SHEELKUMAR ASHOKKUMAR SHAH,AHMEDABAD V. THE DY. CIT, CENTRAL CIRCLE-1(2), AHMEDABAD

CO 48/AHD/2025

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted the additions made by the Assessing Officer on the grounds of unexplained cash receipts and payments attributed to the assessee, Sheelkumar Ashokkumar Shah, for the Assessment Year 2019-20. The additions were based on entries found in diaries during a search operation at the premises of a key person of the Sankalp Group, which were later linked to the assessee. The CIT(A) found that the same entries had been considered in the assessments of other group entities, leading to double taxation if the same were taxed again in the hands of the assessee. The Tribunal agreed with the CIT(A)'s decision, emphasizing that the entries pertained to group-level transactions and not individual transactions of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775309 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-09-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 06-06-2025
• Other Referred Cases: CIT v. President Industries (258 ITR 654), CIT v. Gurubachhan Singh J. Juneja (302 ITR 63)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R. P. RASTOGI
• Assessee Lawyers: TUSHAR HEMANI; KUSHAL FOFARIA; ARS.
• Keywords: Business income; Unexplained expenditure; Document seized; Documents seized; Search and seizure; Loose papers; Opportunity of cross examination
• Section: 143(3); 132; 69C

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘B’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ]BEFORE S/SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER AND MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 Asstt.Year : 2019-2020 The Deputy CIT, Cent.Cir.(1)(2) Ahmedabad. Vs. Sheelkumar Ashokkumar Shah C/o.M/s.Natson Co., 5, Panchayat Bhavan Bhadra Ahmedabad. PAN : AEJPS 5387 M (Applicant) (Responent) Assessee by : Shri Tushar Hemani, Sr.Advocate & Shri Kushal Fofaria, ARs., Revenue by : Shri R.P. Rastogi,CIT-DR सुनवाई क तारीख/Date of Hearing : 03/09/2025 घोषणा क तारीख /Date of Pronouncement: 08/09/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: The present appeal by the Revenue and the cross objection filed by the assessee arise out of the order of the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as “CIT(A)”] dated 20.02.2025 for the Assessment Year 2019-20, which in turn emanates from the assessment order passed by the Assessing Officer [hereinafter referred to as “AO”] under section 153C read with section 143(3) of the Income Tax Act, 1961 (“the Act”) on 24.02.2024. Since both the appeal and the cross objection pertain to the same assessment order, they are being disposed of by this common order. Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 2 2. Facts of the Case 2.1 The Assessee filed his original return of income for the A.Y. 2019-20 on 24.10.2019 declaring total income of Rs.46,20,170/- which was processed u/s 143(1) of the Act. A search and seizure operation under section 132 was carried out on Sankalp Group on 30.10.2018. During the search at the residential premises of Shri Dilip C. Patel, key person of Sankalp Group, certain incriminating materials were found, containing references relating to the assessee. The Incriminating documents were inventoried as Annexure A/1 to A/15. Among them, Annexure A/12 and A/14 consisted of diaries containing handwritten entries in coded form of cash receipts and payments. Based on seized materials notice under section 153C was issued on 05.09.2022. In response, the assessee filed return on 10.11.2022 declaring income of Rs.46,20,170/- 2.2 The AO, while analysing Annexure A/12 and A/14, observed that the entries were recorded using symbols (+) and (–) to denote cash receipts and cash payments respectively, and amounts were noted after omitting the last three zeros, with years reduced by ten. The AO concluded that these entries reflected unaccounted cash transactions pertaining to the assessee. The statement of Shri Dilip C. Patel was recorded under section 132(4), wherein he confirmed that the diaries contained details of cash receipts and payments of Sankalp Group. The AO further correlated certain entries with actual property transactions. For instance, an entry noted as “(–)37=80” was found to match the registrar fee of Rs. 37,800 in a property transaction relating to Shri Robin Goenka. Similarly, project names such as “Iconic” and “Grace-II” mentioned in the seized documents were verified with GujRERA records to establish that the coded dates actually related to the period 2017–2018 and not 2007–2008. 