DCIT CENTRAL CIRCLE 7(2), MUMBAI, MUMBAI vs. JESUS SUDHIR LALL, MUMBAI

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ITA 2495/MUM/2026Status: DisposedITAT Mumbai29 September 2026AY 2013-1411 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the grounds of appeal raised by the Revenue were squarely covered by its own decision in the assessee's case for AY 2012-13. The Tribunal reiterated that to invoke the extended limitation period under the fourth proviso to Section 153A, it is mandatory for the AO to demonstrate that the escaped income is "in the form of an asset" and its value exceeds Rs. 50 lakhs. The Tribunal found that the AO had not shown that the alleged income escaped assessment was represented "in the form of an asset." The additions made under Section 69A and 69C were not based on any specific asset discovered during the search. Therefore, reopening the assessment beyond six years was in violation of Section 153A/153C, rendering the reassessment order void-ab-initio. The Tribunal affirmed the order of the CIT(A). The assessee's cross-objection was dismissed as infructuous due to the dismissal of the Revenue's appeal.

What were the facts?

The Revenue (DCIT Central Circle – 7(2), Mumbai) appealed the order of the CIT(A) – 51, Mumbai, dated 26.12.2025, for Assessment Year (AY) 2013-14. The assessee, Jesus Sudhir Lall, filed a cross-objection. A search action was conducted on the assessee and its group on 14.03.2022. The Assessing Officer (AO) made additions under Section 69A for unexplained money (Rs. 13,81,86,106) and under Section 69C for unexplained expenditure (Rs. 2,55,69,920). The CIT(A) deleted these additions, holding that assessment proceedings could not be initiated under Section 153C read with Section 153A beyond six years from the search date, as the income was not represented in the form of an 'asset'. The Revenue's appeal and the assessee's cross-objection were heard by the ITAT Mumbai.

What were the issues?

1. Whether, on the facts and in law, cash constitutes an "asset" for the purposes of section 149(1)(b) of the Income-tax Act, 1961? The Revenue argued that cash constitutes an asset, and the interpretation by the CIT(A) defeats the object of extended limitation under Section 149(1)(b). The assessee contended that the additions were based on conjecture and surmises, without corroborative evidence, and that no cash was found at their premises, thus failing the basic condition for invoking Section 69A. The assessee also argued that Section 69C was wrongly invoked as no expenditure was claimed in their books. 2. Whether the Ld. CIT(A) erred in law in holding that income in the form of unaccounted cash receipts is not "represented in the form of an asset" under section 149(1)(b)? The Revenue argued that the CIT(A)'s interpretation was incorrect. 3. Whether unexplained expenditure assessed under section 69C necessarily presupposes existence of unaccounted money and therefore satisfies the asset condition under section 149(1)(b)? The Revenue contended this. 4. Whether receipt of unsecured loans in cash results in escaped income represented in the form of an asset notwithstanding its subsequent accounting as a liability? The Revenue raised this. 5. Whether the interpretation adopted by the Ld. CIT(A) defeats the object of extended limitation provided under section 149(1)(b)? The Revenue argued this.

Which sections of the Income-tax Act were involved?

Section 149(1)(b),Section 69C,Section 69A,Section 153C,Section 153A,Section 132(4),Section 148,Section 37,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by Revenueand Cross Objection therein by assessee is directed against the order of ld. CIT(A) – 51, Mumbaidated 26.12.2025 for Assessment Year (AY) 2013-14. The Revenue has raised following grounds of appeal: “1. Whether, on the facts and in law, cash constitutes an "asset" for the purposes of section 149(1)(b) of the Income-tax Act, 1961? 2. Whether the Ld. CIT(A) erred in law in holding that income in the form of unaccounted cash receipts is not "represented in the form of an asset" under section 149(1)(b)?

3.

Whether unexplained expenditure assessed under section 69C necessarily presupposes existence of unaccounted money and therefore satisfies the asset condition under section 149(1)(b)?

4.

Whether receipt of unsecured loans in cash results in escaped income represented in the form of an asset notwithstanding its subsequent accounting as a liability?

5.

Whether the interpretation adopted by the Ld. CIT(A) defeats the object of extended limitation provided under section 149(1)(b)?

6.

