HEMENDRA RAMJI VIRA,MUMBAI vs. DCIT CC 4(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E’ BENCH
MUMBAI

BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER
&

SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
ITA No.2467/Mum/2025 to 2472/Mum/2025
(Assessment Year :2013-14 to 2018-19)

Hemendra Ramji Vira
1201, Kailash Palace
Uppashraya Lane
Ghatkopar East
Mumbai-400 077
Vs. DCIT CC 4(1)
Mumbai – 400 051
PAN/GIR No.AABPV6781A
(Appellant)
..
(Respondent)

Assessee by Shri Vinod Kumar Bindal a/w Shri Satish Gupta
Revenue by Shri Ritesh Misra, CIT DR
Date of Hearing
12/06/2025
Date of Pronouncement
26/06/2025

आदेश / O R D E R

PER BENCH:

The aforesaid appeals have been filed by the assessee, against separate impugned orders of the learned Commissioner of Income Tax (Appeals), Mumbai (ld CIT(A) for short), pertaining to assessment years (AYs) 2011-12, 2013-14 to 2018-19. Since, the issues involved are common for all the assessment years; a common appellate order has been passed for all the assessment

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

2
years. There was search and seizure action u/s 132 of the Act on the premises of the assessee on 07/10/2017 as per the panchnama in the name of the assessee ‗Mr. Hemendra Ramji
Vira placed‘ on record in the Paper Book. The additions made in all the years which are under challenge in these 7 appeals are as under:
2. In AY 2011-12 assessment order passed u/s 147/143(3) of the Act on 30/12/2018 by the DCIT Central Circle 4(1) Mumbai which are similar to the additions made for the three AYs 2016-
17 to 2018-19 passed u/s 153A of the Act vide orders dated
31/12/2019:

Reasons of additions
Amount (Rs)
Cash loan to Nilesh Bharani u/s 69
Notional interest earned u/s 56
Rs 25,00,000/-
Rs 66,00,000/-

AY
Reasons of additions
Amount (Rs.)
2013-14 Bogus
LTCG u/s 68
–
scrip
Confidence Finance & Trading Ltd
Notional Commission u/s 69C
5,11,42,500/-

15,34,275/-
2014-15 Bogus
LTCG u/s 68
–
scrip 1,25,22,500/-

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

3
Confidence Finance & Trading Ltd
Notional Commission u/s 69C
3,75,675/-
2015-16 Bogus
LTCG u/s 68
–
scrip
Greencrest Financial Services Ltd
Notional Commission u/s 69C
3,30,86,741/-

9,92,602/-

AYs 2016-17 to 2018-19

AY
Reasons of Addition
Amount (Rs.)
2016-17 Cash loan to Nilesh Bharani u/s 69
Notional interest earned u/s 56
2,05,00,000/-
12,05,425/-
2017-18 Cash loan to Nilesh Bharani u/s 69
Notional interest earned u/s 56
27,29,00,000/-
2,69,33,710/-
2018-19 Notional interest earned u/s 56
3,52,08,000/-

ITA No. 6405/Mum/2024 for the AY 2011-12

4
contended that thus, the consequent assessment order passed based on the said notice u/s 148 of the Act issued on 29/03/2018
by the ld.AO who was lacking competent juri iction for reopening the assessment for this assessment year is unsustainable, bad in law and void ab initio and which must be quashed at the threshold cancelling the entire income- tax demand so raised.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

5
the online portal of the income-tax department as is mentioned in para 2 of the assessment order in this appeal. Thereafter, the first notice u/s 143(2) of the Act for completing the reassessment for this assessment year was issued by the AO, Circle 4(1),
Mumbai on 20/08/2018 and the first notice u/s 142(1) was also issued by the DCIT Central Circle 4(1) Mumbai as is mentioned in para 2 of the relevant assessment order. The said notice was also responded by the assessee on 06/09/2018 to the DCIT
Central Circle 4(1) Mumbai.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

6
7. The ld. counsel also submitted that the assessee was under a bonafide belief, in absence of service of the said order u/s 127(2) on him that the assessment juri iction over the assessee must have been transferred after issuing the notice u/s 148 as the assessee could not have any reason at all to presume that the said notice was illegally issued without juri iction of the case with the said AO Circle 27(1) Mumbai. The assessee was further informed by his then counsel that after an income-tax search on assessees, all their cases are transferred to the Central Circles for assessments of incomes and therefore, the requisite compliances were made before the AO Central Circle under the bonafide belief that the revenue officer must have acted as per law, at least on the juri ictional issues of issuing notice u/s 148 of the Act, having the authority of assessment of income of the assessee.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

7
Accountants firm had a copy of the said assessment juri iction transfer order dated 17/01/2018 having been procured by them from the department in the case of one of those 4 assessees.
Therefore, before the ld.CIT (A), the assessee took these grounds of appeal categorically as grounds of appeal no. 1 and 2
reproduced in para no. 3, page no. 3 of the CIT(A) order dated
13/11/2024. Thus, the ld. Counsel also stated that though not material as per law because what is illegal at the threshold, cannot at all be validated by compliance thereto whether deliberately or in ignorance of the facts / law, yet there was a bonafide reason for the assessee due to which the assessee could not object about the juri ictional illegality of the notice issued u/s 148 of the Act before the AO.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

8
the notice issued u/s 148 of the Act on 29/03/2018 by the erstwhile AO who had already been divested with assessment juri iction on the assessee.
10. The ld. Counsel referred to the section 127 which is reproduced below:
Power to transfer cases
127. (1) The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent juri iction) to any other Assessing Officer or Assessing Officers
(whether with or without concurrent juri iction) also subordinate to him.
(a) where the Principal Directors General or] Directors
General or Principal Chief Commissioners or Chief
Commissioners or Principal
Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal
Director General or Director General or Principal Chief
Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner from whose juri iction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order;

