SHARAD KUMAR BHANDARI, JAIPUR,JAIPUR vs. DCIT CIRCLE (INTL TAX), JAIPUR, JAIPUR

fu/kZkj.k o"kZ@Assessment Years : 2015-16 Sharad Kumar Bhandari cuke The DCIT, P-17, Tilak Marg, C-scheme, Vs. Circle (Intl Tax), Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AEXPB7469P vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA. No. 234/JPR/2025 fu/kZkj.k o"kZ@Assessment Years : 2015-16 Juhi Bhandari cuke The DCIT, P-17, Tilak Marg, C-scheme, Vs. Circle(Intl Tax), Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AMCPB4653N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Siddharth Ranka, Adv. jktLo dh vksj ls@ Revenue by : Smt. Runi Pal, CIT (through VC) a lquokbZ dh rkjh[k@ Date of Hearing : 26/06/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 13/08/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.

By way of two separate appeals filed by the assessee(s), the assessee challenges the assessment orders dated 24.01.2025 (Sharad Kumar Bhandari) & 23.01.2025 (Juhi Bhandari) respectively passed by & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur the ACIT/DCIT Circle (International tax), Jaipur [for short AO] as per provision of section 153C r.w.s. 144C (13) of the Income Tax Act, 1961 [for short Act] for the assessment year 2015-2016. That order of assessment was passed after considering the direction of Dispute Resolution Panel [in short “DRP’] passed under Section 144C(5) of the Act dated 19.12.2024.

2. As the issues in both appeals are similar, related, and were heard together by consent, they are disposed of by this common order.

3. The hearing of the appeal was conducted after issue of proper notices to both the parties with a option to attend in virtual mode or in physical as it convenient.

2. In the facts and circumstances of the case and in law, the ld. Dispute Resolution Panel ("DRP") erred in giving directions to the ld. AO for making additions of Rs. 1,31,79,660 to the income of the assessee under Section 69, which is paid through banking channel and accepted by ld. AO. The action of the Id. DRP/AO is illegal, unjustified, arbitrary, and against the facts of the & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur case, in spite of all evidence on record. Relief may please be granted by deleting the entire additions of Rs. 1,31,79,660.

3. In the facts and circumstances of the case and in law, the ld. DRP erred in giving direction to the Id. AO in making additions of Rs. 11,69,050 to the income of the assessee under Section 69, alleging it to be on-money paid by the assessee for the purchase of flat on irrelevant and unacceptable documents. The action of the Id. DRP/AO is illegal, unjustified, arbitrary, and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 11,69,050.

4. In the facts and circumstances of the case and in law, the ld. DRP erred in giving directions to the Id. AO for enhancing the income of the assessee by Rs. 1,20,10,610 under Section 69, despite the fact that the source of payment, through banking channel, was fully explained and supported by bank statement and remained undisputed by the ld. AO. The action of the ld. DRP is illegal, unjustified, arbitrary, and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 1.20.10.610/-.

5. The assessee craves his rights to add, amend or alter any of the grounds on or before the hearing.”

5. Vide application filed on 05.05.2025 the assessee relying on the decision of Hon’ble Apex Court in the case of National Thermal Power Co Ltd. 229 ITR 383 (SC) sought revising the existing grounds & taking additional grounds of appeal as here under:-

Existing Existing Grounds of Revised / Revised & Additional Ground No. Appeal Additional Grounds of Appeal

Ground No.

1. In the facts and 1. That in law and in the circumstances of the case facts and circumstances and in law, the ld. AO of the case, the assumed jurisdiction in the proceeding initiated u/s case of the assessee under 153C of the Act for A.Y. Section 153C without 2015-2016 is without recording proper satisfaction, jurisdiction, is barred by alleging payment of on- limitation, is void-ab- money for the purchase of a initio, is non-est in law, flat, and without providing is illegal, is bad-in-law the satisfaction note as and deserves to be recorded by the AO of the quashed & set-aside. searched person and the underlying documents on the basis of which allegations were levelled against the & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur assessee. The action of the ld. AO is illegal, unjustified, arbitrary, and against the facts of the case. The proceedings initiated under Section 153C are liable to be quashed as being illegal and void ab initio. 2 In the facts and 2 That in law and in the circumstances of the case facts and circumstances and in law, the ld. Dispute of the case, the Resolution Panel ("DRP") assessment order dated erred in giving directions to 21.01.2025 passed u/s the ld. AO for making 153C r.w.s. 144C(13) additions of Rs. 1,31,79,660 r.w.s. 153B of the Act is to the income of the assessee void-ab-initio, is non-est under Section 69, which is in law, is illegal, is bad- paid through banking in-law and deserves to be channel and accepted by ld. quashed & set-aside AO. The action of the ld. being barred by DRP/AO is illegal, limitation. unjustified, arbitrary, and against the facts of the case, in spite of all evidence on record. Relief may please be granted by deleting the entire additions of Rs. 1,31,79,660 3 In the facts and 3 That in law and in the circumstances of the case facts and circumstances and in law, the ld. DRP erred of the case the ld. DRP in giving direction to the ld. grossly erred in giving AO in making additions of directions to the ld. AO Rs. 11,69,050 to the income to make addition of Rs. of the assessee under Section 11,69,050/- to the income 69, alleging it to be on- of the assessee u/s 69 of money paid by the assessee the Act towards alleged for the purchase of flat on ‘on-money’ paid by the irrelevant and unacceptable assessee towards documents. The action of the purchase of residential ld. DRP/AO is illegal, flat. unjustified, arbitrary, and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 11,69,050 & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 4 In the facts and 4 That in law and in the circumstances of the case facts and circumstances and in law, the ld. DRP erred of the case the ld. DRP in giving directions to the ld. grossly erred in AO for enhancing the exercising powers u/s. income of the assessee by 144C(8) & by giving Rs. 1,20,10,610 under directions to the ld. AO section 69, despite the fact for enhancing the income that the source of payment, of the assessee by Rs. through banking channel, 1,20,10,610/- u/s 69 of was fully explained and the Act towards supported by bank statement consideration paid by the and remained undisputed by assessee on account of the ld. AO. The action of the purchase of residential ld. DRP is illegal, flat. unjustified, arbitrary, and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 1,20,10,610 5 The assessee craves his 5 The assessee craves his rights to add, amend or alter rights to add, amend or any of the grounds on or alter any of the grounds before the hearing on or before the hearing

6.1. The documents and data so found and seized pertain to the assessee and these have bearing on the determination of total income of the assessee. Therefore, after recording satisfaction note on 27.03.2023 as per prerequisite condition laid down in provisions of section 153C of the Act, notices was issued for A.Y. 2015-2016 to 2021-2022 on 27.03.2023 by ld. AO which was duly served upon the assessee through e-filing portal. Return of income has been filed by the assessee in response to the notice u/s 153C of the Act on 26.04.2023. No additional income was declared in the return of income filed in response to the notice u/s 153C of the Act.

6.2. In the satisfaction note ld. AO based on the data extracted from the computer and mobiles etc. which was in large number, noted that it can be proved beyond doubt that the M/s Om Metal Consortium Pvt Ltd was regularly indulged in taking cash against the sale of flats at “Pallacia”

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur from the outside parties. The actual rate of these flats sold to parties, seems to be much higher than what is recorded in the books of accounts. The difference is obviously taken in cash by the assessee group against the sale of these flats, which is evidenced from various documents/chats/images found during the search. Since these amounts are paid in cash therefore, that part remains unaccounted and the same was not declared in their regular return or were remain from unexplained / undeclared sources. Evidence in the form of whatsapp chats retrieved from the mobile device of Shri Vishal Kothari were extracted which pertains to to unaccounted cash investments made by various buyers in the Pallacia project including that of by the assessee. Ld. AO thus based on the corroborated internal evidence depicted in the image having “Details as on 17.04.2013” of flats sold in Pallacia project which was found from the mobile of Shri Vishal Kothari noted that it was list on the left side of S. NO.” Column, actual handwritten rate of flats is recorded. That sheet makes it clear that the rates are bifurcated into cheque amount and cash amount charged for each flat. Based on that set of facts ld. AO worked out the selling rate which worked out at Rs. 9,000/- per square feet and out of which Rs. 2,500/- per square feet was paid in cash by the assessee. From that evidence ld. AO noted that the assessee Shri Sharad Kumar Bhandari and his spouse paid Rs. 55,00,000/- in cash against the & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur booking of flat no. G52. Therefore, a Show Cause Notice dated 19.03.2024 was issued by the ld. AO to which reply dated 20.03.2024 was filed by the assessee. Considering that reply ld. AO prepared a Draft Assessment Order on 30.03.2024 relying on those digital documents found during the search operation image “T-9/Vishal Kothari Iphone XS 256 GB/Complete Extraction/Apple IOS Full File system/files/Image”, wherein on the left-hand side of the image details of amount received is recorded and on the right side details of various payment made ( Expenditure ) were found to be recorded. At serial number 20, Rs. 55 i.e. Rs. 55,00,000/- was received by the builder from Shri Sharad Kumar Bhandari against the sale of flat in Pallacia. From that evidence ld. AO noted that the assessee Shri Sharad Kumar Bhandari and his spouse paid Rs. 55,00,000/- in cash against the book of flat no. G52 and the source of these amount remained to be explained. The documents which were relied upon, evidencing the modus operandi of the business runs by the person search upon were provided to the assessee company. Even the relied upon transaction note was also provided to the assessee along with the satisfaction note vide notice dated 06.12.2023. Thus, considering the digital data in Mobile phone of the key person of the search group found during the course of search is having a great evidentiary value and from the data so extracted it is proved that the assessee made cash payment & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur against the purchase of property and the claim of the assessee that no cash payment was made was rejected and thereby the ld. AO issued a draft order proposing addition of Rs. 27,50,000/- based on the proportionate state of completion of the project where the assessee made the investment. Ld. AO divided 50 % of Rs. 55,00,000/- i.e. Rs. 27,50,000/- and spread that amount from A. Y. 2015- 16 to 2021-22.

