ZAHOORA SWEETS & CONFECTIONERY ,MUMBAI V. DCIT CENTRAL -8(3), MUMBAI

ITA 8594/MUM/2025

AI Insights

The case involves Zahoora Sweets & Confectionery, a partnership firm engaged in the business of selling sweets and confectionery, which faced reassessment proceedings for the Assessment Years 2019-2020 to 2022-2023 following a survey under Section 133A of the Income Tax Act, 1961. The survey revealed unaccounted cash sales, leading to additions in the firm's income for these years based on a statement by one of the partners admitting to such sales. The Tribunal's decision addressed the method of estimating these sales and the profit margin applied, ultimately finding the Assessing Officer's approach to be arbitrary and not supported by adequate evidence.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847503 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2021-2022
• Appeal Filed On: 12-12-2025
• Other Referred Cases: M/s. Shivam Resorts v/s. DCIT, CIT, Pune vs. Sinhgad Technical Education Society, CIT v. S. Khader Khan Son, ACIT Vs. Nisha Jain, BKS Galaxy Realtors LLP v. Dy. CIT, New Saravana Stores Bramandamai v Dy. CIT, PCIT vs. Shri Pushkar Construction Co.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Business income; Reassessment proceedings; Corroborative evidences; Rejection of books of accounts; Income from undisclosed sources; Retraction
• Section: 147; 143(3); 131; 44AD; 133A

Judgement Text

"N THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.8592/MUM/2025 (Assessment Year: 2019-2020) ITA No.8593/MUM/2025 (Assessment Year: 2020-2021) & ITA No.8594/MUM/2025 (Assessment Year: 2021-2022) ITA No.8595/MUM/2024 (Assessment Year: 2022-2023) Zahoora Sweets & Confectionery Shop No.1, 2, 3, 4, 219/223, Zahoora Sweets and Confectionery Belasis Road, Nagpada, Mumbai - 400008. Maharashtra. [PAN:AANFM3535F] …………. Appellant Deputy Commissioner of Income Tax Central 8(3), Mumbai Room No.656, 6th Floor, Aayakar Bhavan, M. K. Road, Mumbai – 400020. Vs …………. Respondent Appearance For the Appellant/ Assessee For the Respondent/Department : : Shri Ajay R. Singh & Shir Akshay Pawar Shri Aditya Rai Date Conclusion of hearing Pronouncement of order : : 25.02.2026 26.03.2026 O R D E R [ Per Bench: 1. These are four appeals preferred by the Assessee pertaining to Assessment Years 2019-2020, 2020-2021, 2021-2022 and 2022-2023. Since identical issues were raised in the appeals, the same were heard together and are, therefore, being disposed by way of a common order. 2. The facts common to all the four appeals are that the Assessee, a partnership firm, is in business is of selling sweets, bakery items, cold drinks and other confectionery. The Assessee runs shop at 219/223, Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 2 Belasis Road, Nagpada, Mumbai 400008. A survey action under Section 133A of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], was conducted at the aforesaid premises on 22/12/2022 (Financial Year 2022-2023, Assessment Year 2023-2024). During survey proceedings it was discovered that the Assessee was making unaccounted cash sales. During the survey proceedings statement of Mr. Abrar Abdul Gafur Maredia, one of the partners of Assessee firm, was recorded under Section 131 of the Act. In the aforesaid statement, Mr. Abrar Abdul Gafur Maredia admitted to making unaccounted cash sales. Therefore, reassessment proceedings were initiated for the Assessment Year 2019-2020 to 2021-2022 and for the Assessment Year 2022-2023 the case of the Assessee was selected compulsory scrutiny. 3. The Assessing Officer completed assessment/reassessment for the Assessment Years 2019-2020 to 2022-2023 making following additions on account of unaccounted sales placing reliance upon the Statement of Mr. Abrar Abdul Gafur Maredia [hereinafter referred to as ‘Partner’] recorded on 22/12/2022 under Section 131 of the Act during the survey proceedings conducted under Section 133A of the Act: Assessment Year Sales @ INR.50,000 per day as per Statement of the Partner (Lakhs) Sales after 25% Reduction on account of COVID for AY 2021-2022 and 2022-2023 (Lakhs) Sales Reported as per ITR (Lakhs) Unaccounted Sales (in Lakhs) Profit @ 25% of Unaccounted Sales (Lakhs) 2019-2020 182 182 49.14 132.86 33.21 2020-2021 182 182 54.32 127.68 31.92 2021-2022 182 136.50 31.47 105.03 26.26 2022-2023 182 136.50 56.86 79.64 19.91 4. The Assessee preferred separate appeal before the Learned Commissioner of Income Tax (Appeals) – 50, Mumbai [hereinafter referred to as ‘the CIT(A)’] for the Assessment Years 2019-2020 to 2022-2023. The Learned CIT(A) disposed off the appeals as partly Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 3 allowed vide 4 separate orders, each dated 16/10/2025, without granting any relief to the Assessee in respect of the above additions. 5. Being aggrieved, the Assessee has preferred the present appeals before the Tribunal for the Assessment Years 2019-2020 to 2022-2023. 6. We would take-up appeal for the Assessment Year 2019-2020 as the lead matter. ITA No. 8592/MUM/2025 (Assessment Year 2019-2020) 7. ITA No. 8592/Mum/2025 has been preferred by the Assessee against the Order, dated 16/10/2025, passed by the CIT(A) whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 27/03/2024, passed under Section 147 of the Act for the Assessment Year 2019-2020. 8. The Assessee has raised following grounds of appeal : “1. The Ld. CIT(A) erred in confirming the Assessment order in making an addition of Rs. 33,66,990/- being profit element computed @ 25% on account of alleged unreported cash sales computed at Rs. 1,82,00,000/- [365 x 50,000/-] without bringing any cogent, corroborative, or without any supporting evidence to substantiate the allegation that such unaccounted sales were made by the assessee. 2. The Ld. CII(A) failed to appreciate that total receipt on the day of survey was only Rs. 32,500/- on that day, there was opening balance cash of the day was Rs. 13,000/- therefore cash sale of the day should have been recorded as (32500-13000=19500/-) which should be considered as daily sales while computing the sales turnover instead of taking arbitrary sales of Rs. 50,000/-per day. 3. The Ld. CIT(A) erred in making addition without considering the fact that assessee business is of sweets and confectionaries is highly seasonal specially during festivals and the survey was done on business premises just before Christmas on 22/12/2025, therefore extrapolation of sale taking receipt of one day for whole 365 days is not justified. 4. The Ld. CIT(A) erred in upholding the estimation of profit by applying an arbitrary and excessive profit rate of 25% on the alleged Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 4 unreported cash sales by ignoring the books of accounts, sales register, past history of sales and without demonstrating any basis for such high estimation. 5. The Ld. CIT(A) failed to appreciate that extrapolation of sale turnover without any evidence for the particular year is not justified, further ad-hoc or hypothetical percentage of 25% cannot form bases of addition. 6. The Ld. CIT(A) erred in upholding the addition solely on the basis of survey statement recorded in year 2022 which was retracted and explained, thus without establishing a link between such statement and the actual business transactions of the assessee addition is not justified.” 9. We have heard both the sides and have perused the material on record. Since all the grounds are connected the same are taken up together. 10. The contentions by the Learned Authorised Representative for the Assessee can be summarized as under: (a) The additions had been made by the Assessing Officer by merely relying upon the statement of the Partner recorded under Section 131 of the Act without any corroborative evidence. The aforesaid statement was subsequently retracted by the Partner and therefore, the same cannot be sole basis of making the addition. (b) The Assessing Officer erred in extrapolation of one day's alleged sales (as per the statement recorded) to estimate annual turnover of prior years'. Such an approach is not only arbitrary but also commercially unrealistic and contrary to law. The method adopted by the Assessing Officer of projecting annual turnover of prior years' uniformly on the basis of a single day's sales of 2022 year is fundamentally wrong and incorrect. (c) Sales in the previous year relevant Assessment Years 2021-2022 & 2022-2023 were impacted by COVID. Due to COVID the business/shop was closed and operations were down by 75%. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 5 Even after COVID period the sales never picked up gradually as the businesses were not fully operational on account of government and municipal restrictions. Without fully appreciating the aforesaid, the Assessing Officer has given an ad-hoc concession of 25% on sales turnover for Assessment Years 2021- 2022 & 2022-2023. (d) The books of accounts were duly maintained by the Assessee and the same were audited. The Assessing Officer has neither rejected the books of accounts under Section 145(3) nor pointed out any specific defects therein. The Assessee submits that without rejecting the books of accounts, enhancement of sales purely on the basis of a statement made in year 2022 is not justified in law. Without prejudice to above (e) The survey action under Section 133A of the Act was conducted on 22/12/2022. The cash available at the end of that day was INR.32,500/-. The Assessing Officer had erroneously treated the entire cash of INR.32,500/- as sales for the day. Out of the said amount, INR.13,000/- represented the opening cash balance. The actual sales for the day were only INR.19,500/-. Therefore, any presumption or assumption by the Assessing Officer for the sale for a day to be more than the aforesaid amount of INR.32,500/- or INR.19,500/-, as the case may be, was contrary to facts and invalid. No corroborative evidence was brought on record to substantiate the alleged cash sales of INR.50,000/- per day. The Assessee was engaged in the business of sweets and confectionery. This line of business, by its very nature, did not generate uniform sales throughout the year. It is inherently seasonal and event-driven. Demand fluctuated significantly depending upon festivals, social functions, weather conditions, and religious observances. There were lean periods when sales Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 6 dropped considerably in monsoon months. As a result, turnover during these months was comparatively lower. Further, the shop did not operate 365 days in a year without interruption. The shop remained closed on few days, thereby reducing the effective number of working days. Therefore, the assumption that the business runs uniformly for 365 days and at the same level is incorrect. In such a fluctuating and season-dependent business model, daily sales cannot be presumed to be constant or evenly distributed over the year. There are peak days, average days, and lean days. In year of survey no addition was made by the Assessing Officer. (f) Further, the Assessing Officer has estimated net profit rate at 25% and made addition purely on assumption basis, which is excessive, arbitrary and contrary to settled principles of law. The Assessing Officer action of extrapolating sales and rate of profit uniformly across 4 years and thereby making impugned additions in non-survey years based on assumption & presumption is arbitrary and devoid of any legal sanction. (g) Reliance was also placed upon CBDT Instruction (letter) F. No. 286/98/2013-IT (Inv. II) dated December 18, 2014 and the following judicial precedents: i. M/s. Shivam Resorts v/s. DCIT ITA No. 427/CHD/2023 dated 31/7/2024. Held that extrapolation of income should be confined based on the documents founds. ii. The Court in the case of CIT, Pune vs. Sinhgad Technical Education Society [2015] 378 ITR 84 (Bombay affirmed in [2017] 397 ITR 344 (SC) held that material relying to one assessment year cannot be used to made additions in other assessment years without corresponding material for those years. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 7 iii. CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC) Statement recorded during survey u/s 133A has no evidentiary value by itself addition cannot be made solely on basis of such statement Must be supported by corroborative material No corroborative evidence found No excess stock. iv. In the case of ACIT Vs. Nisha Jain, [2024] 115 ITR(T) 669 (Jaipur-Trib) Court held that Whether were Assessing Officer on basis of surrender made by assessee of Rs. 2 crores during survey made an addition under section 69A, since statement recorded during survey was retracted by assessee and further, there was no incriminating material to support addition nor any other document had been relied upon by Assessing Officer, impugned addition was unjustified. v. In the case of BKS Galaxy Realtors LLP v. Dy. CIT (2024) 116 ITR(T) 175 (Mum)(Trib) Survey income from undisclosed sources-Construction of commercial and residential buildings-Director disowning contents of paper found in the course of survey-Addition is deleted. The Assessing Officer did not have any credible material with him to support the addition. The Assessing Officer could not have resorted to extrapolation on the basis of assumptions and presumptions. The addition relating to additional consideration should be restricted to the evidence found and should not be extrapolated. Hence the entire addition was deleted. vi. In the case of New Saravana Stores Bramandamai. v Dy. CIT (2024) 114 ITR(T) 54(SN) (Chennai) (Trib) Court held that Assessment-Search-Suppression of sales- Assessing Officer to make estimation of gross profit rate Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 8 on suppressed sales-Without evidence of suppression of sales, extrapolation of suppressed sales of part of month for those years impermissible- It was trite law that no addition could be made merely on the basis of assumption, conjectures or surmises. Unless evidence of suppression of sales in relevant years was brought on record, the suppressed sales for only a part of the month could not be extrapolated for those years. Therefore, the assessee had rightly offered the additional income only in respect of sales suppression detected at the time of search by applying the gross profit rate of accounted sales per the books of account. (AY. 2013-14 to 2019- 20) vii. Extrapolation of the turnover, which was not based upon or supported by any material for the years under consideration, could not be upheld. An arbitrary method cannot be adopted. PCIT vs. Shri Pushkar Construction Co. [2023] 154 taxmann.com 22 (Guj) para 5 11. Per Contra, the Learned Departmental Representative vehemently opposed the submission made by the Learned Authorized Representative for the Assessee and placed strong reliance upon the Statement of the partner recorded under Section 131 of the Act. Referring to reply to Question No.27 and 28, Learned Departmental Representative submitted that Partner had clearly admitted that average daily sale of INR.50,000/-. It was submitted that specific queries was made by way of Question No.19 and 21 regarding purchase/sales made in the preceding five Financial Years. Therefore, it cannot be said that the Assessing Officer has merely extrapolate the sales figure of INR.50,000/- per day to the prior years without any basis. In reply to Question No.28, the partner had specifically stated that sales figure reported in Profit & Loss Account were suppressed. It Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 9 was further submitted that the Assessee had filed return of income for the Assessment Year 2023-2024 disclosing sales as per the statement of the Partner recorded under Section 131 of the Act and therefore, the returned income of the Assessee for the Assessment Year 2023-2024 was accepted in the assessment proceedings without making any additions in the survey year. It was further submitted that the statement recorded under Section 131 of the Act stood corroborated by the aforesaid conduct of the Assessee and the evidenced gathered by the survey team during the survey. The Learned Departmental Representative pointed out that the retraction affidavit was furnished by the Assessee after an expiry of more than two years from the date on which recorded of the Statement of the Partner was recorded and therefore, the same could not be relied upon. It was vehemently contended that the retraction affidavit submitted by the Assessee was nothing but an afterthought. Referring reply to Question No.34 recorded in the Statement of the partner, the Learned Departmental Representative submitted that the Partner had given Statement without any coercion or undue influence and has stated so while recording the Statement. The Departmental Representative further submitted that the Assessee was not maintaining proper books of accounts and in this regard reliance was placed upon reply to Question No.16 and 22 in the Statement. It was submitted that the Assessee had not provided any corroborative material in support of the contentions raised and averments made by the Assessee. It was vehemently contended that the Assessing Officer has estimated income based upon material on record. The Assessing Officer had granted 25% reduction for the COVID period and had fairly estimated the profit margin at 25%. Therefore, there was no infirmity in the order passed by the Assessing Officer which was also confirmed by the Learned CIT(A). 