SURINDERSINGH J.NARULA,AHMEDABAD vs. THE ITO, WARD-1(1)(3), AHMEDABAD

ITSSA 129/AHD/2025Status: DisposedITAT Ahmedabad15 January 2026AY 2013-146 pages
AI SummaryAllowed

What were the facts?

The assessee, an individual engaged in software and support services, filed a return for AY 2013-14 declaring income of Rs. 8,83,747. Proceedings under section 153C of the Income Tax Act were initiated based on information from seized documents in the case of H N Safal Group, suggesting the assessee paid on-money for a property. The Assessing Officer (AO) completed the assessment under section 143(3) r.w.s. 153C on December 27, 2018, determining total income at Rs. 26,33,750. An addition of Rs. 17,50,000 was made for disallowing a deduction claim under section 35(1). The assessee appealed to the CIT(A), who dismissed the appeal. The assessee is now before the ITAT.

What did the Tribunal hold?

The Tribunal held that the proceedings under section 153C were initiated to examine the on-money payment, but no addition was made on this specific issue. The addition made by the AO was for disallowing a deduction under section 35(1) concerning a donation, which was an altogether different issue not mentioned in the satisfaction recorded under section 153C. The Tribunal relied on the Supreme Court decision in Abhisar Buildwell, stating that additions in section 153A/153C proceedings can only be made if an addition is made on the basis of seized material. In the absence of any addition based on seized material, the AO lacks jurisdiction to consider 'other information' for making additions in completed assessment years under section 153C. Furthermore, on merits, the Tribunal followed the decision of the Co-ordinate bench in M/s. Gujarat Agro Chem Pvt Ltd., holding that the claim for deduction under section 35(1)(ii) cannot be affected by the subsequent withdrawal of recognition with retrospective effect. Therefore, the addition of Rs. 17,50,000 was deleted.

What were the issues?

1. Whether the proceedings initiated under section 153C were illegal and without jurisdiction, as the condition precedent was not satisfied, and the AO made an addition on an issue not forming the basis of the satisfaction recorded under section 153C (mixed law and fact, turns on Section 153C). 2. Whether the disallowance of deduction under section 35(1)(ii) of Rs. 17,50,000 in respect of donation to School of Human Genetics & Population Health, Kolkata (SHGPH) is valid (mixed law and fact, turns on Section 35(1)(ii)). Assessee's contentions: The proceedings under section 153C were initiated to examine on-money payment, but no addition was made on this issue. The AO made an addition on a different issue (donation deduction) not covered by the section 153C satisfaction. The AO cannot make additions on other information if no addition is made based on seized material. On merits, the disallowance of donation is not justified, citing the case of M/s Gujarat Agrochem. Pvt. Ltd. (ITA No. 2224/Mum/2018) where a similar claim was allowed despite retrospective withdrawal of recognition. Revenue's contentions: The CIT-DR supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(3),Section 35(1),Section 35(1)(ii),Section 153A,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: MS. SUCHITRA RAGHUNATH KAMBLE & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri S N Divetia, & Sri Samir Vora, ARs
Hearing: 07.01.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as ‘CIT(A)’] dated 30.09.2025 for the Assessment Year (A.Y.) 2013-14 in the proceeding u/s 143(3) r.w.s. 153C of the Income Tax Act.

2.

The brief facts of the case are that the assessee is an individual and engaged in the business of software and support service. The return of income for A.Y. 2013-14 was filed on 04.06.2014 declaring income of Rs. 8,83,747/-. A proceedings u/s 153C was initiated in the case of assessee vide notice dated 30.10.2018 on the basis of

The order continues below.

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