CHHOTU RAM KUMAWAT,JAIPUR vs. ACIT CEN CIR 2 JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “A” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 1781/JPR/2025 (Assessment Year:2014-15)

Chhotu Ram Kumawat Vs. ACIT, 11, Arjun Nagar Barkat Central Circle 2, Nagar, Jaipur 302001 Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: ADDPK 0642 C Appellant .. Respondent Appellant by : Sh. Ashok Kumar Gupta, Adv. Respondent by : Sh. Bhanwar Singh Ratanu, CIT Date of Hearing 25.05.2026 Date of Pronouncement 21.07.2026 O R D E R Per Annapurna Gupta, Accountant Member: The present appeal has been filed by the assessee against the order passed by the Office of Commissioner of Income Tax, Appeal CIT(A), Jaipur-04 (hereinafter referred to as “Ld. CIT(A)”) dated 15.10.2025 under Section 250 of the Income Tax Act, 1961, (hereinafter referred to as “the Act”).

P a g e | 2 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat 2. Briefly stated, assessment u/s 153C of the Act was made on the assessee for the impugned assessment year, on the basis of alleged incriminating document found during search conducted on one Sh. Jaipal Singh, a Member of the Kiran Fine Jewellers Group, which was subjected to search action on 02.08.2017. Allegedly an agreement to sell dated 03.11.2012, was found during search on Sh. Jaipal revealing that he had paid Rs.40lacs in cash to the assessee for purchase of a flat at ground floor Plot No.35 Chitragupt Nagar, Jaipur. The seized document was numbered 43-46 of Exhibit 1 of the Annexure A-S. The said agreement was noted to be executed vide registered sale deed on 11.12.2013 in which the sale consideration was recorded at Rs.21,25,000/- ; Rs.17lacs paid through cheque dated 10.10.2013 and the balance Rs.4,25,000/- in cash. During the search action, statement of Sh. Jaipal Singh was recorded, who stated that the assessee-Sh. Chhotu Ram Kumawat, being a builder had constructed total 6 flats in Plot No.34 and 35, Chitragupt Nagar Jaipur and all the flats had been sold at the rate of Rs.40lacs per flat. 3. Based on the documents, so found, during the search at Sh. Jaipal, and his statement recorded during the search, the AO held that the assessee had suppressed the sale consideration received on the sale of flat to Sh. Jaipal at Rs.18,75,000/- [40,00,000-21,25,000], and added the same to the total income of the assessee. 4. Further, noting that the assessee had sold the first floor also during the impugned year, for a consideration of Rs.22,31,000/-, he computed the suppressed sale consideration for the said flat also at

P a g e | 3 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat Rs.17,69,000/- taking Rs.40,00,000/- as the consideration received. Thus, the AO made addition to the income of the assessee on account of suppressed sales of two flats; ground floor and first floor 35 Chitragupt Nagar Jaipur, amounting to Rs.18,75,000/- and Rs.17,69,000/- respectively. 5. The matter was carried in appeal before Ld. CIT(A), where, the assessee challenged the validity of the assessment framed u/s 153C of the Act, and also the merits of the addition made. All the grounds raised by the assessee were dismissed by Ld. CIT(A). Aggrieved by which the assessee has come up in appeal before us. 6. The grounds raised by the assessee read as under:- 1. The Ld. CIT(A) has grossly eared in confirming the order of Ld AO as passed u/s 143(3) r.w.s. 153C of the I.T. Act, 1961 dated 12/05/2021 as well as the action taken u/s 153C on the face of illegal, bad in law and on the facts of the case for want of jurisdiction and various other reasons OR bared by limitation and further contrary to the real facts of the case hence the same may kindly be quashed. 2. Rs. 18,75,000/- and 17,69,000/- (Rs. 36,44,000/-): The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the order of Ld. AO whereas he made an addition of Rs. 36,44,000/- on account of alleged suppressed sales consideration during the year without evidence and without considering the materials and explanations available on records in their true perspective and sense and without invoking the provision of section 145(3) of the act. The addition so made, by the ld. AO is also contrary to the real facts of the case and not according to the provision of law hence the same is illegal, bad in law, against the principle of natural justice. The same may kindly be deleted in full. 3. The Ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the action of Ld. AO whereas he solely relied upon Statement of third party for the purpose of making such a huge addition without providing of opportunity of cross examination to the assesse to establish the sanctity of such statements therefore complete addition may kindly be deleted in full.

P a g e | 4 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat 4. The Ld. CIT(A) has grossly erred in not following the order Honourable ITAT vide ITA 115 to 120/2024 dated 11/03/2025 whereas the Honorable ITAT has deleted the same addition as were made in hands of counterpart named Jaipal Singh on same ground while it was specifically submitted before Ld. CIT(A) for his cognizance. 5. The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the action of Ld. AO whereas he charged the interest u/s 234A, B and C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 6. That the appellant prays your honour indulgences to add, amend OR alter of OR any of the grounds of the appeal on OR before the date of hearing. 7. We have heard both the parties. The contention of the ld. Counsel for the assessee before us on the legal ground was that:- 1. The document found during search on Mr. Jaipal could not be treated as an incriminating material, since the said document being agreement to sell also contained noting regarding the cancellation of the agreement within a span of 17 days itself. He pointed out that while the agreement to sell was dated 03.11.2012, it had got cancelled on 20.11.2012 which was recorded in the agreement itself. 2. That even otherwise the agreement being dated 03.11.2012 and noting the fact of cash having been paid to the assessee on the said date, the transaction undisputedly, pertained to AY 2013-14 and the document therefore could not be treated as incriminating for the impugned year, that is, AY 2014-15. 8. He thereafter pointed out that in the case of Mr. Jaipal, the searched person from whom the document was found, the AO had made addition of the said amount purportedly paid to the assessee of

P a g e | 5 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat Rs.40,00,000/- in AY 2013-14 and not in impugned year i.e. AY 2014- 15. He therefore contended that the document in any case was not incriminating material, and even alternatively, could not be considered incriminating for the impugned assessment year, and the AO could not have assumed jurisdiction in terms of Section 153C of the Act to frame assessment for the impugned year. 9. Reliance was placed on the decision of the Hon’ble Apex Court in the case of Commissioner of Income-tax-III, Pune Vs. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC) for the proposition that for a valid assumption of jurisdiction u/s 153C of the Act, there have to be adverse material found during the course of search on a third person relating to the assessee pertaining to the assessment year for which jurisdiction is assumed u/s 153C of the Act. 10. On the merits of the case, he, reiterated his contentions made for the legal ground above contending that:-  The document pertained to the preceding assessment year, and therefore, the addition if any could have been made in AY 2013-14 and not in AY 2014-15, the impugned year before us.  The document regarding cancellation of the agreement also established that the agreement had not been acted upon and reading the document as a whole the addition could have been made at all on account of any cash paid for the purchase of property.  In the case of Mr. Jaipal, the purchaser of the property, the AO had made the addition of Rs.40lacs in preceding assessment year that is AY

P a g e | 6 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat 2013-14 and not AY 2014-15, the impugned year before us. The said addition made in the hands of Mr. Jaipal, had been deleted by the ITAT in its order passed in ITA Nos.115 to 120/JPR/2024 dated 11-03-2025.  That lastly, the assessee had sold the second floor of the same property on 03.09.2014 ,pertaining to AY 2015-16 ,and assessment u/s 153C of the Act was framed on the assessee for the said year, without making any addition, on account of underreporting of sale consideration for sale of the second floor of the said property.