2.3 On the basis of such decoding, the AO prepared a year-wise summary of transactions. For the relevant year under appeal (AY 2019–20), cash receipts aggregating to Rs.1,63,50,000 and cash payments aggregating to Rs. 70,75,000 were identified as pertaining to the assessee. As the assessee Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 3 did not furnish any satisfactory explanation or corroborative evidence, the AO held that cash receipts of Rs. 1,63,50,000 constituted unexplained money u/s 69A and further held that cash payments of Rs.70,75,000 represented unexplained expenditure u/s 69C. Both sums were brought to tax under section 115BBE. 2.4 The Assessee preferred appeal before CIT(A). Before the CIT(A), the assessee raised multiple objections. It was contended that the seized diaries were found from the possession of Shri Dilip C. Patel and did not belong to the assessee. They were unsigned, unauthenticated, and at best rough notings or “dumb documents” having no evidentiary value. The assessee further submitted that no corroborative material, such as bank entries, cash investments, or statements of counterparties, was brought on record. It was also highlighted that the same seized documents had already been made the basis of additions in the hands of Shri Robin Goenka and Shri Dilip C. Patel, thereby leading to double taxation. The assessee further emphasized that his name was not specifically mentioned in the seized papers, except for vague references such as “Sheel Sir,” and even in the statements recorded from searched parties, no identification of the assessee as a counterparty was made. The assessee also objected to the denial of cross-examination of Shri Dilip C. Patel, whose statement was relied upon by the AO. Reliance was placed on several judicial precedents holding that loose papers and uncorroborated notings cannot be the sole basis of addition. 2.5 The CIT(A), after considering the submissions, found merit in the assessee’s contentions. The CIT(A) noted that no independent evidence was found to prove that the assessee himself had received cash or made payments. The appellant had neither provided any services/products for which any payment was due, nor had he booked any unit in Sankalp Group projects necessitating such payments. Thus, there was no independent nexus of the seized entries with the assessee. The CIT(A) referred to the assessment order of Shri Robin Goenka for AY 2018-19, wherein similar seized documents (Annexure A/12 and A/14) were considered. It was noted Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 4 that these documents reflected group-level transactions, not necessarily attributable to the assessee in his individual capacity. The CIT(A) highlighted that the AO had relied on notings against the name of the assessee to work out alleged unaccounted receipts and payments. However, on closer scrutiny, the seized materials, read with other evidences, showed that these were group transactions of Sankalp/Robin Goenka group, and the assessee’s name appeared only incidentally as a partner in group concerns. The CIT(A) observed that in the appellate order of Shri Robin Goenka (CIT(A)-11, dated 02.05.2023), identical seized materials were already considered. In that case, the addition was not sustained in full but restricted by applying a profit estimation at 14% of receipts/expenditure under the “real income” theory. Thus, substantive addition already stood made in the hands of Robin Goenka, and repeating the same in the assessee’s hands would result in duplication. The CIT(A) concluded that, since the seized documents and related additions had already been taxed in the case of Shri Robin Goenka, separate addition in the assessee’s hands did not survive. Taxing the same receipts/payments again would amount to double taxation, which is not permissible in law. Finally, the CIT(A) held that there was considerable force in the assessee’s arguments. Once the seized diary entries had been considered in Robin Goenka’s case, there was no justification for separate additions in the present assessee’s hands. Accordingly, the additions of Rs. 1,63,50,000/- u/s 69A and Rs.70,75,000/- u/s 69C were deleted. The CIT(A) categorically concluded that the AO’s action had resulted in duplication of income and was therefore unsustainable. 3. Aggrieved by the order of CIT(A), the Revenue is in appeal before us raising following grounds: i. In the facts and on the circumstances of the case, Ld. CIT(A) erred in deleting the addition of Rs. 1,63,50,000/- on account of unexplained receipts u/s. 69A of the Income tax Act relying upon the argument of the appellant that the said entries have already been considered while making addition in the hands of Shri Robin Goenka and therefore no separate addition can be made again in the hands of the appellant since the same would result into double taxation of the same amount. Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 5 ii. In the facts and on the circumstances of the case, Ld. CIT(A) erred in deleting the addition of Rs. 70,75,000/- on account of unexplained expenditure u/s. 69C of the Income tax Act relying upon the argument of the appellant that the said entries have already been considered while making addition in the hands of Shri Robin Goenka and therefore no separate addition can be made again in the hands of the appellant since the same would result into double taxation of the same amount. iii. In the facts and on the circumstances of the case, Ld. CIT(A) has erred in relying upon the argument of the appellant that the said entries have already been considered while making addition in the hands of Shri Robin Goenka for A.Y. 2019-20 wherein erstwhile Ld. CIT(A) vide order dated 02.05.2023 erred in restricting the addition towards unaccounted expenses/outflows/payments income estimating the profit @14% without giving any substantial basis e.g. documentary evidences in support of claim of expenses/outflows by Shri Robin Goenka. iv. The Revenue may please be leave to add/alter/amend and/or substitute any or all of the grounds of appeal. 