the income of the assessee. Therefore, addition of unaccounted income in the hands of Shri Shamjibhai Kangad takes care of rotation of funds in the name of various family members. Hence, the addition made in the hands of the assessee would tantamount to be double addition and hence not justified. Based on these facts, the ld CIT(A) deleted the addition observing as follows: “6.3 I have perused the above plea raised by the assessee. The plea of the assessee is that the assessing officer erred in holding that the contents of the tally data found from Shri Naran B Maheshwari and loose papers seized from Shri Vijay Nagda pertains to the assessee. The assessee has contended that since the documents and data found from a third persons, as per section 292C and 132(4A), it would be presumed that same belonging to them. The assessee further submitted that Shri Naran Maheshwari has filed clarificatory affidavit before the assessing officer that he has not maintained the data recovered from his pen-drive. The assessee submitted that Shri Mihir Kangad, key personnel of the Neelkanth Group has also not admitted the digital data seized from Shri Naran Maheshwari and on this ground, the assessee's contention is that said digital data cannot be considered as authentic and correct. On careful consideration of relevant facts, it is observed that the assessing officer in the assessment order lucidly rebutted the assessee's arguments by demonstrating that comparison of digital data (tally file) seized with bills and vouchers seized has been made and it revealed that data, amount, voucher no., narration, party names etc. are matched. The assessing officer also analyzed that name of various persons in the seized documents and digital data are matched with contact numbers saved in the mobile phone book of family members of Neelkanth Group. Thus, seized data found during the course of search shows the transactions related to Neelkanth Group only. Therefore, this plea being an afterthought is rejected. Moreover, during the course of search, statement of Shri Mihir Kangad (key person of the group) was recorded. In his statement, he had admitted that the transactions in the tally files, though complex but made on the instructions of members of the Neelkanth group. The relevant part of his statement is forming part of the assessment order. The same was produced in the order of the Ld. CIT(A) in page no. 15 & 16. 6.3.1 From the above, it is clear that Shri Mihir Kangad had admitted the fact that the contents of the pen drive found and seized from the possession of Shri Naran B Maheshwari are actual transactions that actually took place and these were recorded at the directions of family members of the Neelkanth Group. In view of the above, the plea of the assessee that the contents found from the pen drive during the course of search at Naran B Maheshwari are third party entries, is not acceptable and hence rejected 6.4 With regard to contention of the assessee that the assessing officer has not provided cross- examination, it is observed that entire addition has been made based upon investigation report/ search report/ seized documents in case of search carried out in the case of Neelkanth Group from which it is revealed that the assessee and his family members are involved in the unaccounted transaction. Reliance is also placed on decision of the Hon'ble Jurisdictional Gujarat High court in the case of Amrapali Fincap Ltd. V/s Income Tax Settlement Commission [2016] 73 taxmann.com 97 wherein it is held that \"Where Settlement Commission denied Page | 73 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 assessee for cross-examination of different witnesses, whose statements were recorded behind its back, and relying upon statements of these witnesses to some extent rejected application for settlement, since Settlement Commission had also taken into consideration other facts available on record, there was no scope for interference.\" It is pertinent to note that even jurisdictional ITAT and High court on identical facts have decided similar issue in favour of department. In this case, the assessee had requested the Settlement Commission for cross- examination of one Sirish C. Shah (S), accommodation entry provider, whose statements had been relied upon by the Department. The Hon'ble Settlement Commission had rejected application of assessee who filed a writ against order of Settlement Commission raising denial of cross-examination as one of the contentions. The Hon'ble Jurisdictional High Court held that since Settlement Commission, besides relying upon statements of 'S' and other witnesses, had also taken into consideration other facts available on record, there was no scope for interference in order of Settlement Commission. (i) In the case of Smt. Kusum Lata Thakral v CIT 150 ITR 714 Punjab & Haryana High Court has held that \"It was clear from the findings recorded by the Tribunal that there was no relationship between the donors and the assessee and there was no natural love and affection. The Tribunal had followed the judgment of the jurisdictional High Court in Shri Tirath Ram Gupta v CIT [2008] 304 ITR 145/[2009] 177 Taxman 294 (Punj. & Har.), laying down that in the absence of natural love and affection, the gift could not be accepted as genuine. The question whether denial of opportunity of cross-examination results in violation of natural justice depends upon facts of each case. The object of cross-examination is to test the veracity of the version given in examination in chief. In the instant case, even if cross-examination was allowed and the donors who had disowned the making of gifts, were confronted and shown to be factually wrong, the same would have made no difference, as there was no natural love and affection and, in its absence, the gifts were not genuine. (ii) In the case of GTC Industries Ltd. v ACIT 65 ITD 380, ITAT Bombay Bench has relied upon the judgment of Calcutta High Court in the case of KisanlalAgarwalla v. Collector of Land Customs AIR 1967 & Cal. 80 and quoted this judgment in para 90 which throws light on the right of cross examination-. \"90. There is a good deal of misconception on this question of the right of cross- examination as part of natural justice. Natural justice is fast becoming the most unnatural and artificial justice and for that confusion the Courts are no less