7. Aggrieved with that draft order the so made by the ld. AO the assessee exercised an option available to challenge that draft assessment order before the Dispute Resolution Panel [DRP]. In that proceeding assessee the DRP taken a different view with that of the ld. AO and the relevant findings of the DRP reads as under:-

“5.5 DRP DISCUSSIONS: 5.5.1 The Panel members have gone through the submission of assessee as well as AO's observations in DAO, satisfaction note by then AO and other documents relevant to the case. The following observations were made by the members: A. Evidence gathered during the search operation in OM Kothari Group included WhatsApp chats, handwritten notes, and statements from the key persons clearly suggest systemic receipt of cash payments ("on money") by the group towards the sale of flats in the "PALLACIA" project. a. In this regard, this fact is established by the statement of Shri Vimal Jain taken during the course of search action wherein he had accepted to receive cash amount/on money on various occasions from various persons on behalf of all directors of OM Kothari Group. b. Further, panel has also gone through one image pasted in the draft assessment order, in the name of "Details as on 17.04.2013" having details of buyer of flats sold in Pallacia project and found from mobile of Shri Vishal Kothari during the course of search action. c. This image contained a list of buyers of flats at Pallacia project and subsequent payment to be received by the group towards sale of flats. In this list, on the left side of S. No. column, hand- written actual rate of flat is recorded which was bifurcated rate for cash and cheque payments made by flat buyers. In that image at Sl. No. 20, having an entry in the name of "Bhandari ji G-52" and on the left side the rate of flat 9000 + 2500 is recorded. This suggests that the assessee had agreed to pay Rs. 9,000/- per square feet rate through cheque and Rs. 2,500/- per square feet through cash. AO in its draft order stated that total purchase consideration of flat would be Rs.2,53,00,000/- (Rs. 11500 * 2200 sqft). d. Though, AO did mention in order that amount paid through banking channel are verifiable from the bank entries but the statement was for emphasizing veracity of evidences such as data, whatsapp chats found during search operation and the AO never stated that source of those payment made through cheque/bank channel payments are verified. The AO was focussed towards addition of Rs.55,00,000/- (Rs.2500 (cash) 2200 sqft), for cash paid as 'on money'. Relevant portion of AO's observation is reproduced as under: e. In view of the discussion held in preceding paras, the panel members observed that once assessing officer, after considering all evidences found during search operation, arrived at purchase consideration value of flat, which in this case is Rs. 2,53,00,000/- [Rs.11,500 per sqft + 22 sqft], then next step for AO would be to find the payments made by the assessee from verified source and through banking channels and then only should have arrived at examining the cash transaction value. However, AO simply added cash component value @2500 per sqm only without verifying the payment made by assessee through the banking channels and from verified sources. f. As per agreement for sale furnished by the assessee, the sale price of flat was Rs.2,08,00,000/-+ plus other expenditures i.e. Membership Fee, Annual Maintenance Charge & corpus fund etc and accordingly, assessee has claimed to make a payment of Rs. 2,29,61,900/- through banking channels. Further, for purchase of flat following payments through banking channel as per details below was claimed by the assessee: g. It is observed that AO in his assessment order, stated that amount paid through the banking channel was verifiable from the bank entries dated 23.1.2013, 22.03.2013, 26.12.2013, 26.12.2013, 08.07.2014 & 12.03.2015. AO also did not mention whether the source of such bank entries are verified or not. Further, no bank statements, bank account type, source of income of assessee, registry of flat, source of funding for making payment were brought on record by the AO. Even though, the assessee vehemently argued that he had paid entire flat consideration through bank channel only and no cash payment was made by him, but he did not furnish any documentary evidence alongwith source of funds in support of his claim before the Panel members. h. Further, as this exercise would perhaps result in enhancement of tax liability of the assessee for assessment year i.e. 2015-16, so keeping in line with Principle of natural justice, an enhancement notice dated 5/12/2024 was issued to the assessee to provide & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur a fair opportunity to present her case by furnishing bank statements, registry of flat alongwith source of funds thereof before panel members within stipulated time i.e. 06.12.2024. However, assessee did not furnish any response/objections till date. i. So, in absence of any documents to substantiate his claim of making payments through bank, source of payment of Rs. 1,20,10,610/- made by Mr Sharad Kumar Bhandari could not be ascertained and remains unverified. Accordingly, the Panel directs the AO to make an addition of Rs.1,20,10,610/- towards unverified payment in the income of assessee for AY 2015-16. j. Further, based on the findings of the search operation, duly discussed by the Assessing Officer and as per discussions held in pre paras, it has been established that the total consideration for the flat was ©2,53,00,000 determined at a rate of Rs.11,500 per sqm (Rs.9,000 Cheque + Rs. 2,500 Cash) and assessee paid partly in cash as well as allegedly through cheques. Assessee has only shown payment details of Rs.2,29,61,900/- out of which an amount of Rs.1,20,10,610/- is still not verified due to non- availability of details of source of payment and bank statement of assessee (as already discussed in pre para). Accordingly, in the considered opinion of the Panel the balance payment of Rs. 23,38,100/- (Rs.2,53,00,000/- - Rs.2,29,61,900/-) for which assessee offered no explanation, was paid by assessee in cash to the developer as 'on money' and liable to added in the income of assessee. Further, the Panel notes that, since it is joint property and in absence of registered deed, the proportionate share is being taken as 50% each and the payment of cash should be divided at half each i.e. Rs.11,69,050/- each. Accordingly, AO is directed to make an addition of Rs. 11,69,050/- [Rs. 23,38,100/- divide by 2] towards payment of cash as on money to the developer. B. Further, the Panel also noted that the AO in his draft assessment order stated that the flats construction work in Pallacia project went for long i.e. from FY 2011 to 2021 and the cash consideration paid by the assessee to the builder/developer being unaccounted and not entered into books of account, are not verifiable, hence their payment date could not be exactly determined. The AO further stated that it would be reasonable to take payment date by assessee in consonance with construction linked revenue recognition of Kothari Group i.e. percentage completion method as adopted by group for real estate project. The relevant portion of AO's observation is reproduced as under:

C. The assessee also contested the above calculation methodology adopted by the Assessing Officer. Upon examining the issue, the Panel concludes that the AO had improperly applied the percentage completion method in the case of the assessee. This method of revenue recognition is typically applicable only to capital-intensive, long gestation businesses and is not appropriate in this case. The Panel further held that in absence of registered sale deed, only source to ascertain the date when rights/ownership of the flat was transferred to assessee is its payment details, which in this instant case is 12.03.2015 which has found mentioned in the details provided by the assessee and also verified from bank entry by AO. This implies that assessee made all the documented payment i.e. Rs.2,08,00,000/- towards purchase of flat by end of FY 2014-15. Accordingly, it would be prudent to hold that the cash payment was made by the assessee around/prior to this date. As per payment details furnished by the assessee, [reproduced at Page 13 above], the last payment towards purchase of flat was made on 12.03.2015 and this payment detail was duly verified by the bank entries as mentioned by the [14:30, 25/07/2025] Rohan Chatter: AO. Accordingly, the Panel opines that Assessee had made all the cash payments before this date i.e. 12.03.2015, and same should be taxed in relevant assessment year i.e. AY 2015-16. This was further strengthened by the fact that as per clause (9) of Agreement for sale dated 07.06.2013, the possession of the flat to be given to purchaser within 30 (thirty) months of date of execution of agreement which falls in calendar year 2015 and most of the payments are reasonably & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur assumed to be paid by assessee in vicinity of that possession date. Accordingly, the Panel holds that the assessee had made all the payments towards purchase of flat at Pallacia Project before March 2015. Accordingly, any cash payments made would be logically taxable in the relevant assessment year i.e. 2015-16. 5.5.2 Accordingly, the AO is hereby directed that addition in respect to payment of cash can only be added to AY 2015-16 and any addition in this regard made in other AYs 2016-17, 2017-18, 2018-19, 2019-20 and 2021-22 should be deleted. 5.6 DRP Directions: 5.6.1 Direction 1: The Panel upholds the AO's observation that insofar the payments were made in cash to the developers towards purchase of flat. Accordingly, the Panel members hereby issue the following directions for compliance by the AO: (i) Addition of Rs.11,69,050/- [Rs. 23,38,100/2] towards payment of cash as 'on money' for which the assessee did not offer any explanation. (ii) Addition on account of payment of Rs.1,20,10,610/- (allegedly through cheque) but not found substantiated. 5.6.2 Direction 2: The AO is hereby directed that addition in respect to payment by cash can only be added to AY 2015-16 and any addition in this regard made in other AYs 2016-17, 2017-18, 2018-19, 2019-20 and 2021-22 should be deleted.”

8. As is evident from the above direction of DRP wherein the ld. AO was directed to make the entire payment of Rs. 11,69,050/- in the year under consideration instead of spearing it over the % completion year of the project. Further the directions were given to make an addition of Rs. 1,20,10,610/- paid by cheque by the assessee, in absence to prove the source thereof. The ld. AO followed that direction of the DRP and accordingly final assessment order was framed on 24.01.2025. Upon receipt of that order the assessee preferred the present appeal on the grounds including that of the additional grounds as reproduced here in above.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 9. Apropos to the various grounds so raised by the assessee, ld. AR of the assessee filed following written submissions in support of his arguments:

“The present written submissions are respectfully tendered in support of the Grounds of Appeal challenging the legality of the proceedings initiated against the assessee u/s. 153C of the Act for A.Y. 2015-2016 and the additions of Rs. 1,31,79,660/- made under section 69 of the Act. FACTUAL BACKDROP

1. That the humble assessee is an Individual and is a non-resident Indian living outside India for past more than 40 years. He is regularly filing his return of income from year to year of the income earned and taxable in India as per the provisions of the Act. Copy of ITR filed for A.Y. 2015-2016 is at PB 44.

2. That a search was carried out at the premises of M/s. OM Kothari Group on 13.07.2020.

3. That the Assessing Officer after recording satisfaction note on 27.03.2023, issued notices dated 27.03.2023 u/s. 153C of the Act to the assessee for the assessment years 2015-2016 to 2021-2022[PB 45-51].Return in compliance to notice u/s. 153C was filed by the assessee on 26.04.2023.

4. That the Assessing Officer issued a notice dated 12.10.2023 [PB 52-56] u/s. 142(1) of the Act to the assessee for the assessment years 2015-2016 to 2021- 2022 wherein details were sought. Assessee vide replies dated 18.10.2023 & 21.10.2023 sought copy of satisfaction note and other relevant material on the basis of which notices u/s. 153C were issued [PB 57-58].

5. That the Assessing Officer issued a notice dated 06.12.2023 u/s. 143(2) of the Act [PB 59] alongwith which copy of satisfaction note dated 27.03.2023 was provided [PB 60-64].That it was alleged that incriminating documents in the nature of one image having “Details as on 17.04.2013” of flats sold in PALLACIA project was found from the mobile phone of Shri Vishal Kothari wherein name of the assessee is also appearing @ Sno.

20. The said image showed that the assessee has purchased the flat for total sale consideration of Rs. 2,53,00,000/- and out of which Rs. 55,00,000/- was paid in cash as ‘on- money’. Since, assessee share in the flat purchased is 50%, his share of ‘on- money’ was alleged at Rs. 27,50,000/-. Scan copy of image found is as under:

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 6. That the assessee filed its detailed reply &objections vide its letter dated 21.12.2023 alongwith which copies of passport copies, bank details, interest certificates, payment details to the builder, agreement to sale dated 07.06.2013 entered by the assessee & Smt. Juhi Bhandari (wife of the assessee) with M/s. OM Metal Consortium Pvt. Ltd. (Builder)[PB 65-115]. It was submitted by the assessee that he & his wife Smt. Juhi Bhandari had jointly purchased the Flat No. G-52, Pallacia Building, A-2, Prithviraj Road, C-Scheme, Jaipur for a total consideration of Rs. 2,29,61,900/- and out of which Rs. 1,20,10,610/- was paid by the assessee from its bank account and Rs. 1,09,51,290/- was paid by Smt. Juhi Bhandari as per following details:

10. That the Assessing Officer issued Draft Assessment Order dated 30.03.2024 [PB 132-154] proposing to make additions u/s. 69 of the Act in the hands of the assessee & Smt. Juhi Bhandari spread over A.Y. 2015-2016 to 2021-2022 towards the ‘on-money paid’ by the assessee on the basis of % completion method of work completed by the builder as follows, reply dated 31.03.2024 [PB 155-159] submitted by the assessee: Amount of Addition in Amount of Addition in Total Addition A.Y. hands of Sharad Kumar hands of Juhi Bhandari proposed Bhandari 2021-22 615725 615725 1231450 2020-21 208725 263450 472175 2019-20 0 0 0 2018-19 228250 228250 456500 2017-18 65450 65450 130900 2016-17 114400 114400 228800 2015-16 1517450 1517450 3034900 Total 2750000 2804725 5554725 11. That the assessing filed an application before the Dispute Resolution Panel on 26.04.2024 [PB 160-171] challenging the draft assessment order passed by the Assessing Officer.

13. Thatadjournment applications dated 06.12.2024 [PB 174-175] &12.12.2024 [PB 176] were filed by the assessee. Thereafter vide letter dated 14.12.2024 objections were filed by the assessee and copies of bank statements reflecting payment made by the assessee from its bank account were sent by speed-post on 16.12.2024[PB 177-184].KINDLY NOTE that proceedings before DRP are manual and nothing can be filed ONLINE.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 32,16,408/-) & A.Y. 2014-2015 (Rs. 5,39,282/-). The said addition was directed to be made even when it was not based on incriminating documents found during the course of search. It further directed that, entire addition towards ‘on-money’ of assessee’s share of Rs. 11,69,050/- [2,53,00,000- 2,29,61,900 = 23,38,100/2] be made in A.Y. 2015-2016 itself u/s. 69 of the Act and additions proposed by Assessing Officer for A.Y. 2016-2017 to 2021- 2022 qua ‘on-money’ were directed to be dropped as follows: A.Y. Proposed Addition 2021-22 0 2020-21 0 2019-20 0 2018-19 0 2017-18 0 2016-17 0 2015-16 1,31,79,660 (11,69,050+1,20,10,610) 15. That consequential Assessment Order dated 24.01.2025 was passed by the Assessing Officer. That the following chart the amount proposed as per Draft Assessment Order dated 30.03.2024 and as per Dispute Resolution Panel order dated 19.12.2024. A.Y. Amount of Addition as per AO Amount of Addition as per DRP 2021-22 615725 0 2020-21 208725 0 2019-20 0 0 2018-19 228250 0 2017-18 65450 0 2016-17 114400 0 13179660 2015-16 1517450 (1169050+12010610) Total 2750000 13179660 16. That for ready reference relevant extracts of section 153C, 153A of the Act is reproduced as hereunder: 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 & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 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: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153Ashall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income 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 as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) …………………………………………………………….. (3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021. Assessment in case of search or requisition. 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 but on or before the 31st day of March, 2021, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and of the relevant assessment year or years: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income 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. Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.–For the purposes of this sub-section, the expression “relevant assessment year” shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.–For the purposes of the fourth proviso, “asset” shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.’ 17. That the Central Board of Direct Taxes vide Circular No. 2/2018 dated 15.02.2018 explained the rationale for amendments made to the Finance Act, 2017. In reference of period for which extended period of 10 years could be invoked u/s. 153A and 153C of the Act it was stated as hereunder: 80. Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendment to section 153A and 153C. 80.1 ………………………………………... 80.2 ……………………………………….... 80.3 ……………………………………….... 80.4 However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including section 132A cases) and the same is represented in the form of undisclosed investment in any asset, section 153A of the Income-tax Act relating to search assessments has been amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided up to the tenth assessment year if- (i) the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years (falling beyond the sixth year); (ii) such income escaping assessment is represented in the form of asset; (iii) the income escaping assessment or part thereof relates to such year or years. 80.5 Applicability: The amended provisions of section 153A of the Income-tax Act shall apply where search under section 132 of the Income-tax Act is initiated or requisition under section 132A of the Income-tax Act is made on or after the 1st day of April, 2017. 80.6 Section 153C of the Income-tax Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income-tax Act. 80.7 Applicability: These amendments take effect from 1st April, 2017. GROUNDS: 153C PROCEEDINGS IS BAD-IN-LAW, ILLEGAL, VOID- AB-INITIO SINGLE SATISFACTION NOTE FOR A.Y. 2015-2016 TO 2021-2022 18. That on perusal of satisfaction note dated 27.03.2023 [PB 60-64] it can be noticed that a single satisfaction note was recorded by the Assessing Officer for the A.Y. 2015-2016 to 2021-2022 against the assessee as follows:

18.1. That it can be noticed that at the time of initiation of proceedings u/s. 153C against the assessee, the Assessing Officer was not sure/aware as to what is the & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur alleged escapement of income by the assessee and for which assessment year and she has simply initiated proceedings u/s. 153C for A.Y. 2015-2016 to 2021-2022 by recording a single satisfaction notefor A.Y. 2015-2016 to 2021- 2022 by alleging that escaped income by the assessee is Rs. 27,50,000/-. 18.2. That furthermore copy of satisfaction note recorded by the Assessing Officer of the searched person was NEVER PROVIDED to the assessee TILL DATE. 18.3. That recording of single satisfaction note u/s. 153C for different assessment years is illegal & is not permissible. Reliance is placed upon:  Hon’ble Supreme Court in ITO v. Saksham Commodities Ltd. (2024) 12 TMI 1068 [PB 211]has dismissed SLP on merits thereby approving Hon’ble Delhi High Court’s judgment in Saksham Commodities Ltd. v. ITO (2024) 4 TMI 461 [PB 212-251]wherein it was held: Proceedings u/s 153C - issuance of the notice was preceded by the drawl of a Satisfaction Note by the jurisdictional AO - importance of material recovered in the course of a search or a requisition made and a right to reassess u/s 153A and 153C - petitioners contended that in the absence of any incriminating material having been unearthed in the search, it would be impermissible for the respondents to initiate action u/s 153C for the six AYs’ preceding the year of search or for that matter, the “relevant assessment year”. Distinction between Section 153A and Section 153C - HELD THAT:- It is only when the transmitted documents and material reaches the desk of the jurisdictional AO that it becomes empowered to initiate action u/s 153C of the Act. This is evident from a plain textual reading of that provision and which speaks of the commencement point being the handing over of documents or assets seized or requisitioned to the AO of the “other person” and it in turn proceeding to issue notice to assess or reassess the income of the non-searched entity in accordance with Section 153A. However, the initiation of action u/s 153C is significantly premised upon the AO being satisfied that the books of account or documents and assets seized or requisitioned having “a bearing on the determination of the total income of such other person”. Issuance of a notice u/s 153C is clearly not intended to be an inevitable consequence to the receipt of material by the jurisdictional AO. That the AO before commencement of action u/s 153C is also obliged to be satisfied that the material so received would “have a bearing on the determination of the total income of such other person” is an aspect of significance and constitutes a fundamental point of distinction between Section 153A and Section 153C. This distinguishing element of the two provisions would become further apparent from the discussion which ensues. It becomes apparent from the legislative mandate of those two provisions being applicable to searches undertaken in a particular time period, the principles of abatement being replicated and the search assessment power being available to be invoked for the “relevant assessment year”, and which extended the power to be exercised over a ten year block, being simultaneously introduced in those provisions. The Legislature clearly intended both these provisions to form part of a cohesive scheme and to be complementary to each other. The aspects of satisfaction and of the & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur material likely to implicate or influence were not added in Section 153A. The fact that any additions that may be ultimately made upon a culmination of assessment under Section 153A being indelibly founded on the material gathered in the course of the search is a separate issue all together. The usage of the expression “have a bearing” would necessarily lead one to conclude that the mere discovery of books, documents or assets would not justify the initiation of proceedings under that provision. Upon receipt of that material, the jurisdictional AO must additionally be satisfied that those are likely to have an impact on “the determination of the total income”.“Bearing” would include something which would lend support or credence. It has also been defined to mean something which may have a practical relation or effect upon, influence or relevance. This leads us to the inevitable conclusion that the initiation of action under Section 153C would have to be founded on a formation of opinion by the jurisdictional AO that the material handed over and received pursuant to a search is likely to influence the “determination of the total income” and would be of relevancy for the purposes of assessment or reassessment. Incriminating material - Cascading effect - The spectre of abatement insofar as the “other person” is concerned would arise only after the jurisdictional AO has formed the requisite satisfaction of the material having “a bearing on the determination of the total income of such other person” and having formed the opinion that proceedings u/s 153C are liable to be initiated. It would be pertinent to bear in mind that Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] was a decision rendered in the context of Section 153A. It was in the aforesaid backdrop that the Court significantly observed that once a search takes place u/s 132 of the Act, notice under Section 153A(1) would mandatorily issue. The abatement of assessment and reassessment pending on that date would, in the case of a Section 153A assessment, be a preordained consequence. However, and in light of what has been observed hereinabove, it is apparent that Section 153C constructs a subtle and yet significant distinction insofar as the question of commencement of proceedings or assumption of jurisdiction is concerned. Nature of the incriminating material that may be obtained and the years forming part of the block which would merit being thrown open - Section 153C enables and empowers the jurisdictional AO to assess or reassess the six AYs’ or the “relevant assessment year”. Ultimately Section 153C is concerned with books, documents or articles seized in the course of a search and which are found to have the potential to impact or have a bearing on an assessment which may be undergoing or which may have been completed. The words “have a bearing on the determination of the total income of such other person” as appearing in Section 153C would necessarily have to be conferred pre-eminence. Therefore, and unless the AO is satisfied that the material gathered could potentially impact the determination of total income, it would be unjustified in mechanically reopening or assessing all over again all the ten AYs’ that could possibly form part of the block of ten years.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur A reading of the aforesaid Satisfaction Notes would establish that jurisdictional AOs’ appear to have proceeded on the premise that the moment incriminating material is unearthed in respect of a particular AY, they would have the jurisdiction and authority to invoke Section 153C in respect of all the assessment years which could otherwise form part of the “relevant assessment year” as defined in Section 153A. In our considered opinion, the aforesaid understanding of Section 153C is clearly erroneous and unsustainable. As explained hereinabove, the discovery of material likely to implicate the assessee and impact the assessment of total income for a particular AY is not intended to set off a chain reaction or have a waterfall effect on all AYs’ which could form part of the “relevant assessment year”. This, more so since none of the Satisfaction Notes record any reasons of how that material is likely to materially influence the computation of income for those AYs’. The Satisfaction Notes would thus have to evidence a formation of opinion that the material is likely to be incriminating for more than a singular assessment year and thus warranting the drawl of Section 153C proceedings for years in addition to those to which the material may be directly relatable. Conclusion - On an overall consideration of the structure of Sections 153A and 153C, we thus find that a reopening or abatement would be triggered only upon the discovery of material which is likely to “have a bearing on the determination of the total income” and would have to be examined bearing in mind the AYs’ which are likely to be impacted. Thus be incorrect to either interpret or construe Section 153C as envisaging incriminating material pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the “relevant assessment year”. In our considered view, abatement of the six AYs’ or the “relevant assessment year” u/s 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs’ that may form part of the block of ten AYs’. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the material gathered is likely to inculpate the assessee. We would thus recognize the flow of events contemplated u/s 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs’ immediately preceding the AY pertaining to the year of search and the “relevant assessment year”. It is only once the AO of the non-searched entity is satisfied that the material coming into its possession is likely to “have a bearing on the determination of the total income” that & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur a notice u/s 153C would be issued. Abatement would thus be a necessary corollary of that notice. However, both the issuance of notice as well as abatement would have to necessarily be preceded by the satisfaction spoken of above being reached by the jurisdictional AO of the non- searched entity. Therefore, and in our opinion, abatement of the six AYs’ or the “relevant assessment year” would follow the formation of that opinion and satisfaction in that respect being reached. We come to the firm conclusion that the “incriminating material” which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs’ immediately preceding the AY corresponding to the year of search or the “relevant assessment year” would not justify a sweeping or indiscriminate invocation of Section 153C. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs’ and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments. Operative Directions - We find that except for a few exceptions which were noticed in the introductory parts of this judgment, the writ petitions forming part of this batch, impugn the invocation of Section 153C in respect of AYs’ for which no incriminating material had been gathered or obtained. Satisfaction Notes also fail to record any reasons as to how the material discovered and pertaining to a particular AY is likely to “have a bearing on the determination of the total income” for the year which is sought to be abated or reopened in terms of the impugned notices. Respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs’ years immediately preceding the assessment correlatable to the search year or the “relevant assessment year” as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above.  Hon’ble Supreme Court in DCIT v. Sunil Kumar Sharma (2024) 10 TMI 1160 [PB 252]has dismissed SLP thereby approving Hon’ble Karnataka & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur High Court’s judgment in DCIT v. Sunil Kumar Sharma (2024) 2 TMI 116 [PB 253-281]wherein it was held: As satisfaction note is required to be recorded under Section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue. In the light of the above said Apex court Decisions and the Panchanama provided herein, it is deemed appropriate to conclude that the notice provided under Section 153C is bad in law. Decided against revenue.  Hon’ble Supreme Court in PCIT v. Dev Technofab Ltd. (2025) 1 TMI 657 [PB 282]has dismissed SLP thereby approving Hon’ble Delhi High Court’s judgment in Dev Technofab Ltd. v. DCIT (2024) 5 TMI 1468 [PB 283-287]wherein it was held: Validity of assessment u/s 153C - Statutory imperatives of incriminating material - HELD THAT:- Undisputedly, and as would be evident from a reading of the Satisfaction Note pertaining to the non-searched entity, namely the petitioner, the material which is alluded to pertains to Assessment Year [“AY”] 2019-20 only. Action under Section 153C however, sought to encompass AYs 2014-15 to 2020-21. Insofar as AYs other than AY 2019-20 are concerned the impugned action would clearly not sustain bearing in mind the judgment rendered by the Court in Saksham Commodities Limited [2024 (4) TMI 461 - DELHI HIGH COURT] wherein held jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs' and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments.  Hon’ble Madras High Court in SNJ Breweries Pvt. Ltd. v. PDIT (2024) 8 TMI 290 has held: 7.6. We find that the learned Judge has erred in generalizing the challenge to the notices under Section 153C of the Act issued to 12 entities on the basis of a satisfaction note for a single entity nor has the learned judge applied the principles in Sinhgad reported in (2018) 11 SCC 490 wherein it was held that seized materials must pertain to relevant assessment years in question. Instead, the learned Judge has chosen to pass an order rejecting the challenge to Section 153C made by Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C.Mariappan, Shanmugakani Sivajothi, Somasundaram & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur Rishi Sharaan and Leela Distillers on the basis of the notice issued to Anitha Bottles. It is trite law that assessments for each entity have to be made individually and there cannot be generalization. It is also trite law that each assessment year is a distinct unit even with regard to the very same assessee. Thus, generalization on the basis of a note issued to a different entity on the crucial aspect of existence of jurisdictional fact necessary to assume jurisdiction under Section 153C of the Act, vitiates the proceedings necessitating examination of the above aspects independently for each of the assessees / appellants.  Hon’ble ITAT, Delhi Bench in Super Bazar Stores Pvt. Ltd. v. ADIT (2025) 4 TMI 1130 [PB 288-292]has held: Validity of jurisdiction assumed u/s 153C - scope of ‘satisfaction note’ recorded by the AO - HELD THAT:- Mere drawing of a perfunctory satisfaction without meeting basic ingredients of providing some tangible & descript information and application of mind thereon has no standing in law and would not confer drastic jurisdiction of assessment u/s 153C of the Act on a person other than searched person. The jurisdiction assumed based on such lackadaisical ‘satisfaction note’ beset with vital infirmities cannot be countenanced in law. The objections raised on behalf of the assessee towards lack of jurisdiction based on a cryptic and non-descript satisfaction thus deserves to be sustained. While recording a consolidated ‘satisfaction note’ is not a bar in law per se as rightly contended on behalf of the revenue, but however, in the same vain, the documents/assets searched need to be specified against each year covered in the satisfaction note to depict application of mind and initiation of action u/s 153C of the Act qua such assessment years. AO has apparently failed to do so in the present case. As a corollary, the notice issued u/s 153C and consequent assessment order passed u/s 153C is vitiated in law and requires to be quashed. The jurisdiction assumed u/s 153C based on vague and non-descript ‘satisfaction note’ is vitiated at the threshold. The consequence assessment order passed u/s 153C thus has no force of law. Appeal of the assessee is allowed. In light of above the impugned notice u/s 153C is illegal & deserves to be quashed & set-aside. PROCEEDINGS FOR A.Y. 2015-2016 WAS BARRED BY LIMITATION 19. That in the instant case satisfaction note has been recorded on 27.03.2023, i.e. during A.Y. 2023-2024 when the impugned notices dated 27.03.2023 were issued to the assessee u/s. 153C of the Act, hence, the search year qua the assessee will be computed from A.Y. 2023-2024. However, it is apparent that notices u/s. 153C for A.Y. 2015-2016 to 2021-2022 were issued to the assessee by presuming the search year to be A.Y. 2021-2022, i.e., the year in which the search was carried out at the premises of OM Kothari Group and not the year in which the incriminating documents were received by the jurisdictional Assessing Officer& satisfaction note was recorded by him. Entire proceedings initiated against the assessee beyond 6 years from the search year, i.e., for A.Y. 2015-2016 is barred by limitation, since, the alleged & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur escaped income qua assessee was Rs. 27,50,000/- which is less than Rs. 50,00,000/-. 19.1. That on perusal of section 153C r.w. 4th Proviso tosection 153A(1) read with Explanation 1 to section 153A(1), the extended period beyond 6 years can be invoked only if the escaped income/asset is more than Rs. 50.00 lacs. WHICH admittedly in the hands of the assessee for A.Y. 2015-2016 was less than Rs. 50.00 lacs. 19.2. That as per satisfaction note, total alleged escaped income for A.Y. 2015-2016 to 2021-2022 was Rs. 27,50,000/-, as per Draft Assessment Order for A.Y. 2015-2016, the alleged ‘on-money’ paid by the assessee was Rs. 15,17,450/- and further the DRP has computed the alleged ‘on-money’ paid by the assessee during A.Y. 2015-2016 to be Rs. 11,69,050/-. 19.3. That before issuing the notice u/s. 153C for A.Y. 2015-2016 the Assessing Officer has not bothered to peruse the Circular No. 2/2018 issued by the Central Board of Direct Taxes wherein the grounds for invoking extended period beyond 6 years were explained in context of section 153C of the Act. Extended period can be invoked only and only when escapement of income was alleged to be more than Rs. 50.00 lacs. The Assessing Officer has not even bothered to peruse section 153C(1) of the Act which refers to the term “relevant assessment years” as referred in section 153A(1) of the Act. The Assessing Officer has not even bothered to peruse 4th Proviso tosection 153A(1) which permits to invoke extended period of limitation only if the escaped income/asset is more than Rs. 50.00 lacs. 19.4. That the period of limitation which could have been invoked on the basis of so-called incriminating material shall be clear from the following table: Limitation as Limitation as Remarks A.Y. Year computed by computed by Assessee AO Satisfaction Note recorded in handsof assessee & 2023-24 1 Notice u/s. 153C issued dated 27.03.2023 2022-23 2 Search carried out premises 2021-22 3 1 of OM GROUP on 13.07.2020 2020-21 4 2 2019-20 5 3 2018-19 6 4 2017-18 7 5 2016-17 8 Barred by 6 limitation if alleged 2015-16 9 7 escapement of income is less & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur than Rs. 50.00 lacs. 19.5. That A.Y. 2015-2016 would be fall within the extended period in light of following authorities:  Hon’ble Supreme Court in the case of CIT v. Jasjit Singh 2022 (10) TMI 572 [PB 293-296](followed subsequently by the Hon’ble Supreme Court in the case of in Shalimar Town Planners Pvt. Ltd.) has clarified as to which year would be ‘search year’ in case of ‘other person’ in reference to section 153C of the Act and accordingly notices could have been issued for which assessment years, as under: Assessment u/s 153C and 153A - date referred under proviso to Section 153(1) - date with reference to which the proceedings for assessment or reassessment of any assessment year - assessees contended that the period for which they were required to file returns, commenced only from the date the materials were forwarded to their A.Os - Revenue urged that the date (relatable to the period for which six years returns were to be filed by the assessee) was to be from the date when the search and seizure proceedings were conducted, in respect of the main assessee u/s 132 - HELD THAT:- As on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision u/s 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation [2012 (4) TMI 335 - DELHI HIGH COURT] adopted, the A.O. seized of the materials – of the search party, u/s 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis- proportionate. For instance, if the papers are in fact assigned u/s 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts. Appeal dismissed.  Hon’ble Delhi High Court in Flowmore Ltd. 2024 (6) TMI 695[PB 297- 300]in reference of non-searched person, where-in regular search was made on 09.02.2022 and notice was issued to the assessee on 31.03.2023 while computing 10 year period,vide its order dated 27.05.2024has held:

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur Reopening of assessment u/s 147 - Time limit for notice u/s 149 - HELD THAT:- The record would reflect that pursuant to a search and seizure operation conducted in respect of the Alankit Group on 18 October 2019, the petitioner was served a notice u/s 153C on 03 March 2022. On culmination of those proceedings, the respondent proceeded to pass a final order of assessment on 23 March 2023, accepting the income which had been assessed originally u/s 143 (3) - The petitioner discloses that insofar as the original Section 143 (3) assessment was concerned, an appeal was taken to the Income Tax Appellate Tribunal which ultimately accorded relief to the petitioner with respect to disallowances made u/s 40 (a) (ia) of the Act. The subsequent notice u/s 148 was concerned with a search which was conducted in the case of the Proform Group on 09 February 2022. Undisputedly and for the purposes of reopening, bearing in mind the proviso to Section 149(1), action could have been initiated only upto AY 2014-15. We take note of the decision in Filatex India Ltd. [2023 (9) TMI 1484 - DELHI HIGH COURT] and where while dealing with an identical question, upon taking note of the manner in which the relevant period under Section 153C is liable to be reckoned, and which we had otherwise dealt with in some detail in our decision rendered in Ojjus Medicare Pvt. Ltd. [2024 (4) TMI 268 - DELHI HIGH COURT] It is therefore ex facie evident that AY 2013-14 falls beyond the ten-year block period as set out under Section 153C read with Section 153A of the Act. Consequently, the impugned notice is rendered unsustainable.  Hon’ble Delhi High Court in the case of Dinesh Jindal 2024 (6) TMI 75[PB 301-307]in reference of non-searched person, where-in regular search was made on 09.02.2022 and notice was issued to the assessee on 30.03.2023while computing 10 year period, vide its order dated 27.05.2024has held: Validity of reassessment action u/s 148 - Time limit for notice u/s 149 - Computation of the "relevant assessment year" for reassessment purposes - computation of the six or the block of ten AYs’ - HELD THAT:- AY 2013-14 would fall beyond the block period of ten years. It becomes pertinent to note that the First Proviso to Section 149 (1) compels us to test the validity of initiation of action for reassessment commenced pursuant to a search, based upon it being found that the proceedings would have sustained bearing in mind the timelines prescribed in Sections 149, 153A and 153C, as they existed prior to the commencement of Finance Act, 2021. This necessarily requires us to advert to the timeframes comprised in both Section 149 (1) (b) as well as Section 153C as it existed on the statute book prior to 01 April 2021, which undisputedly was the date from when Finance Act, 2021 came into effect. Regard must also be had to the statutory scheme for search assessments as it existed prior to Finance Act, 2021 and the indubitable fact that while in the case of the searched person, the six year or the ten year block period is liable to be computed with reference to the date of search, in the case of the non-searched entity, it has to necessarily be the date when the material & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur is handed over to the jurisdictional AO of the “other person”. All that would happen in the case of a search which takes place on or after 01 April 2021, and which warrants a reassessment action being commenced in relation to an AY prior to the first day of April, 2021, since no transmission of material would have occurred, we would necessarily have to bear in mind, the date when a decision may be taken by the jurisdictional AO to proceed against the non-searched entity in terms of the amended scheme pertaining to search assessments, and which now stands merged with the larger power of reassessment which stands comprised in Sections 147 and 148 of the Act. We find ourselves unable to construe or read the First Proviso to Section 149 (1) as requiring us to ignore the First Proviso to Section 153C (1), and for the purposes of computation, reconstruct the point from which the “relevant assessment year” is liable to be computed in the case of a non- searched person. Notwithstanding the procedure under Section 153C having not been adhered to, by virtue of the search having been conducted after 31 March 2021, there exists no justification to reconstruct the point from which the computational exercise would have to be undertaken. It is therefore ex facie evident that AY 2013-14 falls beyond the ten-year block period as set out under Section 153C read with Section 153A of the Act. Consequently, the impugned notice dated 30 March 2023 has been issued beyond limitation and is liable to be quashed and set aside on this score alone. All consequential actions pursuant to the impugned notice would thus meet a similar fate.  Hon’ble Delhi High Court in the case of Saurabh Gupta 2024 (9) TMI 1281 [PB 308-310]in reference of non-searched person, where-in regular search was made on 09.02.2022 and notice was issued to the assessee on 30.03.2023 while computing 10 year period, vide its order dated 17.09.2024has held: Validity of reassessment proceedings - period of limitation - Time limit for notice u/s 149 - relevant period u/s 153C is liable to be reckoned - computation of the “relevant assessment year” from the date of the impugned Section 148 notice - HELD THAT:- As is evident from a reading of that provision any action for reassessment pertaining to an AY prior to 01 April 2021 can be sustained only if it be compliant with the timeframes specified under Section 149 (1) (b), Section 153A or Section 153C as the case may be and on the anvil of those provisions as they existed prior to the commencement of Finance Act 2021. Viewed in that light, it is manifest that the assessment for AYs 2012-13 and 2013-14 could not have been reopened. The record would reflect that pursuant to a search and seizure operation conducted in respect of a third party on 09 February 2022, the petitioner was served with the notices under Section 148 on 30 March 2023. Undisputedly and for the purposes of reopening, bearing in mind the Proviso to Section 149 (1), action could have been initiated only up to AY 2014-15.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur As ex facie evident that AYs 2012-13 and 2013-14 falls beyond the ten- year block period as set out under Section 153C read with Section 153A of the Act. Consequently, the impugned notices are rendered unsustainable. Thus, we allow the instant writ petitions and quash the notice referable to Section 148 - Assessee appeal allowed.  Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt. Ltd.vide its order dated 03.04.2024 has held: G. COMPUTATION OF THE SIX AND TEN YEAR BLOCK IN THE PRESENT BATCH OF WRIT PETITIONS 86. In the present batch, List I pertains to writ petitions which have Satisfaction Notes recorded or Section 153C notices issued between the period 01 April 2021 to 31 March 2022. Undisputedly, the First Proviso to Section 153C, and which has been consistently recognized to also embody the commencement point for reckoning the six or the ten AYs’, shifts the relevant date from the date of initiation of search or a requisition made to the date of receipt of books of account or documents and assets seized by the jurisdictional AO of the non-searched person. Consequently, the block of six or ten AYs’ would have to be reckoned bearing the aforesaid date in mind. Although in the present batch of writ petitions, the date of actual handing over has not been explicitly mentioned in a majority of the writ petitions, learned counsels for respective sides had addressed submissions based on the assumption that it would be the date of issuance of the Satisfaction Note by the AO of the non-searched person and in the case of non- availability of such a note, the date of issuance of the Section 153C notices which would be pertinent for the purposes of the First Proviso to Section 153C.

1. 1. The petitioner has filed the present petition, inter alia, impugning a notice dated 31.08.2024 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] in respect of the assessment year [AY] 2014-15. The petitioner contends that the said notice is beyond the period of limitation as stipulated under Section 149(1) of the Act and therefore is liable to be set aside.

2. The impugned notice was preceded by a notice dated 06.08.2024 issued under Section 148A(b) of the Act. The annexure appended to the said notice sets out the information which according to the Assessing Officer [AO] is suggestive of the petitioner’s income for the AY 2014-15 escaping assessment. The said notice indicates that on 13.07.2020 a search was conducted at various premises in connection with “Om Kothari Group” of & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur Rajasthan. It was alleged that during the course of investigation, evidence was found regarding details of flats sold in a project named Pallacia and cash components collected from sale of such flats. It is also found that the petitioner was one of the purchasers of the flats in question and had purchased a flat bearing no.B-52 in the project Pallacia, admeasuring 7750 sq. ft. at the total sale consideration of ₹ 9,30,00,000/- [7750 sq.ft. at the rate of ₹ 12,000/- per sq.ft.]. It was alleged that the consideration of ₹ 2,32,50,000/- [7750 sq.ft. x ₹ 3,000/- per sq.ft.] was paid in cash as “on money”.

4. It is relevant to note that the AO of the searched entity had issued a satisfaction note dated 11.03.2023 recording his satisfaction that the documents belonging to the petitioner had been discovered which had a bearing on the determination of the petitioner’s income and it was a fit case for initiation of the proceedings under Section 153C of the Act in respect of AYs 2015-16 to 2021-22.

5. It is material to note that the satisfaction note did not purport to handover any material having a bearing on the petitioner’s income for the AY 2014- 15. In the given facts, the only question to be examined is whether the impugned notice is beyond the period of limitation as contended on behalf of the petitioner.

11. Thus, in the facts of the present case, the period of limitation of ten years is required to be reckoned from the end of the assessment year relevant to the financial year in which the decision to take action for re-opening the assessments was initiated, that is, the date on which the notice under Section 148 of the Act was issued.

12. The relevant assessment year in question (AY 2014-15) is beyond the period of ten years as contemplated under Section 153C read with Section 153A of the Act from the end of the assessment year. A tabular statement setting out the block of ten years is set out below: 13. The petition is, accordingly, allowed and the impugned notice is set aside. 20.11. That it is apparent that in case of Synod Farms and Infra Developers Private Limited proceedings were initiated by proposing addition in A.Y. 2014-2015 whereas in the hands of the assessee, the additions have been made in A.Y. 2015-2016. In light of above the impugned notice u/s 153C is illegal & deserves to be quashed & set-aside. DIRECTIONS BY DRP TO MAKE ADDITION QUA AMOUNT PAID BY CHEQUE TO BE ADDED IN A.Y. 2015-2016 IS BAD IN LAW& IS IMPERMISSIBLE 21. That in light of the fact that proceedings initiated for A.Y. 2015-2016 against the assessee itself is illegal. Further enhancement by DRP to proposed Draft & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur Assessment Order is of no relevance and deserves to be quashed & set-aside on this count alone. 21.1. That it is settled law that additions qua 153A/153C proceedings can be restricted only to the extent of incriminating material found during the course of search. Thus the directions of the DRP to make additions towards the amount paid by cheque by the assessee to the Builder is beyond the mandate of section 153C of the Act and thus the said directions are without any basis, is illegal & is bad-in-law. The agreement to sale entered into by the assessee with the builder is not an incriminating material found during the course of search, in fact the copy of the same was given by the assessee only to the Assessing Officer. The DRP did not bring anything on record stating the fact that the sale consideration paid by the assessee by account payee cheque was found doubtful in the search and seizure operation conducted so as to prove that how the transaction recorded in the seized material with that of the transactions already recorded are in the nature of incriminating in nature. 21.2. That the directions of the DRP are purely based on the presumptions and assumptions basis and against the real transaction that has taken place between the buyer and seller and the same are already available on record of the Assessing Officer. 21.3. That furthermore, it is apparent that the said additions have been made only to keep the alleged escaped income of A.Y. 2015-2016 above Rs. 50.00 lacs. 21.4. That addition of Rs. 1,20,10,610/- was directed to made in A.Y. 2015-2016 by the DRP on the ground that source of the same has not been explained. Whereas source of payment made by the assessee to the builder is the sale consideration received by the assessee of Rs. 2,12,50,000/- on sale of immovable property vide registered sale deed dated 29.01.2013 whereby the Long Term Capital Gains earned by the assessee was deposited under Capital Gains Account scheme wherefrom the amount was paid to the builder [PB 180-183]. The said document was shown to the Assessing Officer during the course of assessment proceedings. He was satisfied and hence, no adverse view was taken. 21.5. That further entire addition of Rs. 1,20,10,610/- was directed to made in A.Y. 2015-2016 when part of the payment made by the assessee pertained to A.Y. 2013-2014 (Rs. 32,16,408/-) & A.Y. 2014-2015 (Rs. 5,39,282/-). 21.6. That in absence of a valid satisfaction note recorded clearly justifying the material that the same are in the nature of incriminating in nature qua the assessee, the enhancement powers which the DRP has exercised u/s. 144C(8) read with section 153C of the Act is bad in law and consequently the directions to enhance the income of the assessee is void ab initio and is liable to be quashed. 21.7. That reliance in this regard is placed upon:  Hon'ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC) [PB 315-334]has held: 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.  Hon'ble Supreme Court in the case of DCIT v. U.K. Paints (Overseas) Ltd. (2023) 454 ITR 441 (SC) [PB 335]in light of judgment in the case of Abhisar Buildwell and has held: As observed hereinabove, as no incriminating material was found in case of any of the Assessees either from the Assessee or from the third party and the assessments were under Section 153-C of the Act, the High Court has rightly set aside the Assessment Order(s). Therefore, the impugned judgment and order(s) passed by the High Court do not require any interference by this Court. Hence, all these appeals deserve to the dismissed and are accordingly dismissed.  Hon'ble ITAT, Chennai Bench in the case of ACIT v. RKM Power Pvt. Ltd. (2024) 12 TMI 242 [PB 336-359]has held: Assessment u/s 153C - Transfer Pricing Adjustments - Whether payment towards equipment purchase was not at arms length price? - HELD THAT:- We note that the entire basis of the present appeals is the transfer pricing orders wherein downward adjustments were made to the price paid for the equipment imported by the AE. The Assessee had filed an appeal to this Tribunal against the appellate order for Assessment Year 2013-14 (arising from the assessment under Section 143(3) and the TPO order). This appeal was disposed in RKM POWERGEN PRIVATE LIMITED [2024 (3) TMI 878 - ITAT CHENNAI] wherein the downward adjustment was deleted in its entirety. This Tribunal, had after careful appraisal of the evidence, concluded that the price paid by the Assessee was at arm’s length. Thus, addition u/s. 56(1) made by the AO based on the TP order alone cannot stand in the eyes of law. As observed that the assessment for Assessment Years 2013-14 and 2014- 15 were originally concluded u/s. 143(3) on 31.3.2017 and 21.12.2016 respectively. The date of the search is 23.11.2015. The dates of the TP orders for Assessment Years 2013-14 and 2014-15 are 01.02.2017 and & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 20.12.2018 respectively, well after the search. Therefore, any assessments under Sections 153A/153C in respect of unabated assessments must be based on incriminating materials obtained during search proceeding and not based on post-search materials, in this case TP orders passed subsequent to search materials. Further, in respect of assessments under Section 153C the same principle was reiterated in DCIT v U.K. Paints Ltd. [2023 (5) TMI 373 - SC ORDER] Even earlier held in PCIT v Vikas Telecom Ltd. [2021 (12) TMI 1386 - DELHI HIGH COURT] had held that post-search enquiries cannot be the basis of assessments under Section 153A/153C. Therefore, the reliance placed by the AO on the TP orders passed after the search cannot be countenanced.  Hon'ble ITAT, Lucknow Bench in the case of Shashi Agarwal v. DCIT (2024) 10 TMI 533 has held: Assessment u/s 153A - additions can be made in assessment orders passed u/s 153A or u/s 153C of IT Act in cases falling under unabated/completed assessments, when no incriminating material was found at the time of search u/s 132 - HELD THAT:- It is not in dispute that no incriminating materials were found in the course of search u/s 132 of the IT Act in respect of the various additions made by the AO. Further it is also not in dispute that no assessment proceedings were pending in the cases of the assessee at the time of search conducted on 08/07/2016 in the case of the assessee, u/s 132. Furthermore, as no assessment proceedings were pending in the case of the assessee at the time when (on 08/07/2016) search u/s 132 was conducted, the case of the assessee in the present appeals before us, falls in the category of completed/unabated assessments within the meaning of orders passed in the case of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] and in the case of CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] which was approved in the case of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] and U. K. Paints (Overseas) Ltd. [2023 (5) TMI 373 - SC ORDER] and by the aforesaid instruction No. 1 of 2023 of CBDT, which is binding on Revenue authorities. Accordingly, we direct the Assessing Officer to delete the additions made - Decided in favour of assessee. 21.8. That though section 144C(8)read with Explanation thereto grants power to DRP to enhance the income of the assessee, however, the same cannot be exercised in the instant case, since, in absence of incriminating material NO ADDITION at all could have been made in the hands of the assessee. In light of above the impugned order passed by DRP u/s 144C(8) is illegal & deserves to be quashed & set-aside. DIRECTIONS BY DRP TO MAKE ADDITION QUA AMOUNT PAID BY CHEQUES IS AGAINST PRINCIPLES OF NATURAL JUSTICE AND IN IGNORING THE MATERIAL AVAILABLE ON RECORD 22. That during the course of assessment proceedings the assessee had duly submitted to the Assessing Officer the details of payment made by it towards purchase consideration as hereinbelow:

22.1. That during the course of assessment proceedings, the assessee appellant submitted the bank statements in support of payment made to the builder. 22.2. That during the course of assessment proceedings, the assessee appellant had clarified that it has taken no bank loan to pay the Builder and entire amount stood paid through its own savings/capital gains account. 22.3. That it can be noticed that entire amount was paid through Capital Gains Account No. 61187164085. We are confident that the DRP/AO is aware that the said account can be opened/utilized for only limited purpose, i.e., towards reinvestment in House Property of Long Term Capital Gains earned by an assessee and the payments from the bank is duly verified by the bankers before payment as it can be paid to limited persons only. The DRP has only done lip- service and has proposed addition just for the sake of making additions and somehow to bring the escaped income for A.Y. 2015-2016 above Rs. 50.00 lacs. 22.4. That there is no logic whatsoever to say that source of investment was not verified/proved by the assessee. In-case of payments made through Capital Gains Account Scheme, every single penny is credited from restricted transfers. 22.5. That the DRP failed to peruse the Draft Assessment Order dated 30.03.2024 wherein Assessing Officer in has infact recorded as hereunder:

22.6. That without perusing the assessment record and ignoring the observations of the Assessing Officer the DRP issued show cause notice dated 05.12.2024 granting 1 days’ time to file response wherein it proposed the addition of Rs. & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 1,20,10,610/- under the garb of non-submission of documentary evidences for source of funding. 22.7. That only limited assessee’s have to liberty to approach DRP, granting 1 days’ time to file response to the show cause notice to the NON-RESIDENTS reflects their vindictive approach and is fatal to the assessee’s. The approach & attitude of DRP deserves to be deprecated as the same is TOTALLY OPPOSITE against the purpose for which it was created, i.e., DISPUTE RESOLUTION. It is apparent that on perusal of the order passed by the DRP, no approach towards Resolution of dispute is visible. 22.8. That the DRP failed to even understand as to how, the assessee who is a NON- RESIDENT INDIAN living outside India for more than 40 years would be able to file response that too within a short period of 1 days’ time, that too, with regards to query made to it for the first time with regards to payment made by it during A.Y. 2013-2014 (Rs. 32,16,408/-), 2014-2015 (Rs. 5,39,282/-) & 2015-2016 (Rs. 82,54,920/-). The same is unthinkable and against the natural justice and deserves to be deprecated. 22.9. That the DRP has stated in its order that they had sent the email dated 27.11.2024 to the assessee with regards to afore-said query. However, assessee has checked its email and has also enquired from its Chartered Accountant and submits that no such email was received by it. It is only when the SCN dated 05.12.2024 was uploaded/sent, it came to its knowledge. 22.10. That several Hon’ble High Courts have set-aside orders passed by the Assessing Officer wherein only 1 days’ time were granted to response to the Show Cause Notice by observing that the same is against the principles of natural justice. 22.11. That vindictive approach of the DRP is further visible when it passed the order dated 19.12.2024 in a hurried manner ignoring the adjournment applications & replies dated 06.12.2024, 13.12.2024 & 14.12.2024 filed by the assessee. KINDLY NOTE that proceedings before DRP are manual and nothing can be filed ONLINE. 22.12. That source of payment made by the assessee to the builder of Rs. 1,20,10,610/- is out of sale consideration received by the assessee of Rs. 2,12,50,000/- on sale of immovable property vide registered sale deed dated 29.01.2013 whereby the Long Term Capital Gains earned by the assessee was deposited under Capital Gains Account scheme wherefrom the amount was paid to the builder [PB 180-183]. The said document was shown to the Assessing Officer during the course of assessment proceedings. He was satisfied and hence, no adverse view was taken. The same would also be clear from the following extracts of registered sale deed dated 29.01.2013.

In light of above the impugned order passed by DRP/AO whereby addition of Rs. 1,20,10,610/- has been made in the hands of the assessee deserves to be deleted& set-aside.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur THE DOCUMENT ON THE BASIS OF WHICH PROCEEDINGS INITIATED ARE DUMB DOCUMENTS, HAS NO CORELATION WITH THE ASSESSEE, RIGHT TO CROSS-EXAMINATION NOT GRANTED.