P a g e | 7 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The fact of this ground is that the appellant has contended that the sale agreement dated 03/11/2012, relied upon for issuing notice u/s 153C, had been cancelled on 20/11/2012, and hence could not constitute incriminating material or form the basis of jurisdiction under section 153C and that the said sale agreement pertains to A.Y. 2013-14, whereas the impugned assessment is for A.Y. 2014-15, and there is no direct nexus between the seized document and the transactions completed via registered sale deeds in October 2013 and January 2014. The appellant further contended that the Assessing Officer failed to properly record and satisfy the jurisdictional requirement of "satisfaction", as mandated under section 153C, and simply relied on a cursory note and assumptions, rather than a reasoned and judicious satisfaction. The impugned additions were made based on unverified third-party statements, without any opportunity for cross- examination, violating the principles of natural justice. In this regard, it is noted that as per section 153C of the Income Tax Act (as amended by the Finance Act, 2015 w.e.f. 01.06.2015), the Assessing Officer of the searched person must be "satisfied" that books of account or documents seized belong to or relate to a person other than the searched person, before initiating proceedings against such "other person." In the present case, the satisfaction notes by both the AO of the searched person and the AO of the appellant are recorded. The seized document i.e. sale agreement dated 03/11/2012was specifically identified to pertain to and relate to the appellant, and contains transaction details of the flats sold by the appellant, The appellant has argued that the agreement was later cancelled. However, the mere claim of cancellation does not, in itself, negate the existence of the document at the time of the search, nor its relevance as a document purportedly evidencing unaccounted consideration. Whether the agreement was acted upon or not is a matter of assessment not jurisdiction. At the stage of initiating proceedings, the AO is not required to conclusively prove concealment, but only to be satisfied that the document relates to the appellant and may have bearing on the determination of income. Therefore, the material seized, though dated earlier, was used to verify the completeness and correctness of income disclosed in the impugned assessment year, which is within the scope of section 153C. It is not necessary that a mere claim of cancellation can negate any transaction in the relevant assessment year. In the present case, it is clear that agreement date falls within the A.Y. 2013-14 coupled with the fact that the seized document has bearing on the determination of income for the relevant year, which it is clearly established in this case. The satisfaction notes in this case were duly recorded by both the AO of the searched person and the AO of the appellant. The satisfaction was based on tangible material found during the search, namely, the agreement evidencing a transaction price higher than that disclosed in the registered documents. The AO is not required to conclusively establish concealment at the stage of satisfaction, only a prima facie linkage of the document with the appellant and relevance to income is sufficient for initiating proceedings. In view of the above findings, it is held that the satisfaction recorded u/s 153C is valid and meets the jurisdictional requirements as laid down under the Act and judicial precedents. The seized agreement, though claimed to be cancelled later, was found during the search and contained transaction details relevant to the appellant and the same corroborated with the transaction made by appellant during assessment year 2014-

P a g e | 8 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat 15. The proceedings initiated u/s 153C are therefore legally valid and not having any jurisdictional error. Accordingly, this ground of appeal is dismissed.” 12. With regards to the assessee’s challenge to the addition made on merits, he pointed out that the Ld. CIT(A) had noted that in the case of Mr. Jaipal, the buyer, the ITAT had categorically stated and found the assessee before us to have received Rs.40,00,000/-, in lieu of the said agreement, though not necessarily from Mr. Jaipal, and noting the findings of the ITAT in this regard, in the case of Jaipal, the Ld. CIT(A) held that, since the factual aspect of sale consideration received, stood confirmed, there was no question of the assessee’s pleas on merits being entertained. He drew our attention to the finding of Ld. CIT(A), in this regard, at para 5.5 of his order as under:- “5.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order, remand report and the rejoinder submitted by the appellant. The contentions/submissions of the appellant are being discussed and decided as under:- I have gone through the facts of the case, the submission of the appellant and the case laws relied upon by the appellant. I find that the Id. A/R has relied on the decision of the Hon'ble ITAT in the case of the buyer Shri Jaipal Singh passed vide order dated 11.03.2025 in appeal No. ITA Nos. 115 to 120/JP/2024 wherein the Hon'ble ITAT has held at para 19 that 19. The above contention raised with supporting evidence has not been controverted by the Id. AO through the Id. DR and there is no contrary finding of the lower authority to the submission so made. The document so relied upon was already placed on record by the assessee and therefore, when the assessee on oath submitted the fact that they were tenants and were withdrawing the case the agreement was not proved wrong. The bench noted that sale agreement dated 03.11.2012 was found and seized. (page 24 paper book) This agreement was between Shri Chhotu Ram Kumawat (seller) and Shri Satyapal Singh (Brother of the assessee) and Shri Jaipal Singh (assessee). This deed itself confirms the following facts: a) Assessee and his brother were tenant of the property for last 25 years. The property was owned by Shri Basanth Bihari Lal Mathur. b) They have vacated the possession of the land after the legal heirs of the building sold the property to Shri Chhotu Ram Kumawat c) The dispute were going on and by assessee and his brother with that of Shri Basant Biharilal and not with Chhotu Ram Kumawat.

