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Facts
The case involves appeals by the revenue and the assessee against orders passed by the CIT(A). The revenue's appeals relate to AY 2014-15 and 2016-17, concerning whether assessment should be under Section 153A or 153C. The assessee's appeal for AY 2020-21 challenges additions made on account of alleged undisclosed investment in plots, unexplained investment in jewelry, and unexplained cash.
Held
The Tribunal held that the revenue's appeals should be dismissed on technical grounds, as the assessment should have been made under Section 153C and not Section 153A, since no incriminating material was found during the assessee's search. The assessee's appeal was partly allowed, with additions related to plot investment being deleted due to incorrect appreciation of facts and the scheme being developed by M/s. Krishna Properties. Additions related to jewelry and cash were also deleted as they were already deleted by the CIT(A) and the CIT(A) had no power to revive them.
Key Issues
Whether the assessment was correctly made under Section 153A instead of 153C, and whether additions made by the AO for alleged unexplained investments in plots, jewelry, and cash were justified.
Sections Cited
153C, 153A, 69, 69A, 251, 132
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Income Tax Appellate Tribunal, JAIPUR BENCH “B”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
These appeals by assessee and revenue are directed against the order of CIT(A), Jaipur-04 dated 30.11.2024, 27.03.2025 respectively passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’).
Revenue’s Appeal The revenue has raised the following grounds of appeal vide (A.Y. 2014-15) as under:-
1. Whether on facts and in circumstances of the case, the ld. CIT(A) is justified in accepting the additional ground of appeal
and allowing the appeal of the assessee on technical grounds stating that the case of the assessee should have been covered under the provisions of section 153C of the Act instead of provisions of section 153A of the Act ignoring the fact that warrant of authorization was issued in the name of the assessee and accordingly, assessment was made under the provisions of section 153A of the Act.
2. The appellant craves leave or reserves right to amend, modify, alter, add or forego and ground(s) of appeal at any time before or during the hearing of this appeal. The revenue has raised the following grounds of appeal vide (A.Y. 2016-17) as under:-
Whether on facts and in circumstances of the case, the ld. CIT(A) is justified in accepting the additional ground of appeal
and allowing the appeal of the assessee on technical grounds stating that the case of the assessee should have been covered under the provisions of section 153C of the Act instead of provisions of section 153A of the Act ignoring the fact that warrant of authorization was issued in the name of the assessee and accordingly, assessment was made under the provisions of section 153A of the Act.
2. The applicant craves leave or reserves right to amend, modify, alter, add or forego and ground(s) of appeal at any time before or during the hearing of this appeal.
Assessee’s Appeal
1. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 7,55,88,400/- u/s. 69 of the Act on account of alleged undisclosed investment in purchase of plots at Govind Vihar by:- (i) taking the hypothetical market value of the residential plot at Rs. 20,000/- per sq. mts. and commercial plot at Rs. 80,000/- per sq. mts. without any basis and on surmises & conjectures (ii) not accepting the contention of assessee that these plots were purchased by M/s. Krishna Properties at Rs. 2,15,14,000/-where addition of Rs. 6,68,81,400/-(Rs. 8,81,95,400 – Rs. 2,15,14,000) has been made on protective basis (iii) assuming that since M/s. Krishna Properties has been incorporated in the year under appeal, the alleged unaccounted investment has been made from the alleged unaccounted funds provided by the assessee (iv) incorrectly holding that pattas have been allotted in the name of the partner of the firm whereas pattas have been allotted in the name of M/s. Krishna Properties.
2. The Ld. CIT(A) has erred on facts and in law in holding that though addition of Rs. 13.50 lacs made u/s. 69 of the Act on account of ledger account extracted from the pen drive seized from Vishnu Kumar Gupta, addition of Rs. 3,73,19,845/- made u/s. 69A of the Act on account of unexplained investment in jewellery and addition of Rs. 30,25,140/- made u/s. 69A of the Act on account of unexplained cash cannot be added in the hands of assessee but at the same time directing that in case the impugned transaction or jewellery or cash is disowned by Sh. Govind Agarwal, then in that case the impugned addition shall stand revived in the hands of the assessee without need of any further order is illegal & bad in law and be expunged.
