Ravi Omprakash Agrawal Vs DCIT (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in Ravi Omprakash Agrawal Vs. Deputy Commissioner of Income Tax, decided a series of cross-appeals and cross-objections filed by Shri Ravi Omprakash Agrawal (Assessee) and the Income Tax Department (Revenue) for Assessment Years 2022-23 and 2023-24. The appeals arose from a common order dated 15 April 2025 passed by the CIT(A)-54, Mumbai, following assessments framed under Section 143(3) of the Income Tax Act, 1961. A search and seizure operation under Section 132 had been conducted against the Ravi Agrawal Group on 10 May 2023, during which the Investigation Wing recovered loose papers, diaries, notebooks and digital records and recorded statements of several persons associated with the group. The Assessing Officer subsequently made substantial additions relating to alleged unexplained cash receipts, cash payments, interest expenditure, investments, property transactions and financing activities. The principal controversy concerned whether cash collected and delivered on behalf of third parties could be treated as the assessee’s unexplained money under Section 69A and simultaneously as unexplained expenditure under Section 69C. The Tribunal examined the nature of the transactions, ownership of the funds, evidentiary value of seized records and statements, and the distinction between gross cash movements and commission income earned from Angadia-type services.
A major dispute for AY 2023-24 arose from additions of ₹197,39,54,122 under Section 69A towards alleged unexplained cash receipts and ₹184,03,58,935 under Section 69C towards alleged unexplained cash payments. The Assessing Officer relied upon loose papers, diaries and notebooks found during the search at premises associated with Shri Deepak Singh, described as a cash handler connected with the Ravi Agrawal Group. In his statement, Shri Deepak Singh explained that he collected cash from specified persons and delivered it to other persons according to instructions received from Shri Ravi Omprakash Agrawal, Smt. Monica Khemuka and Shri Sanket Khemuka. The records contained details of cash receipts, payments and movements, which were communicated to Shri Khemraj Parate, an accountant. The Assessing Officer treated the recorded receipts as unexplained money and the corresponding payments as unexplained expenditure, resulting in additions aggregating approximately ₹381.43 crore. The CIT(A), however, concluded that the transactions indicated an undisclosed cash-transportation or Angadia-type activity and restricted the additions to ₹19,07,10,652, representing 5% of the aggregate cash receipts and payments. Both the Revenue and the assessee challenged this determination before the Tribunal.
The assessee, Shri Ravi Omprakash Agrawal, argued that the cash recorded in the seized documents belonged to third parties and was merely collected, transported and delivered through persons associated with him. According to the assessee, the records did not establish that he was the beneficial owner of the entire cash handled. The assessee further submitted that receipt of cash from one person and delivery of the same cash to another constituted one integrated transaction, and therefore taxing both the receipt and payment sides would result in duplication. It was contended that the assessee earned only commission or collection charges of ₹175 per ₹1 lakh transferred, whereas the CIT(A)’s estimation of profit at 5% of both receipts and payments was excessive and inconsistent with the commercial nature of Angadia services. The Revenue, on the other hand, maintained that the seized records established substantial unaccounted cash transactions and that the assessee had failed to explain their sources satisfactorily. The Department also questioned the CIT(A)’s acceptance of Angadia activity because the assessee had not originally disclosed such business income in his returns. The Tribunal was therefore required to determine whether the entire cash turnover, an estimated percentage of gross movements, or only reasonable commission income could be subjected to taxation.
The ITAT Mumbai held that mere handling, possession, collection or transportation of cash does not automatically establish ownership of that money for the purposes of Section 69A. The Tribunal examined the statements of Shri Deepak Singh and the seized records, observing that the entries reflected corresponding cash inflows and outflows forming part of an organised collection-and-delivery mechanism. The Revenue had not established through independent evidence that the entire amount recorded as cash receipts was beneficially owned by Shri Ravi Omprakash Agrawal. Similarly, the cash payments recorded in the same documents could not automatically be treated as expenditure incurred by the assessee from unexplained sources. The Tribunal emphasised that where the source of cash payments is traceable to the corresponding cash receipts, separate taxation of both sides under Sections 69A and 69C results in duplication. It further held that once the activity was characterised as cash transportation or Angadia-type services, the appropriate taxable component was the reasonable commission earned from facilitating the transactions, rather than the gross amount of cash received and delivered. Accordingly, the Tribunal rejected the Assessing Officer’s approach of taxing the entire cash movements and directed that the additions be restricted to reasonable commission income in accordance with its findings.
The Tribunal separately examined the 5% profit estimation adopted by the CIT(A) on the combined value of cash receipts and payments. The assessee maintained that its actual collection charges were ₹175 per ₹1 lakh and that commission was earned only once upon completion of the cash-transfer transaction. The Tribunal considered the nature of the business and the fact that cash receipt and corresponding cash delivery were two stages of the same underlying movement of funds. Consequently, treating both amounts as independent turnover for estimating profit would artificially inflate the taxable income. The Tribunal rejected the proposition that 5% of the aggregate cash received and cash paid represented the appropriate income merely because those amounts appeared in seized records. Its reasoning distinguished between the value of funds handled and the remuneration earned for facilitating their movement. The Tribunal therefore directed that the additions relating to the Angadia-type activity be confined to reasonable commission income, rather than the gross cash receipts and payments or the CIT(A)’s excessive estimation. The same principle was applied to the corresponding controversy for AY 2022-23, where the Assessing Officer had made additions of ₹19,51,01,055 under Section 69A and ₹17,67,50,999 under Section 69C based on similar cash-transaction records.
Another important issue concerned an addition of ₹1,80,448 under Section 69C for AY 2023-24 towards alleged unexplained interest expenditure connected with investments in the shares of Infibeam Avenues Limited. The Assessing Officer relied principally upon the statement of Shri Ravindra Maloo, who claimed that investments in Infibeam Avenues Limited and Vakrangee Limited had been undertaken at the instance of Shri Ravi Omprakash Agrawal and that interest at 18% per annum was payable. The addition was computed on an alleged investment of ₹15,03,736. The assessee disputed the arrangement and explained that Shri Ravindra Maloo was an experienced stock-market professional who had purchased shares in his own name. The Tribunal found that no bank trail, cash trail, ledger, receipt, WhatsApp communication or other corroborative material established actual payment of interest by the assessee. It also noted that the Assessing Officer had selectively relied upon the third-party statement and had not provided the assessee an opportunity to cross-examine Shri Ravindra Maloo. The Tribunal held that Section 69C requires evidence that expenditure was actually incurred; a presumed liability based solely on an uncorroborated third-party statement is insufficient. Consequently, the deletion of ₹1,80,448 by the CIT(A) was upheld. The corresponding challenge concerning denial of cross-examination was treated as academic because the addition had already been deleted on merits.
The Tribunal also considered additions involving alleged unexplained investments and cash transactions for AY 2022-23. One dispute concerned an addition of ₹1,50,00,000 under Section 69A, while another related to ₹4,91,00,000 under Section 69, both arising from material and statements examined during search proceedings. The assessee challenged these additions on the ground that the Revenue had not established actual ownership of unexplained money or investment by reliable independent evidence. The Tribunal examined the underlying material and found that the necessary evidentiary connection between the assessee and the alleged unexplained amounts had not been established sufficiently to justify the additions. It therefore upheld the deletion of the ₹1.50 crore addition and applied similar reasoning to the ₹4.91 crore addition. The Tribunal’s approach emphasised that the existence of entries, allegations or statements referring to substantial monetary amounts does not, by itself, establish taxable ownership or investment in the hands of a particular assessee. The statutory conditions governing additions under Sections 69 and 69A must be satisfied through evidence connecting the relevant funds or investments with the person sought to be taxed.
The Tribunal further adjudicated issues relating to immovable property valuation, alleged foreign-currency transactions and unexplained interest expenditure. In one dispute, Shri Ravi Omprakash Agrawal had purchased Flat No. 1301, Balaji Arcade, Wadala, Mumbai, for ₹1,18,00,000, whereas the stamp-duty valuation was ₹1,38,72,100. The Assessing Officer added the difference of ₹20,72,100 under Section 56(2)(x). The assessee argued that the property was under construction and that the stamp-duty valuation did not reflect its actual market value. However, the Tribunal found that no independent valuation report, comparable sale evidence or other reliable material had been produced to rebut the statutory valuation. Accordingly, the addition of ₹20,72,100 was sustained. In another controversy involving alleged AED transactions, the Assessing Officer made additions of ₹5,53,30,040 under Section 69A and ₹5,53,69,665 under Section 69C based on seized records. The Tribunal found that the corresponding receipts and payments formed part of the same flow of funds and that separate taxation of both sides without establishing ownership or independent unexplained expenditure was unjustified. It therefore upheld the relief granted by the CIT(A) on that issue. The order also addressed alleged interest payments, including an addition of ₹5,71,508 for AY 2022-23, applying its findings concerning unsupported third-party statements and the evidentiary requirements of Section 69C.
In its final decision, the ITAT Mumbai held that the gross value of cash handled in an Angadia-type business cannot automatically be assessed as unexplained money or unexplained expenditure merely because the transactions appear in seized diaries, loose papers or digital records. It directed that additions relating to cash transportation be restricted to reasonable commission income and rejected the separate taxation of corresponding receipts and payments where they represented the same movement of funds. The Tribunal also deleted additions founded solely upon uncorroborated WhatsApp communications and unsupported third-party statements where the Revenue failed to establish ownership, actual expenditure or the necessary evidentiary connection. At the same time, the Tribunal did not grant blanket relief to the assessee: the addition under Section 56(2)(x) relating to the property valuation was sustained, and the Tribunal allowed the Revenue’s grounds concerning certain financing and interest transactions supported by specific entries and corroborative evidence. Thus, the outcome depended upon the quality of evidence supporting each disputed addition. Ultimately, the Revenue’s appeals and the assessee’s appeals were partly allowed, while the assessee’s cross-objections were treated as partly allowed for statistical and legal purposes. The ruling establishes that taxation of cash-handling transactions must distinguish between ownership of funds, actual unexplained expenditure and commission income, while additions under deeming provisions require satisfaction of their specific statutory conditions.