P a g e | 9 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat d) Thus, the agreement covers the three party, tenant, owner and purchase of the property. Here it is hard to believe that the tenant vacant the property and give money therefore it is not unexplained Investment of the assessee. It is not the claim of the revenue that the document registered is not at the prevailing DLC rate and therefore, the unexplained investment to the extent of Rs. 40 Lac cannot be believed to be made by the assesseebecause all these facts of vacating the premises, its possession of 25 years and the seller sales the property in consent of the tenant e) The court case withdrawal application was given after the agreement and thus it is not clear as to the money has been given by the legal heirs of Shri Basant Biharilal Mathur to Shri Chhotu Ram Kumawat or by the assessee. f)The agreement is not registered g)Ld. AO has not examined the legal heirs of the late Shri Basant Biharilal Mathr as to the payment of money in consideration of the vacation of land in favour of Shri Chhotu Ram Kumawat. From the paras 19(d), 19(e) and 19(g) above it is clear that the Hon'ble ITAT has clearly held that unexplained investment of Rs. 40 lacs was made for the purchase of the property and the Hon'ble ITAT further observed that though it is not clear that who made the payment to Shri Chhotu Ram Kumawat, the legal heirs of late Shri Basant Biharilal Mathur or Sh. Jaipal Singh (This is the factual position noted by the Hon'bleITAT at para 19(e)). Therefore, it is clearly concluded by the Hon'ble ITAT as discussed above that Rs. 40 lacs was received by Shri Chhotu Ram Kumawat. So, it has been settled by Hon'ble ITAT that the property was sold by the appellant for Rs. 40,00,000/-. Since, this factual aspect of sale consideration received is decided, the taxability on the same is settled and taxability on the sale amount is a consequent corollary. Respectfully following the decision of the Hon'ble ITAT in the case of Sh. Jaipal Singh, the sale consideration in the hands of the appellant is taken as Rs. 40 lacs. Hence, these grounds No. 2 and 3 of the appeal stands decided against the appellant in light of the above order of Hon'ble ITAT in the case of buyer, Shri JaipalSingh. Hence Ground Nos. 2 and 3 of appeal are dismissed.” 13. We have heard both the parties. The issue for adjudication before us is, with respect to the addition made to the income of the assessee for allegedly suppressing sale consideration of two flats sold by the assessee; i.e. ground floor and first floor 35 Chitragupt Nagar, Imli Wala Phatak, Jaipur. The ground floor was found to be suppressed by amount of Rs.18,75,000/-, while the first floor was noted to be suppressed by an amount of Rs.17,69,000/-. The AO has taken an actual consideration of both the floors to be Rs.40,00,000/-, and the sales suppressed has been computed by the AOon the basis of the

P a g e | 10 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat consideration recorded in the registered sale agreement ofRs.40,00,000/- . The ground floor flat was sold to one Mr. Jaipal vide registered sale deed dated 11.10.2013 for Rs.21,25,000/-. The order of the AO does not record the details of purchase of the first floor of the said property. The assessee however, has filed copy of sale agreement of the first floor at paper book page No.43-48, and the same records the fact of the first floor having been sold to one Sh. Ashok Kumar Gupta on 3rd January 2014, for a consideration of Rs.22,31,000/-. 14. The only basis with the AO for taking Rs.40,00,000/- as the actual sale consideration is a copy of sale agreement found during search of Sh. Jaipal. The admitted facts relating to the said agreement is that the agreement is dated 03.11.2012. The said agreement notes the fact of the cash of Rs.40,00,000/- having been paid by Sh. Jaipal to the assessee for purchase of ground floor of the said property. The document also records the fact of cancellation of the said agreement, which is reproduced in CIT(A)’s order at page No.20 and a copy of the same was filed before us at paper book Page No.22 as under:- “यह है �क म� �लाटन �च�गु�तनगरम�गत वष�से�करायेदारका�बजह।तथा कोमेरे कुमावतकेम�यउ�त�लाटम�बननेवाले�लैटकेपेरे चाल�सलाखदेनेकायहइकरारनामा�कयागयाथामैनेछोटूरामजीकोऊदाकरता �दखाईथी।जब�कमौ�खकतयहुआथा�क रजाम�द�हेतुऐसा�लखाजारहाहै।मेनेउ�च कोनह�ं�दयेथे इस को�करा�करताह�क इस इकरारनामाकाकोईअि�त�वनह�रहाहै” 15. Mr. Jaipal in his statement recorded during search, had stated the assessee, Sh. Chhotu Ram Kumawat was a builder, and he had

P a g e | 11 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat constructed total six flats Plot No.34 and 35 Chitragupt Nagar, Jaipur, and all the flats had been sold at the rate of Rs.40,00,000/- per flat. He had, further, admitted that, the registered sale deeds were executed at the DLC rate and therefore, there was difference in the sale consideration reported in the sale agreement flats and the registered sale deeds. 16. Mr. Jaipal had subsequently, retracted from his statement stating that the flat had been purchased for Rs.21,25,000/- only.The content of his retraction letter is reproduced at page 21 of the Ld. CIT(A)’s order as under:- "2.Flat No. 35-Chitragupta Nagar. The facts of the issue are that the assessee wants to purchase the said flat No. 35 from the Builder. He was not having own funds and the purchase consideration is to be borrowed from bank residential house loan. As know that the bank finances on the basis of agreement to sale only and also finances a part of the sale consideration i.e. not the entire sale consideration amount.As such the assessee made and entered into an agreement with the builder ShriChotu Ram Kumawat for a sum of Rs. 40,00,000/- and also shown as being paid in cash. But in fact no such cash was actually paid to him. The facts and submissions are evident from the agreement itself that the Flat was only under construction and even no roof was constructed and as such no person/huver will Puy the entire sale consideration in advance. The facts and submissions are also deriving support from the statement of Builder ShriChotu Ram Kumawat recorded during the course of post search enquiries and the said statement is in search file of the assessee with your goodself. Thus the assessee purchased the said flat for Rs. 21.25.000/- and the said sale consideration was paid by account by cheque out of the residential house loan borrowed from Allahabad Bank. Tonk Road, Jaipur. A copy of bank statement has already been filed. Thus no addition of Rs.40,00,000/- as proposed deserves to be made as the assessee paid no alleged cash to the builder. The remaining details/explanation regarding notings in seized diary are under preparation and I humbly request that a further time of about 10 days” 17. In the case of Mr. Jaipal, the AO in assessment framed u/s 153A of the Act had made addition on account of the said seized material of Rs.40,00,000/- for consideration paid in cash to the assessee in AY

P a g e | 12 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat 2013-14. The said addition had been confirmed by the Ld. CIT(A), but stood deleted by the ITAT in its order passed in ITA Nos,115- 120/JPR/2024 dated 11.03.2025 held at para 19 as under:- “19. The above contention raised with supporting evidence has not been controverted by the Id. AO through the Id. DR and there is no contrary finding of the lower authority to the submission so made. The document so relied upon was already placed on record by the assessee and therefore, when the assessee on oath submitted the fact that they were tenants and were withdrawing the case the agreement was not proved wrong. The bench noted that sale agreement dated 03.11.2012 was found and seized. (page 24 paper book) This agreement was between Shri Chhotu Ram Kumawat (seller) and Shri Satyapal Singh (Brother of the assessee) and Shri Jaipal Singh (assessee). This deed itself confirms the following facts: a) Assessee and his brother were tenant of the property for last 25 years. The property was owned by Shri Basanth Bihari Lal Mathur. b) They have vacated the possession of the land after the legal heirs of the building sold the property to Shri Chhotu Ram Kumawat c) The dispute were going on and by assessee and his brother with that of Shri Basant Biharilal and not with Chhotu Ram Kumawat. d) Thus, the agreement covers the three party, tenant, owner and purchase of the property. Here it is hard to believe that the tenant vacant the property and give money therefore it is not unexplained Investment of the assessee. It is not the claim of the revenue that the document registered is not at the prevailing DLC rate and therefore, the unexplained investment to the extent of Rs. 40 Lac cannot be believed to be made by the assessee because all these facts of vacating the premises, its possession of 25 years and the seller sales the property in consent of the tenant e) The court case withdrawal application was given after the agreement and thus it is not clear as to the money has been given by the legal heirs of Shri Basant Biharilal Mathur to Shri Chhotu Ram Kumawat or by the assessee. f)The agreement is not registered g)Ld. AO has not examined the legal heirs of the late Shri Basant Biharilal Mathr as to the payment of money in consideration of the vacation of land in favour of Shri Chhotu Ram Kumawat.” 18. The above facts emanates from the assessment order and the Ld. CIT(A) order and are not disputed by either of the parties. 19. Considering the above facts what arises is that the document found during search on Mr. Jaipal, though pertains to an agreement to sell dated 03.11.2012, the said document also records cancellation of the agreement within 17 days dated 20.11.2012. The cancellation noted in the said agreement, which is reproduced above in our order, clearly

P a g e | 13 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat states that though in writing, it was agreed between the assessee and Mr. Jaipal to have undertaken the transaction of sale of ground floor of the property for Rs.40,00,000/- in cash, but orally, the parties had agreed otherwise and the sum of Rs.40,00,000/- had not been given to by Jaipal to the assessee and the agreement had been cancelled. 20. What is derived therefore is that, on a complete reading of the alleged incriminating material found during search on Mr. Jaipal, no adverse view could be taken against the assessee. The material as a whole reflected the fact that though the parties had initially entered into an agreement to transact sale of property for Rs.40,00,000/- in cash, but the said agreement had been subsequently, cancelled within 17 days. Thus, what is derived, from said document is that, the transaction recorded in the agreement to sell was never undertaken/executed. 21. Another fact which is derived from the said incriminating material is that, it notes the fact of Rs.40,00,000/- allegedly having exchanged hands from Mr. Jaipal to the assessee on the date of the agreement itself i.e. 03.11.2012, which transaction pertains to Financial Year 2012-13, relating to AY 2013-14. In the case of Mr. Jaipal, the AO had made addition of his income, in the assessment framed u/s 153A of the Act for AY 2013-14, even the Ld. CIT(A), in his findings on the legal ground at para 4.2 of his order has categorically noted that in the present case it is clear “that the agreement date falls within AY 2013-14”. Thus, undisputedly, the transaction recorded in the incriminating document pertains to the preceding assessment year AY 2013-14.

P a g e | 14 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat 22. It is evident therefore, that the alleged document found during search on Mr. Jaipal was clearly not any incriminating material having any impact on the determination of income of the assessee and neither did the said document pertain to the impugned assessment year. 23. Considering the same therefore, we have no hesitation in holding that the AO had wrongly assumed jurisdiction u/s 153C of the Act to frame assessment in the case of assessee u/s 153A of in Act for the impugned assessment year i.e. AY 2014-15. We draw support from the decision of the Hon’ble Apex Court in the case of Singhad Technical Education Society (Supra) whereas the Apex Court had categorically held that in case of third person assessment u/s 153C of the Act can be framed only for those assessment years relating to which adverse material or incriminating material has been found during search on person. Wetherefore, hold that the assessment framed in the present case on the assessee not being basis on any adverse material and the material not even pertaining to the impugned year, the jurisdiction assumed by the AO was without the authority of law. The order passed therefore, as a consequence, u/s 153C of the Act is we hold not sustainable in law, and accordingly, we quash the assessment framed. The legal ground of appeal Nos.1, 3 to 5 raised by the assessee, accordingly are allowed. 24. On the merits of the case, our finding of facts in the legal ground are relevant for adjudication of the same. As noted above, the document found during search on Mr. Jaipal, relating to the assessee was clearly

