Income Tax Appellate Tribunal - Rajkot
The Dcit, Central Circle-1 Rajkot, ... vs Prafulbhai Narendrabhai Gangdev, ... on 13 March, 2026
आयकर अपील य अ धकरण,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 सं./ITA No. 797 & 798/RJT/2024
Assessment Year: (2014-15 & 2015-16)
(Physical Hearing)
DCIT, Central Circle-1, Shri Prafulbhai Narendrabhai
nd
Amruta Estate, 2 Floor, MG Road, बनाम/ Gangdev
Rajkot - 360001 Vs. 87, Jan Kalyan Society, Tagor Road,
Rajkot - 360001
थायीलेखास.ं /जीआइआरसं./PAN/GIR No.: ABWPG1570C
(Assessee) (/Respondent)
आयकर अपील सं./ITA No. 799/RJT/2024
Assessment Year: (2018-19)
(Physical Hearing)
DCIT, Central Circle-1, Shri Prafulbhai Narendrabhai
Amruta Estate, 2nd Floor, MG Road, बनाम/ Gangdev
Rajkot - 360001 Vs. 87, Jan Kalyan Society, Tagor Road,
Rajkot - 360001
थायीलेखास.ं /जीआइआरसं./PAN/GIR No.: ABWPG1570C
(Assessee) (/Respondent)
आयकर अपील सं./ITA No. 800/RJT/2024
Assessment Year: (2021-22)
(Physical Hearing)
DCIT, Central Circle-1, Shri Prafulbhai Narendrabhai
nd
Amruta Estate, 2 Floor, MG Road, बनाम/ Gangdev
Rajkot - 360001 Vs. 87, Jan Kalyan Society, Tagor Road,
Rajkot - 360001
थायीलेखास.ं /जीआइआरसं./PAN/GIR No.: ABWPG1570C
(Assessee) (/Respondent)
िनधा रती की ओर से/Assessee by : Shri D. M. Rindani, Ld. AR &
Ms. Devina Patel, Ld. AR.
राज की ओर से/Respondent by : Shri Sanjay Punglia, Ld. CIT(DR)
सुनवाई की तारीख/Date of Hearing : 28/01/2026
घोषणा की तारीख/Date of Pronouncement : 13/03/2026
ITA No. 797 to 800/Rjt/2024
Prafulbhai N. Gangdev (Group Case)
आदे श /ORDER
Per, Dr. Arjun Lal Saini, AM:
Captioned four appeals filed by the revenue, pertaining to different assessment years (AYs) 2014-15 to 2015-16, 2018-19 and 2021-22, are directed against the separate orders passed under section 250 of the Income- tax Act, 1961 (hereinafter referred to as 'the Act'), by Commissioner of Income Tax (Appeals) [in short 'Ld.CIT(A)'], which in turn arise out of separate assessment orders passed by the Assessing Officer (in short 'AO') u/s 143(3) r.w.s. 147 of the Act.
2. Since, the issue involved in these four appeals of Revenue are identical and similar, therefore, these appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity. Brief facts narrated in ITA 797/Rjt/2024 for assessment year (AY) 2014- 15 have been taken into consideration for deciding these appeals en masse.
3. Although, these appeals filed by the revenue, contain multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the revenue. We find that most of the grounds raised by the 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 revenue. With this background, we summarize and concise the grounds raised by the revenue, as follows:
(i) "On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the protective addition of Rs. 1,81,75,000/- u/s.69C r.w.s.115BBE on account of unexplained payment/investments made in acquisition/development of the land".
( This is Ground No. 1 raised by the revenue in ITA No.797/RJT/2024, for AY 2014- 15 and Ground No. 1 raised by the revenue in ITA No.798/RJT/2024 for AY 2015-16) Page 2 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
(ii) "On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs.2,00,00,000/- made u/s.69A r.w.s.115BBE of the Income tax Act on account of unexplained cash loan given to partner Shri Hiren Khakkar.
( This is ground No. 1 of revenue in ITA No. 799/Rjt/2024 for AY 2018-19)
(iii) "On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs. 1,41,50,000/- made u/s.69A r.w.s.115BBE of the Income tax Act on account of unexplained on-money paid towards the purchase of land".
( This is ground No. 1 of revenue's appeal in ITA No. 800/Rjt/2024 for A.Y. 2021-22)
4. The relevant material facts, as culled out from the material on record, are as follows. The return of income for the year under consideration that is, for assessment year (AY) 2014-15 was filed on 11.08.2014 declaring therein total taxable income of Rs.4,11,367/-. The main source of income is shown as remuneration, interest income and share profit from the firm wherein he is partner and also shown income from house property, and income from other sources. 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 including Praful Gangdev Group of Rajkot. All the four groups are in the business of real estate and are mainly concentrated in and around Rajkot. A total of forty- 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 residence of the assessee has also been covered u/s 132 of the Act. The assessee, Shri Praful N Gangdev is a partner in many firms like M/s Jagnath Granites, M/s Subh Construction, M/s Buildcon Creations LLP (Trinity Towers project), M/s Buildcon Associates (The Spire project), M/s Neelratna Enterprise LLP (The Spire 2 project), M/s Yagnik Road Page 3 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) Highstreet LLP (High Street Business Bay project), M/s Buildfolio Realities LLP (Business Centrum project) and M/s Radhe Developers (Business Corner Project) etc. Details regarding unaccounted receipts and payments of all these projects have been recovered from the seized material during the search. Since the residence premise of the assessee has been covered under section 132 of the Act during the search operation, the case of the assessee has been re-opened under section 148 of the Act after following the due procedure laid down in the Income Tax Act in this regard and after obtaining approval from competent authority as specified u/s 151 of the Act. Notice u/s 148 of the Act requiring the assessee to file his Return of Income has been issued on 03.02.2023. In response, the assessee has filed his return of income on 04.02.2023 showing therein net taxable income of Rs.4,11,370/-. Notice u/s 143(2) of the Act was issued on 01.03.2023. Subsequent notices u/s 142(1) of the Act calling basic as well as specific details relevant to the assessment proceedings have been issued time to time. All these notices have been issued online through ITBA and duly served upon the assessee online through e-filing portal and on registered mail. Further, in view of the natural justice images of the material used against the assessee has been confronted to him through notice u/s 142(1) and show cause notice. During the assessment proceedings the assessee has also raised certain objections which have also been disposed of and discussed in the notice / show caused notice issued.
5. The assessing officer noticed that during the course of search and seizure, proceedings, incriminating documents containing accounted and unaccounted transactions were seized. The transactions pertaining to the assessee about unaccounted cash payments for acquisition of land for the project 'the spire'. The assessee is a partner of M/s Buildcon Associates who has developed project "The Spire". The members of the Sonwani Family (RK Group) are also one of the partners in the above firm. The partners and their percentage holding in the M/s Buildcon Associates are as under:
Sr. No. Name of the partner % stake
Page 4 of 54
ITA No. 797 to 800/Rjt/2024
Prafulbhai N. Gangdev (Group Case)
1 Sarvanand Sadhuram Sonwani 12.5%
2 Praful Narendrabhai Gangdev 25%
3 Kalpesh Narayanbhai Kothari 12%
4 Jay Vinodrai Bosamia 8%
5 Hiren Rajeshbhai Khakhar 9%
6 Chiragbhai Harishbhai Lakhani 12.5%
7 Amish Dhansukhbhai Thakrar 21%
Here, it is pertinent to mention that the RK Group is one of the leading business group of Rajkot which has developed / is developing multiple real estate projects in the nature of Commercial, Residential and Industrial plotting projects. The Group is headed by Shri Sarvanand Sadhuram Sonwani and he is supported by his family members in the management of the business. The Sonwani family is a joint unit for the purpose of business. Important family members, offices, key associates and employees were also covered in the search and survey operation to get hold of important incriminating evidences. The premise of Shri Girish Vanjani was also covered during the search action. Shri Girish Vanjani was maintaining the accounts of the RK Group (including parallel unaccounted cash transactions) at the instruction of Shri Sarvanand Sonwani.It can be seen that Shri Girish Vanjani has categorically stated that he does the work of accounting as per the instructions of Shri Sarvanand Sonwani. Even Shri Sarvanand Sonwani has accepted (in his statements recorded u/s 131 of The Act at the residential premise of Girish Vanjani on 27.08.2021) that Shri Girish Vanjani does the accounting work of R K Group as per his instructions. A snapshot of the relevant portion of statement of Shri Sarvanand Sonwani is pasted in the assessment order. Thus, Shri GirishVanjani is a key employee and accountant of the R K Group is an admitted and confirmed fact. During the course of search and seizure action at the residential premise of Shri Girish Vanjani, Pen Drives and Hard Discs were recovered. Forensic Mirror Imaging (Digital Data Backup) of these devices was taken and the same were Seized. The backup contained key accounting files of the entire group in a very systematic manner. The accounts of 1) Sale of units 2) Cost of lands 3) Expenses incurred on various projects and other miscellaneous transactions made by R K Group members with various counter parties were maintained in accounting software known as MIRACLE. Details of sale of units Page 5 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) maintained in various excel sheets were also found and seized from the premise of Shri Girish Vanjani.
6. The assessing officer noticed that multiple miracle files have been found from the digital data that has been imaged and seized during the search operation. Many miracle files found are duplicate copies of each other or either not fully updated. Some Miracle files are more updated than the other. From the plethora of Miracle files that have been found during the post search analysis, 3 files have been isolated which when studied together cover the financial transactions of the group. The details of the three Miracle files as under -
All the data collected and seized during the search and survey operation has been perused and co-related with the actual transactions made by the group persons and entities. The financial transactions pertaining to sale and purchase of various kinds of properties as seized in the form of Digital Data and in the form of Hard Data were also compared and corroborated with the documentary evidences and responses received from the Sub-registrar office and with the data available in public domains on various government portals like - 1) anyror.gujarat.gov.in 2) garvi.gujarat.gov.in and 3) gujrera.gujarat.gov.in. The Comparison of the financial transactions entered in the Miracle accounting files seized during the search was also made with those reported on the regular books of various group members and entities. All this comparison and corroboration exercise has revealed following factual aspects about the seized data -
Fact 1 The seized Miracle files recovered during the search operation contain transactions that took place between 1) R K Group members or Entities Page 6 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) wherein RK Group members are partners and 2) various other parties (counter parties). They include the accounts of cash as well as bank transactions.
It is seen in most of the ledgers from the seized Miracle file that they contain some Bank transactions which are found recorded on the regular books and some Cash transactions which are normally not recorded on the regular books of the respective Group member. This manner of recording the transactions highlights a fact that one part (mostly in Bank) of every deal was being reported on the regular books and the other part (mostly in cash) of the deal was not being reported on the regular books.
Thus, some transactions from the Miracle files were accounted for whereas some were not accounted for in the regular books of the respective group member who owns the transaction.
Fact 2 The data entered in the Miracle software is in coded form -
1) In the miracle files mentioned at Sr. 2 and 3 (in table supra) the entries have been backdated by 10 years i.e. 01-04-2019 is entered as 01-04-2009, however, in the miracle file at Sr. No. 1 i.e. "DIVYARAJ & CO. (01 08 2009 to 30 06 2016)" has actual date of transactions And
2) the amounts have been coded (in all miracle files) by inserting decimal "." Before last two digits e.g. transaction of Rs. 2,50,000/- is entered as 2500.00 in miracle files.
Fact 3 The names of the ledgers of different projects, persons have been written in coded form. It is seen that mostly the names of the projects for which any particular transaction is recorded on the seized file were mentioned with the initials.
For example - 1) R K Residency is mentioned as RKR, 2) R K Prime is mentioned as RKP, 3) The City Centre is mentioned as TCC, 4) R K Supreme is mentioned as SPM etc.
7. The partnership -firm M/s Buildcon Associates, wherein the assessee is one of the partners, has developed a commercial real estate project name "The Spire". This project has been developed on the land situated at Revenue Survey No.516, 150 ft Ring Road, Rajkot. The transactions carried out for the acquisition of the land are found recorded on seized miracle ledgers. There are three ledgers HS 14, HS 516 and RJT516 have been found which contain transactions underwent towards land acquisition. Therefore, assessing officer, issued a show cause notice to the assessee to explain the "on money".
Page 7 of 54ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
8. In response, the assessee, vide his written submission dated 06.03.2023 submitted his explanation/ reply. The operative part of his reply is reproduced as under:
"In this context we have to state that the issue of alleged on money of Rs.35,02,01,050/- paid by the assessee for purchase of Land during the year under consideration hinges on evidence gathered from third party document or statement. It is true that our above-named client is a partner in the firm and the firm has purchased the property amounting to Rs.2,97,00,000/- and TDS deducted thereon. All payment made through proper banking channel. And also our above named client has not paid any amount over and above the purchase value of the property. Further we have to draw your kind attention that the Property is purchased by the firm and firm had not made any cash payment over and above Purchase value of the property. Further in the AY 2015-16, our above named client is holding 25% share in a partner in the firm M/s. Buildcon Associates. It is the first year of the Partnership firm. The firm is started from 14/11/2014. So the question of addition made in the hands of our above named client is does not arise. Now the issue is that third party statement or transaction recorded in accounting software named 'Miracle' seized during the search proceedings from the possession of third party in absence of any corroborative evidence despite using ultimate weapon of search, can result in justified addition.
The legal provision relating to presumption u/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. Based on the incriminating material found from third party search but not belonging to the assessee, this presumption will not be applicable unless corroborated by other evidence. Presumption available under section 132(4A) can be drawn against the person in whose case search is authorized and from whose possession or control books of account, diary or documents are found in the course of search. Presumptions regarding correctness of contents of books of account etc. cannot be raised against the third party.
Lastly comes the crucial issue as to whether the impugned impounded digital data / 'Excel' sheet forms a dumb document or not. The department has failed to corroborate the impugned seized documents indicating assessee's alleged on money payment over and above the Purchase price itself. It is nowhere clear as to whether it is an alleged document forming part of the books of account maintained in the regular course of business by the assessee. All it contains therefore is rough nothings and jottings only.
Further your honor has mentioned in the specific information that "On perusing of seized data, It is noticed that In the Miracle file 1 ledgers related to the land purchased by M/s Buildcon associates for the project The Spire has been found. There are three ledgers HS 14, HS 516 and RJT516 have been found. In the ledger RJT 516 the bank entry of Rs. 2,97,00,000/- has been found recorded in the Miracle ledger. And the bank entry of Rs.2,97,00,000/- matches exactly thus establishing the correctness of the ledger. The second ledger 'HS 14' is related to payment to M/s Hitech Prop mart Pvt. Ltd. (Shri Harisingh Sucharia is the director of the company). The total amount paid is Rs.10,00,00,000/ -. This ledger is related to Page 8 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) Hari Singh because 'HS' as abbreviation is used for Shri Harisingh Sucharia. The narration in the last entry of the ledger clearly mentions his name. This ledger reflects the exclusive portion of Shri Sarvanand Sonwani. Another ledger which pertains to the land purchase is 'HS 516'. In this ledger the entries in the Box-A in the below pasted snapshot of ledger 'HS 516' have not been counted as the entries appear to have been corrected the same day. Entries from 19.04.2014 have been considered for on-money cash payment calculation. The entries in the credit side of the ledger are the receipts from the partners of M/s.Buildcon Associates. For e.g. In the narration 'AMISH' is written which means Amish Thakrar. Amish Thakrar is a partner in the firm M/s Buildcon Associates. What the ledger implies is that Shri Amish Thakrar and other partners gave cash first to Shri Sarvan and Sonwani who then transferred the cash to Shri Harisingh Sucharia.
In this context we have to state that in the notice specific information, your honour has found the three ledges i.e. Ledger of Amish Thakrar, Sarvanand Sonwani and Harisingh Sucharia, there is no any evidence, ledger found which is related to our above named client. Further the above documents are found from the premises of Shri Sarvanand Sonwani not from our above-named client. Our above named client, Shri Prafulbhai N Gangdev has no concern with Divyaraj & Co. and not made any transaction with Divyaraj & Co.
Only on the assumption basis and taken the prejudice mind towards our above named client and wants to add the entire differential amount in the hands of our above named client. It is totally wrong, unwarranted, unjustified and bad in law. Your honour has mentioned that Shri Amish Thakrar and other partners gave the cash first to Shri Sarwanand Sonwani who then transferred the cash to Harisingh Sucharia. In this regards we have to state that our above named client has no concern with them, he has never given any single paisa to Sarvanand Sonwani and also no any documentary evidence found that our above named client has given the cash over and above the purchase value of the property. So the question of addition on presumption basis is does not arise.
Further following partners are in the partnership deed:
In the above manner the partners are the firm. Your honour propose to made addition of Rs.1,81,75,000/- in the FY 2013-14, Rs.6,68,19,563/- in the FY2014-15, Page 9 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) Rs.25,00,000/- in the FY 2015-16 and Rs.55,700/- in the FY 2016-17it is totally wrong, unwarranted, unjustified and bad in law.
It is mentioned Details in the form of financial transactions recorded in accounting software named 'MIRACLE' have been seized during the search proceedings.
In this regard, it is submitted that the incriminating document on which your honour intends to make addition is not found from the possession of the assessee Shri Praful Bhai N Gangdev. The fact cannot be denied that the in consequence of search carried out on RK Group on 24.08.2021 various incriminating documents were found and seized from the premises of M/s. R.K. Group and not from the premises/possession of the assessee. The said fact has been mentioned in the first para of "Specific Information" above show cause notice dated 05.01.2023. It is settled principle that additions cannot be made towards undisclosed/unexplained income on account of on-money payment only on the basis of admission of third- party documents i.e. ledger's exclusive portion of Shri Sarvanand Sonwani, instead it should be based on the basis of corroborative documentary evidences found during the search. Further, there is no iota of evidence brought on record by department to show that the assessee has paid on money for Purchase of Land to the tune of Rs.6,68,19,563/- during the year under consideration.
There is no any unexplained investment made by our above named client. Whatever investment made, the same is reflected in the books of accounts. So we request your honour kindly accept the same and take on records and oblige.
Further we have to draw your kind attention that your honour has already made the addition of Rs.33,99,78,250/- (Rs.7,27,00,000/- for FY 2013-14 + Rs.26,72,78,250/- for FY2014-15) in the case of the firm M/s. Buildcon Associates. Your honour has wrongly added Rs.7,27,00,000/- for the FY 2013-14 when the firm is not existing even though your honour has added in the AY 2015-16 hence total addition made on the same ground and same issue and made the addition on account of unaccounted investment within the meaning of section 69B of the I T Act amounting to Rs.33,99,78,250/ -. When the addition is already made in the hands of the Firm then made the further addition in the hands of partner on same issue is does not arise. It is a double addition made. It is totally wrong, unwarranted, unjustified and bad in law. So we request your honour kindly accept the same and not made the double addition on the same ground and oblige."
9. The above reply of the assessee has been perused carefully by the assessing officer. However, the same was found not acceptable. The contention of the assessee and its acceptability was discussed by the assessing officer, in the assessment order. Based on the discussion made above and after considering the reply of the assessee filed in response to show cause notice and considering the material available on record, it was concluded by the assessing officer that total unaccounted on-money payment of Rs.35,02,01,050/- has been made towards the Page 10 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) purchase of land situated at R.S.No.516, 150ft Ring Road, Rajkot on which project "The Spire" has been developed by the partnership firm of the assessee. Accordingly, substantive addition with respect to these unaccounted payments is already made in the hands of the firm. However, as there were no apparent sources in the hands of the firm to make above unaccounted payments for the acquisition of land. Therefore, the same had been obviously borne by the partners of the firm in their respective share. Considering the above, it is fair that proportionate protective addition in the hands of respective partners (including the assessee) as per their respective share in the firm is made to their respective total incomes for the respective years. The detail of year wise unaccounted payment and the proportionate share of the assessee (being 25% stake) are calculated as under:
In view of the above, as per assessing officer, source of payment to the extent of Rs.1,81,75,000/- for the year under consideration is remained unexplained and hence added as income in the hands of the assessee within meaning of section 69C r.w.s. 115BBE. Since, the project for which unaccounted payment were made have been pursued by the partnership- firm, M/s Buildcon Associates, therefore, addition on substantive basis have been made in the hands of the firm. However, there were no sufficient funds in the hands of the firm to meet the above unaccounted payments (discussed supra), therefore, to protect the interest of revenue addition on protective basis are being made in the hands of the assessee under section 69C r.w.s 115BBE of the Act.Page 11 of 54
ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
10. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld.CIT(A), who has deleted the addition made by the assessing officer, therefore, revenue is in appeal before us.
11. 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. The Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. Whereas, learned Counsel for the assessee, relied on the submissions made before the lower authorities. We note that this ground relates to the protective addition of Rs.1,81,75,000/- on account of alleged unaccounted payment made for purchase of land. While passing the assessment order, the AO observed that a Search & Seizure and Survey action was carried out by the DDIT (Inv.), Unit-1, Rajkot in the case of leading real estate builders of Rajkot and their key associates on 24.08.2021including R K Group of Rajkot and Praful Gangdev Group of Rajkot. 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 and this Group is headed by Shri Sarvanand Sonvani and he is supported by his family members in the management of the business. Gangdev group has also completed several Real estate projects in Rajkot and in some of the project, Sonvani family is also partner. Shri Sarvanand Sonvani is a partner of the assessee-firm. During the course of search at the premise of Shri Girish Vanjani (who is the cashier cum accountant of the Sonvani Family), digital data in the form of entries in Miracle accounting software have been Page 12 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) recovered and seized. In the seized miracle file ledgers related to the land purchased by M/s. Buildcon associates for the project 'The Spire' had been found. There were three ledgers HS 14, HS 516 and RJT 516 which had been found. In the ledger RJT 516, the bank entry of Rs.2,97,00,000/- had been found recorded in the Miracle ledger. The bank entry of Rs.2,97,00,000/- matches exactly with the amount mentioned at Sale Deed of the land purchased by the assessee firm, thus establishing the correctness of the ledger. The said ledger is reproduced for better understanding :-
Page 13 of 54ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) The ld.CIT(A) noted that the second ledger 'HS 14' is related to payment to M/s. Hitech Propmart Pvt. Ltd. (Shri Harisingh Sucharia is the director of the company). The total amount paid is Rs.10,00,00,000/
-. This ledger is related to Hari Singh because 'HS' as abbreviation is used for Shri Harisingh Sucharia. The narration in the last entry of the ledger clearly mentions his name. This ledger reflects the exclusive portion of Shri Sarvanand Sonvani. The said ledger is reproduced for better understanding :Page 14 of 54
ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
12. The ld.CIT(A) noted that another ledger which pertains to the land purchase is 'HS 516'. In this ledger the entries in the Box-A in the below pasted snapshot of ledger 'HS 516'have not been counted as the entries appear to have been corrected the same day. Entries from 19.04.2014 have been considered for on-money cash payment calculation. The entries in the credit side of the ledger are the receipts from the partners of M/s Buildcon Associates. For e.g. in the narration 'AMISH' is written which means Amish Thakrar. Amish Thakrar is a partner in the firm M/s. Buildcon Associates. The AO has observed that what the ledger implies is that Shri Amish Thakrar and other partners gave cash first to Shri Sarvanand Sonvani who then transferred the cash to Shri Harisingh Sucharia. The complete ledger 'HS 516' is pasted below for reference.
Page 15 of 54ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) Page 16 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
13.The ld.CIT(A) noted that after totaling the cash payments made in the above said three ledgers, the AO had found that the total cash paid to the sellers of the land was Rs.35,02,01,050/- spread across four Page 17 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) financial years. The year wise bifurcation of cash expense for land purchase were as under :
Therefore, the AO had calculated the proportionate unaccounted part contribution by the assessee having 25% share, which is as under :
Further, the AO after considering the reply filed by him, had doubted the source and made addition of the above said amount in the different assessment years in the hands of the firm, M/s. Buildcon Associates on substantive basis and addition of proportionate amount as calculated above, made in the hands of assessee on protective basis. During the course of appellate proceedings, the assessee has filed written submission before ld.CIT(A).
14. The ld.CIT(A) noted that he had already adjudicated the appeal in the case of M/s. Buildcon Associates for A.Y.2015-16 to A.Y.2017-18 related to the said land and deleted the substantive addition made on account of unexplained expenses u/s.69C of the Act, vide appeal no. CIT(A), Ahmedabad-11/11580/2014-15, CIT(A), Ahmedabad- 11/11933/2015-16 & CIT(A), Ahmedabad-11/11471/2016-17 dated 05.07.2024.Since, the ld.CIT(A) had deleted the substantive addition made by the AO on account of unaccounted cash payment for purchase of the land for Rs.1,81,75,000/- in the hand of M/s. Buildcon Associates on merit, therefore, the protective addition for the same addition in the hand of the assessee for the same land does not survive. Hence, learned CIT(A) deleted the protective addition.The conclusions arrived at by the CIT(A) are, therefore, correct Page 18 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) and admit no interference by us. We, approve and confirm the order of the CIT(A).
15. In the result, following appeals of the revenue, are dismissed:
(i) Ground No. 1 raised by the revenue in ITA No.797/RJT/2024, for AY 2014-15 and
(ii)Ground No. 1 raised by the revenue in ITA No.798/RJT/2024 for AY 2015-16.
16. Concise and summarized ground number (ii) is reproduced below, for ready reference:
(ii) "On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs.2,00,00,000/- made u/s.69A r.w.s.115BBE of the Income tax Act on account of unexplained cash loan given to partner Shri Hiren Khakkar.
( This is ground No. 1 of revenue in ITA No. 799/Rjt/2024 for AY 2018-19)
17. Brief facts of the issue in dispute are stated as under. The assessee,( Shri Praful N Gangdev) was a partner in many firms like M/s. Jagnath Granites, M/s. Subh Construction, M/s. Buildcon Creations LLP (Trinity Towers project), M/s. Buildcon Associates (The Spire project), M/s. Neelratna Enterprise LLP (The Spire 2 project), M/s. Yagnik Road Highstreet LLP (High Street Business Bay project), M/s. Buildfolio Realities LLP (Business Centrum project) and M/s. Radhe Developers (Business Corner Project) etc. The firms were engaged in Real Estate business. As per the Income-Tax Return for A.Y.2018-19 filed on 12.09.2018, declaring total income at Rs. 18,79,230/-. A Search & Seizure and Survey action was carried out by the DDIT (Inv.), Unit-1, Rajkot in the case of leading real estate builders of Rajkot and their key associates on 24.08.2021 including R K Group of Rajkot and Praful Gangdev Group of Rajkot. The premises covered were a mix of residential and business premises of their related entities, their family members, key associates and employees. Gangdev group has also completed several Real estate projects in Rajkot. The Page 19 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) residence of the assessee has also been covered u/s.132 of the Act. Since the residence premise of the assessee has been covered under section 132 of the Act during the search operation, the case of the assessee has been re- opened under section 148 of the Act after following the due procedure laid down in the Income Tax Act in this regard and after obtaining approval from competent authority as specified u/s.151 of the Act. Notice u/s 148 of the Act requiring the assessee to file his Return of Income had been issued on 19.11.2022. In response, the assessee has filed his return of income on 21.11.2022 showing therein net taxable income of Rs. 18,79,2300/- (same as original return). Notice u/s 143(2) of the Act was issued on 18.12.2022. During the course of search and seizure at residential premises of the assessee, incriminating documents containing unaccounted transactions were seized. One such documents seized as page no. 31 of Annexure-10 is reproduced as under:-
18.While explaining the above seized page, Shri Prafulbhai N. Gangdev in his statement recorded on oath clarified that the above were the transactions Page 20 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) carried out between him and his partner Hiren Khakhar. The relevant portion of his statement recorded on oath u/s 132 of the Act is pasted hereunder for reference:
The AO had observed that the seized page is the ledger of the assessee firm the Shri Hiren Khakhar. The credit side balance of Rs. 2,00,00,000/- (written in coded form as 200000.00) is the opening date of 01.04.2018, which means loan of Rs.2,00,00,000/- has been taken by Shri Hiren Khakhar from Shri Praful Gangdev. Further, the AO observed that narration of the ledger shows that further cash of Rs. 60,00,000/- had been advanced by the assessee to Shri Hiren Khakhar during F.Y 2018-19 and also accrued interest on the amount of advanced. The calculation of the interest is also given on lower side of the page (written by pen). It is seen that the assessee has earned total interest of Rs. 12,08,851/- (in coded form it is written as 12088/51). During the course of assessment proceedings, the assessee had filed written submission, which was considered and rebutted by the AO in the para 8 of the assessment order. Therefore, the AO held that the assessee had given cash loan to his partner Shri Hiren Khakhar and also not explained the source of the said cash. Thus, the AO had made addition of Rs.2,00,00,000/- being deemed income u/s.69A of the Act while passing the assessment order.
19. On appeal, the learned CIT(A) deleted the addition, therefore, revenue is in appeal before us.Page 21 of 54
ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
20. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. During the course of appellate proceedings, the assessee had filed written submission before learned CIT( A). On perusal of the written submission, it was observed by ld.CIT(A) that the assessee had taken mostly similar contentions which were taken before the AO and the same was rebutted by the AO in para 8 of the assessment order. The ld.CIT(A) noted with regards to the assessee's claim that the transaction recorded on the said seized documents did not belong to him, it is observed that the claim of the assessee is not correct because, the document on the basis of which addition was made, has been seized from the possession of the assessee during search action u/s. 132 of the Act. Further, the assessee himself in his statement recorded on oath stated that the above seized page contained the transactions between him and his partner Shri Hiren Khakhar. It is also relevant to note that the assessee Shri Praful Gangdev and Shri Hiren Khakhar both were the partners in M/s Buildoon Associates, one of the business firm of assessee's group which engaged in developing large real estate project. The assessee had also not provided any documentary evidences to show that the facts stated during statement u/s 132(4) was incorrect. On perusal of the assessment order, it is also observed that during the course of assessment proceedings, the assessee had stated that he was only a middlemen and these facts clearly indicated that the assessee was well aware about the transactions recorded on above seized ledger, therefore, clarification given during search proceedings was correct and simultaneously, that transactions were carried out by him. The declaration from Shri Hiren Khakhar was nothing after afterthought of the assessee to avoid the tax liability to be arisen on above transactions. The Seized documents showed that the assessee had paid cash loan to his partner Shri Hiren Khakhar. Hence there is live nexus between transactions entered by Page 22 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) the partners with the assessee and the seized documents cannot be said as dumb documents. The fact that addition is based upon documents found during the course of search clearly prove that addition made in present case is not on presumption but based upon concrete additions. Reliance is placed on the latest decision of the Hon'ble ITAT, Rajkot in the case of M/s. Ahir Salt and Allied Products Vs. The DCIT, Cent.Cir.1, Rajkot in IT(SS)A No.6 and 7/RJT/2022 for A.Y.2016-17 & Α.Υ.2017-18 dated 12.06.2024, wherein the Hon'ble Tribunal has held as under:-
"14. The assessee's argument before us is that, the assessment framed in the present case under section 153A of the Act was invalid, since no incriminating material was found from the assessee's premises during search conducted; that whatever incriminating material was found, it was found from a third party The plea was to the effect that in assessment framed under section 153A of the Act, consequent to search undertaken on the assessee, only incnminating material found hom the assessee's premises can be considered while framing assessment under section 1534 of the Act
15. We are not an agreement with the contention of the Ld. Counsel for the assessee that the incriminating material found in the present case was from a third party and not from the assessee.
16. that the incriminating material is a pen drive containing some accounting information/data allegedly of the Neelkanth group and the assessee and certain vouchers of income and expenses, is a fact which not in dispute. That they were found from the premises of Shri Naran B. Maheshwan and Sh. Vijay Nagda during search conducted on them as part of the search action taken on the group to which the assessee belonged, is also a fact which is not disputed. That these persons are the accountant and cashier of the group, looking after its financial affairs, is also an admitted fact.
17. in the light of the above facts, the persons from whose possession the incriminating material was found, i.e. the pendrive, are admittedly closely linked with the assessee, in relation especially to maintenance of accounts. They are surely not alien to the transactions. And cannot be said to be outsiders/third parties. In fact considering the fact that they were admittedly maintaining data of the group, the possession of pendrive, also containing data of the group, with them in fact is to be attributed to the group, of which the assessee is a part. The possession of the pendrive, though physically found from other persons, the constructive possession is to be treated as that of the assessee. The Hon'ble Madras High Court in the case of S.R. Trust Vs. ACIT, in its order in Writ Petition No.22213 of 2018, dated 12.3.2021, dealt with an identical plea of the assessee, and rejected the same applying the principle of constructive possession. The Hon'ble High court made a very pertinent observation in this respect stating that if such an approach, as canvassed by the assessee is adopted, then it would be very easy for any assessee to evade the provisions of the Act by utilizing services of the third-Page 23 of 54
ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) party. Relevant finding of the Hon'ble High Court in this regard is at para 16 of the order as under.
"16. Once I come to the conclusion that the materials seized by the department incriminate the petitioners herein, notices issued to Dr.S. Gurushankar for six assessment years have to necessarily be sustained. Of course, one other contention of the petitioners' counsel deserves to be considered. The petitioners' claim that nothing was seized from the residence of Dr.S.Gurushankar. The material was seized only from the residence of Sachithananth. Sachithananth was not an assessee. But this argument has to be stated only to be rejected. Sachithananth is not someone who is alien to the transaction. He is the Personal Assistant to Dr.S. Gurushankar. Dr. S. Gurushankar is none other than the Managing Trustee of M/s.S.R. Trust which runs MMHRC. Therefore, the possession of incriminating material by Sachithananth can certainly be attributed to both the petitioners herein. The principle of constructive possession can very well be applied to the case on hand. If such an approach is not adopted, then it will be very easy for an assessee to evade the provisions of the Act by utilizing the a services of third parties. In case arising under the http://www.judis.nic.in Prevention of Corruption Act, the Hon'ble Supreme Court applied the principle of constructive receipt. The Hon'ble Supreme Court in the decision reported in (2015) 12 SCC 348 (D. Velayutham vs. State), held as follows:-
"15. Though this Court has stressed the need and significance of phenolphthalein as a trap device in corruption cases, so as to allay doubts about the actual receiving of bribes by accused persons, there may be cases where there are multiple demanders in a common or conjoint bribe demand, and for whatsoever reason, only one receives the sum on their behalf, and is entrapped in consequence. Depending on strength of the remainder of evidence, in these cases, constructive receipt by co-accused persons is open to establishment by the prosecution, in order that those who intermediately obtain bribes be latched with equal culpability as their co- accused and entrapped receivers. If the receipt and handling of bribe money by Accused 2 so convincingly and inexorably points towards his http://www.judis.nic.in custodianship of part of the same bribe amount on behalf of his superior officer, namely Accused 1, then Accused 1 cannot rely on mere non- handling/non-receipt of the bribe money, as his path to exculpation. This Court's construal of anti- corruption cases is sensitive even to these byzantine methods of bribetaking, and where an evader escapes a trap, constructive receipt has to be an alternate means of fastening criminal culpability." The case on hand warrants a similar approach. If incriminating material was seized from the personal assistant of the assessee, then constructive possession must be attributed to the assessee."
18. Moreover, we completely agree with the Ld.CIT(A)(para 6.3.1) that the incriminating material found during search on the group and its employees, anywhere, can be used for framing assessment u/s 153A of the Act. As long Page 24 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) as the incriminating material is found during a common search action, it can be used for framing assessment. There cannot be and there is no requirement in law for the incriminating material to be found only with the assessee for use against him. This proposition militates against the basic purpose of conducting search on various entities and persons related to a group simultaneously, which is unearthing all incriminating material relating to the group wherever kept. Since all entities and persons are related, incriminating material can be found any where in the group. The underlying principle is discovery of incriminating material during search. This can be used against any entity searched to which it relates.
19. In view of the above, plea raised by the assessee in Ground nos. 2 and 3 that the incriminating material was not found at the premises of the assessee, and therefore, no addition could have been made in the hands of the assessee in the assessment framed under section 153A of the Act, deserves to be rejected."
5.3.1 It is relevant to refer to decision of the Hon'ble Ahmedabad ITAT in the case of Shailesh S. Patel [2018] 97 taxmann.com 570wherein facts were that a search action was carried out in the case of one 'SBA' Group. In the course of search, a Banakhet (agreement to sale) inter alia was found and seized. This Banakhat revealed that the assessee along with other four parties agreed to purchase certain parcel of land at from one 'CRP'. The consideration for purchase of the said land by the assessee along with four co-owners was mentioned in the Banakhat at Rs.6.11 crores. Thus, 1/5th share attributable to the assessee amounting to Rs. 1.22 crores was quantified by the Assessing Officer as share of investment by the assessee in the aforesaid land as co- owner. This Barnakhat was found to be notarized and signed by the parties of both sides. The Assessing Officer found that this transaction was not incorporated by the assessee while filing the return of income. Consequently, the case of the assessee was reopened by issuance of notice under section 148. The Assessing Officer further passed holding reassessment order that source of payment of total consideration as per Banakhat remained unexplained. The Assessing Officer accordingly added amount of Rs.1.22 crores being proportionate share of the assessee as a co- owner towards undisclosed source of payment of consideration to the total income of the assessee. The Hon'ble ITAT has held as under.-
"15. We shall now address the issue on merits. We observe from the appellate order of the CIT(A) that the assessee did not disclose the transactions found to be recorded in Banakhat to the AO at all. While the assessee has not advanced its arguments on merits in any detail except for the submission that (i) Banakhat was executed for earning hefty commission (ii) the proposed seller in the Banakhat did not have Page 25 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) the ownership right to enable him to sell the parcel of the land to the proposed purchasers including the assessee (iii) the sale ultimately took place between the land owners and Shri Rameshbhai B. Agrawal group without any reference to the proposed seller (Chandankumar Ramandas Pohani) and proposed purchasers (assessee and others) in the final deed; we notice that the CIT(A) has found that Banakhat was notarized and duly signed by the assessee and the other parties. The CIT(A) also observed that such Banakhats are typically prepared in the land transactions by the middlemen/investors and the lands are first acquired against consideration and thereafter arranged to be transferred directly from the owner to the actual buyer in the final deed to gain benefit of differential proceeds. The aforesaid narrative oppears quite credible in the light of execution of Banakhat. It is for the assessee to demonstrate the circumstances for execution of Banakhat when the proposed seller was not the owner. The assessee is in audacious denial even on the face of tangible documentary evidence towards payment of Rs. 1,50,00,000/- in cash as mentioned in Banakhat. The assessee has also not declared any commission income flowing from such Banakhat, if any, as propounded. The Banakhat executed was not shown to have been eventually cancelled. Therefore, the entire story led on behalf of the assessee is a smoke screen with an intent to mislead the Revenue and deny it of its lawful taxes Ostensibly, the assessee does not seek to come out with clean hands and wishes to play hide and seek. Hence, we find apparent plausibility in the reasoning given by the CIT(A). The inference drawn by the CIT(A) is not without legal foundation. The balance of probabilities are skewed against the assessee. The plea raised on behalf of the assessee appears marginal and peripheral when seen in totolity. Hence, we do not see any justifiable reason to dislodge the order of the CIT(A)"
21. The ld.CIT(A) also placed reliance on decision of the Hon'ble Delhi High Court in the case of Smt. Urmila Gambhir Vs. CIT 325 ITR 171 wherein it is held as under:
"12. To summarize, the contention of learned counsel for the assessee is that annexure A-6 which is a loose sheet of paper is a dumb document with no evidential value and, therefore, could not have been relied upon by the authorities below for crriving at any conclusion much less for the authorities on making additions in the income of the assessee; there was no causal connection between that paper and purchase of agricultural land at village Bhigan, Tehsil Gannour, District Sonepat, there was no basis for arriving at the figure of Rs. 51,76,200 even on the basis of the said document; in any case the deed regarding that land was in the name of the company and addition could not have been made at the hands of the assessee, the said document was not made available to the Income-tax Appellate Tribunal by the Revenue and, therefore, reliance thereupon amounted to violation of the principles of natural justice; the burden was on the Revenue to prove any Page 26 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) undisclosed income at the hands of the assessee, which was not discharged by the Revenue.
13. It is not in dispute that these very arguments were raised by the assessee before the Assessing Officer, in the appeal before the Commissioner of income-tax (Appeals) and thereafter before the Income-tax Appellate Tribunal as well. The Income-tax Appellate Tribunal has discussed the order of the Assessing Officer in detail, on the basis of which the Assessing Officer made the additions. What is not in dispute is that, a document including annexure A-6 were found and seized from the premises of the assessee during the search. The assessee did not disown this document or state that it did not belong to him. His explanation was that this document had no connection with the purchase of the land by M/s. D. D. Industrial Corporation Limited at village Bhigan, Tehsil Gannaur, District Sonepat. It is only a rough estimate of the cost of setting up of a new project in and around Gurgaon and that this paper did not have any description of khasra number of any land and it also did not contain the address of any person. In this backdrop, the Assessing Officer dealt with the aforesaid contention to find out as to whether the document has any connection with purchase of the land by M/s. D. D. Industrial Corporation Limited at village Bhigan, Tehsil Gannaur, District Sonepat or it related to setting up of a hew project in and around Gurgaon only. Since there was no denial that the said paper was related to the purchase of the property, it was for the assessee to demonstrate how it was related to the proposed purchase of land in and around Gurgaon. The Assessing Officer found that the assessee had failed to furnish any details of land which he proposed to purchase in and around Gurgaon. No project details, which he was planning to have at the said land, had been furnished by the assessee. He had also failed to produce Mr. K. Lal (M. M. Suri) against whom 50.00 is mentioned in the said sheet of paper. He also observed that nature of the figures in the paper clearly suggested that they were not appropriate expenses to be paid but expenses actually incurred on various accounts mentioned in the said paper. Commenting upon the figures mentioned, which could only be in hundreds, the Assessing Officer opined that it was highly improbable that the architect fee would be only Rs.140, mutation charges would be only Rs.150 and the brokerage would be only Rs.650. Therefore, he concluded that the figures were in hundreds, Proceeding further on that basis, according to him, the cost of land was Rs.50,50,000 and other expenses Rs. 16,08,500 and in this manner the total cost of the land came to Rs.66,58,500. If the brokerage of Rs.65,000 is to be taken into consideration, it comes within the range of 0.75 to 1 per cent, of the cost of land which was keeping in view of the prevalent brokerage. Further, significant finding arrived at by the Assessing Officer and noted by the Tribunal are as under:
"12. The Assessing Officer further observed that the assessee in his statement recorded on October 19, 1996, admitted having met and discussed regarding project with Shri K. Lal from the office of Shri M. M. Suri, consultant for the projects. However, the assessee and any of his company had not shown any expenses on account of consultancy charges paid to Shri K. Lal. No consultant would provide consultancy without charging the fees. The payment of Rs. 5,000 shown at page 34 of annexure A-6 to Shri K. Lal would show the relationship between Page 27 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) the assessee, the paper and Shri K. Lal. This would further prove that this paper relate to the land purchased for DD Industrial Corpn., which had started its activities subsequent to the search. The assessee itself had admitted having discussed regarding negotiation with foreign company and its components for project at Gannaur with Shri K. Lal in the month of May and June 1996 in his reply to question 7 and 8 of the statement recorded on November 19, 1996. Thus the Assessing Officer observed that this proved the close nexus between Shri K. Lal, the page and the land at village Bhigan.
13. The Assessing Officer also observed that page 36 of annexure AA- 140 was the site plan for the said land and no expenses of this account had been shown to have incurred in the books. The expenses/payment to architect and Shri K. Lal as reflected in page 34 of annexure A-6 would further substantiate that this paper related to the unaccounted expenditure of the assessee on account of purchase of land at village Bhigan for DD Indi. Corpn. The assessee failed to furnish the details of the persons who had made this site plan. When specifically confronted in question No. 14, the assessee replied that one Shri S. K. Arora had made this plan....
15. The Assessing Officer further noted that pages 4 and 5 of annexure A-6 which were the sketches of the land in village Bhigan showed the land rate was thus ranging from Rs. 17 lakhs to 20 lakhs per acre. Thus the Assessing Officer observed that this also proved that the consideration of Rs. 16,00,000 for 4 acres of land shown by the assessee in its books of account was understated value of land. The unexplained investment had been shown in page 34 of annexure A-6."
14. On that basis he arrived at a finding that the said sheet of paper was connected with purchase of land at village Bhigan, Tehsil Gannaur, District Sonepat in the name of M/s. D. D. Industrial Corporation Limited. Since the company was incorporated in January, 1996 only and it had not started its functions, there was no occasion for generation of unaccounted or accounted income for the company. For this reason he made actual additions in the income of the assessee who was the promoter of the said company and protective assessment was made in the name of the company,
15. The Commissioner of Income-tax as well as Income-tax Appellate Tribunal have confirmed the aforesaid findings. The Income-tax Appellate Tribunal observed that once it is found that slips were found from the possession and control of the assessee, then the onus was upon the assessee to prove the contents of the slips, since the contents of the slip were within the knowledge of the assessee and he fails to discharge this onus.
16. The discussion in this behalf is summed up in the following manner:
"22. On consideration of the matter we are of the view that these papers:
pertain to the land in the village Bhigan and the rates shown were ranging between Rs. 17 lakhs and Rs. 20 lakhs per acre and not as claimed by the assessee. The finding given by the Assessing Officer on examination of the matter that figure shown at pages 3 and 4 of annexure A-6 is hundred appears to be correct. We find in agreement with the reasoning assigned by Page 28 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) the Assessing Officer in arriving at the said conclusion. We, therefore, uphold the order of the Assessing Officer passed in this regard. Since the addition made substantively in the hands of the late Subhash Gambhir is upheld, we direct to delete the addition made protectively in the company (M/s. D. D. Indl. Corpn.)"
17. It is clear from the above that after analyzing facts/material, findings of facts are arrived at to the effect that the said sheet of paper relates to actual transactions and did not depict or reflect rough estimate of the cost of setting up of a new project in and around Gurgaon, explanation sought to be given by the assessee, which he failed to establish: In the facts and circumstances of the case, we, therefore, cannot treat it to be a dumb paper and are unable to accept this contention of the learned counsel for the assessee. Concurrent findings are arrived ot by all the three authorities below and it is not a case where these findings can be treated as perverse. In view thereof, reliance placed upon the judgment of this court in Girish Choudhary (2008) 296 (TR 619 (Delhi) or the judgment of the Supreme Court in V.C. Shukla [1998] 3 SCC 410 (SC) and Lalchand Bhagat Ambica Ram[1959] 37 ITR 288 (SC) would not be of any assistance. This question is thus answered in the affirmative, le, in favour of the Revenue and against the assessee."
22. Reliance is placed on decision of the Hon'ble Ahmedabad ITAT in the case of Pravinbhai Patel 45 taxmann.com 533 wherein it is held as under:
"Section 153C of the Income-tax Act, 1961-Search & Seizure - Assessment of income of any other person (Dumb documents) - A search was carried out in case of V, a builder and in course of said proceedings a 'MOU' executed by assessee was seized-As per terms of 'MOU', assessee had to receive certain amount from V on transfer of plot-Assessing Officer taking a view that said document (MOU) belonged to assessee, initiated proceedings under section 153C and made certain addition to assessee's income - Whether since MOU was duly signed by assessee in presence of five witnesses, it could not be regarded as a dumb or irrelevant document Held, yes Whether, therefore, impugned addition made by Assessing Officer was to be confirmed-Held, yes [Paras 8 and 10) [In favour of revenue] Section 132 of the Income-tax Act, 1961-Search and seizure General (Sub- section 4A) Whether sub-section (4A) of section 132 is a deeming provision and, therefore, scope of said sub-section cannot be extended to any other section of Act-Held, yes."
In above case, the Hon'ble Ahmedabad ITAT has held as under:
11. As far as the decisions relied upon by the assessee are concerned those are distinctly distinguishable on facts as well as on law. In the case of Prarthana construction (supra), the document in question has not established the involvement of the said assessee and in the absence of the nexus it was held that the impugned document did not belong to the assessee.
Likewise, in the case of Unique Organizer & Developers (supro) the question of "on money" transaction was not proved by the Revenue Page 29 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) Department. There was a finding on facts that the said addition was based on suspicion and surmises. We have also perused the decision of Maulik Kumar K. Shah (supra) and noted that the decision of the AO was devoid of evidence in support of his allegation. We, therefore, conclude that the decision cited by the assessee were primarily on their own facts; hence not matched with the facts of the appeal in hand. We also conclude that in a situation when any books of account or documents, etc. have been delivered to the requisitioning officer having jurisdiction over "such other person" Le, other than the person who has been searched; then those documents, etc., delivered or requisitioned shall be dealt with as if they have been found in the possession or control of "such other person" against whom the proceedings have been initiated u/s.153C of IT Act. Such books of account or documents shall be deemed to have been found in the possession or control of such other person as if recovered in the course of search u/s. 132 of IT Act. Moreover, in this case the assessee being one of the signatory of the contents recording the transactions hence the documents was belonging to the assessee. Therefore, the amount in question was rightly assessed in his hand. We find no force in this ground of the assessee; hence, dismissed.
23. In view of the above, the plea of the assessee was rejected by ld.CIT(A). Further, with regards to the assessee's contention that the AO had wrongly decoded the figures mentioned on seized documents without any basis, it is observed that this contention of the assessee is not correct because, on perusal of the above said seized page, it is clearly seen that in the lower part of the seized page calculation of interest was given and interest had been calculated as 9519/16, 2298/75 and 12088/51 etc. Here, it is relevant to mention that no-one calculate the interest in paise. Further, beside the interest calculation for the period from 1/7 to 30/9, figure of Rs.9,07,500/- was mentioned in pencil. All these facts implies that the interest amount mentioned as 12088/51 should be read as 1208851. In similar way figure mentioned on ledger also be read by removing decimal.", accordingly, amount 200000.00 is read as Rs.2,00,00,000/- and other figures are also read in same way. It is important to mention here that on perusal of assessment order in the case of Buildcon Creation LLP for A.Y.2019-20, it was observed that during the course of statement record in a. Shri Praful N. Gangdev was asked to explain the contents of this diary (diary of flat No. C-1103 seized as A5 of Annexure-A at premise C-1) and in reply, he stated Page 30 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) that this diary was related to project Trinity and as per page No. 4. 62.50 represented Rs.62,50,000/- and Kamleshbhai Thakrar was the buyer of Flat No. C-1103 of Trinity Towers. He further stated that amount "1000=00"
written on page number 4 represented Rs.1,00,000/- received in cash and other amounts were similarly noted. Scanned copy of the relevant portion of that statement recorded at the residential premises (premise C-1) of Shri Praful Gangdev is reproduced for ready reference:-
In view of the above, the ld.CIT(A) noted that the assessee was habitually written the unrecorded/unaccounted transaction in coded form. Thus, the contention of the assessee was rejected. In view of the above, it is concluded that the assessee had given cash loan to Shri Hiren Khakhar amounting to Rs.2,00,00,000/- during the A.Y.2018-19 and Rs.60,00,000/- during the A.Y.2019-20 and earned interest of Rs. 12,08,851/- during A.Y.2019-20. Since, the assessee had not recorded the said transactions in his books of account/return of income, therefore, the AO had rightly made addition to the total income of the assessee.
24. However, Ld.CIT(A) noted that the assessee has taken alternate contention and stated that he was partner in the various partnership firms Associates (profit share ratio 25%), M/s. Buildcon Creation LLP (profit Page 31 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) share ratio 20%), M/s. Buildfolio Realities LLP (profit share ratio 15%), M/s. Krishna Developers (profit share ratio 25%), M/s. Neelratna Enterprise (profit like M/s. Buildcon share ratio 13%), M/s. Yagnik Road Highstreet LLP (profit share ratio 17%) etc. and the said firms were engaged in the business of real estate. He had been deriving profits from these firms and data of on-money receipts of these firms were also seized during the same search operation. The assessee has also stated that the assessee is the key person and he had handled the entire business of Gangdev Group, and had received the on-money from various firms which was added by the AO. He has further stated that he is common partner in various firms and receipt on money was already added by the AO in the different assessment years in the various firms and also the CIT(A) has given the decision and directed to take the 16% profit in some case and in some cases, directed to take the 21% profit on unaccounted cash. Therefore, the assessee had pleaded to grant the benefit of telescoping of the on-money received from the projects (details were already seized during the search operation) against the unaccounted cash loan alleged to have been given by the assessee to his partner Shri Hiren Khakhar.
15. Therefore, learned CIT( A) noted that the assessee & his family members wore the key member of Gangdev Group and Gangdev Group consists of various firms/LLP, which were engaged in the business of real estate project. It is also a fact that the assessee was partners in various firm/LLP, wherein, it was revealed from the seized documents found during the course of search action that Gangdev Group was involved in on-money receipt on sale/booking of its units/showroom/office/flats etc. Shri Praful Gangdev and Shri Siddharth Gangdev was the key partners of the Gangdev Group and the said seized documents related to on-money payment towards purchase of land was found and seized from the residence of Shri Siddharth Page 32 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) Gangdev. For ready reference, it is necessary to state here that one of the assessee firms of this Gangdev Group namely M/s Buildcon Associates (assessee's share is 25% in M/s. Buildcon Associates) had receipt on-money amounting to Rs.17,10,10,753/- & Rs.35,60,26,040/- during A.Y.2018-19 & A.Y.2019-20 respectively. Similarly, another firm namely M/s. Krishna Developers (assessee's share is 25% in M/s. Krishna Developers) had receipt on-money amounting to Rs. 29,66,34,377/- & Rs.2,48,69,338/- during A.Y.2018-19 & Α.Υ.2019-20 respectively. The AO had also estimated the profit on the said on-money receipt while passing the assessment order and the undersigned had also estimated the profit on the said on-money receipt. Therefore, it can be safely concluded that the assessee had enough cash flow to give cash loan to his partner, Shri Hiren Khakhar. Thus, the claim of the assessee regarding grant of the benefit of telescoping of the on-money receipt from the other project against the said cash loan given to his partner, is acceptable. Thus, ld.CIT(A) directed the AO to delete the addition made on account of cash loan of Rs.2,00,00,000/- given. We have gone through the above findings of the learned CIT (A) and noted that there is no any infirmity in the conclusion reached by the learned CIT(A).
16. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
17. In the result, Ground No. 1 of revenue in ITA No. 799/Rjt/2024 for AY 2018-19, is dismissed.
18. Concise and summarized ground number (iii) is reproduced below, for ready reference:
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(iii) "On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs. 1,41,50,000/- made u/s.69A r.w.s.115BBE of the Income tax Act on account of unexplained on-money paid towards the purchase of land".
( This is ground No. 1 of revenue's appeal in ITA No. 800/Rjt/2024 for A.Y. 2021-22)
19. This ground relates to making addition of Rs. 1,41,50,000/-, on account of "on-money" payment for the purchase of two parcels of land situated at revenue survey no. 103/2 and 219 at Raiya Village, Rajkot. The brief facts of the case are that the assessee had filed return of income for the year under consideration on 01.02.2022 declaring total income of Rs.40, 18,520/-. A search and seizure action u/s 132 of the Act was carried out in R.K. Group and others on 24.08.2021. During the course of search action at the residential premise of Shri Praful N. Gangdev, incriminating documents related to the purchase/sale of two parcels of land situated at revenue survey no. 103/2 and 219 at Raiya Village, Rajkot were found and seized as page no. 34 of Annexure A/9. Accordingly, the case was selected for compulsory scrutiny and notice u/s 143(2) of the Act was issued on 23.06.2022 to the assessee. Further, on perusal of page no. 34 of Annexure A/9, it was observed that this was signed agreement dated 02.10.2020 wherein details of property alongwith names of sellers and purchasers as well as cash payments involved in the said property. Shri Praful Gangdev in the statement recorded u/s 132(4) of the Act had accepted that cash had been exchanged between parties and he being one of the partners had also admitted to had paid Rs.25 lacs. The AO had further observed that in the said seized documents i.e. page no. 34, it was written that the total value of land is Rs.5,66,00,000/- and out of which Rs.25,00,000/- & Rs.75,00,000/- had been paid on 07.09.2020 & 30.09.2020 respectively. It was further observed that Rs.1,00,00,000/- was reduced which was part of one Shri Anilbhai and the rest Rs.3,66,00,000/- was to be paid by 28.02.2021 else interest @ 1.5% would be charged. Therefore, the AO found that the said Page 34 of 54 ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case) consideration had been paid out of books by the purchasers to the sellers against the purchase of plot which was over and above the documented price.Further, during the course of assessment proceedings, the assessee in his reply dated 04.11.2022, had stated that he had made the satakhat for the purchase of this property but the deal was cancelled due to some litigation in the procedure of agriculture land converted into non-agriculture land and the said land in question was in the name of "Shri Sarkar" i.e. in the name of the Government in the revenue records. However, the AO had not accepted the reply of the assessee and made addition of Rs.1,41,50,000/- (25% total on-money of Rs.5,66,00,000/-] to the total income of the assessee while passing the assessment order.
20. During the course of appellate proceedings, the assessee has filed written submission before ld.CIT(A) and taken various contentions. The ld.CIT(A) observed that he had adjudicated the appeal in the case of Smt. Lajvantiben Rajabhai Hinduja, owner of the said land for A.Y.2021-22 and deleted the addition made on account of unaccounted capital gain vide appeal no. CIT(A), Ahmedabad-11/10108/2020-21 dated 15.12.2023. The relevant portion of the finding of said assessee order is reproduced as under:-
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21 In the abovementioned order the ld.CIT(A) has held that the assessee Shri Praful Gangdev had given cash advance of Rs.25,00,000/- as mentioned in the satakhat and also affirmed in the statement recorded u/s.132(4) of the Act during the course of search action by the assessee. Therefore, keeping in view of above findings, remaining addition of Rs.1,16,50,000/- [Rs.1,41,50,000 - Rs.25,00,000] in the hand of the assessee for the same land does not survive. Thus, ld.CIT(A) directed the assessing officer to delete the addition of Rs.1,16,50,000/-.In the wake of above delineation, we see no error in the conclusion drawn by the CIT(A) in this regard. The CIT(A) in our view, has rightly deleted the addition. We, thus decline to interfere with the conclusion so drawn by the CIT(A) whose order is under challenge by the revenue. Hence, we dismiss the appeal of the revenue.
Page 53 of 54ITA No. 797 to 800/Rjt/2024 Prafulbhai N. Gangdev (Group Case)
22. In the result, ground No. 1 of revenue's appeal in ITA No. 800/Rjt/2024 for A.Y. 2021-22 , is dismissed.
Order is pronounced in the open court on 13/03/2026.
Sd/- Sd/-
(Dr. Dinesh Mohan Sinha) (Dr. Arjun Lal Saini)
ाियक सद / Judicial Member लेखा सद /Accountant Member
Rajkot
Date: 13/03/2026.
आदे श की ितिलिप अ ेिषत/ Copy of the order forwarded to :
अपीलाथ / The Assessee
थ / The Respondent
आयकर आयु / CIT
आयकर आयु (अपील)/ The CIT(A)
िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT
गाड फाईल/ Guard File
By order,
(True Copy)
Assistant Registrar/Sr.P.S/PS
ITAT, Rajkot
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