JOINT COMMISSIONER OF INCOME TAX (IN SITU) CIRCLE-I, , LUDHIANA vs. KAPIL THAPAR, LUDHIANA

आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH

HEARING THROUGH: PHYSICAL MODE

ŵी लिलत कुमार, Ɋाियक सद˟ एवं ŵी कृणवȶ सहाय, लेखा सद˟
BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM

आयकर अपील सं./ ITA No. 246/Chd/ 2025
िनधाŊरण वषŊ / Assessment Year : 2016-17

The JCIT (Insitu)
Circle-1, Ludhiana

बनाम

Kapil Thapar
Prop. Narainji Traders Mandi
Kesarganj, Ludhiana-141008,
Punjab
˕ायी लेखा सं./PAN NO: AAUPT5937B
अपीलाथŎ/Appellant
ŮȑथŎ/Respondent

Cross Objection No. 10/Chd/2025
In (आयकर अपील सं./ ITA No. 246/Chd/ 2025)
िनधाŊरण वषŊ / Assessment Year : 2016-17

Kapil Thapar
Prop. Narainji Traders Mandi
Kesarganj, Ludhiana-141008,
Punjab
बनाम

The JCIT (Insitu)
Circle-1, Ludhiana

˕ायी लेखा सं./PAN NO: AAUPT5937B
अपीलाथŎ/Appellant
ŮȑथŎ/Respondent

िनधाŊįरती की ओर से/Assessee by :
Shri Sudhir Sehgal, Advocate

राजˢ की ओर से/ Revenue by :
Shri Vivek Vardhan, Addl. CIT, Sr. DR

सुनवाई की तारीख/Date of Hearing :
07/10/2025
उदघोषणा की तारीख/Date of Pronouncement : 28/10/2025

आदेश/Order

PER KRINWANT SAHAY, A.M:

The present appeal has been filed by the Department and Cross
Objection filed by the Assessee against the order of the Ld.
CIT(A)/NFAC, Delhi dt. 18/12/2024 pertaining to Assessment Year 2016-
17. 2. Department has raised the following grounds in its appeal:

"1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,04,00,000/- made by the Assessing Officer u/s 69A on account of unexplained money as alleged money received over and above the sale value of property, without considering the facts and circumstances of the case that there was sufficient incriminating maerial in the form of loose papers found during the search proceedings to establish that the assessee has received cash over and above the value as per the sale deed.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT (Appeals) has erred in on fact and law, in ignoring the direct and circumstantial evidences brought on record by the Assessing Officer to establish that M/s L.G. Promoters has purchased the property for Rs. 18,75,00,000/-.
3. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off."

19 crores on sale of immoveable property and, therefore, the income has escaped assessment.
7.2
Then, there is a dissemination note from the Investigation Wing alongwith seized documents found during search from the premises of Sh. Rajinder Singh Dhawan, placed at page 9 of the Paper Book. There is reference to the assessee's reply, dated 15.01.2019, in which, the detail of sale of property for a sum of Rs. 2,43,00,000/- had been submitted by all the co-owners as per pages 7 to 8 of the Paper Book.
But, then certain wrong observation had been made by the Investigation Wing at page 10, that there is unexplained component of Rs. 16.32 crore.
7.3
Further, in the order clause (d) of section 148A, again the department has alleged that the sale of property at Rs. 18.75 crore on the basis of seized document recovered during search from Sh.Rajinder
Singh Dhawan and as per reasons recorded and show cause notice at pages 12 to 13, it has again been at page 13, in para 13 as under:-
"In view of the above, the information available as mentioned above clearly suggests that taxable income amounting to Rs. 19,00,00,000/- has escaped assessment, thus, in order to bring that income and any other income which comes to the notice subsequently to tax during the course of assessment proceedings for the A.Y. 2016-17, it is a fit case for issuance of notice under section 148 to bring that escaped income to tax. This order is passed with the prior approval of the Pr.
Chief Commissioner of Income Tax, NWR, Ludhiana."

