ITAT Chennai: Median Flat Prices Cannot Prove Unaccounted Cash Receipts

By CA Vijayakumar Shetty Income Tax Judiciary September 30, 2026

TaxGuru Citation: 2026 taxguru.in 14303
Case Name: DCIT Vs Ivar Estates Private Limited (ITAT Chennai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2017-18
Courts: All ITAT, ITAT Chennai

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DCIT Vs Ivar Estates Private Limited (ITAT Chennai)

Can a Flat’s Lower Selling Price Be Treated as Cash Received? Chennai ITAT Says Evidence Must Come First

A discount or a price difference in a builder’s records may justify enquiry. It does not, without evidence of payment, prove that the builder received the difference in cash. The Chennai Bench of the ITAT has applied this distinction in a consolidated order concerning Ivar Estates Private Limited and Appaswamy Real Estates Limited, dismissing nine Revenue appeals over alleged unaccounted receipts from the sale of flats.

The decision is DCIT v. Ivar Estates Pvt. Ltd. and Appaswamy Real Estates Ltd., ITA Nos. 2984, 2985, 3368, 3041, 2838, 4297, 4298, 4299 and 4300/Chny/2026, pronounced on 28 September 2026. The disputed assessments covered different years from AY 2017–18 to AY 2023–24. The CIT(A) had deleted the additions, and the Tribunal upheld those deletions.

What the search revealed

A search of the Appaswamy group took place on 3 November 2023. The Department found loose sheets, electronic records and WhatsApp conversations involving sales personnel. Statements were also recorded from employees, some of whom spoke of cash collections from customers and subsequent changes to prices in the group’s Build Super Fast ERP system.

The Revenue’s case was that the group received part of the consideration for flats in cash, then reduced the sale price recorded in its regular system. A software consultant confirmed that the ERP system technically allowed a price to be changed after booking. The Department treated that facility, the employee statements, the conversations and the differences between prices shown in records as mutually supporting evidence of an undisclosed cash practice.

The material certainly called for examination. The question before the Tribunal, however, was whether it proved the actual cash receipts added in the hands of these two companies for the particular years.

How the AO calculated “on-money”

The AO proceeded on an assumed pricing rule: discounts of about 5% could be treated as normal, while reductions beyond that level represented cash received outside the books. He also determined median selling rates for projects and compared them with the final prices appearing in the ERP records. The difference was treated as undisclosed consideration.

That method produced substantial additions across the nine appeals. For Ivar Estates, the additions ranged from approximately ₹3.11 crore to ₹6.32 crore across five years. For Appaswamy Real Estates, the four additions ranged from approximately ₹5.70 crore to ₹21.47 crore. Their size made the evidentiary basis of the formula particularly important.

The CIT(A) deleted the additions, finding that the AO had extrapolated from selected material to numerous flats, projects and years without establishing that the alleged cash had actually been received in those transactions. The Revenue carried the matter to the Tribunal.

Negotiation is different from payment

The Tribunal examined the WhatsApp material on its own terms. Some conversations indicated discussion about a possible cash component. But the Tribunal found no communication establishing a completed payment by an identified purchaser, with its amount, date and recipient. A conversation about how a transaction might be structured could raise suspicion; it could not automatically prove that the transaction was completed in that manner.

The employees’ statements were also relevant evidence, but they were not conclusive. Explanatory or retraction affidavits had been furnished, and the officers had not re-examined the employees to test those explanations. More fundamentally, general statements about an alleged sales practice did not identify the purchasers, dates and cash amounts making up the additions under appeal.

Similarly, the software consultant established that the ERP system could be altered. That did not establish that it was altered to conceal cash received in the transactions assessed.

Estimation cannot establish the receipt itself

The Tribunal identified the central defect in the AO’s approach: the alleged receipt was inferred from the pricing formula, and the same formula was then used to quantify it. Estimation may help determine the amount of an undisclosed receipt once reliable evidence establishes that a receipt existed. It cannot, by itself, create the foundational fact of receipt.

There was no statutory rule that a discount exceeding 5% represented cash. Nor was the AO’s median rate shown to be the price actually agreed with each buyer. Flats in the same project may command different prices because of booking date, floor, orientation, construction stage, payment schedule or negotiation. Applying one assumed rate across units and years ignored those differences.

The Tribunal also noted the combined absence of purchaser admissions, buyer-wise cash records, cash receipts, side agreements, parallel books or a corresponding money trail. The regular books had not been rejected, and no mismatch was established between the final ERP records, customer agreements, registered deeds and bank receipts. The Bench carefully clarified that rejection of books is not an absolute prerequisite where reliable independent evidence proves an unaccounted receipt. Such evidence was missing here.

Author’s comment

The decision’s strongest proposition is “prove the receipt before estimating its amount.” Search material need not be ignored, and direct evidence is not the only possible proof. But the evidence must form a credible link to actual additional consideration. Several records reflecting the same suspicion do not become proof merely because they are read together.

For a builder, variations in flat prices are commercially unsurprising. For the Department, a suspicious chat, an employee statement or an ERP change may provide a lead to examine a specific buyer and transaction. In these appeals, the enquiry did not establish that link. The Tribunal therefore upheld deletion of the additions and dismissed all nine Revenue appeals.

Cases Discussed

Smt. N. Saroja Vs. Assistant Commissioner of Income Tax, Central Circle-II, Tiruchirapalli, T.C.A. Nos. 1395 to 1401 of 2009, Madras High Court, order dated 18.03.2026
B. Kishore Kumar v. Deputy Commissioner of Income-tax, Central Circle-IV(1), Chennai, [2015] 62 taxmann.com 215 (SC) / [2015] 234 Taxman 771 (SC), 02.07.2015
Dhakeshwari Cotton Mills Ltd. v. CIT, AIR 1955 SC 65
Surjeet Singh Chhabra v. Union of India
Mehta Parikh & Co. v. ITO, (1956) 30 ITR 181 (SC)
Daulat Ram Rawatmull v. CIT, (1973) 87 ITR 349 (SC)
Fort Projects (P.) Ltd. v. DCIT, [2013] 29 taxmann.com 84 (Kolkata – Trib.)
Pullangode Rubber Produce Co. Ltd. v. State of Kerala, (1973) 91 ITR 18 (SC)
CIT v. S. Khader Khan Son, (2008) 300 ITR 157 (Mad.), affirmed by the Supreme Court

FULL TEXT OF THE ORDER OF ITAT MUMBAI

These nine appeals preferred by the Revenue in the cases of M/s. IVAR Estates Private Limited and M/s.Appaswamy Real Estates Limited are directed against the respective common orders passed by the learned Commissioner of Income Tax (Appeals)-19, Chennai [hereinafter referred to as “the ld.CIT(A)”], arising out of the separate assessment orders framed by the Deputy Commissioner of Income Tax, Central Circle-2(1), Chennai [hereinafter referred to as “the AO”], for the assessment years under consideration.

2. All these appeals arise out of the same search proceedings and involve an identical issue, namely, the additions made by the AO towards alleged undisclosed income arising from the sale of flats, which have been deleted by the Ld.CIT(A). The impugned additions have been made by the AO on the basis of the very same seized material and common statements recorded during the course of search proceedings. The only distinction among these appeals lies in the quantification of the additions in the hands of the respective assessee’s for the different assessment years under consideration. Thus, the facts and circumstances giving rise to the impugned additions, as well as the issues involved, are substantially identical in all these appeals. Accordingly, with the consent of both the parties, all these appeals were clubbed, heard together and are being disposed of by this consolidated order for the sake of convenience and brevity.

3. For the sake of convenience and ready reference, the particulars of the appeals preferred by the Revenue, along with the quantum of additions made by the AO and subsequently deleted by the Ld.CIT(A), are tabulated hereunder:

M/s. IVAR Estates Private Limited

S. No	AY	ITA No	Date of assessment order	Assessment order passed u/s.	Date of CIT(A) order	Quantum of addition – undisclosed income from sale of flats (Rs.)	No of days of delay in filing of appeal
1	2017-18	2984/Chny/2026	30.09.2025	147	02.02.2026	6,19,62,880	20
2	2018-19	2985/Chny/2026	30.09.2025	147	02.02.2026	5,44,98,894	20
3	2019-20	3368/Chny/2026	29.09.2025	147	02.02.2026	6,31,65,979	34
4	2020-21	3041/Chny/2026	29.03.2025	147	02.02.2026	5,56,34,550	22
5	2021-22	2838/Chny/2026	29.03.2025	147	02.02.2026	3,10,86,230	14

M/s. Appaswamy Real Estates Limited

S. No	AY	ITA No	Date of assessment order	Assessment order passed u/s.	Date of CIT(A) order	Quantum of addition – undisclosed income from sale of flats (Rs.)	No of days of delay in filing of appeal
1	2017-18	4297/Chny/2026	01.04.2025	147	12.02.2026	5,69,70,000	102
2	2021-22	4298/Chny/2026	31.03.2025	147	12.02.2026	16,91,01,615	102
3	2022-23	4299/Chny/2026	31.03.2025	147	12.02.2026	21,47,37,055	102
4	2023-24	4300/Chny/2026	29.03.2025	143(3)	12.02.2026	8,98,86,490	102

4. We note that the present appeals preferred by the Revenue are barred by limitation by the number of days indicated hereinabove. The Revenue has filed petitions seeking condonation of the delay in filing the respective appeals, duly explaining the circumstances which occasioned such delay. We have heard the rival submissions and carefully perused the petitions filed by the Revenue, along with the reasons adduced therein for seeking condonation of delay.

5. Upon consideration of the explanations furnished by the Revenue and the facts and circumstances of the case, we are satisfied that the Revenue was prevented by sufficient cause from presenting the appeals within the prescribed period of limitation. It is a settled principle of law that, while considering an application for condonation of delay, the expression “sufficient cause” is required to be construed in a manner that advances the cause of substantial justice, provided the delay is neither deliberate nor attributable to gross negligence or lack of bona fides. In the present cases, having regard to the reasons explained in the condonation petitions, we find that the delay has been satisfactorily explained and that sufficient cause has been made out for condonation thereof.

6. Accordingly, in the interest of substantial justice, we condone the delay in filing all the aforesaid appeals preferred by the Revenue and admit the same for adjudication on merits. We shall now proceed to dispose of the appeals on merits in accordance with law.

7. The Ld.DR, at the outset, submitted that the appeal of M/s.IVAR Estates Private Limited for the A.Y.2017-18 in ITA No.2984/Chny/2026 may be taken up as the lead case, inasmuch as the facts and circumstances of the case, the nature of additions made by the AO, the evidences relied upon and the issues arising for adjudication are substantially identical in all the nine appeals. The Ld.DR further submitted that the findings and decision of the Tribunal in the said lead appeal would equally govern the remaining eight appeals, subject to the respective amounts of additions and the assessment years involved. The Ld.AR appearing for the assessee’s agreed with the aforesaid submission of the Ld.DR and expressed his consent for adopting the appeal of M/s.IVAR Estates Private Limited for the A.Y.2017-18 as the lead case.

8. Having considered the submissions of both the parties and having regard to the commonality of the issues involved in these appeals, we deem it appropriate to take up the appeal of M/s.IVAR Estates Private Limited for the A.Y.2017-18 in ITA No.2984/Chny/2026 as the lead case for the purpose of adjudication. Accordingly, with the consent of both the parties, we proceed to examine the facts, rival contentions, material available on record and the legal issues arising in the said appeal in detail. Our observations, findings and conclusions recorded while adjudicating the lead appeal shall apply mutatis mutandis and with equal force to the remaining eight appeals, since the underlying facts and the issues involved therein are substantially identical, except for the variations in the quantum of additions and the assessment years concerned. Consequently, the remaining eight appeals shall stand adjudicated in conformity with our findings and decision in the lead appeal, subject to any specific factual distinction or independent issue, if any, requiring separate consideration.

9. The Revenue has raised the following grounds of appeal:

“1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.

2. The Ld. CIT(A) erred in deleting the additions on account of addition under business income for various AYs involved viz.

3. The Ld. CIT(A) erred in allowing relief to the assessee without giving adequate opportunity to the AO while examining the seized documents and arriving at a methodology which was being considered for the first time at the appellate stage, of giving credence to the undisclosed purchases.

4. The Ld. CIT(A) erred in granting relief to the assessee by holding that seized material obtained during the course of search does not have evidentiary value by not taking cognisance of the legal presumptions bestowed u/s 132(4A) and sec. 292C of the Act.

5. The Ld. CIT(A) erred in granting relief to the assessee by holding that seized material obtained during the course of search does not have evidentiary value in variance with the law enunciated by the Hon’ble Division Bench of the High Court of Madras in T.C.A. Nos.1395 to 1401 of 2009, Smt.N.Saroja Vs The Assistant Commissioner of Income Tax, Central Circle-II, Tiruchirapalli. Vide its order dated 18.03.2026 has held that the legal presumption u/s 132(4A) is in favour of Revenue and the onus lies on assessee to rebut it with supporting corroborative evidences.

6. The Ld. CIT(A) failed to take cognisance of the fact that the additions and disallowances were based on the sworn statements recorded during the course of search, and failed to take into consideration the decision of the Hon’ble Supreme Court in the case of B.Kishore Kumar v. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai [2015] 62 taxmann.com 215 (SC)/[2015] 234 Taxman 771 (SC) [02-07-2015] wherein it was held that the Assessing Officer is justified in making additions as undisclosed income on basis of sworn statements of assessee during search and seizure.

7. The Ld.CIT(A) erred in holding that WhatsApp chats, being uncertified under Section 65B of the Indian Evidence Act, are ‘dumb documents’ when uncorroborated and cannot constitute incriminating evidence without taking cognizance of the fact that the IT Act, 1961 is a special statute and does not import the strict rules of evidence from the Evidence Act.

8. The ld. CIT(A) erred in not taking cognisance that Section 132(4A) of the IT Act creates a statutory presumption as to the truth of documents found during search & the legislature has specifically empowered the IT Department to rely on electronic records found during search as held in the decision of the Hon’ble Apex Court in Dhakeshwari Cotton Mills Ltd. v. CIT AIR 1955 SC 65 held that the IT authorities are not bound by the technical rules of evidence.

9. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order of Ld. CIT(Appeals) may be set aside and that of Assessing Officer may be restored.”

10. The brief facts of the case as emanating from the records are that the assessee, is a company of ‘Appaswamy Group’ and is engaged in the business of real estate development, including construction and sale of residential apartments. For the assessment year 2017-18, the assessee filed its return of income on 31.10.2017 declaring a total income of Rs.2,48,67,730/-.

11. A search and seizure action u/s.132 of the Act was carried out on 03.11.2023 in the case of M/s.Appaswamy Real Estates Limited and other entities/persons of ‘Appaswamy Group’. During the course of the search at the corporate office and other premises of the group, various electronic devices, loose sheets, books of account and other documents were found and seized.

12. During the course of search, mobile phones belonging to certain sales personnel were examined. The search party noticed certain WhatsApp conversations between the sales personnel and prospective/existing customers. According to the Revenue, the said conversations indicated negotiations regarding payment of a portion of the sale consideration in cash, over and above the consideration recorded in the books of account. Similar conversations were stated to have been found in the mobile phone of another sales manager.

13. The search party also relied upon certain loose sheets containing particulars such as unit numbers, “actual price”, “final price”, car parking charges and other details. On the basis of the difference between the figures appearing therein, the Revenue inferred that the consideration actually agreed with certain customers was higher than the consideration ultimately recorded in the books of account.

14. In the course of search proceedings, statements u/s.132(4) of the Act were recorded from various employees and officials of the group, including sales managers and personnel connected with the ERP system. Certain employees stated that cash was collected from customers in connection with sale of apartments and that the corresponding sale consideration appearing in the ERP/CRM software, namely, Build Super Fast (“BSF”), was thereafter reduced to the extent of the alleged cash component.

15. The case of the Revenue, based upon such statements, was that a discount up to about 5% was ordinarily permissible in the normal course of business and that any post-booking reduction in price beyond such percentage represented cash allegedly received outside the books of account. It was further stated by certain employees that post-booking alterations in the ERP system were made pursuant to instructions received from senior officials/management.

16. The implementation consultant of the software vendor was also examined during the course of search. He stated that the BSF software technically permitted modification of the sale price even after booking of an apartment. Statements were also recorded from the AGM(Systems), Vice President(Sales) and certain other senior officials. The Revenue relied upon these statements to support its inference that the prices originally entered in the ERP system were capable of being subsequently altered.

17. Consequent to the search, case of the assessee was reopened by issuing notice u/s.148 of the Act on 21.05.2025. In response, the assessee filed the return of income declaring the same amount of total income originally returned. Accordingly statutory notice u/s.142(1) of the Act was issued by the AO in response to which the assessee duly furnished the details and explanations called for by the AO.

18. During the assessment proceedings, the AO, relying upon the WhatsApp conversations, loose sheets, data extracted from the ERP system and statements recorded during search, proceeded on the premise that entities of the Appaswamy Group had been collecting a part of the consideration for sale of apartments in cash and thereafter reducing the recorded sale price in the ERP system.