12. In rejoinder, the Learned Authorized Representative for the Assessee vehemently contended that the additions made by the Assessing Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 10 Officer were not sustainable in law since no interpolation could have been made by the Assessing Officer to estimate sales turnover for prior financial years by merely relying upon the Statement of the Partner which was subsequently retracted and the cash sales made on date of survey on 22/12/2022. 13. We have considered the rival submission and have perused the material on record. 14. We note that the Assessee had set up a case that the additions were made by the Assessing Officer merely on the basis of statement of the Partner of the Assessee-firm. In this regard we note that during the survey proceedings, the survey team had taken account of the actual cash sales made by the Assessee on 22/12/2022. Therefore, the conclusion arrived by the Assessing Officer that the Assessee had indulged in making unaccounted cash sales was not based solely on the Statement of the Partner recorded under Section 131 of the Act. For the same reason, the judicial precedents on which reliance was placed are distinguishable on facts and therefore, do not come to the aid of the Assessee. We also note that for the Assessment Year 2023- 2024 the Assessee had disclosed sales in the return of income for the survey year in line with the Statement of the Partner recorded under Section 131 of the Act during the survey proceedings and the same has been accepted by the Revenue. Therefore, we reject the contention advanced on behalf of the Assessee that the additions were based merely on the Statement of the Partner recorded under Section 131 of the Act without any corroborating evidence. 15. During the course of hearing it was also contended on behalf of the Assessee that the statements given by the Partner was retracted subsequently by way of an affidavit. On perusal of the affidavit, we note that the affidavit is on stamp paper which bears a stamp of 26th December, 2022 as the date of issuance to stamp paper to the Assessee, 28th December, 2022 as the date of recording of statement Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 11 and 22nd January 2023 as the date of presenting the affidavit before the notary and entry into register. We note that survey was conducted on 22nd December, 2022. As per the affidavit the retraction statement contained therein is of 28th December 2022 (presented before notary on 22nd January 2023). We find that the Assessee had placed the aforesaid affidavit before the Assessing Officer for the first time as Annexure 2 to Letter, dated 14/03/2024, filed during the reassessment proceedings for the Assessment Year 2019-2020. The signature of the deponent is purportedly affixed on 28/12/2022 while the notary has affixed signatures on 22/01/2023. Further, the factum of the said affidavit having been placed before the Assessing Officer after a period of almost 14 months after date of which it was presented before notary and after a period of almost 17 months from the date of which it was purportedly recorded does not inspired confidence. In our view, the retraction statement was an afterthought and therefore, we reject the contention of the Assessee that the statement given by the Partner under Section 131 of the Act cannot be relied upon in view of the aforesaid retraction affidavit, dated 28/12/2022. 16. At this juncture we deem it appropriate to refer to the relevant extract of the Statement of the Partner recorded under Section 131 of the Act which reads as under: “Q.1 Please identify yourself. Please also confirm that oath has been administered to you and that you have been made aware of the consequences of giving false statement on oath. Ans. I am Abrar Abdul Gafur Maredia, aged 42 years, S/o Abdul Gafur Gulam Rasool, residing at Murga Giran CHS, 9th Floor, Flat No. 902. Patthe Bapurao Marg, Mumbai Central, Mumbai400008. 1 confirm that oath has been administered to me and I also confirm that I have been made aware of the consequences of giving false statement on oath. Q. 4 Please state your educational qualifications Ans. I have done studies till 7th std. Q.10 Please state nature of business activities carried out by Zahoora Sweets & Confectionery. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 12 Ans. M/s Zahoora Sweets & Confectionery is the name and style of our shop where we sale sweets, confectionery, bakery items, cold drinks, ice creams, farshan etc. Q.14. Please state the name of all the Partners along with their shares in the firm M/s Zahoora Sweets & Confectionery and date of their admission. Ans. The names of partners of Zahoora Sweets & Confectionery is an under along with their shares and date of admission. Sr. No Name of the partners Percentage of shares Date of admission 1. Abdul Gafur Gulam Rasool Maredia 23% 01.06.2006 2. Abrar Abdul Gafur Maredia 20% 01.06.2006 3. Mohd. Raees Abdul Jamil 13% 01.06.2006 4. Shahid Naseem Mohd Races 12% 01.06.2006 5. Amin Umer Arodia 10% 01.06.2006 6. Ammar Haroon Rashid Gada 10% 01.06.2006 7. Shoaib Ibrahim Kadiwal 7% 01.06.2006 8. Abdullah Yunus Marcdia 5% 01.06.2006 Total 100% 01.06.2006 Q. 16 Please state as to what books of accounts are maintained by the firm on day to day basis. Ans. Sir, we do not maintain any books of account of the Firm. Most of the sales and purchase are done on cash basis. Q.17 In answer to question No. 16, you have stated that no books of account are maintained on day to day basis. In the circumstance, how are the sales and purchase accounted for and in absence of books viz sales and purchase bills vouchers, stock registers, cash book, ledger of purchase parties etc, how do you keep track on the financials of the business and prepare final accounts? Ans. Sir, it is true that we do not maintain books of accounts le sales and purchase bills vouchers, stock registers, cash book, ledger of purchase parties etc, on day to day basis. At the closing hours we count the cash generated out of sales every day and pay out to all of our daily wage staff and pay to our purchase parties. We take the balance cash home. We inform Shoaib Ibrahim Kadiwal (Our tax consultant and partner) about the sales and outgoing expenses on quarterly basis. We accumulate cash for the entire month the same way. Afterwards at the end of the month, we pay our electricity/water/telephone bill and pay out our creditors monthly from the cash accumulated in that particular month. After all payments, the balance cash is distributed among the Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 13 partners according to their shares and all available bills/invoices are sent to Shoaib Ibrahim Kadiwal on quarterly basis for accounting purpose. Q.18. Please state how much cash is accumulated and kept at your house at Flat No. 902, 9th Floor, Murga Giran CHS, Patthe Bapurao Marg, Mumbai Central, Mumbai-400008 as on date. Ans. Sir, as on date, cash of approximately 2 lakhs is available at my residence. Q.19 Please furnish Purchase and sales bills for last 5 financial years. Ans. Sir, out of total sales, manual sales bills are generated only in the case of customers who ask for the same. On an average sale bills are generated approximately in 20% to 30% cases. Purchases of raw material are made in cash and the component of the purchases which are made in cash correspond to the sales which are made without bills. All rough and kutcha bills are destroyed and there are no records for them. As stated by me earlier after the month end all available bills/vouchers are sent to Shoaib Ibrahim Kadiwal for records and accounting purposes. Therefore purchase and sales bills for last five years may be obtained from Shri Shoaib Ibrahim Kadiwal. However, 1 am furnishing with you purchase and sales bills for last two months which are yet to be sent to Shoaib Ibrahim Kadiwal. Q.20 Please state where the books of account and other documents of the aforesaid firm are kept and maintained. Ans. All available bills in respect of sales and purchase are sent to the tax consultant cum partner of the Firm Shri Shoaib Ibrahim Kadiwal onmonthly basis. He prepares the books of account and the same is kept and maintained by him only, at his office at An- Nazir, Munawara, Momin Nagar, Patel Estate Road, Jogeshwari (W), Mumbai-400102 Q. 21. Please furnish Balance sheet, Trading and P& L account, Audit Report for the last five F.Y. Ans. Sir, as stated earlier the books of account are kept and maintained by Shri Shoaib Ibrahim Kadiwal who is a Tax Consultant and partner in the Firm. The copy of the above mentioned documents are not available at this premises and the same can be obtained from Shri Shoaib Ibrahim Kadiwal. Q.22. Please furnish sales and purchase registers. Ans. We do not maintain any sale and purchase register. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 14 xx xx Q.25. Please furnish copy of GST return filed for last three F.Y. Ans. GST return is not readily available with me write now. However, I may be allowed one week to furnish the same. Q.26. Please furnish details of daily production of volume wise, item wise, cost wise and sale price wise sweet, confectionery and bakery items. Ans. Sir, the details of the same is not readily available as our main karigar is not present today. Daily production of item wise and sale price wise sweet, confectionery and bakery items shall be furnished in one-week time. Q.27. Please state the actual amount of average daily sales. Ans. Sir, the actual average daily sales is around 45 to 50 thousand which aggregates to approximately comes to Rs. 1.64 crores to Rs. 1.82 crores annually, 20% of which comes by way of online payment and and about 80% is cash sales. Q. 28. In answer to question no. 27 you have stated that your average 4 daily sales is around 45 to 50 thousand which approximately comes to 1.82 crores annually, however, perusal of P&L account for F.Y 2021-22 it is seen that sales has been shown Rs. 56,86,626/-. Further sales for F.Y 20-21 has been shown of Rs. 31,47,731/- and in F.Y 2019-20 and F.Y 2018-19 it is shown atRs. 54,32,203/- & 49,14,191/-. Please confirm and explain the same. Ans. Sir, I have stated in my statement that my average daily sales fluctuates between 45 to 50 thousand per day. I accept that the sales figure appearing in P&L account are suppressed and wrongly reported which has resulted into suppression of gross profit and net profit. I hereby accept and admit that daily sales of Rs. 45 to 50 thousands are correct and the factual sales figure for F.Y 2021-22 and 2022-23 till date. I am 212-25 ready to pay the differential tax for