PRAKASH HIRALAL SEJPAL,SURENDRANAGAR vs. WARD-1 SURENDRANAGAR, SURENDRANAGAR

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट । In The Income Tax Appellate Tribunal, “SMC” Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member आयकर अपील सं./ITA No. 941 & 942/Rjt/2025 [ िनधा�रण वष� /Assessment Year: 2020-21 & 2021-22 ] Prakash Hiralal Sejpal, Income Tax Officer, Ward 1, 40 Vishwakunj Society Ratanpar, Surendranagar, Vs. Ratanpar, Surendra Nagar, Surendranagar Joravarnagar S.O 363020, Gujarat-363020 (Gujarat - India) �ायीलेखासं./जीआइआरसं./PAN/GIR No.: AERPS0356Q (Assessee) (Respondent) िनधा�रती की ओर से/Assessee by : Shri Kalpesh Doshi, Ld. AR राज� की ओर से/Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR सुनवाई की तारीख/Date of Hearing : 09/04/2026 घोषणा की तारीख/Date of Pronouncement : 06/07/2026 :: आदेश/ORDER :: Per, Dr. Arjun Lal Saini, AM: Captioned two appeals filed by the assessee, pertaining to assessment years (AY) 2020-21 and 2021-22, are directed against the separate orders passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 13.10.2025 by the National Faceless Appeal Centre (NFAC), Delhi/ Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arise out of separate assessment orders passed by the Assessing Officer (in short ‘assessing officer’) u/s 147 of the Act.

We have gone through above notice u/s. 148 of the Act and in the above notice, it is stated that the search was initiated in the assessee’s case, however, in fact, no search was initiated in the assessee`s case. The search was initiated u/s. 132 of the Act, in case of other assessees. The above notice also mentioned that search was initiated on 22.10.2021, in case of other assessees, which is also wrongly stated in the notice under section 148 of the Act. The actual date of search is as on 24.08.2021, whereas in the notice it is mentioned as 22.10.2021, which shows, complete non-application of mind by the assessing officer. Hence, it is not a valid notice in the eye of law. Law is well settled that whenthe statute requires to do certain thing in certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on a legal maxim 'Expressiouniusest exclusion alteris', meaning there by that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner and following of other course is not permissible. Hence, we find that the notice under section 148 of the Act is itself defective and it was issued by the assessing officer without application of mind, therefore, entire reassessment proceedings should be quashed. 38. Now coming to the procedure to be followed by the assessing officer under section 148A of the Act. We note that before us, assessee has submitted following documents and evidences relating to reassessment proceedings, which are reproduced below: (i) Copy of acknowledgement and return of income filed by the assessee for AY 2016- 17. (Paper book pg no. 1-11) (ii) Copy of approval of satisfaction note by PCIT, central, Ahmedabad dated 21.12.2022. (Paper book pg no. 12-13) (iii) Copy of approval for reopening of assessment dated 07.02.2023 issued by the PCIT, Central Cirlce-2, for AY 2016-17. (Paper book pg no. 14-16) (iv Copy of notice u/s. 148 of the Act dated 23.02.2023 issued by the DCIT/ACIT central Circle – 2, Rajkot for AY 2016-17. (Paper book pg no. 17) (v) Copy of reply and preliminary objections raised dated 01.03.2023 filed by the assessee alongwith return of income filed in response to notice u/s. 148 of the Act dated 23.02.2023. (Paper book pg no. 18-19) (vi) Copy acknowledgement and return of income for AY 2016-17 filed by the assessee in response to notice u/s. 148dated 23.02.2023(Paper book pg no. 20- 30) 39. We have gone through the above basic documents submitted by the assessee in the paper book, which were also available before the lower authorities and we observe that assessing officer has not followed the procedure mentioned in section 148A of the Act, properly. While following the procedure, we find that there are lot of launches which is not curable. Itwas submitted that the allegation in the entire Annexure (Reason) is that of unaccounted receipts by assessee from booking / sale of units in the project "Silver Heights". However, while justifying the reopening of case under the prescribed time-limit u/s 149 of the Act, it was alleged that income chargeable to tax in assessee`s case is not represented in the form of assets / expenditure, that is, nowhere, it is mentioned that income chargeable to tax, which has escaped assessment amounts to Rs.50,00,000/- or more. Therefore, there is clear contradiction between the allegation raised on the basis of so-called documents/data seized from the premises of third party and averment made in justification of compliance with the provision of Section 149(1)(b) of the Act. For better understanding, the provisions of Section 149(1)(b) of the Act, are reproduced below: *“Time limit for notices under sections 148 and 