19. For quantifying the alleged unaccounted receipts, the AO adopted a methodology whereby the rates appearing in the master price sheets and/or what was considered to be the actual or median sale rate were compared with the final rates appearing in the ERP system. After allowing a standard discount of 5%, the balance difference was treated as representing alleged cash receipts. On this basis, the Revenue worked out aggregate alleged unaccounted cash receipts of Rs.31,43,48,171/- for the period covering assessment years 2016-17 to 2023-24, out of which a sum of Rs.6,19,62,880/- was attributed to the assessee for the assessment year 2017-18.

20. The AO accordingly issued a show-cause notice dated 11.07.2025, proposing to bring the aforesaid sum of Rs.6,19,62,880/- to tax as undisclosed/unaccounted income of the assessee.

21. In response, the assessee categorically denied having received any unaccounted consideration in cash. It was submitted that the quantification made by the AO rested entirely upon assumptions, presumptions and estimates and that the WhatsApp conversations relied upon by the Department did not establish actual payment or receipt of any cash consideration.

22. The assessee further explained that variations in the sale prices of apartments were attributable to several commercial factors, including negotiated discounts, location and orientation of the units, stage of construction, bulk bookings, market conditions, commercial expediency and other customer-specific considerations. It was contended that there could be no uniform presumption that every reduction exceeding 5% represented receipt of cash outside the books.

23. It was also specifically contended that no material evidencing actual payment of cash by any identified customer to the assessee was found during the course of search. The assessee further disputed the evidentiary value of the statements recorded from the employees and submitted that such statements had been obtained under coercion and duress and were subsequently retracted by the concerned persons through affidavits.

24. The AO, however, did not accept the retractions on the ground that no contemporaneous or cogent evidence had been produced to substantiate the allegation of coercion or duress. According to the AO, the statements had been recorded after confronting the concerned persons with the materials found during search and the similarity in the statements was attributable to the common modus operandi allegedly followed by the sales personnel.

25. The AO further observed that the absence of seizure of physical cash, jewellery or any corresponding asset would not, by itself, disprove the allegation of unaccounted cash receipts when, according to him, the inference was supported by electronic data, internal records and statements recorded during search. The methodology adopted for quantification was also considered by the AO to be reasonable.

26. The AO consequently concluded that the assessee had received consideration in cash outside its regular books in connection with sale of flats and accordingly made an addition of Rs.6,19,62,880/- as unaccounted business income from sale of flats for the assessment year under consideration.

27. The AO, after making the aforesaid addition of Rs.6,19,62,880/- towards alleged unaccounted business receipts from sale of flats, completed the impugned assessment u/s.147 of the Act vide order dated 30.09.2025. Consequently, as against the returned income of Rs.2,48,67,730/-, the AO determined the total income of the assessee at Rs.8,68,30,610/- for the A.Y.2017-18.

28. Aggrieved by the additions so made and the findings recorded by the AO, the assessee carried the matter in appeal before the Ld.CIT(A).

29. The assessee, in the course of the first appellate proceedings, assailed the addition of Rs.6,19,62,880/- made by the AO. The assessee before the Ld.CIT(A) contended that the addition had been made without any reliable, incriminating or corroborative material and were founded substantially upon assumptions, estimates, extrapolations and interpretations unsupported by any independent evidence.

30. It was submitted that, during the assessment proceedings, the assessee had furnished detailed explanations and documentary evidence, including retraction affidavits and project-wise clarifications. However, according to the assessee, the AO failed to properly appreciate the same and proceeded to place reliance upon loose sheets, statements subsequently retracted by the concerned persons and assumed selling prices.

31. The assessee emphasized that, notwithstanding an extensive search conducted for about five days covering the business premises of the group as well as the residences of its directors and employees, no undisclosed cash, unexplained investment, unaccounted expenditure, parallel books of account or other incriminating material evidencing receipt of unaccounted consideration from purchasers of flats was found. It was further pointed out that the regular books of account maintained by the assessee had not been rejected by the Assessing Officer.

32. The assessee challenged the addition of Rs.6,19,62,880/- representing alleged unaccounted cash receipts from sale of flats. It was contended that the said addition did not emanate from any material found or seized during the course of search but was arrived at by adopting an artificial pricing methodology evolved by the Investigation Wing.

33. According to the assessee, the Department worked out a so-called “median rate per sq. ft.” from the ERP data and treated such median rate as the actual selling price of the flats. Wherever the actual sale consideration recorded in the books, registered sale deeds and customer agreements was lower than the assumed median rate, the differential amount was presumed to represent cash consideration received outside the books.

34. The assessee submitted that such “median rate” was neither found nor seized during the search nor reflected in any contemporaneous document maintained by the assessee. It was merely a post-search computational exercise undertaken by the Investigation Wing by utilizing the assessee’s own ERP data. No purchaser was examined to establish payment of consideration over and above the registered consideration and no receipt, ledger, diary, parallel account or other evidence showing receipt of cash was found.

35. The assessee further submitted that the Investigation Wing, by adopting the aforesaid methodology, quantified alleged cash receipts of Rs.102,04,27,807/- in respect of eight projects of various group entities spread over different assessment years. The assessee contended that the entire quantification was based upon estimates and not upon any seized document evidencing receipt of cash.

36. The assessee explained before the Ld.CIT(A) that the preliminary list price or target price reflected in the ERP was merely an indicative price intended for preliminary customer communication and internal MIS purposes and could not be equated with the actual negotiated selling price.

37. It was submitted that sale prices in the real estate business necessarily varied depending upon several commercial considerations such as the stage of construction, date of booking, prevailing market conditions, floor and orientation of the apartment, payment schedule, bulk bookings, repeat customers, early-bird concessions, festival discounts, referral benefits, upfront payments and the working-capital requirements of the developer.

38. The assessee therefore contended that merely because one flat was sold at a rate lower than another flat, or below an indicative ERP/list price, no inference could legally be drawn that the differential amount had been received in cash. By way of illustration, the assessee referred to the “Altezza” project, where flats booked simultaneously by Shri Vinu Thomas and his relatives were sold at negotiated prices. By comparing such negotiated rates with a notional median rate, the Department estimated alleged cash receipts aggregating to Rs.50,52,150/- in respect of five flats. It was submitted that there was no incriminating material whatsoever evidencing receipt of such amount in cash and that the difference represented nothing more than commercially negotiated pricing.

39. The assessee further submitted that the AO had accepted the regular books of account and had not invoked any provision for rejection thereof. No defect had been pointed out in the method of accounting or in the recording of sales. The sale transactions were supported by agreements, registered sale deeds, receipts, bank transactions and ERP records. It was therefore contended that, having accepted the books of account, the AO could not indirectly disregard the recorded sale consideration and substitute the same with a hypothetical or estimated consideration computed on the basis of an assumed median rate. The assessee contended that, in the absence of rejection of the books and in the absence of evidence of suppressed receipts, the substitution of documented sale consideration by an estimated “actual selling price” was contrary to settled principles governing assessment of business income.

40. The assessee extensively challenged the reliance placed upon loose sheets stated to have been seized from the residence of Shri R.Swaminathan, Vice-President–CRM, and upon his statement recorded u/s.132(4) of the Act. It was submitted that the search at the residence of Shri R.Swaminathan continued for several days and that no books of account, ERP data, customer files or other company records were maintained or found at his residence. Particular reliance was placed upon his answer to Question No.9 of the sworn statement, wherein he categorically stated that no books of account relating to the Appaswamy group were maintained at his residence and that the books were maintained by the accounts department at the corporate office. Notwithstanding the above, on the last day of the search, certain “Buyer Abstract Analysis” sheets relating to the projects “Azure The Oceanic” and “Clover by the River” were stated to have been produced by Shri R.Swaminathan and seized as ANN/KA/RS/LS-1 and ANN/KA/RS/LS-2.

41. The assessee’s specific case before the Ld.CIT(A) was that these documents were not prepared by Shri R.Swaminathan and were not found at his residence. According to the assessee, the printouts were brought by the search officials and Shri Swaminathan was made to put handwritten notings thereon and to state that the workings had been prepared from data available at his residence. The assessee highlighted the inherent contradiction between the answer to Question No.9, wherein Shri Swaminathan categorically denied the availability of any books or company records at his residence, and the subsequent answers wherein he was made to state that detailed customer- wise workings had been prepared from data available at his residence. It was contended that detailed buyer abstracts containing customer names, unit numbers, areas, booking dates, rates and other particulars could not possibly have been prepared from memory without access to ERP data or primary company records.

42. The assessee submitted that Shri R.Swaminathan, immediately upon receiving a copy of his statement on 24.11.2023, filed a detailed retraction by e-mail on 08.12.2023 and thereafter an affidavit dated 18.12.2023 explaining the circumstances in which his statement had been recorded. Similar retractions were stated to have been filed by other employees, namely Shri Vijay Shyam, Shri Sovik Sarkar and Shri P.Muthukumar, upon receipt of copies of their statements.

43. It was further pointed out that portions of the statements of different employees, though recorded separately at different places by different officers, contained strikingly similar and substantially identical language. According to the assessee, such uniformity itself demonstrated that the answers were not spontaneous statements of the employees but had been dictated or influenced during the search. The assessee contended that the AO rejected the retractions merely by observing that coercion had not been established, without examining the deponents, confronting them with their retractions or bringing any independent evidence on record to disprove the contents of the affidavits. Reliance was placed, inter alia, upon Mehta Parikh & Co. v. ITO (1956) 30 ITR 181 (SC) and Daulat Ram Rawatmull v. CIT (1973) 87 ITR 349 (SC) in support of the proposition that affidavits could not simply be discarded without examination of the deponents or contrary evidence.

44. The assessee further contended before the Ld.CIT(A) that the statements recorded during search, particularly when subsequently retracted, could not constitute the sole basis for an addition in the absence of independent incriminating material. Reliance was placed upon CBDT Instruction F.No.286/2/2003-IT(Inv.II) dated 10.03.2003, whereby the Department had cautioned against obtaining confessions during search proceedings and emphasized that assessments should be based upon credible evidence collected during search. The assessee also relied upon, inter alia, Pullangode Rubber Produce Co. Ltd. v. State of Kerala(1973) 91 ITR 18 (SC), CIT v. S.Khader Khan Son (2008) 300 ITR 157 (Mad.), affirmed by the Supreme Court, and CIT v. Smt. S.Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras), to contend that an admission was not conclusive and that an addition could not be sustained merely upon an uncorroborated statement.

45. The assessee also disputed the reliance placed upon certain WhatsApp conversations retrieved from the mobile phones of sales personnel. It was contended that the messages did not evidence any actual payment or receipt of cash. At best, according to the assessee, they represented enquiries from prospective customers as to whether a cash component was permissible, and the concerned employees had merely indicated that they had no authority in that regard. It was emphasized that no message recorded an actual arrangement, demand, collection, acknowledgment or utilization of cash. The assessee further questioned the evidentiary value of the electronic material on the ground that it was not duly authenticated/certified and was not corroborated by any independent evidence. Reliance was placed upon various decisions, including A. Johnkumar v. DCIT, ACIT v. Manchukonda Shyam, Atul Tantia v. DCIT, Designers Points v. ACIT and ACIT v. Jayant Hiralal Shah, for the proposition that uncorroborated electronic messages/WhatsApp chats could not, by themselves, justify an addition.

46. The assessee contended that even assuming, without admitting, that some material existed in relation to particular transactions, the same could not legally be extrapolated to all flats, projects and assessment years in the absence of transaction-specific incriminating evidence. It was submitted that the Revenue was required to establish actual receipt of on-money through cogent evidence and could not substitute proof with mathematical extrapolation or comparison of sale rates. Reliance was placed upon Fort Projects (P.) Ltd. v. DCIT [2013] 29 taxmann.com 84 (Kol. Trib.), D.N.Kamani HUF v. DCIT [1999] 70 ITD 77, Mani Square Ltd. v. ACIT [2020] 118 taxmann.com 452 (Kol. Trib.), Meenamani Ganga Builder LLP v. ACIT and DCIT v. Heaven Associates [2023] 154 taxmann.com 595 (Ahd. Trib.). According to the assessee, these authorities supported the proposition that alleged on-money could not be extrapolated across other transactions merely upon presumption and that negotiated sale consideration evidenced by regular documentation could not be displaced without tangible evidence of additional consideration.

47. On the cumulative factual and legal grounds set out above, the assessee submitted before the Ld.CIT(A) that the addition of Rs.6,19,62,880/- towards alleged unaccounted receipts from sale of flats was not supported by legally admissible or corroborative evidence. It was therefore prayed before the ld.CIT(A) that the addition made merely on the basis of assumptions, estimated/median sale rates, retracted statements, uncorroborated electronic material and a third-party loose sheet be deleted in their entirety.

48. Upon due consideration of the submissions made by the assessee and the material available on record, the Ld.CIT(A), vide the impugned appellate order dated 02.02.2026, deleted the addition made by the AO on account of alleged undisclosed income arising from the sale of flats. While granting the aforesaid relief to the assessee, the Ld.CIT(A) recorded his findings and observations, the relevant portion of which is reproduced hereunder:

“6.2.18 The undersigned notes that addition made by the AO towards alleged receipt of unaccounted cash is not supported by any incriminating material placed on record during the course of assessment proceedings. While a search was conducted covering the appellant’s business premises, project sites and the residences of directors and employees, the assessment order does not identify or rely upon any seized material which directly evidences actual receipt of cash over and above the consideration recorded in the regular books of account. This factual position emerges clearly from a reading of the assessment order and remains undisputed. In the assessment order passed for the year under consideration, the AO has not referred to any seizure of any unaccounted cash, jewellery or other valuable articles representing undisclosed income. There is also no reference to any undisclosed investment, benami asset or unexplained accretion to wealth traceable to the appellant or its key personnel. In cases involving allegations of on-money receipts in real estate transactions, some corresponding evidence of possession or application of such cash would ordinarily be expected. However, no such material has been brought on record by the AO to substantiate the allegation in the present case.

6.2.19 Further, the AO has not relied upon any parallel or duplicate books of account, cash ledgers, diaries, registers or electronic data evidencing systematic recording of alleged cash collections. No buyer-wise cash receipts, acknowledgements, side agreements or documents reflecting payment of consideration outside the registered sale deeds have been identified or produced. Importantly, the assessment does not cite even a single instance where a customer has admitted to having paid cash to the appellant, nor has any purchaser been examined or confronted to corroborate the allegation of unaccounted receipts. The material relied upon by the AO primarily consists of internal communications, loose working papers and statements recorded from employees. However, these materials, in the absence of corroboration, do not by themselves establish actual receipt of cash. The assessment order does not demonstrate a direct and proximate nexus between such material and the alleged undisclosed income. There is no linkage shown between the figures referred to in such material and any actual flow of funds, either into the hands of the appellant or towards any unaccounted expenditure or investment.

6.2.20 There is no finding that such cash was used for payments to contractors, landowners or suppliers, nor is there any material to show that it was deployed for personal expenditure or investments of the directors. In the absence of evidence regarding both receipt and application of the alleged cash, the addition rests entirely on inference rather than on demonstrable facts. Therefore, it can be inferred that the addition on account of unaccounted cash receipts has been made on the basis of estimations and assumptions drawn, without the support of any incriminating evidence evidencing receipt of cash by the appellant. The undersigned is of the view that such material may give rise to suspicion or prompt further enquiry, it does not, in the absence of corroboration, constitute sufficient proof of undisclosed income. In the present case, the AO, has not brought on record any cogent material to discharge the burden of establishing that the appellant actually received unaccounted cash during the relevant previous year. Therefore, it is held that the addition made is not based on any seized incriminating material directly evidencing cash receipt, but on inferences and post-search estimations. Consequently, the addition cannot be sustained merely on the basis of presumptions, inferences or estimates, without independent and credible evidence linking the appellant to actual unaccounted cash receipts.

6.2.21 As evident in the assessment order passed, it is observed that the AO has proceeded to make the addition on the premise that the sale consideration disclosed by the appellant in respect of residential flats does not reflect the true consideration and that the flats were, in fact, sold at rates higher than those recorded in the books of account and registered sale deeds. According to the AO, the material gathered during the course of search indicated that the actual selling prices were higher and that the difference between such alleged prices and the disclosed consideration represented unaccounted cash received by the appellant. Proceeding on this assumption, the AO has adopted an estimated “median rate” as the alleged actual selling price and has computed the addition by comparing such rate with the prices recorded by the appellant. In arriving at the said conclusion, the AO has disregarded the primary documentary evidence produced by the appellant, namely the registered sale deeds executed in favour of individual purchasers, the corresponding sale agreements entered into with customers, the contemporaneous entries in the appellant’s ERP and accounting systems, and the bank statements evidencing receipt of consideration through banking channels. These documents collectively form a complete and consistent chain of evidence demonstrating the actual consideration received on sale of the flats. The undersigned notes that the assessment order does not record any finding that these documents are fabricated, unreliable or otherwise untrue. There is also no allegation that the consideration mentioned in the registered documents was understated with the consent or connivance of the purchasers.

6.2.22 A close reading of the assessment order further reveals that the “median rate” adopted by the AO does not emanate from any seized document evidencing completed transactions at such rate. The AO has not identified any specific document recovered during the course of search which records sale of a flat at the assumed median price. The said rate is neither reflected in the appellant’s books of account nor in its ERP system, which records customer-wise and flat-wise sale consideration. The undersigned is of the view that the “median rate” is thus an inferential figure arrived at by the AO by analysing internal communications and working papers, without establishing that such rate was actually realised in any concluded sale transaction.

