DEPUTY COMMISSIONER OF INCOME TAX, DELHI vs. RAJYOG BUILDTECH PRIVATE LIMITED, DELHI

ITA 8174/DEL/2025Status: DisposedITAT Delhi28 September 2026AY 2015-167 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision. Regarding the first issue, the Tribunal noted that the assessment was based on incriminating material seized from the laptop of Sh. Saurabh Gupta, an employee of M/s OPG Securities Pvt. Ltd., which is a third-party premise. It is well-settled law that even in coordinated searches, incriminating material derived from third-party premises can only be assessed under section 153C of the Act, as supported by the Delhi High Court's decision in Anand Kumar Jain HUF. Therefore, the Tribunal affirmed the CIT(A)'s finding that proceedings should have been under section 153C and rejected the Revenue's grounds. On the merits of the case, the Tribunal noted that the protective addition of Rs. 7.50 crore was made in the assessee's hands. However, the substantive addition of Rs. 7.50 crore was made in the hands of Sanjay Singhal for AY 2015-16. The Tribunal further noted that a Coordinate Bench of the Delhi Tribunal had quashed the entire assessment proceedings in the case of Sanjay Singhal. Relying on the principle that if a substantive addition does not survive, a protective addition also does not survive, and citing the Delhi High Court's decision in PCIT vs. Electrical and Electronic India Ltd., the Tribunal held that the protective addition in the assessee's case was not sustainable. Consequently, the CIT(A)'s deletion of the addition was affirmed. The appeals for both assessment years were dismissed.

What were the facts?

The Revenue is in appeal against the orders of the CIT(A) for assessment years 2015-16 and 2016-17. A search and seizure action under section 132 was conducted on the Sanjay Singhal Group on 15.11.2017. The assessee, Rajyog Buildtech Pvt. Ltd., was also covered. The Assessing Officer (AO) initiated proceedings under section 153A, issuing a notice on 4.4.2019. The assessee filed a return of income. The AO made a protective addition of Rs. 7.50 crore as unexplained cash credit under section 68, considering an advance received from M/s OPG Securities Pvt. Ltd. during FY 2014-15 as an accommodation entry. The substantive addition was made in the hands of Shri Sanjay Singhal. The CIT(A) deleted the protective addition, holding it premature as the substantive addition was under appeal before the ITAT and had not attained finality.

What were the issues?

1. Whether the assessment under section 153A was invalid, and if so, whether the entire assessment order ought to have been quashed, as argued by the Revenue. The Revenue contended that if the CIT(A) held the section 153A jurisdiction invalid, the assessment should have been annulled. The assessee argued that the addition was not based on incriminating material found during the search in its case and that proceedings should have been under section 153C if the AO relied on material seized from a third party. 2. Whether the CIT(A) erred in holding that proceedings ought to have been initiated under section 153C, without observing that the seized material belonged to the assessee, as statutorily required, according to the Revenue. The Revenue argued that the CIT(A) failed to observe the statutory requirement that seized material must belong to the assessee for section 153C proceedings. 3. Whether the CIT(A) erred in deleting the protective addition merely on the ground that the substantive addition in the hands of Shri Sanjay Singhal was confirmed by the CIT(A), when the substantive addition was under appeal before the ITAT and had not attained finality, as argued by the Revenue. The Revenue contended that the deletion was premature and contrary to law.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 143(3),Section 143(1),Section 139(1),Section 143(2),Section 142(1),Section 68,Section 69A,Section 153C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI

Before: SHRI SUDHIR KUMAR & SHRI MANISH AGARWAL&

For Appellant: Shri Amit Goel, Adv. & Shri Pranav Yadav
For Respondent: Shri K. Hauthang, CIT(DR)
Hearing: 19/08/2026Pronounced: 28/09/2026

PER SUDHIR KUMAR, JM: These appeals by the Revenue are directed against the separate orders of the Ld.

Commissioner of Income Tax (Appeals)-24, New Delhi relevant to assessment years 2015- 16 & 2016-17 respectively. Since both the appeals are interconnected, hence the same were heard together and are being disposed of by this common order for the sake of convenience by dealing with the facts of ITA No. 8174/Del/2025 (AY 2015-16), as a lead case wherein, the revenue has raised the following grounds for appeal. i)

On the facts and circumstances of the case, the learned CIT(A) has erred in non- holding the assessment under section 153A, invalid but thereafter failing to annul t

The order continues below.

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