in which, the assessee had 1/4th share measuring 187.5 Sq yards and the total consideration of the same was Rs. 1,21,50,000/- and 1/4th share of assessee was Rs. 30,37,500/-and the same had been disclosed, while filing the return of income for the relevant Assessment year as per copy at page 2 of Paper Book. The three sale deeds were executed as for Rs. 32.40 lacs, 20.25 lacs and 68.65 lakhs by all the four co-owners."
7.5
The Assessing Officer did not agree to that and based on the seized document as recovered from the third party premises, the total addition of Rs. 2,04,00,000/- was made u/s 69. 8. Since, the assessee had raised additional grounds of cross objections, the same being the legal ground of appeal, in which, it has been contended that the notice ought to have been issued u/s 153C, rather than u/s 148 and for that, the following written submissions have been made as under:-
"i). Thus, the first issue is that whether the issuance of notice u/s 148 by the Assessing Officer is legally valid or not since, as per facts on record, there was search on 'third party' premises and as per the belief of the department, the information contained in this document pertained to assessee concerned and the Assessing Officer was, thus, of the belief that the income of the assessee has escaped assessment and, thus, he issued a notice u/s 148. ii). It is submitted that clause (b) of sub-clause (1) of section 153C reads as under:-

"any books of account or document, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to a person other than the person referred to in section-153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing
Officer having juri iction over such other person and that Assessing
Officer shall proceed against each such other person and issue notice and assess or reassess the of the other person in accordance with the provisions of section-153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or 6

requisition is made and for the relevant assessment year or years referred to in sub-section (1) of Sgcjion-153A :

iii) The above reading of section lays down that where the Assessing
Officer is satisfied that any books of accounts or documents is seized or requisitioned pertains to or any information contained there relates to a person, other than the person referred to in section 153A, then the Assessing Officer of the searched person would record his satisfaction that action u/s 153C is required to be taken against any other person qua him, the books of accounts/documents/information unearthed during the course of search and, thus, under such circumstances, the notice u/s 153C is required to be issued.

iv)
The binding judgment of Hon'ble Supreme Court in the case of "Vikram Sujit Kumar Bhatia", reported in 453 ITR 417 is clearly applicable.
v)
It is further submitted that earlier before Finance Act 2015, the words were belong or belongs to instead of pertain or pertains to and, thus, it is submitted that the Assessing Officer ought to have followed the procedure contemplated in section 153C, which is mandatory one, since the AO has failed to follow this procedure and, therefore, the assessment order passed is not sustainable and reliance is placed on the following judgments: - a.. Judgment in the case of ITO vs. Vikram Sujit Kumar Bhatia as reported in [2023] 149 taxmann.com 123 (SC) b.
Judgment in the case of Rajat Subhra Chatterji vs. ACIT passed by ITAT.Delhi vide order dated 02.03.2016 in ITA No. 2430/Del/2015. c.
Delhi Bench in ITA. No. 1571/Del/2015. d.
Judgment in the case of ITO Amritsar vs. Arun Kumar Kapoor passed by ITAT, Amritsar; Bench ITA No. 147(ASR)/2010. vi)
It is further argued that section 153C reads as under:-

153C. (1) Notwithstanding anything contained in section-139, section-
147, section-148, section-149, section-151 and section-153, where the Assessing Officer is satisfied that,-
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or 7

(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section-153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having juri iction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section-153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the]
determination of the total income of such other person for six assessment years! immediately preceding the assessment year relevant to the previous year in; which search is conducted or requisition is made and for the relevant assessment! year or years referred to in sub-section (1) of section-153A :
From the bare reading of the above section, it is very much clear that the Assessing Officer of the searched would have to record his satisfaction and transmit the material to the Assessing Officer of such other person, to whom, these material pertain as found during the course of search and then from Finance Act 2015, the scope of sub- clause (b) has been amplified in the sense that under such circumstances, the notice u/s 153C is mandatory.
vii). It is further stated that in the judgment of Hon'ble Supreme Court as cited above, it was held that the amendment brought to section 153C vide Finance Act 2015 shall be applicable to searches conducted u/s 132 of the Act, even before 01.06.2015 i.e. the date of amendment. Thus, since in our case the year is Assessment year 2016-
17, it is otherwise applicable in the above said case. We rely on the judgment of Hon'ble Chandigarh Bench of the ITAT in the case of Sh.
Subhash Chander Gupta in ITA No.765/Chd/2024, in which, in identical circumstances, it was held in para 12 of the judgements as under:-

"12. We have taken cognizance of the alleged seized material
(extracted supra) as well as the belief formed by the AO while recording the reasons for re-opening of the assessment. According to the Revenue, this paper pertains to the assessee. The information contained in this paper is regarding payment of Rs. 13 Cr to the assessee. Thus, this also pertains to the assessee. In such situation, to our mind, the AO ought to have initiated the proceedings under Section 153C. In other words, AO of the searched person i.e. AO of Shri
Sanjay Bansal or of the Trust should have recorded satisfaction that information contained in this loose paper pertains to the assessee and action against the assessee deserves to be taken under Section 153C because income has escaped assessment in the hands of the assessee. Such satisfaction ought to have been transmitted to the AO of the assessee and only thereafter, assessment could have been made. No action under Section 147/148 could be taken against the assessee because Section 153C starts with a non obstante clause namely, notwithstanding anything contained in Section 139/147. Thus,
Section 147/148 has no bearing if proceeding required to be taken against the assessee under Section 153C of the Income Tax Act. The AO has failed to follow the mandatory procedure required to be followed, hence, assessment order is not sustainable and accordingly, is quashed. For our above view, we are fortified by the judgements relied upon by the Id. Counsel for the assessee and taken note by us in paragraph No. 7 of this order. The Act contemplated a procedure which is required to be followed mandatorily and which has not been followed by the AO."
Thus, as per our additional ground of cross-objection, the assessment as framed by the AIO u/s 148 deserves to be quashed since proceedings ought to have been initiated u/s 153C and not u/s 148."
9. Alternatively, the assessee had also contended that even notice issued u/s 148, which is a ground taken in cross objection, it has been argued that 'wrong reasons to believe' have been formed by the Assessing Officer, while reopening the case u/s 148 and it is a case of only borrowed satisfaction and the main stress of the Ld. Counsel of the assessee have been that in the notice in clause (d) of section 148A, a reason to believe have been formed that there is escapement of income to the tune of Rs. 19 crore, though, all such facts were available with the Assessing Officer, which have been mentioned in dissemination note as stated above and, thus, it has been contended that wrong reasons to believe have been formed by the Assessing
Officer and even there is no statement of any person that the property was sold by the assessee for a consideration of Rs. 18.75 crore.
9.1
The detailed 'Brief Synopsis' have been submitted in this regard and reliance has been placed on the judgment of Hon'ble Bombay
High Court in the case of 'M/s BIC Cello India Pvt. Ltd. vs ACIT', reported in 475 ITR 463 (SC) and to other case of Bombay High Court in the case of 'Ankita A. Choksey Vs ITO', reported in 411 ITR 207, besides the cases of Juri ictional Chandigarh Bench of the ITAT in the case of 'Kissan Fats
Limited in ITA No. 407/Chd/2023' and in the case of 'M/s Fortune
Metaliks Ltd. Vs DCIT in ITA No.1090/Chd/2019' and also on the latest judgment in the case of 'Taj Land Developers and Promoters Pvt.Ltd. in 9

ITA No. 606/Chd/2024' for Asstt. Year 2011 -12. In the case of Taj Land
Developers & Promoters Pvt. Ltd., the two judgments of Hon'ble
Bombay High Court, as 'cited supra' have been followed and it has been held that the Assessing Officer having not verified the information received from the Investigation Wing and it was treated as gospels truth and it is not permissible u/s 147 and in that case, the reassessment notice had been quashed by the Chandigarh Bench of the ITAT.
9.2
It was further contended by the Ld.Counsel that before the CIT(A), detailed submissions on the wrong reasons having been recorded and also non-application of mind by the AO were made, these submissions have been reproduced by the Ld. CIT(A) from pages 2 to 14 of the order and further submissions on merits of addition had been submitted from page 15 to 27 of the order. The Ld. CIT(A) has given his decision on the issue of 148 against the assessee as per discussion in para 7, page
27 to page 28 of the order and has dismissed the ground of appeal with regard to reopening of the assessment u./s 148 and on merits, he has allowed the appeal of the assessee as per discussion made by him from pages 28 to 32 of the order. The Ld. CIT (DR) relied upon the order of AO/CIT(A) and argued that the AO has rightly invoked section 148
on the basis of information from the Investigation Wing and provisions of section 153C are not applicable.
9.3
Since the legal issue as raised by the assessee goes to the root of assumption of juri iction by the Assessing Officer concerned, we deem it proper to deal with the additional ground of cross objections alongwith the ground raised in the Cross Objections filed by the assessee on 04.04.2025. 10. We have carefully gone through the basis of issuance of notice vide clause (d) of section 148A and also seized records, which have 10