6.2.23 It is also an admitted position that the AO has not rejected the books of account maintained by the appellant. The assessment order does not invoke the provisions of section 145(3) of the Act, nor does it contain any finding that the books are incorrect, incomplete or not in accordance with recognised accounting principles. On the contrary, the assessment accepts the books of account for determining business results, except for the limited purpose of substituting the sale consideration with an estimated figure. Such selective acceptance of books is legally untenable, as the AO cannot simultaneously accept the books as reliable and yet disregard the most fundamental entry therein relating to sale consideration.

6.2.24 During the course of appellate proceedings, the AR asserted that the AO has proceeded entirely on an erroneous and unfounded assumption that any target price, benchmark rate, or indicative figure discussed internally among sales personnel must necessarily reflect the actual selling price at which the residential flats were ultimately sold to customers. According to the AR, such an assumption is divorced from commercial prudence and ignores the well-recognized business realities governing the real estate sector. Internal target rates or aspirational price points are, at best, guiding tools for sales teams and cannot be equated with the final negotiated consideration agreed upon with individual buyers. The AR pointed out that the appellant is a large real estate developer dealing in the sale of multiple residential units, and it is an established commercial fact that the selling price of each flat is influenced by a host of variable and dynamic factors. These include, inter alia, the precise location of the flat within the project, the floor on which it is situated, its orientation and ventilation, the view offered, the carpet and built-up area, the stage of construction at the time of booking, the date of sale, prevailing demand- supply conditions in the market, and the bargaining strength and negotiating ability of individual customers. Consequently, uniformity in pricing is neither commercially feasible nor expected, and variations in sale consideration across different units are an inherent feature of the business.

6.2.25 It was further submitted that, apart from these project-specific variables, the appellant’s pricing decisions were significantly influenced by external macroeconomic factors. The AR specifically drew attention to the market slowdown in the real estate sector and the unprecedented disruption caused by the COVID-19 pandemic, which severely impacted demand, liquidity, and customer sentiment. During this period, developers across the industry were compelled to offer discounts, incentives, and negotiated rates to attract buyers, liquidate inventory, and maintain cash flows necessary for meeting construction and financial commitments. The appellant, being no exception, had to align its pricing strategy with these prevailing market conditions. The AR emphasized that these factual and commercial explanations were duly placed before the AO during the course of assessment proceedings, supported by details of registered sale deeds, booking dates, and comparative pricing across units. However, the AO failed to appreciate these submissions in their proper perspective and instead chose to mechanically rely on internal discussions and estimated rates, without demonstrating as to how such figures translated into actual receipt of unaccounted cash. In doing so, the AO ignored the commercial realities of the business as well as the contemporaneous market conditions, thereby rendering the entire basis of the addition speculative and unsustainable.

6.2.26 The undersigned observes that the assessment order does not record any reasoned finding as to why the explanations offered by the appellant during the course of assessment proceedings were not acceptable. There is no analysis to prove that the factors cited by the appellant could not have resulted in variations in sale prices. Instead, the AO has proceeded to apply a uniform or median rate across multiple transactions, thereby overlooking the fact that uniform pricing is alien to the real estate business and that negotiated pricing is the norm rather than the exception. Such an approach results in replacing actual transaction values with a hypothetical benchmark, without any supporting evidence. From the manner in which the assessment has been framed, it is evident that the AO has effectively substituted his own notion of what the selling price of the flats ought to have been, in place of the prices actually realised and duly documented by the appellant. This amounts to assessing income on the basis of presumed or idealised pricing rather than on real income that has accrued or been received. At this juncture, it is appropriate to rely upon the decision rendered by the Hon’ble ITAT, Kolkata in the case of Fort Projects P Ltd vs Deputy Commissioner of Income-tax – [2013] 29 taxmann.com 84 (Kolkata – Trib.) wherein the Hon’ble ITAT, Kolkata has held as under.

“the decision to sell a particular flat at a particular price was taken out of commercial expediency and it cannot be questioned by the Department without any tangible evidence. It is for the assessee to decide how to conduct the business. The AO cannot put himself in the armchair of the businessman and judge how business should be conducted or at what price a particular product should be sold”.

Thus, it can be held that it is well settled that the AO cannot sit in the armchair of the businessman and determine the price at which a product should be sold, unless there is clear and cogent evidence of suppression or understatement of consideration.

6.2.27 On a careful consideration of the entire material on record, the undersigned finds that the addition has been made solely on the basis of an assumed and notional median rate, without reference to any incriminating material evidencing receipt of higher consideration and without rejection of the books of account. The sale consideration recorded by the appellant is supported by statutory documents, contemporaneous accounting records and bank receipts, and no defect has been pointed out therein. In the absence of evidence establishing that the appellant actually received consideration in excess of what is recorded, the substitution of recorded sale prices with an estimated rate is not legally permissible. Therefore, it is held that the action of the AO in adopting an assumed median selling price and computing alleged undisclosed income on that basis is not supported by facts or law. The addition, being founded on notional assumptions rather than on real income and corroborative evidence, is therefore unsustainable in the eyes of law.

6.2.28……

6.2.29……

6.2.30 The undersigned, after carefully considering the detailed submissions of the AR, the manner in which the AO placed reliance on the statements of the employees, the material available on record, and the judicial precedents cited, finds that the statements in question were recorded during the course of the search proceedings and were immediately retracted, i.e., within ten days from the date of receipt of copies of the sworn statements, through duly sworn affidavits explaining the circumstances under which such statements were made. The undersigned also finds that neither the Investigation Officer nor the AO has made any attempt to examine the deponents afresh after the retractions were filed instead the AO merely relied on the statements which were retracted subsequently. The undersigned also notes that the AO has not brought on record any independent or corroborative evidence to substantiate the allegations allegedly arising from the statements. There is no material linking any specific customer to any cash payment, nor is there any evidence demonstrating receipt or application of unaccounted funds by the appellant. In the absence of such corroboration, and particularly in view of the prompt and categorical retractions, the evidentiary value of the original statements stands substantially weakened.

6.2.31……

6.2.32 From the above, it is evident that the clarification letter was filed during the course of the search proceedings itself. Neither the Investigation Officer nor the AO took any steps to controvert or rebut the clarification furnished by Shri Ravi Appasamy, and the said clarification letter has not been discussed or even adverted to in the assessment order. It can therefore be reasonably inferred that the clarification was not considered by either the Investigation Officer or the AO while framing the assessment. It is a well-settled principle that a statement recorded during search, when subsequently retracted, cannot by itself form the sole basis of an addition unless it is corroborated by independent and credible evidence. The Hon’ble Apex Court in the case of Kasmira Singh v. State of Madhya Pradesh AIR 1952 SC 159, has observed that the correct way to approach a case of confession is to marshal evidence against the accused excluding the confession altogether from consideration. Where the case can be decided independent of confession, then, it is not necessary to take help of confession. This principle assumes greater importance in search assessments, where additions must be rooted in material unearthed during the search and not merely on oral statements.

6.2.33 In this rega was followed in the case of Daulat Ram Rawatmull v. CIT(1973) 87 ITR 349 (SC) in which it was held that

“once an affidavit is furnished, it should be presumed to be a correct statement of facts. If these facts are to be controverted, either the deponent must be examined or evidence contrary to facts must be led. In the absence of these the affidavits could not be ignored”.

6.2.35 By applying this settled position of the law to the facts of the present case, the undersigned is of the view that the AO was not justified in placing reliance on retracted employee statements, without further verification and without independent corroboration. In view of the above findings, the undersigned holds that the action of the AO in relying upon the sworn statements of employees, which were subsequently retracted and remained uncorroborated, is not sustainable. Such statements, in the absence of independent supporting evidence and without affording the appellant an opportunity of cross-examination, cannot be used to sustain the addition. Accordingly, the reliance placed on these statements is rejected and the addition founded thereon is unsustainable.

6.2.36…..

6.2.37…..

6.2.38…..

6.2.39…..

6.2.40 The undersigned after carefully considering the detailed submissions of the AR, examined the nature and contents of the WhatsApp chats and loose electronic records relied upon by the AO, and the assessment order and the judicial precedence(s) relied. The undersigned finds that the AO has relied upon these electronic communications without demonstrating that they record or evidence actual receipt of unaccounted cash. On a plain reading, the chats reflect internal discussions and customer interactions typical of a sales environment and do not establish completed transactions involving cash receipts outside the books of account. More particularly, the AO has not brought on record any independent corroborative evidence to substantiate the inferences drawn from the electronic material. There is no linkage/ nexus revealed between the WhatsApp chats or loose electronic records and any specific sale transaction, customer payment, or flow of unaccounted funds.

6.2.41 In view of the above, the undersigned is of the view that the reliance placed by the AO on WhatsApp chats and loose electronic records, without proper authentication and without independent corroboration, is not justified. Such material, in isolation, does not constitute incriminating evidence of receipt of unaccounted cash. Therefore, the addition made relying upon such material is unsustainable.

6.2.42….

6.2.43….

6.2.44 As evident in the assessment order, the AO has proceeded to quantify the alleged undisclosed cash receipts from the sale of residential flats by adopting a uniform and project-wise estimation methodology, rather than by identifying actual instances of cash receipt supported by concrete evidence. The AO first formed a broad premise, primarily on the basis of sworn statements recorded from certain employees of the appellant group particularly the sales person(s), that discounts normally offered to customers were limited to about 5% and that any reduction in the sale price beyond such level represented cash received outside the books. Proceeding on this assumption, the AO sought to compute the alleged cash component embedded in the sale of flats across various projects and assessment years. For this purpose, reliance was placed on three loose sheets of paper allegedly seized from the office premises of the Appasamy Group. On an analysis of these loose sheets, the AO inferred that the figure described as “Fixed Rate” or “Actual Rate” represented the true sale price of the flat, while the “Flat Rate” represented the amount received through banking channels. The difference between these two figures was treated by the AO as the cash component allegedly received from the customer. By way of illustration, where the “Fixed Rate” was Rs.21,300/- per sq. ft. and the “Flat Rate” was Rs.20,830/- per sq. ft., the difference of Rs.470/- per sq. ft. was assumed to be cash received. Having drawn this inference from the loose sheets, the AO extrapolated the same logic to the Buyer Abstract Analysis Reports generated from the ERP software used by the appellant. The AO noticed variations in the rates at which flats were sold and concluded that such variations arose on account of price reductions granted by the CRM or sales team, which, according to him, were compensated by collection of cash from customers.

6.2.45 Thereafter, the AO adopted a further step in the quantification process by substituting the rates reflected in the Buyer Abstract Analysis Reports with what he termed as the “actual selling price” of the flats. This “actual price” was not derived from any seized document or recorded transaction but was computed by the AO by determining a “median rate” per square foot at which flats in a particular project were allegedly sold. For instance, in respect of the Alteeza project, a median rate of Rs.7,999/- per sq. ft. was arrived at, while for the Capella project, a median rate of Rs.9,600/- per sq. ft. was adopted. The AO then treated this median rate as the benchmark or true sale price for all flats in the respective project. Wherever the recorded sale rate of an individual flat, as per books and ERP data, was lower than the adopted median rate, the differential amount was treated as undisclosed cash received by the appellant. This exercise was carried out project-wise, and in respect of projects such as Capella, The Bloomingdale Phase 2, Trellis North and Trellis South, the median rate was uniformly substituted in place of the recorded rate to compute the alleged cash component. Using this methodology, the AO aggregated the differences across all flats and across multiple assessment years, arriving at a total alleged undisclosed cash receipt of Rs.102.04 Crores for the appellant group as a whole for AYs 2016-17 to 2024-25. Out of this, a sum of Rs.31.43 Crores was attributed to the appellant, and Rs. 1,28,11,095/-, Rs. 6,19,62,880/-, Rs. 5,44,98,894/-, Rs. 6,31,65,979/-, Rs. 5,56,34,550/-, Rs. 3,10,86,230/- was allocated to the AY(s) 2016-17, 2017-18, 2018-19, 2019-20, 2020-21 & 2021-22. It is also evident from the assessment order(s) passed that the median rate itself was not static and was revised upward at different stages even within the same project, without recording any specific basis or rationale for such revision. These revised median rates were nevertheless used as the benchmark to re-compute the alleged cash component, thereby inflating the quantified amount.

6.2.46 The undersigned finds that the AO has computed the alleged unaccounted income by applying an assumed rate or difference uniformly across multiple transactions, without bringing on record any seized material relatable to each such transaction. The assessment order does not set out any factual basis for treating all transactions alike or for presuming that each transaction involved receipt of unaccounted cash. The undersigned is of the view that the computation has been carried out in a mechanical and formulaic manner, without taking into account transaction-specific factors or commercial considerations. The AO has not established any rational nexus between the seized material, (if any), and the transactions to which the extrapolation has been applied. In the absence of such nexus, the extrapolation undertaken lacks evidentiary support and cannot be sustained. The approach adopted by the AO results in quantification of income based on assumptions and guesswork rather than on real income supported by evidence. Such arbitrary extrapolation is not permissible under the scheme of the Act, particularly in the context of a search assessment where additions must be firmly rooted in material unearthed during the search. Therefore, it is held that the quantification of the addition, being based on illogical extrapolation and mechanical application of assumptions without transaction-specific seized material, is unsustainable both on facts and in law.

6.2.47 In addition, during the course of appellate proceedings, the AR assailed the very basis of the estimation made by the AO by, contending that the appellant maintains regular and audited books of account in the ordinary course of business, supported by a robust ERP system, registered sale deeds, customer agreements and complete banking records, and that at no point has the AO recorded any dissatisfaction regarding their correctness or completeness or invoked section 145 of the Act. It was specifically contended that no defect has been found in the method of accounting, no discrepancy has been pointed out in quantitative details of flats sold, and no mismatch has been identified between sale agreements, registered sale deeds, ERP records and bank receipts, thereby clearly demonstrating that the books of account were accepted in toto. The AR further submitted that while the AO relied upon the same books for accepting turnover and allowing business expenditure, he selectively disregarded the recorded sale consideration and substituted it with assumed or hypothetical prices, which is legally impermissible as the AO cannot approbate and reprobate without valid reasons. On an objective examination of the record, it is found that the AO has indeed not pointed out any specific defects, yet proceeded to estimate income by adopting notional selling prices without any cogent legal or factual basis, rendering the addition made on a purely estimated basis legally untenable.

6.2.48 On a cumulative and holistic consideration of the facts, material on record and the submissions made during the appellate proceedings, it is evident that the addition of Rs. 1,28,11,095/-, Rs. 6,19,62,880/-, Rs. 5,44,98,894/-, Rs. 6,31,65,979/-, Rs.5,56,34,550/-, Rs. 3,10,86,230/- for the AY(s) 2016-17, 2017-18, 2018-19, 2019-20, 2020-21 & 2021-22 was made by the AO towards alleged unaccounted cash receipts from sale of residential flats is based on assumptions and estimates, without support from any incriminating or corroborative evidence. No unaccounted cash, undisclosed investment, parallel books, or customer confirmations were found or brought on record to substantiate the allegation. The addition is founded on sworn statements of employees which were subsequently retracted, or was any independent corroboration obtained. Further, the books of account have been accepted without rejection, and the recorded sale consideration is supported by registered documents, ERP records and bank receipts. The substitution of actual consideration with notional prices and the quantification based on illogical extrapolation are contrary to settled legal principles and commercial realities. Therefore, the addition(s) of Rs. 1,28,11,095/-, Rs. 6,19,62,880/-, Rs. 5,44,98,894/-, Rs. 6,31,65,979/-, Rs. 5,56,34,550/-, Rs. 3,10,86,230/- for the AY(s) 2016-17, 2017-18, 2018-19, 2019-20, 2020-21 & 2021-22 are unsustainable in the eyes of law both on facts and legality. Accordingly, the grounds raised upon this issue are treated as allowed and the AO is directed to delete the addition of Rs. 1,28,11,095/-, Rs. 6,19,62,880/-, Rs.5,44,98,894/-, Rs. 6,31,65,979/-, Rs. 5,56,34,550/-, Rs. 3,10,86,230/- made for the AY(s) 2016-17, 2017-18, 2018-19, 2019-20, 2020-21 & 2021-22 respectively.”

49. Aggrieved by the order of the Ld.CIT(A) deleting the addition made by the AO towards the alleged undisclosed income arising from the sale of flats, the Revenue has preferred the present appeal before the Tribunal.

50. The Ld.DR, appearing on behalf of the Revenue submitted that, while making the impugned addition, the AO had, inter alia, relied upon loose sheets seized from the Corporate Office of the assessee group containing details of “Actual Price” vis-à-vis “Final Price”, which, according to the Revenue, evidenced cash differentials in the sale consideration of flats. The AO had also taken into consideration WhatsApp conversations retrieved from the mobile phones of the sales personnel relating to collection of cash, sworn statements recorded from five employees consistently referring to collection of cash from purchasers of flats, reduction of sale price in the ERP system, confirmation obtained from the software vendor regarding the facility for post-booking modification of prices, Buyer Abstract Analysis Reports and the ERP/CRM data indicating systematic variations in the prices recorded therein. It was, therefore, contended that the impugned addition was founded upon several independent pieces of evidence which, when read cumulatively, mutually corroborated each other and was not based merely upon the statements recorded during the course of search. The Ld. DR, therefore, submitted that the finding of the Ld.CIT(A) to the contrary was factually erroneous.