(b) where the Principal Directors General or Directors
General or Principal Chief Commissioners or Chief
Commissioners or Principal
Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

9
(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or As- sessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director
General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,-
(3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent juri iction) to any other Assessing Officer or Assessing
Officers
(whether with or without concurrent juri iction) and the offices of all such officers are situated in the same city, locality or place.
(4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.
Explanation.- In section 120 and this section, the word “case”, in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

10
in respect of any year stands transferred to the new AO from the earlier AO. Thus, the Explanation has set at rest all such apprehensions in an unambiguously and clearly worded law.
THUS, AS PER THE LAW AS ABOVE, THE ERSTWHILE AO (ACIT
CIRCLE 27(1)) COULD IN NO MANNER AT ALL TAKE ANY PROCEEDINGS IN THE CASE OF THE ASSESSEE FOR ANY ASSESSMENT
YEAR
POST
17/01/2018
WHEN
THE ASSESSMENT JURI ICTION OVER THE ASSESSEE WAS TRANSFERRED FROM THE ACIT CIRCLE 27(1) MUMBAI BY THE JURI ICTIONAL PCIT 27 MUMBAI TO THE DCIT
CENTRAL CIRCLE 4(1) MUMBAI.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

11
by an AO who held charge on corporate assessees or by the AO
(Exemption) holding charge on charitable institutions who are assessed u/s 11 to 13. In the said case the Hon’ble Orrisa High
Court
(2023)
151
taxmann.com
433
(Orissa) dated
06/03/2019 held that since the juri iction was with the AO
(Exemption) on the basis of an affidavit filed by the revenue only, the notice issued u/s 143(2) of the Act by the ld.AO Corporate
Circle was without juri iction but also granted permission to the Revenue to issue appropriate notice to the petitioner in accordance with the law as at the relevant time of passing the order by the High Court on 06/03/2019 for the AY 2014-15, assessment completed on 30/12/2016, the Revenue had time to take action of assessment. It is important to appreciate that by virtue of the incorporated structure and nature of activities of the said assessee, both the respective ld.AOs could assess the assessee and the assessee had no reason to object during the assessment proceedings as such. It is important to appreciate that in Kalinga (supra), no order at all was passed u/s 127 of the Act by the Competent Authority and there was no discussion, rather could not at all be on the same.

12
Act. There is no provision u/s 127 of the Act to file an objection where the juri iction has already been transferred. However, there is a provision of hearing when the assessment juri iction is being transferred out of city to some other city, and then a hearing must be granted by the PCIT before passing the assessment juri iction transfer order u/s 127(2) of the Act. In case, the same was not granted by the PCIT, then the only remedy with the assessee is to challenge the same in a Writ
Petition before the juri ictional High Court. The ld. Counsel
Submitted that here, the assessee has not at all been objecting the assessment juri iction with any particular AO either in Mumbai or in Navi Mumbai but to the legality of the impugned notice issued u/s 148 of the Act on 29/03/2018 by an AO who did not at all have any authority as per the legal mandate by the Explanation u/s 127 as the assessment juri iction on the assessee had already been validly and lawfully transferred to the Central Circle in terms of the CBDT instructions and no objection at all has been raised by the assessee to the same before any appellate authority.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

13
to quash the assessment order as illegal based on a void ab initio notice issued u/s 148 of the Act by an AO who was not vested with the juri iction over the assessee as on the date of issue of the notice on 29/03/2018:

(i)
Himalaya
Drug
Company v
DCIT
[2024]
169
taxmann.com 243 (Kar.) and SLP of the revenue (2024)
169 taxmann.com 244 (SC)dismissed dated 12/11/2024
a, date subsequent to the date (01/05/2023) of Kalinga
(supra)judgment where the High Court held:
“Thus, the undisputed facts are that the assessee's case was transferred from ACIT, Circle - 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) dated 20.07.2009; notices under Section 153C for the assessment years under consideration were issued by the DCIT, Central Circle,
Bengaluru on 11.05.2009 (earlier than the date of transfer order); and actual date of transfer of files from ACIT is 19.08.2009. Thus, it is ex-facie apparent that the notices u/s 153C were issued prior to transfer of case and juri iction conferred on the DCIT.”

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

14
38. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of "territorial juri iction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O juri iction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. On the other hand, sub-section (2) of Section 124 contemplates the manner in which any controversy as regards the territorial juri iction of an A.O is to be resolved. Apropos, sub-section (3) of Section 124 of the Act, the same places an embargo upon an assessee to call in question the juri iction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Section 143 or Section 148 or sub-section (1) of Section 153A or sub-section (2) of Section 153C. In sum and substance, the obligation cast upon an assessee to call in question the juri iction of the A.O as per the mandate of subsection (3) of Section 124 is confined to a case where the assessee objects to the assumption of juri iction by the A.O, and not otherwise.
39. At this stage, we may herein refer to certain judicial pronouncements that had in the past held the field on the aforesaid issue. The Hon'ble High Court of Bombay in the case of Peter Vaz (supra) and that of the Hon'ble High Court of Gujarat in the case of Commissioner of Income-tax v.
Ramesh D. Patel [2014] 42 taxmann.com 540/225 Taxman
411/362 ITR 492 (Gujarat), had held, that as Section 124 of the Act pertains to territorial juri iction vested with an AO under sub-section (1) or sub-section (2) of Section 120, therefore, the provisions of sub-section (3) of Section 124
which places an embargo on an assessee to raise an objection as regards the validity of the juri iction of an A.O would get triggered only in a case where the dispute of the assessee is with respect to the territorial juri iction and would have no relevance in so far his inherent juri iction for framing the assessment is concerned. Also, a similar view had been taken by the Hon'ble High Court of Calcutta in the case of Principal Commissioner of Income-tax v. Nopany&
Sons [2022] 136 taxmann.com 414/286 Taxman 388
(Calcutta). In the case before the Hon'ble High Court the case

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

15
of the assessee was transferred from ITO, Ward-3 to ITO,
Ward-4 and the impugned order was passed by the ITO,
Ward-4 without issuing notice u/s 143(2), i.e. only in pursuance to the notice that was issued by the ITO, Ward-3, who had no juri iction over the assessee at the relevant time. The Hon'ble High Court considering the fact that as the assessment was framed on the basis of the notice issued under Sec. 143(2) by the assessing officer who had no juri iction to issue the same at the relevant point of time quashed the assessment……Apropos the judgment of the Hon'ble Apex Court relied upon by the A.O in the case of Deputy Commissioner of Income-tax (Exemption) v. Kalinga
Institute of Industrial Technology [2023] 151 taxmann.com
434/293 Taxman 493/454 ITR 582 (SC), it would be relevant to cull out the facts as were involved in the aforesaid case.
(i) the assessee had in the aforesaid case challenged the notice issued u/s.143(2) of the Act by the ACIT, Corporate
Circle-1(2), Bhuwaneshwar, as being without juri iction;
(ii) the juri iction over the case of the assessee that was vested with ACIT, Corporate Circle-1(2), Bhuwaneshwar was after filing of the return of income changed and got vested with the Jt. CIT (O ) (Exemption), Bhuwaneshwar;
(iii) it was the assessee's case that as the juri iction to issue notice u/s. 143(2) of the Act in its case was with Jt.CIT(O )(Exemption),
Bhuwaneshwar, therefore, the impugned notice issued u/s. 143(2) of the Act by the ACIT,
Corporate
Circle-1(2),
Bhuwaneshwar was without juri iction and, thus, was liable to be quashed;
(iv) the Hon'ble High Court of Orissa considering the fact that the juri iction to issue notice u/s. 143(2) of the Act in the case of the assessee remained with the Jt. CIT (O ) (Exemption),
Bhuwaneshwar, therefore, held the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2),
Bhuwaneshwar as having been issued without juri iction and thus, quashed the same.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

16
45. On Special Leave Petition (SLP) filed by the revenue, the Hon'ble Apex Court, inter alia, observed that as the records revealed that the assessee had participated in the assessment proceedings pursuant to notice issued u/s.
142(1) of the Act, and thus, had not questioned the juri iction of the A.O, therefore, there was no justification for the High Court to have set-aside the notice issued u/s.143(2) of the Act by the ACIT, Corporate Circle-1(2),
Bhuwaneshwar. Elaborating on the scope of Section 124(3)(a) of the Act, the Hon'ble Apex Court observed that the same precluded the assessee from questioning the juri iction of the A.O if he does not do so within 30 days of receipt of notice u/s. 142(1) of the Act.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

17
(supra), emphasizing on the statutory requirement of passing of an order u/s127(2)(a) of the Act where the assessee's case was transferred from one A.O to another, and the said AO's were not subordinate to the same Commissioner, had observed, that as required per the mandate of law, an agreement between the Director General, Chief Commissioner or Commissioner as the case may be, of the two juri ictions is necessary.

(iii) Bansilal
B.
Raisoni&
[2019]
101
taxmann.com 20 (Bom)
“Section 124, read with section 153A, of the Income-tax Act,
1961 - Assessing Officer - Juri iction of (Objection to) -
Whether time limit for raising objection to juri iction of Assessing Officer prescribed under sub-section (3) of section 124 has a relation to Assessing Officer's territorial juri iction - Held, yes - Whether, therefore, where assessee contended that since no search was carried out at its premises, notice issued by Assessing Officer under section 153A was without authority of law, in such a case, time limit prescribed under sub-section (3) of section 124 for raising said objection would not apply - Held, yes”

ITA No.6405/Mum/2024 and others
1 (Pune-Trib) Once transfer of case of assessee was ordered under section 127, Assessing Officer who was vested with juri iction by virtue of direction or order issued under sub-section (1) or (2) of section 120 and section 124, stood divested of same and, in such a case, notice issued under section 143(2) by said Assessing Officer after date of transfer, was to be regarded as invalid notice and, consequently, assessment framed under section 143(3) pursuant to notice so issued would be void ab initio.

(v)
17. In response to the same, the Ld. CIT DR primarily relied on the orders of the authorities below without controverting the submissions of the assessee but strongly pleaded that the ld.CIT(A) has given a finding in para 7.9 of his appellate order challenged in this appealthat when the PCIT 27 Mumbai himself approved the issuance of notice u/s 148 of the Act on 29/03/2018, he had consciously bestowed the juri iction on the ACIT Circle 27(1) Mumbai for the purpose of issuance of the notice u/s 148 of the Act on 29/03/2018 and therefore, the said notice was issued validly and as per law by the ACIT Circle 27(1)
Mumbai having juri iction over the assessee as on the said date and the consequent assessment order passed is a legally valid assessment order.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

