HARPREET SINGH MAKHIJA,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-3(3)(2), AHMEDABAD

ITSSA 137/AHD/2023Status: DisposedITAT Ahmedabad18 August 2026AY 2012-1373 pages
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What were the facts?

The assessment year in question is 2012-13. The assessee is Harpreet Singh Makhija, and the respondent is the Income Tax Officer. The case involves a search and seizure operation conducted on H.N. Safal Group on September 4, 2013, which led to the seizure of a hard disk containing data related to various projects. An Excel file within this data allegedly showed that the assessee purchased Bungalow No. 76 in the Safal Amrakunj Project and paid unaccounted cash ('on-money') in addition to the registered sale deed consideration. The Assessing Officer (AO) initiated proceedings under section 153C of the Income Tax Act, 1961, after recording satisfaction based on the seized material. The assessee admitted the purchase but denied any cash payment beyond the registered sale deed. The AO treated Rs. 85,05,800/- as unexplained investment under section 69 and completed the assessment under section 143(3) read with section 153C on December 24, 2018. The CIT(A) confirmed the additions. The appeal reached the Tribunal, where the Accountant Member and Judicial Member differed, leading to a reference to the Third Member.

What did the Tribunal hold?

The Third Member, in his opinion, decided all three referred issues in favour of the Revenue and against the assessee. The Accountant Member had directed the AO to verify the assessee's percentage of ownership in Bungalow No. 76 and reduce the 'on-money' addition proportionately, setting aside the matter to the AO for this limited purpose. The Judicial Member had decided all three issues in favour of the assessee. The final order, in conformity with the majority decision (Accountant Member and Third Member), held that the legal grounds and issues on merits were decided in favour of the Revenue. The matter was restored to the AO for verification of the assessee's percentage of ownership in Bungalow No. 76, as per the Accountant Member's directions. The addition was to be reduced proportionately based on this verification. The ratio is that while procedural delays in satisfaction recording and denial of cross-examination might be grounds for vitiation, the majority decision ultimately favored the Revenue on these points, with the final outcome dependent on a factual verification regarding ownership share.

What were the issues?

1. Whether the assessment order dated 24/12/2018 passed under section 143(3) read with section 153C of the Income Tax Act, 1961, is bad in law due to delay in recording satisfaction by the AO of the assessee? (Question of law) 2. Whether serious prejudice has been caused to the assessee by not providing a copy of the statement of the searched person and denying the opportunity to cross-examine the searched person, rendering the assessment order bad in law? (Question of mixed law and fact) 3. Whether the additions made by the AO and confirmed by the CIT(A) are sustainable on merits? (Question of mixed law and fact) Assessee's contentions: (1) The delay of nearly eleven months between the AO of the searched person recording satisfaction and the jurisdictional AO recording his own satisfaction vitiated the proceedings under section 153C and caused prejudice by leaving insufficient time for fair inquiry and hearing. (2) The assessment relied on the interpretation of coded entries in an Excel sheet based on the searched person's statement, which was not provided, and the assessee was denied cross-examination, violating natural justice. (3) The addition was based solely on an unsigned Excel sheet from a third party, without independent corroboration, and there was uncertainty regarding the 'on-money' amount (Rs. 70 lakhs vs. Rs. 85,05,800/-). Reliance was placed on Gujarat High Court judgments and coordinate bench decisions. Revenue's contentions: (1) The satisfaction was recorded in the same financial year, and the timing of recording satisfaction in May 2017 or March 2018 did not materially prejudice the assessee or provide an advantage to the Revenue. (2) The Revenue did not present specific arguments on the second and third issues in the provided text, but supported the orders of the AO and CIT(A).

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 153C,Section 255(4),Section 69

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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMARAS “”

For Appellant: Shri Sakar Sharma, AR
For Respondent: Shri Kiran Unavekar, CIT-DR
Hearing: 17.06.2026

This matter has been placed before me as Third Member under the provisions of Section 255(4) of the Income-tax Act, 1961 ("the Act"), pursuant to a reference made by the Hon'ble President, Income Tax Appellate Tribunal, on account of a difference of opinion between the Ld.

Accountant Member and the Ld. Judicial Member constituting the Ahmedabad Bench in the captioned appeal relating to Assessment Year 2012-13. 2. The Hon'ble President, ITAT, vide order dated 21.04.2026, has referred the matter to the Vice President (AZ) for exp

The order continues below.

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