Income Tax Appellate Tribunal - Pune
Acit, Central Circle -2, Aurangabad, ... vs Rajendra Singh Rajpal, Manjeet Ginning ... on 9 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES "B", PUNE
BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER
AND MS. ASTHA CHANDRA, JUDICIAL MEMBER
आयकर अपील सं. / IT(SS)A No.18/PUN/2025
Assessment Year : 2015-16
ACIT, Central Circle-2, Vs. Rajendra Singh Rajpal,
Aurangabad Manjeet Ginning Factory,
Aurangabad Road,
Sendhwa - 451 666,
Madhya Pradesh
PAN : ABAPR6790D
Appellant Respondent
Assessee by : Shri Abhay N. Agrawal
(Virtual)
Revenue by : Shri Amit Bobde
Date of hearing : 10.02.2026
Date of pronouncement : 09.03.2026
आदे श / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of Revenue pertaining to A.Y. 2015-16 is directed against the order dated 07.03.2025 framed by National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 30.09.2021 passed u/s.153A of the Income Tax Act, 1961 (in short 'the Act').
2. Revenue has raised following grounds of appeal :
"1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition of Rs. 2,62,07,624/- made as per the provisions of section 69 r.w.s. 115BBE of the Act on account of notings in pocket diaries found during search action at the Disha Group.
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified In not appreciating the facts that the addition made was based on not (unaccounted) cash payments to Devanand Narayan Kotgire amounting to Rs.2
IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal 2,62,07,624/-made by the assessee i.e. unaccounted credit/investment for which the assessee failed to furnish satisfactory explanation before the AO.
3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the contention of the assessee that the transactions were covered by the offer of peak credit in the case of Devanand Narayan Kotgire when there was no working of peak credit in the case of Devanand Narayan Kotgire in the assessment of income for the relevant assessment year.
4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not following the procedure laid down u/s 250(4) of the Act for the making enquiry or directing to make further enquiry before deciding the appeal matter relating to addition of Rs. 2,62,07,624/-.
5. The appellant craves leaves to add, alter, modify, delete and amend any of the grounds, as per circumstances of the case."
3. Brief facts of the case are that the assessee is an individual and filed return of income on 28.11.2014 declaring income of Rs.9,67,15,750/-. Thereafter, on account of search conducted in the Manjeet (Rajpal) group of Aurangabad, Patna, Calcutta on 21.01.2020 which was also linked to Kotgire and Loharuka Groups as together they have formed many partnerships/LLPs for Real Estate activities and assessee also being one of them was covered by the search u/s.132 of the Act. In reply to notice issued u/s.153A of the Act, assessee filed the return of income for A.Y. 2020-21 declaring income at Rs.9,59,16,800/- and Agricultural income at Rs.7,94,875/-. Assessee is proprietor of Manjeet Ginning Factory and engaged in the business of manufacturing of Cotton and Selling the finished goods such as Finished Cotton, Cotton Seed and Trading and Export of Ginned cotton etc. Ld. Assessing Officer firstly disallowed the claim of Agricultural income at Rs.7,98,950/- and secondly on the basis of seized documents including pocket diaries found that the Accountant 3 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal of Disha Group shows the transactions between the assessee and Mr. Devanand Narayan Kotgire (in short DNK). These transactions are for the cash receipts and cash payments during F.Y. 2011-12 to F.Y. 2019-20. As per the peak theory, ld. Assessing Officer has worked out the amount and observed that for F.Y. 2014-15 relating to A.Y. 2015-16 the peak credit balance in the account with DNK is at Rs.2,62,07,624/- and concluded the proceedings making addition for the peak credit amount at Rs.2,62,07,624/- and assessed income at Rs.12,29,23,374/-. Thereafter, assessee preferred appeal before ld.CIT(A) and succeeded and both the impugned additions were deleted.
4. So far as the addition made by the Assessing Officer u/s.69 r.w.s.115BBE of the Act at Rs.2,62,07,624/- is concerned, ld. CIT(A) has deleted the addition observing that transactions of cash receipts and cash payment entered between various persons and DNK have been accepted by DNK and have been offered to tax. Aggrieved Revenue is now in appeal before this Tribunal challenging the finding of ld.CIT(A) deleting the addition of Rs.2,62,07,624/-.
5. Ld. Departmental Representative giving reference to the written submissions has submitted that Mr. Devanand Narayan Kotgire in the Affidavit has owned up the transactions as business transaction in nature and agreed to Peak credit theory for the transactions entered with assessee and claimed the credits and debits as they are part of business cycle and that amounts were rotating. Ld. DR further submitted that DNK has considered the peak credit amount as business 4 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal receipts and then offered 8% as his business income on such peak credit amount and not offered whole of the peak credit of unaccounted money. It is submitted that these business transactions have two parties, i.e. Buyer and Seller or Service provider or Receiver. One cannot do business with itself and by its very nature will have two parties atleast and therefore only offering one part of unaccounted transaction by DNK would not be sufficient but the other part of unaccounted money needs to be taxed in the hands of business counter part of DNK, like the assessee. He also submitted that the order of ld.CIT(A) is not speaking to the extent that it is completely silent on the evidence gathered during the search in form of pocket diaries having the names of assessee and only if DNK had owned up all the unaccounted transactions as his own money and offered it as income u/s.69/69A, then it could be said that the unaccounted transactions belonged to DNK and no addition in the hands of any other person is warranted.
6. On the other hand, Ld. Counsel for the assessee submitted that similar issue has come up before this Tribunal in the case of another assessee Navin Hanumanprasad Bagadiya, - ITA No.990/PUN/2024 order dated 26.09.2025 and this Tribunal vide order dated 26.09.2025 in ITA No.990/PUN/2024 has restored the matter to the file of ld.CIT(A) with necessary directions. He however submitted that DNK has offered the income in two categories firstly certain transactions have been treated as business transactions and net profit @8% has been offered on value of such business transactions and for other set of transactions peak credit has been calculated and the same has been offered 5 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal to tax. He therefore submitted that issue may be restored to the file of ld.CIT(A) with a specific direction of examining the surrender/income offered by DNK in its income tax return post search and if the transactions entered with assessee has been considered for the purpose of calculating the peak, then no addition to that extent deserves to be made in the hands of assessee. Ld. Counsel for the assessee while supporting the finding of ld.CIT(A) also drew our attention to the documents filed in the paper book running into 79 pages along with the case laws relied upon. Index of the paper book is reproduced below :
Sr.No. Particulars Pages
1 Copy of reply filed before learned AO on 1-2
29/09/2021
2 Copy of written submissions filed before 3-8
CIT(A)-12, Pune by the assessee submitted on 8/12/2023 3 Copy of order dropping penalty proceedings 9 u/s.271D in the case of assessee 4 Copy of order dropping penalty proceedings 10 u/s.271E in the case of assessee 5 Copy of the written submissions filed 11-19 before CIT(A)-12, Pune by the assessee submitted on 22/02/2025 6 Copy of Assessment order passed by DCIT 20-24 in the matter of Devanand Narayan Kotgire for AY 2015-16 Addition in respect of diaries/loose papers found and seized at third party premises having no evidentiary value unless being supported with corroborative evidence 7 Common Cause (A Registered Society) v. 25-33 Union of India [2017] 77 taxmann.com 245 (SC) 8 Additional Commissioner of Income-tax v. 34-36 Miss Lata Mangeshkar [1974] 97 ITR 696 (Bombay) 9 Central Bureau of Investigation v. V.C. 37-53 Shukla [1998) 1998 taxmann.com 2155 (SC) 10 Deputy Commissioner of Income-tax v. 54-77 Metrocity Homes [2015] 171 taxmann.com 6 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal 303 (Nagpur-Trib.) Ownership of the funds is the sine qua non for invoking the principle of peak credit 11 Bhaiyalal Shyam Behari v. Commissioner 78-79 of Income-tax [2005] 276 ITR 38 (Allahabad)
7. We have heard the rival contentions and perused the record placed before us. We observe that the assessee has been subjected to search u/s.132 of the Act on 21.01.2020 along with Manjeet (Rajpal) Group of Aurangabad, Kotgire and Loharuka Groups. Admittedly, in the seized diaries, there are transactions of cash receipts and cash payments between the assessee and DNK and ld. Assessing Officer made addition for the peak credit of the net of cash receipts and cash payments between the assessee and DNK. However, ld.CIT(A) has deleted the addition observing that DNK has given Affidavit and has owned up all the alleged transactions and offered the income as business profits @8% on peak credit of such transactions. We note that similar issue under identical facts and circumstances has come up before this Tribunal in the case of DCIT Vs. Navin Hanumanprasad Bagadiya, - ITA No.990/PUN/2024 order dated 26.09.2025. Finding of Tribunal reads as under :
"9. We have heard the rival contentions and perused the record placed before us. During the course of search and seizure action conducted in the Pride Group of Aurangabad, Pune and Kolkata on 21.02.2020, certain documents were seized including pocket diaries which contain the transactions between DNK and the assessee. During the post search enquiries, DNK in the statements recorded accepted the ownership of these diaries. Undisputedly, the transactions mentioned in the pocket diaries which have been entered have been accepted by DNK including the cash transactions with assessee. As per these diaries, there were transactions of receipts and payments and the payments from the assessee's side 7 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal has been higher and the working of cumulative difference of the net payment made by the assessee to DNK has also been referred in the assessment order and the same has been extracted (supra) as per which during F.Y. 2010-11 the cumulative difference was Rs.58,58,000/- which increased to Rs.6,05,31,261/- during F.Y. 2013-14 and which finally came done to Rs.4,85,55,855/- during F.Y. 2016-17. The alleged transactions have been admitted by DNK as well as the assessee and the same is also discernible from the grounds filed before ld.CIT(A) which appears at para 6.2 of the impugned order. The said submissions read as under :
"2.1 Ground No. 01: The addition made at Rs. 6,05,31,261/- is invalid and bad in law. The addition made is unjustified and unwarranted.
a) The search u/s 132 of the Income Tax Act, 1961 was also conducted at assessee premises and no documents or any noting's etc is found with relation to DISHA GROUP.
b) If this transaction seems to be business transaction and not loans and advances then also it cannot be treated as income of assessee as DISHA GROUP has admitted all these transaction as their income.
c) The assessee has filed reply u/s 271D & 271E, elaborating all the points that it is not loans and advances and Addl. CIT (Central), Nashik has accepted the submissions and dropped penalty proceedings. The copy of orders of Sec.
271D & 271E are enclosed.
d) The transactions into diaries are from many people more than 300 but all the transactions are admitted by DISHA GROUP as his own transactions and no one is concerned with these transactions.
e) The assessee submits that, Shri Devanand Kotagiri has owned up all the transactions in the seized diaries as his own transactions and thereby, offered income on such transactions. Shri Devanand Kotagire has also offered net profit at 8% in respect business transactions apart from peak credit which was owned up by him as his own money & transactions.
f) The assessee is filing regular return of income from the business, profession and other sources and sources of investment are on record.
g) The transaction noted in the diaries are already considered as income in the hands of Shri Devanand Kotgire and the said transaction are already included yearwise in the income of Shri Devanand Kotgire and tax was paid thereon. Once the transactions are accepted by A.O. as income of Shri 8 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal Devanand Kolgire and tax is also paid by him thus addition made by learned A. O, are seems to be as double taxation.
h) A.O. has made addition in relevant assessment year on account of working as per peak theory for the FY 2010-11, 2011-12, 2012-13 amounting to Rs. 5,96,42,291/-. The addition so made is for previous year are not as per law and secondly the learned A.O. has accepted all these transaction from diaries in the hands of Shri Devanand Kotgire.
i) That on the facts and the circumstances of the case and in law, the learned A.O. has erred in making addition u/s 69 of 1.T. Act on account of noting in pocket diaries found at DISHA GROUP at 6,05,31,261/- is unwarranted and required to be deleted.
j) That additions u/s 69 is not required as learned A.O. has not proved that these are loan-transactions. In fact, the assessee and Disha-group-has-business transactions-In view of this, addition made u/s 69 is not sustainable."
10. In the above submissions, the main contention of the assessee is that since the alleged transactions are business transactions and have been owned by DNK no separate additions need to be made in the hands of assessee. We note that during the course of assessment proceedings the transactions appearing in the pocket diaries indicate that assessee has made net cash payment to DNK on year to year basis and the cumulative difference has increased upto Rs.6,05,31,261/-. It is also an admitted fact that during F.Y. 2013-14 relevant to the A.Y. 2014-15 the receipts are Rs.22,38,970/- and payments are at Rs.13,50,000/-. Prior to A.Y. 2014-15 whether any addition has been made in the hands of assessee during A.Y. 2010-11 to A.Y. 2013-14, information is not available on record. In the subsequent assessment proceedings from A.Y. 2015-16 and onwards the ld. AO has made the addition only if the cumulative balance has increased in comparison to the preceding years cumulative balance. Now the transactions in diaries clearly depict that cash payments have been made by the assessee and the source of such cash payments needs to be explained.
11. Now coming to the Affidavit given by DNK, the same has been executed on the very same day when the assessment proceedings have been concluded in the case of assessee on 29.09.2021 and there is no reference of said Affidavit in the assessment order. This Affidavit was placed before ld.CIT(A) in the said Affidavit DNK has stated as under :
"I Devanand S/o. Narayan Kotgire aged about 56 years R/o. Disha Square, Sutgirni Chowk, Garkheda, Aurangabad - 431 9 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal 001 hereby declare and confirm that there was a search u/s.132 of Income Tax Act, 1961 on dated 21.01.2020 and during the search operation some diaries were found and seized containing cash transactions, some names, some expenses and sale receipts in cash from various projects. I hereby confirm that I owned up all transactions and nobody is related to it. The income calculated by me on the basis of diaries for all assessment years from 2014-15 to 2020-21, belongs to me only and I am ready to pay tax and interest thereon to avoid litigation and buy mental peace. Hence this Affidavit."
12. On the basis of the above Affidavit, the assessment proceedings in the case of DNK were concluded and additions were made keeping into consideration the peak balance and treating the transactions as business transactions and income calculated @8% on such business receipts. However, ld.CIT(A) has observed that since DNK has owned up the transactions, sustaining the addition in the hands of assessee would tantamount to double addition. We however find that this finding of ld.CIT(A) is not correct because the transactions in the pocket diaries were regarding cash receipts and payments and the payments made by the assessee in cash were much more than the receipts from DNK and ld.CIT(A) ought to have dealt with the issue about source of cash available with the assessee for making payment to DNK. On the contrary, ld.CIT(A) merely took the basis of the Affidavit and has deleted the addition without examining as to whether DNK has owned up total cash payments or only the profit element in such business transactions. The transactions in the pocket diaries records the two types of transactions, firstly receipt and payment in cash and secondly if the transactions is of business nature then the profit element embedded in such transactions in the hands of DNK who has carried out the same. DNK has carried out the business transactions and so he has offered the net profit on the business transactions but the question still remains about the first part of the transactions, i.e. the source of cash available with the assessee to make payments to DNK. This issue remained to be adjudicated by ld.CIT(A) inspite of the fact that ld. Assessing Officer has referred to the total transactions in the assessment order but ld.CIT(A) failed to examine the issue in entirety. Further, ld.CIT(A) has totally disregarded the fact that ld. Assessing Officer has made the addition for unexplained cash which has never been owned up by DNK in the return of income filed before the AO as unexplained/unaccounted cash. Merely offering the net profit on the business transaction will not be sufficient to explain the source of cash payment made by assessee to DNK. Ld.CIT(A) failed to verify all these aspects prior to giving relief to the assessee.
13. In light of our aforesaid discussion, we are of the considered opinion that the issues need to be remanded to the file of lower authorities. We therefore set aside the impugned order and restore the issues raised by Revenue in the instant appeal to the file of 10 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal ld.CIT(A) for re-adjudication as per our observations referred supra. Ld.CIT(A) shall give reasonable opportunity to the ld. Jurisdictional Assessing Officer to make submissions regarding the Affidavit filed by DNK as well as to the assessee and examine the amount of addition accepted by DNK vis-à-vis the total amount of excess cash payment given by the assessee to DNK. If necessary, ld.CIT(A) may also call for a remand report from ld. JAO. After considering the same, ld.CIT(A) shall decide the issue in accordance with law as contemplated u/s.250(6) of the Act. Grounds of appeal raised by the Revenue are allowed for statistical purposes."
8. In light of the above decision of this Tribunal considering the very same facts before us, ld. Counsel for the assessee submitted that DNK has offered the income under two heads, firstly certain unaccounted cash transactions have been treated as business transactions and income has been offered @8% and on certain transactions income offered to tax as per peak credit theory. We however find that specific details are not available on record which could show that the transactions entered into between the assessee and DNK are part of the peak credit income offered by DNK or are part of the business income on which income @8% has been offered on peak credit. Therefore, the issue needs to be restored to the file of ld.CIT(A) to carefully examine the factual aspect about the unaccounted cash given by the assessee to DNK and that whether alleged unaccounted cash transactions peak amount calculated by ld. Assessing Officer has been considered by DNK while offering to tax the peak credit amount (if any). Ld.CIT(A), if required, may call for a remand report from the ld. Jurisdictional Assessing Officer. Needless to mention that ld.CIT(A) shall provide reasonable opportunity of hearing to the assessee. Assessee is also directed to remain vigilant and make satisfactory compliance to the notice(s) of hearing issued by ld.CIT(A) and 11 IT(SS) A No.18/PUN/2025 Rajendra Singh Rajpal should refrain from taking adjournments unless otherwise required for reasonable cause. Grounds raised by the Revenue are allowed for statistical purposes.
9. In the result, the appeal of the Revenue is allowed for statistical purposes.
Order pronounced on this 09th day of March, 2026.
Sd/- Sd/- (ASTHA CHANDRA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पण
ु े / Pune; दिन ांक / Dated : 09th March, 2026.
Satish आदे श की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to :
1. अपील र्थी / The Appellant.
2. प्रत्यर्थी / The Respondent.
3. The Pr. CIT concerned.
4. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, "B" बेंच, पण ु े / DR, ITAT, "B" Bench, Pune.
5. ग र्ड फ़ इल / Guard File.
आिे श नुस र / BY ORDER, // True Copy // Assistant Registrar, आयकर अपीलीय अधिकरण, पुणे / ITAT, Pune.