DEPUTY COMMISSIONER OF INCOME -TAX CENTRAL CIRCLE-1(1), AHMEDABAD, AHMEDABAD, GUJARAT vs. RAJESH NANUBHAI JHAVERI, AHMEDABAD, GUJARAT

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ITSSA 47/AHD/2025Status: DisposedITAT Ahmedabad25 August 2025AY 2011-125 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessment order for Assessment Year 2011-12 was barred by limitation as prescribed under section 153C(1) of the Act. The satisfaction by the non-searched AO was recorded in March 2018. The Tribunal noted that the period of six years for assessment under section 153C, when applied to a non-searched person, is to be reckoned from the date of receiving the seized material by the AO having jurisdiction over that person. In this case, the receipt of records by the AO was in March 2018, making the preceding six years AY 2017-18 to 2012-13. Therefore, AY 2011-12 fell outside this period. The Tribunal respectfully followed the Apex Court judgment in CIT vs. Jasjit Singh, which held that the proviso to section 153C(1) was intended to address the reckoning of the six-year period from the date of seizure, to avoid prejudice to third parties who might have to preserve records for an inordinate period. The Tribunal found no merit in the Revenue's grounds of appeal as the assessment itself was beyond the period of limitation. Consequently, the order of the CIT(A) quashing the assessment order was confirmed. No issue was expressly left undecided.

What were the facts?

The Revenue has appealed the order dated 24-02-2025 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad. The appeal arises from an assessment order passed under section 143(3) read with section 153C of the Income Tax Act, 1961, for the Assessment Year 2011-12. The Assessing Officer (AO) had made additions of Rs. 6,00,00,000/- under section 69 for unexplained investment in cash for the purchase of bungalows and Rs. 2,20,00,000/- under section 69A for unexplained cash receipt from Shridham Finance. The CIT(A) had deleted these additions. The Revenue's appeal before the ITAT challenges the deletion of these additions on merits. The assessee, Rajesh Nanubhai Jhaveri, is the respondent.

What were the issues?

1. Whether, in law, the CIT(A) erred in deleting the addition of Rs. 6,00,00,000/- under section 69 of the Act, being unexplained investment in cash for the purchase of Bungalow No. 9 & 10 at Abhishree Residency, without considering incriminating documents found and seized during search and the AO's findings? 2. Whether, in law, the CIT(A) erred in deleting the addition of Rs. 2,20,00,000/- under section 69A of the Act, being unexplained cash receipt from Shridham Finance, without considering incriminating documents found and seized during search and the AO's findings? Assessee's Contention: The assessee argued that the entire assessment order was barred by limitation as prescribed under section 153C of the Act. The assessee relied on the judgment of the Hon'ble Supreme Court in CIT vs. Jasjit Singh. Revenue's Contention: The Revenue's grounds of appeal focused on the merits of the additions made under sections 69 and 69A. The Revenue did not raise any ground challenging the finding that the assessment was barred by limitation. The CIT-DR could not controvert the assessee's submission regarding limitation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153C,Section 69,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH

Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member

IT(SS)A No. 47/Ahd/2025 Assessment Year 2011-12

The DCIT Rajesh Nanubhai Jhaveri Central Circle-1(1), 21, Tapovan Society, Ahmedabad Vs Nr. Manekbaug Jain Temple, Manekbaug, Ambawadi, Ahmedabad-380015 (Appellant) PAN: AAPPJ6927N (Respondent) Revenue Represented: Shri Alpesh Parmar, CIT-DR Assessee Represented: Shri Deepak R Shah, A.R.

Date of hearing : 08-07-2025 Date of pronouncement : 25-08-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

This appeal is filed by the Revenue as against the appellate order dated 24-02-2025 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of the assessment order passed under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2011-12.

I.T(SS).A No. 47/Ahd/2025 A.Y. 2011-12 Page No 2 DCIT Vs. Rajesh Nanubhai Jhaveri

2.

The Grounds of Appeal raised by the Revenue reads as under: 1) "In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.6,00,00,000/- u/s.69 of the Act being unexplained investment in cash for purchase of Bunglow No. 9 & 10 at Abhishree Residency without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO" 2) "In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs 2.20,00,000/-u/s 69A of the Act being unexplained cash receipt from Slidham Finance without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO

3) "The Revenue craves leave to add/alter/armed and/on substitute any or all of the grounds of appeal."

3.