3. The appellant craves to alter, amend and modify any ground of appeal.
Necessary cost be awarded to the assessee.
First we take up the appeal of the revenue in & 104/JP/2025 for A.Y. 2014-15 & 2016-17, where revenue has risen the same ground.
The brief facts of the case are that a search u/s. 132 of the Act was carried out at the premises of Sh. Vishnu Kumar Gupta on 22.10.2019. In consequence to this search, a search was also carried out on Shri Govind Agarwal, father of the assessee and on the assessee. In search no incriminating material was found from the residential and business premises of the assessee.
4. During the assessment proceedings AO on the basis of certain data found from the pen drive seized from the premises of Shri Vishnu Kumar Gupta who is son in law of Shri Govind Agarwal, issued notice to the assessee for making various addition. In response to the same assessee explained that the transaction in the pen drive found from Shri Vishnu Kumar Gupta relates to his father Shri Govind Agarwal though the transactions are noted in his name. Assessee further explained that his father Shri Govind Agarwal is filing petition before the settlement commission wherein the income as per these data has been considered in working out the additional income. Shri Govind Agarwal filed the settlement petition on 29.09.2021 at 6 PM in the office of Settlement Commission at New Delhi. Thereafter the assessee approached the AO on 30.09.2021 to provide copy of the settlement petition filed by his father but AO did not took the same on record stating that the assessment order is already completed. The AO in framing the assessment of the assessee for A.Y. 2014-15 made addition of Rs. 9,45,00,000/- in respect of investment in Dream Home Project, Rs. 3,32,19,212/- for profit of Dream Home Project and Rs. 99,31,800/- on account of on money received from sale of Plot No. 8 and 9 of Dream Home Project. Similarly, for A.Y. 2016-17, he made addition of Rs. 32,50,000/- u/s. 69 of the Act on the basis of entry noted in the excel sheet of ‘Alok Ji Hisab’ found in the pen drive of Sh. Vishnu Kumar Gupta, Rs. 56,96,473/- on account of investment in land at Khasra no. 40, 41 & 42 on the basis of ledger account and data found in the pen drive of Sh. Vishnu Kumar Gupta and Rs. 89,40,000/- u/s. 69 of the Act by treating the amount credited in the account of Mohit (Titu) as per the ledger account extracted from pen drive seized from Vishnu Kumar Gupta.
Before Ld. CIT (A) assessee explained that the Hon’ble Interim Board of Settlement (IBS) vide order DT. 28.08.2023 (PB 70-104) has settled the case of the assessee wherein Hon’ble IBS has accepted the additional income of Rs. 5,63,83,277/- offered by him with further addition of Rs. 2,02,81,526/- and accepted that investment in assets is covered by the income offered as mentioned in the petition and the cash flow statement (PB 62-64 & 69). An additional ground was also raised that order passed u/s. 153A of the Act as against 153C of the Act is illegal and bad in law.
The Ld. CIT (A) at para 4.3 of the appellate order for A.Y. 2014-15 admitted the additional ground. Thereafter at para 4.4, page. 18 he observed that additions in the assessment order u/s. 153A of the Act has been made on the basis of documents found in search of Shri Vishnu Kumar Gupta and no addition has been made on the basis of any incriminating material unearthed during the course of search of the assessee. The AO in the remand report has given his comment against the admissibility of the additional ground and no objection has been given on the merits of the ground of appeal. He referred to various decisions at page 19 to 31 of the order and held that the right course of action for the AO of the searched assessee and AO of the appellant would have been to take action as per section 153C of the Act. Accordingly, it is observed that AO of the assessee shall proceed as per section 153C of the Act in accordance with law and thus additions made in the assessment order are deleted on the technical ground without expressing any opinion on the merits on the addition.
We have thoroughly gone through the order of AO & Ld. CIT (A) and given our thoughtful consideration to the arguments of Ld. AR & Ld. DR. We find that Ld. CIT(A) after admitting the additional ground and referring to the decision of ITAT Delhi Bench in case of Bijendra Singh Lodha V. JCIT in & 1529/DEL/2022, decision of ITAT Ahmedabad Bench in case of PCIT V. M/s. Real Marketing Pvt. Ltd. in ITSSA No.128 to 133/AHD/2021, decision of ITAT Kolkata Bench in case of Sh. Krishna Kumar Singhania V. DCIT in ITSSA No. 109 & 1110/KOL/2017 and after referring to the decision of Hon’ble Supreme Court in case of PCIT V. Abhisar Buildwell (P.) Ltd. in 454 ITR 212 and DCIT V. U.K. Pants (Overseas) Ltd. 454 ITR 441 and the decision of Rajasthan High court in case of Shyam Sunder Khandelwal Vs. ACIT 161 Taxmann.com 255 has held as under: - ‘In view of the above discussion, the right course of action for the AO of the searched assessee and AO of the appellant would have been to take action as per section 153C of the Act. In the judgement of Hon’ble High Court in the case of Shyam Sunder Khandelwal (supra), it has also been held that “However, the respondents shall be at liberty to proceed against the petitioners in accordance with law”. In the case of the appellant, the ld. AOs of the searched person and of the appellant OR the common AO of the both the searched person and the appellant, as the case may be, shall proceed as per section 153C of the Act in accordance with law. The phrase regarding six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made, has been inserted in sub- section (1) of Section 153C of the Act by the Finance Act, 2017 and in this regard the date of search is 22-10-2019. The language of section as on date of issuance of notice u/s. 153C shall apply as per ratio of Income-tax Officer v. Vikram Sujit kumar Bhatia [2023] 149 taxmann.com 123 (SC)/ [2023] 293 Taxman 4 (SC)/ [2023] 453 ITR 417 (SC) [06-04-2023]. No opinion is being expressed on the contention of the merits of the case including on the contention of the appellant regarding that all the additions made in the assessment order have been considered in the settlement petition filed by the father of the appellant as such issue has not been examined. Needless to say, in the assessment proceedings of the appellant, the contentions on the merit are to be seen independently and from the perspective of the assessment in the hands of the appellant. In view of totality of the above discussed facts and circumstances and law, the additions made in the assessment order are hereby deleted on the technical ground as discussed above. This ground of appeal of the appellant is allowed in the above terms.’ We further note that this view is also supported by the decision given by Delhi High Court in case of PCIT V. Anand Kumar Jain HUF 432 ITR 384, ITAT Delhi Bench in case of Trilok Chand Choudhary Vs. ACIT order dt. 20.08.2019 and ITAT Mumbai Bench in case of Kalyan Development Corporation vs. ACIT (2025) 233 TTJ 413. Hence, we do not file any infirmity in the order of Ld. CIT (A) which is upheld by dismissing the ground of the revenue. In for A.Y. 2016-17, the ground raised by the revenue is same as in A.Y. 2014-15 and therefore, the finding given (supra) would mutatis-mutandis apply to A.Y. 2016-17 also. In the result both the appeals of the revenue are dismissed.
9. The brief facts of ground no. 1 of assessee’s appeal is that the AO at Para 6 to 6.2 of the order observed that from the document found in survey at the business premises of assessee, it is noticed that assessee has developed a scheme namely Govind Vihar at village Dantli. Accordingly assessee was required to explain the source of the investment made in purchase of the property and also why the investment may not be taken by applying the rate of Rs. 20,000/- per sq. mts. for residential plot and Rs. 80,000/- per sq. mts. for commercial plot. In response to the same assessee explained that he has not made any such investment. The investment is made by firm M/s. Krishna Properties in which he is a partner. The AO, however, rejected the explanation of assessee by holding that allotment letter issued by JDA (in original) were found from the business premises of the assessee. Hence assessee is responsible for these pattas. Merely saying that he has not made investment is not sufficient to prove. It is only a self serving reply. Accordingly he made addition of Rs. 7, 55, 88,400/- on account of unexplained investment in plots by applying the rate of Rs. 20,000/- per sq. mts. for residential plot and Rs. 80,000/- per sq. mts. for commercial plot.
The Ld. CIT (A) at Para 5.2, Pg 19-20 of the order observed that AO has passed a very detailed order in case of M/s Krishna Properties where after detailed discussion in Para 8 of the assessment order, protective addition was made by holding that since M/s. Krishna Properties was incorporated in the year under appeal, there cannot be earlier accumulated unaccounted cash and the pattas has been allotted in the name of the partners of the firm. Accordingly it was held that all unaccounted investment has been made by the partner, i.e. the assessee. Hence the addition made by the AO is confirmed.
We have considered the rival submission and gone through the material on record. We find that the admitted fact is that Govind Vihar Scheme is developed by M/s. Krishna Properties and not by the assessee. The patta in this scheme is also issued by JDA in the name of M/s. Krishna Properties and not in the name of the assessee as alleged by the lower authorities. This is evident from copy of few patta placed at (PB 95-112) which were found in survey. Hence the addition is made by AO and confirmed by Ld. CIT (A) on incorrect appreciation of facts. We also find that survey was carried out at 38, Jai Ambey Nagar which is the address of M/s. Krishna Properties and not at 36, Jai Ambey Nagar as alleged by the AO (PB 94). M/s. Krishna Properties purchased these plots from three parties and the JDA allotted all the patta to the partnership firm M/s. Krishna Properties. The total purchase cost of these plots was Rs. 2, 15, 14,000/- which is duly declared in the books of M/s. Krishna Properties. Further AO also completed the assessment of M/s. Krishna Properties (PB 27-43) wherein same addition has been made on protective basis after reducing the purchase cost declared in the books of M/s. Krishna Properties. The protective addition has been made as the addition was earlier made in the case of assessee. Thus it is evident that the investment is made by M/s. Krishna Properties and not by the assessee. We further note that the lower authorities have considered the rate of Rs. 20,000/- per sq. mts. for residential plot and Rs. 80,000/- per sq. mts. for commercial plot. However, no document was brought on record to adopt this rate. Section 69 of the Act can be invoked only when assessee has made investment which is not recorded in the books of accounts or the explanation offered is not in the opinion of AO satisfactory. In the present case, no document is referred to establish that the investment made by M/s. Krishna Properties is more than that recorded in its books of accounts. Hence the addition confirmed by Ld. CIT (A) is deleted. The ground of the assessee is allowed.
The brief facts of ground no. 2 of the assessee is that the AO made addition of Rs. 13.50 lacs u/s. 69 of the Act on the basis of ledger account extracted from the pen drive seized from Vishnu Kumar Gupta, addition of Rs. 3, 73, 19,845/- u/s. 69A of the Act on account of unexplained investment in jewellery and addition of Rs. 30, 25,140/- u/s. 69A of the Act on account of unexplained cash. The Ld. CIT(A) deleted all the three additions on the basis that AO has made addition of Rs. 3,78,39,089/- on account of unexplained investment in jewellery and addition of Rs. 30,25,140/- on account of unexplained cash in the assessment order dt. 25.02.2025 framed in case of Sh. Govind Agarwal (PB 7-26). In respect of addition of Rs. 13.50 lacs made on the basis of transaction in the ledger account, the addition was deleted for the reason that Sh. Govind Agarwal has owned up the transaction in this ledger account for earlier years before the Settlement Commission but AO has not made the addition in his case for the year under consideration against which the appeal is pending before him for which enhancement notice has been issued. However, the Ld. CIT (A) further held that in case the impugned transaction or jewellery or cash is disowned by Sh. Govind Agarwal, then in that case the impugned addition shall stand revived in the hands of the assessee without need of any further order.
We find that in ground no. 2, the assessee has challenged the observation of Ld. CIT (A) even though the additions made by AO are deleted by him. We are of the view that power of Ld. CIT (A) in disposing an appeal is given in section 251 of the Act. As per this section, the Ld. CIT (A) against an order of assessment may confirm, reduce, enhance or annul the assessment. He has no power to revive the addition if such addition made in case of other person is disowned by him. This bench is convinced with the arguments of the Ld. AR and proposed an alteration in the directions of the Ld. CIT (A) to the extent that the matter of M/s. Krishna Properties should be examined in its own facts and submission based on evidences adduced. Thus this ground of appeal of assessee is partly allowed.
In the result, both the appeals of the Revenue mentioned (supra) are dismissed and the appeal of the assessee is partly allowed in above terms.
The Order is pronounced in the open court on 15th day of September 2025.