INCOME TAX OFFICER, WARD 3 3 5, AHMEDABAD vs. VASANI INFRASTRUCTURE, AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 2304/Ahd/2025 & CO No. 101/Ahd/2025 (Assessment Year: 2011-12) Income-Tax Officer, Vasani Infrastructure, Vs. Ward (3)(3)(5), A/6, Sabri Kutir Bungalows, Ahmedabad Sarkari Vasahat Road, Vastrapur, Ahmedabad, Gujarat - 380015 [PAN : AAIFV 1733 H]

(Appellant) .. (Respondent & Cross-Objector) Revenue represented by : Shri Jai Singh, CIT-DR & Shri C. Darni Nath, Sr. DR Assessee represented by: Shri Vartik Choksi, AR Date of Hearing 16.06.2026 Date of Pronouncement 07.08.2026

O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the Revenue and the corresponding Cross Objection has been filed by the assessee against the order dated 01.09.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “Ld. CIT(A)”] under section 250 of the Income-tax Act, 1961 [“the Act”] for the Assessment Year (AY) 2011-12.

(1) The Ld. CIT(A) erred in law and on facts in deleting the addition made on account of unexplained investment u/s 69A of the IT. Act, 1961 amounting to Rs. 2,95,62,810/-.

(2) The Ld. CIT(A) erred in law and on facts by not appreciating the facts of the case that the department had seized the documents (during the course of search & seizure at Venus Group) which clearly showed receipt of on-money of Rs. 2,95,62,810/- from the assessee.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 2–

(4) The Ld. CIT(A) erred in law and on facts by relying on the decisions which are not relevant, especially reliance on the decision of the Hon'ble Supreme Court of India in the case of Radhasoami Satsang v. CIT(1992) ITR 321(SC).

(4) The Ld. CIT(A) erred in law and on facts by stating that no further appeal was filed by the Revenue against the orders of Ld. CIT(A) in the following cases of other co-owners of the same land, which are enumerated below along with the corresponding ITA numbers for the appeals filed by the Revenue against the orders of Ld. CIT(A), which are pending in ITAT:

S N Name AY ITA No. 1 Hareshbh¡i Ravjibhai Vasani 2010-11 ITA 1297/AHD/2019 2 Ritaben H Vasani 2010-11 ITA 1292/AHD /2019 3 Ravjibhai Popat Vasani 2010-11 ITA 1296/AHD/2019 4 Babubhai Popatbhai Vasani 2010-11 ITA 1293/AHD/2019 5 Kailashben Madhubhai Vasani 2010-11 ITA 1298/AHD/2019 6 Madhubhai Popatbhai Vasani 2010-11 ITA 1294/AHD /2019 7 Ravjibhai P Vasani, L/H Smt. 2010-11 ITA 1291/AHD/2019 Savitaben R Vasani

(5) The appellant craves leave to add, alter and or to amend all or any the ground before the final hearing of the appeal.”

“1. In the law and in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the validity of the assessment order, failing to appreciate that the impugned order passed by the Assessing Officer under section 143(3) r.w.s 147 of the Act dated 10.10.2018 is bad in law, void ab initio, and lacks jurisdiction.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 3– 2. In the law and in the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the Assessing Officer was justified in issuing notice under Section 148, without appreciating that when a search is conducted and documents belonging/pertaining to a third person are seized, the assessment must be framed under Section 153C and not under Section 147.”

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 4– section 143(3) read with section 147 of the Act vide order dated 10.10.2018 by making addition of Rs.2,95,62,810/- under section 69A of the Act.

(i) The reassessment itself was invalid since the entire proceedings had been initiated exclusively on the basis of documents seized during the course of search in the case of Venus Group and, therefore, the only permissible course available to the Assessing Officer was to proceed u/s 153C of the Act and not u/s 147;

(ii) The seized documents neither belonged to the assessee nor contained its name or any reference to the specific survey numbers purchased by it;

(iii) The addition was founded entirely upon loose sheets and rough notings recovered from the premises of a third party without any corroborative evidence establishing actual payment of on-money by the assessee;

(iv) The Assessing Officer neither supplied complete copies of the seized material nor disclosed the basis on which the alleged coded entries were decoded;

(v) No statement of the concerned persons was furnished to the assessee and no opportunity of cross-examination of the persons from whose possession the documents were recovered or of the alleged intermediary named "Bhuro" was afforded;

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 5– (vi) The figures appearing in the alleged summary sheets did not tally even with the documented consideration reflected in the registered sale deeds and therefore the very foundation of the Assessing Officer's inference was erroneous;

(vii) The entire addition rested upon third-party documents which, in the absence of independent corroborative evidence, possessed no evidentiary value in law.