20
Mumbai as on the said date. The PCIT 27 Mumbai could only have any such juri iction if and if only the PCIT Central 2
Mumbai under whom the DCIT Circle 4(1) Mumbai had passed an order u/s 127(2) of the Act transferring back the assessment juri iction over the assessee to the ACIT 27(1) Mumbai before
29/03/2018, but admittedly which was not done as no evidence for the same has been placed or pleaded by the ld.CIT DR. It is also a settled law that at the same time, there could be no two assessing officers over an assessee to pass income-tax assessment orders, much less for the same assessment year.
Further, on perusal of the reasons recorded and proposal sent to the PCIT 27 Mumbai by the ACIT Circle 27(1) Mumbai, placed at PB page no. 41-42, it is clear that he did not mention therein at all the vital fact that the assessment juri iction over the assessee had already been transferred from his charge to the DCIT Central Circle 4(1) Mumbai by the PCIT 27 Mumbai vide an order dated 17/01/2018, rather in para 4 therein, the AO has mentioned that after receipt of the information received from the Investigation Wing, the return of income of the assessee for the AY 2011-12 has been analysed, particularly when he could not possess the said return of income with him as on the said date due to it having been transferred earlier by an order u/s 127(2) on 17/01/2018. 19. We also take note that the reasons recorded by ACIT, Circle
27(1), Mumbai and the proposal sent to PCIT–27, Mumbai do not disclose the material fact of juri ictional transfer. It is apparent

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

21
that the reasons were recorded mechanically, without access to the assessment records — which had already been transferred.
Thus, the PCIT–27, while granting sanction under section 151, was misled into believing that the case still lay within his juri iction.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

22
As the saying in jurisprudence goes, a foundation laid in sand cannot support the edifice of justice.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

23
24. In the result, the appeal of the assessee is allowed.

ITA no. 2467 to 2472/Mum/2025 (Assessment years: 2013-
14 to 2018-19)
25. The grounds of appeal taken by the assessee in brief are as below:
 Firstly, addition made in absence of any incriminating material found during the course of search in the premises of the assessee on 07/10/2017 where the material relied was found in income-tax searches with no common search
/ joint warrant in searches.
 Secondly, no mandatory DIN on the body of the assessment orders.
 Thirdly, incompetent and mechanical approval u/s 153D of the Act by the Addl CIT.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

24
on the income-tax search conducted on the assessee on 07/10/2017. Whatever material has been referred to in the assessment order, during the course of search on 07/10/2017, was available with the authorised officer at the relevant time having being procured from extraneous sources in the income- tax searches elsewhere at different times and in none of those search warrants, the name of the assessee was appearing as per panchnamas or information of those searches placed on record.
Thus, those searches were independent income-tax searches.
The ld.AO‘s main reliance is based on the statements ofthe assessee recorded u/s 132(4) at the time of search which were later on retracted by the assessee on 09/12/2017 by filing an affidavit with the Investigation Unit Mumbai as his statements recorded during the search on him were not based on any incriminating material found in his premises but were based on the statements of third parties recorded elsewhere. Admittedly, the affidavit filed by the assessee on 09/12/2017 was not at all cross examined by the revenue. Thus, the correctness of its contents cannot be doubted at this stage now and the same stands accepted in view of the judgment of the Apex Court in Mehta Parikh & Co. vs CIT (1956) 30 ITR 181 (SC) (LB).

25
statements recorded u/s 132(4) of the Act on09/10/2017, the assessee was shown the statements recorded u/s 132(4) elsewhere about the money lent in cash to Nilesh Bharani /
Evergreen Enterprises outside the regular books of account but there was no question at all in any manner on the claim of Long- term capital gains as exempt u/s 10(38) of the Act for the period relevant to the AYs 2013-14 to 2015-16 and which are the only additions made in these three assessment years and no addition has been made for any cash loans given.The additions made in the three reaming AYs 2016-17 to 2018-19 are only in respect of the alleged cash loans given to Evergreen Enterprises / Nilesh
Bharani and there is no addition for the LTCG, however, for the reasons best known to the ld.AO, a detailed discussion on the cash loan transactions has been made in the assessment order for the AY 2013-14 to 2015-16.The ld. Counsel stated that this clearly demonstrates that the ld.AO was not at all applying his mind but was passing the assessment orders mechanically. The Ld. Counsel of the assessee further submitted as was pleaded before the lower authorities also forming part of the paper book submitted that all these questions and answers relevant to the additions made in the hands of the assessee in the respective
AYs clearly demonstrate and confirm the contention of the assessee that no such evidence much less incriminating the assessee in any manner was found during the course of search in the premises of the assessee searched u/s 132 of the Act and therefore, by following the judgment of the Apex Court in PCIT vs
Abhisar Buildwell (P) Ltd [2023] 149 taxmann.com 399 (SC), no ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

26
addition at all could be made in any assessment order passed u/s 153A of the Act.

27
07/10/2017 based on which these assessment orders were passed. Such action of the Assessing Authority is malicious, contemptuous and need to be reversed in toto. He also stated that, had it been a case of search u/s 132 of the Act, then the earlier assessments based on the search conducted on 07/10/2017 had to be abated as were pending as on the date of these assessment order i.e. 31/12/2019 in appeal here. Since, nothing is apparent in support of the contention of the ld.AO, the said averment of the ld.AO must be disregarded. The ld. counsel also pointed out that in any case, statements recorded after the impugned search, which is basis of proceedings u/s 153A, cannot be considered as incriminating material seized during the search as held in PCIT vs Jaypee Financial Services Ltd
[2021] 127 taxmann.com 490 (Delhi), Shankarlal Bhagwati
Prasad Jalan [2017] 84 taxmann.com 275 (Bombay), CIT v
P.K. Ganeshwar [2009] 308 ITR 124 (Mad.), ACIT vs Ambika
International, New Delhi on 13 September, 2023- ITA No.
5071/DEL/2017, BS Associates vs DCIT 2019-TIOL-2578-
ITAT-INDORE.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

