Prashant Prakash Nilawar Vs ACIT (ITAT Mumbai)
Black Diary Notings Held Dumb & Reconciled – ITAT Mumbai Deletes Entire ₹7.23 Cr Additions in Search Case
Search u/s 132 on the Rucha Group led to additions of ₹7.23 crore in the case of Prashant Prakash Nilawar, a land consultant, based on a black spiral diary & certain loose sheets allegedly evidencing unaccounted cash expenses.
AO treated various notings in the diary as unexplained expenditure u/s 69C, unexplained money u/s 69A, & unexplained investment in jewellery u/s 69B, despite Assessee’s claim that the diary merely recorded cash balances & reconciliations related to Rucha Group LLP, where he was a partner.
Before CIT(A), Assessee demonstrated that most entries matched with audited ledgers of Rucha Group LLP. Accepting this, CIT(A) deleted ₹5.23 crore out of ₹5.35 crore added u/s 69C, sustaining only ₹11.20 lakh for want of source proof. CIT(A) also deleted additions towards cash, foreign currency, & jewellery, holding them as explained through records of Rucha LLP, Assessee’s late father’s balance sheet, & CBDT Instruction No.1916 on jewellery.
On appeal, ITAT held that even the ₹11.20 lakh sustained could not survive since the entries represented cash inflows, not expenses, & section 69C covers only unexplained expenditure. Tribunal found the entire diary to be reconciled & corroborated by the LLP’s books & described AO’s inference as “mere conjecture.”
