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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
O R D E R PER RAJ PAL YADAV, VP The present four appeals are directed at the instance of Revenue against the separate orders of the ld. Commissioner to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 2 of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 16.01.2024, 16.01.2024, 17.01.2024 and 18.01.2024 passed in assessment years 2016-17, 2017-18, 2019-20and 2020-21 respectively.
2. On receipt of notices in these appeals, assessee has filed Cross Objections bearing No. 17, 18, 19 and 20/CHD/2025 respectively.
3. The Registry has pointed out that Cross Objections are time barred by 326 days. Before adverting to the delay caused by the assessee in filing these Cross Objections, we take note of the issues agitated in the Cross Objections. In assessment year 2016-17, 2017-18 and 2019-20, the assessee has taken three preliminary jurisdictional issues in the Cross Objection, namely, that no search u/s 132 of the Income Tax Act was carried out on the Registered Office of the assessee company, therefore, assessment u/s 153A ought to have not been framed upon the assessee. Accordingly, this assessment is ab-initio void.
4. The second ground taken by the assessee is that since no search was carried out upon the assessee and no to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 3 incriminating material was seized, therefore, assessment ought to have not been framed u/s 153A. According to the assessee, AO has been using the digital data found in the search carried out upon M/s Homeland Buildwell Pvt. Ltd., then assessment ought to have been passed u/s 153C and not u/s 153A of the Act. The last common ground in all four assessment years taken by the assessee is that approval required to be granted by the Addl. CIT, Ludhiana u/s 153D has not been granted in accordance with the guidelines laid down for granting such approvals. In other words, the approval is a mechanical approval and hence, assessment orders are not sustainable.
5. The assessee has filed applications for condonation of delay in all these four Cross Objections. In its application, it has been pleaded that their Tax Consultant Shri Avinash Jain was of the view that since ld. CIT (Appeals) has granted relief and deleted the additions made by the AO, therefore, there is no need for the assessee to litigate with the Department any more. However, when Revenue has filed the appeal before the Tribunal and assessee took advice from other consultant for to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 4 arguing these appeals, then it was advised to challenge the impugned assessment order on these issues also which have been raised before the ld. CIT (Appeals) but no finding was recorded.
6. Apart from above, ld. counsel for the assessee has submitted that impugned order is open for debate in the appeals of Revenue, then assessee is at liberty to take any plea which can upheld the impugned order. He made reference to rule 27 of the Income Tax Appellate Rules, which read as under : “Respondent may support order on grounds decided against him “The Respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.”
7. The ld. Ld. CIT DR opposed the prayer of the assessee. He submitted that assessee ought to have filed the Cross Objection within the time limit.
Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 5 it within that period. This expression sufficient cause employed in the section has also been used identically in sub- section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
Ordinarily a litigant does not stand to benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 6 3. "Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
9. Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (1998) 7 SCC 123 dated 03.09.1998. It reads as under:
Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 7 for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
In the light of above, if we examine the facts of present case, then it would reveal that assessee is agitating jurisdictional issues in its Cross Objections in each to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 8 assessment year. On all such issues, its Tax Consultant initially opined for not litigating further with the Revenue. It was a bonafide error at the end of the assessee because already relief was granted to the assessee by the ld. First Appellate Authority. It might have been though by the assessee not to litigate with the Department. However, when Revenue has filed the appeals, then it came to its notice to take all preliminary issues which can support the impugned order. Therefore, we condone the delay in filing Cross Objection because there was no malafide intention. The assessee has not adopted a delaying strategy to litigate with the Revenue.
10.1 Apart from above, we are of the view that since legal issues are being raised by the assessee in its Cross Objections, therefore, Rule 27 of ITAT Rules empowers it as a respondent to take all these pleas, even otherwise, namely, without filing the Cross Objections. Therefore, we admit the grounds taken in the Cross Objection and proceed to decide them on merit. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 9 10.2 The brief facts have been tabulated lucidly by the ld. CIT (Appeals) in the impugned orders wherein the facts are being noticed through lists of events. We take note of the relevant facts from sub-paragraph 12 of paragraph 2 page 3 of the ld. CIT (Appeals)’s order in assessment year 2017-18, which read as under : “12. That a search action u/s 132 of I.T. Act was taken against its director at their residence situated at Kothi No. 140, Deepali Enclave, Pitampura, New Delhi -110034 as well as its site office situated at Plot No 252 Sector, 67 Airport Road Mohali, Punjab-160067. However no warrant of authorization u/s 132 of I.T. Act was issued against the assessee company, rather warrant of authorization u/s 132 was issued against Ajay Bindal/Sunita Bindal and M/s Homeland Buildwell Pvt. Ltd. respectively. Detail as under:- S. No. Address of premises Date of search Remarks 1 Remarks 2 1. 154 1st Floor, Aggarwal Cyber Plaza-1, Plot No. 3,4,5,6, Netaji Subhash Place, Pitampura, Delhi-110034 No search action on the assessee The AO admitted that there is no warrant of authorization in the name .of the assessee at this premises Survey u/s,133A of I.T. Act, conducted on 26/02/2020. No panchnama was drawn for this premises. '2. CP- 67, Sector-67, Airport Road, Mohali No search action on the assessee The AO admitted that no warrant of authorization against the assessee at this premises but it is in the name of M/s Homeland Buildwell Pvt. Ltd. Authorization of Search warrant solely in the: name of M/s Homeland Buildwell Pvt. Ltd. Panchnama was drawn in the name of M/s Homeland Buildwell Pvt. Ltd.
3. Kothi No. 140, Deepali Enclave, Pitampura, New Delhi -110034 26/02/2020 No warrant of authorization against the assessee but in the name of directors of the assessee. Panchnama was drawn in the name of Sh. Ajay Bindal and Smt. Sunita Bindal, director of the assessee. No documents much less incriminating documents belongs to and/or pertaining to the assessee were -found and or seized.”
13. That no Panchnama regarding search u/s 132, was drawn in the name of the assessee company, in respect of any premises.
14. Date-wise synopsis of the events are as under: S.No. Date Particulars of Event 1. 26.02.2020 Survey u/s 133A conducted at registered office of the assessee situated at 154 1st Floor, Aggarwal Cyber Plaza-1, Plot No. 3,4,5,6, Netaji Subhash Place, Pitampura, Delhi-110034 2. 26/02/2020 Warrant of authorization in the name of M/s Homeland Buildwell Pvt. Ltd. in respect of site office of the appellant situated at CP-67, Sector- 67, Airport road, Mohali to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 10 3. 26/02/2020 Warrant of authorization in the name of Sh. Ajay Bindal & Smt. Sunita Bindal, director of the assessee at their residence situated at Kothi No. 140, Deepali Enclave, Pitampura, New Delhi -110034. 4. 28.02.2020 Panchnama drawn in the name of M/s Homeland Buildwell Pvt. Ltd. in respect of premises bearing no. CP-67, Sector-67, Airport road, Mohali 5. 28.02.2020 Panchnama drawn in the name of Sh. Ajay Bindal & Smt. Sunita Bindal in respect of residence premises bearing no. Kothi No. 140, Deepali Enclave, Pitampura, New Delhi -110034 6. 16.02.2021 Notice dt. 16/02/2021 issued u/s 153A of I.T. Act 7. 12.03.2021 Objection filed in response to notice u/s 153A dt. 16/02/2021, stating that no warrant of authorization in the name of the assessee hence initiation of proceeding u/s 153A is bad in law & without jurisdiction. 8. 27.08.2021 Notice dt. 27/08/2021 issued u/s 142(1). In the said notice the AO has again asked the assessee to file its ITR u/s 153A of the I.T. Act, without disposing the objection raised by the assessee vide letter dt. 12/03/2021. 9. 10.09.2021 The assessee again filed the objection against initiation of assessment proceeding u/s 153A of I.T. Act. ITR o/s 153A filed under protest. However, said ITR was submitted manually before the AO, due to non-function of e- portal of the Income Tax Deptt. Letter dt. 24/09/2021 issued by the AO stating that search was initiated 10. 24.09.2021 against the assessee on the basis of warrant of authorization at the residence of the directors of the company situated at Kothi No. 140, Deepali Enclave, Pitampura, New Delhi -110034. 11. 25.09.2021 Objection in response to letter dt. 24/09/2021 filed alongwith detailed reply to questionnaire dt. 27/08/2021 issued u/s 142(1) of I.T. Act. 12. 28.09.2021 Show Cause for proposed addition vide order sheet dt. 28/09/20211 13. 30.09.2021 Reply filed and inter-alia stated that to confront the relevant documents for proposed addition. 14. 30.09.2021 Approval u/s 153D granted by the JCIT. Assessment order framed u/s 153A r.w.s. 144 of LT. Act, without 15. 30.09.2021 confronting any material for proposed addition.
15. That the present management of the appellant has no relationship with M/s Homeland group of companies and none of the person of Homeland Group hold any shares since 29.08.20216.
16. No notice u/s 143(2) was issued/served to the assessee.”
11. The first common issue involved in the Cross Objection in all these assessment years is that approval granted by the JCIT u/s 153D has not been granted in accordance with the to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 11 guidelines laid down for granting such approval. In other words, the approval is being granted in a mechanical manner, hence, assessment orders are not sustainable. The ld. counsel for the assessee has filed a Paper Book running into 10 pages wherein he has pointed out that the AO has sent a letter to Addl. CIT for granting approval in these cases on 29.09.2021. Copy of this letter has been placed on page 1 of the Paper Book and the approving authority, namely, Shri B.K.Singh, Addl. Commissioner of Income Tax has granted the approval on 30.09.2021. Copy of this letter is placed on page 2. Thereafter, ld. counsel for the assessee has made reference to a letter dated 29.09.2021 vide which Assessing Officer has sought approval in the case of Homeland Group. In this list, there are 15 assessees and there were 6 assessment years. Thus, in total, 90 assessment orders of this group were also sent to the Addl. Commissioner who has granted the approval on same day i.e. 29.09.2021. The ld. counsel for the assessee, thereafter, made reference to the letter of the Assessing Officer dated 29.09.2021 vide which approval was sought in the case of Shri Rajinder Singh Gujral, Shri Kewal Krishan Chhabra for assessment years 2009-10 to 2012-13. These approvals have also been granted on 30.09.2021.
to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 12 Similarly, approval has been granted to two more assessees namely, Jindal Oil & Fats Ltd. and others. These assessments were also for six years. In other words, total 12 assessment orders were sent in this group. On the strength of these details, it was contended by the ld. counsel for the assessee that roughly more than 110 assessment orders were sent to the Addl. Commissioner on 29.09.2021 where approval was sought u/s 153D and the approving authority has granted the approval on 29 or 30.09.2021. It was contended that it was not humanly possibly to go through these large number of pages, what to talk of applying judicious mind on the seized material, if any, found during the course of search which goad the AO to frame the search assessments. Therefore, this approval is a mechanical approval not sustainable in the eyes of law. The ld. counsel for the assessee has placed on record this correspondence from page No. 1 to 10 of the Paper Book. He further submitted that the assessee could lay his hands on these details, otherwise there were a large number of other assessments where such approval was sought on the last day and approval was granted by the competent authority without application of mind. In support of his contention, he relied to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 13 upon following judgements, whose copies have been placed on the record : Sl.No. PARTICULARS APPROVAL GRANTED BY THE COMPETENT AUTHORITY U/S 153D OF THE ACT 1. Judgement of the Hon'ble Supreme Court in the case of ACIT vs. Serajuddin and Co. as reported in [2024] 163 taxmann.com 118 (SC).
2. Judgement of the Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin and Co. as reported in [2023] 150 taxmann.com 146 (Orissa).
3. Judgement of the Hon'ble Supreme Court in the case of PCIT vs. Anuj Bansal as reported in [2024] 165 taxmann.com 3 (SC).
4. Judgement of the Hon'ble Delhi (HC) in the case of PCIT (Central-2) vs. Anuj Bansal as reported in [2024] 165 taxmann.com 2 (Delhi).
5. Judgement of the Hon'ble Delhi (HC) in the case of PCIT vs. MDLR Hotels (P) Ltd as reported in [2024] 166 taxmann.com 327 (Delhi).
6. Judgement of the Hon'ble Delhi (HC) in the case of PCIT vs. Shiv Kumar Nayyar as reported in [2024] 163 taxmann.com 9 (Delhi).
7. Judgement of the Hon'ble Allahabad (HC) in the case of PCIT vs. Sapna Gupta as reported in [2023] 147 taxmann.com 288 (Allahabad).
8. Judgement of the Hon'ble Allahabad (HC) in the case of PCIT vs. Siddarth Gupta as reported in [2023] 147 taxmann.com 305 (Allahabad).
9. Judgement of the Hon'ble Allahabad (HC) in the case of PCIT vs. Subodh Aggarwal as reported in [2023] 149 taxmann.com 373 (Allahabad).
10. Judgement of the Hon'ble ITAT Bench 'F', Mumbai in the case of Smt Shreelekha Damani vs. DCIT (OSD-1), CR-7, Mumbai [2017] 88 taxmann.com 383 (Mumbai).
Judgement of the Hon'ble ITAT Bench 'F\ Mumbai in the case of Vrushali Sanjay Shinde v. DCIT [2023] 154 taxmann.com 324 (Mumbai-Trib.).
12. Judgement of the Hon'ble ITAT Bench 'B', Pune in the case of SMW Ispat (P.) Ltd. v. ACIT [2024] 163 taxmann.com 119 (Pune-Trib.).
Judgement of the Hon'ble ITAT Bench 'A', Chandigarh in the case of M/s Ganesh Builders v. DCIT in dated 16.05.2024.
14. Judgement of the Hon'ble ITAT Bench 'A', Delhi in the case of Apple Commodities Limited vs. DCIT, Noida as reported in ITA no. 1510/DEL/2022.
15. Judgement of the Hon'ble ITAT Bench 'E', Delhi in the case of Mainee Steel Works Pvt Ltd. vs. DCIT, Gurgaon as reported in to ITA no. 3377/Del/2024.
16. Judgement of the Hon'ble ITAT Bench 'B', Chandigarh in the case of S.P. Singla Construction Private Limited vs. DCIT, Chandigarh as reported in to 145/CHD/2024.
17. Judgement of the Hon'ble ITAT Division Bench 'B', Chandigarh in the case of Maxport India Pvt Ltd vs. DCIT, Chandigarh as reported in ITA no. 579/CHD/2023.
Judgement of Hon'ble ITAT Pune Bench 'A', Pune in the case of M/s Ganraj Home LLP vs. ACIT as reported in on the issue of Statement of Employee during search.
19. Judgement of Hon'ble Bombay High Court in the case of PCIT vs. Umesh Ishrani as reported in [2019] 108 taxmann.com 473 on the issue of no enquiry, verification made from other party.
ITA Nos.356 to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 14 20. Judgement of the Hon'ble ITAT Bench 'E', Delhi in the case of M/s Maple Destination and Dreambuild Pvt. Ltd. vs. DCIT as reported in on the issue of no evidentiary value & statement recorded during search.
21. Judgement of the Hon'ble ITAT Division Bench 'A', Chandigarh in the case of Sh. Paramjeet Singh Mogla vs. ITO as reported in on the same issue of statement in the case of M/s AB Alcobev Pvt. Ltd. 11.2 In the case of ACIT V Serajudddin & Company, Hon'ble Supreme Court has upheld the judgement of Hon'ble Orissa High Court wherein it has been held that approval was not granted after due application of mind, rather it was granted in a mechanical manner. The Hon'ble Orissa High Court has observed that approval was a mandatory requirement which ought to have been granted after due application of mind.