28
that during the year under consideration, the assessee has claimed LTCG on sale of shares of Confidence Finance & Trading
Ltd (for the AYs 2013-14 and 2014-15)and claimed the same exempt. Identical findings have been given by the ld.AO in the AY
2015-16 where the scrip was different as Greencrest Financial
Services Ltd. Then in para 6.1.2 he has said, under the head
―Facts Relating to Share transactions‖ the huge LTCG exemption claimed of the assessee made u/s10(38) of the Act was found suspicious and thus, detailed investigation of this issue was undertaken. Various tools / data bases available were examined including ITD data, BSE data, money control website, court rulings, internet as well as investigation wing report and findings of the SEBI in ascertaining the correctness of the LTCG claim.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

29
For this proposition, the assessee relied on the decision in ACIT vs Arun Aggarwal in ITA 253 and 254/LKW/2020 date of decision 20/10/2021. 32. The ld. Counsel also pointed out that on a plain reading of the assessment order, it is clear that the AO did not have any information except some half-baked report received from the Investigation Unit with no head and tail except a long-drawn story as copied in the assessment orders. None of the persons therein, has named the assessee, as nothing such is mentioned.
No addition can be made on the basis of any such information in an assessment order passed u/s 153A of the Act.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

31
existence of the law are clear which stipulate that to make any addition u/s 153A of the Act for an already completed assessment, any material relied should have been found during the course of search in the premises of the assessee only and nowhere else. He categorically stated that if anything was found during the course of search in the premises of some other assessee where the name of the assessee did not figure at all in their search warrants, then the course of reassessment available with the Revenue Authorities have been specifically designed in the statute u/s 153C of the Act which is also para-materia and non obstante section as is the section 153A of the Act. These two sections were applicable at the relevant time only in respect of income-tax searches conducted upto 31/03/2021 either in the premises of the assessee or in the premises of someone else allegedly detecting incriminating material in respect of an assessee not searched.

32
made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961.”

33
the said person not searched through the domain of thesection
153C of the Act.
Thus, any assessment
/reassessment proceedings-initiated u/s 148 of the Actin respect of the said incriminating information foundduring the course of a search up to 31/03/2021 onsome other assessee is illegal and is ab initio as thesame can be considered only by taking recourse to the provisions of the section 153C r.w.s. 153A of the Act. Thus, the assessment of the said amount of LTCG, which was claimed to be exempt u/s 10(38) of the Act by the assessee, made u/s 147 of the Act is beyond the scope of section 147, albeit it can be roped in only u/s 153C.

(i)
It is mandatory for the AO of the person searched to make an assessment / reassessment of income of the said assessee u/s 153A of the Act for the 6 assessment years prior to the date of search and also for the extended 4 relevant assessment years, subject to fulfillment of the prescribed conditions for the same, on the basis of an income-tax search conducted on him.

(ii)
However, in the assessment / reassessment orders passed within the scope of section 153A of the Act, the AO cannot consider any undisclosed income detected by way of an incriminating information pertaining / relating to the said assessee, during an income-tax search conducted in the premises of some other assessee(s),even conducted at the same time or income connected matter. In such a case where AO gets any information or material about any assessee from the search of some other person, he can, make assessment of the undisclosed income/ amount emanating from such information or material for the assessment / re assessment vide separate assessment/ reassessment orders to be passed u/s 153A by taking recourse to the provisions of the section 153C of the Act. Because the cause of action for the said incriminating information for different amounts had originated in ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

34
different search(es) in the different premises of other assessees and for the same, the mandatory route legislated u/s 153C of the Act must be followed.

(iii)
Further, an assessee can also be assessed multiple times u/s 153C r.w.s 153A of the Act, despite having already been assessed u/s 153A of Act on the basis of an income-tax search in his premises, where the incriminating information has been received u/s 153C of the Act by the AOs of the searched person as well as of the person not searched, which information originates in different searches at different times on different persons as well.

ITA No.6405/Mum/2024 and others
(DoD-
08/12/2023) ix.
Court in SLP no. 51947/2024 vide order dated 16/12/2024. x.
Hon‘ble
ITAT
Mumbai
―D‖
5568 to 5573/Mum/2024 for AYs 2013-14 to 2018-19
DoD-31.01.2025, decision arising from the same search and on the identical facts (as in the case of assessee)has directed the AO to delete the additions in all the years under dispute (para 12 to 14, page no. 8 to 10)

“39. We have considered the submissions of both sides and perused the material available on record. In the present case, undisputedly the addition is made under section 68and

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

36
section69Cof the Act on account of alleged accommodation entries of bogus long-term capital gain. From the perusal of the assessment order, it is discernible that the said addition is not based on any material or document found during the course of search/survey action under section 132/133Aof the Act conducted at the residential premises of the assessee. It is further evident that the AO has placed reliance uponthe findings of the Investigation Wing, Kolkata, wherein the scrip M/s Shree Nath
Commercial & Finance Ltd. was included in the list of 84
companies whose share prices were manipulated by a syndicate of entry operators. The AO from pages 4-12 of the assessment order discussed the findings of the Investigation Wing, Kolkata, wherein the modus operandi of providing bogus accommodation entry, players on the scheme, role of the operator, role of the promoters of the penny stock companies, role of shareholders and exit providers has been discussed. fluctuation, the history of the company, and the financials of the scrip M/s D.B. (International)
Stock Brokers Ltd. From pages 18-27, the AO has analysed the statements of theentry providers in the scrip of M/s D.B.
(International) Stock Brokers Ltd. It is pertinent to note that these statements were recorded under section 132(4)of the Act on 13/06/2014 during the course of the search action at their premises. Thus, it is worth noting that none of the statements were pursuant to search/survey action under section 132/133Aof the Act conducted at the residential premises of the assessee on 06/10/2017 and are much prior to the search in the case of the assessee. From the perusal of the statements, it is further pertinent to note that though the entry operator has agreed that they have arranged investments in the shares in M/s D.B.
(International) Stock Brokers Ltd. on behalf of some of the beneficiaries, however there is no allegation against the assessee.
Similarly, from pages 27-36, the AO analysed the financials and price fluctuation in the scrip M/s Shree Nath Commercial &
Finance Ltd. Identical to M/s D.B. (International) Stock Brokers
Ltd., the statement of entry operators relied upon by the AO, who admitted to have provided accommodation entry in M/s Shree
Nath Commercial & Finance Ltd., were recorded in the year 2015, i.e. much prior to the search/survey conducted at the residential premises of the assessee. Therefore, from afore- noted factual position, it is evident that the entire addition is based on the information received during the search carried out in case of some

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

37
other persons. Further, from para-7.10 of the assessment order, it is also evident that the statement of the assessee was also recorded under section 132(4)of the Act pursuant to the information received during the search carried out in case of some other persons. In view of the aforesaid peculiar factual matrix of the present case, it is the plea of the assessee that the assessment should have been done under section 153Cof the Act instead of the assessment order being passed under section 153Aof the Act.

"23. It is pertinent to note that though the ld. AO had stated that large number of incriminating documents were found and impounded during the search, we find that ultimately no addition was made based on the same by the ld. AO in the assessment proceedings, as the ld. AO was convinced with the explanations given by the assessee for those documents. The fact of assessee

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

38
claiming exemption u/s 10(38) of the Act for sale of shares of MARL was duly disclosed in the return of income filed on 29.11.2015 prior to the search itself. No document whatsoever was found and seized from the premises of the assessee during his search representing any incriminating document qua the issue of claim of exemption u/s 10(38) of the Act. The only document whichfall within the ambit of incriminating nature is the forged signature of Shri Koteshwar Rao in the documents pertaining to allotment of preferential shares submitted to Ministry of Corporate
Affairs (MCA), which was also not seized from the premises of the assessee. The investigation wing of Income Tax Department had gathered those informations from MCA and had confronted Shri
Koteshwar Rao during the course of search. Shri Koteshwar Rao denied having affixed his signature thereon as he had resigned from the post of Director of MARL in the year 2012. However, from the statements recorded by the investigation wing of income tax department from various persons involved , it is evident that the signature of Shri Koteshwar Rao was indeed forged in the documents pertaining to allotment of preference shares to various persons including the assessee and his family members. At this juncture, it would be relevant to note that both Shri Koteshwar Rao as well as the assessee in their individual sworn statements had categorically denied having known each other. Hence it becomes evident that assessee was never involved in any of the forgery acts that had been carried out in the allotment of preference shares of MARL. But we find that the assessee was confronted by the revenue with those very same forged signed documents in order to draw adverse inference on the claim of exemption u/s10(38) of the Act on the assessee. Hence the said forged signed documents become incriminating documents found during the course of search of third parties (which include MARL and Shri
Koteshwar Rao). Accordingly, if at all the assessee need to be questioned based on those incriminating documents, as per the scheme of provisions of Chapter XIV (sections 153A to 153C) of the Act , it could be done only by taking recourse to section 153C of the Act and not u/s153A of the Act irrespective of the fact whether the assessment is abated or not. This is so because , the provisions of Sections 153A and 153C of the Act are special provisions starting with non-obstante clause thereon whichhad been introduced in the statute only for the limited purpose of ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

39
framing assessments pursuant to search actions carried out and information / materials surfaced therein.

40
clause and both the AOs involved were bound to act as per this provision as term deployed therein is "shall". Accordingly, as per the law, no addition in an assessment order passed u/s 153A of the Act without following the mandatory route of section 153C of the Act in the case of the assessee was possible on the basis of some alleged material seized / statements from / of the alleged entry providers as no incriminating material in any manner at all depicting bogus LTCG was found during the course of search in the premises of the assessee or on the strength of any search warrant in the name of the assessee in any premises anywhere.
Thus, the only course available for the revenue was to initiate proceedings u/s 153C of the Act on the assessee whereby the AO of the entry provider was statutorily required, (and not the officers of the investigation unit of the department under any circumstance on the basis of the seized material) if he was satisfied that the seized material/information from the searched entry provider had some bearing etc. on the determination of the assessable income of the assessee by sending the same to the AO of the assessee and then the AO of the assessee should have proceeded to assess the same by a separate assessment order u/s 153A read with the section 153C of the Act. Undisputedly, section 153C of the Act is a non obstante section and a complete code by itself and both the AOs involved were bound to act as per this provision as term deployed therein is "shall". No option was available with the AOs to act otherwise overruling the law at their whims.
Therefore, if the material found and seized from an entry provider
'pertains or pertain to, or any information contained therein, relates to the assessee, then the ld. AO of the said entry provider must have initiated the assessment process u/s 153C of the Act. It is in his exclusive domain to be satisfied whether 'pertains or pertain to, or any information contained therein, relates to' or not and the statute in an unambiguous language has not bestowed this power on any other authority, which admittedly here has been completely misunderstood to be with the Investigation Unit of the income-tax department by the ld. AO while completing the assessment.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

41
"Assessment of income of any other person u/s 153C of the Act

153C. (1)Notwithstanding anything contained in section139, section 147, section 148, section 149, section151 and section 153, where the Assessing Officer is satisfied that,--
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having juri iction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books ofaccount or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A:

Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso tosub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having juri iction over such other person:

Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or reassessment has abated.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

42
(2)
Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having juri iction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section132A and in respect of such assessment year--
(a) no return of income has been furnished by such other person and no notice under sub-section (1) of section142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having juri iction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section153A."

(emphasis supplied by us)

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

It is proposed to amend sub-section (1) of the said section so as to provide that where the Assessing Officer is satisfied that,
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned, shall be handed over to the Assessing Officer having juri iction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if that Assessing Officer is satisfied that the books of account or documents or assets, seized or requisitioned, have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A.

This amendment will take effect from 1st June, 2015."

44
received any information relating to bogus LTCG based on entry operators statements only on or after 5.9.2016 and certainly not before that date. This is so because absolutely no documents of incriminating nature was found and seized in the premises of the assessee during the course of search on 30.3.2016 which got concluded on 31.3.2016 at 8.40 P.M. Hence even if 5.9.2016 is construed as the date of receipt of information by the AO of the assessee, then that would become the date of search on the assessee in order to proceed on the assessee in terms of section 153C of the Act. This view of ours is fortified by the decision of the Hon'ble Juri ictional High Court in the case of CIT vs RRJ
SecuritiesLtd reported in 380 ITR 612 (Del) followed in Pr. CIT vs
RajBuildworth (P) Ltd reported in 113 taxmann.com 600 (Delhi) and the SLP of the revenue dismissed by the Hon'ble Apex Court which is reported in 113 taxmann.com 601 (SC). Consequently, the period relevant to the Asst Year 2015-16 herein, when the impugned incriminating material was found in a search of a third person, got shifted from the scope of an assessment u/s 153A of the Act to the provisions of the sections 153C of the Act being one of the six assessment year preceding the date of search in the case of the other person.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

45
by the revenue legally in the proceedings u/s 153A of the Act on the assessee.”

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

46
42. These additions, embedded within the assessment orders framed under section 153A of the Act, pertain to assessment years which stood concluded and untainted by the presence of any incriminating or seized material. To permit such additions would be to extend the scope of section 153A beyond its statutorily intended frontier, one which is firmly anchored in the existence of material unearthed during the search. Accordingly, these additions are liable to be, and are hereby, deleted.

AY 2016-17 to AY 2018-19

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

47
Para 5.33 for alleged cash loan given in the assessment orders

Assessment year
Opening
Balance
Cash loan given during the year
Cash loan receive d back during the year
Balance outstanding cash loan
Amt in Rs
Amt in Rs
Amt in Rs
Amt in Rs
2012-13
0000
0000
0000 0000
2013-14
0000
0000
0000 0000
2014-15
0000
0000
0000 0000
2015-16
0000
0000
0000 0000
2016-17
000
2,05,00,000
2,05,00,000
2017-18
2,05,00,000
27,29,00,000
29,34,00,000
2018-19
29,34,00,000 0000
29,34,00,000
Total
29,34,00,000

Para 5.34 for estimated interest earned on the above loans

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

48
Assessment year
Interest of Current Year
Loans
Interest of earlier year loans
Total Interest for the Year
Amt in Rs.
Amt in Rs.
Amt in Rs.
A B
C
2012-13
0000
0000
0000
2013-14
0000
0000
0000
2014-15
0000
0000
0000
2015-16
0000
0000
0000
2016-17
12,05,425
0000
12,05,425
2017-18
2,44,93,710
24,60,000 2,69,53,710
2018-19
0000
3,52,08,00
0
3,52,08,000
Total
3,94,000
21,34,582 25,28,582

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

49
45. For such additions in respect of the cash loans lent, the learned counsel of the assessee also placed reliance on the decision dated 31/01/2025 of the coordinate bench ofthe ITAT
Mumbai in the case of Rajeshkumar Rameshchandra Shah in appeal nos. ITA 5568 to 5573/Mum/2024, followed in Rupal K
Mehta in ITA no. 6191-6196/Mum/2024dated 27/02/2025 for six assessment years where orders were passed u/s 153A besides otherswhere the facts of the alleged cash loans given to Nilesh Bharani were identical based on an income-tax search on Mr Nilesh Bharani as in this case, except to the extent that there the assessee denied any knowledge of any such transactions rather knowledge of Evergreen Enterprises as well but here the assessee on confrontation admitted in his statement u/s 132(4) to have arranged some cash loan transactions through Evergreen
Enterprises and estimated the same around Rs 10 crores. The ld.
Counsel also submitted that the assessee never admitted to have given any cash loan but only said he arranged loans for various entities of Sunshine group through Evergreen Enterprises.

50
raised on the assessee on 10/10/2017 when the alleged material/ information had already been found in an independent income- tax search conducted in the premises of Mr Nilesh
Bharani since the afternoon of 06/10/2017. The ld. counsel also said that no other material has been referred to in the assessment orders which could suggest any such undisclosed income. He also stated that physical presence of many Revenue
Officers as per the Panchnamas for the 4 days (from 07/10/2017
to 10/10/2017) in the premises of the assessee without having found any material needing examination and confrontation with the assessee itself during the said search, demonstrate the clear mental pressure and harassment exerted on the assessee to pressurize him to sign on the dotted lines as recorded by the Revenue Officers on the 4th day of the search in his residence.
Admittedly, the statement was also retracted by the assessee at the earliest thereafter on 09/12/2017 by filing an affidavit, not controverted hither to by the revenue through his cross examination proves that the said statement was not at all voluntary and where words were allegedly put in the mouth of the assessee then.