148A. 149. (1) No notice under section 148 shall be issued for the relevant assessment year- (a) if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years and three months, but not more than five years and three months, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more. (2) No notice to show cause under section 148A shall be issued for the relevant assessment year- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than five years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment, as per the information with the Assessing Officer, amounts to or is likely to amount to fifty lakh rupees or more.]” *91. The above section Substituted by the Finance (No. 2) Act, 2024, w.e.f. 1-9-2024. Prior to its substitution, section 149, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4- 1989, Finance Act, 2001, w.e.f. 1-6-2001, Finance Act, 2012, w.e.f. 1-7-2012, Finance Act, 2021, w.e.f. 1-4-2021, Finance Act, 2022, w.e.f. 1-4- 2022/w.r.e.f. 1-4-2021 and Finance Act, 2023, w.e.f. 1-4-2023, read as under. '149. Time limit for notice- (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of- (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion, ог (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before Ist day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (h) of sub-section (1) of this section or section 153A or section 153C. as the case may be they stood immediately before the commencement of the Finance Act, 2021. 40. In the context of the above provisions of section 149(1)(b) of the Act vis-à-vis notice u/s 148 of the Act, it was submitted by ld Counsel that provisions of section 149(1)(b) of the Act, empowers an authority to issue notice u/s 148 of the Act, if the alleged income is represented by any asset or expenditure. It is apparent on the face of the show-cause notice( in brief “SCN”), that assessing officer is not certain, as to whether in assessee`s case, the alleged escaped income is represented by asset or expenditure, both these phrases have been issued in the SCN. The reason and the belief as also the information leading to allegation of escapement of income must be clear and explicit at the initial stage itself prior to recording of the reasons and then issue of notice pursuant to the reasons. The show cause notice (SCN) having used both the phrases at a time, it suffers from vagueness and demonstrates absence of initial judgment itself, as to whether the information represents assessee`s asset or expenditure. As a result, the notice becomes bad in law and assessment order deserves to be quashed. The exercise of jurisdiction u/s the new sections 147 and 148 of the Act, is not meant to determine during reassessment, as to whether an item represents an asset or an expenditure or whether it exceeds the threshold of Rs.50 lakhs. The said exercise is required to be carried out prior to or at the time of recording the satisfaction and the reasons and while obtaining the requisite approvals of higher authorities. Obviously, this has not been done and hence the notice suffers from an inherent jurisdictional lack of power. The assessee submitted before the assessing officer that in the assessee`s case, no 'asset' or 'expenditure' is identified in the entire Annexure (Reason) and hence, reopening of the case beyond the prescribed time-limit is patently illegal. The clause no. (b) of section 149(1) requires that the income chargeable to tax should be represented in the form of (i) an asset, (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account. The reasons provided for issue of notice u/s 148 of the Act, bears a solitary allegation of receipt of ‘on money’, but the money has not been quantified in the reasons recorded. However, its representation in the form of an asset or an expenditure or an entry in the books of account is nowhere recorded in the reason for reopening. Hence, the notices u/s 148 (especially for assessment year 2016-17, 2017-18 and 2018-19) of the Act, which are issued without fulfilling the conditions of section 149(1)(b) of the Act, do not sustain in the eyes of law and hence, the consequential proceedings too, become bad in law. 41. The assessee also submitted before the assessing officer that inthe para No.2 of the show cause notice (SCN) it has been stated that although there is no search action carried out in the case of the assessee, notice can be issued u/s. 148 of the Act, under clause (iv) of Explanation 2 to Section 148 of the Act. In this connection, it was submitted that copies of documents / data said to have been seized from the premise of Shri Girish Vanjani provided to the assessee (two ledger accounts) do not pertain to assessee and also, the information contained therein does not relate to assessee. It was submitted that nowhere in the impugned documents/data, it is specifically stated that the alleged cash has been paid to the assessee or that the entries in such seized data are related to purchase of residential units from the assessee. Therefore, merely on the basis of name "MM", "Silver Heights", "Mukeshbhai" etc. resembling with the name of the assessee, it cannot be presumed that such transactions are carried out with the assessee, much less the allegation of ‘on money’ paid. In this regard, it is pertinent to reproduce here, show cause notice issued by the assessing officer on 13.03.2023, during the assessment proceedings, which is as follows:

“18. We note that the assessee has contended that the addition made by the assessing officer is just based on the excel file data found and seized from the third party. The addition cannot be made without rejecting the audited books of account u/s 145(3) of the Act. We note that no tangible documents, loose papers found during the course of search. So far, the excel sheet is concerned, there is no signature of the assessee as well as authorized partner of M/s Vivan Infraspace LLP. The Assessing Officer one side has observed that perusal of the excel sheet revealed that the assessee- company has not reported entire receipts, as appearing from the seized excel sheet. Matching of entries on the seized excel -sheet found from the third- party with those on the accounting ledger of the assessee and of M/s Titanium Buildcon LLP (developer of the project The City Centre) has no any nexus in the case since the assessee has worked with company, M/s Titanium Buildcon LLP and has no relevance with any document seized in the form of data/transactions recorded in the excel file from third-party. In absence of any instance of transactions being pointed out by the assessing officer, there is nothing for rebuttal by the person receiving such notice from the assessing officer. A person can offer rebuttal with evidence only where the department provides the details of the transactions which they consider to have led to cash receipt by the assessee. Merely comparing the excel sheet found from the third- party with the accounts of assessee- company, will not be an instance to prove that the assessee- company has received cash from the third- party. The well settled legal position is that a non- speaking document without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed pursuant to search and seizure action. From the search and seizure perspective, such non speaking seized documents are referred to as "Dump Documents". 19. Therefore, we find that no arbitrary addition to the income of the assessee can be made by the Assessing Officer based on the dump documents, loose papers containing scribbling, rough/vague notings in the absence of any corroborative material, evidence recorded and finding that such dump documents had materialized into transactions giving rise to income of the assessee, which had not been disclosed in regular books of accounts by the assessee. For that reliance is placed on the judgement of the Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO [1981] 7 Taxman 13/131 ITR 597 held that the fictional receipt cannot be deemed to be receipt in the absence of any cogent material to support the factum of actual receipt. Moreover, the Hon'ble High Court of Delhi in case of CIT vs. D.K. Gupta [2008] 174 Taxman 476 upheld the order of the Tribunal wherein it was held that Ad-hoc/Dumb Documents without any corroborative evidence and finding, that the alleged documents nave materialized into transactions cannot be deemed to be the income of the assessee. The Hon'ble Calcutta Bench of ITAT in case of T.S. Venkatesan v. Asstt. CIT [2000] 74 ITD 298 held that in the absence of corroborative evidence, addition of undisclosed income could not be made simply on the basis of entries on loose papers recovered from the residence of a third- party and certain general statements of said party. Therefore, the well settled legal position is that a non- speaking document referred to as a "Dump Document" without any corroborative material, evidence on record, has to disregarded for the purposes of assessments to be framed u/s 153A and 153C of the Act. Page | 12 The aforementioned legal position also gathers support from the Judgement of the Hon'ble Supreme Court in case of CBI v. V.C. Shukla 1998 taxmann.com 2155 popularly known as Jain Hawala Case wherein it was held that any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational and hence legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. In this case it was held that entries in Jain Notebooks held on facts admissible under section 34, but file containing loose sheets of papers are not "book" and hence entries therein not admissible under section 34 of the evidence Act. Further it was also held in this case that entries in books of account shall not alone be sufficient evidence to charge any person with liability. The above view further gathers reinforcement from the judgment of the Hon'ble Supreme Court in case of Common Cause v. Union of India [2017] 77 taxmann.com 245/245 Taxman 214/394 ITR 220 popularly known Sahara dairies and Aditya Birla diaries case. In this case, the Hon'ble Supreme Court, following the judgment rendered in case of V.C. Shukla (supra), laid down the following principles: (i) Entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible; (ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. (iii) The meaning of account book would be spiral notebook/ped but not loose sheets. (iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another; (v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts; (vi) The Court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence. 20. We note that apart from excel sheet, no evidence has been found to suggest that the assessee had actually received the said amount. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the excel sheet were the income of the assessee, received from RK Group. The Assessing Officer has not brought on record any evidence to suggest that RK Group has admitted that the amounts were paid to the assessee- company. Hence, simply rough noting on the excel file, which is Page | 13 not signed by any party, does not mean that the addition could be made in the hands of the assessee- company. Since no evidence was found relating to the existence of any transaction between the assessee- company and R K Group and in the absence of any corroborative evidence to suggest that the assessee- company had actually received the said amount, no addition could be made merely on the basis of noting excel file found during the search proceedings from third party. 21. We find that no tangible documents, any loose papers found during the courses of search, which contains the signature of the assessee as well as authorized partner of M/s Titanium Buildcon LLP. In Pankaj Dahyabhai Patel (HUF) Vs. ACIT (1999) 63 TT) (Ahm) 790-where papers were not seized from house of the assessee nor was in his handwriting, of the assessee, the inference of on-money receipt based on such paper was not justified. Additions based on loose papers without corroborative evidence, it was held, by Tribunal, to be not sustainable. Neither evidence to link the seized documents found in the premises of third party, that is, R K Group during the course of search, then the presumption u/s 132(4A) of the Act not applicable. The action of the Assessing Officer in making addition based on the searched person`s excel -sheet data, recording of third party, that the same belongs to the assessee, is incorrect, as the same would be clearly impermissible, as the seized data, admittedly, had no nexus with the assessee and there is no signature of assessee or third-party, on such excel sheet. In the case of Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The entire addition revolving to the excel sheet found and seized from the third- party which is "dump documents" which has no legality in the eyes of the law and the addition exclusively based on such documents needs to be deleted. 22. We note that assessee’s issue under consideration is also covered by the judgement of the Hon’ble High Court of Gujarat in the case of PCIT vs. Kaushik Nanubhai Majithia R/Tax Appeal No. 20 of 2024 order dated 06.03.2024, while passing the order the Hon’ble Gujarat High Court has made the following observations: “1. Having noted the findings of the facts returned by the Commissioner of Income Tax (Appeals) ('CITA', in brief) and the Income Tax Appellate Tribunal ('ITAT', herein after), we may record that, essentially, the proceedings under Section 153C of the Income Tax Act, 1961 (in short, 'IT Act of 1961') were initiated against the Respondent- assessee on the basis of an excel sheet found from the computer of a person, associated with the Company, namely Navratna Organizers and Developers Private Limited (in short as "the Developer'), in the premises of whom the search was conducted. 2. The excel sheet, according to the learned Counsel for the Revenue, contained the details of payment made by the assessee to the developer, with respect to which tax had been paid by the developer before the Settlement Commissioner. The findings returned by the CITA and ITAT on the issue is sought to be assailed on the ground that the payment of tax by the developer, in whose premises search was conducted, before the Settlement Commissioner, with respect to the amount entered in the excel sheet found from the possession of the assistant working with the developer, is sufficient proof of the transaction between the assessee and the developer.

Sd/- [ Dr. Arjun Lal Saini ] लेखा सद�य/Accountant Member //True Copy// Rajkot Date: 06/07/2026 आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to :  अपीलाथ�/ The Assessee  ��थ�/ The Respondent  आयकर आयु�/ CIT  आयकर आयु�(अपील)/ The CIT(A)  िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाड� फाईल/ Guard File By Order

Sr. Private Secretary ITAT, Rajkot