51. The Ld.DR drew the attention of the Bench to the sworn statement of Shri Souvik Sarkar, Sales Manager of the Appaswamy Group, recorded on 07.11.2023 u/s.132(4) of the Act. It was submitted that Shri Souvik Sarkar had categorically admitted that the assessee group was receiving unaccounted cash from customers towards the sale consideration of apartments. He had also explained the procedure followed for collecting such cash and for making corresponding adjustments in the sale price recorded in the Build SuperFast (BSF) software.

52. The Ld.DR submitted that Shri Souvik Sarkar had specifically explained that where a customer agreed to pay a portion of the consideration in cash, the matter was discussed with the higher management, including Shri R. Swaminathan, Senior Vice President, Sales, and that the cash component was accepted after obtaining the requisite approval. Thereafter, the sale price of the apartment was reduced in the ERP system to the extent of the cash component received, thereby ensuring that only the balance consideration received through banking channels was reflected in the regular books of account. According to the Ld.DR, the statement disclosed not merely an isolated transaction but an established procedure followed by the sales team in dealing with customers.

53. The Ld.DR further referred to the WhatsApp conversations recovered from the POCO M3 mobile phone belonging to Shri Souvik Sarkar, which was imaged and seized during the search proceedings. Particular reliance was placed on the conversation between Shri Souvik Sarkar and Shri Gopinath, a customer who had purchased apartment No. R-11 in the project “Clover by the River”. It was submitted that the said conversation disclosed negotiations regarding the actual sale consideration and the cash component payable by the customer. The customer had referred to the amount of Rs.25.00 lakhs proposed to be paid in cash and had sought a corresponding reduction in the sale price. The conversation also referred to Shri R. Swaminathan in connection with the cash transaction. The Ld.DR contended that the nature and contents of these communications clearly indicated that the cash component formed part of the agreed sale consideration and was not an ordinary commercial discount.

54. The Ld.DR emphasised that, when confronted with the said WhatsApp conversations, Shri Souvik Sarkar had confirmed that the communications were between himself and the customer and had explained the circumstances in which the cash component was agreed upon. Thus, the electronic evidence recovered during the search was corroborated by the sworn statement of the person from whose mobile phone the communications were retrieved.

55. The Ld.DR submitted that the statement of Shri Souvik Sarkar was further corroborated by the sworn statement of Shri R.Swaminathan, recorded u/s.132(4) of the Act on 07.11.2023. Shri R.Swaminathan, being the Senior Vice President, Sales, was directly involved in the sales operations of the assessee group. The AO had recorded that Shri R. Swaminathan confirmed the receipt of unaccounted cash components in connection with apartment sales undertaken by the group.

56. It was contended that the admission of a senior managerial official, read together with the statement of Shri Souvik Sarkar and the recovered WhatsApp conversations, constituted corroborative material supporting the Department’s allegation that cash was being received over and above the consideration reflected in the regular books of account.

57. The Ld.DR further submitted that the investigation had established the manner in which the cash component was concealed through modifications made in the BSF ERP software. Referring to the statement of Shri Souvik Sarkar, it was submitted that, upon receipt of cash from a customer, the original cost sheet was revised by reducing the agreed sale consideration to the extent of the cash received. The revised cost sheet was thereafter communicated to the concerned personnel, and corresponding changes were made in the ERP system.

58. The Ld.DR specifically pointed out that Shri Souvik Sarkar had demonstrated the process of modifying the sale price in the BSF software by logging into the system during the search proceedings. Screenshots of the login screen, project details, unit modification screen and changed unit price were reproduced in the assessment order. It was argued that this demonstration constituted independent corroboration of the procedure explained in his sworn statement. According to the Ld.DR, the reduction of the sale price in the ERP system was not merely a theoretical possibility but an actual process demonstrated during the search, which supported the AO’s finding regarding the suppression of sale consideration.

59. The Ld.DR also relied upon the sworn statement of Shri R.Venkatachalapathi, AGM (Systems), who was responsible for managing the ERP software of the assessee group. It was submitted that Shri R.Venkatachalapathi had confirmed that he had made changes in the flat rates recorded in the BSF software upon the instructions of Shri R.Swaminathan.

60. The Ld.DR contended that this statement established the link between the sales personnel who negotiated and received the cash component and the systems personnel who subsequently modified the recorded sale consideration. The involvement of different employees at various stages of the transaction, as explained in their respective statements, demonstrated the manner in which the alleged unaccounted cash receipts were kept outside the regular books of account.

61. The Ld.DR further referred to the statement of Shri Gurupandiyan, Implementation Consultant of M/s.Micromen Software Solutions Pvt. Ltd., the vendor of the BSF software. It was submitted that Shri Gurupandiyan had confirmed that the flat rate could be changed in the software even after the booking of an apartment. He had also explained the availability of reports containing the history of changes made to flat rates, including details of the old rate, revised rate, user and date of modification.

62. It was argued that the statement of the independent software consultant supported the technical feasibility of the process described by the employees of the assessee group. The Ld.DR, therefore, submitted that the evidence regarding modification of sale prices in the ERP system could not be brushed aside as a mere unsubstantiated allegation.

63. The Ld.DR also placed reliance on the sworn statements of other sales personnel, including Shri P.Muthu Kumar and Shri Vijay Shyam, who had explained the practice of receiving cash from customers and reducing the corresponding sale price in the ERP system. It was submitted that the loose sheets seized during the search contained separate columns indicating the “Actual Price” and “Final Price” of apartments. The statements recorded during the search explained that the actual price represented the sale consideration agreed with the customer, whereas the final price represented the amount received through banking channels.

64. The Ld.DR submitted that the statements also explained that a normal commercial discount of up to 5% could be allowed to customers, whereas a reduction exceeding 5% was treated by the investigation as representing the cash component received from the customer. It was contended that the Assessing Officer had taken these explanations into account while quantifying the alleged unaccounted receipts.

65. The Ld.DR submitted that the AO had quantified the unaccounted cash receipts by examining the seized electronic records, cost sheets and Buyer Abstract Analysis reports generated from the BSF software. In respect of certain projects, the difference between the actual price and the final price was identified from the available records. In other cases, the AO had adopted the median rate per square foot for determining the alleged actual sale consideration and compared the same with the rates recorded in the ERP system. It was contended that the computation was based on the modus operandi revealed during the search and the material available in the seized records. The Ld.DR accordingly supported the quantification made by the Assessing Officer and submitted that the unexplained difference in the sale consideration was liable to be brought to tax in accordance with law.

66. The Ld.DR, therefore, submitted that the AO was justified in treating the alleged cash component as unaccounted receipts and making the consequential addition. The Ld.DR accordingly prayed that the order of the AO making an addition of Rs.6,19,62,880/- be upheld and the grounds raised by the Revenue be allowed.

67. Per contra, the Ld.AR for the assessee, at the outset, submitted that the controversy involved in the present appeals filed by the Revenue is squarely covered by the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for AY 2023-24 in ITA No.1857/Chny/2026, vide order dated 18.08.2026. The Ld.AR invited our attention to paragraphs 113 to 158, appearing at pages 53 to 70 of the said order, wherein this Tribunal, after examining the identical search material, allegations and methodology adopted by the AO, dismissed the appeal preferred by the Revenue. The Ld.AR submitted that the findings recorded by this Tribunal for A.Y. 2023-24 apply with equal force to the assessment years under consideration, there being no material distinguishing feature either on facts or in law.

68. Elaborating on the factual background, the Ld.AR submitted that the assessments for AY(s) 2017-18 to 2021-22 and A.Y.2023-24 emanated from the very same search conducted on 03.11.2023 in the Appaswamy Group. The common allegation of the Revenue was that the assessee had collected part of the sale consideration of residential flats in cash and subsequently reduced the corresponding consideration recorded in the ERP/BSF system. According to the Ld.AR, the AO had undertaken a consolidated exercise covering FYs 2015-16 to 2022-23 and quantified the alleged unaccounted cash receipts attributable to the assessee at an aggregate amount of Rs.31,43,48,171/-. The additions made for the assessment years under consideration were merely year-wise allocations arising from the said common exercise.

69. The Ld.AR submitted that the additions for the impugned assessment years were not founded upon any independent or distinct evidence. The AO had relied upon the same categories of seized electronic data, WhatsApp conversations, loose sheets, statements of employees, ERP/Buyer Abstract Analysis Reports and the assumption that discounts or reductions exceeding 5% of the alleged fixed price represented consideration received in cash. The very same evidentiary material and methodology had been examined by the Tribunal in the Revenue’s appeal for A.Y.2023-24. The Ld.AR contended that, once the Coordinate Bench had considered the entire material and rejected the inference drawn by the AO, the Revenue could not seek a different conclusion for the impugned assessment years without demonstrating any independent incriminating material peculiar to those years.

70. Referring to the findings recorded by the Tribunal in A.Y.2023-24, the Ld.AR submitted that the fundamental premise of the AO was that wherever the recorded selling price was lower than the alleged actual price, fixed price or median price, the difference necessarily represented cash consideration received outside the books. He submitted that the Tribunal had specifically examined this premise and held that the existence of different prices in internal records did not, by itself, establish receipt of unaccounted consideration. The Revenue was required to establish that the difference between the prices represented an amount actually paid by the purchaser and received by the assessee outside its regular books of account.

71. The Ld.AR further submitted that expressions such as “Actual Price”, “Final Price” and “Target Rate” appearing in loose sheets or internal records could, at the highest, indicate prices contemplated, quoted, negotiated or recorded at different stages of a transaction. Such descriptions could not automatically be construed as evidence of cash received by the assessee. According to him, the Tribunal had already rejected the very inference forming the foundation of the additions made for the assessment years under consideration.

72. The Ld.AR then addressed the Revenue’s reliance upon the statutory presumptions contained in sections 132(4A) and 292C of the Act. He submitted that this contention, had also been considered by the Tribunal for A.Y. 2023-24. The Tribunal had held that the statutory presumption could operate with respect to the ownership of a document, the truth of its contents and the handwriting or signature appearing therein, but could not be extended to a fact which the document itself did not record. According to the Ld.AR, even if the figures appearing in the seized documents were presumed to be genuine, such presumption could not establish that the difference between two prices represented cash actually received by the assessee. He contended that the Revenue was, in effect, seeking to employ the statutory presumption to infer an unrecorded cash transaction which was not evidenced by the seized document itself. The Ld.AR submitted that the Tribunal had already rejected such an extension of the statutory presumption and, consequently, the corresponding grounds raised by the Revenue were devoid of merit.

73. With regard to the adoption of the 5% benchmark, the Ld.AR submitted that the AO had proceeded on the basis of statements of certain sales personnel that discounts up to approximately 5% were ordinarily permissible and that any reduction exceeding such percentage represented cash consideration received outside the books. He contended that the Tribunal, in the assessee’s own case for A.Y. 2023-24, had specifically rejected this proposition.

74. The Ld. AR submitted that neither any provision of the Act nor any independent commercial or documentary material established 5% as an immutable dividing line between a genuine commercial discount and unaccounted cash consideration. Even assuming that the assessee had an internal guideline ordinarily restricting discounts to 5%, a departure from such guideline could not, ipso facto, establish undisclosed taxable income. The Revenue was required to demonstrate, transaction by transaction, that the reduction in the recorded price corresponded to consideration actually received from the concerned purchaser outside the books.

75. The Ld.AR further submitted that the Tribunal had recognised that the selling prices of residential apartments could vary on account of several commercial factors, including the floor, orientation, view, location within the project, stage of construction, timing of booking, prevailing demand, payment terms, bulk booking, repeat-customer relationship, referral concessions, early- payment incentives, market conditions and liquidity requirements. He therefore contended that the mechanical application of the 5% benchmark, without establishing actual receipt of cash, was unsustainable and that the issue stood concluded by the earlier decision of the Coordinate Bench.

76. The Ld. AR further assailed the median-rate methodology adopted by the AO for quantifying the alleged unaccounted consideration. He submitted that the Ld. CIT(A) had specifically found that the actual price adopted by the AO was not derived from any seized document or recorded transaction but was computed by determining a median rate per square foot and applying the same as a benchmark to the flats in the respective projects. The AO had thereafter treated the difference between such assumed rate and the recorded consideration as unaccounted income, without bringing on record transaction- specific evidence establishing actual receipt of the differential amount.

77. The Ld. AR submitted that this very methodology had been examined by the Tribunal for A.Y. 2023-24. The Tribunal had distinguished between the existence of undisclosed income and its quantification. According to the Ld. AR, estimation could be resorted to for determining the quantum of undisclosed income only after the foundational fact of an undisclosed receipt had first been established through reliable material. An estimation exercise could not itself be employed to establish the very existence of such receipt. He contended that the AO had reversed this sequence by first assuming that the price differential represented cash consideration and thereafter quantifying the assumed receipt through a median-rate formula. Such computation, in the absence of foundational evidence of actual cash receipt, could not sustain an addition. The Ld.AR submitted that the Tribunal had already disapproved this approach in the assessee’s own case and that the identical methodology adopted for the impugned assessment years was consequently unsustainable.

78. Adverting to the Revenue’s reliance upon the ERP/BSF system, the Ld.AR submitted that the mere existence of a facility to alter sale prices after booking did not establish that the assessee had actually used such facility to suppress cash receipts. He submitted that this aspect had also been considered by the Tribunal for A.Y.2023-24, wherein it was held that the editing facility merely demonstrated the technical capability of the software and not the actual occurrence of an unaccounted transaction.

79. The Ld. AR submitted that post-booking alterations could arise for legitimate commercial reasons, including renegotiation, cancellation and rebooking, modification of payment schedules, additional discounts, correction of errors, changes in specifications and settlement of customer disputes. Unless an identified alteration in the ERP system was linked through an audit trail or other reliable evidence to an identified cash receipt, the technical capability to modify prices could not constitute evidence of undisclosed income. He therefore contended that the Revenue’s reliance upon the ERP editing facility did not advance its case.

80. Addressing grounds relating to WhatsApp conversations, the Ld.AR submitted that the very same communications had been examined by the Tribunal in A.Y. 2023-24. He submitted that the Tribunal had found that the messages relied upon by the Revenue related, at the highest, to enquiries, negotiations or discussions regarding the possibility of a cash component in the sale consideration. The communications did not establish a completed payment by an identified purchaser, receipt of a specified amount of cash, the date of delivery, the identity of the recipient or the subsequent utilisation of such cash. The Ld.AR contended that a discussion regarding the possibility or mode of payment could not, without further evidence, establish that payment was ultimately made. He further submitted that the Revenue’s description of the WhatsApp communications as corroborative evidence had also been considered by the Tribunal. Where the foundational fact of actual cash receipt remained unproved, communications indicating negotiations or enquiries could not bridge the evidentiary gap between a proposed transaction and a completed payment.

81. According to the Ld.AR, the Department had not identified any purchaser pertaining to the impugned assessment years who had admitted payment of cash consideration to the assessee. He therefore submitted that the findings recorded by the Tribunal concerning the WhatsApp communications applied equally to the present appeals.

82. The Ld.AR next addressed the Revenue’s reliance upon statements recorded from employees during the course of search u/s.132(4) of the Act. He submitted that the Tribunal had already considered this contention for A.Y.2023-24 and held that, although a statement recorded u/s.132(4) of the Act constituted relevant evidence, it was neither conclusive nor incapable of explanation. The evidentiary weight of such a statement depended upon the nature of the statement, the knowledge and capacity of the maker, the circumstances in which it was recorded, the extent of corroboration and any subsequent explanation.

83. The Ld.AR submitted that the statements relied upon by the Revenue were general statements concerning an alleged sales practice and did not identify particular purchasers, dates, cash amounts or recipients constituting the alleged unaccounted receipts. He further submitted that the employees had furnished retractions or explanatory affidavits after copies of their statements were made available. However, no exercise had been undertaken by the Revenue to re-examine the deponents, confront them with their affidavits or independently verify the allegations.

84. The Ld.AR emphasised that the Tribunal had recorded the categorical factual finding that no identified purchaser had admitted payment of cash, no buyer-wise cash record had been found and no corresponding receipt, asset, investment or expenditure had been traced. In these circumstances, general statements of employees could not validate the mechanical application of the 5% formula or the estimated additions made on a year-wise basis.

85. As regards the Revenue’s reliance upon the decision in B.Kishore Kumar v. DCIT, the Ld.AR submitted that the said decision had already been distinguished by the Tribunal in A.Y. 2023-24. He submitted that the case of B.Kishore Kumar (supra) involved a clear and categorical admission by the assessee himself concerning undisclosed income, supported by printouts and other material, and such admission had not been displaced by a prompt and substantiated retraction. In contrast, the present case involved statements of employees concerning an alleged general practice, which were subsequently disputed, without transaction-specific evidence establishing the actual cash receipts quantified by the AO. The Ld.AR therefore contended that the factual foundation of the decision in B.Kishore Kumar (supra) was materially different and that the Revenue’s reliance upon the same was misplaced.

86. The Ld.AR further submitted that the AO had not rejected the regular books of account maintained by the assessee. No material defect in the method of accounting had been demonstrated, nor had any mismatch been established between the ERP records, customer agreements, registered sale deeds, banking receipts and books of account. The AO had accepted the books for determining turnover and business expenditure but had selectively disregarded the recorded sale consideration and substituted the same with hypothetical selling prices. According to the Ld.AR, such an approach was inconsistent. In the absence of any finding that the recorded transactions were false or that consideration over and above the recorded price had actually been received, the AO could not substitute the recorded sale consideration with an assumed median consideration. He submitted that the Ld.CIT(A) had correctly appreciated this aspect while deleting the additions.

87. The Ld.AR also placed considerable emphasis on the absence of any corresponding money trail. He submitted that, despite an extensive search covering the business premises, project sites and residential premises, the Department had not found any parallel books of account, buyer-wise cash records, purchaser confirmations of cash payments, cash receipts, side agreements or corresponding unexplained investments or expenditure. The Ld.AR submitted that the Tribunal, in A.Y.2023-24, had specifically considered the absence of such corroborative material and observed that, where the entire quantification proceeded from an assumed price differential, the absence of a corresponding money trail assumed considerable evidentiary significance.

88. The Ld.AR further submitted that the Department had not demonstrated that the alleged cash receipts were deployed for making payments to landowners, contractors, suppliers or other persons connected with the projects. Nor had any corresponding undisclosed investment or expenditure been identified in the hands of the assessee, its directors or connected persons. Since the same search formed the foundation of the additions for the impugned assessment years, the Ld. AR contended that the aforesaid factual findings of the Tribunal were equally applicable to the present appeals.

89. Referring to the orders passed by the Ld.CIT(A), the Ld.AR submitted that the first appellate authority had examined the entire material and recorded a categorical finding that the additions were based upon assumptions and estimates without support from incriminating or independent corroborative evidence. The Ld.CIT(A) had taken note of the fact that no unaccounted cash, undisclosed investment or parallel books had been found; no customer confirmation of cash payment had been obtained; the employee statements had subsequently been retracted and remained without independent corroboration; and the regular books of account had been accepted without rejection.

90. The Ld.AR further submitted that the recorded sale consideration was supported by registered documents, ERP records and banking receipts. The Ld.CIT(A) had therefore held that substitution of actual consideration with notional prices and quantification of alleged undisclosed income by extrapolation was unsustainable. According to the Ld.AR, the findings of the Ld.CIT(A) were entirely consistent with the subsequent decision of the Tribunal in the assessee’s own case for A.Y.2023-24.

91. Dealing specifically with the grounds of the Revenue, concerning the alleged lack of adequate opportunity to the AO, the Ld.AR submitted that the allegation was misconceived. He contended that the Ld.CIT(A) had neither admitted any new source of income nor substituted the assessment with a new factual case. The Ld.CIT(A) had merely examined the correctness of the methodology adopted by the AO and considered whether the seized material could support the inference and quantification made in the assessment order.

92. The Ld.AR further submitted that the Tribunal, while deciding the Revenue’s appeal for A.Y.2023-24, had independently examined the identical methodology on merits and held it to be unsustainable. Consequently, according to him, the Revenue could not demonstrate any surviving prejudice on this account.

93. The Ld.AR thereafter submitted that all the substantive grounds raised by the Revenue stood answered by the decision of the Coordinate Bench. Ground challenging deletion of the alleged unaccounted business income, was directly covered by the Tribunal’s order for A.Y.2023-24. Grounds concerning the presumptions u/s.132(4A) and 292C of the Act, stood answered by the finding that such presumptions could not establish an unrecorded cash transaction not evidenced by the seized documents. Ground concerning statements recorded u/s.132(4) of the Act and reliance upon B. Kishore Kumar, was covered by the Tribunal’s findings regarding the general nature of the employee statements, their subsequent retractions and the absence of transaction-specific corroboration. Similarly, ground concerning WhatsApp communications, stood answered by the Tribunal’s finding that discussions or negotiations regarding possible cash payments did not establish actual receipt of cash.

94. The Ld.AR submitted that the principle of consistency and judicial discipline required the Coordinate Bench’s decision to be followed in the present appeals. He emphasised that this was not a case where the assessee was merely relying upon a decision rendered in the case of another taxpayer. The earlier decision was rendered in the assessee’s own case, arising from the same search dated 03.11.2023, concerning the same alleged modus operandi, the same categories of seized material, the same employee statements and electronic evidence, the same 5% benchmark and the same median-rate and extrapolation methodology. Further, A.Y.2023-24 formed part of the very same consolidated quantification of alleged unaccounted cash receipts amounting to Rs.31.43 crores.

95. The Ld.AR contended that the Revenue had not brought on record any independent incriminating material peculiar to the impugned assessment years establishing actual receipt of cash. No purchaser had been identified as having admitted payment of cash; no receipt or acknowledgement, parallel ledger, corresponding seized cash, unexplained asset or expenditure had been identified; and no independent material had been brought on record to establish that the difference between the assumed median rate and the recorded rate was actually received by the assessee. The Ld.AR therefore submitted that the Revenue was merely seeking reconsideration of the same evidentiary inferences which had already been examined and rejected by the Tribunal for A.Y. 2023-24. In the absence of any material distinguishing feature, the decision of the Coordinate Bench squarely governed the present appeals.

96. In conclusion, the Ld.AR submitted that the additions towards alleged undisclosed income from sale of residential flats for the impugned assessment years arose from the very same search material and identical estimation methodology which had already been considered by the Tribunal in the assessee’s own case for A.Y.2023-24. He submitted that the Ld.CIT(A) had correctly appreciated the facts and evidence and deleted the additions made by the AO. Accordingly, he prayed that the orders of the Ld.CIT(A) be upheld and all the substantive grounds raised by the Revenue in the present appeals be dismissed.

97. We have heard the rival submissions, perused the orders of the authorities below and carefully considered the material placed on record including the paper book filed by the Ld.DR and the written submissions filed by the Ld.AR. We have also gone through the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y.2023-24 in ITA No.1857/Chny/2026, dated 18.08.2026, particularly the findings recorded in paragraphs 113 to 158 thereof, as referred to by the Ld.AR. The solitary substantive controversy arising for our consideration is whether the Ld.CIT(A) was justified in deleting the addition of Rs.6,19,62,880/- made by the AO towards alleged unaccounted cash receipts from the sale of residential flats. The said addition was made by the AO in the assessment completed u/s.147 of the Act on 30.09.2025, principally on the basis of certain loose sheets, WhatsApp conversations, statements recorded from employees during the course of search, ERP/BSF data and the estimated difference between the alleged actual selling price and the consideration recorded in the regular books of account.

98. At the outset, we find considerable force in the submission of the Ld.AR that the controversy involved in the present appeal is substantially identical to the issue considered by the Coordinate Bench in the assessee’s own case for A.Y.2023-24. Admittedly, both assessments emanate from the search conducted on 03.11.2023 in the Appaswamy Group. The allegation of the Revenue in both years is that the assessee had received a portion of the sale consideration of residential flats in cash and had subsequently reduced the recorded sale consideration in the Build Super Fast (BSF) ERP system. The material relied upon by the AO, the alleged modus operandi, the statements of the employees, the inference drawn from the WhatsApp conversations, the application of the 5% discount benchmark and the adoption of an estimated median selling rate are substantially common to both years. It is also an undisputed feature of the assessment proceedings that the alleged unaccounted receipts of Rs.31,43,48,171/- attributable to the assessee were quantified through a consolidated exercise covering different assessment years, and the addition of Rs.6,19,62,880/- for the year under consideration represents a year-wise allocation arising from that very exercise.

99. We further note that the Coordinate Bench, while deciding the Revenue’s appeal for A.Y. 2023-24, had occasion to examine the evidentiary value of the material gathered during the same search and the legal sustainability of the methodology adopted by the AO. As brought to our notice, the Coordinate Bench considered the statutory presumptions u/s.132(4A) and 292C of the Act, the statements recorded u/s.132(4) of the Act, the subsequent retractions, the WhatsApp communications, the ERP price- modification facility and the quantification of alleged undisclosed income by adopting a uniform discount benchmark and estimated median selling rates. The Coordinate Bench, upon consideration of the material, dismissed the Revenue’s appeal. The Revenue has not demonstrated before us any independent incriminating material peculiar to A.Y.2017-18 which would warrant a different conclusion. In these circumstances, the findings recorded in the assessee’s own case for A.Y. 2023-24 assume direct relevance to the adjudication of the present appeal. The relevant findings of this Tribunal in confirming the action of the Ld.CIT(A) in deleting the addition made by the AO towards alleged undisclosed from sale of flats are as under:

“113. We have heard the rival submissions advanced by both the parties, carefully perused the assessment order and the impugned appellate order, and examined the material available on record. We find that the grounds raised by the Revenue, though separately worded, essentially assail the deletion of two substantive additions, namely, the addition of Rs.1,76,09,243/- towards alleged unaccounted cash receipts from the sale of residential flats and the addition of Rs.18,87,00,000/- towards alleged cash payment for the acquisition of the Vadapalani property. The other grounds concerning the evidentiary value of seized material, the statutory presumptions u/s.132(4A) and 292C of the Act and the alleged erroneous appreciation of evidence by the Ld.CIT(A) are integrally connected with these two additions and are, therefore, considered together.

114. At the outset, we deem it appropriate to delineate the principles governing appreciation of material gathered during the course of search proceedings. It is well settled that proceedings under the Act, are not fettered by the strict and technical rules of evidence applicable to criminal proceedings and that the AO is entitled to take into consideration all relevant material, including seized documents, loose sheets, electronic records, statements and surrounding circumstances. Equally, however, such latitude in matters of evidence does not confer authority upon the AO to make an addition founded upon conjectures, surmises or assumptions which do not bear a rational and proximate nexus with the material relied upon. Though the Revenue is not required to establish undisclosed income beyond reasonable doubt, the conclusion must nevertheless satisfy the test of preponderance of probabilities founded upon credible and objective material. Suspicion, howsoever strong, cannot substitute evidence of the taxable event.

115. The principal contention advanced by the Ld.DR is that the Ld.CIT(A) proceeded on an erroneous premise that the addition towards alleged unaccounted consideration from sale of flats was made by the AO solely on the basis of statements recorded from certain employees during the course of search. According to the Ld.DR, the AO had, in fact, relied upon a body of material comprising, inter alia, loose sheets containing expressions such as “Actual Price” and “Final Price”, WhatsApp communications retrieved from mobile phones of sales personnel, statements recorded from five employees, Buyer Abstract Analysis Reports, Excel workings found in a pen drive, ERP/CRM data, the statement of the software implementation consultant and the technical facility available in the ERP system for modification of sale price subsequent to the initial booking.

116. We have carefully considered the rival submissions and perused the assessment order, the order of the Ld.CIT(A) and the material placed before us. On such consideration, we are unable to accept the Revenue’s contention that the Ld.CIT(A) proceeded as though the addition was founded solely upon the statements of employees. A reading of the impugned appellate order demonstrates that the Ld.CIT(A) separately examined the internal price sheets, the methodology based upon the alleged permissible discount of 5%, the ERP/CRM data, the employee statements and their subsequent retractions, the WhatsApp communications, the Buyer Abstract Analysis Reports, the regular books of account and, importantly, the absence of transaction-specific corroborative evidence establishing actual receipt of cash. The Ld.CIT(A) did not proceed on the basis that the materials relied upon by the AO did not exist; rather, he examined their evidentiary worth and concluded that they did not establish actual receipt of unaccounted consideration by the assessee. The first premise of the Revenue’s challenge is, therefore, factually misconceived.

117. The Ld.DR nevertheless submitted that the aforesaid materials, when read cumulatively and not in isolation, mutually corroborated each other and established a systematic modus operandi whereby part of the sale consideration was received in cash and the sale price was thereafter reduced in the ERP system.

118. There can be no quarrel with the proposition that evidence is required to be appreciated cumulatively and that, in an appropriate case, an undisclosed transaction may be established through a chain of surrounding circumstances even in the absence of a single document recording every constituent element of the transaction. However, cumulative appreciation of evidence cannot mean that several ambiguous or inferential materials, each dependent upon the same unproved assumption, can collectively be elevated into proof of the foundational fact itself. Corroboration necessarily contemplates evidence which lends independent support to the fact sought to be established. Mere plurality of materials does not cure the absence of the essential evidentiary link.

119. The fundamental fact which the Revenue was required to establish in the present case was not merely that different prices were discussed, quoted or recorded at different stages, but that the difference between such prices represented consideration which was actually paid by the purchasers and received by the assessee outside its regular books of account.

120. The loose sheets and internal sales records containing expressions such as “Actual Price”, “Final Price”, “Target Rate” or similar descriptions may undoubtedly indicate that different prices were contemplated, quoted, negotiated or recorded at different stages of the sales process. However, such documents, by themselves, do not record that the difference between the initial price and the finally recorded consideration was received by the assessee in cash.

121. The expression “Actual Price” appearing in an internal sales document cannot be construed divorced from the commercial setting in which such documents are prepared. Depending upon the context, it may represent an initial quotation, target price, benchmark price, indicative selling rate or internal expectation before negotiations with the customer. The mere nomenclature employed in an internal document cannot, without corroborative evidence, establish that the amount mentioned therein was the consideration actually realised from the purchaser.

122. Significantly, the documents relied upon by the AO do not disclose the date on which the alleged cash was paid, the purchaser who made such payment, the person who received it on behalf of the assessee, the place or mode of delivery, or the manner in which such cash was thereafter accounted for, deployed or utilised. No corresponding cash receipt, acknowledgement, side agreement, parallel ledger or purchaser confirmation has been brought on record.

123. Thus, what emerges from the seized material is, at the highest, the existence of two different price figures. The further conclusion that the difference between those figures physically changed hands in cash is an inference drawn by the AO. Such material could undoubtedly constitute a basis for further purchaser-wise investigation, but the difference between two price figures cannot, without something more, constitute proof of actual receipt of the differential amount in cash.

124. The Revenue has also sought to invoke the statutory presumptions u/s.132(4A) and 292C of the Act. There is no dispute that the said provisions permit certain rebuttable presumptions concerning ownership of documents found in possession or control of a person during search, truth of the contents thereof and the handwriting or signature appearing thereon. However, the statutory presumption operates in relation to the contents actually recorded in the document. It cannot be extended to a fact which the document itself does not state. Even assuming that the loose sheets belonged to the assessee and that the price figures recorded therein were correctly reproduced, the presumption cannot be stretched to hold that the difference between those figures necessarily represented cash consideration received outside the books when the document contains no such recital.

125. In other words, the presumption as to the truth of the figures recorded in a document and the inference sought to be drawn regarding the commercial character of the difference between those figures are two distinct matters. Sections 132(4A) and 292C of the Act cannot be employed to insert into a document a transaction which the document itself does not record.

126. We are, therefore, unable to accept the contention of the Revenue that the mere juxtaposition of “Actual Price” and “Final Price” establishes the receipt of cash differential. Such a conclusion presupposes that the former figure necessarily represented the amount actually realised and that the latter represented only the accounted component. That assumption constitutes the very fact which the Revenue was required to establish by evidence and cannot be treated as proved merely because one of the figures was described as “Actual Price”.

127. Considerable reliance was placed by the Ld.DR upon the statement of Shri Vijay Shyam to contend that discount up to 5% was ordinarily permissible and, consequently, any reduction exceeding 5% necessarily represented cash received from the purchaser. It was argued that the AO had adopted a fair and conservative approach by allowing 5% discount and treating only the balance differential as unaccounted receipt. We are unable to subscribe to the aforesaid proposition.

128. Neither any provision of the Act nor any independent commercial or documentary material has been brought to our notice which would establish 5% as an immutable dividing line between a genuine commercial discount and unaccounted cash consideration. No resolution of the Board of Directors, binding pricing policy, customer agreement or contemporaneous record has been identified to establish that the assessee was legally or commercially prohibited from granting discount beyond 5%.

129. Even assuming that an internal guideline contemplated discount ordinarily not exceeding 5%, departure from an internal pricing guideline cannot, ipso facto, result in undisclosed taxable income. The Revenue was still required to establish that the excess reduction in a particular transaction corresponded to an amount actually received from the concerned purchaser outside the books. It cannot be ignored that the price of a residential apartment may depend upon several commercial variables, including the floor, orientation, view, location within the project, stage of construction, timing of booking, prevailing demand, payment terms, bulk booking, repeat-customer relationship, referral concession, early-payment incentive, market conditions, inventory position and liquidity requirements of the developer. The assessee had also placed reliance upon commercial disruptions in the real-estate sector and the necessity of offering discounts for liquidation of inventory. The AO has not demonstrated that these explanations were factually incorrect or commercially impossible in relation to the transactions under consideration.

130. A general statement of an employee regarding an ordinary pricing practice cannot be converted into an irrebuttable rule that every transaction involving a discount exceeding 5% necessarily contains a corresponding cash component. Before applying such formula, the AO was required to establish, transaction-wise, that the concerned purchaser actually paid the alleged differential amount in cash. No such purchaser-wise verification has been carried out. No purchaser has admitted payment of cash. Nor has any customer-specific document been identified showing that the precise reduction beyond 5% was received by the assessee outside the books. In our considered view, therefore, the 5% methodology does not quantify an independently established undisclosed receipt; rather, it first presumes the existence of such receipt and thereafter proceeds to quantify the presumption. Such methodology cannot furnish the foundational evidence necessary for making the addition.

131. The Ld. DR further contended that the Buyer Abstract Analysis Reports and Excel workings recovered from the pen drive of Shri Vijay Shyam constituted primary incriminating material and, consequently, the impugned addition could not be characterised as a post-search estimation. Even if the provenance of such reports and workings is accepted, their evidentiary value necessarily depends upon what they actually record. A computational document comparing different rates does not become evidence of actual receipt of cash merely because it was discovered during search. The Buyer Abstract Analysis Reports do not record delivery or receipt of cash, nor do they identify the person who allegedly paid or received the cash. They essentially constitute an analysis or comparison of different price figures. The conclusion that the difference exceeding 5% represented cash consideration continues to rest upon the disputed employee statement and the assumption adopted by the AO.

132. The Revenue’s contention that the quantification is reasonable because it is arithmetically derived from the Buyer Abstract Analysis Reports also overlooks an important distinction between existence of undisclosed income and quantification of undisclosed income. Once the factum of undisclosed receipt is established through reliable material, estimation may, in an appropriate case, be resorted to for determining its quantum. Estimation, however, cannot be employed to establish the very existence of the receipt. Mathematical precision in computation cannot validate an unproved factual premise.

133. The Ld. DR also relied upon the statement of the software implementation consultant to establish that the ERP/CRM system permitted alteration of the sale price subsequent to booking of a flat. The evidence, in our view, establishes no more than the technical capability of the software. The existence of an editing facility cannot, by itself, establish that the facility was actually used for suppressing cash receipts. Post- booking alterations may arise for several legitimate commercial reasons, including renegotiation, cancellation and rebooking, modification of payment schedules, grant of additional discount, correction of erroneous entries, change in specifications or settlement of customer disputes. For the technical capability of the ERP system to acquire incriminating character, the Revenue was required to establish a nexus between an identified alteration in the system and a corresponding receipt of cash. No audit trail has been brought to our notice demonstrating that a higher concluded sale consideration was reduced in the ERP system after receipt of a specific cash amount. No purchaser has stated that a higher price was originally agreed, that a portion thereof was thereafter paid in cash and that the recorded ERP price was correspondingly reduced. Technical capability cannot be equated with proof of actual misuse. The Ld. CIT(A), in our view, was justified in declining to draw such inference.

134. As regards the WhatsApp communications, the Ld. DR contended that the chats were not relied upon in isolation but constituted corroborative material when read with the loose sheets, ERP data and statements of employees. For the purposes of deciding the present appeal, we do not consider it necessary to enter into the wider question regarding the admissibility or technical certification of the electronic material. Even proceeding on the assumption that the WhatsApp communications were authentic, properly retrieved and capable of being considered in income- tax proceedings, their evidentiary value must depend upon what the communications actually establish.

135. On examination, the communications referred to in the record appear to relate to enquiries, negotiations or discussions regarding the possibility of a cash component. They do not record a completed payment by any identified purchaser. There is no communication acknowledging receipt of a specified cash amount, recording its date of delivery, identifying the person receiving the amount or explaining its subsequent utilisation.

136. We are of the considered opinion that a discussion regarding the possibility or mode of payment cannot, without further evidence, be equated with proof that such payment was ultimately made. The characterisation of these communications as “corroborative” also does not carry the Revenue’s case further. Corroboration presupposes a primary fact which is capable of receiving independent support. Where the actual receipt of cash itself remains unproved, communications indicating negotiations or enquiries regarding cash cannot bridge the evidentiary gap between discussion and completed payment. At the highest, they reinforce a suspicion that cash was discussed in the sales environment; they do not establish that the impugned amount was actually received by the assessee.

137. The Revenue has placed substantial reliance upon statements recorded from five employees and contended that consistency in their statements established a standardised modus operandi. It was further submitted that the employees were confronted with seized material, that the search proceedings were conducted in an orderly manner, that the panchanamas did not record any allegation of coercion and that no contemporaneous complaint was made. There is no dispute that a statement recorded u/s.132(4) of the Act constitutes relevant evidence. At the same time, neither section 132(4) of the Act nor the general principles governing admissions render every statement conclusive and incapable of explanation. An admission is undoubtedly an important piece of evidence, but the weight to be attached thereto depends upon its nature and clarity, the knowledge and capacity of the maker, the circumstances in which it was made, the extent of corroboration available and the explanation subsequently offered. The absence of an allegation of coercion in the panchanama may be a relevant circumstance while considering the allegation concerning the manner in which the search was conducted. It does not, however, establish the substantive truth of every answer recorded during search. Likewise, orderly conduct of search proceedings does not dispense with the requirement of testing the statements against objective and transaction-specific evidence.

138. In the present case, the employees furnished retractions/explanatory affidavits after copies of their statements were made available, and the Managing Director is also stated to have furnished clarification during the search proceedings. Once sworn affidavits disputing or explaining the earlier statements were placed on record, it was open to the Investigation Wing or the Assessing Officer to re-examine the deponents, confront them with their affidavits and require them to explain the documents relied upon by the Revenue. Admittedly, no such exercise was undertaken. Nor has independent evidence been brought on record demonstrating that the affidavits were false.

139. We do not consider it necessary to return any categorical finding as to whether the original statements were obtained under coercion. Even if the statements are treated as voluntary and are retained in evidence in their entirety, they essentially constitute general statements regarding an alleged sales practice. They do not identify the particular purchasers, dates, cash amounts and recipients constituting the alleged unaccounted receipts of Rs.1,76,09,243/- for the relevant previous year. Thus, the decisive question is not merely whether the assessee conclusively established coercion. The more fundamental issue is whether, after the statements were disputed, there existed independent material establishing actual receipt of the impugned amount during the relevant previous year.

140. We find that no identified purchaser has admitted payment of cash; no buyer-wise cash account has been found; and no corresponding receipt, asset, investment or expenditure has been traced. Consequently, the general statements of employees, even if taken into consideration, cannot fill every missing link in the alleged transactions or validate the mechanical application of the 5% formula.

141. The reliance placed by the Ld.DR upon Surjeet Singh Chhabra v. Union of India (supra) does not materially advance the case of the Revenue. The said decision arose in the context of a confession under the customs law and turned upon the particular nature and circumstances of the admission therein. It cannot be understood as laying down a universal proposition that every statement recorded during a search under the Income-tax Act, irrespective of the identity and knowledge of its maker, contents thereof, subsequent retraction and absence of corroboration, constitutes conclusive proof of a quantified undisclosed receipt.

142. Likewise, the decision in B.Kishore Kumar v. DCIT (supra) is distinguishable on facts. That case involved a clear and categorical admission by the assessee himself regarding undisclosed income, supported by printouts and other material, and the admission was not displaced by a prompt and substantiated retraction. In the case before us, the Revenue predominantly relies upon statements of employees concerning an alleged general practice; such statements were subsequently disputed; and no transaction-specific evidence has been brought on record proving the cash receipts quantified by the AO. A decision rendered in the context of an unequivocal admission by the assessee himself, corroborated by incriminating material, cannot be mechanically applied to general and disputed statements of employees.

143. The Ld. CIT(A) has also referred to the principles emanating from Mehta Parikh & Co. v. CIT and CIT v. Daulat Ram Rawatmull. In the context of the present case, the relevance of those principles is that sworn factual assertions made in the affidavits could not simply be ignored without examining the deponents or bringing contrary material on record. The affidavits may not, by themselves, conclusively establish the assessee’s case; nevertheless, once they formed part of the evidentiary record, they required objective consideration. The failure to undertake such examination materially diminishes the weight sought to be placed exclusively upon the original statements.

144. The Ld. DR contended that absence of seizure of physical cash or identification of its subsequent utilisation could not disprove receipt of unaccounted consideration. However, the order of the Ld.CIT(A) cannot be read as resting upon non-recovery of physical cash alone. The absence of cash is only one circumstance amongst several other evidentiary deficiencies, namely absence of parallel books, buyer-wise cash records, purchaser confirmations, cash receipts, side agreements, money trail, unexplained investments or expenditure, coupled with acceptance of the regular books and registered sale documents. Where an extensive search of the business premises, project sites and residential premises of directors and employees does not yield either the alleged cash or any reliable record evidencing its receipt or application, and where the entire quantification proceeds from an assumed price differential, absence of any corresponding money trail assumes considerable evidentiary significance.

145. We find that the Revenue has neither demonstrated that the alleged cash receipts were deployed for unaccounted payments to landowners, contractors, suppliers or other parties connected with the projects nor identified any corresponding undisclosed investment or expenditure in the hands of the assessee, its directors or connected persons. We are aware that proof of utilisation is not a condition precedent where actual receipt of undisclosed consideration stands otherwise established by cogent evidence. Its significance in the present case arises because the primary factum of receipt itself remains unestablished. Where neither the source- side evidence, namely payment by purchasers, nor the destination-side evidence, namely receipt, possession or utilisation by the assessee, is available, the conclusion of actual receipt becomes substantially inferential.

146. It is also an undisputed factual position that the regular books of account were not rejected u/s.145(3) of the Act. No material defect in the method of accounting has been demonstrated. Nor has the AO established any mismatch between the final consideration reflected in the ERP system, customer agreements, registered sale deeds and banking receipts.

147. We find that the AO has substantially accepted the books for determining turnover, expenditure and business results, but has selectively substituted the sale consideration by adopting an assumed price based upon the impugned methodology. We do not propose to lay down any absolute proposition that an addition towards unaccounted receipt can never be made unless the books are formally rejected. Where direct and reliable evidence establishes receipt outside the books, an addition may be permissible notwithstanding absence of formal rejection. However, where the AO seeks to substitute documented transaction values with an estimated sale consideration and there is no direct evidence of additional receipt, acceptance of the books and absence of identified defects therein assume considerable significance. An estimated selling price cannot displace the consideration evidenced by contemporaneous transactional documents merely because, in the opinion of the AO, a higher price ought to have been realised. Pricing of an individual residential unit is fundamentally a matter of commercial judgment and business expediency. In the absence of tangible evidence demonstrating suppression of consideration, the AO cannot substitute his perception of an appropriate selling price for the price actually negotiated by the assessee. The principle noticed in Fort Projects (P.) Ltd. v. DCIT (supra) is relevant to this limited extent.

148. We find that the methodology adopted by the AO also suffers from indiscriminate extrapolation. Different purchasers, projects, units and periods may be governed by materially different commercial circumstances. Even if seized material created an adverse inference in relation to a particular identified transaction, such inference could not automatically be extrapolated to unrelated transactions unless a rational nexus was demonstrated. The AO has applied a standard formula across transactions without first identifying seized material evidencing actual receipt of cash in each transaction or establishing a representative pattern on the basis of proved transactions. This brings us to an important distinction. There is a fundamental difference between estimation of the quantum of an established undisclosed receipt and establishing the existence of an undisclosed receipt through estimation. Where reliable evidence establishes that an undisclosed business activity or receipt existed but its exact quantum cannot be determined, estimation may, depending upon the facts, be permissible. Estimation cannot, however, be employed to first presume that an undisclosed receipt existed and thereafter quantify that very presumption. The machinery of estimation cannot cure absence of foundational evidence concerning the taxable event itself.

149. In the present case, the AO has not first established through cogent material that the assessee actually received on-money from identified purchasers and thereafter proceeded to estimate its quantum. On the contrary, the existence of on-money itself has been inferred from price variations, and the same inference has thereafter been subjected to a mathematical formula. The resultant figure may possess arithmetic precision, but arithmetic precision cannot substitute evidentiary foundation.

150. Another significant aspect of the matter is that not even a single purchaser has been shown to have admitted payment of cash over and above the consideration disclosed in the registered documents. The AO has not identified any purchaser who stated that he or she paid on-money to the assessee, nor does the assessment order disclose purchaser-wise examination establishing such payment. Where the allegation is that the consideration recorded in registered documents and regular books does not represent the true consideration and that a portion thereof passed outside the books, some material concerning the payer, recipient, amount, date, manner of payment or other circumstance evidencing movement of the additional consideration would ordinarily be expected. No buyer-wise statement of alleged cash consideration has been identified; no cash receipts or acknowledgements have been recovered; no side agreements recording consideration different from the registered consideration have been found; no parallel set of books or cash ledger recording collection of on-money has been brought on record; and no diary, register or electronic record evidencing systematic receipt and accounting of unrecorded consideration has been identified. The absence of evidence from the very persons from whom the alleged unaccounted consideration is stated to have emanated assumes considerable significance, particularly when the other materials relied upon by the Revenue do not independently establish completed cash transactions.

151. Where the Revenue seeks to establish that the apparent consideration reflected in the regular books and registered documents is not the real consideration and that an additional amount has been received outside the books, the burden of establishing such fact lies upon the Revenue. Such burden need not necessarily be discharged only through direct evidence. Circumstantial evidence and the doctrine of human probabilities may undoubtedly be employed. Nevertheless, the circumstances relied upon must constitute a credible and coherent chain from which the conclusion sought to be drawn reasonably follows. The doctrine of human probabilities is a rule for appreciation of evidence; it cannot be invoked to dispense altogether with evidence of the foundational transaction. Even the test of preponderance of probabilities presupposes existence of primary facts and surrounding circumstances from which the asserted conclusion can reasonably emerge. Probability cannot become a substitute for evidence where the fundamental fact of receipt itself remains unproved.

152. In the present case, material links in the chain sought to be constructed by the AO are conspicuously absent. There is no identification of the payer of the alleged cash; no purchaser confirmation or admission; no contemporaneous cash receipt; no parallel agreement; no duplicate books recording cash consideration; no buyer-wise cash ledger; no corresponding unaccounted cash or assets; and no evidence of deployment of the alleged receipts.

153. Viewed cumulatively, therefore, the conclusion that the assessee actually received the sum of Rs.1,76,09,243/- does not reasonably and necessarily flow from the material relied upon by the AO.

154. We further find that the Ld.CIT(A) has recorded a categorical finding of fact that, notwithstanding the extensive search conducted at the business premises, project sites and residential premises of the directors and employees, no material was discovered directly establishing receipt of unaccounted cash consideration from purchasers of flats. Significantly, neither in the assessment order nor before us has the Revenue identified any seized material recording an actual purchaser-wise receipt of cash over and above the consideration accounted for in the regular books. The Revenue has also not demonstrated that the Ld.CIT(A) overlooked any material which conclusively or reasonably establishes such receipt. No perversity has been shown in the findings that there was no buyer-wise evidence, no purchaser admission, no parallel books and no corresponding evidence regarding receipt, possession or application of the alleged cash.

155. We also agree with the Ld.CIT(A) that the materials relied upon by the AO, at the highest, furnish grounds for suspicion and further investigation. Once such suspicion arose, however, it was incumbent upon the Revenue to carry the enquiry to its logical conclusion by bringing on record evidence having a direct and proximate nexus with actual unaccounted receipts. An assessment of undisclosed income cannot remain at the stage of suspicion. An unverified hypothesis cannot acquire the character of taxable income merely because an arithmetical formula is applied to figures found in internal documents.

156. We may clarify that our conclusion does not rest upon the absence of any single category of evidence. Non-recovery of physical cash, viewed independently, may not be decisive. The difficulty for the Revenue in the present case is the simultaneous absence of purchaser evidence, receipt evidence, parallel accounting records, money trail, asset trail and evidence of utilisation, coupled with the absence of any document recording completed cash receipt. The loose sheets record price variations but not cash receipt. The Buyer Abstract Analysis Reports quantify price differences but do not record payment. The ERP evidence demonstrates technical capability but not actual manipulation for concealment of cash. The WhatsApp communications indicate discussions or negotiations but not completed payments. The employee statements speak of an alleged general practice but do not establish purchaser-wise receipt of the impugned amount. The 5% formula quantifies an assumption but does not independently prove the assumption. Thus, these materials are not independent evidentiary links converging upon a proved fact of receipt. To a substantial extent, they are different manifestations of the same underlying inference drawn from variation in sale prices. We are of the considered opinion that a collection of assumptions does not acquire the character of proof merely by repetition across different forms of material.

157. Upon an independent and cumulative consideration of the entire material, we are of the considered view that the Revenue has failed to establish a direct and proximate nexus between the materials relied upon by the AO and the alleged receipt of unaccounted cash consideration of Rs.1,76,09,243/- by the assessee during the relevant previous year. The material may have justified further investigation. It may also have generated suspicion regarding the possibility of cash transactions. However, suspicion of a transaction and proof of a transaction occupy distinct evidentiary fields. Before an amount can be brought to tax as an actual undisclosed receipt, there must exist material reasonably establishing that such receipt, in fact, accrued or was received by the assessee.