51
statement recorded u/s 132(4) of the Act per se not at all evidence, unless it is supported with any material gathered during the course of said search.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

52
material discovered during the course of the search. In this regard, instructive guidance may be drawn from the decision of the Hon‘ble Delhi High Court in the case of PCIT vs. Pavitra
Realcon Pvt. Ltd. and Others in ITA No. 579/2018, where the principle was emphatically reiterated.
“20. However, it is an undisputed fact that the statement recorded under Section 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements.
21. In the case of KailashbenManharlal Chokshi v. CIT', the Gujarat High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph no. 26 of the said decision has been reproduced hereinbelow: -

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

53
that the Tribunal was not justified in making addition of Rs. 6
lakhs on the basis of statement recorded by the Assessing
Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee.

[Emphasis supplied]
22. Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal, wherein, it was held that merely because an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below:

"20. In our view, a plain reading of section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search.
The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4) of the Act. However, such statements on a stand alone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation,

[Emphasis supplied]
23. In our opinion, the Act does not contemplate computing of undisclosed income solely on the basis of statements made during a search. However, these statements do constitute information, and if they relate to the evidence or material found during the search, they can be used in proceedings under the Act, as specified under Section 132(4) of the Act. Nonetheless, such statements alone, without any other material discovered during

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

54
the search which would corroborate said statements, do not grant the AO the authority to make an assessment.

"18. Further, while writing the order, it has come to our notice that the Hon'ble Apex Court in the case of Sinhgad
Technical Education Society has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against
153C are invalid for want of any incriminating material found for the 19. In view of the above, the additional grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd.
And Mis Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned."

"36.4. In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132-A of the 1961 Act. However, the completed/unabated assessments can be re-opened by the ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

55
AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved."

[Emphasis supplied]”
9. In Shantilal Savla - ITA No. 357 to 363/Mum/2025 DoD
22/05/2025
13. We have heard the rival submissions and perused the material available on record. The issue pertaining to the existence of incriminating material for the assumption of juri iction by the Ld.
AO under section 153A of the Act has been duly challenged by the assessee before the Ld. CIT(A) and the Hon’ble ITAT. The incriminating material relied upon by the revenue was found at the premises of Mr. Nilesh Bharani and M/s Evergreen Enterprises, and the statements of the partners therein were recorded as evidence of undisclosed income. It is an undisputed fact that Mr.
Nilesh Bharani is engaged in the business of finance, particularly in cash lending and borrowing, and has earned income in cash.
However, based on the statement of the assessee, it is evident that the assessee merely advanced a loan of Rs. 35 lakhs to Mr.
Nilesh Bharani through banking channels. The assessee was also subjected to a search under section 132 of the Act on 18/12/2017, but no incriminating documents or material were found at the premises of the assessee. The entire addition in the present case is based solely on presumptions and pertains to third parties involved in the same search proceedings. Factually, the same issue has already been adjudicated in favour of the assessee. We respectfully rely on the decisions of the Coordinate
Bench of the ITAT-Mumbai in the cases of Rajeshkumar
(supra), and observe that the Hon’ble Supreme Court's ruling in Abhisar Buildwell (P.) Ltd. is squarely applicable to the facts of the present case.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

57
to observe, in the statement recorded u/s. 132(4) of the Act, Shri
Jagdish T Ramani, who allegedly was assisting Shri Nilesh
Shamji Bharani in his work, had stated that Shri Nilesh Shamji
Bharani had instructed him to follow up with the lender, i.e., the assessee, to determine the modality of payment. He had stated that he instructed one of the office boys to collect money from the lender and after the money is collected, it is given to the borrower on execution of a promissory note. He had further stated that after the money is delivered to the borrower and promissory note is obtained, he had instructed the office boy to deliver the promissory note to the lender. It is quite surprising that considering the magnitude of the alleged cash loan transaction appearing in the seized document, not a single piece of incriminating material relating a cash loan transaction was recovered from the assessee during the search and seizure operation conducted on assessee. If the version of Mr. Jagdish T
Ramani that the promissory note given by the borrower is delivered to the lender is to be taken on face value, then at least if not all few such promissory notes would have been recovered in course of search and seizure operation carried out in case of the assessee. It is quite improbable that such huge amount of cash loan transaction would not leave any trace of incriminating material /evidence with the assessee. Thus, on cumulative analysis of facts and materials available on record, we are of the opinion that is no conclusive evidence was available with the A.O.
to establish on record that the entries appearing in the seized material actually represent cash loan transaction of the assessee.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

58
material for carrying out the assessment u/s.153A of the Act and statement cannot justify the additions made by the ld. AO.
Similarly, other judgments which have been referred and relied upon by the ld. Counsel and which are not repeated but underlying principle is that for making the addition within the scope and ambit of Section 153A for unabated assessment years, statement alone cannot be treated as an incriminating material to make an addition. Albeit in case of assessment u/s153A
(searched person) wherein the addition for unabated assessment has to be confined on the basis of incriminating material found during the course of search.

ITA No.6405/Mum/2024 and others
Hemendra Ramji Vira

Order pronounced on 26th June, 2025. (GIRISH AGRAWAL) (AMIT SHUKLA)
ACCOUNTANT MEMBER
JUDICIAL MEMBER
Mumbai; Dated 26/06/2025
KARUNA, sr.ps

Copy of the Order forwarded to :

BY ORDER,

(Asstt.