P a g e | 15 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat not adverse to the assessee, since the agreement also recorded the fact of the cancellation of the same. 25. Further, the transaction noted in the agreement did not pertain to the impugned year before us, but pertained to the preceding year. On the basis of these facts alone, the addition made is not sustainable, since no adverse view against the assessee could be taken, on the basis of the material found during search on Mr. Jaipal, and even otherwise the transaction recorded therein did not pertain to the impugned assessment year. The ld. Counsel for the assessee has also drawn our attention to the fact that the second floor of the impugned property was sold in the succeeding assessment year i.e. AY 2015-16 and again for a consideration far less than that alleged by the AO to have been received by the assessee for the sale of all the flats i.e. Rs. 40,00,000/-, but however, no addition was made by the AO therein. The only basis for the Revenue Authorities for treating the actual sale consideration to be Rs.40,00,000/- is the purported agreement to sell found during search on Mr. Jaipal, and the statement of Mr. Jaipal admitted so. Mr. Jaipal had stated to have sold all flats for Rs.40,00,000/-, however, as pointed out by the ld. counsel for the assessee, the AO has accepted the lesser sale consideration for the sale of the second floor flat of the said property in the succeeding assessment year. Therefore, the AO himself has not relied conclusively on the statement of Mr. Jaipal. 26. Further, Mr. Jaipal had subsequently, retracted his statement also, stating that, the agreement for Rs.40,00,000/- was entered only to

P a g e | 16 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat enable getting sufficient bank loan for which he eventually upon and scrapped the agreement also. No infirmity has been pointed out by the Revenue in the retraction of the statement of Mr. Jaipal. 27. Therefore, considering all the facts and circumstances that:- 1. The basis for making addition that is the agreement to sell found during search on Mr. Jaipal, when read as a whole did not reveal the agreement to have been acted upon. 2. That in any case the transaction was noted to have been carried out in the preceding assessment year. 3. That Mr. Jaipal, who had admitted to have bought the flats for Rs.40,00,000/-, had subsequently, retracted his statement. 4. That in any case the addition made in the hands of Mr. Jaipal stood deleted by the ITATand also the fact that the addition in any case was made in the hands of Mr. Jaipal in the preceding assessment year. 28. We hold that there is no merit in the case of Revenue for making any addition on account of the transaction recorded in the agreement to sell found during the search on Mr. Jaipal. The addition therefore made, on account of the ground floor flat sold to the assessee amounting to Rs.18,75,000/- is directed to be deleted. As per the addition made on the account of first floor flat the facts as noted reveal that the said transaction took place between the assessee and one Mr. Ashok Kumar Gupta and except for the statement of Mr. Jaipal stating that all the flats had been sold by the assessee for Rs.40,00,000/-, there is no other basis with the Revenue for treating the actual consideration for the sale of

P a g e | 17 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat said flat for Rs.40,00,000/-as opposed to the registered sale consideration of Rs.22,31,000/-. 29. In fact, as pointed out by the ld. Counsel for the assessee, the AO himself has accepted the sale of the second floor flat of the same property at the registered sale consideration in the assessment framed u/s 153C of the Act, in the case of the assessee for the succeeding assessment year i.e. AY 2015-16. 30. Wetherefore, find that, there is no basis at all with the Revenue to treat the actual sale consideration of the first floor of the impugned property at Rs.40,00,000/-. The addition therefore made on account of the sum of Rs.17,69,000/-, we hold is not sustainable and direct deletion of the same. In fact the entire addition made to the income of the assessee of Rs.18,75,000/- and Rs.17,69,000/-, on account of alleged suppressed sale of ground floor and first floor of Plot No.35 Chitragupt Nagar, Jaipur is directed to be deleted. The assessee succeeds on merits also. 31. Therefore, Ground No.2 raised by the assessee is allowed. 32. In effect, the appeal of the assessee is allowed. Order pronounced in the open court on 21.07.2026

Sd/- Sd/- (T. R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 21.07.2026 Mittali, Sr. PS

P a g e | 18 ITA No. 1781/JPR/2025 Chhotu Ram Kumawat