ACIT, CENTRAL CIRCLE-3(2), CHENNAI vs. STN PROPERTIES PRIVATE LIMITED, CHENNAI

आयकर अपीलीय अिधकरण, ’ए’ Ɋायपीठ, चेɄई
IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI
ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी एस.आर. रगुनाथॎ, लेखा सद˟ के समƗ
Before Shri S.S. Viswanethra Ravi, Judicial Member &
Shri S.R. Raghunatha, Accountant Member

आयकर अपील सं./I.T.A. Nos.1647 & 1648/Chny/2024
िनधाŊरण वषŊ/Assessment Year: 2012-13 & & 2014-15
6/24, EB Colony, 1st Main Road,
Adambakkam, Tambaram,
Chennai 600 088. [PAN:AAKCS6317F]

(अपीलाथŎ/Appellant)

(ŮȑथŎ/Respondent)

अपीलाथŎ की ओर से / Appellant by :
Ms. E. Pavuna Sundari, CIT
ŮȑथŎ की ओर से/Respondent by :
Shri K.G. Raghunath, Advocate
सुनवाई की तारीख/ Date of hearing :
18.09.2025
घोषणा की तारीख /Date of Pronouncement
:
10.12.2025

आदेश /O R D E R

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

Both the appeals filed by the Revenue are directed against different orders both dated 31.03.2024 passed by the ld. Commissioner of Income
Tax(Appeals)–20, Chennai for the assessment years 2012-13 & 2014-15. 2. Since issues raised in both the appeals of the Revenue are similar based on the same identical facts, with the consent of both the parties, we proceed to hear the appeals together and pass consolidated order for the sake of convenience.

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6. Against the above additions made in the assessment order, the assessee filed an appeal before the ld. CIT(A). After considering the written submissions of the assessee and analysis of the facts, material brought on record and by following the judgement of the Hon’ble
Supreme Court in the case of PCIT v. Sinhgad Technical Education
Society (2017) 397 ITR 344 (SC), the ld. CIT(A) deleted various additions made by the Assessing Officer. The relevant findings of the ld. CIT(A) are reproduced herein below for better understanding:
7.20. In view of the fact that transactions based on which additions are made during the year in the hands of appellant company are actually carried out by Sri
T.S. Nedunselian, unexplained investment/ unaccounted expenditure/ Undisclosed
Business income, arising if any, is to be taxed in hands of Sri T.S Nedunselian but not in hands of appellant company. Therefore, I am of considered view that additions made by AO during the year are not sustainable in hands of appellant.
The AO is directed to delete addition made towards 1. Unaccounted investment
Rs.2, 14.05,000/-wrt M/s. Kumaralayam Properties Ltd., 2. Unaccounted investment Rs.99,00,000/- wrt Mr. Basker, 3. Unaccounted Expenditure to Mr.
Fernando of Rs. 15,00,000/-, 4. Unaccounted Expenditure to Mr. Lakshmanan of Rs.51,00,000/- , 5. Unaccounted Expenditure to Mr. Ravi of Rs.2,12,45,000/-, 6. Unaccounted Expenditure to Mr. Gopi of Rs.33,00,000/- in hands of appellant.
Consequently, Grounds of appeal of appellant relating to the issues are Allowed.

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"153C "((1))" (Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 133, 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, 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):

a)
Existence of undisclosed/unexplained asset or incriminating seized documents against the appellant, as a result of search.

b)
Seized material should have bearing on determination of total income of appellant for relevant assessment years.

c)
Recording of satisfaction by the AO of the person searched that, the undisclosed assets or incriminating document found as a result of search should "belongs to the appellant, for relevant assessment year.
d)
Proper satisfaction is to be recorded by the AO for the relevant assessment year for issuance of notice u/s 153C.

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7.21.7 Observations made by Hon'ble Supreme Court vide para 18 of above order is reproduced below:

"The ITAT permitted this additional ground by giving a reason that it was a Juri ictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a juri ictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction
Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal.
That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 200
1-02 was even time barred."

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9. The ld. DR further submits that the Id. CIT(A) erred in not considering the sworn statement of Shri M. Mohanraj employee of Shri T.
S. Nedunchelian in which he has stated that he had maintained the accounts/notings in the seized material commonly for all the entities including the assessee company and he argued that the transactions contained in the seized material related to the assessee also. The ld. DR further submits that the Id. CIT(A) has erred in deleting the addition made towards unexplained money with respect to cash deposits in bank accounts on the ground that under section 153C of the Act, the additions have to be made based on incriminating materials only without appreciating that the other additions have been made based only on the details in the seized incriminating material which are wrongly deleted by the CIT(A), prayed to set aside the order of the ld. CIT(A) and restore that of the Assessing Officer.

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are, in law, transactions of the individual himself and the assessments must be made only in the hands of the individual. He submits that the provisions of section 153A of the Act applies to the ‘searched person’, whereas, section 153C of the Act applies to ‘other persons’, if incriminating material belonging to them is found. He vehemently argued that the material seized belong to Shri T.S. Nedunselian (through his proprietorship) and not other person, further, argued that there is no existence of undisclosed/unexplained asset or incriminating seized documents against the assessee as a result of search and relied on the judgement of the Hon’ble Supreme Court in the case of PCT v. Sinhgad
Technical Education Society (supra). He strongly supported the order passed by the ld. CIT(A) on merits.

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12. The Assessing Officer noticed that transactions relating to Appur land project are recorded in seized sheets extracted from electronic device vide ANN/SP/STN/LS/S page 76-93. When they are shown to Shri
S.T. Nedunselian, he again identified them as transactions between
KPPL and STN. The relevant portion of the statement is reproduced at page 30 of the impugned order. With regard to the question as to whether
STN refers to M/s. STN Properties or M/s. STN Properties Pvt. Ltd.
(assessee), the ld. CIT(A) noticed that the seized document vide
ANN/SP/STN/LS/S-11 is identified as ‘cost profit analysis of Appur
Project’ by Shri Mohan Raj while replying to question number 11 of his sworn statement dated 16.11.2016. The relevant portion of statement of Shri Mohan Raj is reproduced at page 31 and the seized document of page 11 of Cost Profit Analysis of Appur Project is extracted at page 32 of the impugned order. Upon perusal of the above said seized document, the ld. CIT(A) observed that the parties to Appur land project are M/s.
STN Properties [Prop: S.T. Nedunselian], M/s. Srivatchaa Shelters
[Partner Sri V. Rajaiah], M/s. Kumaralayam Properties Pvt. Ltd. [Dir:
Nanda Gopal Reddy] and noted that the cash payments with reference to the above transaction found in seized sheets pertain to Shri S.T.
Nedunselian, but, not to assessee-company. During the course of appellate proceedings, the assessee filed copies of ledger accounts of I.T.A. No.1647 & 1648/Chny/24
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M/s. STN Properties, which are part of seized documents, where transactions pertaining to the above projects are recorded. By reproducing the concerned ledger account at page 33 of the impugned order, the ld. CIT(A) has noted that the transactions are recorded in the books of M/s. STN Properties, propriety concern of Shri S.T.
Nedunselian. Therefore, the ld. CIT(A) has inferred that the payments are made by Shri S.T. Nedunselian in his individual capacity, but, not by the assessee-company and therefore, the source for such cash payments are to be verified in the hands of Shri S.T. Nedunselian and not in the hands of the assessee company.

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however, the contention of the ld. DR is that nowhere in the statement,
Shri S.T. Nedunselian has not stated as to in whose hands he was specifically admitting the undisclosed income. We are unable agree with the contention of the ld. DR for the reason that admittedly, in reply to question No. 12, which is reproduced at pages 34 & 35 of the impugned order, Shri S.T. Nedunselian admitted that “The said transactions are properly accounted in my books of accounts. I am producing the relevant proof as Annexure D.” Further, upon perusal of the ledger account reproduced at page 37 of the impugned order, we note that the said ledger account pertains to STN Properties, which is a proprietary concern of Shri S.T. Nedunselian. In view of the above clear facts, the observation of the ld. CIT(A) at para 7.15.4 of the impugned order that the source for such cash payments are to be verified in the hands of Shri S.T.
Nedunselian, is fully justified and we find no infirmity in the above observations of the ld. CIT(A).

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15. With regard to the unexplained expenditure towards payments made to Sri Bhaskar, Sri S.T. Nadunselian vide his sworn statement explained that the payments to Sri Bhaskar are ‘land advance for purchase of property’ at Valayakarnai village. Sri S.T. Nadunselian explained before the Assessing Officer that the project could not be realized and could not receive back advance made to Sri Bhaskar. He further explained that he is not able to explain the sources for land advance made to Sri Bhaskar for AYs 2011-12, 2012-13 & 2013-14 of ₹.99,00,000/-, ₹.10,00,000/- and ₹.10,00,000/- respectively, he offered
₹.1.19 crores as his unaccounted expenditure for respective years. The relevant statements of Sri S.T. Nadunselian are reproduced under Part B of the assessment order as well as pages 42 & 43 of the impugned order.
We note that in reply to question No. 18, which is reproduced at pages 42
of the impugned order, Shri S.T. Nedunselian admitted that the project at Valayankarnai has not taken off and payments to Sri Bhaskar are made out of his real estate income. The ld. CIT(A) noted that Shri S.T.
Nedunselian nowhere in his sworn statement referred to the name of the assessee. While offering the income on account of unaccounted investment also, he clearly stated that he is offering it as his unaccounted expenditure. Further, the ld. CIT(A) observed that no evidence is found showing that the assessee company has actually transacted with I.T.A. No.1647 & 1648/Chny/24
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Valayakarnai lands. In view of the above clear facts, the observation of the ld. CIT(A) at para 7.17.3 of the impugned order that the addition cannot be made in the hands of the assessee company for admission made by Shri S.T. Nedunselian in his own hands, is fully justified and we find no infirmity in the above observations of the ld. CIT(A).

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Nedunselian and thus, the ld. CIT(A) opined that the unexplained investment/unaccounted expenditure/undisclosed business income, arising if any, is to be taxed in the hands of Sri S.T. Nedunselian, but, not in the hands of the assessee company. Accordingly, the ld. CIT(A) rightly directed the Assessing Officer to delete the addition made by the Assessing Officer. We find no infirmity in the order passed by the ld.
CIT(A).

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19. The contention of the ld. DR that other additions made based only on the details in the seized incriminating material, the addition with respect to cash deposits in assessee’s bank account should have been deleted, is not acceptable for the reason that the provisions of section 153C of the Act is abundantly clear that direct co-relation must exist between the existence of incriminating material for assumption of juri iction under section 153C of the Act. The ld. CIT(A) noted that the bank accounts were not found during the course of search and the cash deposits in bank accounts were found only during the proceedings initiated under section 153C of the Act. Therefore, the ld. CIT(A) held that the addition on account of deposits found in bank account of the assessee cannot be said to have emanated from seized material. Upon perusal of the decision in the case of PCIT v. Sinhgad Technical
Education Society (supra), we note that the Hon’ble Supreme Court, at para 13 of the order, observed that one of the juri ictional conditions precedent to the issue of a notice under section 153C of the Act is that “money, bullion, jewellery or other valuable article or thing” or any ‘Books of account or document” must be seized or requisitioned for the relevant assessment year for issue of notice under section 153C of the Act. In present case, admittedly, bank account of the assessee was not found during the course of search, but, however, cash deposits in bank

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accounts were found only during the course of proceedings under section 153C of the Act and thus, the addition on account of deposits found in bank account cannot be said to have been emanated from seized material. Under the above facts and circumstances of the case, we find no infirmity in directing the Assessing Officer to delete the addition and the same is justified. Thus, the ground raised by the Appellant-Revenue is dismissed.

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ITA No. 1648/Chny/2024 AY 2014-15
21. We find the issues raised by the Appellant-Revenue in this appeal are similar to issue raised in ITA No. 1647/Chny/2025 for AY 2012-13, wherein, we have confirmed the order passed by the ld. CIT(A) holding that the additions made by the Assessing Officer are not maintainable, as there is no dispute with regard to facts and circumstances in the present case with that of ITA No. 1647/Chny/2025, wherein, we discussed the same in the aforementioned paragraphs. Therefore, the view taken by us in ITA No. 1647/Chny/2025 is equally applicable in this appeal also. Thus, ground Nos. 2 to 7 raised by the Appellant-Revenue are dismissed.

Vm/-
आदेश की Ůितिलिप अŤेिषत/Copy to:
1. अपीलाथŎ/Appellant,
2.ŮȑथŎ/ Respondent,
3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem
4. िवभागीय Ůितिनिध/DR &
5. गाडŊ फाईल/GF.