Cases Discussed
- Mahadhan AgriTech Limited Vs. ACIT (ITAT Mumbai); ITA No. 2227/Mum/2024 & Others; 24/07/2025 — The assessee cited this decision while disputing additions made without establishing the necessary statutory requirements concerning alleged unexplained money.
- ACIT Vs. Sankalp IN (ITAT Ahmedabad); IT(SS)A Nos. 45 to 48/Ahd/2022; 31/01/2025 — The assessee relied upon this decision to support its contention that amounts having an identifiable source should not automatically be assessed as unexplained money .
- Ramavatar Goenka Vs. ACIT (ITAT Ahmedabad); IT(SS)A Nos. 1/Ahd/2023 & Others; 10/01/2025 — The assessee cited this decision while contesting the taxation of cash allegedly returned from property-related transactions.
- CIT Vs. Golani Brothers (Bombay High Court); (2017) 85 taxmann.com 355 — The assessee cited this judgment while opposing the treatment of cash allegedly received back from property-related transactions as unexplained money under Section 69A.
- CIT Vs. Ravi Kumar (Punjab & Haryana High Court); (2007) 294 ITR 78 — The assessee relied upon this decision while contending that additions under Section 69A could not be sustained without establishing the necessary connection between the alleged money and the assessee.
- Damani Vs. CIT; (2003) 261 ITR 635 — The decision was cited during the parties’ arguments concerning the characterisation and taxation of disputed amounts.
- National Thermal Power Co. Ltd. Vs. CIT (Supreme Court); (1998) 229 ITR 383 — The assessee relied upon this judgment in support of the Tribunal’s authority to consider legal issues arising from the facts and material on record.
- Patoa Brothers Vs. CIT (Gauhati High Court); (1982) 133 ITR 672 — The assessee cited this decision while disputing additions where the Revenue had not established actual possession or ownership of unexplained money. The judgment was relied upon in submissions concerning the statutory conditions for invoking Section 69A.
- CIT Vs. Jagdish Prasad Mohanlal Joshi — The assessee relied upon this decision to support the argument that an addition cannot rest solely on an uncorroborated statement . The supplied order does not reproduce its complete citation.
- Kailashben Manharlal Chokshi Vs. CIT — Cited by the assessee while challenging additions based on third-party statements unsupported by independent documentary evidence.
- CIT Vs. Harjeev Aggarwal (Delhi High Court) — The assessee cited this judgment to support its contention that statements must be evaluated alongside reliable supporting material before adverse additions are made.
- Andaman Timber Industries Vs. Commissioner of Central Excise (Supreme Court) — The assessee relied upon this judgment while challenging the addition based on Shri Ravindra Maloo’s statement . The Tribunal considered the denial of cross-examination significant, particularly because no independent evidence established actual payment of interest.
- CIT Vs. Odeon Builders (P.) Ltd. (Supreme Court) — Cited by the assessee in support of its challenge to additions based on third-party statements and the absence of an opportunity for cross-examination.
- PCIT Vs. Shapoorji Pallonji & Co. Ltd. — The assessee cited this decision while challenging the use of adverse third-party statements without permitting cross-examination.
- IPCA Laboratories Ltd. Vs. DCIT — The decision was cited in the assessee’s submissions concerning the denial of cross-examination.
- Dikesh Mehta Vs. DCIT (ITAT Mumbai); ITA No. 3839/Mum/2023 — The decision was relied upon in the dispute concerning Angadia-type cash transportation , gross cash receipts and commission income . It formed part of the authorities cited in support of distinguishing the funds handled from the income earned.
- PCIT Vs. Ms. Kavita Agarwal — The assessee cited this decision while challenging the addition for alleged interest expenditure under Section 69C.
- CIT Vs. S. Khader Khan — The decision was cited in submissions concerning the reliability of statements and the requirement for supporting evidence before making additions.
- CIT Vs. M.P. Scrap Traders — The assessee cited this authority in support of its challenge to additions based on the Revenue’s interpretation of seized records.
- DCIT Vs. Premsons — The decision was referred to in the assessee’s submissions concerning the evidentiary foundation of additions.
- D.N. Singh Vs. CIT (Supreme Court) — The judgment was among the authorities cited in the arguments concerning the applicability of deeming provisions to disputed cash transactions.