responsible than the litigants. Ordinarily the principle of natural justice is that no man shall be a judge in his own cause and that no man should be condemned unheard. This latter doctrine is known as audi alteram partem. It is on this principle that natural justice ensures that both sides should be heard fairly and reasonably. A part of this principle is that if any reliance is plated on evidence or record against a person then that evidence or record must be placed before him for his information, comment and criticism. That is all that is meant by the doctrine of audi alteram partem, that no party should be condemned unheard. No natural justice requires that there should be a kind of a formal cross-examination. Formal cross-examination is procedural justice. It is governed by rules of evidence. It is the creation of Courts and not a part of natural justice but of legal and statutory justice. Natural justice certainly includes that any statement of a person before it is accepted against somebody else, that somebody else should have an opportunity of meeting it whether it (sic), by way of interrogation or by way of comment does not matter. So long as the party charged has a fair and reasonable opportunity to see, comment and criticize the evidence, statement or record on which Page | 74 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 the charge is being made against him the demands and the test of natural justice are satisfied. Cross-examination in that sense is not the technical cross-examination in a Court of law in the witness-box.\" The Hon'ble ITAT has further held that, \"As regards the dictum 'audi alteram partem' the assessee's basic contention was that the statements of witnesses and materials which were relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which were adverse to the assessee should have been disclosed to the assessee and the witnesses should have been offered for cross-examination. The right to cross-examine the witness who made adverse report is not an invariable attribute of the requirement of the said dictum. The principles of natural justice do not require formal cross- examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, of law that the revenue could not rely on any evidence which had not been subjected to cross-examination. However, if a witness has given directly incriminating statement and the addition in the assessment is based solely or mainly on such statement, in that eventuality it is incumbent on the Assessing Officer to allow cross-examination. Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of collateral nature.\" (iii) It is pertinent to note that Hon'ble Delhi High court in the case of CIT Vs Kuber Fibers Pvt. Limited 77 taxman.com 345 has held that \"Where statements recorded were corroborated by materials, there was no justification to reject statements, which merely explain documents seized\". The Hon'ble High court has observed as under: \"16. This court notices, at the outset that Mr. Agarwal was no doubt a family member and a relative of the assessee's directors. At the same time, it is undeniable that he too was a director of the assessee company at the relevant time. The documents seized (A- 5, A-6 and A-7) detailed elaborate workings of accounts and what is more, quantities of raw materials and profits. The documents were prepared at the time a family settlement was arrived at, sometime in 1990-91. The statements-recorded on 20-3-1996 were corroborated by the materials. As far as the question relating to cross examination is concerned, the court notices that though the documents were furnished to the assessee, it had not sought opportunity of cross examination; this was made at the fag end, in March, 1997. This court finds no justification to reject the statements, which merely explain the documents seized; the assessee could well have given a full explanation instead of seeking rejection of the documents on the ground that they were prepared in the context of a family dispute leading to a settlement. This question of law too, is answered against the assessee and the revenue.\" (iv) Further, the Hon'ble Supreme Court has held in the case of State of J&K Vs. Bakshi Gulam Mohd. AIR 1967 (SC) 122 and in the case of Nath International Sales Vs. UOI AIR 1992 Del 295 that the right of hearing does not include a right to cross-examine. The right to cross-examine must depend upon the circumstances of each case and also on the statue concerned. Similarly, in the case of T. Devasahaya Nadar V. CIT (1964) 51 ITR 20 (Mad), the Hon High Court of Madras held that we are of opinion that it cannot be said as a general proposition of law that any evidence upon which the department might rely should have been Page | 75 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 subjected to cross-examination. The procedure for assessment is indicated in section 23(3) of the Act. The Income-tax Officer is not a court. Having regard to the nature of the proceedings, he occupies the position of a quasi-judicial tribunal. He is not bound by the rules of evidence in the Indian Evidence Act. The limit of the enquiry and the kind of materials or evidence which he can act upon cannot be specified and the statute has not attempted it. Wide though his powers be, he must act in consonance with rules of natural justice. One such rule is that he shall not use any material against the assessee without giving him an opportunity to meet it. The source of information for the material against the assessee need not be divulged. In fairness to the assessee he should be told what is against him, so that he may, if he can, displace it. It is no denial of natural justice if the Income-tax Officer refuses to produce an informant for being cross-examined by the assessee. The range of natural justice is wide and whether or not there has been violation of natural justice would depend on the facts and circumstances of the case. (v). It is important to read the genesis of right to cross-examination. The issues of examination and cross-examination have root in Section 138 of Evidence Act' 1872. As per the same, the order of examinations is- witnesses shall be first examined-in-chief, then (if the adverse party so desires) cross-examined then (if the party calling him so desires) re-examined. Section 60 of the Indian Evidence Act, 1872 prescribes the provision of recording oral evidence. All those statements which the court permits or expects the witnesses to make in its' presence regarding the truth of the facts are called Oral Evidence. Thus, the 'witnesses' fall into the category of 'oral evidence. The issue arises that in Income Tax Proceedings, when Department has not relied upon any oral evidences (or statements of witnesses) and have independently correlated the seized material with books and/or bank accounts of the searched person &/or of the third party, then can the affected party demand it as right that even those persons whose statements have not been used against it be called/summoned &assessee be given right to cross-examination. (vi) The Hon'ble Allahabad High Court in the case of Motilal Padampat Udyog Ltd. v. C.I.T. (160 Taxman 233) observed that the assessee-company was engaged in the business of manufacturing vanaspati oil. A search was conducted at the premises of the firm 'V', to which the assessee used to supply oil. During the search, a rough cash book was found which revealed that certain payments had been made by the firm 'V' to the assessee as 'on money' in addition to the purchase price. The statements of the partners and cash book were served on the assessee on its request. The assessee, however, prayed that the statements of the partners and employees of firm 'V and of any other person as recorded by the department should be furnished to the assessee and if no such statement had been recorded, then the persons should be summoned and their statement be recorded on oath and due opportunity should also be provided to the assessee to cross-examine each of them. The Assessing Officer rejected the explanation of the assessee and made addition of amount received as 'on-money'. The assessee's case was that as no such opportunity to cross-examine the partners of the firm had been provided to the assessee, the rough cash book and the statement of the said persons could not be used against it. On appeal, the Commissioner (Appeals) set aside the order of the Assessing Officer. On further appeal, the Tribunal restored the order of the Assessing Officer holding that as the statement had been recorded during the assessment proceedings and the copies of such statements had been provided to the assessee, no question arose for summoning the said persons for providing the assessee an opportunity to cross-examine them. On reference, Hon'ble Allahabad High Court held that it was not in dispute that the adverse material which was found by the income-tax authorities during the course of search in the business premises of 'V' had been placed before the assessee. The entries recorded in the rough cash book seized during the search operation tallied with the entries recorded in the regular books of account of the assessee as also that of \"V'. The assessee was issued the copy of the rough cash book as Page | 76 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 also the statements of partners of 'V'. After considering the reply the assessment order was passed. Hence, the assessment was validly made though the assessee was not given the right of cross-examination of the partners and employees of 'V'. In this case, it is held that Right of cross examination of persons from whom the Assessing Officer has collected the evidence is not required by law. The requirement of the statute for a valid assessment would be met fall the evidence collected which is to be used against the assessee while framing the assessment order is placed before the assessee and he is given opportunity to rebut the evidence. (vii) Reliance is also placed on ratio of decision of Kanungo and Co. v. Collector of Customs [1983] ELT 1486 (SC) wherein, Hon'ble Supreme Court again held as under: \"We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the assessee to give a suitable explanation. The complaint of the assessee now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the assessee or should be allowed to be cross- examined by them on the statements made before the Customs Authorities.\" 6.4.1 In view of the above factual discussion and legal matrix, the claim of the assessee regarding cross-examination is rejected. 6.5 Now coming to the second main plea of the assessee that, the issue has already been considered in the assessment of Shri Shamjibhai Sadhabhai Kangad is concerned, it is seen that, the assessing officer had recasted the entries of the seized pen drive in tally data and bifurcated the income element and capital receipts and capital expense. While doing so, he had accepted the contention of Shri Shamjibhai Sadhabhai Kangad, who happens to be the founder of the Neelkanth Group that the unaccounted income earned by him was routed as loans in the names of various family members. Therefore, the inflow of the funds is nothing but the unaccounted income of Shamjibhai Sadhabhai Kangad. This is clearly established from the seized tally data (pen drive) which also contains balance sheets as well. Hence it is clear that the entire entries made in the seized pen drive has been considered and the relevant income element has been brought to tax in the hands of Shamjibhai Sadhabhai Kangad, the founder of the Neelkanth group. In the appellate proceedings in the case of Shri Shamjibhai Sadhabhai Kangad, the additions made on the basis of the seized pen drive have already been confirmed by this office. Hence it is clear that the entries made in the seized pen drive has already been added by the assessing officer in the hands of the founder of the group. Therefore, the addition made again in the hands of the assessee has resulted in duplicate addition and hence, the same is directed to be deleted. Thus, the ground of appeal no. 2 is allowed.” Page | 77 LaxmanbhaiTejabhaiAhir v. DCIT IT(SS)A No. 1 to 11 & 14/Rjt/2023 AY.2013 – 14 to 2021-22 78. We have gone through the above findings of the ld. CIT(A) and observed that there is no infirmity in the conclusion reached by the ld. CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 79. In the combined result, appeal of the assessee, in IT(SS)A 05, 06, 07, 08, 09, 10, 11/RJT/2023, are partly allowed and Revenue`s appeal in IT (SS)A No.14/RJT/ 23, is dismissed. Order is pronounced on 30/01/2025 in the open court. Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date:30/01/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "