ITAT Ahmedabad: Recorded Book Entries Cannot Be Treated as Bogus Solely on Seized Excel Sheet

March 18, 2026 : The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that transactions duly recorded in the regular books of account and supported by banking evidence cannot be treated as bogus expenditure merely on the basis of entries found in a seized Excel sheet during search proceedings.

The ruling came in a batch of appeals arising from a search conducted under Section 132 in the Kothi Group on 5 November 2020, which also covered HK Ispat Pvt. Ltd. Assessments were subsequently framed under Section 153A.

During assessment proceedings, the Assessing Officer relied on a seized Excel file containing entries of cheque and cash transactions and treated ₹5,00,000 as unexplained expenditure under Section 69C of the Income Tax Act. The officer also made additions under Section 68 in respect of unsecured loans.

Before the Commissioner of Income Tax (Appeals), the assessee submitted that the cheque transactions appearing in the Excel sheet were already recorded in its regular books of account and were routed through banking channels. It was argued that no independent incriminating material was found during the search to indicate that the entries represented unaccounted expenditure. Accepting these submissions, the CIT(A) deleted both the addition under Section 69C and the additions relating to unsecured loans, holding that the Assessing Officer had relied solely on digital notings without corroborative evidence.

Challenging this, the Revenue contended before the Tribunal that the seized Excel sheet contained both cheque and cash entries and that the presence of cash transactions indicated unexplained expenditure. It was argued that the CIT(A) erred in ignoring the incriminating nature of the document.

The Tribunal, however, found that the assessee had produced audited books of account, bank statements, confirmations, and other supporting documents demonstrating that the cheque transactions were duly recorded and verifiable through banking channels. It noted that once such transactions are reflected in regular books and supported by a banking trail, they cannot be treated as bogus merely on the basis of entries in a seized Excel sheet.

The Bench observed that the Assessing Officer had failed to bring any independent corroborative material on record to establish that the recorded transactions represented unexplained expenditure. It further held that selective reliance on entries in a digital sheet, without disproving the corresponding entries in the books of account, is not legally sustainable.

Accordingly, the Tribunal upheld the order of the CIT(A) deleting the addition of ₹5 lakh under Section 69C and dismissed the Revenue’s appeal on this issue.

Case Title: ACIT, Central Circle-2, Vadodara v. HK Ispat Pvt. Ltd.
Case No.: IT(SS)A No. 73/Ahd/2025 & batch (AY 2015–16 to 2021–22)
Bench: Dr. B.R.R. Kumar (Vice President) and Suchitra R. Kamble (Judicial Member)
Date of Order: 18 March 2026