158. In the present case, the foundational fact of actual receipt remains unproved. The AO has proceeded from price variation to presumed cash receipt and thereafter from presumed cash receipt to quantified undisclosed income. Such reasoning effectively employs estimation not merely for determining the quantum of established income but for establishing the very existence of income. In our considered opinion, such an approach cannot be sustained. We accordingly find no infirmity in the conclusion reached by the Ld.CIT(A). The findings recorded by the Ld.CIT(A) are based upon a proper appreciation of the evidentiary material and have not been displaced by the Revenue by bringing any cogent contrary material before us. We therefore concur with the Ld.CIT(A) that the AO failed to discharge the burden of establishing actual receipt of unaccounted cash consideration by the assessee. Accordingly, the order of the Ld.CIT(A) deleting the addition of Rs.1,76,09,243/- towards alleged unaccounted cash receipts/on-money from sale of flats is upheld. We find no perversity, factual error or legal infirmity in the impugned finding warranting our interference. The grounds raised by the Revenue on this issue are, therefore, dismissed.”

100. It is well settled that, although the principle of res judicata does not strictly apply to income-tax proceedings, where a fundamental factual issue permeating different assessment years has been considered and decided on the same material, judicial discipline and consistency require that the earlier decision be followed in the absence of any material change in facts or law. We are conscious that each assessment year constitutes a separate unit of assessment and that the Revenue is not precluded from establishing undisclosed income in a particular year on the strength of independent evidence relatable to that year. However, where the very same search material and identical estimation methodology form the foundation of additions in different assessment years, a departure from the decision of a Coordinate Bench cannot be justified merely because the quantum of the addition or the assessment year is different. In the present case, no distinguishing feature has been brought to our notice which would justify taking a view contrary to that adopted by the Coordinate Bench in the assessee’s own case. Nevertheless, for completeness, we proceed to examine the principal contentions raised by the Revenue in the light of the material available on record.

101. The principal contention of the Ld.DR is that the AO did not make the addition merely on the basis of oral statements but relied upon several pieces of evidence which, when considered cumulatively, established a systematic practice of collecting cash consideration from purchasers of flats. In this regard, reliance has been placed upon the loose sheets containing the expressions “Actual Price” and “Final Price”, WhatsApp conversations recovered from the mobile phones of sales personnel, statements recorded from employees and officials of the assessee group, and the facility available in the BSF software for modifying the sale consideration even after booking. We have considered these submissions. There can be no dispute that material found during a search, including electronic records and statements recorded u/s.132(4) of the Act, constitutes relevant evidence and is required to be examined in its proper factual context. Equally, however, the existence of such material does not dispense with the requirement of establishing a rational and proximate nexus between the material relied upon and the particular undisclosed income sought to be assessed.

102. In the present case, the essential factual premise underlying the addition is that the difference between the alleged actual or fixed price and the final consideration recorded in the books necessarily represented cash received by the assessee. In our considered view, the mere existence of two different prices in an internal document, cost sheet or ERP record cannot, without further corroboration, establish that the higher price was the consideration ultimately agreed upon and that the difference was actually paid by the purchaser and received by the assessee outside its books. The expressions employed in an internal working paper may indicate a quoted price, target price, preliminary negotiated price, revised price or final agreed consideration, depending upon the context in which the document was prepared. The Revenue is required to establish, by reference to the relevant transaction and surrounding evidence, that the difference represents an actual receipt rather than a commercial price revision or discount. The AO has not demonstrated such a nexus in respect of the transactions forming the basis of the impugned addition.

103. We have also considered the Revenue’s reliance upon the presumptions contemplated u/s.132(4A) and 292C of the Act. The said provisions permit presumptions, subject to their statutory conditions, regarding the ownership of books of account or documents, the truth of their contents and the handwriting or signatures appearing therein. However, such presumptions cannot be extended to establish a further factual proposition which the document itself does not record. Even assuming that the figures appearing in the seized loose sheets are genuine and correctly recorded, the presumption regarding their contents cannot, by itself, establish that the difference between two figures was actually received by the assessee in cash. The existence of a price differential and the actual receipt of unaccounted consideration are two distinct factual propositions. The former may emerge from the document, whereas the latter requires a further evidentiary link. We find that the Revenue has sought to infer the latter merely from the former, without establishing the intervening facts. This aspect has also been considered by the Coordinate Bench in the assessee’s own case for A.Y.2023- 24. We, therefore, find no infirmity in the conclusion of the Ld.CIT(A) that the seized loose sheets, in the absence of independent corroboration, do not establish the actual receipt of the alleged cash consideration.

104. Coming to the statements recorded from the employees and officials of the assessee group, we find that the AO has placed considerable reliance upon the statements of Shri Souvik Sarkar, Shri R.Swaminathan, Shri P.Muthukumar, Shri Vijay Shyam and other personnel connected with the sales and ERP functions. The Ld.DR has particularly emphasised that these statements described the alleged procedure for collecting cash from customers and thereafter reducing the recorded sale consideration in the ERP system. We have given due consideration to this contention. A statement recorded u/s.132(4) of the Act is undoubtedly relevant evidence and cannot be discarded merely because it has subsequently been retracted. However, its evidentiary weight must be determined with reference to the nature of the admission, the knowledge of the person making it, the circumstances in which it was recorded, the explanation subsequently offered and, importantly, the extent to which it is corroborated by other reliable material.

105. In the present case, the Ld.CIT(A) has recorded a categorical finding that the concerned employees furnished retractions or explanatory affidavits promptly after obtaining copies of their statements. In particular, Shri R.Swaminathan, upon receiving a copy of his statement on 24.11.2023, submitted a retraction by e-mail dated 08.12.2023, followed by an affidavit dated 18.12.2023. Similar retractions were furnished by other employees. The Ld.CIT(A) further found that neither the Investigation Officer nor the AO undertook any meaningful exercise to re-examine the deponents, confront them with their subsequent explanations or obtain independent evidence to verify the allegations contained in the original statements. The AO rejected the retractions primarily on the ground that coercion or duress had not been established. While the absence of proof of coercion may be relevant in assessing the credibility of a retraction, it does not, by itself, establish the correctness of every factual allegation contained in the original statement or prove the quantum of undisclosed income attributed to the assessee.

106. We further find that the statements relied upon by the Revenue principally describe an alleged general practice concerning the collection of cash and modification of sale prices. The assessment order does not demonstrate how the alleged practice, even if assumed to have existed, establishes that the assessee actually received Rs.6,19,62,880/- during the relevant previous year. No transaction-wise reconciliation has been brought on record linking the statements to identified purchasers, the precise cash amounts allegedly paid, the dates of payment and the corresponding receipts in the hands of the assessee. The Revenue has also not brought on record any independent confirmation from the purchasers establishing payment of consideration over and above the amounts recorded in the registered sale deeds and books of account. In the absence of such corroboration, the statements cannot be treated as conclusive proof of the entire estimated addition. The principles emerging from the decisions in Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) and Mehta Parikh & Co. v. ITO (1956) 30 ITR 181 (SC), as relied upon before the Ld.CIT(A), support the necessity of examining admissions and affidavits in the context of the surrounding evidence rather than treating them as incapable of explanation or rebuttal.

107. We also find that the reliance placed by the Revenue upon the decision in B. Kishore Kumar v. DCIT does not advance its case. As explained before us, the Coordinate Bench in the assessee’s own case for A.Y. 2023-24 has already considered and distinguished the said decision on its facts. The present case involves statements made by employees concerning an alleged general sales practice, which were subsequently disputed, whereas the addition sought to be sustained is a quantified amount arrived at by applying an estimated pricing formula across numerous transactions. The evidentiary question is not merely whether the statements were admissible or relevant, but whether they establish the actual receipt of the specific unaccounted consideration brought to tax. In the absence of transaction-specific corroboration, the general statements cannot validate the entire addition. We accordingly concur with the Ld.CIT(A) that the AO was not justified in treating the retracted statements, without further verification and independent supporting evidence, as sufficient proof of the alleged undisclosed receipts.

108. We next advert to the WhatsApp conversations recovered from the mobile phones of the sales personnel. The Ld.DR has placed particular reliance upon the conversation between Shri Souvik Sarkar and Shri Gopinath concerning apartment No. R-11 in the project “Clover by the River”, wherein reference was made to a proposed cash component of Rs.25.00 lakhs and a corresponding reduction in the sale price. According to the Revenue, the said conversation, read with the statement of Shri Souvik Sarkar, demonstrates that cash consideration formed part of the agreed transaction. We have examined the contention in the context of the findings recorded by the Ld.CIT(A). The crucial distinction is between a discussion or negotiation regarding a proposed mode of payment and evidence establishing that the proposed payment was ultimately made. The Revenue has not demonstrated that the conversation was followed by actual delivery of the stated cash amount, nor has it identified any corresponding receipt, acknowledgement, cash record or other independent evidence establishing the completion of the alleged cash transaction.

109. It is pertinent to note that the mere reference to a cash component in a communication may constitute a circumstance warranting further enquiry. However, such a communication cannot automatically be treated as proof of a completed cash receipt, much less as proof that similar cash amounts were received in respect of other flats, projects and assessment years. The Revenue has not established any direct linkage between the WhatsApp conversations and the amount of Rs.6,19,62,880/- added for the year under consideration. The conversations relied upon do not furnish a transaction-wise basis for the impugned quantification. The Coordinate Bench, while considering the same category of electronic communications in the assessee’s own case for A.Y. 2023-24, has also examined the distinction between negotiations concerning possible cash payments and evidence of actual receipt. Respectfully following the said decision, and having regard to the absence of independent corroboration in the present year, we hold that the WhatsApp conversations do not furnish a sufficient basis for sustaining the impugned addition.

110. The Revenue has also placed considerable emphasis upon the facility available in the BSF ERP software for modifying the sale consideration after booking of an apartment. The Ld.DR has referred to the statement of Shri Gurupandiyan, Implementation Consultant of M/s Micromen Software Solutions Pvt. Ltd., as well as the statements of the sales and systems personnel, to contend that the assessee could alter the sale price after receiving the cash component. We find that the technical capability of the software to modify the recorded price is not in dispute. However, the existence of an editing facility and the actual suppression of sale consideration are separate matters. A modification in the ERP system may arise on account of renegotiation of price, cancellation or rebooking, revision of payment terms, correction of an erroneous entry, additional commercial discounts or other legitimate business considerations. Unless a particular modification is linked through reliable evidence to the receipt of an identified amount of cash outside the books, the mere availability or exercise of the modification facility cannot establish undisclosed income.

111. The demonstration of the ERP modification process by the sales personnel during the search establishes, at the highest, that the recorded sale price could be altered in the software. It does not establish that every such alteration, or every reduction beyond the assumed permissible discount, was necessarily preceded by receipt of unaccounted cash. The Revenue has not produced any transaction-wise audit trail demonstrating that the original ERP price represented the finally agreed consideration, that the difference was actually collected from the purchaser in cash and that the revised price was entered for the purpose of suppressing such receipt. In the absence of this essential linkage, the inference drawn by the AO remains unsubstantiated. We, therefore, agree with the Ld.CIT(A) that the ERP data and the software vendor’s statement, although relevant to the technical functioning of the system, do not independently establish the receipt of the alleged undisclosed consideration.

112. The next and more fundamental aspect concerns the methodology adopted by the AO for quantifying the alleged unaccounted receipts. It is evident from the assessment order, as examined by the Ld.CIT(A), that the AO proceeded on the premise that discounts up to approximately 5% could ordinarily be allowed to customers and that any reduction exceeding such percentage represented consideration received in cash. Thereafter, by adopting the alleged actual, fixed or median selling rate as the benchmark, the AO computed the difference between such rate and the consideration recorded in the ERP system and treated the differential amount as unaccounted income. In our considered view, this methodology suffers from a fundamental evidentiary defect. The AO has proceeded to quantify undisclosed income without first establishing, through reliable evidence, the existence of the alleged undisclosed receipt in the transactions to which the formula was applied.

113. The adoption of a 5% benchmark is not supported by any statutory provision prescribing that a discount exceeding such percentage must be treated as undisclosed consideration. Even assuming that the assessee ordinarily permitted discounts up to 5% under its internal commercial guidelines, a departure from such guidelines cannot, by itself, establish that the excess reduction was compensated by cash received outside the books. A business may grant a higher discount for several commercial reasons, and the genuineness of a particular price reduction must be examined with reference to the facts of that transaction. The AO has not established that the discounts granted in the transactions under consideration were fictitious or that the purchasers had actually paid the differential amounts to the assessee. The mechanical conversion of every reduction beyond 5% into alleged cash consideration is, therefore, not supported by a demonstrated factual nexus.

114. We further find that the AO has adopted estimated median selling rates for different projects and substituted such rates for the actual consideration recorded in the books. As noted by the Ld.CIT(A), the median rate was not a rate appearing in any seized document evidencing a completed sale transaction at that price. It was an inferential figure computed from the available ERP data by the AO. The AO thereafter treated the said rate as the true selling price of the flats and assumed that the difference between the estimated rate and the recorded consideration had been received in cash. Such an exercise effectively substitutes a hypothetical selling price for the consideration actually recorded in the contemporaneous transaction documents. In the absence of evidence establishing that the estimated rate represented the consideration actually agreed upon and realised from the respective purchasers, the resulting difference cannot be brought to tax as undisclosed business income.

115. It is also relevant that the assessee is engaged in the business of real estate development, wherein the selling price of residential apartments is influenced by several commercial considerations. The floor on which an apartment is situated, its orientation, view, location within the project, date of booking, stage of construction, prevailing market conditions, payment schedule, bulk booking arrangements, customer negotiations and liquidity requirements may legitimately result in variations in the sale price of different units. The Ld.CIT(A) has examined the explanations furnished by the assessee in this regard and has found that the AO did not establish that such factors could not account for the price variations noticed in the ERP records. We find no material before us to displace this finding. The AO cannot assume that all flats in a project ought to have been sold at a uniform or median rate and treat every departure from such rate as suppression of consideration. The decision of the Kolkata Bench in Fort Projects (P.) Ltd. v. DCIT [2013] 29 taxmann.com 84, relied upon by the Ld.CIT(A), is relevant to the extent that a commercial decision concerning the selling price cannot be displaced merely by substituting the AO’s own assessment of an appropriate price, without tangible evidence of suppressed consideration.

116. The distinction between the existence of undisclosed income and the estimation of its quantum is of considerable importance in the present case. Where reliable material establishes that an assessee has actually received unaccounted consideration, the question of determining its quantum may arise, and an estimation based upon a rational and evidentiary foundation may be permissible in appropriate circumstances. However, estimation cannot itself be employed to establish the foundational fact that undisclosed consideration was received. In the present case, the AO has proceeded in the reverse order. He has first assumed that the difference between the estimated median rate and the recorded sale rate represents cash consideration and has thereafter aggregated such differences across various transactions to determine the alleged undisclosed income. The computation is thus founded upon the very assumption which the Revenue was required to establish. We find that the Coordinate Bench in the assessee’s own case for A.Y. 2023-24 has considered this fundamental defect in the methodology. In the absence of any material distinguishing the present year, the same reasoning applies with equal force to the addition under consideration.

117. We also find that the extrapolation undertaken by the AO lacks the necessary transaction-specific foundation. The Revenue has relied upon certain loose sheets, internal communications and employee statements to infer an alleged general practice and has thereafter extended that inference to numerous transactions across different projects and assessment years. The assessment order does not demonstrate that each transaction to which the formula was applied involved an actual cash payment. Nor has the AO established that the transactions were sufficiently comparable in their relevant commercial features to justify the uniform application of the assumed rate or discount benchmark. The mere fact that the alleged unaccounted receipts have been allocated year-wise does not establish their actual receipt in the respective years. The quantum of Rs.6,19,62,880/- attributed to A.Y.2017-18 must independently satisfy the requirement of being supported by reliable evidence. Since the amount is derived from the same unsubstantiated estimation methodology, its year-wise allocation cannot cure the underlying evidentiary defect.

118. Another material aspect which has been correctly appreciated by the Ld.CIT(A) is that the AO has not rejected the regular books of account maintained by the assessee. The sale transactions are supported by customer agreements, registered sale deeds, ERP records and banking receipts. The assessment order does not identify any material discrepancy between these records, nor does it record a finding that the registered sale deeds or customer agreements are fabricated or that the recorded consideration is false. The AO has also not invoked section 145(3) of the Act or recorded any finding that the books of account are incorrect or incomplete. While the acceptance of books does not, by itself, preclude an addition where independent evidence establishes suppressed receipts, the absence of any demonstrated defect or independent proof assumes significance in the present case. The AO has accepted the recorded business transactions for determining the regular business results but has selectively substituted the recorded sale consideration with a hypothetical figure, without establishing that any amount over and above the recorded consideration was actually received.

119. We are therefore of the considered view that the recorded sale consideration cannot be displaced merely because the AO considers that a higher price ought to have been realised. The charge to tax is upon income which has accrued, arisen or been received in accordance with the provisions of the Act. A notional difference between an assumed selling price and the consideration recorded in the regular books cannot, without evidence of actual accrual or receipt, be treated as undisclosed business income. The Revenue has not established that the assessee acquired an enforceable right to receive the alleged higher consideration or that the differential amount was actually received from the purchasers. Consequently, the addition cannot be sustained merely upon a comparison of estimated and recorded selling rates.

120. We further note the categorical findings recorded by the Ld.CIT(A) that, notwithstanding the extensive search conducted at the business premises, project sites and residential premises of the directors and employees of the group, the AO has not identified any parallel books of account, buyer-wise cash ledgers, cash receipts, acknowledgements or side agreements evidencing the alleged undisclosed consideration. No purchaser has been examined who admitted to having paid cash over and above the recorded sale consideration. The Ld.DR before us has fairly admitted that no enquiry was ever conducted with any of the purchasers to demonstrate that they had actually paid cash to the assessee over and above the registered value for sale of flats. The Revenue has also not identified any corresponding unexplained investment, expenditure or application of funds traceable to the alleged cash receipts. We are conscious that the absence of seizure of cash or corresponding assets is not, by itself, conclusive proof that no undisclosed income was received. Nevertheless, where the entire addition is founded upon an estimated price differential, the absence of independent corroboration or a corresponding money trail assumes considerable evidentiary significance. In the facts of the present case, the Revenue has not brought on record sufficient material to bridge the gap between the alleged pricing differences and the actual receipt of undisclosed consideration.

121. We have also considered the submission of the Ld.DR that the various pieces of evidence relied upon by the AO mutually corroborate one another and ought to be considered cumulatively rather than in isolation. We agree with the general proposition that evidence must be appreciated in its entirety and that the probative value of individual circumstances may be enhanced when they form part of a consistent and reliable chain of evidence. However, a cumulative appreciation of evidence cannot dispense with proof of the essential fact sought to be established. In the present case, the loose sheets disclose price differences; the WhatsApp conversations indicate discussions concerning possible cash payments; the employee statements describe an alleged general practice; and the ERP evidence demonstrates the technical possibility of modifying sale prices. Even when these circumstances are considered together, the Revenue has not established a reliable link between them and the actual receipt of Rs.6,19,62,880/- by the assessee during the relevant previous year. The material may furnish grounds for suspicion or further investigation, but it does not, in the absence of transaction-specific corroboration, establish the entire estimated amount as undisclosed income.

122. We also find no merit in the Revenue’s objection concerning the alleged lack of adequate opportunity to the AO during the first appellate proceedings. The Ld.CIT(A) has examined the material relied upon in the assessment order, the explanations furnished by the assessee and the legal sustainability of the inference and quantification made by the AO. The Revenue has not demonstrated before us that any specific additional evidence was admitted in contravention of the applicable procedural requirements or that any material finding was recorded on the basis of evidence which the AO had no opportunity to examine. In any event, the substantive controversy concerning the evidentiary value of the common search material and the estimation methodology has also been independently considered by the Coordinate Bench in the assessee’s own case for A.Y. 2023-24. No factual or legal prejudice warranting interference with the impugned appellate order has been established before us. We accordingly reject the Revenue’s objection on this account.

123. On a careful examination of the impugned appellate order, we find that the Ld.CIT(A) has dealt with the controversy in considerable detail. The Ld.CIT(A) has examined the absence of direct evidence of actual cash receipts, the evidentiary limitations of the loose sheets and WhatsApp conversations, the subsequent retractions of employee statements, the lack of transaction-wise corroboration, the acceptance of the regular books of account and the arbitrary application of the 5% benchmark and median-rate methodology. The findings recorded in paragraphs 6.2.18 to 6.2.48 of the impugned order demonstrate that the ld.CIT(A) has not deleted the addition merely on the ground that no physical cash was found during the search. On the contrary, the deletion is founded upon a cumulative appreciation of the material and the failure of the Revenue to establish that the alleged differential consideration was actually received by the assessee. The Ld.CIT(A) has also given due consideration to the commercial explanations offered by the assessee for variations in the selling prices of different apartments. We find that these findings are supported by the material discussed in the appellate order and have not been effectively controverted by the Revenue through any independent evidence relating to the year under consideration.

124. More importantly, we find that the decision of the Coordinate Bench in the assessee’s own case for A.Y.2023-24 directly governs the substantive controversy before us. The earlier decision arose from the same search, concerned the same alleged modus operandi and involved the same categories of seized material and the same methodology adopted for determining the alleged unaccounted receipts. The Coordinate Bench considered the evidentiary value of the loose sheets, statutory presumptions, employee statements, electronic communications and ERP records, as well as the sustainability of the 5% discount benchmark and the median-rate extrapolation. The Revenue has not brought on record any independent evidence peculiar to A.Y. 2017-18 which establishes that the assessee actually received consideration over and above the amounts recorded in its books. The mere fact that the amount allocated to the present year is Rs.6,19,62,880/- does not constitute a distinguishing feature when the addition itself arises from the same consolidated estimation exercise. We, therefore, respectfully follow the decision of the Coordinate Bench in the assessee’s own case for A.Y. 2023-24 and hold that the addition made by the AO for the year under consideration cannot be sustained.

125. In view of the foregoing discussion, and upon a cumulative consideration of the facts, circumstances and material available on record, we are of the considered opinion that the AO has failed to establish, by cogent and reliable evidence, that the assessee received unaccounted cash consideration of Rs.6,19,62,880/- from the sale of residential flats during the relevant previous year. The addition is founded substantially upon inferences drawn from internal pricing records, general statements of employees, electronic communications and an estimated median-rate formula, without establishing the actual receipt of the differential consideration in the transactions concerned. The quantification of the alleged undisclosed income, being based upon assumptions and mechanical extrapolation rather than established receipts, is not sustainable. The Ld.CIT(A), having examined the material and the explanations furnished by the assessee, has rightly deleted the addition. We find no perversity, factual infirmity or error of law in the conclusion reached by the Ld.CIT(A) warranting our interference.

126. Accordingly, respectfully following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y.2023-24 in ITA No.1857/Chny/2026, dated 18.08.2026, and for the independent reasons discussed hereinabove, we uphold the order of the Ld.CIT(A) dated 02.02.2026 deleting the addition made by the AO towards alleged unaccounted cash receipts from the sale of residential flats. Consequently, the substantive grounds raised by the Revenue are dismissed.

127. In the result, the appeal filed by the Revenue for A.Y. 2017-18 in ITA No.2984/Chny/2026 is dismissed.

128. We shall now proceed to adjudicate the remaining appeals, which are dealt with hereunder, seriatim:

ITA Nos.2985, 3368, 3041 and 2838/Chny/2026 for the AY(s) 2018-19, 2019-20, 2020-21 and 2021-22 in the case of M/s.IVAR Estates Private Limited

129. We shall now take up the Revenue’s appeals in ITA Nos.2985, 3368, 3041 and 2838/Chny/2026 for the AY(s) 2018-19, 2019-20, 2020-21 and 2021-22, respectively, in the case of M/s.IVAR Estates Private Limited. In these appeals, the Revenue has challenged the common order of the Ld.CIT(A)-19, Chennai, dated 02.02.2026, deleting the additions of Rs.5,44,98,894/-, Rs.6,31,65,979/-, Rs.5,56,34,550/- and Rs.3,10,86,230/- made by the AO towards alleged unaccounted cash receipts from the sale of residential flats for the respective assessment years.

130. We have heard the rival submissions and perused the material available on record. At the outset, we find that the facts and circumstances giving rise to the impugned additions in these four appeals are substantially identical to those considered by us in the lead appeal of the Revenue for A.Y.2017-18 in ITA No.2984/Chny/2026 supra. The additions in all these assessments years emanate from the same search conducted on 03.11.2023 in the case of the Appaswamy Group and are founded upon the very same loose sheets, WhatsApp conversations, statements recorded from employees and data extracted from the BSF ERP system. The AO has adopted an identical methodology for quantifying the alleged undisclosed income by comparing the recorded sale consideration with the assumed median selling rates and treating the differential amount, after allowing a standard discount of 5%, as unaccounted cash receipts. The only material distinction among these appeals is the quantum of the additions attributed to the respective assessment years.

131. We further note that the Ld.CIT(A), while deleting the additions for the assessment years under consideration, has recorded common findings in paragraphs 6.2.18 to 6.2.48 of the impugned appellate order. The Ld.CIT(A) has found that the additions are not supported by any independent or corroborative evidence establishing actual receipt of cash consideration over and above the amounts recorded in the regular books of account. No buyer- wise cash receipts, parallel books of account, acknowledgements, side agreements or customer confirmations have been identified by the AO to substantiate the alleged unaccounted receipts. The Ld.CIT(A) has further observed that the AO has not rejected the books of account maintained by the assessee, nor has he demonstrated that the consideration recorded in the registered sale deeds, customer agreements and ERP records is incorrect or unreliable. The alleged undisclosed income has instead been quantified by substituting the recorded consideration with estimated selling rates, without establishing that the differential consideration had actually accrued or been received by the assessee.

132. We find that the aforesaid findings of the Ld.CIT(A) are equally applicable to all four assessment years presently under consideration. The Revenue has not brought on record any independent or transaction-specific evidence peculiar to any of these assessment years to establish that the assessee actually received consideration in cash over and above the amounts disclosed in its books. The mere allocation of the alleged unaccounted receipts among different assessment years, based upon a common estimation exercise, cannot establish the actual receipt of such amounts during the respective previous years. We have already examined the evidentiary value of the seized loose sheets, electronic communications, employee statements and ERP records, as well as the sustainability of the median-rate methodology and the extrapolation adopted by the AO, while adjudicating the lead appeal for A.Y.2017-18. For the detailed reasons recorded therein, we have held that the additions made on the basis of such unsubstantiated estimation and extrapolation cannot be sustained.

133. We also find that the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y.2023-24, which has been considered and followed by us while disposing of the lead appeal, governs the substantive controversy arising in the present appeals. The Revenue has not demonstrated any distinguishing factual feature or brought on record any independent evidence for the AY(s) 2018-19 to 2021-22 which would warrant a departure from the findings recorded in the lead appeal. Accordingly, following the decision of the Coordinate Bench in the assessee’s own case for A.Y.2023-24 and adopting our detailed findings and conclusions recorded in ITA No.2984/Chny/2026 for A.Y.2017-18, which shall apply mutatis mutandis to these appeals, we hold that the additions made by the AO towards alleged unaccounted cash receipts from the sale of flats are unsustainable.

134. In view of the foregoing discussion, we are of the considered opinion that the Ld.CIT(A) was justified in deleting the additions for the AY(s) 2018-19, 2019-20, 2020-21 and 2021-22 also. We find no infirmity in the findings recorded by the Ld.CIT(A) warranting our interference. Accordingly, we uphold the impugned appellate order dated 02.02.2026 insofar as it relates to the aforesaid assessment years and dismiss the grounds raised by the Revenue in all these four appeals.

135. In the result, the appeals filed by the Revenue in ITA Nos.2985, 3368, 3041 and 2838/Chny/2026 for the assessment years 2018-19, 2019-20, 2020- 21 and 2021-22, respectively, in the case of M/s. IVAR Estates Private Limited, are dismissed.

ITA Nos.4297, 4298, 4299 and 4300/Chny/2026 for the AY(s) 2017-18, 2021-22, 2022-23 and 2023-24 in the case of M/s.Appaswamy Real Estates Limited

136. We shall now take up the Revenue’s appeals in ITA Nos.4297, 4298, 4299 and 4300/Chny/2026 for the AY(s) 2017-18, 2021-22, 2022-23 and 2023-24 respectively, in the case of M/s. Appaswamy Real Estates Limited. In these appeals, the Revenue has challenged the common order of the Ld.CIT(A)-19, Chennai, dated 12.02.2026, deleting the additions of Rs.5,69,70,000/-, Rs.16,91,01,615/-, Rs.21,47,37,055/- and Rs.8,98,86,490/- made by the AO towards alleged unaccounted cash receipts from the sale of residential flats for the respective assessment years.

137. We have heard the rival submissions and perused the material available on record. At the outset, we find that the facts and circumstances giving rise to the impugned additions in these four appeals are substantially identical to those considered by us in the lead appeal of the Revenue for A.Y.2017-18 in ITA No.2984/Chny/2026 supra. The additions in all these assessments years emanate from the same search conducted on 03.11.2023 in the case of the Appaswamy Group and are founded upon the very same loose sheets, WhatsApp conversations, statements recorded from employees and data extracted from the BSF ERP system. The AO has adopted an identical methodology for quantifying the alleged undisclosed income by comparing the recorded sale consideration with the assumed median selling rates and treating the differential amount, after allowing a standard discount of 5%, as unaccounted cash receipts. The only material distinction among these appeals is the quantum of the additions attributed to the respective assessment years concerning the assessee.

138. We further note that the Ld.CIT(A), while deleting the additions for the assessment years under consideration, has recorded common findings in paragraphs 6.2.18 to 6.2.48 of the impugned appellate order. The Ld.CIT(A) has found that the additions are not supported by any independent or corroborative evidence establishing actual receipt of cash consideration over and above the amounts recorded in the regular books of account. No buyer- wise cash receipts, parallel books of account, acknowledgements, side agreements or customer confirmations have been identified by the AO to substantiate the alleged unaccounted receipts. The Ld.CIT(A) has further observed that the AO has not rejected the books of account maintained by the assessee, nor has he demonstrated that the consideration recorded in the registered sale deeds, customer agreements and ERP records is incorrect or unreliable. The alleged undisclosed income has instead been quantified by substituting the recorded consideration with estimated selling rates, without establishing that the differential consideration had actually accrued or been received by the assessee.

139. We find that the aforesaid findings of the Ld.CIT(A) are equally applicable to all four assessment years presently under consideration. The Revenue has not brought on record any independent or transaction-specific evidence peculiar to any of these assessment years to establish that the assessee actually received consideration in cash over and above the amounts disclosed in its books. The mere allocation of the alleged unaccounted receipts among different assessment years to the present assessee, based upon a common estimation exercise, cannot establish the actual receipt of such amounts during the respective previous years. We have already examined the evidentiary value of the seized loose sheets, electronic communications, employee statements and ERP records, as well as the sustainability of the median-rate methodology and the extrapolation adopted by the AO, while adjudicating the lead appeal for A.Y.2017-18 in the case of M/s.IVAR Estates Private Limited supra. For the detailed reasons recorded therein, we have held that the additions made on the basis of such unsubstantiated estimation and extrapolation cannot be sustained.

140. We also find that the decision of the Coordinate Bench of this Tribunal in the assessee’s group company case for A.Y.2023-24, which has been considered and followed by us while disposing of the lead appeal, governs the substantive controversy arising in the present appeals. The Revenue has not demonstrated any distinguishing factual feature or brought on record any independent evidence for the assessment year under consideration in the case of the preset assessee which would warrant a departure from the findings recorded in the lead appeal. Accordingly, following the decision of the Coordinate Bench in the assessee group company case for A.Y.2023-24 and adopting our detailed findings and conclusions recorded in the lead case as above in ITA No.2984/Chny/2026 for A.Y.2017-18 in the case of M/s.IVAR Estates Private Limited, which shall apply mutatis mutandis to these appeals, we hold that the additions made by the AO towards alleged unaccounted cash receipts from the sale of flats are unsustainable.

141. In view of the foregoing discussion, we are of the considered opinion that the Ld.CIT(A) was justified in deleting the additions for the AY(s) 2017-18, 2021-22, 2022-23 and 2023-24 also. We find no infirmity in the findings recorded by the Ld.CIT(A) warranting our interference. Accordingly, we uphold the impugned appellate order dated 12.02.2026 insofar as it relates to the aforesaid assessment years and dismiss the grounds raised by the Revenue in all these four appeals.

142. In the result, the appeals filed by the Revenue in ITA Nos.4297, 4298, 4299 and 4300/Chny/2026 for the AY(s) 2017-18, 2021-22, 2022-23 and 2023-24 respectively, in the case of M/s.Appaswamy Real Estates Limited are dismissed.

143. In the result, all the appeals of the Revenue are dismissed.

Order pronounced on 28th September, 2026 at Chennai.

Filed under ITAT Judgments Section 145

Author Info

Name: CA Vijayakumar Shetty

Qualification: CA in Practice

Company: Shetty & Co, Chartered Accountants, Mangalore

Location: Mangalore, Karnataka

Articles Published: 6,782

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Case Law Details

DCIT Vs Ivar Estates Private Limited (ITAT Chennai)

S. No

AY

ITA No

Date of assessment order

Assessment order passed u/s.

Date of CIT(A) order

Quantum of addition – undisclosed income from sale of flats (Rs.)

No of days of delay in filing of appeal

1

2017-18

2984/Chny/2026

30.09.2025

147

02.02.2026

6,19,62,880

20

2

2018-19

2985/Chny/2026

30.09.2025

147

02.02.2026

5,44,98,894

20

3

2019-20

3368/Chny/2026

29.09.2025

147

02.02.2026

6,31,65,979

34

4

2020-21

3041/Chny/2026

29.03.2025

147

02.02.2026

5,56,34,550

22

5

2021-22

2838/Chny/2026

29.03.2025

147

02.02.2026

3,10,86,230

14

S. No

AY

ITA No

Date of assessment order

Assessment order passed u/s.

Date of CIT(A) order

Quantum of addition – undisclosed income from sale of flats (Rs.)

No of days of delay in filing of appeal

1

2017-18

4297/Chny/2026

01.04.2025

147

12.02.2026

5,69,70,000

102

2

2021-22

4298/Chny/2026

31.03.2025

147

12.02.2026

16,91,01,615

102

3

2022-23

4299/Chny/2026

31.03.2025

147

12.02.2026