3.1 Against the said appeal of the Revenue, the assessee has filed Cross Objection with following grounds: 1. In law and facts and circumstances of the case, the Ld. CIT(A) has erred in dismissing the ground of the appellant that the Satisfaction Note prepared by the AO does not fulfil the parameters laid down by CBDT. 2. In law and facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the action of the AO of not providing the appellant with an opportunity of cross examination of any of the personnel of the Sankalp Group from whose possession such loose sheets have been found & seized. 3. In law and in the facts and circumstances of the appellant's case, appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal. 4. The Learned Authorised Representative (AR) for the assessee reiterated the facts of the case and submitted that the assessee is only a partner in Sankalp Venture LLP, which forms part of the Sankalp Group, and no independent cash receipts or payments can be attributed to him in his individual capacity. The AO has proceeded merely on the basis of certain notings in seized diaries found from the residence of Shri Dilip C. Patel, a key person of Sankalp Group, wherein some entries mentioning “Sheel Sir” were found. According to the AO, the expression “Sheel Sir” referred to the assessee. The AR submitted that such inference is unfounded and Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 6 unsupported by corroborative evidence. It was argued that the seized diaries in question, being Annexures A/12 and A/14, contained rough notings of alleged cash transactions in relation to real estate projects of the Sankalp Group. These entries, even if accepted, represent on-money receipts and related cash payments in the course of business of the group. They cannot be said to pertain to the assessee in his individual capacity. The assessee has not purchased any unit in any Sankalp project, nor has he rendered any service to generate such cash transactions. Thus, there is no independent nexus between the assessee and the seized material. The AR further pointed out that the same seized material, including notings of “Sheel Sir”, had already been made the basis of additions in the cases of Sankalp Venture LLP and Shri Robin Goenka, who is the main person of the group and also a partner in Sankalp Venture LLP. In those cases, the appellate authorities, after detailed examination, have held that the notings pertain to the real estate business of the group and not to any individual partner. The CIT(A) restricted the additions in those cases by estimating real income at 14% of the unaccounted receipts, and the Co-ordinate Bench, in further appeal, reduced the estimation to 13%, thereby settling the issue. 4.1 The AR therefore submitted that once substantive additions have already been sustained in the cases of Sankalp Venture LLP and Shri Robin Goenka on the same seized material, making separate additions again in the hands of the present assessee would clearly result in duplication and double taxation, which is impermissible under the scheme of the Act. Reliance was placed on the orders of the Co-ordinate Bench in the cases of Sankalp Venture LLP [IT(SS)A No.53/Ahd/2023] and Shri Robin Goenka [IT(SS)A/446/Ahd/2023], copies of which were placed on record, to demonstrate that the issue already stands adjudicated at the group level. 4.2 In light of these facts, the AR strongly supported the order of the CIT(A) in deleting the impugned additions of Rs.1,63,50,000 under section 69A and Rs. 70,75,000 under section 69C, submitting that the CIT(A) has rightly appreciated the evidence and applied settled judicial principles. Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 7 4.3 On the other hand, the Learned Departmental Representative (DR) strongly supported the order of the Assessing Officer. The DR contended that the CIT(A) erred in deleting the additions merely by relying upon orders passed in the cases of Sankalp Venture LLP and Shri Robin Goenka. According to the DR, the assessee’s case stands on a separate footing, as the seized documents contained specific references relatable to him, and therefore additions were made in full in his individual hands. 5. We have carefully considered the rival submissions, perused the orders of the authorities below, the material placed on record, and the judicial precedents relied upon. The issue in dispute in the Revenue’s appeal relates to deletion of additions made by the AO on account of alleged unaccounted cash receipts of Rs.1,63,50,000 under section 69A and unaccounted cash payments of Rs.70,75,000 under section 69C, both arising from notings found in diaries seized from the residence of Shri Dilip C. Patel, an associate of the Sankalp Group. The AO has on the basis of decoding of entries, treated the notings as representing undisclosed transactions of the assessee, relying upon the fact that certain entries carried the name “Sheel Sir”, which he interpreted as the assessee. On this basis, the AO made the entire addition of receipts and payments in the hands of the assessee. 5.1 The CIT(A), however, after detailed examination, deleted the additions. The findings recorded by the CIT(A) at paras 6.5 to 6.14 are categorical that no corroborative evidence was brought on record by the AO to establish that the notings in the seized diaries related to the assessee in his individual capacity. It has been observed that the assessee had not purchased any unit in the projects of the Sankalp Group, nor had he rendered any services from which such receipts could be generated. Further, the seized notings were admittedly business-related and pertained to on-money receipts and cash payments in real estate transactions of the group. It was also noted that identical seized notings, including references to “Sheel Sir”, had already been subject matter of substantive additions in the cases of Shri Robin Goenka and Sankalp Venture LLP. Those additions Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 8 were not sustained in entirety, but only profit element was brought to tax by the CIT(A) and further restricted by the Co-ordinate Bench. 5.2 The AR for the assessee before us has reiterated these contentions and placed on record the orders of Co-ordinate Bench in the cases of Robin Goenka and Sankalp Venture LLP, wherein on identical seized material, the Co-ordinate Bench has held that the notings represent business transactions of the group and that only real income embedded in such receipts can be taxed, and not the entire receipts or payments. In those group cases, the additions were restricted to 13% of the receipts. It was thus submitted that taxing the same notings again in the present assessee’s hands would lead to impermissible double taxation. The DR, however, relied on the order of the AO and contended that the assessee’s case is separate, as the seized diaries contained specific notings of “Sheel Sir”. It was submitted that the AO, after decoding, had quantified the amounts, and in the absence of any explanation from the assessee, the additions were justified. 5.3 The contention of the Learned DR that the assessee’s case stands on a different footing inasmuch as the seized diaries contained notings of “Sheel Sir”, which on decoding were quantified by the AO, does not persuade us. Mere mention of such a term in seized loose sheets, without any corroborative evidence to establish that it directly relates to the assessee in his individual capacity, cannot form the basis of substantive addition. It is trite law that loose papers or rough jottings by themselves have no evidentiary value unless supported by independent material. Even assuming that the term “Sheel Sir” refers to the assessee, the settled principle laid down by the Hon’ble Gujarat High Court in CIT v. President Industries (258 ITR 654) and in CIT v. Gurubachhan Singh J. Juneja (302 ITR 63) is that what can be brought to tax is only the profit element embedded in such unaccounted transactions and not the entire receipts or payments. Therefore, the reliance placed by the DR on the mere presence of “Sheel Sir” in the seized diaries does not advance the Revenue’s case in the Printed from counselvise.com IT(SS)A No.44/Ahd/2025 With CO No.48/Ahd/2025 9 absence of corroboration and in the face of consistent judicial authority mandating taxation only of real income. 5.4 We also note that in those group cases, the CIT(A) and the Co-ordinate Bench have categorically held that such seized notings represent business receipts and payments of the Sankalp Group, and not individual transactions. The Co-ordinate Bench has, after telescoping receipts and payments, restricted the additions to profit element at 13%. Once substantive additions have already been sustained on the same seized material in the hands of group entities, taxing the same again in the assessee’s hands would amount to duplication, which is not permissible. 5.5 In view of the above, we find no infirmity in the order of the CIT(A) deleting the additions of Rs.1,63,50,000/- under section 69A and Rs.70,75,000/- under section 69C. The Revenue’s grounds of appeal are therefore dismissed. 6. The assessee has filed a cross objection raising certain legal grounds relating to the validity of the satisfaction note recorded under section 153C and the denial of cross-examination of persons of Sankalp Group. However, at the time of hearing, the Learned AR for the assessee submitted that the assessee does not wish to press the cross objection. The same is, therefore, dismissed as not pressed. 7. In the result, the appeal filed by the Revenue is dismissed and the cross objection filed by the assessee is dismissed as not pressed. Order pronounced in the Court on 8th September, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 08/09/2025 Printed from counselvise.com "