F.Y 2021-22 and also will pay advance tax for F.Y 2022-23. Suppression of sales and net profit for the F.Y prior to F.Y 2021-22 shall be worked out and submitted to you in ten days time. Q. 31. During the course of survey proceedings an amount of Rs. 32,500/ has been found from cash counter at 10.30 p.m today. Please confirm and explain the same. Ans. Sir, I confirm that the amount of Rs. 32,500/-has been found from the sales counter. This amount is cash sales receipt (for Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 15 today ie 22.12.2022. Q. 32. Please confirm the amount of cash of Rs. 32,500/- is inventoried as per annexure C and the same is returned back to you. Ans. Sir, I confirm that an amount of Rs. 32,500/- is inventoried and returned back to me. Q.34. Do you want to state anything else. Ans. No Sir, I confirm that whatever stated about by me is true and correct to the best of my knowledge and belief. The above statement is given by me voluntarily, without any force, threat, coercion, any inducement, promise, or any other undue influence was brought to bear on me. The statement has been read by me and I have found it to have been correctly recorded as per my say. I shall abide by whatever I have stated above I further affirm that oath was administered upon me before recording the statement. “ 17. During the hearing submissions were advanced by both the sides by placing reliance upon the favorable portions of the Statement of the Partner. It is settled legal position that the Statement recorded under Section 131 of the Act must be considered as a whole. Neither the Assessee nor the Revenue can rely upon only a part of the aforesaid Statement while ignoring the balance. In the present case the Assessing Officer has relied upon on part of the Statement [i.e. reply of Question No.27, 28 and 29 - reproduced in Paragraph 16 above] in order to estimate cash sales at INR.50,000/- per day. In our view, the aforesaid, approach arrived by the Assessing Officer cannot be countenance. On the other hand, it was contended on behalf of the Assessee that the sales made on the day of survey (i.e. 20/12/2022) were interpolated for prior years without any material on record without any material whatsoever. On perusal of the Statement of the Partner we find that in response to Question No.19, 21, 25, and 28 [reproduced in Paragraph 16 above], the Partner had made following disclosure/statement in relation to prior years: Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 16 (a) Books of accounts for last five years were kept and maintained by Mr. Shoaib Ibrahim Kadiwal (tax consultant cum partner in Assessee firm). The purchase and sale bills for last five years may be obtained from him. (b) The GST returns for the last three Financial Years were not readily available (however, the Partner may be allowed one week time to furnish the same). (c) Average daily sales were fluctuate between 45 to 50 thousand per day – I am ready to pay differential tax for Financial Year 2021-2022 (Assessment Year 2022-2023) and Financial Year 2022-2023 (Assessment Year 2023- 2024). The suppression of sale and net profit for Financial Year prior to Financial Year 2021-2022 shall be worked out and submitted in 10 days time. Therefore, we find that specific statement/disclosures in relation to suppression of sales in the preceding financial years were made by the Partner in his Statement recorded under Section 131 of the Act. Therefore, we reject the contention of the Assessee that the Assessing Officer had no material whatsoever to make interpolation in relation to financial years prior to the year of survey. At the same time, we note that the Assessing Officer has not made any further inquiry after recording the aforesaid Statement. The Assessment Orders are silent regarding any further documentary evidence gathered by the Assessing Officer from the Assessee or its partners. 18. Having noted as above, we do find merit in the contentions advanced on behalf of the Assessee to the extent that estimation of sales at INR.50,000/- per day by the Assessing Officer was based solely on the basis of reply given by the Partner in response to Question No.27 and 28 in his Statement recorded under Section 131 of the Act. On perusal of the said Statement as a whole, we find that the Partner had, in response to other questions, provided further explanation which suggested cash sales were less than INR.50,000/- per day. In this Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 17 regard, we deem it appropriate to refer to the following statement/disclosure made by the Partner in response to Question No.19, 27 and 31. “Q.19 Please furnish Purchase and sales bills for last 5 financial years. Ans. Sir, out of total sales, manual sales bills are generated only in the case of customers who ask for the same. On an average sale bills are generated approximately in 20% to 30% cases. Purchases of raw material are made in cash and the component of the purchases which are made in cash correspond to the sales which are made without bills. All rough and kutcha bills are destroyed and there are no records for them. As stated by me earlier after the month end all available bills/vouchers are sent to Shoaib Ibrahim Kadiwal for records and accounting purposes. Therefore purchase and sales bills for last five years may be obtained from Shri Shoaib Ibrahim Kadiwal. However, 1 am furnishing with you purchase and sales bills for last two months which are yet to be sent to Shoaib Ibrahim Kadiwal. Q.27. Please state the actual amount of average daily sales. Ans. Sir, the actual average daily sales is around 45 to 50 thousand which aggregates to approximately comes to Rs. 1.64 crores to Rs. 1.82 crores annually, 20% of which comes by way of online payment and and about 80% is cash sales. Q.31. During the course of survey proceedings an amount of Rs. 32,500/ has been found from cash counter at 10.30 p.m today. Please confirm and explain the same. Ans. Sir, I confirm that the amount of Rs. 32,500/-has been found from the sales counter. This amount is cash sales receipt (for today ie 22.12.2022. 