The appellant craves leave to add to alter, amend, modify and/or delete any or all of the above said grounds of appeal. The appellant reserves its right to file further submission in the appeal.”

2.

On receipt of memorandum of appeal, the assessee has filed its cross- objection raising following grounds: Ld.CIT(A) erred in not adjudicating the appeal on merits without appreciating that the additions/disallowances are made by the Ld.A.O. in the assessment order merely on the basis of conjecture and surmises. Thus, the same are unjustified and needs to be deleted.

Addition of Rs.13,81,86,106/- made under section 69A of the Act as Unexplained Money is unjustified

2.

The Ld.CIT(A) failed to appreciate that the addition of Rs.13,81,86,106/- is made by the Ld.A.O. under section 69A of the Act only by relying on the rough dumb jottings made in the loose papers, diaries and other material found at the residence of third party without having any corroborative evidence. The said addition is made only on the basis of guesswork, conjecture and surmises. Thus, the addition of Rs. 13,81,86,106/- is not justified and the same needs to be deleted.

3.

The Ld.CIT(A) failed to appreciate that the Assessee was not found to be an owner of any money, bullion and jewellery in the year under consideration. No cash was ever found at the premises of the Assessee. Thus, the basic condition to invoke the provisions of section 69A of the Act does not satisfy in the present case. Thus,addition of Rs.13.81.86.106/- made under section 69A of the Act is not justified and the same needs to be deleted.

4.

The Ld.CIT(A) failed to appreciate that the Ld.A.O. relied on the statement of third party for making the addition of Rs.13,81,86,106/- under section 69A of the Act without providing the assessee an opportunity of cross examination. Thus, the addition of Rs. 13,81,86,106/- made under section 69A of the Act is in breach of the principles of natural justice and the same needs to be deleted.

Addition of Rs.2,55,69,920/- made under section 69C of the Act as Unexplained Expenditure is unjustified

5.

The Ld.CIT(A) failed to appreciate that, the Ld.A.O. added a sum of Rs.2,55,69,920/- under section 69C of the Act without appreciating that the Assessee has not claimed any expenditure of Rs.2,55,69,920/- in his books of accounts. Thus, the basic condition to invoke section 69C of the Act does not satisfy in the facts of the present case. Hence, the addition of Rs.2,55,69,920/-under section 69C of the Act is not justified and the same needs to be deleted.

6.

The Ld.CIT(A) failed to appreciate that, the addition of Rs.2,55,69,920/- is made under section 69C of the Act solely by relying on the rough dumb jottings made in loose papers, diaries and other material found at the residence of third party without having any corroborative evidence. The said addition is made only on the basis of guesswork, conjecture and surmises. Thus, theaddition of Rs.2,55,69,920/- is unjustified and the same may be deleted.

7.

The Ld.CIT(A) failed to appreciate that the Ld.A.O. relied on the statement of third party for making the addition of Rs.2,55,69,920/- under section 69C of the Act without providing the assessee an opportunity of cross examination. Thus, the addition of Rs.2,55,69,920/- made under section 69C of the Act is in breach of the principles of natural justice and the same needs to be deleted.

8.

The Assessee craves leave to add, amend, alter delete any of the above grounds of appeal.

3.

Rival submissions of both the parties have been heard and the record perused. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that the grounds raised by the Revenue are squarely covered by the decision of this Tribunal in assesses own case for AY 2012-13 in ITA No. 9308/Mum/2025 and CO No. 156/Mum/2026 dated 16.07.2026. While explaining the facts of the case, the learned AR of the assessee submits that a search action was carried out on the assessee and its group on 14.03.2022. The assessment year under consideration is beyond six years from the year in which the search under Section 132 of the Act took place. Similar additions were made by assessing officer (AO) in AY 2012-13 under Sections 69A and 69D on account of unexplained money and unsecured loans received in cash. However, on appeal the learned CIT(A) allowed relief to the assessee by holding that assessment proceedings cannot be initiated under Section 153C read with Section 153A when the AO was not in possession of books of account, documents or evidence which revealed that income was represented in the form of an ‘asset’ which escaped assessment. Aggrieved by the order of ld CIT(A), the revenue filed appeal before Tribunal, wherein the order of ld CIT(A) was upheld. Admittedly, the year under consideration is also beyond six assessment years from the date of search. Thus, the decision of the Tribunal in AY 2012-13 in ITA No. 9308/Mum/2025 dated 16.07.2026on an identical set of facts is applicable to the grounds of appeal raised by the Revenue in the year under consideration. The learned AR of the assessee submits that the appeal of the Revenue is liable to be dismissed as the grounds of appeal are squarely covered against the Revenue. In the alternative submission, the learned AR of the assessee submits that, in any case the Revenue succeeds in the present appeal, still the matter is to be restored back to the file of the learned CIT(A), as he has not adjudicated various grounds of appeal on merits.

4.

On the other hand, the learned Commissioner of Income Tax - Departmental Representative (ld. CIT-DR) for the Revenue submits that the facts for AYs 2012-13 and 2013-14 are almost similar, except for the variance in the figures of addition. However, he has filed his written submissions and the record, which may be considered. The ld CIT-DR for the revenue submits that the additions made in the assessment order is based on asset. 5. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We that the AO while passing assessment order under section 143(3) read with section 147 made addition under section 69A of Rs. 13.81 Crore on account of unexplained money by taking view that the assessee received cash. The AO also made addition under section 69C of Rs. 2.55 Crore on account of cash expenditure. The ld CIT(A) deleted the addition by taking view that search action under section 132 had taken place on 14/3/2022. On the basis of search action assessment proceedings were initiated by issue of notice under section 148 of the Act. It was held that section 149 of the Act lays down the time lines for issue of notice u/s 148 of the Act. As per the said section, notice under section 148 of the Act can be issued beyond 3 years upto 10 years unless the AO 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 an asset or expenditure in respect of a transaction or in relation to an event or occasion or an entry or entries in books of account, which has escaped assessment amounts to or is likely to amount fifty lakhs rupees or more. It was also held that the first proviso to section 149, speaks that no notice under section 148 can be issued for an assessment year beginning on or before 1/4/2021, if a notice under section 148 or 153A or 153C could not have been issued at the time on account of being beyond the time limit specified under section 149 or 153A or 153C as they stood immediately before the commencement of Finance Act 2021. The ld CIT(A) held that issue before him is whether the reopening is based on the finding of any asset in form of immovable property being land or building or both, shares and securities, loans and advances and deposits in bank account for the FY 2012-13 (AY 2013-14) or not. In the assessment order there is no finding of any asset (including financial interest in any entity) located outside India. It was also noted that no undisclosed asset in form of land or building, shares and securities, loans and advances and deposits in bank account pertaining to FY 2012-13 (AY 2013-14) was found. There is no documentary evidence /material to indicate that any income represented in the form of asset such as land or building, shares and securities, loans and advances and deposits in bank account has escaped assessment for AY 2013-14. We find that, on a similar set of facts in AY 2012-13, the learned CIT(A) deleted the similar addition. The difference is only the figure of addition. We find that on further appeal before the Tribunal, the order of the learned CIT(A) was confirmed in ITA No. 9308/Mum/2025 dated 16.07.2026. The relevant part of the order of Tribunal in appeal for AY 2012-13 is extracted as under:

“11. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various case laws relied by Id AR of the assessee. We find that there is no dispute that search action under section 132 was carried out on 14.03.2022. Thus, AY 2012-13 is beyond the six year from the year in which search action was conducted. The AO reopened the case for AY 2012- 13 by issuing notice under section 148 dated 30.03.2023. We find that while issuing notice under section 148, the AO was of the view that case of the assessee is covered under Explanation 2(i) of Section 148 of the Act as the information gathered from search action suggest that income chargeable to tax exceeds Rs. 50.00 Lakhs which has the escaped assessment. The AO obtained approval from Competent Authority under Section 151 and issued notice under Section 148 dated 30.03.2023. Before Id CIT(A), the assessee filed detailed written submissions which we have recorded above. We find that the Id CIT(A) held that first proviso to section 149 stipulates that no notice under section 148 can be issued for an assessment year beginning on or before 01/04/2021, if a notice under section 148 or 153A or 153C could not have been issued at the time on account of being beyond the time limit specified under section 149 or 153A or 153C as they stood immediately before the commencement of Finance Act 2021 and held that a valid notice could be issued under section 148 for AY 2012-13 on 31.03.2021, only if there was an income in relation to 'asset' (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. It was held that extended period was exclusively restricted to the cases wherein escaped income was "in relation to any asset" located outside India. We further find that the Id CIT(A) categorically held that issue before him for adjudication is whether the reopening is based on the finding of any asset in the form of immovable property being land or building or both, shares or securities, loan and advances and deposits in the bank account for FY 2011- 12. There is no finding in the assessment order about 'asset' including financial interest in asset outside India. There is no undisclosed asset in the form of land or building, shares or securities, loan and advances and deposits in the bank pertaining to the FY 2011-12 (AY 2012-13) which were found during the search. 12. We find that Hon'ble Delhi High Court in Smart Chips (P) Limited Vs ACIT (2025) 476 ITR 389 (Delhi), while considering the contention of the petitioner assessee in the said case) held that in terms of the fourth proviso to Section 153A(1) of the Act, no notice for the relevant assessment year or years could be issued unless the AO had in his possession books of account or other documents or evidence which revealed that income represented in the form of an asset has escaped assessment. Thus, the extended period of limitation beyond the six years preceding the assessment year relevant to previous year in which a search was conducted, would be applicable only in cases where the AO had evidence, which discloses that the escaped income was represented by an asset. It was contended that, in the said case, the income which is alleged to have escaped assessment is on account of an expenditure, which the AO had disallowed and not on account of any asset which represent such income. The Hon'ble High Court after considering factual basis of additions in para-16 onwards held that the AO believed that the petitioner's income had escaped assessment for AY 2016-17 on essentially three grounds. First, the petitioner had deducted expenses relating to amounts paid to certain persons who had not filed their income tax returns and the AO thus doubted the genuineness of the said transactions. Second, the petitioner had booked expenses, which according to the AO, were personal expenses of its directors and had not been incurred wholly and exclusively for the purpose of the petitioner's business. And third, that the petitioner had paid certain amounts as expenses for availing contractual manpower services and the AO doubted the genuineness of the said payments. It is clear from the above that there is no allegation that the income which has escaped assessment was represented in the form of an 'asset'. Therefore, the conditions as stipulated in Clause (a) the fourth proviso to Section 153A(1) of the Act are not satisfied. The AO does not have the possession any books of account, other documents or evidence, which reveals that the petitioner's income that is represented in the form of an asset has escaped assessment. In terms of Explanation 2 to Section 153A(1) of the Act, the term 'asset' is defined to include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank accounts. The AO seeks to disallow expenses on account of doubting the genuineness for the reason that the same were not incurred wholly or exclusively for the purpose of the petitioner's business. In absence of any further material to establish that such expenses had resulted in the acquisition of any asset, the conditions stipulated in the fourth proviso to Section 153A(1) of the Act would remain unsatisfied. In the aforesaid view, the period of limitation for issuing a notice under Section 153A of the Act, in the given facts of this case, would necessarily have to be confined to a period of six assessment years immediately preceding the assessment year relevant to the previous year in which the search under Section 132 of the Act was conducted. The search in question was conducted in financial year 2022-23; thus, the relevant block of six assessment years would be the six assessment years preceding AY 2023-24, being the assessment year relevant to the previous year in which the search was conducted. Accordingly, the High Court held that AY 2016-17 falls beyond the block of six years. 13. We find that Mumbai Tribunal in Viraj Profiles Limited Vs DCIT (supra), while considering the similar grounds of appeal against validity of reopening beyond six year by invoking fourth proviso to section 153A, the bench held as under;

4.3 We have heard rival contentions on this legal issue and perused the record. We have extracted the fourth proviso to sec. 153A of the Act in the preceding paragraph. A careful perusal of the above said proviso would reveal that, in order to invoke the fourth proviso to sec. 153A, it is required to be shown by the AO that (a) the books of account or other documents or evidence in his possession reveal that the income which has escaped assessment for the relevant assessment year is "in the form of asset" (b) the quantum of income so escaped amount to fifty lakhs or more in the relevant assessment year or in aggregate in the relevant assessment years. (c) the said income should have escaped assessment for such year or years. (d) the search is initiated on or after 1st day of April, 2017. (e) the relevant assessment year is the year preceding the year of search which falls beyond six preceding assessment years but not later than ten assessment years. Hence, it is required to be shown by the AO that the escaped income was "in the form of asset" and further the value or aggregate value of assets has exceeded Rs.50.00 lakhs. The corollary is that, if the escaped income is not represented "in the form of asset", the fourth proviso to sec. 153A of the Act cannot be invoked in order to reopen the assessment of a year falling beyond six assessment years preceding the year of search. 4.4 In the instant case, we notice that the AO has not shown that the alleged income escaped for assessment is represented "in the form of an asset". What is assessed in this year u/s 153A of the Act is the addition towards alleged bogus purchases and disallowance of salary/professional fee u/s 37 of the Act. It is not shown that the income, if any, generated out of these two disallowances is represented in the form of asset. Hence, we are of the view that the AO could not have invoked the fourth proviso to sec. 153A of the Act in order to reopen the assessment of AY 2011-12 and accordingly hold that the said reopening is not in accordance with the law and is liable to be quashed. Accordingly, we quash the orders passed by the tax authorities for AY 2011-12." 14. We further find that Chennai Tribunal in DCIT Vs Midas Golden DistilleriesPrivate Limited (supra) followed the Mumbai Tribunal on similar issue. 15. Thus, in view of the aforesaid factual and legal independent appreciation of facts, we find none of the additions constitute an 'asset' of specific nature or in qualifying form required to assume jurisdiction beyond six years period as prescribed in the section 148/153A or 153C. Hence, reopening beyond period of six years are clearly in violation of provisions of section 153A/153C as stood on 31.03.2021 and is invalid. Therefore, reassessment order passed thereto has become void-ab initio. Thus, we affirm the order of Id CIT(A), with our additional observation. In the result, the grounds of appeal raised by the revenue are dismissed.

6.

On considering the consistent finding of the Tribunal on a similar set of facts and on similar grounds of appeal, we find that the grounds of appeal raised by the Revenue are squarely covered against the Revenue. As regards the objection of the learned CIT-DR for the Revenue in his written submissions that the expression ‘asset’, defined under Section 149(1)(b), is defined inclusively and not restricted to the assets specifically mentioned in the Explanation, the statement recorded under Section 132(4) constitutes material relevant for determination of the statutory asset condition and to independently examine the expenditure pertaining to Financial Year 2012-13 independently. The ldCIT-DR for the revenue also relied upon the case law in Thiru. A.J. Ramesh Kumar vs DCIT (2022) 139 taxmann.com 190 (Madras) and in BannalaJat Construction (P) Ltd. vs. ACIT, (2019) 106 taxmann.com 128(SC).On careful perusal of both the decisions, we find that the ratio of the said decisions is not applicable on the facts of the present case. In Thiru A.J. Ramesh Kumar vs DCIT (supra) Hon’ble Madras High Court held that statement recorded under section 132(4) has a strong evidentiary value and is binding on a person making it. However, in the present case the issue is whether the addition made by Assessing Officer is in the form of asset. Similarly, in Barnnalal Jat Constructions (P) Ltd. vs ACIT (supra) while dismissing the Special Leave Petition, the Hon’ble Supreme Court affirmed the order of Rajasthan High Court that addition made on the basis of statement recorded under section 132(4) was justified. However, the issue before us is quite different as has been discussed above that addition is not based from asset discovered / found during the search action. Moreover, similar submissions have been considered while deciding the appeal for AY 2012-13 (supra). Thus, we do not find any merit in the various grounds of appeal raised by the Revenue. Hence, we affirm the order of the learned CIT(A).In the result, the appeal of the Revenue is dismissed. 7. Considering the fact that we have dismissed the appeal of the Revenue, the specific adjudication on the various grounds raised by the assessee in its CO has become academic and, accordingly, the same is dismissed as infructuous.In the result, the CO of the assessee is also dismissed as infructuous. 8. In the final result, appeal of Revenue is dismissed and appeal of assessee is also dismissed. Order was pronounced in open court on 29/09/2026. Sd/- Sd/- RAKESH KUMAR LODHA PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated: 29/09/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai

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