The assessee, in support of its contentions, relied upon several judicial precedents including the decisions of the Hon'ble Gujarat High Court and various Benches of the Tribunal dealing with the evidentiary value of loose papers recovered from third parties.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 6– 10. Aggrieved by the relief granted by the Ld. CIT(A), the Revenue is in appeal before us. The assessee, on the other hand, has filed the present Cross Objection challenging the validity of the reassessment proceedings.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 7– corroborative material establishing that the assessee had paid consideration over and above the amount recorded in the registered sale deeds.

12.1 The Ld. AR submitted that even according to the Assessing Officer, the seized material consisted merely of rough notings, summary sheets and alleged cash vouchers recovered from third parties and such documents, without any independent corroboration, cannot constitute legal evidence for making an addition u/s 69 of the Act. It was argued that the Assessing Officer failed to conduct any independent enquiry either from the vendors of the land or from the alleged intermediary referred to as "Bhuro" in the seized documents. No statement implicating the assessee has been brought on record.

12.2 The Ld. AR further also submitted that repeated requests were made during the reassessment proceedings seeking complete copies of the seized documents, copies of statements recorded during the search, copies of the panchnama, the alleged decoded cash book and the basis of decoding the entries, besides seeking an opportunity to cross-examine the persons from whose possession the documents were recovered and none of these requests was acceded to by the Assessing Officer and, therefore, the addition stands vitiated for violation of the principles of natural justice.

12.3 On the legal issue, the Ld. AR submitted that once the entire basis of reopening emanates from documents seized during search conducted on a third party, the Assessing Officer could have assumed jurisdiction only under section 153C of the Act and not under section 147. Reliance was placed upon the judgment of the Hon'ble Bombay High Court in Sejal Jewellery v. Union of India (2025) 171 taxmann.com 846 (Bom.), the decision of the Ahmedabad Bench of the Tribunal in Sai Krupa Developers, and other judicial precedents cited before the Commissioner (Appeals).

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 8– 12.4 The Ld. AR further submitted that the controversy is squarely covered by the order of the Ld. CIT(A) in the assessee's own case for Assessment Year 2010-11 involving identical seized material, identical land transactions and identical procedure adopted by the Assessing Officer. It was submitted that the Ld. CIT(A), while deciding the present year, has merely followed his own order for Assessment Year 2010-11 and deleted the addition on the principle of consistency.

13.1 The first contention of the assessee is that once the very basis of reopening was material seized during search in the case of a third party, proceedings could have been initiated only under section 153C and not under section 147. We find that the Ld. CIT(A) has rejected this contention by relying upon the decision of the Ahmedabad Bench of the Tribunal in Shailesh S. Patel v. ITO [2018] 97 taxmann.com 570 (Ahd.), wherein it has been held that the availability of proceedings u/s 153C does not ipso facto bar the Assessing Officer from invoking section 147 where the statutory conditions for reopening are otherwise satisfied. The Hon'ble Bombay High Court in Sejal Jewellery v. Union of India (2025) 171 taxmann.com 846 has indeed taken a different view. On this issue, we are further guided by the order of the co-ordinate bench of the Tribunal in the case of Shri Vighnaharta Reality Pvt. Ltd. Vs. ITO in ITA No.2205/Ahd/2018, wherein the Co-ordinate Bench held vide its order dated 18.02.2025 as under:-

“4. We first address the legal challenge to the reassessment proceedings raised by the assessees in their appeals and cross-objections. Since the facts and the basis of additions are identical in both cases, except for the quantum, we proceed to examine the issues in ITA No. 2205/Ahd/2018 – Shri Vighnaharta Realty Pvt. Ltd. vs. ITO as the lead case.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 9– the statutory requirements, rendering all subsequent actions, including the reassessment order, illegal and unsustainable in law. The assessee further disputes the issuance of notice under section 148 and the reopening under section 147 of the Act, asserting that the reassessment was based solely on third-party information from the Venus Group search, without any independent application of mind by the Assessing Officer. It is contended that the notice under section 148 was issued mechanically, without recording valid reasons to believe that income had escaped assessment, which is a mandatory requirement under section 147. The assessee also argues that the reassessment proceedings were based on borrowed satisfaction, as the AO failed to conduct any independent verification or obtain corroborative evidence linking the alleged transactions to the assessee. Additionally, the assessee asserts that its written submissions and judicial precedents were not properly considered, leading to an incorrect legal conclusion.

6.1. The AR placed reliance on the Hon’ble Supreme Court's decision in the case of ITO vs. Vikram Sujitkumar Bhatia [2023] 149 taxmann.com 123 (SC), wherein it was categorically held that if documents “pertain” to a person other than the searched person, then section 153C of the Act is the only appropriate provision for assessment, even if the search was conducted before the Finance Act, 2015 amendments. The AR also relied on the decision of this Bench in the case of Sai Krupa Developers vs. ACIT (ITA No. 248/Ahd/2023), wherein the tribunal quashed reassessment proceedings initiated under section 147 of the Act, holding that when the seized material directly relates to another assessee, the AO must follow section 153C of the Act and cannot bypass it by invoking section 147 of the Act. Additionally, reliance was placed on Shyam Sunder Khandelwal vs. ACIT (Rajasthan High Court), where it was held that when an AO has access to specific material found during a search, it is mandatory to conduct assessment under section 153C of the Act and invoking section 147 of the Act amounts to jurisdictional overreach.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 10–

8.1. In our opinion, the scope of section 147 of the Act is wider than section 153C of the Act. Section 153C of the Act is restrictive as it requires the seized documents to “belong to” or “pertain to” the assessee. Section 147 of the Act, on the other hand, is a broader provision that allows reassessment based on "reason to believe" that income has escaped assessment. We find that the Assessing Officer recorded detailed reasons for reopening the assessment, wherein the seized material from Venus Group contained notations of alleged unaccounted cash transactions, which were correlated with Greenstone and SMFL. The AO conducted further analysis and found that the transactions allegedly represented accommodation entries, leading to unaccounted income of the assessee. The CIT(A) also, after considering the material, held that the AO

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 11– had independent reasons to believe that income had escaped assessment, and therefore, proceedings under Section 147 of the Act were legally sustainable. The Hon’ble Supreme Court of India in the case of Abhisar Buildwell (P) Ltd. (2023) 149 taxmann.com 399(SC) examined the scope of Section 153A of the Act and its interplay with Section 147 of the Act in cases of search assessments. The key issue before the Court was whether Section 147 of the Act (reassessment) can be invoked if conditions under Section 153A of the Act are not met. The Apex Court ruled that Section 153A is a special provision applicable to search cases. However, it does not automatically bar the application of Section 147 of the Act. Applying the same rationale to Section 153C of the Act, the existence of a special provision does not override the power of reassessment under Section 147, provided the AO has independently applied his mind and formed a reason to believe that income has escaped assessment.

8.2. The Hon'ble Madras High Court in the case of Saloni Prakash Kumar (supra) held that Section 153C of the Act is merely an enabling provision that allows the issuance of notice notwithstanding the provisions of Sections 139, 147, 148 of the Act, etc. However, it does not preclude the department from reopening an assessment under Section 148A(b) of the Act for the purpose of completing the assessment under Section 147. The Revenue relied on this ruling to support the validity of reassessment proceedings under Section 147 of the Act, asserting that even if third-party material is involved, the AO is not restricted to using only Section 153C of the Act and can proceed under Section 147 of the Act if independent satisfaction is recorded. The judicial principle laid down by the Hon’ble court directly supports the view taken by the CIT(A) and the AO, affirming that the notice under Section 148 was validly issued.

8.3. We are of the opinion that the presence of a specific provision governing search assessments does not automatically exclude the applicability of reassessment provisions. The reassessment framework operates independently, provided the conditions prescribed under the law are satisfied. The essential requirement for invoking reassessment in such cases is the existence of material/information based on another person’s search that provides the AO with reason to believe that income chargeable to tax has escaped assessment. The procedural aspect of invoking jurisdiction under one provision does not restrict the AO from exercising powers under another provision, as long as the statutory conditions are met. In the present case, the AO, upon analyzing the seized documents found at Venus Group, which refers to Greenstone and SMFL, independently examined their contents and correlated them with the financial dealings of the assessee. The reassessment proceedings were not initiated merely on borrowed satisfaction but on the AO’s independent analysis of the material/information at hand. The distinction drawn by the assessee between different provisions does not invalidate the reassessment proceedings, as the key factor is the AO’s application of independent reasoning to establish escapement of income. The correlation between the seized documents and the financial transactions of the assessee supports the AO’s conclusion that income had escaped assessment, thereby justifying the assumption of jurisdiction. Reassessment remains justified when the AO, based on seized material, establishes a clear and reasonable nexus between the material/information and the income that has escaped assessment. The mere fact that the material was found at a third party’s premises does not preclude reassessment when the AO demonstrates independent

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 12– application of mind and correlates the transactions to the assessee. In the present case, the AO has independently verified and linked the transactions, thereby satisfying the jurisdictional requirement for invoking reassessment.

8.4. Accordingly, we uphold the order of CIT(A) and dismiss the legal grounds raised by the assessee. The AO had sufficient grounds to reopen the assessment, and the CIT(A) correctly sustained the jurisdiction assumed by the AO. The legal grounds raised by the assessee are, therefore, dismissed.”

In view of the discussion above, as also relying on the judicial precedents, the legal ground raised by the assessee by way of its Cross-objection is dismissed.

13.2 We shall now proceed to examine the merits of the impugned addition. The principal issue before us for adjudication is whether the addition of Rs.2,95,62,810/- made u/s 69A of the Act can be sustained solely on the basis of loose papers, handwritten notings, cash vouchers and alleged cash books seized during the course of search conducted in the case of Venus Group.

13.3 The Assessing Officer has proceeded on the premise that the seized documents reflected total unaccounted cash payment of Rs.33.24 crore relating to land situated at Tarapur/Sargasan and, on the basis of the proportion of land purchased by the assessee, allocated Rs.21.11 crore to the assessee, out of which Rs.2.95 crore was attributed to the year under consideration. However, on careful examination of the assessment order and the seized material relied upon therein, we find that there is no document which directly records payment of cash by the present assessee. None of the seized papers bears the name of the assessee. None of them contains the assessee's signature. Equally, no document specifically refers to the survey numbers purchased by the assessee. The Assessing Officer has merely inferred the assessee's involvement by proportionately allocating the alleged cash receipts recorded in the seized documents on the basis of the extent of land purchased. Such allocation is founded entirely upon presumption rather than any direct evidence. The assessee had repeatedly requested copies of the complete seized material, statements recorded during search, decoded cash books, basis of decoding the entries, and opportunity to cross-examine the persons whose

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 13– statements or documents were proposed to be relied upon. The assessment order also does not reveal who is the alleged intermediary "Bhuro", or any other person connected with the transaction. No statement has been brought on record wherein any person has admitted receipt of cash from the assessee. The entire addition, therefore, in our considered opinion, rests solely upon third-party documents and inferential correlation made by the Assessing Officer. The Hon'ble Supreme Court in Kishinchand Chellaram v. CIT (125 ITR 713) has held that any material proposed to be used against an assessee must be disclosed to him and opportunity afforded to rebut the same. It is also pertinent to note that the Revenue did not bring any material on record to establish any type of nexus between the seized material and the present assessee.

13.4 At this stage, it would be pertinent to note that an identical controversy arising from the very same search conducted in the case of Venus Group came up for consideration before the Coordinate Bench of this Tribunal in the case of ITO v. Shri Vighnaharta Reality Pvt. Ltd. & Others in ITA No.2370/Ahd/2018 and connected matters, wherein the Co-ordinate Bench held vide its order dated 18.02.2025 as under:-

“11. We have carefully considered the rival submissions, the orders of the lower authorities, and the material available on record. The core issue in the present appeal is whether the addition made under Section 69A of the Act was justified based on the seized documents found during the search in the case of Venus Group.

11.1. The AO primarily relied upon loose sheets and handwritten notations seized from the premises of Venus Group, which, according to him, represented unaccounted cash transactions linked to the assessee. On the other hand, CIT(A) examined the seized documents and the reasoning of the AO in detail. The CIT(A) noted that the AO had not demonstrated how the seized documents pertained to the assessee. It was observed that mere notings on loose papers, without independent corroboration, could not be the basis for making an addition. The CIT(A) further found that the AO had not conducted any inquiries to establish the authenticity of the alleged cash transactions. The CIT(A) recorded that the AO had not produced any evidence to show that the alleged entries on the loose sheets represented actual transactions of the assessee.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 14– There was no confirmation from any party, including Venus Group, that the notings pertained to the assessee. The CIT(A) highlighted that the AO had incorrectly linked the figures in the seized documents with the assessee’s transactions. The CIT(A) observed that no effort was made by the AO to explain how the handwritten entries were decoded to establish their linkage with the assessee. The CIT(A) also highlighted that the AO had incorrectly linked the figures in the seized documents with the assessee’s transactions. The CIT(A) observed that no effort was made by the AO to explain how the handwritten entries were decoded to establish their linkage with the assessee. The CIT(A) also found that no independent statement or submission from Venus Group or any other concerned party confirmed the authenticity of the notations and the AO failed to establish that these were actual cash transactions undertaken by the assessee.

11.2. The CIT(A) held that loose sheets found in third-party premises, without further corroboration, could not be relied upon for making additions under Section 69A of the Act. Reliance was placed on various judicial precedents including that of jurisdictional high court where it was held that loose sheets and unverified documents, without independent corroboration, could not form the sole basis of an addition. It was categorically observed that unless the Revenue could establish a clear nexus between the seized material and the assessee, no addition could be sustained under Section 69A of the Act. It was also held that mere entries in seized documents without substantive evidence could not justify additions. Similarly, it is settled principle that loose documents with handwritten notings do not constitute conclusive evidence in the absence of independent corroboration.

11.3. In view of the detailed findings of the CIT(A) and applying the principles laid down in judicial precedents relied on, we find no reason to interfere with the decision of the CIT(A). The addition made by the AO lacks independent corroboration and is based solely on unverified, third-party notations, which have been rightly disregarded by the CIT(A). Accordingly, the appeal of the Revenue is dismissed.”

The facts of the present case are materially identical and belong to the same group, originated from the same search. Here also, the Revenue has failed to establish any direct nexus between the seized material and the assessee except by adopting a theory of proportional allocation. Respectfully following the aforesaid decision of the Coordinate Bench, we find no reason to take a different view.

ITA No. 2304 and CO No. 101/Ahd/2025 Assessee: Vasani Infrastructure Asst.Year : 2011-12 - 15– 13.5 Accordingly, having regard to the totality of the facts and circumstances of the case, the material available on record and the judicial precedents discussed hereinabove, we do not affirm the reasons for deleting the addition by the Ld. CIT(A), but confirm the order of the Ld. CIT(A) deleting the addition based on merits and on the reasons given in this order. Accordingly, the grounds raised by the Revenue are dismissed.

The order pronounced in the open Court on 07.08.2026

Sd/- Sd/-

(RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 07.08.2026 **btk आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent. 2. संबंिधतआयकरआयु�/ Concerned CIT 3. 4. आयकरआयु�(अपील) /The CIT(A)- 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल /Guard file. आदेशानुसार/ BY ORDER, True Copy सहायकपंजीकार (Dy./Asstt. Registrar) आयकरअपीलीयअिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation … ……words processed by the Hon’ble VP on his PC On ….03.08.2016… 2. Date on which the typed draft is placed before the Dictating Member ………04.08.2026 3. Other Member………….04.08.2026…. 4. Date on which the approved draft comes to the Sr.P.S./P.S…………05.08.2026… 5. Date on which the fair order is placed before the Dictating Member for pronouncement……07.08.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S….......07.08.2026 7. Date on which the file goes to the Bench Clerk ………07.08.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order……………………………………