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Facts
A search and seizure operation was conducted on the Gogia Group on 15.10.2019, leading to multiple additions by the Assessing Officer (AO) for various assessment years. These additions included undisclosed investments (on-money in real estate projects like Nana Chiloda, Stellar, and Sumel Business Park-III), under-invoicing of sales, disallowance of Long Term Capital Gains (LTCG) exemption under Section 10(38) for 'penny stocks,' and alleged on-money in the Earth Erita project. The AO's basis for these additions largely relied on third-party WhatsApp chats, digital images, loose notings, and extrapolations. The CIT(A) subsequently deleted most of these additions, citing a lack of incriminating material for unabated assessment years (relying on *PCIT vs. Abhisar Buildwell (P) Ltd.*) and finding additions for abated years to be unsubstantiated on merits.
Held
The Tribunal dismissed all appeals filed by the Revenue, upholding the CIT(A)'s deletion of additions. It affirmed that no additions can be made for unabated assessment years without specific incriminating material found during the search related to the assessee and the relevant year. The Tribunal also ruled that third-party material, uncorroborated WhatsApp chats, and general statements or investigation reports cannot form the sole basis for additions, especially when contradicted by documentary evidence or sworn affidavits. The single appeal by assessee Smt. Anuradha Shivkumar Gogia regarding the confirmed addition for on-money in the Earth Erita project was allowed.
Key Issues
Jurisdiction for additions in unabated assessments without incriminating material; validity of additions based on third-party material or extrapolations; disallowance of Section 10(38) exemption for Long Term Capital Gains (LTCG) on alleged penny stocks; additions for on-money payments in real estate transactions (Nana Chiloda, Sumel Business Park-III, Stellar, Earth Erita projects); and validity of approval under Section 153D.
Sections Cited
10(38), 45, 55A, 68, 69, 69A, 115BBE, 132, 132(4), 143(2), 143(3), 145(3), 153A, 153D, 268A
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Shri Narendra Prasad Sinha
Consolidated Appeals (36)
Per Bench: All these captioned appeals by the Revenue and corresponding Cross Objections by the different Assessees and one Appeal by the Assessee (Anuradha Shivkumar Gogia in IT(SS)A No.130/Ahd/2024 for Assessment Year 2019-20) have been directed against the separate orders of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] and pertained to the assessments carried out under Section 153A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) pursuant to the search action carried out under Section 132 of the Act conducted on the Gogia Group on 15.10.2019. Since the facts in all these appeals are identical and they involve common and overlapping issues, hence the same were heard together and are being disposed of by this common order.
2. FACTUAL BACKGROUND OF THE CASE: 2.1. A search and seizure action was carried out under section 132 of the Income Tax Act, 1961, (herein after referred to as “the Act”) on the Gogia Group on 15.10.2019. The search operation covered the business and residential premises of the main promoters, Shri Shivkumar Gogia and his family members, as well as various partnership firms and companies associated with the group. The Gogia Group is primarily engaged in the business of real estate development, construction, and allied activities in and around Ahmedabad.
1. 2.2. Consequent to the search, proceedings under section 153A of the Act were initiated against all persons covered by the search. Notices under section 153A of the Act were issued, requiring the assessees to file returns of income for the six assessment years immediately preceding the year of search, as well as for the year
1. IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 8 of search itself. In compliance with these notices, the assessees filed their respective returns of income. Thereafter, the Assessing Officers (in short, “the AO”) proceeded to frame assessments under the provisions of section 153A read with section 143(3) of the Act.
2.3. In the assessment orders so framed, the AO made multiple additions in the hands of the assessees pertaining to different assessment years. These additions were primarily grouped under the following heads: (i) Undisclosed investment on account of alleged on-money payments in various real estate projects, including the Nana Chiloda Project, the Stellar Project, and Sumel Business Park; (ii) Addition on account of alleged under-invoicing of sales; (iii) Disallowance of exemption claimed on Long Term Capital Gains under section 10(38) of the Act, treating the underlying shares as "penny stocks"; and (iv) Addition on account of alleged on-money received on the sale of property in the Earth Erita project. These additions were made based on material allegedly found during the search action, including digital data like WhatsApp chats retrieved from third-party mobile phones, digital images and loose notings found in the premises of other persons or concerns, as well as inferences drawn by the AO based on such material.
2.4. Aggrieved by the additions made in the assessment orders, the assessees preferred appeals before the Commissioner of Income Tax (Appeals). The Ld. CIT(A), after considering the detailed written submissions, voluminous paper books, and legal arguments of the assessees, proceeded to delete the majority of the additions. A key basis for the deletion, particularly for those assessment years that had already attained finality and were not pending on the date of search (i.e., unabated assessment years), was the legal ground that no additions could be made under section 153A of the Act in the absence of any incriminating material found during the course of search action in case of the specific assessee and in relation to the unabated/completed assessment year/s. For this legal proposition, the CIT(A) placed heavy reliance on the decision of the Hon’ble Supreme Court in the IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 9 case of PCIT vs. Abhisar Buildwell (P) Ltd. (2023) 454 ITR 212 (SC). For the abated assessment years (where assessments were pending on the date of search), the additions were primarily deleted on merits, with the CIT(A) holding that the Revenue had failed to establish with any cogent or credible evidence that any consideration over and above what was recorded in the registered documents had actually been paid or received.
2.5. The only exception was in the case of Smt. Anuradha Shivkumar Gogia for AY 2019-20. In this case, the Ld. CIT(A) confirmed an addition of Rs. 40,00,000/- made by the AO under section 69A on account of the on-money received in "Earth Erita" property sale transaction.
3. Aggrieved by the action of the Ld. CIT(A) in deleting the majority of the additions made by the AO, the Revenue has come up in appeals before this Tribunal, whereas, the assessees, in turn, have filed cross-objections, primarily on the legal ground challenging the validity of the approvals granted by the superior authority under section 153D of the Act, contending that these approvals were mechanical and granted without proper application of mind, thereby vitiating the entire assessment proceedings. In the case of Smt. Anuradha Shivkumar Gogia, the assessee is in appeal against the confirmation of the addition of Rs. 40,00,000/- by the CIT(A).
4. The Revenue has, thus, come in appeals before us contesting the action of the Ld. CIT(A) :
o in deleting the addition made on account of alleged undisclosed investment in the Nana Chiloda Project, arguing that the Ld. CIT(A) erred in holding the orders bad in law without considering the inferences drawn by the AO from indicative incriminating material. o in deleting the addition on account of undisclosed investment made for the purchase of shops in Sumel Business Park-III.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 10 o in deleting the additions made by the AO for alleged undisclosed business income arising from under-invoicing of sales. o in deleting the additions made by the AO for undisclosed investment on account of on-money allegedly paid in the Stellar Project. o In deleting additions made by disallowing LTCG exemption u/s 10(38) of the Act on alleged penny stock transactions. o In the corresponding Cross-objections the assessees have challenged the legality of the assessment orders for want of valid approval u/s 153D of the Act. the assessee Smt. Anuradha Shivkumar Gogia challenges the confirmation of the addition of Rs. 40,00,000/- on account of alleged on-money received in the Earth Erita project.
DETAILED ISSUE-WISE ADJUDICATION 5.1 At the outset, the Ld. representatives of both the Revenue and the assessees mutually agreed that the various additions made in the assessment orders fall into six main categories of issues as noted above. It was mutually agreed by the Ld. Representatives of both sides that the appeals could be adjudicated by taking up each common issue, supported by a lead case for arguments. The assessees have taken almost identical cross-objections, which we will discuss in the later part of the order. Accordingly, we proceed to adjudicate the appeals issue-wise.
Issue 1: Jurisdiction in Unabated Assessments & Addition for Nana Chiloda Project 5.2 As per the details provided during the hearing, this issue is common in the following appeals filed by the Revenue :
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 11 S.No. Appeal No. Assessee Assessment Appellant Ground Name Year No. 1 IT(SS)A M/s Shivam 2018-19 Revenue 1 & 2 86/AHD/2024 Associates 2 IT(SS)A Amitkumar 2019-20 Revenue 1 85/AHD/2024 Shivkumar Gogia 3 IT(SS)A Sagar 2019-20 Revenue 1 98/AHD/2024 Shivkumar Gogia Lead case : M/s Shivam Associates in IT(SS)A No.86/AHD/2024 (Revenue Appeal): 5.3. The Revenue in this appeal has taken following Grounds of Appeal: “1) In the facts and on the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the order under section 153A r/w 143(3) of the Act is bad in law and not sustainable without considering the inference made by the A.O. based on the indicative but relevant incriminating material unearthed, seized during the search and post-search operation. 2) In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of undisclosed investment u/s 69 r.w.s.115BBE of Rs.24,21,37,500/-on account of on money payment for purchase of land. 3) The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal.”
5.4. Identical Grounds have been taken in the other appeals mentioned in the chart above.
Brief Facts & Findings of the Assessing Officer: 6.1. During the year under consideration, assessee had purchased the land measuring 9611 sq.mts at Survey No. 241/1 at Nana Chiloda for Rs. 1,65,00,000/- on 21.09.2017 from Arvindkumar Babulal Bhambroliya, Vrajlal Babulal Bhambroliya, Ashokbhai Babulal Bhambroliya, Viken Naranbhai Prajapati, Hiren
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 12 Naranbhai Prajajpati and Laljibhai Kalabhai Bhambroliya. During the course of search, the registered sale-deed of land purchased by the assessee was found from the premises of the assessee, however, no other incriminating material was found.
6.2 The AO, however, observed that the purchase value of Rs. 1,65,00,000/- was far less than the market value of the land and that certain on-money had exchanged hands. The AO, in this respect, referred to a third party Whatsapp chat found and seized in the case of one Shri Vijaykumar K Manghrani during the search in his case. The said chat allegedly was between Shri Vijaykumar K Manghrani and one Shri Kamal Dalal, wherein the price of the land in Chiloda TP Scheme No. 241 was quoted at Rs. 22,500/- per sq. yd. The AO extrapolated this rate to the assessee's land, recomputed the purchase value at Rs. 25,86,37,500/-, and treated the difference as unexplained investment and made the addition of Rs. 24,21,37,500/- alleging that assessee had paid on-money to that extent for acquiring the said property.
7. Findings of the Ld. CIT(A): 7.1. The Ld. CITA deleted the addition primary on two grounds. Firstly, on the legal ground, he noted that the assessment year 2018-19 was an unabated assessment year as the time limit to issue a notice under section 143(2) of the Act had expired before the date of search. He, following the law laid down by the Hon’ble Supreme Court in PCIT vs. Abhisar Buildwell (P) Ltd.(supra), no addition could be made in an unabated/completed assessment under section 153A of the Act, unless it was based on incriminating material found during the course of search action pertaining to that particular assessee and that specific year. He held that the WhatsApp chat from a third party's phone could not be considered as incriminating material belonging to the assessee.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 13 7.2 Secondly, on merits, he held that the WhatsApp chat was a "dumb document" as it did not name the assessee, was dated almost a year after the assessee's transaction, referred to a different survey number (124/2), and was completely uncorroborated by any evidence of cash movement or statements from any involved party.
8. Submissions Before the Tribunal 8.1. Revenue’s Plea: The Ld. DR contended that the Ld. CIT(A) erred in deleting the additions. It was submitted that although no direct incriminating material was found during the search on the assessees, the AO possessed material in the form of a third-party WhatsApp chat indicating a much higher market rate for properties in the same area. It was argued that the search on the third party was conducted simultaneously. He contended that the WhatsApp chat was "indicative and relevant incriminating material" found during a search on the same day and the AO was right to draw inferences from it. He submitted that the CIT(A) erred in ignoring the market reality reflected in the chat. 8.2 Assessee’s Plea: The Ld. AR for the assessee, however, reiterated the submissions as were made before the Ld. CIT(A). He contended that the impugned additions for the unabated assessment years were legally unsustainable as no incriminating material pertaining to the assessee for the relevant year was found during the search action. Strong reliance was placed by him on the decision of the Hon'ble Supreme Court in PCIT vs. Abhisar Buildwell (P) Ltd, contending that the jurisdictional bar as laid down in Abhisar Buildwell (supra) was absolute for unabated years. 8.3 The Ld. AR has further contended that material from a third party's premises cannot form the basis of addition under section 153A assessment, which must be based on material found during the search in case of the assessee. It was also contended that the third-party WhatsApp chat, relied upon by the AO was IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 14 uncorroborated and refers to a different property and a different period. The Ld. AR relied upon on the decision of Hon’ble Jurisdictional High court in the case of “ PCIT vs. Hitesh Ashok Vaswani” (156 taxmann 200) and of the Hon’ble Delhi High Court in the case of “Ishita Varshney Jain vs. ACIT” 2024 (12) TMI 260, to contend that third-party chats cannot determine the value of a different property. On merits, he emphasized the complete lack of corroboration, the time lag, the difference in property details, and the absence of any cash trail, relying on the principles laid down by the Hon’ble Supreme Court in K.P. Varghese vs. ITO. 131 ITR 597 (SC).
Adjudication and Findings of the Tribunal: 9.1. We have heard the rival submissions and perused the material on record. Two fold submissions have been made on this issue, Legal/Jurisdictional and on merits.
A. Jurisdictional principle—unabated assessments/ no incriminating material unearthed:
9.2. The undisputed facts are that the assessee-firm had purchased a parcel of land on 21.09.2017. The assessment for the relevant year, A.Y. 2018-19, was unabated/completed assessment as on the date of search, i.e. 15.10.2019. The Assessing Officer, during the course of assessment proceedings under section 153A of the Act, made an addition of Rs. 24,21,37,500/- under section 69 of the Act, alleging that the assessee had made on-money payment for the said purchase of land. The solitary basis for this substantive addition was a WhatsApp chat dated 14.09.2018, which was retrieved from the mobile phone of a third party, one Shri Vijaykumar K. Manghrani. This chat purportedly contained a discussion about a prevailing rate of Rs. 22,500/- per sq. yd. for land in a nearby area. The legal position concerning the scope of assessment under section 153A of the Act, for IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 15 unabated/completed assessment years is no longer res integra. The Hon'ble Supreme Court of India, in the landmark case of PCIT vs. Abhisar Buildwell (P) Ltd. 454 ITR 212 (SC) has unequivocally settled the law on this point. The Apex Court has held that in respect of completed/unabated assessments, no addition can be made by the Assessing Officer in an order passed under section 153A of the Act in the absence of any incriminating material unearthed during the course of search. The jurisdiction to assess or reassess total income under section 153A is fundamentally triggered by the discovery of such incriminating material. If no such material is found, the completed assessment attains finality and no additions can be made.
9.3. In the instant case, it is an admitted fact, and was also fairly conceded by the Ld. DR during the course of hearing, that no incriminating document, asset, or any other material was found or seized from the premises of the assessee that could remotely suggest the payment of any consideration over and above what was recorded in the registered sale deed. The AO, in this case has presumed the payment of on-money by relying upon the digital chat recovered from a third person’s mobile phone. Such material, which belongs to a third party and was not found during the search action in the case of the assessee, cannot be construed as "incriminating material" for the purpose of assuming jurisdiction under Section 153A in the hands of the present assessee for an unabated assessment year. The jurisdictional prerequisite, as mandated by the Hon’ble Supreme Court, is conspicuously absent in the facts of the present case. Moreover, the said chat is not relating to the land purchase transaction of the assessee and, hence, the unrelated third-party chat relating to a different property cannot be treated as incriminating material in the case of the assessee. This issue is, accordingly, decided in favour of the Assessee and against the Revenue.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 16 B. Merits—onus, evidence, and character of digital chats:
9.4. Even on merits, the impugned additions are not sustainable. It is a settled principle of law, enunciated by the Hon’ble Supreme Court in the case of K.P. Varghese vs. ITO 131 ITR 597 (SC), that the onus to prove that an assessee has invested more than what is recorded in the books of accounts is squarely and heavily on the Revenue. This onus cannot be discharged by relying on suspicion, surmises, or uncorroborated third-party information. The WhatsApp chat relied upon by the AO is nothing but a "dumb document" which has no evidentiary value whatsoever, against the assessee. It does not name the assessee, it pertains to a different survey number, and it is dated almost a full year after the assessee’s transaction was concluded and registered. The AO has made no independent inquiry to verify the contents of the chat, has not cross-examined the parties to the chat to establish its authenticity or context, and has brought no material on record to establish a live and direct nexus between this third-party chat and the specific transaction undertaken by the assessee. The addition is based on assumptions and presumptions, which is impermissible in law.
9.5. Therefore, looking from any angle, both on the jurisdictional ground as laid down by the Hon’ble Supreme Court in “Abhisar Buildwell” (supra) and on the merits of the case, the addition made by the AO is legally untenable and deserves to be deleted. We, therefore, find no infirmity in the well-reasoned order of the Ld. CIT(A) on this issue and in deleting the impugned addition.
C. Connected Cases for AY 2019-20 (Abated Assessments):
9.6. In the cases of Amitkumar Shivkumar Gogia and Sagar Shivkumar Gogia for AY 2019-20, the assessments were abated. However, the CIT(A) deleted the additions on merits, finding that the AO's reliance on the third-party WhatsApp chat was completely unjustified and uncorroborated. The reasoning on merits as discussed above mutatis mutandis applies to these cases. In view of our detailed
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 17 findings, we uphold the order of the Ld. CIT(A) in deleting the additions in all cases related to this issue. The Revenue’s appeals on this issue are dismissed.
Issue 2: Addition on account of alleged on-money in Sumel Business Park-III 10.1. This issue is common in the following 19 appeals:
S.No. Appeal No Assessee Name Appellant Assessment Ground Year No. 1 IT(SS)A Shivkumar 2014-15 Revenue 1 & 3 125/AHD/2024 Lachmandas Gogia 2 2015-16 Revenue 1 & 3 IT(SS)A Shivkumar 126/AHD/2024 Lachmandas Gogia 3 IT(SS)A Shivkumar 2017-18 Revenue 1 & 3 128/AHD/2024 Lachmandas Gogia 4 IT(SS)A Shivkumar 2014-15 Revenue 1 & 3 79/AHD/2024 Lachmandas Gogia HUF 5 2015-16 Revenue 1 & 3 IT(SS)A Shivkumar 80/AHD/2024 Lachmandas Gogia HUF 6 IT(SS)A Shivkumar 2016-17 Revenue 1 & 3 81/AHD/2024 Lachmandas Gogia HUF
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 18 7 IT(SS)A Shivkumar 2018-19 Revenue 1 & 3 82/AHD/2024 Lachmandas Gogia HUF 8 IT(SS)A Anuradha 2014-15 Revenue 1 & 3 88/AHD/2024 Shivkumar Gogia 9 IT(SS)A Anuradha 2015-16 Revenue 1 & 3 78/AHD/2024 Shivkumar Gogia 10 2014-15 Revenue 1 & 3 IT(SS)A Dhiraj 116/AHD/2024 Shivkumar Gogia 11 IT(SS)A Dhiraj 2016-17 Revenue 1 & 3 95/AHD/2024 Shivkumar Gogia HUF 12 IT(SS)A Dhiraj 2017-18 Revenue 1 & 3 96/AHD/2024 Shivkumar Gogia HUF 13 2014-15 Revenue 1 & 3 IT(SS)A Aisha Dhiraj 90/AHD/2024 Gogia 14 2015-16 Revenue 1 & 3 IT(SS)A Aisha Dhiraj 91/AHD/2024 Gogia 15 2014-15 Revenue 1 & 3 IT(SS)A Amitkumar 83/AHD/2024 Shivkumar Gogia 16 IT(SS)A Amitkumar 2018-19 Revenue 1 & 3 94/AHD/2024 Shivkumar Gogia 17 IT(SS)A Sagar 2014-15 Revenue 1 & 3 109/AHD/2024 Shivkumar Gogia
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 19 18 IT(SS)A Sagar 2015-16 Revenue 1 & 3 110/AHD/2024 Shivkumar Gogia 19 IT(SS)A Sagar 2017-18 Revenue 1 & 3 111/AHD/2024 Shivkumar Gogia
Lead case: Shivkumar Lachmandas Gogia in IT (SS)A No.128/AHD/2024:
11.1. The Revenue is in appeal and has raised the following grounds:
“1) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the order under section 153A r/w 143(3) of the Act is bad in law and not sustainable without considering the inference made by the A.O. based on the indicative but relevant incriminating material unearthed, seized during the search and post-search operation. 2) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.39,66,33,526/- on account of undisclosed business income. 3) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of undisclosed investment u/s .69 r.w.s.115BBE of Rs.95,56,600/- on account of on-money payment for purchase of shops. 4) The Revenue craves leave to add/ alter/ armed and/ or substitute any or all of the grounds of appeal."
Brief Facts & Findings of the Assessing Officer:
12.1. As per the assessment order, during the search action in the case of the assessee, a digital image carrying handwritten notes regarding sale/purchase of Shop No. C-339 (Block-C, Sumel Business Park-III, Ahmedabad) was found, and the statement of assessee Shri Shiv Kumar Lachmandas Gogia was recorded in this respect. From the above material, the Assessing Officer gathered that the assessee has purchased shop No. C-339 and the rate as per the sale deed was lesser than the IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 20 market rate. He observed that the market value of shops in Sumel-III would not be less than Rs. 36,200/- per sq. ft. He, accordingly issued a show-cause notice proposing addition for the difference between the market rate @ Rs. 36,200/- per sq. ft. and the rate at which the assessee purchased the shop.
12.2. In response, the assessee submitted that he had not purchased Shop No. C-339; that Shop No. C-339 was owned by Shri Sonu Bhai (Rajendra Keswani) through M/s. Avas Infrastructure & Gruh Finance Ltd. for Rs. 18.50 lakhs and was sold on 02.08.2016 for Rs. 22.00 lakhs. The assessee also furnished a copy of the sale deed of the said shop. The assessee further submitted that he, however, had purchased another shop No. E-T1. The assessee submitted that reliance on a WhatsApp message/digital note to assume a rate of Rs. 36,200/- per sq. ft. was not justified to assume the purchase price of the assessee. The assessee also filed comparative sale deeds of other shops in the same project showing rates consistent with the assessee’s declared purchase price. The assessee further submitted that no incriminating material pertaining to the assessee’s shops was found in the search; therefore, in an unabated assessment year, no addition could be made. The Assessing Officer rejected these explanations and, based on extrapolation from the said digital image and the C-339 notes, made the addition of Rs. 95,56,600/- towards alleged on-money paid for Shop No. E-T1 in Sumel-III.
Findings of the Ld. CIT(A):
13.1. The Ld. CITA deleted the addition so made by the AO by observing that AY 2017-18 was an unabated assessment year. Following the ratio of Abhisar Buildwell (P) Ltd. (supra), he held that the addition was bad in law as it was not based on any incriminating material found during the course of search action in the case of the assessee for the relevant assessment year. He noted that the digital image pertained to a different property (Shop No. C-339) and could not be used to IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 21 make an addition in the assessee's case for the purchase of Shop No. E-T1. Thus, the legal/jurisdictional requirement was not met. He further noted that even on merits, the addition was based on assumptions only and was not supported by any corroborative evidence.
Submissions Before the Tribunal:
14.1. Revenue’s Plea: The Ld. DR contended that a digital image containing noting for shop C-339 in Sumel Business Park-III, which suggested a market rate of Rs. 36,200/- per Sq. Ft. was found during the search. He in this respect submitted that the digital image was crucial evidence of the prevailing market rate in the project, and hence, the AO was justified in using it to estimate the on-money payment for other shops purchased in the same project. 14.2. Assessee’s Plea: The Ld. AR, however, submitted that the relevant assessment year was unabated. The digital image relied upon by the AO did not pertain to any shop purchased by the assessees and that the said unverified, third- party document did constitute as an incriminating material qua the assessee. That it was duly explained to the AO that shop C-339 was owned and sold by a third party, and evidence for the same was also provided. That the additions based on pure estimation without any corroborating evidence were not justified and hence rightly deleted by the Ld. CIT(A). He also submitted that the addition was unsustainable on merits also as it was based on an uncorroborated, dumb document without any evidence of a cash trail.
Adjudication and Findings of the Tribunal:
A. Legal Issue:
15.1. We have considered the rival contentions and perused the record. In this case, the assessee filed the income tax return on 31.10.2017; the outer limit for issuing notice under section 143(2) was 30.09.2018, and a search was conducted
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 22 on 15.10.2019, by which time, the assessment had already been completed/unabated. It is an admitted fact that no incriminating material was found during the search for the year under consideration relating to the purchase of shop in question. The AO made the impugned additions on the basis of a single digital image of a note which pertained to a completely different property-shop C- 339, which was not purchased or owned by any of the assessees herein. All the assessment years under consideration were unabated as on the date of search. The principles applied by us in our detailed findings on issue No. 1 above will mutatis mutandis apply to this issue as well. The digital note regarding shop C-339, not having been qua the shops purchased by the assessee does not qualify as "incriminating material" qua these assessees for the purpose of making an addition under section 153A of the Act. The additions are, therefore, legally flawed under the law settled by the Hon'ble Supreme Court in Abhisar Buildwell (supra).
B. Findings on merits :
15.2. On merits as well, the AO’s action of extrapolating a rate from an unverified, unexplained note about a third-party property to all the properties purchased by the assessees, herein, and thereby making impugned additions based on assumptions and presumptions, is arbitrary and devoid of any legal sanctity. The assessee provided evidence that the property mentioned in the note (C-339) was sold by its owner at a rate far lower than the Rs. 36,200/- per sq. ft. estimated by the AO. The assessee in support of his contention not only submitted the collector rates/Jantri rates issued by Government of Gujarat, but also comparative sales instances. As per the comparative instance brought on record by the assessee, the rate of the shop was Rs. 5,000/- to Rs. 6,000/- per Sq. Ft. in Sumel Business Park. The AO brushed aside all this evidence and proceeded with his estimation based on a single, unverified, and uncorroborated piece of digital data, that too not related to the shops/property purchased by the assessee. No evidence of any on-
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 23 money or cash exchanged between the parties was found. A bald estimation without any supporting evidence of cash flow cannot be sustained. The Ld. CIT(A) was, therefore, justified, in deleting the additions on this issue. Consequently, all appeals of the Revenue on this issue are devoid of merit and are hereby dismissed.
15.3. These findings, both legal and on merits, will apply to all 19 appeals covered under this issue.
Issue 3: Addition on account of alleged under-invoicing of sales:
16.1 This issue is common in the following 14 appeals:
S.No. Appeal No. Assessee Assessment Appellant Ground Name Year No. 1 IT(SS)A Shivkumar 2014-15 Revenue 1&2 125/AHD/2024 Lachmandas Gogia 2 IT(SS)A Shivkumar 2015-16 Revenue 1&2 126/AHD/2024 Lachmandas Gogia 3 IT(SS)A Shivkumar 2016-17 Revenue 1&2 127/AHD/2024 Lachmandas Gogia 4 IT(SS)A Shivkumar 2017-18 Revenue 2 128/AHD/2024 Lachmandas Gogia
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 24 5 IT(SS)A Dhiraj 2014-15 Revenue 2 116/AHD/2024 Shivkumar Gogia 6 IT(SS)A Dhiraj 2015-16 Revenue 2 113/AHD/2024 Shivkumar Gogia 7 IT(SS)A Dhiraj 2016-17 Revenue 2 114/AHD/2024 Shivkumar Gogia 8 IT(SS)A Dhiraj 2017-18 Revenue 2 115/AHD/2024 Shivkumar Gogia 9 IT(SS)A Dhiraj 2018-19 Revenue 2 117/AHD/2024 Shivkumar Gogia 10 IT(SS)A Sagar 2014-15 Revenue 2 109/AHD/2024 Shivkumar Gogia 11 IT(SS)A Sagar 2015-16 Revenue 2 110/AHD/2024 Shivkumar Gogia 12 IT(SS)A Sagar 2016-17 Revenue 2 118/AHD/2024 Shivkumar Gogia
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 25 13 IT(SS)A Sagar 2017-18 Revenue 2 111/AHD/2024 Shivkumar Gogia 14 IT(SS)A Sagar 2018-19 Revenue 2 119/AHD/2024 Shivkumar Gogia
Lead case: Shiv kumar Lachmandas Gogia in IT (SS)A No.125/AHD/2024 for AY 2014-15:
17.1. The Revenue is in appeal and has raised the following grounds:
“1) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the order under section 153A rws 143(3) of the Act is bad in law and not sustainable without considering the inference made by the A.O. based on the indicative but relevant incriminating material unearthed, and confronted to the assessee during the search and post- search operation. 2) In the facts and. on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.9,95,82,011/-on account of undisclosed business Income. 3) In the facts and. on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of undisclosed investment u/ s.69 rws..115BBE of Rs. 1,71,01,400/ - on accoun.t of on money payment for purchase of shops. 4) The Revenue craves leave to add/ alter/ armed and/ or substitute any or all of the grounds of appeal
."
18. Background and Assessment Proceedings: 18.1. In the assessment carried out u/s 153A of the Act pursuant to the search and seizure action under Section 132 of the Act on October 15, 2019 on the Shiv Gogia group, the Assessing Officer made the impugned addition in the hands of the assessee on account of suppression of sales by way of under invoicing.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 26 19. Material Unearthed During Search Action: 19.1. The following materials was unearthed and seized during the search action carried out u/s 132 of the Act:
• Seized Documents (Annexures A/2 to A/6): These were loose paper files containing manual order forms, "order estimates," and corresponding tax invoices. A comparison revealed significant differences between the value on the order estimate and the final tax invoice, thus showing under invoicing. However, it is pertinent to mention here that these documents were seized from the premises of M/s. Shivali Fashion Pvt. Ltd. and pertained to a limited period from October 1, 2019, to October 14, 2019, relevant to AY 2020-21, not to the year under consideration (AY 2014-15). • Digital Data: WhatsApp chats from a mobile phone were seized, which included messages (No. 178 and 179) mentioning a "60:40 ratio." The AO interpreted this as a formula for under-invoicing sales (60% by cheque, 40% in cash).
Statements Recorded:
• Employee's Statement: Shri Mayur R. Ramchandwani, an employee, stated on October 15-16, 2019, that the difference between the order estimate and the final invoice was received in cash and was not recorded in the books of accounts. • Assessee's Statement: On January 27, 2020, the assessee, Shri Shivkumar Gogia, was confronted with pages from Annexure A/2 and admitted that the cash difference was not recorded in the books.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 27 21. AO's Observations: Based on the above material and statements, the AO observed that the entire group was systematically under-invoicing sales by 40-60% and hence, issued a show-cause notice to the assessee as to why the additions be not made in the case of assessee for under invoicing.
Assessee's Reply to the Assessing Officer: 22.1. The assessee strongly contested the addition with the following key arguments:
1. Business Expediency: It was argued that the practice of issuing lower-value invoices was a "business expediency" done at the request of customers from remote areas to retain their business.
2. Profit Neutralization: The assessee contended that this practice resulted in no profit, as the cash difference received from customers was passed on to the respective suppliers through a corresponding reduction in the purchase price. For example, if a sale was under-billed by Rs. 500, the corresponding purchase from the supplier was also under-billed by Rs. 500, thus neutralizing any impact on profit.
3. Contesting the "60:40" Ratio: The assessee explained that the "60:40" ratio in the WhatsApp chat was not for under-invoicing but related to a product mix for an order placed with a supplier—60% for higher-range suits and 40% for lower-range suits.
Limited Scope and Retraction: The assessee claimed the practice was not widespread and the AO had "picked and chosen" documents. It was argued the actual cash component was minimal (2-3.4%) and not 40-60%. A retraction affidavit from the employee was also filed.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 28 5. Business Discontinuation: The assessee's proprietary business in M/s. Shiv Textiles had been discontinued on June 30, 2017, more than two years before the search took place.
6. Invalid Extrapolation: The AO's action of applying findings from one entity in one year to another entity for a completely different year was arbitrary, without basis, and legally impermissible.
Legal Argument: No Incriminating Material: The primary submission was that the assessment for AY 2014-15 was a completed/unabated assessment. No incriminating material, whatsoever, relating to the assessee's concern, M/s. Shiv Textiles, for AY 2014-15 was found during the search. It was submitted that making an estimation on the entire turnover based on these limited documents was a wild guess and imagination and unjustified in a search assessment under Section 153A.
Material Belongs to a Different Entity and Year: The seized annexures (A/2-A/6) belonged to a different legal entity (M/s. Shivali Fashion Pvt. Ltd.) and pertained to a different assessment year (AY 2020-21).
AO's Final Reasoning and Finding: The AO rejected all of the assessee's submissions. He relied heavily on the initial statements of the assessee and his employee, treating the later explanations and retractions as self-serving afterthoughts. He found the theory of profit neutralization to be unsubstantiated, concluding that the suppressed sales were a "net gain" to the assessee, as all expenses were already accounted for in the books. He extrapolated the findings from the limited documents of M/s. Shivali Fashion Pvt. Ltd. for AY 2020-21 of 40-60% suppression ratio to the total turnover of the assessee's proprietary concern, M/s. Shiv Textiles for assessment of income for AY 2014-15, and made an addition of Rs. 9,95,82,011. He justified the extrapolation by claiming it was a group-wise modus operandi and that the suppressed sales represented a "net gain."
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 29 24. Appellate Proceedings Before the CIT(A): Being aggrieved by the order of the AO, the assessee preferred appeal to the CIT(A) contesting the addition made by the AO, both on legal and factual grounds. The AR of the assessee made the following key legal and factual submissions:
Absence of Incriminating Material: It was reiterated that not a single piece of paper or evidence was found during the search that related to under- invoicing by M/s. Shiv Textiles for AY 2014-15. It was, therefore, contended that since AY 2014-15 was a completed/unabated assessment, as the original return had been filed and the time limit for issuing a notice under Section 143(2) had expired on the date of search, hence, in the light of the binding precedent of the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd.(supra), no addition can be made under Section 153A in the absence of incriminating material found during the course of search action for that specific year and pertaining to the assessee. That the entire addition was based on an extrapolation from documents belonging to another company (M/s. Shivali Fashion Pvt. Ltd.) for a future assessment year (AY 2020-21). That this was unjustified, as each assessment year is different and independent.
Material Pertained to a Different Entity and Year: The seized annexures (A/2 to A/6), which formed the sole basis of the addition, were seized from the premises of M/s. Shivali Fashion Pvt. Ltd., which was a separate legal entity and even the alleged transactions were of the year 2019 relevant to AY 2020-21 not AY 2014-15. That the AO's action of extrapolating the estimations from one company for a subsequent assessment year i.e. AY 2020-21 to a different proprietary concern for AY 2014-15 was legally untenable, as each assessment year and each assessee is distinct and independent.
Non-Rejection of Books of Accounts: The AO failed to firstly reject the audited books of accounts of the assessee for AY 2014-15 under Section 145(3)
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 30 of the Act, which is a mandatory prerequisite before resorting to an estimation- based addition.
CIT(A)'s Reasoning and Findings: The CIT(A) first acknowledged the binding legal principle laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) and held that for a completed/unabated assessment, the foundational requirement for making an addition under Section 153A is the existence of incriminating material unearthed during the search for the relevant assessment year. He observed that the AO himself had noted that the seized annexures (A/2 to A/6) pertained to transactions in October 2019 (AY 2020-21) and were found at the premises of a different concern, namely, M/s. Shivali Fashion Pvt. Ltd. He further observed that there was a complete absence of any incriminating material that could be linked to the assessee's business for AY 2014-15. That the addition was based purely on extrapolation. He held that the AO's action of making an addition in AY 2014-15 based on material pertaining to AY 2020-21 was contrary to the spirit of the law. He held that the additions under section 153A of the Act must have a direct nexus with material found in that search for that specific year. The Ld. CIT(A), therefore, concluded that the addition made by the AO on this issue in the case of the assessee was unsustainable in law. Therefore, the CIT(A) deleted the entire addition of Rs. 9,95,82,011 made on account of under-invoicing of sales in the hands of the assessee.
Submissions before this Tribunal:
o Ld. DR’s Submissions: The Ld. DR submitted that documents found in the search of a group concern, M/s Shivali Fashions, for A.Y. 2020-21, indicated a modus operandi of under-invoicing sales. That the AO, therefore, was correct in applying this modus operandi to the assessees
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 31 in this group, as they operate in the same line of business. The Ld. DR also referred to the observations made by the AO at pages Page Nos.31 onwards of the assessment order, wherein, the AO by making extensive tables compared the order estimates to tax invoices. The AO concluded that the assessee was clearly under-invoicing its sales in a big way on receipt of cash, a practice that was admitted by the assessee in his recorded statement. That the under-invoicing was found to be in the range of 40% to 60%, with the assessee preparing bills for only 55% to 60% of the sale value and receiving the rest in cash . The Ld. DR also referred to page Nos.31 of the assessment order, wherein the table,the AO has given examples of Under-invoicing by referring to the seized material pages 80 & 81of Annexure-A/2 . In case of party Decent Dresses, Machlipattnam, for an order estimate dated October 9, 2019, with a value of Rs. 2,08,185, the tax invoice was issued for only Rs. 1,89,045. This resulted in a difference, or under-invoicing, of Rs. 19,140 . The Ld. DR referring to pages 82 & 83 of the seized material Annexure A/2, submitted that the sales made to the party Rani's Botique, Uadipur, an order estimate dated October 9, 2019 showed the sales of Rs. 1,03,055, whereas, the tax invoice was raised for only Rs. 30,990. This showed an under-invoicing of Rs. 72,065. He, therefore, submitted that the modus operandi of under invoicing was apparent from the seized material. o Assessee’s Plea: The Ld. AR, on the other hand, contended that the additions were made in unabated assessment years based on material that belonged to a different assessee (M/s Shivali Fashions) and a different assessment year (A.Y. 2020-21). There was no incriminating material pertaining to the assessees for the years under consideration. Reliance was placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (2017) 397 ITR
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 32 344 (SC), which holds that material for one year cannot be used for other years without separate incriminating material for the relevant year.
Adjudication and Findings of this Tribunal:
27.1. We have considered the rival submissions of the Ld. Representatives of the parties. In these set of appeals, the Assessing Officer made substantial additions by alleging under-invoicing of sales. A perusal of the assessment order reveals that the AO extrapolated a supposed modus operandi which he believed was unearthed during the search of a different entity, namely M/s Shivali Fashions, and that too for a different assessment year - A.Y. 2020-21. This supposed modus operandi was then blindly applied to the present assessees for various unabated assessment years. The law does not sanction such a course of action. The Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (supra) has held that material relating to one assessment year cannot be used to make additions in other assessment years without there being corresponding incriminating material found for those specific years. By the same logic, material found from the premises of one assessee cannot be used against another assessee without an independent basis. The action of the AO is thus legally flawed on two counts: firstly, for making additions in unabated years without any incriminating material found in the assessees’ cases, and secondly, for extrapolating findings from one entity and for a different assessment year to another entity and for a different assessment year. This action of the AO is jurisdictionally flawed and is unsustainable the eyes of law. The Ld. CIT(A) correctly deleted these additions, and we find no reason to interfere with the said findings. The Revenue's appeals on this issue are consequently dismissed.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 33 27.2. Since the facts and issue involved are identical in all the appeals as given in the chart above, therefore our findings given above will mutatis mutandis apply to all the aforementioned appeals.
Issue 4: Addition on account of alleged on-money in the Stellar Project:
28.1. This issue is common in the following 5 appeals: S.No. Appeal No. Assessee A.Y. Appellant Ground Name No.
1 IT(SS)A Dhiraj 2018-19 Revenue 3 117/AHD/2024 Shivkumar Gogia 2 IT(SS)A Aisha Dhiraj 2018-19 Revenue 2 93/AHD/2024 Gogia 3 IT(SS)A Amitkumar 2018-19 Revenue 2 94/AHD/2024 Shivkumar Gogia 4 IT(SS)A Keisha 2018-19 Revenue 2 97/AHD/2024 Amitkumar Gogia 5 IT(SS)A Sagar 2018-19 Revenue 2 119/AHD/2024 Shivkumar Gogia
Lead case: Dhiraj Shiv kumar Gogia bearing Appeal No. IT (SS)A No.117/AHD/2024 for AY 2018-19 29.1 The Revenue is in appeal and has raised the following grounds:
1) In the facts and on the circumstances of the case and in law, the Ld. CIT (A) has erred in holding that the order under section 153A r/w 143(3) of the Act is bad in law and not sustainable without considering the inference made by the A.O. based on the indicative but relevant incriminating material unearthed, seized during the search and post-search operation. 2) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 30,41,67,271/- on account of undisclosed business income.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 34
3) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of undisclosed investment u/s.69 r.w.s.115BBE of Rs.2,93,57,000/-on account of on-money payment for purchase of shops. 4) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.14,38,750 u/s 68 r.w.s. 115BBE on account of exempt LTCG u/s 10(38) of the Act from penny stock scrip in the shell companies. 5) The Revenue craves leave to add/alter/amend and/or substitute any or all of the grounds of appeal
30. Brief facts relating to the issue:
30.1. During the course of the assessment under section 153A of the Act, the AO noted from the digital data found during the search action contained a copy of the Distribution Deed of land bearing Survey No. 43/4/1 situated at Bodakdev, Ghatlodia, Ahmedabad entered between Shri Ashokbhai Krishnagiri (1st Party) and Shri Kishor Krishnagiri & Shri Anup Krishnagiri (2nd Party). The AO noted that the assessee had purchased Shop No. 104 from M/s. D. K. Properties. The AO observed that Bodakdev was a fast-growing commercial area and that the lesser value of the shop was shown in the purchase deed as compared to the market value. The AO further referred to a Whatsapp chat dated 13/08/2018 found from the mobile phone of one Shri Vijay Kumar Kalumal Manghrani in a separate search action, wherein, the rate for the shop in the same project was quoted at Rs. 18,000/- to Rs. 20,000/- by one broker namely Sh. Chirag. On the basis of the said chat between third parties, the AO assumed that assessee would have purchased the shop at a value higher than the value as mentioned in the purchase deed.
30.2. The assessee submitted that the alleged distribution deed was a purchase agreement by the builder M/s D K Properties with the land owner at which the builder had developed the commercial project and this agreement was executed so that the developer may undertake the construction project and avail bank loan etc. The assessee also explained that the alleged third party whatsapp chat was dated 13.08.2018. whereas, the shop was purchased by the assessee much earlier
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 35 on 20.02.2018 and therefore, the said chat had nothing to do with the transaction of the assessee. The assessee also submitted Jantri rates (Collector rates) issued by the Government of Gujarat to show that the purchase deed of the assessee matched with the said rates. The assessee also furnished the sale deeds of other shops showing that the rates were comparative to the rate at which the assessee had purchased the shop. It was also submitted that no incriminating material was found during the search action in the case of the assessee to suggest that any money, over and above, what had been stated in the purchase deed, had exchanged hands.
Findings of the Assessing Officer:
The AO made an addition of Rs. 2,93,57,000/- in the case of the assessee alleging payment of on-money for the purchase of Shop No. 104 in the "Stellar" project. The basis was once again a WhatsApp chat, dated 13.08.2018, found from the mobile phone of the same third party, Shri Vijay Kumar Manghrani unconnected with the assessee. This chat, with a broker named Shri Chirag, quoted a rate of Rs. 18,000/- to Rs. 20,000/- for a shop in the same project. The AO ignored the assessee's submissions that the assessee had purchased the shop on 20.02.2018, which was about six months before the chat took place and made the addition based on his estimation from the third-party chat.
Findings of the Ld. CIT(A):
The Ld. CITA deleted the addition so made by the AO. He noted that AY 2018-19 was an unabated assessment year. He held that the addition was not based on any incriminating material found from the assessee for the relevant year, and was therefore jurisdictionally invalid as per the law laid down by the hon’ble Supreme Court in the case of Abhisar Buildwell (supra). He also found the addition to be untenable on merits on the ground that the alleged Whatsapp chat recovered in a IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 36 separate search action from a third party and also relating to a different property cannot be made basis to make the impugned addition in the case of the assessee.
Proceedings before this Tribunal:
33.1. Revenue's Plea: The Ld. DR submitted that the AO was justified in relying on a third-party WhatsApp chat indicating higher market rates.
33.2. Assessee's Plea: The Ld. AR, however, contended that the addition in an unabated year based on an uncorroborated, third-party chat was illegal. 34. Findings of the ITAT:
34.1. The facts and legal issue here are identical to those that have been discussed above wherein it has been held that that in the absence of any incriminating material found during the course of search Action, no addition can be made in an unabated/ completed assessment year. The assessment year is unabated. The material relied upon is a third-party WhatsApp chat found from a person unrelated to the assessee. The chat is post-facto to the transaction. No corroborative evidence was found. In view of the law laid down by the Hon’ble Supreme Court in the case of case of Abhisar Buildwell (supra), we hold that the impugned addition is unsustainable legally as well as factually on merits. The Ld. CITA was fully justified in deleting the impugned addition. We uphold his order. The Revenue's appeals on this issue are dismissed. Our above findings will mutatis mutandis apply to all the five appeals mentioned in the chart above.
35. Issue 5: Disallowance of exemption u/s 10(38) of the Act (Penny Stock):
1. This issue is common in the following 10 appeals:
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 37
S.No. Appeal No. A.Y. Appellant Assessee Ground Name No. 1 IT(SS)A Shivkumar 2015- Revenue 4 126/AHD/2024 16 Lachmandas Gogia 2 IT(SS)A Anuradha 2014- Revenue 4 88/AHD/2024 Shivkumar 15 Gogia 3 Revenue 4 IT(SS)A Anuradha 2018- 89/AHD/2024 Shivkumar 19 Gogia 4 IT(SS)A Dhiraj 2018- Revenue 3 117/AHD/2024 19 Shivkumar Gogia 5 IT(SS)A Aisha Dhiraj 2015- Revenue 4 91/AHD/2024 Gogia 16 6 IT(SS)A Aisha Dhiraj 2016- Revenue 4 92/AHD/2024 Gogia 17 7 Revenue 4 IT(SS)A Amitkumar 2015- 99/AHD/2024 Shivkumar 16 Gogia 8 IT(SS)A Amitkumar 2016- Revenue 4 84/AHD/2024 17 Shivkumar Gogia 9 IT(SS)A Sagar 2016- Revenue 4 118/AHD/2024 Shivkumar 17 Gogia 10 IT(SS)A Sagar 2018- Revenue 4 119/AHD/2024 Shivkumar 19 Gogia 11 Revenue IT(SS)A 2019- Anuradha Shiv 1 20 No.112/Ahd/2024 Kumar Gogia
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 38
Lead case: Dhiraj Shiv Kumar Gogia bearing Appeal No. IT (SS)A No.117/AHD/2024 (Revenue Appeal)
36.1. The Revenue in this respect has raised the following Ground No.4 in this appeal:
“4) In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.14,38,750 u/s 68 r.w.s 115BBE on account of exempt LTCG u/s 10(38) of the Act from penny stock scrip in the shell companies.“
Brief Facts :
37.1. The brief facts relevant to the issue under consideration are that the assessee declared long term capital gain during the year under consideration in respect of shares sold during the year and claimed the same as exempt u/s 10(38) of the Act. The AO, however, observed that the scrip in which the assessee invested was a penny stock and that the alleged long term capital gains claimed by the assessee on such penny stock was bogus and that the assessee had brought in his unaccounted money into the regular books of account. The AO, in this respect, referred to the statement of Shri Shiv Kumar Gogia recorded on 15.10.2019 wherein, though, he denied of having any knowledge that the shares of four scrips in which the assessee and his family members traded were penny scrips, however admitted to have taken accommodation entry of LTCG during different years.
37.2. The Assessee, however submitted before the AO that the long term capital gain was genuine. It was submitted that in his statement Sh. Shiv Kumar Lachmandas Gogia never stated that long term capital gain was bogus. In fact , it was stated by him that his family members had earned long term capital gain. That all the details and evidences were furnished to prove the genuineness of the transaction. That no incriminating material, whatsoever, was unearthed during
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 39 the course of search action relating to the transactions in the shares. It was, therefore, submitted that in the absence of any incriminating material found during the course of search action, addition cannot be made solely on the basis of any uncorroborated statement recorded during the course of search action in the assessment pertaining to a completed/unabated assessment year.
Findings of the Assessing Officer:
38.1. The AO, however, disallowed the exemption claimed by the assessee under section 10(38) on LTCG earned from the sale of shares. The AO's basis was that the scrips in which the assessee traded were penny stocks and the transactions were arranged to book bogus LTCG. He relied on the statement made by Shri Shivkumar Gogia under section 132(4) during the course of search action and observed that Mr. Shiv Kumar Gogia had admitted that he had obtained accommodation entries in respect of Long-Term capital Gains on sale of shares. He accordingly made the impugned addition.
Findings of the Ld. CIT(A):
The Ld. CITA deleted the addition so made by the AO. He noted that the relevant assessment years were unabated. He held that the AO had not brought on record any specific incriminating material found during the course of search action to prove that the assessee’s share transactions were bogus. He observed that the additions were based on a general statement and third-party investigation reports, which cannot override the documentary evidence of genuine transactions furnished by the assessee. In the absence of any incriminating material found in the assessee's case linking him to any such bogus transactions, he held that the addition could not be sustained, following the ratio of the law laid down by the Hon’ble Supreme Court in the case of “Abhisar Buildwell” (supra).
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 40 40. Precise Pleas of the Parties before us:
• Revenue's Plea: The Ld. DR has contended that the LTCG was rightly disallowed as it arose from arranged "penny stock" transactions, as established from general investigation reports and statement of Sh. Shiv Kumar Gogia recorded during the course of search action.
• Assessee's Plea: The Ld. AR has contended that the disallowance in unabated years, without any specific incriminating material contradicting the documented transactions, is illegal. The AR submitted that it has never been accepted by Shri Shiv Kumar Gogia that these were penny stocks and that the Ld. AO has misunderstood his statement and has wrongly drawn adverse inference against the assessee. He submitted that firstly, there was nothing incriminating found in respect of Long Term Capital Gains earned by the assessee. He, referring to the statement of Shri Shiv Kumar Gogia, has pointed out that the search officer without having any material on record and only upon verification of past Income tax returns, asked general questions to him relating to the investment made equity shares and capital gains arose thereon. He pointing out to question No.23 explained that the search officer misguided him that the 4 companies in which the assessee traded were in the list of shell companies without providing any evidence in this respect and that Shri Gogia was pressurize him to believe that these were shell companies. However, Shri Gogia, specifically mentioned that the investment in all these scrips was made assuming all these are genuine shares. He further submitted that Shri Shivkumar L. Gogia under a misapprehension due to the officer’s assertion that the companies were shell entities, stated that he will pay the tax on LTCG, if these entities were found to be shell entities. He in this respect has submitted that neither the search officer pointed out any evidence that the scrips in which the assessee traded were that of Shell companies nor Shri Gogia was aware of that and that this fact is well emerged out from reading out the entire statement
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 41 of Shri Gogia. The Ld. AR further submitted that it is not a case where assessee has just purchased the share and sold out immediately. In this regard, the Ld. AR invited the attention to the paper book to demonstrate that 50,000 shares of Murad Properties and projects Ltd. were purchased on 10/10/2014 at the cost of Rs. 5,00,000/- and were sold on 20/06/2017 for Rs. 9,97,500/- and similarly 50,000/- shares of Purple Enterprises limited were purchased at the cost of Rs. 9,41,250/- on 02.01.2015 and subsequently sold on 20.06.2017 for Rs. 14,41,250/-. It was submitted that these transactions have been carried out at recognized stock exchange and after payment of security transaction tax (STT). The Ld. AR invited the attention on the copy of Share Certificate, D-Mat statements, contract notes, bank statements, etc. (PB Pg. 215 to 274) filed before the AO during the course of assessment proceedings. The AR submitted that even on merits, it is a genuine investment done through recognized stock exchange and therefore there is no question of fictitious long term capital gain as alleged by the AO. It was submitted that AO has not brought any material evidence to rebut any of the evidence and the explanation given by the assessee. It was submitted that it is a typical case where there is absolutely no evidence to support the addition made by the AO, which appears to have been made. The Ld. AR has further placed reliance on the following judgments of jurisdictional Gujarat High Court wherein it has been held that no addition/disallowance can be made in relation to penny stocks in the absence of any incriminating material found during the course of search. • The Principal Commissioner Of Income Tax (Central), Ahmedabad Versus Rajesh Mohanbhai Patel- 2023 (5) TMI 1355 - Gujarat High Court Dated: - 4-5- 2023 • The Principal Commissioner Of Income Tax (Central), Ahmedabad Versus Shardaben Arvindbhai Patel- 2023 (7) TMI 176 - Gujarat High Court Dated: - 4- 5-2023 • The Principal Commissioner Of Income Tax (Central), Ahmedabad Versus Amita Arvindbhai Patel -2023 (6) TMI 526 - Gujarat High Court -Dated: - 4-5- 2023
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 42 • The Principal Commissioner Of Income Tax (Central), Ahmedabad Versus Kaushik Devjibhai Patel -2023 (5) TMI 1318 - Gujarat High Court -Dated: - 4-5- 2023
Findings of the ITAT:
41.1. We have given a thoughtful consideration to the matter. The assessment years in question are unabated. The law requires that any addition for such years must be based on incriminating material. Here, the AO has relied on a general Investigation Wing report and on the statement of Shri Shivkumar Gogia, without pointing to any specific incriminating document seized from the respective assessees for the respective years that would prove the transactions to be bogus. It is a settled position of law that a statement alone, without any corroborative incriminating material, cannot be the basis for an addition. The assessee has provided a complete documentary trail for the share transactions which included demat account statements showing the entry and exit of shares, contract notes issued by registered brokers, and bank statements evidencing the receipt of sale consideration through regular banking channels after payment of Securities Transaction Tax (STT). The Revenue has not found any flaw in this documentation, nor have they brought on record any evidence of a cash trail or any statement from a broker implicating the assessee. The proposition of law as lais down by the Hon’ble Supreme Court in the case of “Abhisar Buildwell” (supra) is squarely applicable in this case. The additions were made in respect of completed assessments on the date of search action without any incriminating material being found during the search action. General investigation Wing reports are not a substitute for specific evidence against the assessee for the relevant year. It has also been held by the various courts time and again that any statement recorded u/s;.132(4) of the Act during the course of search action without any corroborating material unearthed during the course of search action would not, in itself, constitute incriminating material. The Hon’ble A.P. High Court in the case of IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 43 “Naresh Kumar Agarwal” (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) of the Act would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur). The Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation.
41.2. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) of the Act that the cash amount seized belonged to him and it represented undisclosed income not recorded in the books of accounts. The assessee did not immediately retract from the above admission but only during the assessment proceedings at a belated stage. In his retraction, the assessee stated that the surrender was made under a mistaken belief and without looking into books of account and without understanding law and that he had been compelled and perturbed by events of search and that the pressure of search was built so much that he had to make the surrender without having actual possession of the assets or unexplained investments or expenses incurred and that there was no such income as undisclosed. The Hon’ble Delhi High Court, after considering the fact and circumstances of the case, while dismissing the appeal of the revenue, observed that though the fact that the assessee may have retracted his statement belatedly, yet, it did not relieve the AO from examining the explanation offered by the IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 44 assessee with reference to the books of account produced before him. It has been held that a retracted statement even under section 132(4) of the Act would require some corroborative material for the Assessing Officer to proceed to make additions on the basis of such statement.
41.3. In the case of “Basant Bansal vs. ACIT” reported in (2015)63 taxmann.com 199 (Jaipur Trib.), having somewhat similar facts, the assessee therein, during the search and seizure action u/s 132 of the Act, offered a summary discloser of income as undisclosed and the department accepted the summary surrender of income and thereafter advance tax for the said surrendered of income was also deposited, but thereafter it was contended by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the department was that the admission was voluntary made and was not under any mistaken belief of fact or law and that the assessee had enough time to go through the facts of his case, law applicable in his case and take advice from his counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by him was final and binding on him. The co-ordinate Jaipur Bench of the Tribunal, however, after overall appreciation of the fact and evidences before it, observed that the assessee’s surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co-ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate bench of the Tribunal (supra) while holding so, apart from relying upon various decisions of the higher courts, has also relied upon the decision of the Tribunal in the case of “Dy CIT vs. Pramukh Builders” (2008) 112
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 45 ITD 179 (Ahd.) wherein, it has been held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive. Therefore, merely in the absence of proof of pressure, threat, coercion or inducement the statement cannot be held as conclusive and additions cannot be made by solely relying on a statement or a letter.
41.4. Even the CBDT Letter No.286/2/2003-IT(Inv) dated Oct 3, 2003 in this respect read as under:
“To The Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. Sir,
Subject: Confession of additional Income during the course of search & seizure and survey operation – regarding Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely.
Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders
Yours faithfully,”
41.5. A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 46 are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solely on the basis on such statements should not be made and that corroborative evidences should be collected or obtained before making such additions. The circular of the CBDT is binding on the revenue officials. In the facts and circumstances of this case, when seen in the light of above case laws and CBDT circular, additions in this case cannot be said to be justifiably made.
41.6. In the case of “ CIT v. Sri Ramdas Motor Transport Ltd.” Reported in (1999) 238 ITR 177 (AP), Hon’ble Andhra Pradesh High Court, while deliberating upon the provisions of Section 132(4) of the Act has held in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant part of the said order is reproduced below:
“A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such per son under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value.” 8.5.1. Hon’ble Delhi High Court in the case of “ CIT vs Harjeev Aggarwal” reported in 241 Taxman 199(Delhi) has held in para 21 of the judgement as follows:
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 47 “ 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken.” 1.5.2. This position has been reiterated by Hon’ble Delhi High Court in the case of “Pr. CIT Vs. Best Infrastructure(India) Pvt. Ltd.”, 397 ITR 182 (Delhi.), by observing in para 38 of the said order that statements recorded under Section 132(4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by the hon’ble High Court in Harjeev Aggarwal (Supra).” 41.7. The Hon’ble Jurisdictional Gujarat High Court in a series of cases, including PCIT vs. Rajesh Mohanbhai Patel (2023) TMI 1355, has consistently held that in the absence of any incriminating material found during the search, additions on account of alleged penny stock transactions in unabated years are not sustainable, especially when the assessee has provided documentary evidence to prove the genuineness of the transactions. In the light of the binding precedents and the facts on record, we hold that the Ld. CIT(A) was fully justified in deleting these additions. The appeals of the Revenue on this issue are accordingly dismissed.
41.8. The facts and issue involved being identical, our findings given above will mutatis-mutandis apply to all the 11 appeals as mentioned in the chart above.
41.9. So far as the appeal of the Revenue in the case of Anuradha Shiv Kumar Gogia foray 2019-20 is concerned, though the assessment year under consideration is an abated assessment year, however, the fact on the file is that there is no evidence pointed out by the AO to show that the aforesaid scrips in which the assessee dealt with were penny stock scrips. We have already discussed the issue in detail as above on merits. Moreover, the statement given, if any, by Shri Shivkumar Gogia
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 48 has no relevancy so far as the assessee Anuradha Shivkumar Gogia is concerned. Even the Ld. AR has duly demonstrated that the said statement was abstracted by misguiding Shri Shivkumar Gogia without even any evidence on the file that the said scrips were penny stock scripts. When the statement of Shri Shivkumar Gogia is read as a whole, then it comes out that the said admission of Shri Shivkumar Gogia of dealing in penny scrips was not intended but was abstracted by misrepresenting the facts without any cogent or reliable evidences on the file. Moreover, the statement of Shri Shivkumar Gogia is not binding upon the assessee. The assessee has duly proved on file the genuineness of the transaction which could not be rebutted by the AO. Therefore, there is no merit in this appeal of the Revenue, the same is also accordingly dismissed.
Issue 6: Addition sustained by CIT(A) for on-money received in Earth Erita Project:
42.1. This Appeal has been filed by the Assessee . S.No. Appeal No. Assessee Name Assessment Appellant Ground Year No. 1 ITA Anuradha 2019-20 Assessee 4 130/AHD/2024 Shivkumar Gogia 42.2. This issue is specific to Smt. Anuradha Shivkumar Gogia for A.Y. 2019- 20, which was an abated assessment year. The assessee is in appeal (ITA 130/AHD/2024) against the confirmation of an addition of Rs. 40,00,000/-. The assessee inter alia has taken following Ground No.4 in her appeal contesting the addition on the above issue:
“4. On the facts and in the circumstances of the case and in law, the Hon’ble CIT(A) has erred in confirming the addition amounting to INR 40,00,000/- made by the learned AO under section 69A rws 115BBE of the Act on account of following:
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 49 4.1. That the above addition has been made ignoring the detailed submissions and explanations along with the evidences brought on record by the Appellant justifying the actual value of the sale consideration. 4.2. That the above addition has been made without there being any direct evidence against the Appellant with the learned AO that such payment was received by the Appellant. 4.3. That the addition has been made arbitrarily on the incorrect assumptions without bringing on record any comparable instance in this regard. 4.4. That the above addition has been made ignoring the fact that the actual value of the property sold by the Appellant is not less than value determined by the stamp value authority. 4.5. Without prejudice to the above, the addition has been made without making any reference to valuation officer in view of the specific provision under section 55A of the Act in this regard. 4.6. Without prejudice to the above, CIT(A) has erred in treating the amount of INR 40,00,000 under section 69A of the Act and taxing the same at the higher rate of 60%under section 115BBE of the Act without appreciating the fact that the same could be treated as Long Term Capital Gain under section 45 of the Act being sale consideration and hence provisions of section 69A rws 115BBE of the Act cannot be invoked. “
Factual Matrix and Lower Authorities' Findings:
43.1. The brief facts of the case are that during the course of search action, an Agreement to Sell for a bungalow in the "Earth Erita" project was found, showing a sale consideration of Rs. 4.46 crores. However, the final registered Sale Deed for the same property showed a consideration of Rs. 4.06 crores. The AO treated the difference of Rs. 40 lakhs as on-money received by the assessee in cash. The AO also made reference to the statement of Shivkumar Lachmandas Gogia recorded under section 132(4) of the Act during the post search enquiry who has also confirmed that the bungalow was sold to Smt. Leelaben K Mehta for Rs. 4,46,00,000/-. During the course of assessment proceedings, assessee was asked to explain the difference and was show-caused as to why the difference of Rs.40 lakhs received in cash as on-money be not added to the income of the assessee.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 50 The assessee, however, submitted that the said bungalow has been sold for Rs. 4,06,00,000/- only and no such additional cash payment was received. The assessee also brought on record the affidavit of Shri Sajag Mehta Son of Late Smt. Linaben K. Mehta in which he confirmed that property was purchased for Rs.4,06,00,000/- by cheque and no cash payment had been received. It was also explained that the alleged agreement for sale of Rs.4,46,00,000/- was prepared for bank loan for purchase of bungalow, which was not acted upon.
Findings of the AO:
44.1. However, the learned Assessing Officer did not accept the reply and evidences brought on record by the assessee as satisfactory and treated the difference of Rs. 40,00,000/- between the agreement and the sale deed as undisclosed on-money and added the same as unexplained income of the assessee under section 69A of the Act.
Findings of the CIT(A):
45.1. The assessee went in appeal before learned CIT(A), who confirmed the addition of Rs.40,00,000/- made by the AO on account of alleged on-money received by the assessee by holding that the assessee failed to conclusively prove the reason for the price reduction in the sale-deed.
Precise Pleas of the Parties :
• Assessee's Plea: The Ld. AR has contended that the CIT(A) has erred in confirming the addition, as the difference in price between the draft agreement and the final sale deed was due to a genuine renegotiation, and there was no evidence of any on-money receipt. The Ld. AR has referred to the Affidavit of Shri Sajag Mehta Son of Late Smt. Linaben K. Mehta filed before the AO during the assessment proceedings, which stated that she had paid purchase value of bungalow of Rs.4,06,00,000/- by cheque and no cash
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 51 payment had been made and that the agreement for sale of Rs.4,46,00,000/- was prepared for bank loan for purchase of bungalow, which was not acted upon. The learned AR has further submitted that the property has been sold at a price which was above the stamp value rate/ Jantri Rate of the Gujarat Govt. The Ld. AR submitted that statement of the assessee Smt. Anuradha Gogia was never recorded during the course of search in respect of alleged cash receipts. The learned AR submitted that no corroborative evidence has been found or brought on record by the AO to justify the alleged cash receipt. Regarding the statement of Shivkumar L. Gogia, the Ld. AR submitted that his statement without any corroborative evidence, could not have been taken as a basis for making the impugned addition. The Ld. AR, in this respect, has relied upon following judicial decisions: • Sh. Vikram Dhirani Vs Acit, Central Circle-7, (Old Central Circle-12) New Delhi And (Viceversa) 2023 (4) TMI 742- Dated: - 17-4-2023 • Cit Vs Harjeev Aggarwal 2016 (3) TMI 329 Dated: - 10-3-2016 • Principal Commissioner Of Income Tax, Delhi Vs Best Infrastructure (India) Pvt. Ltd. 2017 (8) TMI 250 Dated: - 01-08-2017 The Ld. AR has further submitted that the burden is on the revenue to show that assessee had received higher consideration towards the sale of her bungalow than that was mentioned in the sale-deed. He, in this regard, has placed reliance on the Supreme Court decision in the case of KP Varghese Vs. ITO, Ernakulam (supra), He has further submitted that no cash trail was found/identified by the Ld. AO which could substantiate that the assessee had received any cash as on-money and hence prayed for the deletion of addition on this issue.
Revenue's Plea: The Ld. DR, however, has supported order of the CIT(A) and submitted that the impugned addition has been rightly confirmed by the Ld. CIT(A).
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 52 47. Findings of the ITAT: 47.1. We have considered the rival submissions of the Ld. Representatives of the parties. The initial onus to prove that the assessee had received consideration over and above, what was stated in the final registered document, was on the Revenue. The Revenue's case rests entirely on the draft agreement to sell. The assessee explained that the higher amount in the draft agreement was tentatively mentioned only for the exploratory purpose of the purchaser’s bank loan application, which ultimately was not acted upon, and the deal was concluded at the lower price. Crucially, the assessee also furnished a sworn affidavit from the purchaser of the property, who categorically stated on oath that no cash payment was made to the assessee over and above the consideration recorded in the registered sale deed. The assessee has provided a plausible explanation for the price reduction and has supported it with an affidavit from the buyer. The Revenue has not conducted any cross-examination of the buyer, nor has it brought on record any evidence of cash changing hands. An un-acted upon draft agreement cannot be treated as conclusive evidence of actual sale consideration, especially when it is contradicted by the final registered document and a sworn affidavit from the buyer. 47.2. So far as the reliance of the lower authorities on the statement of Shiv Kumar Gogia is concerned, it is pertinent to mention here that Sh. Shiv Kumar Gogia is not a party to the transaction. No statement of the assessee Anuradha Gogia was recorded during the course of search action. She was also neither summoned nor cross examined on this issue during the course of assessment proceedings. Even the purchaser, who had given a duly sworn affidavit was also not summoned and confronted. Therefore, the uncorroborated statement of third party to the transaction can not be acted upon. Moreover, no such cash was recovered during the course of search action. Under the circumstances, we do not find justification on the part of the lower authorities in making /confirming the impugned addition
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 53 and the same is accordingly ordered to be deleted. We have already discussed, while deliberating upon the issue No.5 as above, the legality of such uncorroborated statement recorded during the course of search action in the light of various case laws and held that such a bald statement has no evidentiary value. Our findings given above in this respect squarely apply to the issue under consideration. As discussed above neither the recording of the statement of a third party to the transaction was legally permissible nor the same constitute incriminating material and therefore the impugned addition made by the AO on the basis of such statement is not sustainable and hence the same is accordingly ordered to be deleted.
Low Tax Effect: Without prejudice to our findings given above in each of the appeal, it is noticed that the tax effect in the following appeals is less than the prescribed limit of Rs. 60 lakhs, as fixed by the CBDT vide circular No. 05 /2024 dated 15.03.2024 under section 268A of the Act. It has been clarified therein that the said limit will also be applicable to pending appeals:
1. IT(SS)A 79/AHD/2024 ACIT Vs Shiv Kumar Lachman Dass Gogia HUF AY- 2014-15 2. IT(SS)A 81/AHD/2024 ACIT Vs. Shiv Kumar Lachman Dass Gogia HUF AY 2016-17.
48.1. The aforesaid two appeals of the revenue are therefore also dismissed being not maintainable having low tax effect than the prescribed limit under section 268A of the Act.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others 54
Issue 7: Validity of approval u/s 153D (Cross Objections) Lead Case: CO 5/AHD/2025 (Assessee) of AY 2018-19 49.1 The assessee has taken identical ground of cross-objections in all the Cross-objections filed by them. Cross-Objection No.5/Ahd/2025 is taken as the lead case for the purpose of narration of facts and further deliberation: 1) On the facts and circumstances of the case, the assessment order passed u/s 153A/143(3) is illegal and liable to be quashed as the same has been passed violating the mandatory provisions of section 153D of the Act. 2) That the purported approval u/s 153D of the Act is illegal, bad in law and also without application of mind. 3) On the facts and circumstances of the case, the addition made in the assessment order is itself illegal, unsustainable, contrary to the facts on record and liable to be deleted.
4) That the respondent craves leave to add, amend or alter any of the grounds of Cross objection.
49.2. The assessee through above cross-objections has contended that the approval granted by the Joint Commissioner of Income Tax (JCIT) was illegal and bad in law as the Ld. JCIT had given the approval mechanically in all cases in a short span without application of mind. Since we have decided all the appeals of the Revenue on merits in favour of the assessee, therefore, at this stage, we are not inclined to go into the merits of the aforesaid cross-objections taken by the assessee as the same at this stage have been rendered academic in nature and are accordingly dismissed. However, the assessee will be at liberty to raise the same at appropriate stage, if need be.
IT(SS)A No78/Ahd/2024 & 74 Others (including Cos) Anuradha Shivkumar Gogia & Others Asst.Year : 2015-16 & Others In the result:
To summarize the final outcome:
o All the captioned appeals filed by the Revenue are Dismissed. o The appeal filed by the assessee, Smt. Anuradha Shivkumar Gogia (ITA 130/AHD/2024), is Allowed. o All the captioned cross-objections filed by the various assessees stand dismissed at this stage. o Order pronounced in the Open Court on 28/11/2025.