The ld. CIT DR, on the other hand, submitted that Addl. Commissioner of the Range is associated with these assessments from very inception of search. He is fully aware about the details and keeps on monitoring the assessments. Therefore, he has every idea of the material involved in each case and how assessments have been framed. On the last day, he has only approved procedurally, otherwise, these assessments are being framed with his knowledge.
13. We have duly considered the rival contentions and gone through the record carefully. In every judgement cited before to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 15 us, it has been propounded that if it is not humanly possible to go through all the documents and approval has been granted on the last day only for the mere fulfilment of the procedure, then it is not a proper approval required to be granted by the competent authority u/s 153D. If it is being demonstrated that such approval has been granted in a mechanical manner, then the assessments are not sustainable. We find that these issues have been examined very elaborately, more particularly by the ITAT Chandigarh Bench in wherein number of judgements have been referred. We take note of the finding of the ITAT in the case of S.P.Singla Construction & others ITA No.140/CHD/2024 to 145/CHD/2024. The relevant discussion made by the Tribunal reads as under :
9. The ld. Counsel for the Assessee stated that the CIT(A) erred in pointing out that the Addl. CIT has applied his mind by supervising and monitoring all the search and seizure case periodically. The ld. counsel argued that the approval under section 153D of the Act starts from the day of drafting of assessment order. He pointed out the relevant provision of section 153D, which reads as under:- “Prior approval necessary for assessment in cases of search or requisition. 153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of subsection (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner: Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the Principal Commissioner or to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 16 Commissioner under sub-section (12) of section 144BA
10. In view of the above provision, the ld. Counsel for the Assessee stated that the CIT(A) has explained the procedure contained in Instruction No. F.No. 286/161/2006- IT(Inv.II) dated 22.12.2006 wherein, the procedure as to how the assessment of search and seizure cases is to be completed. The ld. Counsel for the Assessee referred the entire instructions. He also referred to another Instruction No. F.286/57/2002-IT (Inv. II) dated 03.07.2002 issued by CBDT.
11. The ld. Counsel stated that these instructions carry procedure which is to be adopted for completing block assessments and it does not talk about approval to be granted by the Addl. CIT /Joint CIT. He stated that the CIT(A) while adjudicating this issue has only discussed the same procedure that the JCIT being Range Head was involved in the entire process of assessment. He argued that the Legislature in its wisdom has introduced this provision by the Finance Act, 2007 w.e.f. 01.06.2007 for prior approval of search assessment order by higher authority like JCIT. Learned Counsel argued that the act of granting approval under Section 153D of the Act is not a mere internal process relating to the administrative functioning of the Department but is a quasi-judicial function mandated by the provisions of the Act with an underlying requirement of it being based on due application of mind and cogent reasoning. Hence, he argued that from the very approval, it is very clear that the approval granted by the JCIT was mechanical in nature and deserves to be quashed.
12. On the other hand, the ld. CIT DR Smt Kusum Bansal supported the order of CIT(A) and argued that the CIT(A) is correct in adjudicating the issue that the approval granted by JCIT u/s 153D of the Act is after application of mind for the reason that the JCIT being Range Head and all search and seizure assessments are regularly supervised and monitored by the Range Heads as well as concerned PCIT. She argued that the Assessing Officer as well as the Range Head, both, has to follow the instructions for completing assessment in search cases as per instructions of CBDT canvassed by the ld. Counsel for the Assessee. The ld. CIT DR pointed out from the letter written by DCIT, Central Circle-1, Chandigarh dated 15.06.2021 that the draft assessment order in the case of Assessee was sent and enclosures were assessment records. She argued that JCIT vide approval dated 19.06.2021 has gone into the assessment records and that is part of the approval granted by the JCIT that the concerned assessment record in Volume I without pagination is returned herewith. She argued that once the approval is granted by the JCIT after examining the assessment record, it is the proper compliance of provisions of section153D of the Act. In the present case, she stated that approval u/s 153D of the Act is after due examination of records including seized material as well as verification by JCIT i.e. the Range Head. Hence, she supported the order of the CIT(A) on this issue.
13. We have heard the rival contentions and gone through the facts and circumstances of the case. We have gone through the order of CIT(A) who has adjudicated this issue and the relevant findings of the CIT(A) are produced above in the above para 6 of this order. We have gone through this order and noted that CIT(A) has discussed the entire search procedure and how assessment in the search cases are to be carried out in terms of CBDT Instruction F. No. 286/161/2006-IT (Inv.II) dated 22.12.2006 and F No. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 17 286/57/2002-IT (Inv.II) dated 03.7.2002.
The Assessee before us has filed the details of approval granted by JCIT u/s 153D of the Act and the relevant record, the relevant dates and events mentioned by the assessee, which reads as under;- AY Date of Date of Date of Order No of pages in Sending Approval by the Order Additional Assessment Commissione r Order 2013-14 15/06/2021 19/06/2021 02/07/2021 103 2014-15 15/06/2021 19/06/2021 05/07/2021 135 2015-16 15/06/2021 19/06/2021 06/07/2021 237 2016-17 15/06/2021 19/06/2021 06/07/2021 298 2017-18 15/06/2021 19/06/2021 09/07/2021 244 2018-19 15/06/2021 19/06/2021 12/07/2021 419 2019-20 15/06/2021 19/06/2021 12/07/2021 343
15. These are simplicitor admitted facts. From the above chart, the ld. counsel has pointed out that JCIT had received the search material which is running into 10000 or more pages seized during the course of search and thereafter the explanations filed by the Assessee during the assessment proceedings. Even the assessment orders for these assessment years running from 103 minimum to419 of maximum pages. We noted that the JCIT being Range Head may be supervisory head for search assessments but he cannot direct the AO as to how assessment in a particular manner is to be made and which document is to read and how. He cannot be a party to framing of assessment because assessment is always framed by the Assessing Officer under the scheme of Income Tax Act. The assessment process is mentioned in the provisions of section 153A of the Act, which means that the assessment is to be framed by the Assessing Officer only being a quasi-judicial authority. From the very provision of section 153A of the Act, it is clear that the assessment is a domain of only the Assessing Officer and not any other authority under the Income Tax Act. Now, on facts, whether in the present case the JCIT can interfere in the regular assessment. We noted that this issue is dealt by Delhi Tribunal in & 2693/Del/2017 and C.O. No.9/Del/2022 in the case of SEH Realtors Pvt.Ltd., Order dated 23rd July, 2024, wherein the entire scheme is discussed in paragraph Nos. 8 to 10, as under :- “8. We find as per the scheme of the Act, for framing search assessments, the Ld. AO can pass the search assessment order u/s 153A or u/s 153C of the Act only after obtaining prior approval of the draft assessment order and the conclusions reached thereon from the ld. JCIT, in terms of section 153D of the Act. This is a mandatory requirement of law. The said approval granting proceedings by the ld. JCIT is a quasi judicial proceeding requiring application of mind by the ld. JCIT judiciously. In order to ensure smooth implementation of the aforesaid provisions, in consonance with the true spirit of the scheme of the Act, it is the bounden duty of the Ld. AO to seek to place the draft assessment order together with copies of the seized documents before the ld. JCIT well in time much before the due date of completion of search assessment. The ld. JCIT to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 18 is supposed to examine the seized documents, questionnaires raised by the Ld. AO on the assessee seeking explanation of contents in the seized documents, replies filed by the assessee in response to the questionnaires issued by the Ld. AO and the conclusions drawn by the Ld. AO vis- à-vis the said seized documents after considering the reply of the assessee. All these functions, as stated earlier, are to be performed by the ld. JCIT in a judicious way after due application of mind. Even though as vehemently argued by the Ld. CIT-DR, the ld. JCIT is involved with the search assessment proceedings right from the time of receipt of appraisal report from the Investigation Wing, still, the ld. JCIT, while granting the approval u/s 153D of the Act has to independently apply his mind dehors the conclusions drawn either by the Investigation Wing in the appraisal report or by the Ld. AO in the draft assessment order. The copy of the appraisal report submitted by the Investigation Wing to the Ld. AO and ld. JCIT are merely guidance to the Ld. AO and are purely internal correspondences on which the assessee does not have any access. Moreover, the Act mandates the Ld. AO to frame the assessment after getting prior approval from ld. JCIT u/s 153D of the Act. The ld. JCIT getting involved in the search assessment proceedings right from inception does not have any support from the provisions of the Act as no where the Act mandates so. The scheme of the Act mandates due application of mind by the Ld. AO to examine the seized documents independently dehors the appraisal report of the Investigation Wing and seek explanation/clarifications from the assessee on the contents of the seized documents. When the scheme of the Act provides for a leeway to both the Ld. AO as well as the ld. JCIT to even ignore the conclusions drawn in the appraisal report by the Investigation Wing and take a different stand in the assessment proceedings, the fact of ld. JCIT getting involved in the search assessment proceedings right from the receipt of copy of appraisal report, as argued by the Ld. CIT DR, has no substance. In other words, irrespective of the conclusions drawn in the appraisal report by the Investigation Wing, both the Ld. AO and the ld. JCIT are supposed to independently apply their mind in a judicious way before drawing any conclusions on the contents of the seized documents while framing the search assessments. As far as the argument of the Ld. CIT DR that the details were normally filed by the assessee at the last moment is concerned, the ld. AO has got every right to reject the said replies if not filed within the stipulated time. It is not the case of the revenue that the details were filed by the assessee in the instant case at the last moment. Even if it is so, as stated above, it is the prerogative of the ld. AO to accept the said letter containing details or reject the same as it was not filed within the stipulated time. On the contrary, if the ld. AO himself grants time to the assessee to furnish the details till the last moment, then no fault could be attributed to the assessee. In such circumstances, the only irresistible conclusion that could be drawn is that the ld. AO is not serious about the statutory deadlines provided in the Act. In our considered opinion, if the arguments of the Ld. CIT DR are to be appreciated that the ld. JCIT need not apply his mind while granting approval of the draft assessment orders u/s 153D of the Act as it is not provided in section 153D of the Act, then it would make the entire approval proceedings contemplated u/s 153D of the Act otiose. The law provides only the Ld. AO to frame the assessment, but, certain checks and balances are provided in the Act by conferring powers on to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 19 the ld. JCIT to grant judicious approval u/s 153D of the Act to the draft assessment orders placed by the Ld. AO.
Let us now examine whether in the aforesaid background of the scheme of the Act, whether the approval in terms of section 153D of the Act has been granted by the ld. JCIT in a judicious way after due application of mind or not, in the instant case. We have gone through the approval granted by the ld. 140-Chd- 2024 & Others – S.P. Singla Constructions 20 JCIT on 27.03.2015 u/s 153D of the Act. The said approval letter clearly states that a letter dated 27.03.2015 was filed by the Ld. AO before the ld. JCIT seeking approval of draft assessment order u/s 153D of the Act. The ld. JCIT has accorded approval for the said draft assessment order on the very same day i.e. on 27.03.2015 for various assessment years for 232 files on a single day. In any event, whether is it humanly possible for an approving authority like the ld. JCIT to grant judicious approval u/s 153D of the Act for all the assessment years on a single day is the subject matter of dispute before us. Further, we find that similar issue has been addressed by the Hon'ble Jurisdictional High Court in the case of PCIT vs. Anju Bansal in ITA 368/2023 order dated 13.07.2023 wherein, under similar circumstances, the Hon'ble Delhi High Court categorically held that statutory approval given by a quasi judicial authority without due application of mind as contemplated in section 153D of the Act would be fatal to the entire search assessment proceedings. The relevant operative part of the said order is reproduced below:- "12. This aspect was brought to the fore by the Tribunal in the impugned order. The Tribunal, thus, concluded there was a complete lack of application of mind, inasmuch as the ACIT, who granted approval, failed to notice the said error. 12.1 More particularly, the Tribunal notes that all that was looked at by the ACIT, was the draft assessment order.
13. In another words, it was emphasised that the approval was granted without examining the assessment record or the search material. The relevant observations made in this behalf by the Tribunal in the impugned order are extracted hereafter: " 17.1 However, in the present case, we have no hesitation in stating that there is complete non-application of mind by the Learned Addl. CIT before granting the approval. Had there been application of mind, he would not have approved the draft assessment order, where the returned income of Rs.87,20,580/-, Similarly, when the total assessed income as per the AO comes to Rs. 16,69,42,560/-, the Addl. CIT could not have approved the assessed income at Rs. 1,65,07,560/- had he applied his mind. The addition of Rs. 15,04,35,000/- made by the AO in the instant case is completely out of the scene in the final assessed income shows volumes . 17.2 Even the factual situation is much worse than the facts decided by the Tribunal in the case of Sanjay Duggal (supra). In that case, at least the to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 20 assessment folders were sent whereas in the instant case, as appears from the letter of the Assessing Officer seeking approval, he has sent only the draft assessment order without any assessment records what to say about the search material. As mentioned earlier, there are infirmities in the figures of original return of income as well as total assessed and the Addl. CIT while giving his approval has not applied his mind to the figures mentioned by the AO. Therefore, approval given in the instant case by the Addl. CIT, in our opinion, is not valid in the eyes of law. We, therefore, hold that approval given u/s 153D has been granted in a mechanical manner and without application of mind and thus it is invalid and bad in law and consequently vitiated the assessment order for want of valid approval u/s 153D of the Act. In view of the above discussion, we hold that the order passed u/s 153A r.w.s. 143(3) has to be quashed, thus ordered accordingly. The ground raised
by the Assessee is accordingly allowed". [Emphasis is ours]
14. In this appeal, we are required to examine whether any substantial question of law ari ses for our consideration.
15. Having regard to the findings returned by the Tribunal, which are findings of fact, in our view, no substantial question of law arises for our consideration. The Tribunal was right that there was absence of application of mind by the ACIT in granting approval under Section 153D. It is not an exercise dealing with a immaterial matter which could be corrected by taking recourse to Section 292B of the Act.
16. We are not inclined to interdict the order of the Tribunal."
10. The ld. AR also placed on record the recent decision of Hon‟ble Jurisdictional High Court in the case of PCIT vs Shiv Kumar Nayyar reported in 163taxmann.com9 (Del) wherein it was held that where order of approval u/s 153D of the Act for relevant assessment year was granted by Additional Commissioner who had granted approval for 43 cases on a single day without perusing the draft assessment orders at all and without an independent application of mind, impugned assessment order was rightly declared to be illegal by Tribunal.”
16. In view of the above, we are of the view that the power of approval under Section 153D of the Act is statutory in nature granted pursuant to the specific provisions of Section 153D and is not a mere administrative exercise. The power of approval vested with JCIT under Section 153D of the Act entails an application of mind while perusing the assessment records, seized records, replies of assessee and issues raised by the AO and the procedure followed for framing of assessment order. The act of granting approval under Section 153D of the Act is not a mere internal process relating to administrative functioning but is a quasi-judicial function mandated by specific provisions of the Act with an underlying requirement of it being based on due application of mind. This being the situation, the approval to be granted under Section 153D of the Act for passing of the assessment order by the JCIT is reflective of the Act to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 21 of confirming, rectifying, sanctioning or convention to an act or thing done by another authority in exercise of the statutory mandate and is not an internal administrative process of the Department but the exercise of a quasi-judicial function. As in the present case, the assessee filed set of assessment orders, demand notice and the computation sheet issued by the same Assessing Officer and the approval granted by the JCIT under Section 153D of the Act, which clearly remarks as “………………….”
17. From the above noting (which are in Hindi), means that simplicitor approval of draft assessment order by the JCIT under Section 153D of the Act is clearly without application of mind as no verification of assessment records, seized material or the replies of the assessee were considered by the JCIT while granting approval. Hence, the approval is mechanical in nature and does not stand to the scrutiny of law. Hence, we quash the assessment order framed in consequence to approval granted under Section 153D of the Act.”
13.1 In the light of propositions laid down in all these judgements, if we examine the facts of the present case, then it would reveal that more than 100 assessments have been sent to the ld. Addl. CIT for approval. It was not humanly possible for the ld. Addl. CIT to go through these assessments of different assessees alongwith the seized material used in each case. For example, in the case of the assessee, assessment is running into 25 pages in each year, meaning thereby 175 pages of the assessment for six years in the case of the assessee were sent to the approving authority. Similarly, there were 15 more assessees whose six years’ assessments have been sent to the ld. Addl. CIT simultaneously with the assessments of the assessee. If all those pages are to be counted, then they are more than 1000 to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 22 pages. Practically, it was impossible for the ld. Addl. CIT to go through all these pages and apply his mind. Therefore, the proposition laid down in all these judgements is fully applicable in the case of the assessee. We find that ITAT Chandigarh in the case of S.P. Construction has made reference to the judgement of ITAT Delhi in and 2693/Del/2017 in the case of Seth Realtors Ltd. In this judgement, ITAT Delhi has taken note of the submissions made by the ld. CIT DR before us. In paragraph 8 of this judgement, the Co-ordinate Bench of the ITAT Delhi has duly taken note of the submissions made by the CIT DR that Addl. CIT is associated with the assessment proceedings from very inception. The ITAT has observed that if scheme of the Income Tax Act is being perused, then it would reveal that it provides a leeway to both the ld. AO as well as JCIT to even ignore the conclusion drawn in the Appraisal Report by the Investigation Wing and take a different stand in the assessment proceedings.
13.2 The argument of the Revenue that JCIT is involved in the search assessment right from the receipt of copy of Appraisal Report, has no substance. Thus, this argument has duly been dealt with by the ITAT Delhi Bench and we concur to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 23 with the finding of the ITAT Delhi on this aspect. The ITAT, across India has followed this proposition and Hon'ble Delhi High Court, Allahabad High Court, Bombay High Court, Orissa High Court has affirmed the conclusions drawn by the ITAT that if it was not humanly possible to go through all the assessment orders alongwith the seized material, then it is to be construed that approval granted by the Addl. CIT/JCIT is not in consonance with the scheme of Income Tax, rather it is being granted in a mechanical way which would render the assessment order unsustainable in the eyes of law. Accordingly, we allow this ground of appeal and quash all the assessment orders for A.Y. 2016-17, 2017-18 and 2019-20. As far as A.Y. 2020-21 is concerned, the assessment order has been passed u/s 143(3). It is a normal scrutiny assessment and no approval was required u/s 153D of the Income Tax Act. Therefore, this issue is not involved in this year, though assessee has raised this issue in its Cross Objection. Accordingly, this ground of Cross Objection in assessment year 2020-21 is rejected.
14. Apart from the above preliminary issue, the next contention raised by the ld. counsel for the assessee for A.Y. 2016-17, 2017-18 and 2019-20 is that no search was carried to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 24 out upon the assessee, therefore, no assessment u/s 153A ought to have been passed. This issue was argued by the ld. counsel for the assessee, however, on 05.05.2025, the Bench has passed the following order :
“The Revenue is in appeal against the separate orders of the CIT(A) dated 16.01.2024 passed for assessment years 2016-17, 2017-18, 2019-20 and 2020- 21. On receipt of notice in the appeals of Revenue, assessee has filed Cross Objections bearing No. 17, 18 and 19 in assessment year 2016-17 to 2019-20.
2. The Registry has pointed out that these Cross Objections are time barred by 326 days. Assessee has filed an application for condonation of delay.
3. It has been submitted before us that in the Cross Objections, assessee has raised a jurisdictional issue on the ground that no Warrant of Authorization was issued to conduct the search upon the premises of the assessee. According to the ld. Counsel for the assessee, the Warrant of Authorization was issued in the name of the Directors and not in the name of the assessee. Therefore, assessment orders passed under Section 153A are not sustainable in assessment year 2016-17 to 2019-20.
4. The ld. CIT DR, at the very outset submitted that though this issue was raised before the CIT(A) also and it appears that a remand report was called for, but exact copy of Warrant of Authorization has neither been reproduced in the impugned order nor is available on the record. The CIT(A) has noted this argument but conclusively did not adjudicate it. Therefore, it is not practically possible for him to argue the Cross Objections unless a Report from the AO is being called for whether any Warrant of Authorization is existing or not.
5. After hearing both the sides on this issue, we are of the view that AO deserves to be given an opportunity to submit copy of Warrant of Authorization before the next date of hearing. The AO is directed to submit copy of Warrant of Authorization issued against the name of the assessee. We will also appreciated if ld. AO would join hearing through virtual mode on the next date and keep the record ready with him.
6. Hearing is adjourned to 03.06.2025. Copy of this ordersheet be supplied to both the parties. Ld. CIT DR would apprise the ld. CIT (Administration.) having territorial jurisdiction over the AO for ensuring the compliance.
7. Appeals are treated as partly heard.” to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 25 14.1 The ld. CIT DR has placed on record a communication received from the AO dated 23.05.2025. The ld. CIT DR has submitted that though copy of the Panchnama drawn in a search in the name of the assessee is not available with the Revenue, but a Warrant of Authorization for carrying out the search is available. He placed on record copy of this Warrant of Search and submitted that a valid search was carried out at the premises of the assessee. On the other hand, ld. counsel for the assessee has filed a detailed written submission, which reads as under :
Submission to additional ground No. 1 on the issue, if no search conducted then section 153A cannot be invoked:-
1.1 It is submitted that the case was heard by the Hon'ble Bench on 05.05.2025 and on that date in order to adjudicate the grounds of appeal in the cross objections of the assessee with regard to the fact that there was no search warrant in the name of assessee and, as such, the completion of assessment as framed by the AO u/s 153A is void ab-initio. The Hon'ble bench have been kind enough to record a finding in 05.05.2025 asking the Ld. CIT (DR) to produce the relevant copy of warrant of authorization, if any, and that copy of the warrant authorization has been forwarded to me on 29.05.2025 and, before, we go to the comments on the above said search warrant, we may submit as under:- 1.2 The Company M/s AB Alcobev Pvt. Ltd. has a registered Office at 154, 1st Floor, Aggarwal Plaza-I, Sakarpur, North West Delhi and the assessment order and the order of the CIT(A) was passed at the above said address. 1.3 We have vehemently submitted that the provisions of Section 153A of the Income Tax Act are not applicable in the present case, as only a survey under Section 133A was conducted on the assessee, and no Panchnama was executed in the name of the assessee pursuant to the search warrant. The summary of submissions is as under: • A search was carried out in Kothi No. 140, Deepawali Enclave, New Delhi as per Panchnama and its annexure placed at pages 142 to 158 of the paper book. Where the one of the director Sh. Ajay Kumar Bindal & Smt. Sunita Bindal are residing. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 26 • No search operation was actually conducted at the premises of the assessee. • The warrant of authorization does not mention the assessee's address as the place to be searched. • No Panchnama was drawn in the name of the assessee pursuant to the said warrant.
• No documents or materials were seized or impounded from the assessee during the course of the search. • The warrant of authorization dated 26.02.2020, issued in the name of the assessee, remains unexecuted. • Only a survey under section 133A was conducted at the premises of the assessee's company, as per proof placed at page 160 of the Paper Book-II and the order u/s 133A (3) (ia) was passed vide order, dated 27.02.2020 as per page 159 of the Paper Book. • A mere survey does not fulfil the statutory requirements for invoking section 153A of the Income Tax Act. • Therefore, the Assessing Officer lacked valid jurisdiction to initiate or proceed under section 153A against the assessee. 1.4 The company was constructing a Mall at CP-67, Sector 67, Airport Road, Mohali and a Panchnama was drawn at the above said premises, in the name of Homeland Buildwell Pvt. Ltd., which has no link or connection with the said company. Copy of the Panchnama in the name of other company is placed at pages 161 to 170 of Paper Book-II. The search started at the above premises at 4.40 PM and where the search conducted at the premises at Delhi started at 8.30AM. 1.5 We objected to the proceedings u/s 153A before the AO vide our letter, dated 01.03.2021, placed in Paper Book at pages 173 to 174 and another letter, dated 10.09.2021 placed at pages 176 to 177 and asked for copy of the search warrant and the Panchnama coupled with the satisfaction note in the case of assessee company. 1.6 The Ld. Assessing Officer vide letter, dated 24.09.2021, copy placed at pages 171 to 172, mentioned that the search was initiated on the basis of warrant of authorization issued by the Principal Director of Investigation on 24.02.2020 as the books of accounts and other documents were suspected to be found at the premises of the director of the company, Kothi No. 140, Deepawali Enclave, New Delhi and stated that, the selection of the case of AB Alcobev Pvt. Ltd. u/s 153A is in order. 1.7 We filed a detailed reply on the next day i.e. on 25.09.2021 , which copy of the letter has been placed at pages 178 to 198 and the relevant discussion on the issue that no search having been conducted in the name of company is from pages 178 to 186 of Paper Book-ll, alongwith the case laws. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 27 1.8 Further, we had made these submissions before the Ld. CIT(A) starting from page 16 of his order, contending to page 20 of the order of CIT(A) that no panchnama was drawn in the name of company i.e. M/s AB Alcobev Pvt.Ltd. and the reference was given to all the letters as stated above. 1.9 Further, we wish to bring to your kind notice that in our submission before the CIT(A) at page 18, we have summarized our arguments from para 1.9 to para 1.10, which are being relied upon. 1.10 It is further submitted that from para 1.11 to para 1.14 of the order of CIT(A), we have dealt that initiation of search and conduct of search are two different aspects of search and seizure proceedings and on a plain reading of section 153A r.w.section 153B, to be a valid search can be said to have been initiated, only on the execution of search warrant authorization. l.11 We have reproduced section 153A and 153B at page 19 of the Paper book and reading of both section makes it clear that on the conduct of search, the six assessment years immediate to assessment relevant to previous year, in which, such search is conducted are required to be assessed/reassessed and further, 153B lays the time limit for completion of assessment proceedings from the last of the authorization for search u/s 132. Then in the proviso to section 153B clause (a) & (b), it has been stated that on the conclusion of search as recorded in the last Panchnama drawn in relation to any person, in whose case, warrant of authorization has been issued, clearly brings out the case for execution of search warrant is sine- que for the purposes of completion of assessment and, therefore, for the purposes of determining the assessment year, for which, the assessment u/s 153A is required to be made, it is pre requisite to ascertain the financial year, in which, the search was actually conducted because otherwise, scheme related to search, would not work in the absence of following:- "i) Years(s) of assessment covered u/s 153A cannot be ascertained, without actual conduct of search. (i) Period of limitation u/s 153B for completion of assessment cannot be determined without execution of authorization of Warrant. Therefore, under the scheme of search related assessment, actual conduct of search or execution of warrant of authorization is mandatory otherwise scheme of assessment in search related matter would not work. It is a well settled law as well as evident from plain reading of section 153 B of I.T. Act, that actual conduct of search or execution of warrant of authorization can be ascertained from the Panchnama drawn during the course of search. However, in the present case, warrant of authorization of search/Panchnama has not been executed. Therefore, no assessment order u/s 153 A can be made by the A.O., hence initiation of assessment proceeding u/s 153 A is invalid, bad in law & without jurisdiction." 1.12. Reliance is being made on the following judgments on the above issue: - (i) J.M. Trading Corpn. Vs ACIT, as reported in [20081 20 SOT 489 (MUM) as per copy of order is placed in Judgement Set at serial no 1. (Refer page no. 1-9 of case law index book)
ITA Nos.356 to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 28 "Section 153A, read with section 132 of the Income-tax Act, 1961 - Assessment in case of search on requisition - Assessment years 1998-99 to 2001-02 and 2004-05 - Whether provisions of section 153A are only applicable in case valid search is conducted against assessee under section 132 - Held, yes" This judgment of Mumbai Bench has been upheld by the Hon'ble Bombay High Court in the judgement, dated 29.06.2009 in and the Hon'ble Supreme Court has dismissed the SPL filed by the revenue on 06.09.2010. while deciding the CC No. 13456/2010 against the judgment of Hon'ble Bombay High Court, the above finding has been given in the following case of Chandigarh Bench of the ITAT as in the case of Indo Pacific Finlease Ltd. and by Ahmedabad Bench in the case of Dr. Manshu Kanjibhai. ii) Above order of CIT Vs. J.M TRADING CORPN. confirmed by the High court of Mumbai in ITA No. 276/2009. (BOMBAY HC). Copy of order is placed in Judgement Set at serial no 2. (Refer page no. 10-12 of case law index book) iii) Order of Hon'ble Bombay High court was challenged by the department in the case of CIT Vs. J.M TRADING CORPN, wherein SLP filed by the Department was dismissed by the Hon'ble Apex Court in CC 13456/2010 vide order dated 20.08.2010. Copy of order is placed in Judgement Set at serial no 3. (Refer page no. 13 of case law index book) iv) Indo Pacific Finlease Ltd. Vs ACIT, reported in [2017] 83 taxmann.com 265 (Chandigarh-Trib.), and in this judgment, the following finding has been given:- (Copy of order is placed in Judgement Set at serial no 4). (Refer page no. 14-18 of case law index book) "12. In another judgment of the Hon'ble Gujarat High Court in the case o f Jolly Fantasy World Ltd. {supra), it has been held that in the absence of warrant authorization in the name of the assessee, the assessment is ab initio void. We would also like to refer to another order of the Mumbai Bench of the ITAT in the case of J.M. Trading: Coryn. v.Asstt. CIT [20081 20 SOT 489 (Mum.), which has been upheld by the Hon'ble Bombay High Court in its judgment dated 29.6.2009, in and further, the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue as on 6.9.2010 while deciding CC No. 13456/2010 against the judgment of Hon'ble Bombay High Court. In this case, the ITAT held that, no search being conducted against the assessee, the period of operation to which the provisions of section 153 A of the Act would apply, cannot be determined and the invoking of provisions of section 153A of the Act is baseless. It. was also held that the provisions of section 153A of the Act are only applicable in case valid search is conducted against the assessee under section 132 of the Act and ITAT also held that proceedings under section 143(3) r.w.s. 153A of the Act are null and void and the same are cancelled." iv) Similarly, reliance is made on the judgment of Ahmedabad "D" Bench in the case of Dr. Mansukh Kanjibhai Shahi Vs ACIT, in which, it has been held as under:- (Refer page no. 19-31 of case law index book) to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 29 "Section 153 A, read with section 132, of the Income-tax Act, 1961 - Search and seizure - Assessment in case of - Assessment years 2002- 03 to 2004-05 - Whether in view of provisions of section 153 A, once warrant of authorization or requisition is issued and search is actually conducted, panchnama is drawn, completed assessments for all relevant years would get reopened, irrespective of whether any incriminating material has been found or not in relation to a particular assessment year - Held, yes - Whether, however, warrant of authorization shall have to be executed by authorized officer in order to justify invoking of jurisdiction by Assessing Officer under section 153 A - Held, yes - A survey action under section 133A was carried out at premises of 'K' Trust in which assessee was Manag- ing Trustee - Survey proceedings led to detection of unaccounted bank accounts - Statement of assessee was recorded during survey wherein total amount of Rs. 1,93,99,865 was admitted as unaccounted money - Subsequently, a search warrant was issued in name of assessee in capacity of managing trustee and aforesaid cash was seized - Thereupon, proceedings were initiated against assessee under section 153A - Assessee challenged validity of said proceedings contending that search warrant having not been served upon him, there had to