SHI vs. AI BUILDERS AND DEVELOPERS,AMBERNATHVS.ACIT, CENTRAL CIRCLE-2, THANE, THANE

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ITSSA 2820/MUM/2025Status: DisposedITAT Mumbai13 May 2026AY 2015-1612 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment orders framed under section 143(3) read with section 153C of the Act were bad in law and liable to be quashed. The primary reason was the absence of any incriminating material pertaining to the assessee found during the search conducted in the case of M/s Patel RPL Realty Group. The Tribunal noted that the additions were mainly based on ledger accounts, which were part of the regular books of account, and post-search inquiries. The assessee had provided confirmations, bank statements, financial statements, and details of repayment through banking channels, which the revenue authorities had not conclusively disproved. The Tribunal followed the coordinate bench decisions in M/s J.S. Infrastructure and Bechar Raghvji Patel, which arose from the same search action and held that in the absence of incriminating material, no addition can be sustained in respect of an unabated assessment year, citing the Supreme Court judgment in Abhisar Buildwell (P.) Ltd. The Tribunal also found that the statement of Shri Hiren Bechar Patel, relied upon by the revenue, was not directly linked to the assessee and lacked corroborative incriminating evidence. Consequently, the addition of Rs. 25,47,533/- made under section 68 read with section 115BBE was deleted. Other grounds were rendered academic.

What were the facts?

The appeals filed by Serene Infratech Co. and Shivsai Builders and Developers (the assessees) challenge orders passed by the Commissioner of Income-tax (Appeals)-11, Pune, dated February 28, 2025. These appellate orders upheld additions made by the Assistant Commissioner of Income-tax, Central Circle-2, Thane (the AO). The AO's orders were passed under section 153C of the Income-tax Act, 1961, on September 28, 2021, for the assessee Serene Infratech Co., and under section 153A on September 26, 2021, for other assessees. The assessment years involved are 2014-15, 2015-16, and 2016-17. The appeals stem from a search conducted on August 8, 2019, in the case of M/s Patel RPL Realty Group.

What were the issues?

1. Whether the assessment orders passed under section 153C (and 153A) of the Income-tax Act, 1961, are bad in law and against natural justice due to the absence of incriminating material found during the search conducted on M/s Patel RPL Realty Group, which pertains to the assessee's unabated assessment years. - Assessee's contention: The AO lacked jurisdiction under section 153C as no incriminating documents were seized from the assessee during the search. The assessment orders are therefore bad in law and should be annulled. - Revenue's contention: The AO made additions based on overall findings during the search and post-search inquiries, including the untraceability of parties. The CIT(A) confirmed these additions. 2. Whether the addition of Rs. 25,47,533/- made under section 68 read with section 115BBE of the Act, representing a so-called non-genuine deposit from M/s Darshan Screen Art, is justified, given the assessee's submission of satisfactory explanations and supporting documents. - Assessee's contention: The addition is based on non-incriminating material, and the explanation provided, along with cogent supporting documents, was to the entire satisfaction of the AO. The addition should be deleted. - Revenue's contention: (Not explicitly recorded in detail, but implied by the CIT(A)'s upholding of the addition based on the AO's findings and post-search inquiries).

Which sections of the Income-tax Act were involved?

Section 153C,Section 68,Section 115BBE,Section 153A,Section 143(3),Section 132(4),Section 142(1),Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI

Before: SHRI ANIKESH BANERJEE & SHRI MAKARAND VASANT MAHADEOKAR

For Appellant: Shri Vijay Patel (Virtually present)
For Respondent: Shri R.A. Dhyani, CIT DR
Hearing: 11/05/2026Pronounced: 13/05/2026

2 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers Per Bench : A bunch of appeal of different assessee filed against the order of the Ld. Commissioner of Income-tax Appeal-11, Pune [for brevity ‘the Ld. CIT(A)’], order passed under section 250 of the Income-tax Act 1961 for Assessment Years 2014- 15, 2015-16 & 2016-17, order passed on 28.02.2025. Impugned order emanated from the order of the Ld. Assistant Commissioner of Income-tax C.C.-2, Thane (for brevity the “Ld. AO”) order passed under section 153C of the Act, date of order 28.09.2021 for Petitioner No.1 and orders passed u/sec. 153A date of order 26.09.2021 for other petitioner.

2.

Since all the appeals pertain to the two assesses, involving similar issues arising out of a similar factual matrix, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. With the consent of the parties, ITA No 2818/Mum/2025 for AY 2016-17 is treated as lead case, and the decision rendered therein shall apply mutatis mutandis to other appeals.

ITA No.2818/Mum/2025, AY 2016-17 3. The assessee has taken the following grounds:- “1. That, the learned CIT(A)-11, Pune has grossly erred in not considering the impugned block assessment order passed is against natural justice and bad in law. The AO may please be directed to annul the impugned block assessment order. 2. That, the learned CIT(A)-11, Pune is not justified in upholding the addition Rs.25,47,533/-, being so-called non-genuine deposit accepted from M/s. Darshan Screen Art u/s.68 r.w.s.115BBE on the basis of non-incriminating material and also the explanation along with

3 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers cogent supporting submitted to the entire satisfaction of the AO. The Assessing Officer may please be directed to delete such addition. 3. The appellant craves leave to add, alter, and amend any ground/s of an appeal on or before hearing of the appeal.”

4.

The Ld. AR contended that the assessment order was passed u/sec. 143(3) r.w.s. 153C of the Act. The said order was passed related to the search occurred on 08.08.2019 in the M/s Patel RPL Reality Group. The assessee challenged the jurisdiction of the Ld. AO for assessment U/s. 153C without relying on any incriminating documents carried out from the search. The said issue was duly agitated before the Ld. CIT(A) during the appeal. The Ld. CIT(A) made the observations on the said legal issue which is noted in paragraphs no.11 to 14 of the impugned appellate order which is reproduced as below: “Findings 11. I have considered the facts of the case and the submissions made by the appellant. The first contention of the appellant is that the addition made by the AO is not based on any incriminating material. Before deciding the contention raised by the appellant, it is necessary to consider as to what constitutes an incriminating material. Though the said term has not been defined in the Act, incriminating material may comprise of document or evidence found in search which demonstrates or proves that what is apparent is not real or what is real is not apparent. The nature of the evidence or information gathered during the search should be of such nature that it should prima facie show that the real and true nature of transaction between the parties is something different from the one recorded in the books or documents maintained in ordinary course of business. If such conditions are satisfied, it can be held that the material found or collected during the course of search as incriminating in nature. Hence, if a search is conducted to investigate certain allegations which are found to be correct during search and based on the various evidences collected during the search action, specific information or finding is generated on account of inquiries conducted during search process which has a bearing on the determination of total income of an assessee, the AO would be within his power to proceed under section 153A of the Act against such person on the basis of such finding which would also constitute incriminating material. Hence, if during the course of search action, elaborate and thorough investigations are carried out to verify/examine modus operandi of an

4 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers illegal scheme orchestrated by certain persons and during such investigations, based on ascertainment of various facts, examination of seized books, recording of statements and analysis of documents of a number of entities in coordination with each other, certain information is generated that (i) the scheme violates the provisions of the Act and that (ii) such scheme has assisted various parties who have taken benefit of such scheme in introduction of their unaccounted income in their books in the form of eligible and non-taxable income, thus affecting determination of their total income, then, this information is clearly covered by section 153A/153C of the Act. 12. In the present case, the documents found during the search were confronted with Shri Hiren Patel, partner of the appellant firm and as discussed earlier in this order, he could not satisfactorily reply to the questions asked. Further, the investigation done during the post- search proceedings clearly suggests that the loan raised by the appellant is not a genuine loan. The facts of the case thus suggest that the addition is made on the basis of incriminating material. 13. The appellant has relied on the decision of Hon’ble Delhi High Court in the case of PCIT vs. Param Dairy Ltd.(supra). It is however seen from the said decision that addition in that case was for the cash payments made for purchase of milk which were already recorded in the books of accounts. As per the order of Hon’ble High Court, there is no allegation that such purchases were bogus. Thus, it was not a case of accommodation entry where unaccounted cash was brought to the books of accounts through a predetermined scheme with the help of accommodation entry operators. In the present case, during the search operation, it was found that the appellant raised unsecured loan from a shell entity and the partner of the appellant firm could not substantiate the unsecured loan raised by the firm and even basic details such as contact person of the lender, business activities of the lender, process followed while raising the loan, etc. could not be explained by him. These findings led to a prima facie belief that the said unsecured loan is not genuine. Thus, the facts of the present case are different than the facts of the case relied upon by the appellant. 14. The appellant has further relied on the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla 380 ITR 573 (Delhi). It is seen from the said order that the addition involved was on account of deemed dividend u/s. 2(22)(e) of the Act and on account of low household withdrawals. Thus, it was not a case of accommodation entry where unaccounted cash was brought to the books of accounts through a pre-determined scheme with the help of accommodation entry operators. In the present case, during the search operation, it was found that the appellant raised unsecured loan from a shell entity and the partner of the appellant firm could not substantiate the unsecured loan raised by the firm and even basic details such as contact person of the lender, business activities of the lender, process followed while raising the loan, etc. could not be explained by him. These findings led to a prima facie belief that the said

5 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers unsecured loan is not genuine. Thus, the facts of the present case are different than the facts of the case relied upon by the appellant.”

5.

The Ld. AR advanced his arguments and submitted that the same search action was conducted in the case of M/s J.S. Infrastructure, which belongs to the M/s Patel RPL Realty Group. It was contended that M/s J.S. Infrastructure had challenged the legality of the assessment on the ground that it was framed in the absence of any incriminating material, before the ITAT, Mumbai Bench. The Coordinate Bench of the ITAT, Mumbai, in the case of M/s J.S. Infrastructure vs. ACIT, IT(SS)A No. 3120/Mum/2025, vide order dated 23.12.2025, examined and adjudicated the said issue. The Bench held that, in the absence of any incriminating material found during the course of search, the assessment order is invalid in law. The relevant observations of the Bench are reproduced hereunder: “9. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has raised various contentions pertaining to "no incriminating material" found during the search for which the Ld. A.R.'s contention was the seized material was only the ledger account of the assessee which was part of the regular books of account of the assessee firm. Pursuant to the search action in the case of Patel RPL Realty Group, ledger accounts of various parties were seized which revealed transactions that were already appearing in the assessee's balance sheet. During the assessment proceedings the assessee had furnished details of confirmation of accounts along with bank entries for the impugned loan transaction along with details of repayment made, sufficiently corroborated by documentary evidences. It is evident from the assessment order as well as from the Ld. CIT(A)'s order that these documents were not disputed by the lower authorities nor was it held to be non-genuine. Further, it is also observed that no discussion of the documentary evidences furnished by the assessee was found in the order of the lower authorities. There is no iota of doubt that the assessee has discharged the primary onus casted upon it u/s. 68 of the Act to establish the identity and creditworthiness of the lenders and the genuineness of the transactions. This fact

6 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers was also not disputed by the Ld. D.R. during the appellate proceedings when confronted with. It is also the settled proposition of law by the Hon'ble Apex Court in the case of Abhisar Buildwell (P.) Ltd. (2023) 149 taxmann.com 399 (SC) that in respect of completed or unabated assessment no addition can be made by the Ld. AO in the absence of any incriminating material found during the course of search. In the present case in hand, except for the ledger account of the assessee which was already forming part of the regular books of account, no incriminating material was found during the search operation. From the above observation, we deem it fit to hold that the assessee has furnished complete details of the unsecured loan received and subsequently repaid through banking channels which are appearing in the books of accounts of the parties, corroborated by bank statements, financial statements, confirmation letters and details of return of income filed by the parties. We are also conscious of the fact that no incriminating material pertaining to the assessee was seized during the search in the case of M/s. Patel RPL Realty Group. 10. On the above factual matrix, we deem it fit to hold that the impugned addition made in the hands of the assessee ought to be deleted as there is no justification in making an addition on the aforementioned facts of the case. 11. Thus, the grounds of appeal raised by the assessee are hereby allowed.”

6.

The Ld. AR further respectfully relied on the order of Coordinate Bench of ITAT-Mumbai in the case Bechar Raghvji Patel & others vs ACIT CC-2, Thane in ITA No. 2871, 2872, 3208 & 3418/Mum/2025 date of pronouncement 13/02/2026. The relevant observation of the Bench is reproduced as below:- “6. We have heard the rival submissions and carefully examined the material available on record. It is an undisputed fact that the search action in the case of M/s Patel RPL Realty Group was conducted on 08.08.2019 and that the impugned assessment year 2012–13 is an unabated year. In respect of completed/unabated assessments, it is now a settled position of law that no addition can be made under Section 153A of the Act in the absence of any incriminating material found during the course of search. On perusal of the assessment order as well as the material placed before us, we find that no incriminating material pertaining to the assessee was unearthed during the search proceedings. The addition made by the Assessing Officer is not based on any seized document or evidence discovered during the search. In such circumstances,

7 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers the assumption of jurisdiction under Section 153A of the Act, for making the impugned addition in an unabated assessment year, is beyond the scope of the statutory provisions. We further note that the Coordinate Bench of the ITAT, Mumbai, in the case of M/s J.S. Infrastructure (supra), arising out of the same search action, has adjudicated an identical issue and, following the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (2023) 149 taxmann.com 399 (SC), held that in the absence of incriminating material, the assessment framed under Section 153A is invalid in law. Respectfully following the ratio laid down therein, we hold that the assessment order passed under Section 153A for AY 2012–13 is bad in law. Consequently, the addition of Rs.11,77,110/- made therein is hereby quashed. In the result, the appeal of the assessee is allowed.”

7.

The Ld. DR argued and stands in favour of the orders of the revenue authorities. The Ld. DR invited our attention in the statement of Shri Hiren Bechar Patel on dated 09/08/2019. In stamen the cash transactions are duly accepted related sale of properties. The Ld. DR submitted a written note which is reproduced as below:- “Background of the case: 1. Assessee is a registered partnership firm engaged in the business of construction and is a part of Patel RPL Realty Group. 2. Search and Seizure action u/s 132 was conducted on Patel RPL Realty group on 08.08.2019 and concluded on 30.09.2019. 3. Notice u/s 153A was issued through ITBA on 17.01.2020 and duly served upon the assessee. 4. Assessment completed u/s 153A vide order dated 26.09.2021. Findings of search/Basis of Addition: 1. During the course of search, ledger accounts of various Kolkata based concerns were found and seized from the office of M/s Patel group located in Ambernath (East) (Party AB 3(2) Bundle No.11 of seized documents) (Incriminating material based on which addition made by AO) (Para 7.1 Page 4 of AO) 2. 2. Result of third party inquiries conducted by AO by issuing notices u/s 133(6):(Para 7.5 Page 5 of AO Sr. No. Name of the Party Remarks 1 Shubh Suppliers Pvt. Ltd. Postal authorities returned the notice with remark

8 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers ‘Address cannot be located. Returned to the sender’ 2 Limestone Properties Pvt Ltd. Postal authorities returned the notice with remark ‘Left. Returned to the sender’. 3 Chetna Suppliers Pvt. Ltd. Postal authorities returned the notice with remark ‘Left. Returned to the sender’. 4 Suraksha Projects Ltd. Postal authorities returned the notice with remark ‘Address cannot be located. Returned to the sender’

3.

Statement of Shri. Hiren Patel recorded u/s 132(4) from which it is evident that he in spite being partner of the firm is not aware of the basic details like key persons, nature of businesses of the parties which have allegedly advanced loans to the assessee. He could not even establish or provide what was the basic procedure followed/terms agreed upon for receiving such huge amounts of money. (Para 7.5 Page 6 to 8 of AO)

4.

During Post search proceedings notices issued to above-mentioned parties but the same were returned unserved. (Refer table on Page 9 of AO)

5.

Common striking feature noticed by the AO: None of the parties from whom assessee has allegedly taken loans is traceable. Hence these are only paper companies and hence identity genuineness and creditworthiness of parties not proved by assessee. (Para 7.7 to 7.10 Page 12 to 14 of AO)

6.

The Kolkata Investigation Unit had carried out search/survey action in relation to certain accommodation entry providers and during this action it was established that these companies were involved in providing accommodation entries.

Gist of issues/GOA: 1. That the Ld. CIT(A) has grossly erred in not considering the impugned block assessment order passed is against natural justice and bad in law. The AO may please be directed to annul the impugned block assessment.

2.

That the Ld. CIT(A) is not justified in upholding the addition of interest of Rs.1,09,673/ on allegedly non-genuine loan accepted from Shubh Suppliers Pvt. Ltd. u/s 68 r.w.s 115BBE on the basis of non-incriminating material and the explanation along with cogent supporting submitted to the entire satisfaction of AO. The AO may please be directed to delete such addition.

Findings on issues/GOA: GOA 1:

9 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers That the Ld. CIT(A) has grossly erred in not considering the impugned block assessment order passed is against natural justice and bad in law. The AO may please be directed to annul the impugned block assessment -

Findings of AO: Notice u/s 153A issued through ITBA Portal on 17.01.2020 duly served on the assessee. Also, Notice u/s 142(1) along with questionnaire issued to the assessee on 19.12.2020 & 03.02.2021 respectively. Similarly, Notice u/s 143(2) issued to the assessee on 13.06.2021. Also, during assessment proceedings assessee was further given opportunity vide notice u/s 142(1) dated 06.07.2021 to submit the documentary evidences to prove the identity, creditworthiness and genuineness of the loans and repayment. Hence averment of the appellant that assessment orders passed by AO are bad in law because they are in violation of principles of natural justice is factually incorrect and not legally tenable. (Refer Para 4, 5 & 7.2 Page 2, 3 & 4 of AO) Findings of CIT(A): (Para 45 Page 35) Same as A.Y. 2014-15 GOA 2: That the Ld. CIT(A) is not justified in upholding the addition of interest of Rs.1,09,673/ on allegedly non-genuine loan accepted from Shubh Suppliers Pvt. Ltd. u/s 68 r.w.s 115BBE on the basis of non-incriminating material and the explanation along with cogent supporting submitted to the entire satisfaction of AO. The AO may please be directed to delete such addition. AO has made additions based on: (Page 17 of AO) 1. Conclusion drawn by AO based on overall findings during the search as highlighted above. 2. During the course of post search proceedings party was not found to be traceable.

CIT(A) has confirmed the additions based on: (Para 48 Page 35) Same as A.Y. 2014-15. Prayer: Hence in light of the facts and circumstances of the case and legal proposition put forward appeal filed by the assessee be dismissed and additions made by AO duly upheld by CIT(A) be sustained.”

8.

We heard the rival submissions and considered the documents available on record. The assessee has challenged the validity of the assessment framed u/sec.

10 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers 143(3) r.w.s. 153C of the Act on the ground that no incriminating material pertaining to the assessee was found during the course of search conducted in the case of M/s Patel RPL Realty Group on 08.08.2019. On perusal of the assessment order, the impugned appellate order, and the material placed before us, we find that the addition made by the Ld. AO is primarily based upon ledger accounts and post-search inquiries conducted by the department. The alleged ledger accounts were admittedly part of the regular books of account and no independent incriminating material evidencing any undisclosed income of the assessee was brought on record. The assessee had furnished confirmations, bank statements, financial statements, and details of repayment through banking channels in support of the impugned loan transaction. The revenue authorities have not conclusively disproved these documentary evidences. We further note that an identical issue arising out of the very same search action in the case of M/s Patel RPL Realty Group has already been adjudicated by the Coordinate Bench of the ITAT, Mumbai in the case of M/s J.S. Infrastructure (supra), wherein the Coordinate Bench, following the judgment of the Hon’ble Supreme Court in Abhisar Buildwell (P.) Ltd judgment, held that in the absence of incriminating material, no addition can be sustained in respect of an unabated assessment year. We also respectfully follow the order of the Coordinate Bench of ITAT Mumbai in the case of Bechar Raghvji Patel (supra), arising from the same search action, wherein under identical facts the assessment framed u/sec. 153A was held to be invalid in law for want of incriminating material. The Ld. DR heavily relied upon the statement of Shri Hiren Bechar Patel recorded u/sec. 132(4) of the Act. However, on careful consideration of the material on record, we find that Shri Hiren Bechar Patel is not related to the assessee and no direct incriminating

11 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers material linking the assessee with any alleged accommodation entry or undisclosed transaction has been brought on record. Mere reliance upon a general statement recorded during search, without any corroborative incriminating evidence pertaining specifically to the assessee, cannot justify the assumption of jurisdiction u/sec. 153C of the Act. Further, despite detailed arguments advanced by the assessee and the judicial precedents relied upon by the Ld. AR, the Ld. DR could not place before us any contrary judgment of the Hon’ble Jurisdictional High Court or the Hon’ble Supreme Court taking a different view. Considering the totality of the facts and respectfully following the binding ratio laid down in Abhisar Buildwell (P.) Ltd. Judgment and the Coordinate Bench decisions rendered in the cases arising from the same search action, we hold that no incriminating material pertaining to the assessee was found during the course of search. Accordingly, the assessment framed u/sec. 143(3) r.w.s. 153C of the Act is bad in law and liable to be quashed. Consequently, the addition of Rs.25,47,533/- made u/sec. 68 r.w.s. 115BBE of the Act is deleted. Since we have adjudicated the legal issue relating to the jurisdiction of the Ld. AO in favour of the assessee, the other grounds are rendered academic and are kept open. Hence, the appeal of the assessee is allowed. 9. In the result, the appeal of the assessee ITA Nos. 2818 to 2821/ Mum/2025 are allowed Order pronounced in the open court on 13th day of May 2026. Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 13/05/2026

12 ITA No.2818 to 2821/Mum/2025 Serene Infratech Co. & Shivsai Builders and Developers SAUMYASr.PS

Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI

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