been recovered during the course of search from the premises of third party namely Sh. Rajinder Singh Dhawan, which forms the basis of reopening of the case u/s 148. It is a fact that document as found from the premises of third party, namely Sh. Rajinder Singh had formed the basis of reopening of the case u/s 148 and such document was seized during the course of search at the residential premises of Sh. Rajinder
Singh during the course of search conducted on Kewal Chhabra
Group of cases.
10.1
We have also carefully gone through the clause (b) of sub clause of section 153C, wherein, it has clearly been mentioned that in case, the Assessing Officer is satisfied that any document ,which is seized, pertains to or any information contained therein relates to a person, other than the person referred to in section 153A, then the Assessing Officer of the searched person would record his satisfaction that action u/s 153C is required to be taken against any other person qua him, the books of accounts/documents/information unearthed during the course of search and, thus, under such circumstances, the notice u/s 153C is required to be issued.
10.2
The judgment of the Hon'ble Apex Court in the case of "Vikram Sujit Kumar Bhatia" as *
cited supra, is clearly applicable to the facts and circumstances of the case, in which, the Hon'ble Apex
Court has clearly held that in such cases, the action was required to be taken u/s 153C. Further, the issue has been dealt and deliberated at length by the Juri ictional Bench of the ITAT in the case of 'Sh. Subhash
Chander Gupta' as cited supra, wherein, under similar facts and circumstances, the notice u/s 148 was issued on the basis of document found from the premises of 'third party' and the Assessing Officer had issued notice u/s 148 and the assessment as framed by the AO u/s 148
was quashed for the reason, that the proceedings ought to have been 11

initiated u/s 153C and the finding of the Hon'ble Bench in the case of Sh. Subhash Chander Gupta, as cited supra have been reproduced above and it is being relied upon and following the above said judgments of Apex Court and of Sh. Subhash Chander Gupta , we have no hesitation in holding that the assessment as framed by the Assessing Officer u/s 148, deserves to be quashed, since the procedure, which is required to be followed mandatorily have not been followed by the Assessing Officer that the AO ought to proceeded by issuing notice u/s 153C.
10.3
Though, we have quashed the assessment, but even alternatively, the reopening u/s 148 is also not proper and deserves to be quashed, since wrong reasons to believe, both with regard to consideration of property, in which, the assessee had 1/4th share and also as per the order clause(d) of section 148A, the reasons to believe have been formed as per page 13 of the paper book, after considering the reply of the assessee that taxable income amounting to Rs. 19 crore have escaped assessment.
The judgment of the Hon'ble Bombay High Court in the case as cited by the assessee of 'BIC
Cellow Pvt. Ltd.' is clearly applicable to the facts and circumstances of the case, as also in another judgment of Hon'ble Bombay High Court in the case of 'Ankita A Choksey' and both these judgements have been relied and followed by the 'Chandigarh Bench' of the ITAT in the case of M/s Taj Land Developers and Promoters Pvt. Ltd. as stated 'supra'
and the reopening of assessment have been quashed in that case and the facts are identical as in the case of assessee and, thus, by relying upon the finding as given by the Chandigarh Bench of the ITAT in the case 'Taj Land Developers & Promoters Pvt.Ltd.' in para 8 and 8.2, we have no hesitation in holding that the reopening even u/s 148 was bad in law and the assessment as framed by the Assessing Officer u/s 148/143(3) deserves to be quashed.
11. The department has filed the appeal against the order of CIT(A) on merits of the case and, though, the assessee has argued at length that even on merits, the CIT(A) has rightly deleted the addition, which is based on third party evidence and has filed the Brief Synopsis, but since we have granted the relief on the legal issue, it remains just academic in nature to make comments on it. So we are not inclined to give any decision on merits of the case, because the matter is academic in nature as discussed above.
12. In the result, appeal of the Department is dismissed and Cross
Objection of the Assessee is allowed.

Order pronounced in the open Court on 28/10/2025 लिलत कुमार

कृणवȶ सहाय

(LALIET KUMAR)

(KRINWANT SAHAY)

Ɋाियक सद˟ /JUDICIAL MEMBER

लेखा सद˟/ ACCOUNTANT MEMBER

AG

आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to :

आदेशानुसार/ By order,
सहायक पंजीकार/