At the outset, Ld. Counsel for the assessee submitted that Ld. CIT(A) set-aside the entire assessment order was barred by limitation as prescribed u/s 153C of the Act. However the Revenue is in appeal before this Tribunal only on the merits of the case namely addition made u/s 69 of Rs. 6 crores and addition made u/s 69A of Rs. 2.2 crores but not raised any ground on the assessment barred by limitation. Therefore the present appeal filed by the Revenue is liable to be dismissed and in support of the same, he relied upon Hon’ble Supreme Court judgment in the case of CIT vs Jasjit Singh reported in [2023] 155 taxmann.com 155 (SC).

4.

Ld. CIT-DR appearing for the Revenue could not controvent the above submission of the assessee. Further the present Assessment Year 2011-12 is beyond the period of six years as prescribed u/s 153C of the Act in the case non-searched person wherein

I.T(SS).A No. 47/Ahd/2025 A.Y. 2011-12 Page No 3 DCIT Vs. Rajesh Nanubhai Jhaveri

satisfaction is recorded in March 2018 relevant to the A.Y. 2018-19 and the preceding six years are A.Ys. 2017-18 to 2012-13 and not the present A.Y. 2011-12. The Ld. CIT(A) considered this issue in detail as follows:

“5.4. The computation of six years period is to be counted from the date of search. While the search actually conducted in the case of person covered u/s 132 will be date of search, the date of search for the person covered u/s. 153C will be construed as reference to the date of receiving the books of account of documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. Hence applying the said proviso if the date of search is to be considered as date of handing satisfaction note of searched person to be AO of the appellant, herein, the same will be when the seized material being received by the A.O. of the appellant. In the present case, the date of receiving record of searched person by AO of the appellant is March 2018 i.e. A.Y. 2018-19 since the limitation for passing the order u/s 153C on 31/12/2018, the preceding six years would be A.Y. 2017-18, 2016-17, 2015-16, 2014-15, 2013-14 and 2012-13. Similar view has also been laid down by various courts and tribunals as relied upon by the appellant in the written submissions filed before the AO. The A.O. has not cited any contrary judgment to negate the law laid down in aforesaid cases. The reasoning of the AO this will give absurd result is not terrible in law. When the law is different in the case of person searched and the other person, the material relating to him is found from search conducted in case of different assessee, the limitation cannot be same. Otherwise the proviso inserted u/s 153C will be redundant, if the legislature in its wisdom applies two different yardsticks for the purpose of computing limitation, the same cannot be ignored on the ground of effect thereof. Even otherwise, let us take a case of a person not covered under search and material relation to him is found, though during the search but the cognizance is taken by the AO of searched person after a period of say more than 4 years, (as is the facts in present case), how one can expect a person to maintain record for indefinite period. If the view of AO is accepted, the assessment can be taken u/s 153C even for assessment year 2009-10 even though the time limit for completing reassessment in his case has expired. The assessee is not required to maintain any record for such period. How a person can defend himself in absence of any record available to him is a question to be answered. What cannot be done directly cannot be done indirectly by resorting to section 153C. Thus, the reasoning given by the AO on both counts is erroneous. In view of the ratio laid down by these cases relied, the assessment for A.Y. 2011-12 will be beyond the period of six years prescribed in section 153C and hence the present assessment is beyond limitation requires to be set aside. I therefore, set aside the present assessment

I.T(SS).A No. 47/Ahd/2025 A.Y. 2011-12 Page No 4 DCIT Vs. Rajesh Nanubhai Jhaveri

as barred by limitation prescribed u/s 153C of the Act. This ground no, 3 & 4 of appeal are accordingly allowed.”

5.

We have perused the order passed by the Ld. CIT(A), the present Asst. Year 2011-12 which is beyond the period of six years as prescribed u/s 153C(1) of the Act and recording of satisfaction by the non-searched A.O. in March 2018. Thus the assessment order is beyond limitation period and liable to be quashed. The Hon’ble Supreme Court of India in the case of Jasjit Singh (cited supra) held as follows: “……9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts. 11. For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.”

5.1. Respectfully following the Apex Court judgment, we have no hesitation in confirming the order passed by Ld. CIT(A) quashing

I.T(SS).A No. 47/Ahd/2025 A.Y. 2011-12 Page No 5 DCIT Vs. Rajesh Nanubhai Jhaveri

the assessment order passed by the Assessing Officer for A.Y. 2011-12 is beyond the period of six years and barred by limitation. Thus we do not find any merits in the grounds filed by the Revenue, the same are liable to be dismissed.

6.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 25-08-2025

Sd/- Sd/- (NARENDRA PRASAD SINHA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 25/08/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

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