be no proceedings under section 132 and, hence, there was no question of invoking section 153 A - It was seen from records that, though warrant of authorization was issued in name of assessee, being Managing Trustee of Trust, yet it was admitted fact that no search operation was conducted in premises of assessee - Besides, no panchnama was drawn in pursuance of warrant of authorization in name of assessee in his individual capacity - Whether, on facts, conditions precedent for initiating proceedings under section 153A against assessee in his individual status were not complied with and, therefore, impugned proceedings deserved to be quashed - Held, yes." v) 2025 (2) TMI 1030 - ITAT DELHI SHORYA TRADING COMPANY PVT. LTD. VERSUS ACIT, CENTRAL CIRCLE, KARNAL. (Refer page no. 45-49 of case law index book) Assessment u/s 153 A - Assessment in case of search or requisition - as argued no material belonging to or pertaining to assessee was seized from the premises of the director where search was conducted - HELD THAT:- Notice u/s 153 A of the Act can be issued only in the case of a person where a search is initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A of the Act. Admittedly in the case of the assessee neither of any such action was carried out thus the notice issued u/s 153A dt. 23.01.2019 is without jurisdiction and is bad in law. As no search warrant was issued in the name of the assessee thus no proceedings u/s 153A could be initiate in the case of the assessee accordingly the notice issued us 153 A is hereby quashed. Appeal of the assessee is allowed. vi) 2022 (12). TMI 1357 - ITAT AMRITSAR SMT. KSRISHNA DEVI EDUCATIONAL CHARITABLE SOCIETY VERSUS DY. COMMISSIONER OF INCOME TAX. CENTRAL CIRCLE-II, JALANDHAR. (Refer page no. 93-96 of case law index book) to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 30 Assessment u/s 153 A - Incriminating materials found during the search - HELD THAT:- In the entire proceeding, the revenue authority was unable to prove that the search was conducted against the assessee. In Panchnama, there is no assessee's name. The revenue was unable to bring any such incriminating materials on basis of the addition was made U/s 153 A. AO had wrongly applied the jurisdiction for assessment u/s 153 A of the Act. Also, there is no reference of incriminating documents in the assessment order. The order passed by the Id. AO is itself nullity. The addition which was made by the Id. AO is quashed. vii) 2022 (8) TMI 1065 - ITAT NAGPUR M/S NEW VIRAJ HOUSING AGENCY VERSUS ACIT CENTRAL CIRCLE 1 (1), NAGPUR (Refer page no. 50-60 of case law index book) Assessment u/s 153A - only survey operation under section 133A - Whether valid search is conducted against the assessee u/s 132? - HELD THAT:- We find that the search has been initiated in the name of the assessee firm along with names of partners appearing on the warrant of authorization issued u/s 132(1) but no search was conducted at the business premises of the assessee firm. The address mentioned in the partnership deed, notice issued u/s. 133A, the PAN, IT Data base and ITR, copies of which were filed before us, clearly prove that 40, Deshmukh Apartments, Dattatray Nagar, Nagpur where the search was conducted is not the business address of the assessee firm. The search was concluded but no panchnama was drawn in the name of the assessee firm. Therefore, the conditions as stipulated for assuming the jurisdiction u/s. 153A, in our view, have not been satisfied. We do not agree with the contention of the CIT(A) that since, the premises belonged to the partners, search carried out at the residence of partners is a search conducted at the assessee firm. The firm is a separate taxable unit under the income tax act and in view of the Hon'ble Bombay HC decision in the case of Tirupati Oil Corporation [2000 (2) TMI 42 - BOMBAY HIGH COURT], Karnataka High Court decision in Nenmal Parmal [1991 (11) TMI 49 -KARNATAKA HIGH COURT] and in Govind G. Sarawagi HUF [2015 (11) TMI 993 - ITAT AHMEDABAD] it cannot be said that there was any search on the assessee firm. In view of these facts, we are of the opinion that the conditions stipulated u/s. 153A, for the issue of notice, are not satisfied. Until and unless the Assessing Officer assumes the valid jurisdiction u/s. 153A the assessment made in consequence of the notice issued u/s. 153A, in our view is invalid and void ab initio. Accordingly, ground No 1 raised by the appellant for all the assessment years is allowed and we quash the assessment order passed u/s. 153A r.w.s. 143(3). viii) Judgment in the case of ACIT-2 (1), RAIPUR VERSUS S.P. COLD STORAGE as reported in 2016 (5) TMI 321 - ITAT BILASPUR. (Refer page no. 97-105 of case law index book) (Refer page no. of case law index book) Assessment u/s 153A - Held that:- Revenue had conducted survey operation at the business premises of the assessee firm in which materials are seized. This survey does not entitle the Revenue to initiate proceedings u/s 153A. having to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 31 searched the residence of partners of the assessee firm Revenue could have initiated action against the assessee firm only u/s 153C had any document pertaining to the firm were seized from the residential premises. Since no material was seized, the revenue could not have initiated proceedings against the assessee firm u/s 153C. in these circumstances in our considered opinion the revenue cannot take shelter of provisions of section 153A for initiating action against the assessee which we have found to be not a valid one qua the assessee firm. DR cannot be a reasoning to hold that by means of an invalid search Revenue can take recourse to provisions of section 153 A. Hence we hold that since the warrant of search was not executed at the business premises of the assessee firm and from the place of search no material whatsoever relating to the firm was found nor any submission was recorded from the partners of the firm nor the search notice was served upon the partners of the firm, the search conducted qua the assessee firm was not a valid search. In such circumstances, proceedings initiated u/s 153a in the case of the assessee firm are invalid. Accordingly we do not find any infirmity in the order of the learned CIT (Appeals) accordingly we uphold the same. - Decided in favour of assessee. ix) CIT Vs Neelkanth Lease Finance, reported in [2016] 73 taxmann.com 159 (SC). (Refer page no. 32 of case law index book) x) CIT Vs Jolly Fantasy World Ltd., reported in [2015] 57 taxmann.com 80 (Gujarat HC) (Refer page no. 33-43 of case law index book) xi) Jindal Stainless Ltd. Vs ACIT, reported in [2009] 120 ITD 301 (Del.)(Refer page no. 44 of case law index book) Thus, in nutshell, no panchnama was drawn and even if it is said that the search has been initiated but without execution of search, the completion of assessment u/s 153A are bad in law and, thus, it suffers from non-curable defects, which we have submitted at page 20 of the order of CIT(A). 1.13 Further coming to the 'search warrant' for which, a copy has been given to us, from the bare reading of search warrant, it has been assumed in paragraph-3, that if certain summons are issued to the assessee, where four names have been mentioned including, of 'AB Alcobev Pvt. Ltd.' and, then, it has been assumed that the said parties would not produce such books of accounts or other documents and then, it has been stated in the last paragraph that the above parties are in possession of the money, bullion, jewellery or other valuable articles, which were not disclosed for the purposes of Indian Income Tax Act, 1961 and further, it is suspected that such books of accounts or other documents, money, bullion and jewellery have been kept and can be found in 'Kothi No. 140, Deepawali Enclave, Pitampura, New Delhi' for which, Panchnama is at pages 142 to 158 of PB-II and the Panchnama was drawn in the name of 'Sh.Ajay Kumar Bindal and Smt. Sarita Bindal', but no Panchnama was drawn in the name of 'AB Alcobev Pvt. Ltd.' and rather the survey was carried out at the registered office of the company AB Alcobev Pvt. Ltd. at Delhi address as per page 160 and 159 of Paper Book-ll. 1.14. Thus, our contention is that neither any search warrant was issued specifically nor it was executed in the name of AB Alcobev Pvt. Ltd. and as per decided case laws, the assessment framed u/s 153A are void ab-initio and deserves to be quashed, and specially on the basis of the Judgement in the case of M/s. J.M. Trading Corp., where to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 32 the matter has travelled upto Hon'ble Apex court and jurisdictional bench of Chandigarh. 1.15. Even otherwise, on the issue of merits the addition have been made on the basis of the documents recovered from the Laptop of Sh. Monu, and that issue had come up before the Hon'ble ITAT Chandigarh bench in the case of Sh. Paramjit Singh Mogla, in vide order dated 25.03.2025, the addition as made by the department on the basis of material FOUND FROM Shri Monu have been deleted and the copy of said judgement is placed in the judgement set filed on 28.04.2025 at pages 399-406.”
We have duly considered the rival contentions and gone through the record carefully. A conjoint reading of Section 153A alongwith 153B of the Act would reveal that in a case where search has been initiated u/s 132 or books of accounts or other documents or any asset are requisitioned u/s 132A, then assessment u/s 153A would be made in respect of each assessment year falling within six assessment years from the end of the financial year in which the last of authorization for search u/s 132 or for requisition u/s 132A was executed, meaning thereby that Section 153A has start with a non- obstante clause and it has a over riding effect on all other Sections, namely, 139, 147, 148, 149, 151 and 153. Sub- clause (a) of Section 153B(1) would contemplate the time limit to frame assessment u/s 153A and it provides that assessment will be made in respect of each assessment year falling within six assessment years from the end of the financial year in which the last of authorization for search u/s 132 or a to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 33 requisition u/s 132A was executed, meaning thereby that once Warrant of Authorization was executed and a Panchnama was drawn, exhibiting the conclusion of the search, then only limitation would start for framing the assessment u/s 153A. If no Warrant was executed or Panchnama was drawn, then it will be construed that no search was executed upon the assessee.
15.1 In the light of above, if we peruse the alleged authorization for carrying out the search placed on record by the ld. CIT DR, then it would reveal that this Warrant of Authorization has been issued in Form No. 45 under Rule 112 of Income Tax Rules. We deem it appropriate to take note of relevant part of this Form which reads as under : if a summons under sub-section (1) of Section 37 of the Indian Income-tax Act, 1922 or under sub-section (1) of Section 131 of the Income-tax Act, 1961, or a notice under sub-section (4) of Section 22 of the Indian Income-tax Act, 1922 or under sub-section (1) of Section 142 of the Income-tax Act, 1961 is issued to Ajay Kumar Bindal, Smt. Geeta Bindal AB Alcobev Pvt. Ltd., Homeland Buildwell Pvt. Ltd. (name of the person) to produce, or cause to be produced, books of accounts or other documents which will be useful for or relevant to, proceedings under the Indian Income-tax Act, 1922 or under the Income-tax Act, 1961, he would not produce or cause to be produced such books of accounts or other documents as required by such summons or notice; Sarvashri/Shri/Shrimati as specified above are in possession of money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 34 been, or would not be disclosed for the purposes of the Indian Income-tax act, 1922, or the Income-tax Act, 1961; And whereas I have reason to suspect that such books of accounts, other documents, money, bullion, jewellery or other valuable article or thing have been kept and are to be found in Kothi No. 140, Deepali Enclave, Pitampura, New Delhi (specify particulars of the building, place, vessel, vehicle, aircraft) : This is to authorize and require you as specified overleaf [name of the Deputy Director or of the Deputy Commissioner or of the Assistant Director or of the Assistant Commissioner or the Income-tax Officer] ……………..
15.2 A perusal of this Form would reveal that in 3rd paragraph, it would contemplate if a summon u/s 142(1) is being issued to (four names including assessee) to produce or caused to produce books of accounts, other documents, which will be useful for relevant to the proceedings under the Income Tax Act, 1961.
15.3 In the next paragraph, it again made reference to all the four persons mentioned in the earlier paragraph and then exhibit the evidence on which search is to be carried out i.e. ‘Kothi No. 140, Deepali Enclave, Peetampura, New Delhi’. The above residence is not the registered office of the assessee. It is a residential address of one of the Directors. The Registered Office of the assessee is at ‘154, First Floor, Aggarwal Plaza, Shakarpur, New Delhi’. No search was carried out on this premises. No Panchnama was drawn in the name of the assessee. The Panchnama was drawn only in the name of the to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 35 Director i.e. Smt. Geeta Bindal. This fact has been brought to the notice of the AO by the assessee on a number of times and the copy of the correspondence has been placed on page No. 173 to 177 of the Paper Book. The assessee has written a letter once more, whose copies are available on pages No. 178 to 198. The assessee has been informing the AO time and again that no search was carried out at the premises of the assessee and this proceeding is void ab-initio but ld. AO did not adjudicate this objection nor pay any attention towards this objection. The assessee has raised a specific ground before the ld. First Appellate Authority but ld. CIT (Appeals) has not adjudicated this ground. We find that in the absence of a search, no assessment order u/s 153A could be passed. Therefore, the assessment proceeding is void ab-initio and these assessment orders are not sustainable. Accordingly, assessments for the assessment year 2016-17, 2017-18 and 2019-20 are quashed.
Now we take assessment year 2020-21 i.e. ITA No. 360/CHD/2024.
The brief facts of the case are that assessee has filed its return of income on 28.12.2020 u/s 139(1) of the Income Tax Act, 1961 declaring total income of Rs.3,59,810/-. This to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 36 return was selected for scrutiny assessment and a notice u/s 143(2) was issued on 16.02.2021. The AO, thereafter, issued questionnaire u/s 142(1) and passed the scrutiny assessment on 30.09.2021.
17.1 In brief, case of the AO is that assessee has developed a commercial project, namely, CP-67 in Sector 67, Airport Road, Mohali. The assessee has accepted cash, over and above the actual sale proceeds disclosed in the books of accounts. The assessment order is a verbatim same except variation in the quantum than in other assessment years. The AO is mainly harbouring upon the information collected during the course of search conducted at the premises of M/s Homeland Buildwell wherein two laptops were seized. One laptop belongs to one Shri Monu who is erstwhile employee of M/s Homeland Buildwell and presently working with the assessee. The second laptop is of Shri Sanjiv Garg. The files in these laptops have been deleted but according to the AO, details have been retrieved and on the basis of these details, he arrived at a conclusion that assessee has received excess cash on account of sale of property in the project CP-67. In this way, ld. AO has made an addition of Rs.5,86,03,526/- to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 37 18. Dissatisfied with the assessment order, assessee carried the matter in appeal before the CIT (Appeals). It has raised two-fold of submissions, namely; (a) That the material recovered during the course of search at a third party could have not been used against the assessee in a regular assessment u/s 143(3). The AO should have passed the assessment order u/s 153C of the Income Tax Act, (b) That additions made by the AO are not based on any incriminating material pertaining to the assessee discovered during the course of search at the premises of M/s Homeland Buildwell, hence, it is not sustainable.
18.1 The ld. CIT (Appeals) has accepted the contention of the assessee on merit and deleted the addition, however, did not adjudicate the legal issue whether these additions could be made u/s 143(3) or not.
The ld. counsel for the assessee, at the very outset submitted that Section 153C starts with a non obstante clause (not-withstanding anything) therefore, it has an over-riding effect on other Sections, namely, Section 139, 147, 148 and 149 etc. If, during the course of a search, any money, bullion, jewellery or other valuable articles or things or any books of accounts seized or requisitioned, pertains to any other person to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 38 than the searched person, then the AO of the searched person would record his satisfaction that this material belongs to or pertains to the person not covered under the search operation and it demonstrates escapement of income. He would transmit his satisfaction alongwith seized material to the AO of such other person. The AO of the other person than the searched person would again record his satisfaction and initiate the proceedings u/s 153C. This proceeding is a mandatory one and the material collected from the search of M/s Homeland Buildwell could not be used against the assessee. If that material is excluded, then noting is being possessed by the revenue for making any addition.
The ld. CIT DR, on the other hand, relied upon the orders of AO. He submitted that though search warrant was issued against the name of the assessee, which was brought to our notice while dealing with the Cross Objection of the assessee in other assessment years, but could not controvert the fact that no Panchnama was drawn in the name of the assessee.
