ITAT Pune Remands ₹2.53 Crore Addition Under Section 69: Ownership of Seized Diary Transactions by Third Party Cannot Substitute Verification of Cash Payment Source

Case Reference

DCIT Vs Sant Eknath Trading Company (ITAT Pune)
Assessment Year: 2014-15
Order Date: 03rd June, 2026
Arising from: Assessment Order dated 29.09.2021 passed under Section 143(3) read with Section 153C of the Income-tax Act, 1961

Background and Context

The Income Tax Appellate Tribunal (ITAT), Pune Bench, was called upon to adjudicate a Revenue appeal concerning the deletion of a substantial addition made against a partnership firm — Sant Eknath Trading Company — in the course of proceedings following a search and seizure operation. The central question before the Tribunal was whether the CIT(A) had rightly deleted an addition of ₹2,53,36,402 on the ground that the third party involved had already owned up the transactions and offered income thereon.

The matter has significant implications for how search-related additions under Section 69 read with Section 115BBE of the Income-tax Act, 1961 are to be adjudicated when transactions appear in seized documents belonging to a group entity but involve cash dealings with the assessee.

Facts of the Case

The Search and Seizure Action

Sant Eknath Trading Company, a registered partnership firm, had originally filed its return of income for Assessment Year 2014-15 on 23.09.2014, declaring total income of ₹51,68,230/-. A search and seizure operation was conducted under Section 132 of the Income-tax Act, 1961 at the Disha (Kotgire) Group across Aurangabad, Pune, and Kolkata on 21.01.2020.

The documents seized during the search included handwritten pocket diaries containing date-wise records of cash transactions. These diaries were found to contain detailed entries reflecting unaccounted cash receipts and payments between the assessee firm and one Devanand Narayan Kotgire (hereinafter referred to as DNK), recorded in the nature of a parallel cash book.

Assessment Proceedings Under Section 153C

After recording proper satisfaction as mandated under Section 153C of the Act, the Assessing Officer (AO) initiated assessment proceedings against the assessee. The AO extracted the year-wise details of cash receipts and payments from the seized diaries for the period spanning Financial Year 2013-14 through Financial Year 2019-20, as tabulated below:

**Year-wise Cash Transactions (Sant Eknath Trading Company)😗*

Peak Theory Working for the Assessee: