TARA PAREEK,KOTA vs. ACIT, CENTRAL CIRCLE, KOTA, KOTA

THAT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN ISSUING THE NOTICE AND INITIATING THE PROCEEDINGS UNDER SECTION 153C OF THE ACT. THE HON'BLE CIT (APPEALS) HAS FURTHER ERRED IN CONFIRMING THE ACTION UNDERTAKEN BY THE LEARNED AO U/S. 153C OF THE INCOME TAX ACT.

THE APPELLANT CRAVES TO ALTER, AMEND AND MODIFY ANY GROUND OF APPEAL.

NECESSARY COST BE AWARDED TO THE ASSESSEE

The present appeal has been filed by the assessee, a housewife whose primary source of income is interest. For Assessment Year (A.Y.) 2016-17, the assessee declared a total income of Rs. 21,930/-. A search and seizure operation under section 132 of the Income-tax Act, 1961 (“the Act”) was carried out on 02.08.2017 in the case of M/s. Gangwal Commodities, Shri Ajay Gangwal, F-32, Azad Marg, C-Scheme, Jaipur. During the course of the search, certain documents (pages 1 to 7 of Annexure A, Exhibit-4) were seized, wherein Shri Ajay Gangwal admitted cash receipts aggregating to Rs. 1, 15, 74,000/- as his undisclosed income. 3. In the course of enquiry under section 245D (3) of the Act, Shri Ajay Gangwal furnished details of certain persons alleged to have booked flats in the “PRATHAM Complex” and to have made cash payments. These seized papers contained particulars of flat bookings and cash receipts, which were owned up by Shri Ajay Gangwal as his own undisclosed income. The impugned documents also purportedly contained reference to a cash payment of Rs. 5, 00,000/- said to have been made on behalf of the present assessee for A.Y. 2016-17. 3

Pursuant thereto, the assessee’s case was centralized to Central Circle, Kota, and a notice under section 153C of the Act was issued on 03.11.2020. The Assessing Officer (AO) thereafter framed an assessment under section 153C read with section 143(3) of the Act vide order dated 06.04.2021, making an addition of Rs. 5,00,000/- under section 69 of the Act, treating the same as unexplained investment in booking of a flat at “PRATHAM Complex, Jaipur.” Aggrieved, the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals), Udaipur-2 [CIT(A)], who, by order dated 12.03.2025, dismissed the appeal and confirmed the addition of Rs. 5,00,000/-. The grounds challenging both the assumption of juri iction under section 153C of the Act and the consequential penalty proceedings were also rejected by the Ld. CIT (A). 5. The assessee is now before us in further appeal. The assessee has raised two grounds of appeal. Since adjudication of the second ground, relating to the validity of proceedings under section 153C of the Act and the consequent addition, is sufficient to dispose of the appeal, the first ground is taken only for academic consideration and is not relevant for determination of the present dispute. We have carefully considered the rival submissions and perused the material available on record, including the assessment order dated 06.04.2021, the notice issued under section 142(1) of the Act (pages 10-12 of the paper book), and the written submissions of the assessee (pages 1-7 of the paper book). 6. From the record, it is evident that no document or material belonging to or relating to the assessee was found or seized during the search. The only reference relied upon by the AO is a piece of information found at the premises of Shri Ajay Gangwal, wherein the following particulars were noted:

Similar views are there, expressed by the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd. (2023) 143 taxmann.com 178 (SC) has categorically held that: “In respect of completed/unabated assessments, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search under section 132 or requisition under section 132A.” Similarly, the Hon’ble Delhi High Court in CIT v. Kabul Chawla (2015) 380 ITR 573 (Del.) held that completed assessments can be interfered with under section 153A of the Act only on the basis of incriminating material unearthed during search. In the instant case: • The assessment for A.Y. 2016-17 was unabated; • No incriminating document pertaining to the assessee was found during search; • The impugned addition of Rs. 5,00,000/- has been made solely on the basis of third-party information, which itself does not stand in the name of the assessee and is merely an incidental reference contained in the information furnished by the searched party. It is pertinent to note that even this information was in respect of Star Land Base Pvt. Ltd. and not in the name of the assessee. The Assessing Officer, without any direct evidence, has merely drawn an indirect inference on the premise that the assessee had purchased property from Star Land Base Pvt. Ltd., and thereby sought to connect the assessee with the alleged cash payment. No corroborative material or evidence was found during the course of search or subsequently brought on record by the Assessing Officer to establish that the assessee had, in fact, made any such cash investment. In the absence of any independent incriminating document pertaining to the assessee, the reliance placed on such unverified and indirect information cannot, by itself, form a legally sustainable foundation for invoking juri iction under section 153C or for making an addition under section 69 of the Act. Thus, the assumption of juri iction under section 153C is itself invalid, and the consequent addition under section 69 is unsustainable in law.” 9. In view of the above discussion and binding judicial precedents, we hold that the assessment framed under section 153C of the Act for A.Y. 2016-17 is without juri iction and is liable to be quashed. The addition of Rs. 5, 00,000/- made under section 69 of the Act is deleted. 10. In the result, the appeal of the assessee is allowed.

अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकर आयु CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड फाइल/Guard file.