We have duly considered the rival contentions and have perused the record carefully. Section 153C has a direct bearing on the controversy. Therefore, we deem it to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 39 appropriate to take note of the relevant part of this Section which read as under :
Assessment of income of any other person. “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 (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 jurisdiction 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 :”
A bare perusal of this Section would reveal that if during the course of a search, any money, bullion, jewellery or books of account pertains to any person other than the searched person, then AO of the searched person would record his satisfaction exhibiting the fact that income pertaining to other assessee has escaped assessment. Thereafter, he would transmit that seized material alongwith his satisfaction note to the AO having territorial jurisdiction over such other person, the AO of the other to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 40 person would also record his satisfaction and issue notice under Section 153C of the Income Tax Act. In the present case, the AO of M/s Homeland Buildwell has not recorded any satisfaction that documents pertain to the assessee. The details are alleged to be retrieved from computer of two erstwhile employees of M/s Homeland Buildwell, namely Shri Monu and Shri Sanjiv Garg. At the most, information contained in their laptops partially be pertaining to the assessee, but in both the courses, he has to first record his satisfaction that income pertaining to the assessee M/s AB Alcobev has escaped assessment and therefore, he is transmitting these seized materials to the AO of the assessee but no such procedure has been followed. A similar situation has been dealt with by Hon'ble Karnataka High Court in the case of CIT Vs IBC Knowledge Park (69 taxman.com 108). The relevant observations contained in paragraph No. 49 to 51 are worth to be noted which read as under : “49. On a conjoint reading of the aforesaid provisions, it becomes clear that a search can take place only when a concerned officer has information and reason to believe that any person is in possession of any valuable assets, which has not been or would not be disclosed under the Act. In such a case, a search can take place. Following the search, if any books of account, other documents, any valuable assets is or are found in the possession or control of any person in the to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 41 course of a search, then the books of account or other documents or valuable assets could be seized. Under Section 153A, the satisfaction regarding an inference of liability must be recorded. The Assessing Officer has to issue notice to the assessee i.e., the person searched for the purpose of assessment or reassessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Section 153C as already noted, deals with assessment of income of any other person, when the Assessing Officer is satisfied that the books of account or documents or valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to under sub-section(l) of Section 153A of the Act. In such a case, the Assessing Officer has to issue notice to assess or reassess income of other person under Section 153A of the Act. Thus, the fact that search has been conducted would not justify issuance of notice under Section 153A. If it is only during a valid search when certain incriminating materials are detected, notice could be issued.
Chapter XIV-B which deals with special procedure for assessment of search cases deals with undisclosed income as a result of search, the computation thereof and such other provisions. Undisclosed income is defined in Clause (b) of Section 153B. Undisclosed income includes money, bullion or other valuable assets. It is only when the concerned officer has information about the same and has reason to believe that the said valuable assets has not been or would not be disclosed would give jurisdiction to the officer authorized to conduct a search operation. Therefore, the object and purpose of a search is to detect undisclosed income. As defined under Clause (b) of Section 158B of the Act, it is only when the undisclosed income is detected in a search operation that there would be assessment or reassessment, under the provisions of Chapter XIV-B of the Act, of the person who is presumed to be in possession of the undisclosed income. If during the course of search, any valuable assets belongs to or any books of account or document seized or requisitioned pertains to or any information contained therein relates to a person other than the persons searched, then the Assessing Officer, on recording satisfaction, can also assess and reassess the income of any other person. Thus, what emerges is that the sine qua non for the purpose of assessment or reassessment pursuant to a search operation is detection of undisclosed income. In fact, the initiation of search proceeding is also based on possession of information and reason to believe that a person is in possession of certain valuable assets, which has not been or would not be disclosed under the Act. The same is nothing but 'undisclosed income' as defined in Clause (b) of Section 158B(b) of the Act. This becomes even more clear on a comparison of section 132(l)(c) with Section 158B(b) of the Act. It is for the above reason that Sections 153A and 153C begin with a non-obstante clause in order to make these provisions exclusive of Sections 139, 147, 148, 149, 151 and 153 of the Act. If a search operation does not lead to detection of undisclosed income as defined in Chapter XIV-B of the Act, then no purpose would be served in reopening the assessment already completed. Also, if there is no detection of any undisclosed income, then there would be no need for pending assessment to abate. Thus, when particulars of income declared in the return is already available with the Assessing Officer, such income cannot form part of undisclosed income even if such return is filed beyond the time-limit, but before search, as long as they relate to any year covered in the block. Thus, a block assessment is justified only to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 42 on the basis of evidence found during search and the materials or information relatable thereto. Section 153C is in pari materia with Section 158BD conferring jurisdiction over third parties to a search providing certain conditions before the Assessing Officer having jurisdiction over a third party can assume jurisdiction. Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference should be recorded by the Assessing Officer having jurisdiction over the searched persons and communicated to the Assessing Officer having jurisdiction over such third party along with the seized documents and other incriminating materials on the basis of which the Assessing Officer having jurisdiction over such third party would issue notice under Section 153C. On receipt of the aforesaid material, the Assessing Officer having jurisdiction over such third party would proceed against the said third party. Thus, where no material belonging to a third party is found during a search, but only an inference of an undisclosed income is drawn during the course of enquiry, during search or during post-search enquiry, Section 153C* would have no application. Thus, the detection of incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of Section f 53C of the Act.
Before considering the decisions cited at the Bar, it is necessary to refer to a decision of the Hon'ble Supreme Court in Manish Maheshwah v. Asst. CIT [2007] 289 ITR 341/158 Taxman 258. In that case, search was conducted on one of the directors of the assessee-company M/s. Indore Construction (Pvt.) Ltd. When the search was conducted in the premises of the director Sri. Manish Maheshwari and his wife several incriminating documents relating to the company were seized. While dealing with Section 158BD of the Act, the Hon'ble Supreme Court has observed as under: "Condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other ,than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person. The conditions precedent for invoking the provisions of Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of the Act." to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 43 22.1 The other orders relied upon by the assessee of ITAT Chandigarh Bench are on the same line.
It is further observed that Section 158BD is pari materia to Section 153C and judgement of Hon'ble Supreme Court in the case of CIT Vs Calcutta Knitwears reported in 362 ITR 673 also laid down the conditions when 158BD could be invoked.
The ld. AO cannot take into consideration the material collected at the premises of third person without following mandatory procedure contemplated in Section 153C. Hence, the whole addition is not sustainable on this ground. In support of our above conclusion, we are fortified by the judgement of Hon'ble jurisdictional High Court rendered in the case of M/s Misty Meadows Private Limited Vs Union of India, Civil Writ Petition No. 5139 of 2024. The Revenue has challenged this decision in the Hon'ble Supreme Court and SLP has been dismissed. The Hon'ble Supreme Court has specifically observed that in view of the findings recorded in paragraph No. 33 of the Hon'ble High Court’s decision, no interference is called for. The brief to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 44 facts of the case before Hon'ble High Court were that a search & seizure operation was carried out at the premises of M3M (India) Ltd. situated at Paras Twin Tower-B, 6th Floor, Golf Course Road, Sector 54, Gurgaon. The Registered Office of the assessee was situated at Shop No. 4/36, DDA Market, Dakshin Puri Extension, New Delhi. According to the Revenue, while preparing Panchnama drawn at the Paras Twin Tower, Gurgaon, name of the assessee company was also added, though no search was carried out at the premises of the assessee. The AO has issued notice under Section 153A and ultimately passed the assessment order. The assessee had challenged this assessment order by way of a Writ Petition bearing No. 5139 of 2024. The Hon'ble High Court has allowed the writ petition and held that no search was carried out at the premises of the assessee, therefore, no notice ought to have been issued under Section 153A. Hon'ble High Court took cognizance of Section 153C of the Income Tax Act and recorded that the procedure contemplated in 153C is a mandatory procedure. The Hon'ble Court has also made reference to the decision of Hon'ble Supreme Court in the to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 45 case of Abhisar Buildwell Pvt. Ltd. 454 ITR 212 and others. We find that on the principle of law, whether without following the mandatory procedure of Section 153C, the document/information found at the premises of M/s Homeland Buildwell could be used in an assessment proceeding of the assessee undertaken under Section 143(3) or not. We have held that these documents/informations cannot be used and for relying upon these documents, the Revenue has to follow the mandatory procedure contemplated under Section 153C. Thus, additions are not sustainable.
On merits, Revenue has pleaded in its first ground of appeal that ld. CIT (Appeals) has erred in deleting the addition of Rs.5,86,03,526/- which was added by the AO on the basis of documentary evidence recovered during the search u/s 132 and the statement of key person/employee recorded u/s 132(4) of the Act. The Revenue has taken four more grounds but they are peripheral arguments in support of Ground No.1. The ld. CIT DR relied upon the assessment order and submitted that AO has extensively made reference to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 46 to the statement of Shri Monu who is an erstwhile employee of M/s Homeland Buildwell but currently employed by the assessee. He explained the modus-operandi as to how sales are materialized. He made reference to paragraph No.4 of the assessment order and submitted that AO has highlighted as to how cash was received by the assessee as well as M/s Homeland Buildwell from their customers over and above the actual sale consideration mentioned in the documents. He took us through the example of Dr. Ashok Kumar narrated by the AO in paragraph No. 4 of the assessment order.
25.1 The ld. counsel for the assessee, on the other hand, relied upon the finding of the CIT (Appeals) and has filed written submissions before us. The submissions of the ld. counsel for the assessee on this issue read as under : Submission to additional ground No. 2 on the issue of addition on the basis of third party evidence 1. That the search warrant was forwarded on 29th May 2025 for our comments. That the common search warrant mentions the appellant’s name in the third paragraph alongside Ajay Kumar Bindal, Sunita Bindal, and M/s Homeland Buildwell Pvt. Ltd. However, the search warrant was not executed in the name of the appellant, as the Panchanama does not list the appellant under the heading ‘Warrant in the Case of,’ but only names the directors, Shri Ajay Kumar Bindal and Smt. Sunita Bindal.
2. It is a matter of record that the search warrant was issued for premises at Kothi No. 140, Deepali Enclave, Pitampura, New Delhi—an address belonging to the directors. It is further noted that no search was conducted at the business premises or any other premises of the appellant. Only a survey operation was carried out by the department at the assessee’s to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 47 premises as per copy placed at page 159, 160 of the PB-II .
Additionally, a separate search was conducted on M/s Homeland Buildwell Pvt. Ltd., at Sector 67, Airport Road, Mohali, Punjab. (The copy of Panchanama is enclosed at page no. 161 to 163 of PB.) During search at Homeland buildwell Pvt. Ltd., certain annexures were found, based on which the Assessing Officer alleged that both Homeland Buildwell Pvt. Ltd. and the appellant were in receipt of unaccounted cash. The AO further noted that while the assessee was executing the project ‘CP-67’, Homeland Buildwell was engaged in the project ‘Homeland Heights’.
4. It is, evident that the documents relied upon by the Assessing Officer for making additions in the hands of the assessee were, in fact, found during the course of the search conducted on Homeland Buildwell Pvt. Ltd., and not in a search conducted on the assessee.
5. The AO has relied upon material seized during the search of M/s Homeland Buildwell Pvt. Ltd. to make additions in the hands of the assessee. In such circumstances, the proper course of action was to initiate proceedings under section 153C in the case of the assessee after duly recording satisfaction that the seized documents belonged to the assessee and represented its undisclosed 11 income. In the absence of such compliance, the assessment so framed is without jurisdiction and liable to be quashed.
The Assessing Officer has relied upon various documents and digital data seized during the search conducted at the premises of M/s Homeland Buildwell Pvt. Ltd., located at Plot No. 252, Sector 67, Airport Road, Mohali, Punjab. These documents were not recovered from the premises of the directors for which there was a search warrant but were found during an independent search of Homeland Buildwell Pvt. Ltd. The AO has drawn inferences and made additions in the case of the assessee based on the following: to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 48
That the addition was made on the basis of seized documents found during the course of search action u/s 132 of the Act carried out at the premises of third person and hence, outside the scope of proceedings u/s 153A of the Act. Furthermore, the Assessing Officer has not made any addition based on the documents seized from the premises of the directors located at Kothi No. 140, Deepali Enclave, Pitampura, New Delhi. It is a matter of record that all the documents found at the said premises pertain exclusively to the directors themselves. Accordingly, the addition made under section 153A of the Income Tax Act is bad in law, as no incriminating material relating to the assessee was found during the course of the search. Hence, the assessment framed under section 153A deserves to be quashed.
8. In this regards, reliance is being placed upon following case laws 1. 2025 (4) TMI 200 - ITAT DELHI DCIT, CENTRAL CIRCLE, GHAZIABAD VERSUS SUSHIL TYAGI, NEW DELHI AND DCIT, CENTRAL CIRCLE VERSUS YOGENDER SINGH, GHAZIABAD AND (VICE-VERSA), NAVEEN TYAGI VERSUS DCIT, CENTRAL CIRCLE, GHAZIABAD AND SARIKA TYAGI VERSUS DCIT, CENTRAL CIRCLE, GHAZIABA. (Refer page no. 61- 78 of case law index book) Addition made on account of alleged on-money paid by the assessee for purchase of flat - Addition u/s 153A - HELD THAT:- In the instant case, no satisfaction note was ever recorded and no proceedings u/s 153C of the Act were initiated on the assessee herein. AR also placed on record a copy of panchanama drawn on 05.11.2016 in the case of Shri Praveen Tyagi in the premises R-9/242, Rajnagar, Ghaziabad. On perusal of the said Panchnama, we find that the name of Shri Naveen Tyagi i.e. assessee herein, does not figure at all. Hence whatever is being found and seized in the aforesaid residential premises of Shri Praveen Tyagi, if they are sought to be used against the assessee, then the department should have proceeded on the assessee u/s 153C of the Act. It is not in dispute that the assessee was independently covered in the search u/s 132 of the act and proceedings were initiated u/s 153A 13 of the Act in his hands for the year under consideration. But that does not mean that evidence found in the search of a third-party premises could be used in the search assessment proceedings of the assessee u/s 153A. The legislature in its wisdom permits two search assessments to be framed for the same assessment year - one u/s 153A of the Act and other u/s 153C of the Act. In the search assessment u/s 153A of the Act, the assessment is to be framed based on the materials found during the course of search of that assessee plus the declared income. In the search assessment u/s 153C of the Act, materials found in the premises of third party could be used on the assessee provided search material has a bearing on determination of total income of the to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 49 assessee after recording due satisfaction note as mandated in Section 153C of the Act. This is the clear mandate of law in Section 153A and 153C of the Act. This mandate cannot be changed merely because Shri Naveen Tyagi (assessee herein) is also part of VVIP Limited. Hence, the alleged on-money payment cannot be considered in the search assessment framed in the hands of the assessee u/s 153A of the Act. ii) [2024] 111 ITR (Trib) 262 (ITAT [Ranchi]) ACIT, CENTRAL CIRCLE, DHANBAD VERSUS KRISHNA MURARI CHOUDHARY AND (VICE-VERSA) (Refer page no. 79-86 of case law index book) Assessment u/s 153A/153C - Addition u/s 68 - unexplained unsecured loan - assessee had not discharged his onus - additions made are in reference to material found and seized from the premises of the third persons in their respective search operations - CIT(A) deleted addition - HELD THAT:- It will be important to note that section 292C of the Act provides for a presumption that the documents, assets, books of account, etc found at the time of search in the premises of a person is always presumed to be belonging to him/them unless proved otherwise. The presumption derived under this section is a rebuttable presumption. Thus, the person on whom such a presumption is drawn, has got every right to state that the said document does not belong to him/them. AO, if he is satisfied with such explanation, has got recourse to proceed on such a person in terms of section 153C of the Act. In the present case, the seized documents used by the AO for making the additions u/s 153A while making assessment of the assessee were found and seized from the third persons as noted above. Thus, the only legal recourse available to the Revenue is to proceed on the assessee in terms of section 153C of the Act. 14 iii) 2020 (5) TMI 624 - ITAT DELHI DY. CIT, CENTRAL CIRCLE-29, NEW DELHI VERSUS M/S. S.R. CREDITS PVT. LTD. AND (VICE-VERSA) (Refer page no. 87-92 of case law index book) Assessment u/s 153A - reliance is placed on the incriminating material found during the course of search of third-part - HELD THAT:- As perused copy of the Panchnama through which the documents in dispute was seized. On perusal of the Panchnama, we find that the Panchnama is not containing the name of the assessee. Therefore, it is evident that the material relied upon for making the impugned addition was not found from the premises of the assessee. During relevant period, for using any material found from the premises of the third party during the course of the search in the assessment proceedings of the assessee, the Assessing Officer of the third party was required to record satisfaction as the material belonging to the assessee in terms of section 153C of the Act and was then required to proceed as per the provisions of section 153C of the Act. In the instant case, it is evident that addition in dispute has been made in the assessment completed under section 153A of the Act.
to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 50 Assessing Officer is required to follow the procedure laid down in the Act for making the assessment and he cannot devise his own procedure. In our considered opinion, when the case of the assessee is covered under the provision of section 153 of the Act and if reliance is placed on the incriminating material found during the course of search of third-party, then provisions of section 153C of the Act would be applicable and have to be adhered to. iv) 2022 (11) TMI 227 - ITAT DELHI M/S M3M INDIA HOLDINGS VERSUS THE A.C.I.T CENTRAL CIRCLE – 2 GURGAON, HARYANA FARIDABAD v) 2024 (6) TMI 209 - ITAT AMRITSAR SH. NASIR AHMAD DAR VERSUS DCIT/ACIT CENTRAL CIRCLE, SRINAGAR vi) [2024] 110 ITR (Trib) 329 (ITAT [Kolk]) RAVI BADALIA VERSUS DCIT/ACIT, CENTRAL CIRCLE-4 (1), KOLKATA AND ACIT, CENTRAL CIRCLE-4 (1), KOLKATA VERSUS RAVI BADALIA 15 vii) 2024 (1) TMI 750 - ITAT DELHI DIVYA EXIM PVT. LTD. C/O. KAPIL GOEL, ADV., RENU JAIN C/O. KAPIL GOEL, ADV., NISHA JAIN C/O. KAPIL GOEL, ADV. VERSUS DCIT CENTRAL CIRCLE – 25 NEW DELHI viii) 2020 (12) TMI 8 - ITAT CUTTACK KOTHAKOTA RAMA RAO VERSUS ACIT, CENTRAL CIRCLE-1, BHUBANESWAR ix) 2019 (2) TMI 639 - ITAT DELHI DY. CIT, DEHRADUN VERSUS KOHLI REALTORS (P) LTD. x) 2019 (9) TMI 95 - ITAT DELHI MR. TRILOK CHAND CHAUDHARY VERSUS ACIT, CENTRAL CIRCLE-26, NEW DELHI
With the assistance of ld. Representative, we have gone through the record carefully. The ld. First Appellate Authority has made a lucid analysis of each and every minute details in the impugned well-reasoned order running in 104 pages. For re-appraising ourselves, we deem it appropriate to take note of the finding of the CIT (Appeals) from para No. 5 page 78 to page 104 of the order, which read as under : to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 51 FINDINGS : OBSERVATIONS & DECISION 5. in the light of the above submissions, documents submitted by the AR, the various grounds of appeal are adjudicated, as below: 5.1 Summary of the facts highlighted by the AO in assessment order and during appellate proceeding. (i) There was a valid authorization of search. The objection of the appellant regarding initiation of proceeding u/s 153A has been disposed-off by the AO during assessment proceedings. In the present year assessment has been framed u/s 143(3) of the Act. (ii) From the premises site office of Unity Homeland Commercial Project at CP- 67, Sector 67, Airport Road, Mohali, it was found that the shops/ offices of the aforesaid project have been shown to be sold at prices less than the actual sale price agreed. (iii) From the laptop seized from the employee of the appellant company Shri Monu from site office of Unity Homeland Commercial Project at CP-67, Sector 67, Airport Road, Mohali, it was observed that there is data in that laptop which had details of booking with narration booking amount, discount, CA, TDS , amount received etc. On analysis of this document and on the basis of statement of Sh Monu and Sh Sanjeev , it was held that the word 'discount' means unaccounted cash receipt (i.e. on money). An example of a flat was quoted in the assessment order. The appellant could not explain these entries and therefore these amounts were added to the income of the appellant. For the current year such amount was Rs. 5,86,03,526/-.
5.2 Summary of the facts highlighted by the appellant during the appellate proceedings. (i) The search was conducted at the premises of the assessee without any valid letter of authorization and no panchnama was ever drawn in the name of the assessee. (ii) There is mechanical approval by the Addl. CIT u/s 153D. (iii) The receipt of alleged on money in the hands of the appellant company is just anassumption of the Ld. AO without any corroborating evidences in hand. (iv) The statements of persons being lower staff of the appellant company are not in the context of the appellant company and also very confusing and detailing much about a third party instead of the appellant who has no connection with the assessee. (v) The statements of the employees being relied upon by the AO have been recorded under threat and coercion and based on data seized from their personal laptops and the said data being not belonging to the assessee company at all. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 52 (vi) The loose documents relied upon by the Ld. AO are firstly seized from the personal laptops of the employees and has multiple data arid all is unsigned, unnamed and without bearing any signatures of the assessee. (vii) The actual agreements to sell and documents seized from the premises of the assessee do not have any mention or corroboration with the data recovered from the employees of the assessee and thus the Department has adopted a pick and choose policy and the statements alone have been used against the assessee without confronting the same to the assessee. (viii) The assessee is the owner of project named CP-67 which was started in FY 2016-17 and at the time of search operations, the said project was on its initial stages. No booking of revenue was made in the case of the assessee and the title of the property was with the assessee at the time of search operations as no transfers took place. (ix) The audited books of accounts of the assessee were prepared on the basis of guidance note on accounting for real estate transactions and the books have been rejected without any defects found it them. (x) The replies filed by the assessee during the course of assessment proceeding were not considered at all and addition has been made without rejecting the replies filed by the assessee. (xi) The assessment order u/s 143(3) of the I.T. Act is null and void as the same is passed in violation of the CBDT Circular no. 19/2019 dated 14th August, 2019 prescribing procedure for DIN on the assessment order and other documents. (xii) These documents were not confronted to any of the director of the appellant company during search proceedings. (xiii) The laptops were seized from the residence of the employee Sh Sanjeev and not from the appellant company's premises. (xiv) No other unexplained asset or unaccounted cash has been found and seized during search. Had there been excess cash, that would have been recovered during search/survey. 5.3 Decision I have considered the reasoning given by the AO in assessment order, submissions & documents submitted by the appellant, facts of the case and legal position. There are two types of ground taken by the appellant i.e. legal grounds and factual grounds. First the factual grounds are being adjudicated. Grounds of Appeal no 7 ,8, 9, 10 and 11: to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 53 5.3.1 The grounds no 7 to 11 are factual and in these grounds the appellant has contested that addition of Rs. 5,86,03,526/- on account of alleged on-money received on booking. The appellant has submitted the one of the key seized document(page 5 of Ann A-3) forming basis of addition in its paper book filed. Before proceeding further, it is very important to analyse this document, which is being reproduced as under:
5.3.2 Details of the addition made have not been mentioned in the assessment order. However the appellant has provided details of this addition of Rs. 5,86,03,526 /- has been made on the basis of the figure of discount. This primarily on the basis of Ann A- 3, page-5 of which has been reproduced as above. The details are as under: x x x 5.3.4 On analysis of this document as well as facts mentioned in the assessment order, various issues arise which are discussed in the following paragraphs. 5.3.5 Two separate Entities viz. M/s. Homeland Buildwell Pvt Ltd and the appellant i.e. M/s. AB Alcobev Pvt Ltd., (i) There appears to be some mingling of facts in the assessment order. The appellant made a detailed submission in this regard, which has been reproduced in the foreg61ng paragraphs. Summary of its submission on this issue is as under: (a) There is some mixing of facts. There are two separate entities- one is Homeland Buildwell Pvt Ltd which is engaged in development of residential project to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 54 namely Homeland Heights and other is the appellant i.e. AB Alcobev Pvt Ltd., which is engaged in development of commercial project CP-67. These two are separate and independent entities. The projects are in a nearby area. In the assessment order it has been mentioned that the appellant is part of Homeland Group, which is not true, as both are independent entities having no common director. (b) Since both are independent entities, the facts of one entity i.e. M/s. Homeland Buildwell Pvt Ltd. Can not be applied to the appellant company. Whereas the AO has applied these facts to the appellant company. (c) Business activities of both entities are independent and mutually exclusive. (ii). Facts in assessment order: As per assessment order there is no mention of any document which suggests that these entities are in same business or have some common director or common interest. (iii) Finding on this issue: I have carefully considered all the submissions and facts. It is indeed a fact the both these entities are separate, independent and mutually exclusive in in their business activities, Therefore, as per law, the facts of Homeland Buildwell Pvt. Ltd. can not be applied to the appellant company. 5.3.6 Evidentiary value of the statement of the employees Sh. Monu, Sh. Sanjeev and Sh. Amit: (i) In the assessment order, very heavy emphasis has been placed on the state- ments of the employees viz. Sh. Monu, Sh. Sanjeev and Sh. Amit. It is an undisputed fact that the laptop from which the document has been recovered belongs to these employees Sh. Monu and Sh. Sanjeev. This fact has been mentioned in the panchnama/list of impounded material as well as in the statements of these persons recorded. The appellant has submitted that the statement of a third person does not have evidentiary value in absence of any other corroborative evidence. As per assessment order, the other corroborative evidence is the laptop itself. Thus, a very heavy reliance has been placed on the statement of these employees as well as their laptops. It is also submitted that these statement/facts were not confronted to any of the directors during search or post search proceeding. As per assessment order, there is no mention of this statement of material being confronted to any of the directors. During assessment proceedings a show cause was issued vide order sheet entry dated 28.09.2021, wherein it was mentioned that Sh. Monu has mentioned that there is receipt of 'on-money' and the word 'discount' or 'CA' is used for this on-money. In this show cause example of flat no. 160 Tower 5 in Project Homeland Heights was mentioned. (ii) The AR has made a submission on the discussion in the assessment order and his comments thereon, relevant part is being reproduced as under: Quote to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 55 Relevant Para of Allegations of the AO Remarks Assessment Order Para4 The modus operandi related to This is a completely vague receipts of unaccounted cash on and irrelevant allegation on the the sale of immovable properties assessee company without any in Homeland Heights and basis and reflects the confused Project CP- 67 has been state of mind of the AO wherein followed by Sh. Hemant Jindal, he has from the start till the end Sh. Umang Jindal and Sh. relied upon the self-presumed Abhey Jindal. facts related to some unconnected entity and persons and used the same as evidence against M/s AB Alcobev Private Limited and interestingly none of these allegations have been attempted to be verified from the directors of the assessee company who were the actual authorised persons even though the Directors of the company were duly covered under search. Therefore, the assessment has been framed purely on the basis of misbelieves and misconceptions of the AO which have no standing in the eyes of the law. The relevant extracts of the It is submitted that the statement of Sh. Monu clearly project of the assessee is a explain the modus operandi commercial project wherein followed by the M/ s Homeland shops etc. are to be constructed Build well Private Limited in the and sold by the assessee. Project "Homeland Heights" However, for making alleged and M/s AB Alcobev Priavte addition, the Ld. AO is taking Limited in project "CP-67" have backup from the sale of some been produced in the order by residential flats not related to Ld. AO and these particulars the assessee. Therefore, the relates to the sale of the allegation of the Ld. AO is residential flats of any other totally incorrect and baseless project. and without any corroborating material against the assessee. Moreover, if some employee is maintaining some loose sheets in his laptop and having multiple companies then how at all the said data can be considered as incriminating data pertaining to the assessee company especially when there is no other evidence except for a statement extracted from an employee under threat and coercion. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 56 Unquote (ii) Facts as per assessment order: In the assessment order, discussion on the statement of Sh. Monu has been made. (iii) Finding on this issue: I have carefully considered all the submissions and facts. (a) It is a fact the both these persons viz Sh Monu and Sh Sanjeev has joined the appellant company during the current year i.e. FY 2019-20. As per his statement of these persons and the submission of the appellant, Sh Monu joined appellant company on 01.07.2019 and sh. Sanjeev joined the appellant company on 01.05.2019. (b) It is very improbable that entire accounts of excess cash/ on-money would be handled by the employees who have joined in the current year. As per common human conduct probability, if there are transactions involved unaccounted cash, such type of transaction would be dealt by employees who have been with the company for a long duration of time, are time-tested and trusted employees. (c) As highlighted by the AR, there are certain discrepancies in their statements. (d) Besides, in his statement Sh. Monu mentioned that his predecessor Sh Pradeep used to make entries of 'on-money'. Thus, de facto, Sh. Monu was giving a statement on behalf of Sh Pradeep for earlier years. This is not acceptable in law. (e) Furthermore, as per record, no statement of Sh Pradeep has been recorded. (f) It is also a fact that no receipt or agreement or allotment letter has been found seized which indicates transaction of 'on-money'. (g) During the search/survey no unaccounted assets or unaccounted cash were found and seized. If there was such a large generation of unaccounted money, there would be some unaccounted assets or unaccounted cash. This is not the case. (h) Thus, the statements of these persons are neither corroborated with documentary evidence nor supported with discovery of unaccounted assets/unaccounted cash or evidence of unaccounted expenditure. It is a settled law that the statement alone is not sufficient unless supported by corroborative evidence. Therefore, I am of the considered view that the statements of Sh Monu and Sh Sanjeev does not have much of evidentiary value for the current year. 5.3.7 Ratio of disclosed amount to excess cash or 'on-money' (i) This issue has been discussed in the appellant's own cases for the AV 2016-17 and AY 2017-18,and it was observed that ratio of 'discount' i.e. alleged excess cash as per this document and cheque amount was approximately 21 and 47 respectively. (ii) Finding on this issue: to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 57 From this perspective also, I am of the considered view that chances of any person giving huge cash amount, that too in an ongoing project (not ready to move) are negligible. 5.3.8 Issue of interpretation of seized/impounded documents: (i) The appellant has submitted in detail that similar units have been booked at almost similar price, whereas as per assessment order some of the units were accepted while addition on account of excess cash over and above this rate was made by the AO. The relevant part of the appellant's submission is reproduced as under: Quote 1. On perusal of the above chart, it is observed that he appellant has made the booking of the following identical units/ shops:- i. Unit no. F-014 was booked during the A. Y. 2020-21 at a rate of Rs. 14,867 I SFT, whereas unit no. F-016 was booked at a rate of Rs. 10,000/-per SFT. ii. Unit no.624 was booked during the AY 2020-2021 at a rate of Rs. 6,988/- per SFT, Whereas unit no. 621 was booked at a rate of Rs. 6,450/- per SFT. iii Unit no. 825, 826, 827, were booked during the AY 2020-21 at a rate of Rs. 7,100, 7,000, 7,200 per SFT respectively, Whereas unit no.822 was booked at a rate of Rs. 7,059/- per SFT. iv. Unit no. G-012 was booked during the A. Y. 2020-21 at a rate of Rs. 17,887/- per SFT whereas unit no. G-06 was booked at a rate of Rs. 17,280/ - per SFT. v. Unit no. 721 and 727 both booked during the A. Y. 2020-21 at a rate of Rs. 7,200/- per SFT. vi. Unit no. 612 and 613 both booked during the A. Y. 2020-21 at a rate of Rs. 8, 500/- per SFT whereas unit no. 621 was booked at a rate of Rs. 6, 450/- per SFT. vii. Unit no. 916, 917, 918, 919, 920 were booked during the A. Y. 2020-21 at a rate of Rs.7,500/- per SFT whereas unit no.921 was booked at a rate of Rs.7,200/- per SFT. viii. Unit no. 927 was booked during the A. Y. 2020-21 at a rate of Rs. 7, 800/- per SFTwhereas unit no. 921 was booked at a rate of Rs. 7,200/- per SFT. ix. Unit no. 618 was booked during the A.Y. 2020-21 at a rate of Rs. 7,300/- per SFI' whereas unit no. 621 was booked at a rate of Rs. 6, 450/- per SFT.
It may be noted that the booking of unit/ shop no. F-016 at the rate of Rs. 10,000/- per SFI' was accepted by the A.O. Therefore, without any fresh documentary evidence to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 58 booking value of unit/ shop no. F-014 cannot be disturbed. It may be noted that the A.O. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that booking value of unit no. F-014 was suppressed. It may also be noted that the A. 0. has accepted the booking of unit no. F-016 at the rate of Rs. 10, 000/ - per SFI' in the assessment proceedings u/ s 153A for the A. Y. 2016-17.
3. It may be noted that the booking of unit/ shop no. 621 at the rate of Rs. 6,450/per SFI' was accepted by the A.
0. Therefore, without any fresh documentary evidence booking value of unit/ shop no. 624 cannot be disturbed. It may be noted that the A. 0. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that booking value of unit no. 624 was suppressed. It may also be noted that the A. 0. has accepted the booking of unit no. 621 at the rate of Rs. 6,450/- per SFI' in the assessment proceedings for the A. Y. 2020-21.
It may be noted that the booking of unit/ shop no. 822 at the rate of Rs. 7,059/- per SFT was accepted by, the A.O. Therefore, without any fresh documentary evidence booking value of unit/ shop no. 825, 826 and 827 cannot be disturbed. I may be rioted that the A:O; has not pointed out any corroborated evidence which was found and seized during search action, post search operation which could prove that booking value of unit no.
S26 and 827 were suppressed. If may also be noted that the A. 0. has accepted the booking of unit no. 822 at the rate of Rs. 7, 059/ - per SFI' in the assessment proceedings for the A. Y. 2020-21.
It may be noted that the booking of unit/ shop no. G-016 at the rate of Rs. 17,280/- per SFI' was accepted by the A.O. Therefore, without any fresh documentary evidence booking value of unit/ shop no. G-012 cannot be disturbed. It may be noted that the A.O. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that booking value of unit no. G-012 was suppressed. It may also be noted that the A. 0. has accepted the booking of unit no. G-016 at the rate of Rs. 17,280/ - per SFI' in the assessment proceedings u/ s 153A for the A. Y. 2016-1 7.
6. It may be noted that the booking of unit/ shop no. 727 at the rate of Rs. 7,200/- per SFI' was accepted by the A.
0. Therefore, without any fresh documentary evidence booking value of unit/ shop no. 721 cannot be disturbed. It may be noted thg.t the A. 0. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that booking value of unit no. 721 were suppressed. It may also be noted that the A. 0. has accepted the booking of unit no. 727 at the rate of Rs. 7,200/ - per SFI' in the assessment proceedings for the A. Y. 2020-21. 7 It may be noted that the booking of unit/ shop no. 621 at the rate of .Rs. 6450/ -per SFI' was accepted by the A.O. Therefore, without any fresh documentary evidence booking value of unit/ shop no. 612 and 613 cannot be disturbed. It may be noted that the A. 0. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 59 booking value of unit no. 612 and 613 were suppressed. It may also be noted that the A. 0. has accepted the booking of unit no. 621 at the rate of Rs. 6, 450/ - per SFI' in the assessment proceedings for the A. Y. 2020-21.
8. It may be noted that the booking of unit/ shop no. 921 at the rate of Rs. 7200/ -per SFI' was accepted by the A.
0. Therefore, without any fresh documentary evidence booking value of unit/ shop no. 916, 917, 918, 919 and 920 cannot be disturbed It may be noted that the A. 0. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that booking value of unit no. 916, 91 7, 918, 919 an C: 920 were suppressed. It may be noted that the A. 0. has accepted the booking of unit no. 921 at the rate of Rs. 7,200/ - per SFI' in the assessment proceedings for the A. Y. 20-21. 9 It may be noted that the booking of unit/ shop no. 921 at the rate of Rs. 7200/ -per SFI' was accepted by the A.
0. Therefore, without any fresh documentary evidence booking value of unit/ shop no. 927 cannot be disturbed. It may be noted that the A. 0. has not pointed out any corroborated evidence which was found and seized during search action/ post search operation which could prove that booking value of unit no. 927 were suppressed. It may also be noted that the A.O. has accepted the booking of unit no. 921 at the rate of Rs. 7,200/ - per SFI' in the assessment proceedings for the A. Y. 2020-21.
10. It may be noted that the booking of unit/ shop no. 621 at the rate of Rs. 6,450/ -per SFI' was accepted by the A.
Therefore, without any fresh documentary evidence booki.ng value of unit/ shop no. 618 cannot be disturbed. It may be noted that the A.O. has not pointed out any corroborated evidence which was found 62 and seized during search action/ post search operation which could prove that booking value of unit no. 618 was suppressed. It may also be noted that the A.O. has accepted the booking of unit no. 621 at the rate of Rs. 6,450/'- per SFT in the assessment proceedings for the A. Y. 2020-21. It may also be noted that the A. 0. has accepted the booking of unit no. G-016 at the rate of Rs. 10, 000/ - per SFT in the assessment proceedings u/ s 153A for the A. Y. 2016-17. 11.
11. That all the booking as mentioned in the above table was made on the same date. Therefore, the observation of the A.O. at Para 3 of the appellant has received cash in respect of aforesaid shop/units is wrong and as against the material on record.
12. It is contended that since, the value of booking of unit/ shop already accepted by the A. 0. should be compared with the value of booking of other unit/ shop for which addition has been made. It is pertinent to note that the addition made by the A. 0. of Rs. 5,86,03,526/- in respect of aforesaid unit/ shop is patently wrong as the same was made without any corroborated evidence which could prove that the alleged booking value of aforesaid units was inclusive of discount value as against booking value reflected in the regular books of account of the appellant. On the contrary, the appellant has furnished various of following documentary evidence to prove the real/ actual booking value of aforesaid units was the same as reflected in the actual books of account:-
to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 60 (ii) Copy sale deed 63 (Refer P.B. Page 106 to 1797) (ii) In the assessment order, there is no discussion on this aspect. (iii) Finding on this issue: 5.3.8.1 I have carefully considered all the submissions and facts. It is a settled legal principle that any seized document or evidence has to be read as a whole and in its entirety and it cannot be interpreted in bits & pieces so as to give a different meaning to part transactions. For proper interpretation of the document, each entry on the document has to be logically deciphered/interpreted. The relevant judgments in this regard are listed hereunder: (a) In the judgment of Hon'ble High Court of Gujarat in the case of Navjivan Oil Mills vs. Commissioner of Income-tax reported at [2002] 124 Taxman 392 ((Gujarat), it has been held as under": "Whether seized material has to be read and accepted as a whole and it is not permissible to pick and choose or make further estimates therefrom unless and until there is cogent material in support of undertaking such an exercise Held, yes' (b) Further in the judgment of Hon'ble High Court of Gujarat in the case of Glass Lines Equipment Co. Ltd. v. CIT reported at 253 ITR 454, it has been held: ''In the present case it was found that the Commissioner (Appeals) while dealing with the affidavit, had conveniently chosen to accept only one part of the statement which was in favor of the revenue and against the assessee while ignoring the rest of the portion wherein specific averments were made in relation to the balance items of expenditure. In view of the settled legal position, it was not open to either the Commissioner (Appeals) or the Tribunal to ignore a part of the contents of the affidavit The findings recorded by the Commissioner (Appeals) and the Tribunal were concurrent as:--regards the facts and evidence on record and but for the averments made in the affidavit which had been ignored, the said findings would not have been interfered with. It is well-settled cannon of interpretation that a document has to be read as a whole: it is not permissible to accept a part and ignore the rest of the document." to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 61 (d) Also, in the judgment of Ld. Tribunal Bench Pune in the case of Dhanvarsha Builders v. DCIT reported at 102 ITD 3751 (Pune), it has been held as under: "Whether seized document should be read as a whole if it has to be relied upon for computing undisclosed income of assessee in a proceeding under section 158BC Held, yes” (e) Hon'ble Delhi High Court in CIT Vs D.D. Gears Ltd also upheld the same principle. 5.3.8.2 The appellant has submitted details comparing the booking/ sales consideration of aforesaid units/ shops with other identical shops/ units which were sold/ booked during the same period to prove that booking/ sales consideration of aforesaid shops/ units was comparable with other identical units/ shops booked during that period. This has been prepared on the basis of seized /impounded material. 5.3.8.3 I have considered the submission of the appellant as well as assessment order. The appellant has analysed each unit and has been able to explain its point alongwith supporting documents largely. The instances quoted by the appellant have been examined and found in order. Taking widely different rates for similar units is not a logical and rational approach. Thus, I find merit in the arguments of the appellant and hold that taking widely different rates for similar units is not correct. 5.3.8.4 This issue has been discussed at length in the appellate order for the AY 2016- 17 and 2017-18 as well. This is relevant for the current year as well because the document relied upon is primarily the same document. Relevant parts of discussion are reproduced as under. Relevant part of discussion in appellate order for the AY 2016-17: Quote 5.3.9.2 In this document, following entries pertain to the current year i.e. AY 16-17: to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 62 5.3.9.3 It is observed that in the assessment order, only G-016, G-017 and G-018 has been considered for making addition. Whereas no addition has been made on account of F-016, F-017 and F-018. The apparent reason is that no 'discount 'has been mentioned against the shops of first floor. However, it is observed that these bookings have been made at almost the same time and the rate mentioned is also the same. In fact, these have been booked by the same persons. Thus, taking two different approaches in the assessment by accepting rate of first floor and not accepting same rate of ground floor is not a correct approach. If the addition is considered, then the rate of ground floor would work out as under:
5.3.9.4 Thus, the rate works out to over Rs.20,000/- per square feet. Thus, treating three shops @Rs. 10, 0001- per sq ft and the other three shops @20, 0001- plus, is not logical. From this perspective also, I am of the considered view that the chances of any person giving excess cash , which will result in more than double rate, that too in a project in which even land has not been allotted, are negligible. Unquote Relevant part of discussion in appellate order for the AY 2017-18: Quote 5.3.9.2 In this document, following entries pertain to the current year i.e. AY 16-17 and FY 2017-18: to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 63 5.3.9.3 It is observed that in the assessment order, only G-016, G-017 and G-018 has been considered for making addition for the AY 2016-17 and G-010 for the AY 2017- 18. Whereas no addition has been made on account of F-016, F-017 and F-018 in the AY 2016-17. The apparent reason is that no 'discount 'has been mentioned against the shops of first floor. However, it is observed that these bookings were made at the very initial stage of project and the rate mentioned is also almost the same. Thus, taking two different approaches in the assessment by accepting rate of first floor and not accepting same rate of ground floor is not a correct approach. If the addition is considered, then the rate of ground floor would work out as under:
It was submitted by the appellant that the sale deeds have been executed in the cases of G-016 to G-018 at around the rate of Rs.10,0001- per square feet. Copy of sale deeds have been filed during AY 2016-17.
5.3.9.4 Thus, the rate works out to over Rs. 20, 0001- per square feet. Thus, treating three shops @Rs. 10, 000/- per sq ft and the other four shops @20, 000/- plus, is not logical. From this perspective also, I am of the considered view that the chances of any person giving excess cash , which will result in more than double rate, that too In a project in which even land has not been allotted, are negligible. Unquote 5.3.9 Issue of nature and reasonability of amounts mentioned in document and its correlation with the books of account. (i) The AR in written submission filed mentioned as under: Quote to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 64 On perusal of above details, it has been contended that the aforesaid sheet on which the A.O. has relied and has made addition in respect of "Discount" is not a reliable document. On perusal of above entries, it is observed as under: v) At s.no. 7 above, booking of shop no. G-015 booked by Mr. R.K. Nagpal, the following facts has been observed: a. That the booking rate is Rs. 0 b. That the BSP of the shop is 0 c. That the discount given is Rs. 2,94,03,000 / - d. That the agreement price is Rs. (2,94,03,000/-) e. That the ST/GST is Rs. (35,28,360/-) f. That the Total price with ST/GST is Rs. (3,29,31,360) g. That the cheque received is Rs. 0 h. That the balance amount is Rs. (3,29,31,360) On perusal of above details, following questions has arise: h. How can the booking rate be 0 i. How can the BSP of the shop be 0 j. How can discount of Rs. 2,94,03,000/- be given to customer as against the BSP of Rs. 0 k. How can the agreement price of the shop be Rs. (2,94,03,000/-) l. How can ST/GST payable be Rs. (35,28,360/-) m. How can total price with ST/GST be (Rs. 3,29,31,360/-) n. How can the balance amount payable to Mr. R.K. Nagpal be Rs. (3,29,31,360/-) in case no amount being received from him. vi) At s.no. 8 above, booking of shop no. G-016 booked by Mr. Satwant Singh, the following facts has been observed: a. That the booking rate is Rs. 10000 b. That the BSP of the shop is Rs. 2,72,16,667/- to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 65 c. That the the discount given Rs. 3,36,86,000/- d. That the agreement price is Rs. (64,69,333/-) e. That the ST/GST is Rs. 0 f. That the Total price with ST/GST is Rs. (64,69,333/-) g. That the cheque received is Rs. 2,55,77,000/- h. That the balance amount is Rs. (3,20,46,333) On perusal of above details, following questions has arise: k. How can discount of Rs. 3,36,86,000/- be given to customer as against the BSP of Rs. 2,72,16,667 /- l. How can the agreement price of the shop be Rs. (64,69,333/-) m. How can ST/ GST payable be Rs. 0 n. How can total price with ST/GST be Rs. (64,69,333/-) o. How can the balance amount payable to Mr. Satwant Singh be Rs.(3,20,46,333/- in case amount of only Rs. 2,55,77,000/- being received from him. vii) At s.no. 9 above, booking of shop no. G-017 booked by Mr. Kulwinder Singh, the following facts has been observed: a. That the booking rate is Rs. 10000 b. That the BSP of the shop is Rs. 2,72,16,667/- c. That the discount given is Rs. 2,69,68,750/- d. That the agreement price is Rs. 2,47,917/- e. That the ST/GST is Rs. 0 f. That the Total price with ST/GST is Rs. 2,47,917/- g. That the cheque received is Rs. 2,38,66,687 /- h. That the balance amount is Rs. (2,36,18,770/-) On perusal of above details, following questions has arise: a. How can the balance amount payable to Mr. Kulwinder Singh be Rs. (2,36,18,770/-) in case amount of only Rs. 2,38,66,687 /being received from him. viii) At s.no. 10 above, booking of shop no. G-018 booked by Mrs. Amarjeet Kaur, the following facts has been observed : to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 66 On perusal of above details, following questions has arise: p. How can discount of Rs. 2,92,24,000/- be given to customer as against the BSP of Rs. 2,90,16,667 /- q. How can the agreement price of the shop be Rs. (2,07,333/-) r. How can ST/GST payable be Rs. 0 s. How can total price with ST/GST be Rs. (2,07,333/-) t. How can the balance amount payable to Mrs. Amarjeet kaur be Rs. (1,17,42,333/-) in case amount of only Rs. 1,15,35,000/being received from her. F.4 On perusal of the aforesaid details, it can be contended that the details mentioned in the above annexure on the basis of which addition has been made by the Ld. A.O. is not reliable. When the abovementioned entries contains non reliable and unfactual details, then how other details of the aforesaid annexure can be considered while making addition. On the basis of above facts, it can be contended that addition made by the Ld. A.O. without application of mind and without verifying details of the aforesaid annexure and on the basis of surmises and pre notion. Unquote The appellant has further submitted that the sale deed have been executed in these cases and filed copy of the same. (ii) Further the AR has also submitted the copy of ledger account of these persons in its books of account, which are being reproduced as under: Ledger for the unit G-016 to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 67 to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 68 (iii) This issue has not been discussed in assessment order. (iv) Finding on this issue: I have carefully considered all the submissions and facts. The basic condition for a seized document to be interpreted is that all the entries should be logical and in case disclosed transaction also mentioned, these should be relatable with the books of account. On application of these principles, the following inconsistencies were noticed: G-016 Jn the name of Sh Satwant Singh. (a) The BSP is Rs.2,72, 16,667/- and 'discount' is Rs.3,36,86,000/-. As per interpretation in assessment order 'discount' means excess cash (on-money). It means total consideration is Rs. 6,09,02,667/- (Rs. 2,72, 16,667/- plus Rs.3,36,86,000/-). However as per this document total sale consideration is Rs. (-)64,69,333/-. Having negative sale consideration is not possible. (b) Secondly, as per this document, the agreement price is Rs. (-)64,69,333/-. It is not possible to have a negative agreement price. (c ) Thirdly, as per this document, the cheque received is Rs. 2,55,77,000/-. Had this document been correct, this figure would have matched with the cheques paid and appearing in the books of account. However, as apparent from the copy of ledger reproduced above, balance as on 31.3.2016 was Rs.10,61,520/-, which means cheque received was Rs.11,00,000/- and after deducting ST/GST this was the balance. Further, on the date of the search the ledger balance was Rs. 1.17.29,471/-. Thus as seem from the ledger copy submitted total cheque payment tll the date of search i.e.26,9212020 was Re.1.28,19.600/-, whereas, as per this document cheque received was Rs.2,55,77,000/-. Therefore, the bank entry mentioned in this document is much more than the bank entry refected in the books of account This is not possible (d) Fourthly, as per this document, no TDS was made. However as per the ledger account TDS of Rs.1,42,500/- has been made. (e) Fifthly, as per this document, there is no Service Tax/GST. However as per ledger account there are entries of Service tax/GST @12%. (f) Sixthly, as per the document, the balance receivable is Rs.(-)3,20,46,333/. If this document is held to be correct, it would mean that Sh. Satwant Singh would not only get shop free of cost but also get Rs.3,20,46,333/-. This defies all logic. Similar, situation is w.r.t. other two shops viz G-017, G-018 and many other units. Another important aspect is that in many cases, figure of alleged excess cash are not round figures but odd figure . e.g. in case of Rajinder Kaur it is Rs.43,27,062/-, in case of Sh Sarabjit Singh it is Rs.19,97,000/-, in case of Sh Prem Sharma it is Rs.2,33, 13,805/-. If these are figures of unaccounted cash, these should be in round figure. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 69 From this perspective also, I am of the considered view that this document as per Ann A-3, is full of inconsistencies and no logical conclusions can be drawn from this document. Besides, as per assessment order no enquiry has been done form the buyers. Therefore, the addition on the basis of this document is not sustainable. 5.3.10 Issue of the cancellation of the units (i) The AR has further submitted that out these units, several units have been cancelled and filed cancellation requests and copy of the ledger accounts. Relevant part of the submission of the appellant is reproduced as under: Quote F.6.3 It may be noted that the Shop/unit no. 715, 716, 717, 718, 719, 720, 1024, 710, 826, 724 and 1103 has been booked, however the same has been subsequently cancelled by them. Therefore, in the present case, alleged cash of Rs. 84,61,000/- received by the appellant in no case be treated as the income of the appellant as the same has been returned by the appellant upon cancellation of the aforesaid units. In support of the same following documentary evidence are enclosed: (i) Copy of Ledger account in the books of the appellant. (ii) Copy of allotment letter (iii) Copy of cancellation letter (Refer P.B. Page 106 to 1797) (iv) Finding on this issue: I have carefully considered all the submissions and facts. I find merit in the submission of the appellant that as the units have been cancelled, the amount has been returned. Even if for academic discussion there was involvement of excess cash (on money), that would also not remain with the appellant but would go back to the appellant. Besides, it is also a fact that no receipt or agreement or allotment letter has been received which indicates transaction of 'on-money'. No enquiry has been done with the buyers. Therefore, the addition can be held to be sustainable. 5.3.11 Issue of applicability of facts of the case of Homeland Buildwell Pvt Ltd to the Appellant Company (i) The AR has argued that the AO has given example of the excess cash in case of flat, which pertains to Homeland Buildwell Pvt Ltd and applied the same logic in its case whereas it is separate and independent entity and its project is commercial project. Detailed submission has been filed, which has been reproduced in foregoing paragraphs. (ii) In the assessment order AO has discussed this issue as under:
Quote to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 70 … 4.Addition on account of suppression of sale receipts for booking at project CP-67, Sector 67, Mohali: On perusal of the reply filed by the assessee and as per the information on record, the assessee was show-caused vide Order sheet entry dated 28.09.2021 wherein the following facts were confronted to the counsel for the assessee: … (vi) When Sh. Monu was asked to explain Anexure A-18 containing pages 1-40 seized from th9t premises, he explained that these documents relate to the booking of commercial space in the project CP-67, Airport Road, Sector 67, Mohali by Mis. AP Charitable Society, BD-23, Vishaka Enclave, Pitampura, New Delhi as per which the Society has purchased property no. 871, 971 & 1071 in the project CP-67 T2 is the Tower No. i.e. Tower-2, 22 is the Flat No. Total cost of Rs. 1,51,85,0001- is the total sales consideration from sale of flat Sale price of Rs. 90, 00, 0001- is the agreement in sale deed price from sale of Rs. TDS @ 1 % of Rs. 90, 0001- is the TDS deducted on the registered of TDS from 90, 00, 000/- 'After TDS' of Rs. 89, 10, 000/- is the amount left after deduction registered value of the flat. customer for sale (1) the Total Due of Rs.89, 10,0001- is the total amount due from a of flat. the customers (h) Payment Recd. of Rs.89, 10,0001- is the payment received from as per registered deed. customer. Recd. of Rs.90,000/- is the TDS' amount received from the TDS 'DISCOUNT' of Rs.61,85,000I- is the 'CASH' received from the customer against sale of flat. (i) (i) Balance of Rs. 1, 99, 200/- is the excess cash received from the customer. Refund of Rs. 1, 99, 200/- is the amount payable to the customer. The relevant extract of the statement of Sh. Monu recorded on oath during the course of search proceedings uls 132(4) of the Income tax Act, 1961 is reproduced in the assessment order. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 71 When he was asked that who suggested/advised to use the word 'DISCOUNT' and 'CA' cash payments received to these two projects namely 'Homeland Heights' and 'CP-67' wherein Sh. Monu stated that Sh. Umang Jindal instructed him to use the word DISCOUNT' and 'CA' for cash payments received in these two projects. Further, he stated that he joined the group in January 2018, this practice was already being followed and Sh. Umang Jindal was asked-to continue follow the same. He is also stated that before him, Sh. Pradeep who was his predecessor was following this practice of using the words 'DISCOUNT', 'CA' for cash payments received in these two projects. The relevant extract of the statement of Sh. Monu recorded on oath during the course of search proceedings u/s 132(4) of the Income tax Act, 1961 is reproduced in the assessment order. Thus, from the above modus operandi it is clear that the assessee has received cash as advance for the booking of the various units in the project CP-67 Mohali undertaken by the assessee. Incriminating documents in annexure A3 were seized from the premises J3 of the assessee. which contained details of the discount i. c. the cash received from various persons which was not recorded by the assessee in its books of accounts. These records indicate that the books of accounts of the company do not reflect its true state of affairs and the booking amount received from the customers reflected under the head 'other liabilities' in the balance sheet of the company does not show the correct picture as the assessee has tried to under state its revenue by not booking the sale of properties as its taxable receipts in the audited books of accounts and the corresponding income has not been declared in its /TR. Under such circumstances, the books of accounts of the assessee deserves to be rejected u/s 145(3) of the Act. Unquote (iii) Finding on this issue: I have carefully considered all the submissions and facts. Example of flat mentioned in the assessment order pertains to Homeland Buildwell Pvt Ltd and not to the appellant Sh Monu, whose statement was recorded, was an employee of Homeland Buildwell Pvt Ltd during the earlier years and most of the time in his statement he was discussing the matter of Homeland Buildwell Pvt Ltd only. Therefore, his statement may be of relevance in the case of Homeland Buildwell Pvt Ltd but not in the case of the appellant. Further, in the assessment order, there is no mention or discussion on excess cash for sale of shops/commercial property. There is mention of commercial property booked by AP Charitable Society in the project of the appellant company but there is no further discussion whether it is disclosed or undisclosed or modus operandi in respect of this commercial project. From this perspective also, I am of the considered view that modus operandi of one entity for earning unaccounted cash, cannot be applied to the modus operandi in the case of another independent entity having independent and separate nature of business. Material in respect of the appellant has to be available and discussed for making addition in its case. Besides, it is also a fact that no receipt or agreement or allotment letter has been received which indicates transaction of 'on- money'. Further there is no unaccounted asset/unaccounted cash. Thus, the addition is not found sustainable from this point of view. to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 72 5.3.12 Issue of no unaccounted cash or unaccounted asset or no evidence of unaccounted expenditure found during search/survey. As per assessment order, no unaccounted cash or unaccounted asset or no evidence of unaccounted expenditure found during search/survey and therefore there is no such addition in the assessment order. The AR has submitted had there been excess cash received, there would have been unaccounted cash or unaccounted asset, or some evidence of unaccounted expenditure found during search/survey. It was submitted that the directors of the appellant company were also covered under search. Finding on this issue: There are two sides of unaccounted income- generation of unaccounted income and application of unaccounted income. If there is generation of unaccounted income ( as held by the AO in this case, it is by way of excess cash/on-money received on bookings of units), this would result into some unaccounted asset or unaccounted cash of unaccounted expenditure. In the present case, during search/survey no such unaccounted asset or unaccounted cash or evidence of unaccounted expenditure have been found. Although, in practical scenario, there would not be one to one (i.e. exact matching) matching of generation of unaccounted income and its application, but there would be some indication i.e. some part will reflect in the shape of unaccounted asset the addition is not sustainable. 5.3.13 Issue of similar transactions in the other years. As mentioned in the assessment order, addition on the same issue has been made in other assessment years as well. On closely observing additions made in different years, it is seen that no addition was in the AY 2018-19. This is very strange. If an entity is involved in taking excess cash (on money), there is a high chance that it will take it for all the years. It is practically not possible to take excess cash in preceding and succeeding years but not in AY 2018-19. The second strange aspect is that unaccounted cash receipts of the order of Rs. 9 crore has been received in the year A Y 2016-17, when even the land was not allotted and project has not started, whereas in the AY 2018-19, when the project has started, there is no excess cash'. Besides, if year wise comparison of alleged excess cash and total advance received is made, following picture emerges: to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 73 5.3.14 In view of the above discussion, I am of the considered view that the addition of Rs. 5,86,03,526/- on account of excess cash received on account of sale of property in project CP-67 is not sustainable on the facts of the case. Therefore, this addition is deleted. Accordingly, these grounds of appeal no. 7 to 11 are allowed. 5.4 Other Grounds of Appeal: Since the addition has been deleted on factual grounds, other grounds of appeal no.1 to 6 and additional ground1 Which are legal in nature become infructuous and academic In nature. Hence, require no further adjudication. Ground no 12 and 13 are general in nature and require no specific adjudication.
6. In the result the appeal is allowed.
27. In the light of the above, we have re-appraised ourselves with the material possessed by the AO, irrespective of the fact that present assessment order is not sustainable for want of following mandatory procedure contemplated u/s 153C of the Income Tax Act. The statement of Shri Monu and Shri Sanjiv Garg are being placed on record from page No. 11 to 141. It contains complete statement in hand-written as well as typed copy. A perusal of the statement of Shri Monu would reveal that specifically he has not alleged any role of the assessee anywhere. The questions put to him were in such a manner that operative force of the question was towards respective building constructed by M/s Homeland Buildwell, namely Homeland Heights, Sector 60, Mohali but simultaneously Project-67 owned by the assessee is also being mentioned. The details tabulated in the assessment order as well as in to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 74 the statement of Shri Monu are pertaining to the flats only and not for commercial space. Thus, AO has unduly applied the alleged modus-operandi of M/s Homeland Buildwell in the Project of the assessee. No specific material has been referred by Shri Monu qua the assessee. For example, let us take note of question No. 48 and its reply : Que 48 please explain about the rates per square feet at which the properties were sold or are being sold by the company the project 'Homeland Heights', Sec-70 Mohali and 'CP-67', Sec-67,Mohali. Ans 48 the flats in the project 'Homeland Height' Sec-70, Mohali were sold by the at the rate of Rs.6000-7000/- per square feet approximately whereas the rate as per the buyers agreement is Rs.3000-5000/- per square feet approx. The difference between the two is the amount which has been received by the company in cash and the same is unaccounted income.
28. In this reply, the answer is of a general nature. It is not supported by discovery of any specific details that a particular shop was sold @ 3000/- in the Sale Deed but actual Rs.6000/- was received. It is a disclosure of an employee who, at the relevant time was not even employee of the assessee. He has been apprised with the consequences u/s 179 to 180 IPC 191 read with 193 IPC and 27A of Information Technology Act refusing to give password 277, 277A of the Information Technology Act. Thus, an employee of a clerical grade could easily come under the influence of a highly trained revenue official while to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 75 giving the statement. From this type of general statement, it can not be harboured by the AO that assessee has sold the commercial space by accepting cash amount. The ld. counsel for the assessee in his submission has pointed out that sales have not been materialized. It has received only advance booking to the extent of 10% to 15% of the total project. The project was not even complete, how it could be construed that assessee has made the sales by accepting cash over and above the amount stated. The ld. CIT (Appeals), in the above finding has made analysis of each and every detail of the shops booked by customer. It has been appreciated, what was the base price, how much consideration in terms of percentage has been received by the assessee. Therefore, we are of the view that First Appellate Authority has examined the issue analytically in details and no interference is called for. Accordingly, the five grounds raised by the Revenue, which are involving a single issue, are rejected.
In the result, appeals of Revenue are dismissed, Cross Objections of the assessee for assessment year 2016-17, to 358 & 360/CHD/2024 & C.O. Nos.17 to 20/CHD/2025 76 2017-18 and 2019-20 are allowed whereas Cross Objection for assessment year 2020-21 is partly allowed.
Order pronounced on 01.09.2025.