19. On perusal of the above, it can be seen that Partner had in reply to Question No.19 stated that on an average sale bills are generated approximately in 20 to 30% cases. Thereafter, in reply to Question No.27 the partner disclose that actual average daily sale was around 45 to 50 thousand out of which 20% was by way of online payment. From the aforesaid, it can be inferred that the Partner had stated that average daily sales of the Assessee were between INR.45,000/- and INR.50,000/-. It was further stated that sales bills were generated for 20% to 30% of sales. It was also stated that around 20% of the sale Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 18 were received online. During the survey the actual cash sales were recorded at INR.32,500/-. Therefore, in our view, the Assessing Officer was not justified by adopting a figure of average daily sale of INR.50,000/- per in view of reply given to question number 27, without considering the reply given by the Partner to other questions and without considering the Statement as a whole. 20. We note that the Assessee had, on a without prejudice basis, contended that the cash available at the end of the day of survey (22/12/2022) was INR.32,500/-. However, it was vehemently contended that the same included INR.13,500 as opening cash balance. Therefore, the cash sales for the day could at only be taken to be INR.19,500/-. We find that the aforesaid contention advanced on behalf of the Assessee to be contrary to the statement of the Partner recorded under Section 131 of the Act. We note that in response to Question No.31, the Partner had clearly stated that cash receipts for 22/12/2022 were INR.32,500/-. Further, we note that in response to Question No.17, it was stated that the surplus cash was distributed amongst the partner at the end of the day. Therefore, we reject the contention of the Assessee that the cash sales of INR.32,500/- included opening cash balance of INR.13,000/-. 21. Having noted as above, we note that the Assessing Officer has in Paragraph 4.17 recorded as under: “4.17 Based on the statements recorded, impounded material and other documents, it was found that assessee firm is involved in cash sales and around 30% of the total sales being done by this entity are not offered to tax.” 22. Thus, the Assessing Officer has himself concluded that 30% of the total sales were not offered to tax. This finding arrived by the Assessing Officer continues to stand as it has not been challenged by the Revenue. We find that prior to arriving at the aforesaid conclusion in Paragraph 4.17, in paragraph 4.10 the Assessing Officer has taken into Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 19 consideration the statement of the Partner recorded under Section 131 of the Act in the following manner: “4.10 The submissions of the assessee are duly perused, however, the same are not found tenable. During the course of survey proceedings at the premises of assessee at Shop No 1,2,3,4, 219/223, Belasis Road, Nagpada, Mumbai-400 008, the statement of Shri Abrar Abdul Gafur Maredia, one of the partners of M/s Zahoora Sweets, was recorded on oath u/s 131 of the Act. In his statement he admitted the that he did not maintain any books of account and most of the sales were done in cash. Further, he also admitted the following facts in his above-mentioned statement- (a) The assessee does not maintain detailed records of daily transactions such as sales, purchases, and expenses. Instead, it is explained that at the end of each day, they count the cash earned from sales, pay their daily staff and suppliers, and retain the remaining cash. (b) He further stated that every three months, the assessee informs its tax consultant, Shri Shoaib Ibrahim Kadiwal, about their sales and expenses. (c) He also described how assessee accumulates cash throughout the month to cover bills like electricity and water, as well as paying suppliers at the month's end. (d) Lastly, he mentioned that after settling all expenses, the remaining cash is divided among the partners based on their ownership shares, and any relevant invoices or receipts are forwarded to Shri Shoaib Ibrahim Kadiwal every three months for accounting purposes. (e) Sales bills are only generated upon customer request, constituting approximately 20% to 30% of total sales. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 20 Cash purchases of raw materials correspond to sales made without bills. Rough and informal bills are discarded with no record kept. (f) All bills and vouchers are sent to Shri Shoaib Ibrahim Kadiwal for accounting purposes. The assessee provided purchase and sales bills for the last two months. which haven't been sent to Shri Shoaib Ibrahim Kadiwal till then. (g) He stated that the actual average daily sales are around Rs. 45 to 50 thousand which aggregates to approximately comes to Rs. 1.64 crores to Rs. 1.82 crores annually, 20% of which comes by way of online payment and about 80% is cash sales. (h) He acknowledged that the sales figures reported in the profit and loss account are inaccurate, leading to lower gross and net profits. On the day of Survey, the actual sale was Rs. 32.500/-. However, Sh Abrar Abdul Gafur Maredia admitted that the actual daily sales are between Rs. 45,000 to Rs. 50,000, which is true for the fiscal years 2021-22 and 2022-23 so far. He agreed to pay the additional taxes owed for 2021-22 and also promised to pay advance tax for 2022-23.” 23. After taking to consideration the above, the Assessing Officer arrived at the conclusion that 30% of the sales were not offered to tax by the Assessee. We are of the view that the Assessing Officer having concluded as aforesaid erred in adopting figure of INR.50,000/- per day as daily sale to estimate the sales. We have hereinabove in paragraph 21 already concluded that INR.50,000/- could not have been adopted by the Assessing Officer. 24. In view of the above we restrict the addition to 30% of total sales disclosed in the Original Return of Income in terms of findings returned by the Assessing Officer in paragraph 4.17 of the Assessment Order. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 21 25. As regards profit margin in concerned, we note that for the alleged undisclosed sales, the Assessing Officer has applied profit margin rate of 25% on ad-hoc basis. The Assessment Order does not provide any basis to arrive at the aforesaid gross profit margin rate of 25%. In Paragraph 5 the of the Assessment Order the Assessing Officer had recorded that in the original return of income the Assessee had disclosed income at the rate of 8% of Sales on presumptive basis under Section 44AD of the Act. We note that the Assessing Officer has not disturbed the income declared by the Assessee in respect of sales disclosed by the Assessee and has accepted the same. Even for the Assessment Year 2023-2024, the return filed by the Assessee has been accepted and no addition has been made on account of suppression of profit margin. In view of the aforesaid, the addition made by the Assessing Officer in respect of undisclosed sales is restricted to 8% of undisclosed sales (i.e. 30% of total sales disclosed in the Original Return of Income for the relevant assessment year) and the Assessing Officer is directed accordingly. In terms of aforesaid, Ground No. 1 to 6 raised by the Assessee are partly allowed. 26. In result, in terms of paragraph 25 above, the present appeal preferred by the Assessee is partly allowed. ITA No. 8593/MUM/2024 (Assessment Year 2020-2021) ITA No. 8594/MUM/2024 (Assessment Year 2021-2022) ITA No. 8595/MUM/2024 (Assessment Year 2022-2023) 27. ITA No. 8593/Mum/2025 has been preferred by the Assessee against the Order, dated 16/10/2025, passed by the CIT(A) whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 27/03/2024, passed under Section 147 of the Act for the Assessment Year 2020-2021. 27.1 ITA No. 8594/Mum/2025 has been preferred by the Assessee against the Order, dated 16/10/2025, passed by the CIT(A) whereby the Ld. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 22 CIT(A) had partly allowed the appeal against the Assessment Order, dated 27/03/2024, passed under Section 143(3) read with Section 147 of the Act for the Assessment Year 2021-2022. 27.2 ITA No. 8595/Mum/2025 has been preferred by the Assessee against the Order, dated 16/10/2025, passed by the CIT(A) whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 27/03/2024, passed under Section 143(3) of the Act for the Assessment Year 2022-2023. 28. During the course of hearing both the sides agree that our findings/adjudication in relation to appeal for the Assessment Year 2019-2020 shall apply mutatis mutandis to the appeals for the Assessment Year 2020-2021, 2021-2022 and 2022-2023. Therefore, both the sides adopted the submissions made in appeal for the Assessment Year 2019-2020 which have been taken into consideration in light of the applicable facts. We have also taken into consideration the additional submissions made on behalf of the Assessee in respect of Assessment Years 2021-2022 and 2022-2023 being impacted COVID recorded in Paragraph 10(c) above. In our view, our finding/adjudication for the Assessment Year 2019-2020 does not require any change as the reduction in sales on account of COVID pandemic get factored in the sales reported by the Assessee in the Original Return of income. Therefore, taking into consideration our findings/adjudication in appeal for the Assessment Year 2019-2020 above, the estimated undisclosed sales for the Assessment Years 2020-2021, 2021-2022 and 2022-2023 is restricted to 30% of sales disclosed by the Assessee in the original return of income. The addition made by the Assessing Officer in respect of undisclosed sales is restricted to 8% of the aforesaid undisclosed sales and the Assessing Officer is directed accordingly. In terms of aforesaid, Ground No. 1 to 6 raised by the Assessee in the appeals for the Assessment Year 2020- 2021, 2021-2022 and 2022-2023 are partly allowed. Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 23 29. In result, in terms of paragraph 28 above, the appeals preferred by the Assessee for the Assessment Year 2020-2021, 2021-2022 and 2022- 2023 are partly allowed 30. In conclusion, all the four appeals preferred by the Assessee [ITA No.8592/Mum/2025, Assessment Year 2019-2020, ITA No.8593/Mum/2025, Assessment Year 2020-2021, ITA No.8594/Mum/2025, Assessment Year 2021-2022 & ITA No.8595/Mum/2025, Assessment Year 2022-2023] are partly allowed. Order pronounced on 26.03.2026. Sd/- Sd/- (Bijayananda Pruseth) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated :26.03.2026 Milan, LDC Printed from counselvise.com ITA No. 8592, 8593, 8594&8595/Mum/2025 Assessment Year 2019-2020 to 2022-2023 24 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "