Income Tax Appellate Tribunal - Rajkot
Rc Heights Private Limited,Rajkot vs The Dcit/Acit Central Circle -1, ... on 13 April, 2026
आयकर अपीलीय अिधकरण, राजकोट यायपीठ, राजकोट।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAJKOT BENCH, RAJKOT
BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER
AND
DR. DINESH MOHAN SINHA, JUDICIAL MEMBER
आयकर अपील स.ं /ITA Nos. 3 to 4 /RJT/2025
(Assessment Year: 2019-20 & 2021-22)
(Hybrid Hearing)
M/s. RC Heights Pvt. Ltd. Vs. The DCIT/ACIT, Central Circle-1,
65-Silver Stone Krishan Nagar, Raiya Income Tax Office, Amruta Estate
B.O, Building, Nr. Girnar Cinema, MG
Rajkot-360005 Road,
Rajkot-360001
थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAGCR6485D
(अपीलाथ /Appellant) ( यथ /Respondent)
आयकर अपील स.ं /ITA Nos. 941/RJT/2024
(Assessment Year: 2021-22)
The DCIT, Central Circle-1, Vs. M/s. RC Buildcon,
Rajkot 65 Shree Umiya Krupa Silver Stone-1
"Amruta Estate", 2nd Floor, MG Road, St No. 2, Near Oscar Tower, 150 Feet
Rajkot-360001 Ring Road,
Rajkot-360005
थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABAFR6768B
(अपीलाथ /Appellant) ( यथ /Respondent)
I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024
M/s. RC Heights P. Ltd. & M/s. RC Buildcon
आयकर अपील स.ं /ITA Nos. 5 to 7 /RJT/2025
(Assessment Year: 2020-21 to 2022-23)
(Hybrid Hearing)
RC Buildcon, Vs. The DCIT/ACIT, Central Circle-1,
65 Shri Umiya Krupa Silver Stone-1 St Income Tax Office, Amruta Estate
No. 2, Near Oscar Tower, 150 Feet Building, Nr. Girnar Cinema, MG
Ring Road, Road,
Rajkot-360005 Rajkot-360001
थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABAFR6768B
(अपीलाथ /Appellant) ( यथ /Respondent)
िनधा रतीक ओरसे/Assessee by : Shri R.B. Shah, Ld. AR
राज वक ओरसे/Revenue by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR
सनु वाईक तारीख/ Date of Hearing : 27/01/2026
घोषणाक तारीख/Date of Pronouncement : 13/04/2026
आदे श/ORDER
Per Bench:
Captioned five appeals filed by the different Assessees and one cross appeal filed by the Revenue, pertaining to assessment year ( A.Y.) 2019-20 to 2022-23, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-11, [in short 'the Ld. CIT(A)'], under section 250 of the Income Tax Act, 1961 (in short, 'the Act'), which in turn arise out of separate assessment orders passed by the assessing officer.
2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No. 941/Rjt/2024 for assessment year (A.Y.) 2021-22, have been taken into consideration for deciding the above appeals en masse.
Page 2 of 23I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
3. Although, these appeals filed by the Assessee, and Revenue contains multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Assessee and Revenue. We find that most of the grounds raised by the Assessee and Revenue, 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 and Revenue. With this background, we summarize and concise the grounds raised by the Assessee and Revenue, as follows:
"The Ld. CIT(A) erred in deleting the addition of Rs.2,29,64,065/- out of total addition of Rs.2,62,44,645/- ignoring the facts of the case that while assessing officer had established the complete chain of unaccounted receipts through the seized excel file."
(This is ground nos. 1 to 5 of Revenue's appeal in ITA No.941/Rjt/2024 for A.Y. 2021-22 and Ground No.2 and 3 of assessee's appeal in ITA No.6/Rjt/2025 for A.Y. 2021-22, Ground Nos. 2 and 3 in ITA No. 5/Rjt/2025 for A.Y. 2020-21, Ground Nos. 2 and 3 in ITA No.7/Rjt/2025 for A.Y. 2022-23, Ground Nos. 2 and 3 in ITA No.3/Rjt/2025 for A.Y. 2019-20 and Ground Nos. 2 and 3 in ITA No.4/Rjt/2025 for A.Y. 2021-22.]
4. The relevant material facts, as culled out from the material on record, are as follows. The assessee is a partnership Firm engaged in business of civil construction and works contract services and earned its business income. A Search, Seizure and Survey action was carried out by the office of DDIT (Inv.), Unit-1, Rajkot in the case of leading real estate builders of Rajkot and their key associates on 24.08.2021. Four different groups were covered in the operation i.e. R K Group, Ananat Group, Praful Gangdev Group and Suchariya Group. All the four groups are in the business of real estate and are mainly concentrated in and around Rajkot. A total of forty-
Page 3 of 23I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon three (43) premises were covered, out of which 32 premises were covered under section 132 of the Income Tax Act 1961 and the other 11 premises were covered u/s 133A of the Income Tax Act 1961. The premises covered were a mix of residential and business premises of their related entities, their family members, key associates and employees. The RK Group is developing multiple projects in the nature of Commercial Residential and Industrial plotting projects. One such real estate project "RK World Tower"
has been developed by M/s Vivan Infraspace LLP, with business firm of RK Group. During the course of search and seizure action at the office premise of RK Group, situated at 1201, 12th floor, R. K. Prime, 150 Ring Road, Rajkot, incriminating documents in the form of digital data were seized and inventoried as Annexure A-5 from the premise/party A-11A. The details of payment made to the contractor, assessee -firm M/s RC Buildcon, for the project 'RK World Tower' is found in excel file Rameshbhai -WT.The project "RK World Tower" is a commercial project which has big showrooms, shops and offices. This project is developed by M/s Vivan Infraspace LLP, a limited liability Partnership business firm of RK Group. The contract for construction work of this project has been awarded to the assessee (M/s RC Buildcon). Snap shot of 'sheet1' excel file was pasted by the assessing officer in the assessment order. The assessing officer further observed that the data maintained in this sheet is in two parts, that is, upper part and lower part (marked inside separate boxes) and one row is left blank between these two parts. The data maintained in the upper part of the sheet represents the payments made in cash and the data maintained in the lower part of the sheet represents the payment done through banking channel. The assessing officer made elaborate analysis of the seized excel sheet with the Page 4 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon ledger account of M/s. Vivan Infraspace LLP (developer of the project RK World Tower) from the books of assessee- firm, and it was observed by the assessing officer that total amount received during Financial Year (F.Y.) 2020-21 by the assessee, from M/s Vivan Infraspace LLP, as per ledger exactly matches with those recorded in lower part of seized excel sheet "Rameshbhai - WT and the same have been made through banking channel. However, the transactions appearing on upper part of seized excel sheet are not reflected in regular books which proves that the assessee has not reported the entire contractual receipts from M/s Vivan Infraspace LLP. During the assessment proceedings, the assessing officer issued a show- cause notice to the assessee, to explain the transaction.
5. In response, to the show- cause notice of the assessing officer, the assessee submitted before the assessing officer that excel sheet obtained by the Department (Revenue Authorities) does not contain the name of the assessee, and does not contain the signature of the assessee. Therefore, it is a dump document and hence based on the dump document, the addition should not be made in the hands of the assessee. Besides, the excel sheet was found from the third-party premises, therefore, assessee demanded the cross examination during the assessment proceedings. However, assessing officer did not provide the opportunity of cross examination to the assessee. The assessee also submitted that in order to make addition, the revenue authorities should examine the validity of the dump document, which is not signed by both the parties, and moreover name of the assessee does not appear on the excel sheet, which is a dump document. Therefore, the assessee contended that no addition should be made in the hands of the assessee, based on the dump documents.
Page 5 of 23I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
6. However, the assessing officer rejected the above contention of the assessee and bifurcated the cash receipts/entries which were not reflected in books of account of the assessee, as under:
F.Y. Cash receipts/unaccounted receipts (Rs.)
2020-21 2,62,44,645/-
6.1 During the course of assessment proceedings, after consideraing of
replies filed by the assessee, the assessing officer observed that unaccounted cash receipts of Rs. 2,62,44,645/-, is over and above the contractual receipts shown by the assessee in its Profit & Loss account and whatever expenses incurred by the assessee to earn its construction contractual business income have already been claimed fully in its Profit & Loss account for the year under consideration. Accordingly, the assessing officer made addition of Rs.2,62,44,645/-, being unaccounted business income in the assessment order.
7. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the learned CIT(A), who has partly allowed the appeal of the assessee. The ld CIT(A) observed from the said seized documents that the assessee had received cheque amount for contract work and shown the same in the books of accounts for the year under consideration but the cash receipt as reflected in the said excel sheet was not shown in the regular books of account. Therefore, under such circumstances what is to be taxed is the margin of profit that the assessee retained in cash, which obviously is higher than what is reflecting in books. The contention of the assessee that the net profit rate @ 8% should be adopted is no doubt a Page 6 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon reasonable argument as provided under the presumptive scheme of taxation under section 44AD of the Act. However, the evidential value of the seized material showing huge amount of cash receipt cannot be ignored and therefore the contention of the assessee for adopting net profit rate @8% cannot be acceded to. Further, in the case of ITO vs. M/s Shubh Developers, Mehsana reported in (AHD-Trib.) 2024 ITL 1815 having similar set of facts, the Hon'ble ITAT, Ahmedabad Bench adopting the rate of 12.5% as the taxable profit of the assessee. Therefore, ld.CIT(A), in the assessee`s case, for the said unrecorded transactions, estimated the profit @ 12.5% of the cash receipts from M/s Vivan Infraspace LLP, which comes at Rs.32,80,580/- (12.5% of Rs.2,62,44,645/-).
8. Aggrieved by the order of the Ld. CIT(A), the Assessee and Revenue, both are in appeal before us.
9. Learned DR for the Revenue, argued that it was the duty of the assessing officer to examine the excel sheet and to give the fair opportunity of cross examination to the assessee. Moreover, it was also the duty of the assessing officer to get the valuation done of the entire project, so that, the portion of the on- money could be detected, easily. The Ld. DR also submitted written submission before the Bench, and stated that addition was made by the assessing officer based on the excel sheet, which contains the transaction relating to Bank and cash transaction. Therefore, addition should be made based on the excel sheet so found by the revenue authorities.
Page 7 of 23I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
10. The Ld. DR for the Revenue has also submitted that assessing officer has not done the valuation of the entire project therefore, the matter may be remitted back to the file of the assessing officer for fresh adjudication.
11. The Ld. DR for the Revenue has also submitted that opportunity of cross examination was not required to the assessee, as the addition was made by the assessing officer based on the excel sheet found from the third-party premises and such excel sheet contains the entire details of the assessee, therefore addition made by the assessing officer may be sustained.
12. Learned Counsel for the assessee submitted that the addition was made by the assessing officer, just, based on the excel file data found and seized from the third- party premises. The assessee further contended that no tangible documents, were found during the research proceedings. The only some loose papers were found during the course of search, containing no signature of the assessee, as well as authorized partner of M/s Vivan Infraspace LLP. Therefore, on such action sheet, there is neither signature of the assessee nor the signature of the counterparty. The document, which does not contain any signature of any party cannot be used to make the addition in the hands of the assessee. Therefore, it is not valid to make addition in the hands of the assessee based on such dump document and hence entire addition made by the assessing officer may be deleted.
13. The Ld. Counsel for the assessee further submitted that in respect of the excel sheet, which was found from the third party's premises, no opportunity of cross examination was provided to the assessee. Therefore, Page 8 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon on this account the assessment order of the assessing officer may be quashed.
14. The Ld. Counsel for the assessee also submitted, that issue of valuation of building was neither raised by the assessing officer nor by the assessee during the assessment proceedings. The issue of valuation was also not raised by the learned CIT(A) who has power to enhance the income of the assessee. Therefore, the Tribunal does not have power to enhance the assessment of the assessee on the issue which was neither raised by the assessing officer nor by the assessee and even the learned CIT(A), who has co-terminus power did not raise this issue. Therefore, matter should not be remitted back to the file of the assessing officer to re-look the entire documents and evidences, which were already before the assessing officer.
15. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We do not find merit in the submissions of learned DR for the revenue to the effect that matter should be restored back to the file of the assessing officer for valuation of the building. First of all, the assessee is not owner of the building, he is doing job work as per the instruction of the main owner of the building/ construction, therefore, it will not serve any purpose, in the assessee's case under consideration. It will also not serve any purpose if the valuation is done in the case of main owner. In the assessee`s case, the disputed issue before us is the 'on- money, based on the excel sheet found from the premises of third-party and such on-money issue does not have any Page 9 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon connection with valuation of the construction. Moreover, this factual issue was neither raised by the assessing officer, nor by the assessee during the assessment proceedings. Even learned CIT(A) did not raise this issue during appellate proceedings. We note that assessing officer has issued the notice during the assessment proceedings and assessee made the compliance and submitted documents and evidences. Based on such documents and evidences, the assessing officer framed the assessment order. Therefore, the issue cannot be remitted back again to the file of the assessing officer to give second inning to the assessing officer to examine the same set of documents and evidences. Hence, we reject the arguments advanced by the learned DR for the revenue.
16. We note that the excel sheet, which was found from the third party's premises, the opportunity of cross- examination ought to have been provided to the assessee. The owner of such excel sheet was the third party, therefore opportunity of cross examination was compulsory, to examine the veracity of excel sheet, as such excel sheet was neither signed by the assessee nor signed by the opposite party and moreover assessee`s name is not getting reflected on such excel sheet. We note that the assessee has strongly objected that until & unless, an opportunity of cross-examination is granted, such adverse material cannot be used against the assessee. This is strongly objected that until & unless, an opportunity of cross-examination is granted, such adverse material cannot be used against the assessee, as the said excel sheet was found from third party premises, hence, opportunity of cross-examination is necessary. Undoubtedly, apart from this excel -sheet, there is no positive evidence brought on record by the assessing officer to substantiate his findings that the assessee has actually received money out of Page 10 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon books of accounts, hence, an opportunity of cross examination was mandatory in the assessee`s case under consideration.
17. It is settled law that any additions made in absence of providing opportunity of cross examinations of persons, whose statement has been relied upon for making the additions is in violation of natural justice, hence cannot be sustained. The Hon'ble Supreme Court of India, in the case of Krishnachand Chelaram Vs. CIT 125 ITR 713 (SC) and Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR 0241 (SC) has held that additions without providing the opportunity of cross examination is in violation of natural justice. Thus, we note that additions made in absence of providing opportunity of cross-examination of the persons, whose statement has been relied upon for making the additions is violation of principle of natural justice. We also note that not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity. We note that same view was expressed by the Hon`ble Calcutta High Court in the case of Eastern Commercial Enterprises 210 ITR 103 (Cal), wherein it was held that it is a trite law that cross examination is the sine qua-non of due process of taking evidence and no adverse inference can be drawn against the party unless the party is put on notice of the case made out against him. Therefore, the addition made by the assessing officer, on this score, only, needs to be deleted.
18. We note that the assessee has contended that the addition made by the assessing officer is just based on the excel file data found and seized from Page 11 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon the third party. The addition cannot be made without rejecting the audited books of account u/s 145(3) of the Act. We note that no tangible documents, loose papers found during the course of search. So far, the excel sheet is concerned, there is no signature of the assessee as well as authorized partner of M/s Vivan Infraspace LLP. The Assessing Officer one side has observed that perusal of the excel sheet revealed that the assessee- company has not reported entire receipts, as appearing from the seized excel sheet. Matching of entries on the seized excel -sheet found from the third- party with those on the accounting ledger of the assessee and of M/s Titanium Buildcon LLP (developer of the project The City Centre) has no any nexus in the case since the assessee has worked with company, M/s Titanium Buildcon LLP and has no relevance with any document seized in the form of data/transactions recorded in the excel file from third-party. In absence of any instance of transactions being pointed out by the assessing officer, there is nothing for rebuttal by the person receiving such notice from the assessing officer. A person can offer rebuttal with evidence only where the department provides the details of the transactions which they consider to have led to cash receipt by the assessee. Merely comparing the excel sheet found from the third- party with the accounts of assessee- company, will not be an instance to prove that the assessee- company has received cash from the third- party. The well settled legal position is that a non- speaking document without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed pursuant to Page 12 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon search and seizure action. From the search and seizure perspective, such non speaking seized documents are referred to as "Dump Documents".
19. Therefore, we find that no arbitrary addition to the income of the assessee can be made by the Assessing Officer based on the dump documents, loose papers containing scribbling, rough/vague notings in the absence of any corroborative material, evidence recorded and finding that such dump documents had materialized into transactions giving rise to income of the assessee, which had not been disclosed in regular books of accounts by the assessee. For that reliance is placed on the judgement of the Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO [1981] 7 Taxman 13/131 ITR 597 held that the fictional receipt cannot be deemed to be receipt in the absence of any cogent material to support the factum of actual receipt. Moreover, the Hon'ble High Court of Delhi in case of CIT vs. D.K. Gupta [2008] 174 Taxman 476 upheld the order of the Tribunal wherein it was held that Ad-hoc/Dumb Documents without any corroborative evidence and finding, that the alleged documents nave materialized into transactions cannot be deemed to be the income of the assessee. The Hon'ble Calcutta Bench of ITAT in case of T.S. Venkatesan v. Asstt. CIT [2000] 74 ITD 298 held that in the absence of corroborative evidence, addition of undisclosed income could not be made simply on the basis of entries on loose papers recovered from the residence of a third- party and certain general statements of said party. Therefore, the well settled legal position is that a non- speaking document referred to as a "Dump Document" without any corroborative material, evidence on record, has to disregarded for the purposes of assessments to be framed u/s 153A and 153C of the Act. The aforementioned legal position also gathers support from the Page 13 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon Judgement of the Hon'ble Supreme Court in case of CBI v. V.C. Shukla 1998 taxmann.com 2155 popularly known as Jain Hawala Case wherein it was held that any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational and hence legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. In this case it was held that entries in Jain Notebooks held on facts admissible under section 34, but file containing loose sheets of papers are not "book" and hence entries therein not admissible under section 34 of the evidence Act. Further it was also held in this case that entries in books of account shall not alone be sufficient evidence to charge any person with liability. The above view further gathers reinforcement from the judgment of the Hon'ble Supreme Court in case of Common Cause v. Union of India [2017] 77 taxmann.com 245/245 Taxman 214/394 ITR 220 popularly known Sahara dairies and Aditya Birla diaries case. In this case, the Hon'ble Supreme Court, following the judgment rendered in case of V.C. Shukla (supra), laid down the following principles:
(i) Entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible;
(ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability.Page 14 of 23
I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
(iii) The meaning of account book would be spiral notebook/ped but not loose sheets.
(iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another;
(v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts;
(vi) The Court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence.
20. We note that apart from excel sheet, no evidence has been found to suggest that the assessee had actually received the said amount. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the excel sheet were the income of Page 15 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon the assessee, received from RK Group. The Assessing Officer has not brought on record any evidence to suggest that RK Group has admitted that the amounts were paid to the assessee- company. Hence, simply rough noting on the excel file, which is not signed by any party, does not mean that the addition could be made in the hands of the assessee- company. Since no evidence was found relating to the existence of any transaction between the assessee- company and R K Group and in the absence of any corroborative evidence to suggest that the assessee- company had actually received the said amount, no addition could be made merely on the basis of noting excel file found during the search proceedings from third party.
21. We find that no tangible documents, any loose papers found during the courses of search, which contains the signature of the assessee as well as authorized partner of M/s Titanium Buildcon LLP. In Pankaj Dahyabhai Patel (HUF) Vs. ACIT (1999) 63 TT) (Ahm) 790-where papers were not seized from house of the assessee nor was in his handwriting, of the assessee, the inference of on-money receipt based on such paper was not justified. Additions based on loose papers without corroborative evidence, it was held, by Tribunal, to be not sustainable. Neither evidence to link the seized documents found in the premises of third party, that is, R K Group during the course of search, then the presumption u/s 132(4A) of the Act not applicable. The action of the Assessing Officer in making addition based on the searched person`s excel -sheet data, recording of third party, that the same belongs to the assessee, is incorrect, as the same would be clearly impermissible, as the seized data, admittedly, had no nexus with the assessee and there is no signature of assessee or third-party, on such excel sheet. In the case of Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom), Page 16 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The entire addition revolving to the excel sheet found and seized from the third- party which is "dump documents" which has no legality in the eyes of the law and the addition exclusively based on such documents needs to be deleted.
22. We note that assessee's issue under consideration is also covered by the judgement of the Hon'ble High Court of Gujarat in the case of PCIT vs. Kaushik Nanubhai Majithia R/Tax Appeal No. 20 of 2024 order dated 06.03.2024, while passing the order the Hon'ble Gujarat High Court has made the following observations:
"1. Having noted the findings of the facts returned by the Commissioner of Income Tax (Appeals) ('CITA', in brief) and the Income Tax Appellate Tribunal ('ITAT', herein after), we may record that, essentially, the proceedings under Section 153C of the Income Tax Act, 1961 (in short, 'IT Act of 1961') were initiated against the Respondent- assessee on the basis of an excel sheet found from the computer of a person, associated with the Company, namely Navratna Organizers and Developers Private Limited (in short as "the Developer'), in the premises of whom the search was conducted.
2. The excel sheet, according to the learned Counsel for the Revenue, contained the details of payment made by the assessee to the developer, with respect to which tax had been paid by the developer before the Settlement Commissioner. The findings returned by the CITA and ITAT on the issue is sought to be assailed on the ground that the payment of tax by the developer, in whose premises search was conducted, before the Settlement Commissioner, with respect to the amount entered in the excel sheet found from the possession of the assistant working with the developer, is sufficient proof of the transaction between the assessee and the developer.
3. We find Inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet There is no adjudication with regard to the payment, which was shown in the excel-sheet to Page 17 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings written by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis the proceedings was without any signature and there is no corroborative material to substantia the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated.
4. Learned Counsel for the petitioner could not successfully demolish the facts, which ai recorded concurrently by the CITA and ITAT.
5. No question of law much less any substantial question of law arises to entertain this appeal. The same is accordingly, dismissed."
23. The issue is also covered by the judgement of the Co-ordinate Bench of ITAT Rajkot, in the case of Sidique Ibrahim Allana, in ITA No.73/RJT/2025, wherein it was held as follows:
"Analysis and Conclusion:
18. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer initiated the reassessment proceedings against the assessee, with the approval of Principal Commissioner that the books of accounts or documents, seized or requisitioned under section 132 of the Act, in case of Shri Mansur Mehta Group, pertains or relates to the assessee under consideration. Therefore, we note that there was no search on the assessee. We find that the figure mentioned in the WhatsApp chat at 550/-, has been interpreted by the Assessing Officer by adding five zeros, as if, it is at Rs. 5,50,00,000/- without any basis. We find that what is the basis, to add five more zeros, has not been explained by the Assessing Officer in his assessment order. As per learned DR for the revenue, the assessing officer added five zero, after the figure at 550/-, by applying common sense, is not acceptable. The addition made by the Assessing Officer (AO), is based purely on his own assumption, such as arbitrarily adding five zeroes to Rs. 550/-, found in a WhatsApp chat, is not legally sustainable, in the eyes of law, as, it is not corroborated by any further evidence. Such five zeroes were not even corroborated by a clear statement taken during the search proceedings. Neither the assessee stated nor the third-party stated, in his statement that five zeroes to Rs. 550/- may be added.Page 18 of 23
I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
19. We note that the addition made by the assessing officer, must be based on concrete evidence and not on mere suspicion, conjecture, or assumptions. No addition can be made on the basis of assumptions and presumptions without corroborative evidence. A WhatsApp chat showing a reference to Rs. 550/- alone does not prove that the assessee, made investment in India of Rs. 550 x 100,000 (that is, Rs.5,50,00,000). The evidentiary value of a WhatsApp message must be corroborated with supporting evidence such as bank statements, ledger entries, cash flow statement, or statements from the sender/receiver etc. Any arbitrary enhancement in the figure of WhatsApp chat, by the assessing officer (like adding 5 zeroes) without giving the assessee a chance to rebut would violate the principles of natural justice, also. If the assessing officer wants to treat the figure at 550/- equivalent to Rs.5,50,00,000/-, by his own assumption and presumption, then in that circumstances, the onus is on the assessing officer to prove that the amount of Rs.5,50,00,000/-, is the investment made by the assessee in any movable and immovable property, in India, which he has failed to prove with corroborative evidence. That is, the assessing officer must prove that the Rs. 550 refers to undisclosed investment of assessee, and if claiming it is Rs. 5,50,00,000/-, then assessing officer must produce valid evidence before the assessee, for his rebuttal, which the assessing officer has failed to do so. Thus, addition of 5 zeroes to Rs. 550 is based purely on assumption by the Assessing Officer, which is unjustified, and therefore, needs to be deleted.
20. We also note that ld. DRP mentioned in its order that figure of 550/-, is apparently at Rs.550 lakhs, which is again without any base. The learned DRP did not mention that how the figure of 550/- is apparently at Rs.550 lakhs. By following arbitrary method, the said figure, could be apparently be presumed at Rs.5500 lakhs or Rs.55,000/- lakhs also. Thus, the findings of the Ld DRP, is also based on surmise and conjuncture, so far adding five zeroes are concerned.
21. We also note that the provision of Section 132(4A) and Section 292C of the Act creates deeming fiction on the assessee subjected to search or survey, wherein it may be presumed that any such document found during the course of search / survey from the possession or control of person searched / surveyed belongs to such person and contents of such documents are true. However, in the assessee`s case under consideration, it is an undisputed fact that the impugned loose papers- WhatsApp chat, was not found from the possession of assessee, but the same was found from the possession of third party. Therefore, noting made in such loose papers do not present a preponderance of probabilities, so as to support the allegation of unexplained investment. It is well settled position of law that a non- speaking document referred to as a "Dump Document" without any corroborative material or evidence on record has to disregarded for the purposes of assessments to be framed under the Income Tax Act. This view gathers support from the landmark judgement of the Hon'ble Supreme Court in case of CBI v. V. C. Shukla 1998 taxmann.com 2155 (SC) popularly, known as Jain Hawala Case, wherein it was held that any presumption of transaction on some vague, tenuous Page 19 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon and dubious entries in a sheet of paper, is not rational and hence legal, unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. In this case it was held that entries in Jain Notebooks held on facts admissible under Section 34 of Evidence Act, but file containing loose sheets of papers are not "book" and hence entries therein not admissible under Section 34 of Evidence Act. Further it was also held in this case that entries in books of account shall not alone be sufficient evidence to charge any person with liability. Entries even if relevant are only corroborative evidence. Independent evidence as to trustworthiness of those entries is necessary to fasten the liability. In view of these facts, it was held by the Hon'ble Supreme Court that entries made in the Jain Hawala diaries are under Section 34 of the Evidence Act, but truthfulness thereof not proved by any independent evidence. It was also held in this case that "books" ordinarily mean a collection of sheets of paper or other material, blank, written, printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as "book" for they can be easily detached and replaced. The Supreme Court further went on to state that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness fix a liability upon a person.
22.The above view further gathers reinforcement from another recent and landmark judgement of the Hon'ble Supreme Court in case of Common Cause v. UOI [2017] 77 taxmann.com 245 popularly known Sahara dairies and Aditya Birla diaries case. In view of the above rulings laid down by Hon'ble Apex Court, we find that the figure 550/- reflected in the WhatsApp chat, is without any head or tail and such figure does not consist complete breakup of transactions and hence, no adverse inference could have been drawn solely on the basis of such WhatsApp chat. We also place reliance on the decision of Hon'ble Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597 (SC), wherein, it is held that the fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt.
23. Our view is further fortified by the judgement of the Hon'ble High Court of Delhi in case of CIT v. D.K. Gupta [2008] 174 Taxman 476 (Delhi), wherein, Hon'ble High Court had upheld the order of the lower court (ITAT), wherein, it was held that Ad-Hoc / Dumb Documents without any corroborative evidence/finding that the alleged documents have materialized into transactions cannot be deemed to be the income of the assessee. We also find that Co-ordinate Bench of ITAT Mumbai, in case of Amarjit Singh Bakshi (HUF) v. ACIT [2003] 86 ITD 13 (Delhi) (TM) held that any noting in the loose sheet is no evidence by itself. An entry in the books of account maintained in the regular course of business is relevant for purposes of considering the nature and impact of a transaction, but notings on slips of paper or loose sheets of paper cannot fall in this category. Thus, we find that in assessee`s case under consideration, the basis for addition is only WhatsApp chat. The WhatsApp chats are unsigned documents. The Assessing Officer has not established nexus between the WhatsApp chat with actual investment in India by the assessee, if any. Such WhatsApp chat, seized Page 20 of 23 I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon during the course of search, is a dumb document having no evidentiary value, hence no addition can be made, in the hands of the assessee, in the absence of corroborative material. In the instant case, undoubtedly no statement from the parties whose names found in the WhatsApp chat, has been brought to the notice and as such entire addition in the hands of the assessee, on the basis of uncorroborated, WhatsApp chat, in the loose paper form, is not possible.
24. Besides, the assessee under consideration, is a non-resident, therefore no any income has accrued or arisen in India, by way of WhatsApp chat, which contains figure at 550/-.The assessee stated that he lived in the UAE, since 1995, and as per section 5(2) of the Income Tax Act, 1961, an income of a non-resident, is not taxable, if such income, is not received or accrued or arised in India. Since, assessee had no income that is received or accrued or arose in India, hence he is not liable for payment of any taxes in India. Besides, no any investment was made by the assessee, in India, which is mentioned in the WhatsApp chat at Rs.550/-. At the cost of repetition, the provisions of section 5(2) of the Act, is reproduced below:
"(2) Subject to the provisions of this Act, the total income of any previous year of a person, who is a non-resident, includes all income from whatever source derived which-
(a) is received or is deemed to be received in India in such year by or on behalf of such person or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year."
The assessee submitted, a copy of his passport, before the assessing officer, to demonstrate that he was non-resident in India, therefore, we note that since, the assessee is a non-resident in India, therefore, he is not liable to tax in India, on the basis of WhatsApp chat, which contains the figure at 550/-, as the said amount has neither accrued in India nor arisen in India. In addition to this, figure in WhatsApp chat, is an arbitrary figure, without any corroborative evidence, therefore, it is not a real income of the assessee. Under the Income Tax Act, only real income is to be taxed, not the imaginary figure or arbitrary figure, which does not have any support with corroborative evidence. Therefore, in absence of any external evidence, addition cannot be resorted to only on the basis of WhatsApp chat. The department had not brought on record any evidence to prove conclusively that the WhatsApp chat contained details of secreted profits which were chargeable to tax in India. Hence, we are not inclined to accept the contention of the Assessing Officer/ DRP in any manner and hence the addition so made is deleted. Hence ground No.3 raised by the assessee, on merit, is allowed."
Page 21 of 23I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
24. Based on these facts and circumstances, we delete the addition made by the assessing officer and dismiss the appeal of the revenue and allow the appeals of the different assessees, based on same facts and circumstances.
25. The facts and issues involved in all other appeals are analogous to in ITA No. 941/Rjt/2024 for assessment year (A.Y.) 2021-22 (lead case). Accordingly, our observations made in ITA No. 941/Rjt/2024 for assessment year (A.Y.) 2021-22, shall apply mutatis mutandis to the aforesaid other appeals of assessees.
26. Since we have allowed the appeal of the assessee, on merit, therefore, all other issues on legal ground and alternative ground on merit of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.
27. In the combined result:
(i) Ground nos. 1 to 5 of Revenue's appeal in ITA No.941/Rjt/2024 for A.Y. 2021-22 are dismissed.
(ii) Ground No.2 and 3 of assessee's appeal in ITA No.6/Rjt/2025 for A.Y. 2021-22, are allowed.
(iii) Ground Nos. 2 and 3 of assessee's appeal in ITA No. 5/Rjt/2025 for A.Y. 2020-21, are allowed.
(iv) Ground Nos. 2 and 3 of assessee's appeal in ITA No.7/Rjt/2025 for A.Y. 2022-23, are allowed.
(v) Ground Nos. 2 and 3 of assessee's appeal in ITA No.3/Rjt/2025 for A.Y. 2019-20, are allowed.Page 22 of 23
I.T.A Nos. 3 to 7/Rjt/2025 & 941/Rjt/2024 M/s. RC Heights P. Ltd. & M/s. RC Buildcon
(vi) Ground Nos. 2 and 3 of assessee's appeal in ITA No.4/Rjt/2025 for A.Y. 2021-22 are allowed.
Order is pronounced in the open court on 13/04/2026.
Sd/- Sd/-
(Dr. Dinesh Mohan Sinha) (Dr. Arjun Lal Saini)
याियक सद य/ Judicial Member लेखा सद य/Accountant Member
राजकोट/Rajkot
िदनांक/ Date: 13/04/2026
Copy of the order forwarded to :
1. The assessee
2. The Respondent
3. CIT
4. The CIT(A)
5. DR, ITAT, Rajkot
6. Guard File
By order
//True Copy//
Assistant Registrar/Sr. PS/PS
ITAT, Rajkot
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