23. That the Assessing Officer / DRP in their respective orders have referred to one image having “Details as on 17.04.2013” of flats sold in PALLACIA project was found from the mobile phone of Shri Vishal Kothari. They have also referred to certain whatsapp chat between the Builder and certain builder. They have also referred to certain emails found during the course of search. They have also referred to acceptance given by some persons that they have paid ‘on-money’. 23.1. That despite repeated requests, no opportunity to cross-examination was granted. That the Assessing Officer has made addition relying upon the statements given by the OM Kothari Group and has not applied his own mind and did not go into the veracity of the documents submitted by the assessee during the course of assessment proceedings. That merely on the basis of the third party statement the impugned additions cannot be made in the hands of the assessee. It is relevant to mention that in the said statements, nowhere the name of the assessee is said to be mentioned nor there is any evidence that assessee has actually made any cash payment towards purchase of flat in Pallacia. Thus, it is submitted that addition cannot be made on the basis of mere statement of third party which is general in nature. In this regard, it is submitted that the principle of natural justice requires that before any adverse inference based on third party statement or documents is to be taken, then either the documents which has been relied on by the authority or the persons on whose statements authority is relying, must provide the assessee with the relied documents and an opportunity of cross examination of such person before making any addition. In any case, mere bald statement, that too self- serving, without any corroborative evidence cannot be made a ground to make huge additions. In this regard, we wish to rely upon:  That Hon’ble Supreme Court in the case of PCIT v. Tejua Rohitkumar Kapadia (2018 (7) TMI 590) has dismissed the SLP of the department and has upheld the view of the Hon’ble Gujarat High Court in PCIT v. Tejua Rohitkumar Kapadia (2017 (10) TMI 729) wherein it was observed: “The Assessing Officer had disallowed purchase expenditure of ₹ 5.19 crores making the additions treating the purchases as bogus. The assessee carried the matter in appeal. CIT(Appeals) allowed the appeal interalia on the ground that all payments were made by the assessee by Account Payee cheque. The assessee was in fact, a trader. All purchases made from M/s. Raj Impex were found to have been sold and sales were also accepted by the Assessing Officer. The Revenue carried the matter in appeal before the Tribunal. The Tribunal dismissed the earlier making following observations: “31. We have given a thoughtful consideration to the orders of the authorities below. There is no dispute that the purchases made from M/s. Raj Impex were duly supported by bills and all the payments have been made by account payee cheques. There is also no dispute that M/s Raj Impex have confirmed all the transactions. There is no evidence to draw & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur the conclusion that the entire purchase consideration which the assessee had paid to M/s. Raj Impex had come back to the assessee in cash.

3. It can thus be seen that the appellate authority as well as the Tribunal came to concurrent conclusion that the purchases already made by the assessee from Raj Impex were duly supported by bills and payments were made by Account Payee cheque. Raj Impacts also confirmed the transactions. There was no evidence to show that the amount was recycled back to the assessee. Particularly, when it was found that the assessee the trader had also shown sales out of purchases made from Raj Impex which were also accepted by the Revenue, no question of law arises.”  That Hon’ble ITAT Amritsar Bench in the case of Supertech Forgings India Pvt Ltd v. DCIT (2021 (9) TMI 338) has held: 20. We are of the considered view that the Assessing Officer was duty bound to record his independent satisfaction to arrive at prima facie satisfaction that there is escapement of income during the assessment year under consideration. The reasons to reopen reproduced at page 5 above clearly show that the Assessing Officer has merely relied upon the report of the investigating wing whereas, it is necessary for the Assessing Officer to apply his mind on the information received from the investigating wing. But, the AO did not apply his mind to arrive at an independent satisfaction that there was escapement of income. Firstly, that the statement of Shri Madan Lal Pahuja is silent about giving any benefit to the Assessee( answer to question no 8 at page 173) , and Secondly, the Assessing Officer, before initiation the proceedings of reopening, was required to examine the record like VAT Assessment completed in the case of Shri Madan Lal Pahuja on 01.03.2012, whereby the VAT Department accepted the sales made by Shri Madan Lal Pahuja to the Assessee therein. Further, in the assessment under VAT for the Assessee, the VAT Department has accepted the purchases made by the Assessee from Shri Madan Lal Pahuja. Once the sale by Shri Madan Lal Pahuja made to the Assessee and purchases made by the Assessee from Shri Madan Lal Pahuja were accepted, even after registration of FIR on 13.09.2009 against Shri Madan Lal Pahuja, then the non-examination of the Assessment Orders passed by VAT clearly shows the non-applicability of mind by the Assessing Officer before issuing the reasons to reopen. Further, the Assessee has also placed on record the Assessment Order passed in the case of the Assessee for the assessment year 2010-11 which was passed on 18.06.2012 and thereafter the assessment year for 2011-12 which was passed on 04.06.2013. The consistent stand of the Assessee in the reply submitted by him in response to the reasons to reopen to AO, was that the Assessee has been receiving the goods from the parties described above and purchases accepted by the & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur Assessing Officer in the subsequent assessment year i.e. 2011-12.In view of the judgment of the Hon’ble High Court of Punjab & Haryana in the matter of Leader Valves (P.) Ltd [2006] 285 ITR 435 (PUNJ. & HAR.), the additions based on the alleged bogus purchase bill for the assessment year 2010-11 are not sustainable.

21. The aforesaid information was available in the record of the Assessing Officer before issuing the reasons to reopen. However, the Assessing Officer has not applied his mind and had merely relied upon the information received by him from the investigating wing. We may safely rely upon the decision in [2018] 93 taxmann.com 153 HIGH COURT OF BOMBAY PCIT-5 v. Shodiman Investments (P.) Ltd] for this preposition. Further, if we look into the reasons to reopen the assessment, then it is clear that the Assessing Officer had merely relied upon the report of investigating wing and the statement of Shri Madan Lal Pahuja. The abovesaid information was required to be corroborated and verified by the Assessing Officer as, the information at best can be the reasons to give rise to mere suspicion. However, the reason to suspicion, how so ever strong cannot be part take the character of reason to believe. For the reason to believe it is essential that there should be convincing evidence in possession of the Assessing Officer, which give rise to the prima facie conclusion that there is escapement of income. Admittedly, in the present case, the Assessing Officer completed the regular assessment under scrutiny on 18.06.2012 after examining the books of accounts of the Assessee etc. Quite contrary to this, the Assessing Officer in the reasons to reopen, at page above had mentioned as under:- “Further, on doing the independent verification of the assessment record of the assessee company for AY 2010-11, it was noticed that the amount of purchases made by the assessee company from M/s Shree Nath Ispat Udyog, Mandi Gobindgarh amounting to ₹ 2.06 crores and from M/s Shiv Bhole Kirpa Traders, Ludhiana amounting to ₹ 1.05 crores matched with the information received from the office of ADIT (Inv.), Ludhiana.”

24. Though, we had allowed the appeal of the Assessee on the legal ground, we deem it appropriate to discuss the case of the Assessee on merit also. The Assessing Officer made the additions/reopening of assessment were made by the Assessing Officer solely on the basis of the statement recorded by the investigating wing of Shri Madan Lal Pahuja on 07.01.2015. The recording of the statement was the foundation fact as whole case of the Assessing Officer revolves around that statement. The said statement recorded by the investigating wing is not sacrosanct and was required to be proved on the anvil of cross-examination during the assessment proceedings. The Assessee, after receiving the copy of the statement on 08.12.2017 had requested the Assessing Officer to permit the Assessee to cross-examine Shri Madan Lal Pahuja. However, the notice sent through the Inspector for recording the statement of Shri Madan Lal Pahuja had not yielded any result as he failed to turned up for examination and cross-examination during the re-assessment proceedings. In our opinion, the statement recorded by the investigating wing cannot form the basis of making the addition unless it is proved in accordance with law in the assessment proceedings. It was the duty of revenue to produce the witness namely Shri Madan Lal Pahuja as the revenue was relying upon his statement. In our opinion, the onus to produce and examine a witness is on a party who reliance rest on him and not on the other party. The Assessing Officer cannot shift his onus to produce the witness and, in our view, the AO’s onus to produce Shri Madan Lal Pahuja would not shift on the Assessee.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 25. Further, once the Assessing Officer of Shri Madan Lal Pahuja had accepted the sales made to the Assessee in the Assessment Order dated 20.12.2017 passed under Section 143(3) read with 147 of the Act, then the said purchases (sale of Shri Madan Lal Pahuja) cannot be disputed by the Assessing Officer of the Assessee. The abovesaid fact was brought to the notice of the Assessing Officer. However, neither the Assessing Officer nor the CIT (A) had considered the abovesaid fact. Further, both the Lower Authorities had not disputed that the purchases were made by the Assessee from the same parties in subsequent assessment years i.e. 2011-12 & 2012-13 and the Assessment Orders were provided to the Lower Authorities. In our opinion, this is contrary to law laid down by the Hon’ble High Court of Punjab & Haryana in the matter of Leaders Valve (supra). Further, we are of the opinion that nothing has been brought on record by the Assessing Officer or by the CIT (A) to prove that the invoices were issued by the other three concerns namely (1) M/s Lovy Steel & Allied Industries, Dr. Bansal Clinic, sector-3C, Mandi Gobindgarh, (2) Sh. Jatinder Kumar Prop. M/s Shree Nath Ispat Udyog, Bank of India Road, Mandi Gobindgarh, and (3) M/s Shree Radhey Steel & Alloys. As recorded hereinabove, the Assessment Order was passed in the case of Shri Madan Lal Pahuja by applying the GP Rate of 1.2% on total turnover of ₹ 12.43 Crores. The sales were accepted by the department which were duly reflected in the VAT forms. However, by alleging that vehicle numbers mentioned on some of the invoices is not matching, that cannot be a reason to doubt the purchases more particularly when the sales of the Shri Madan Lal Pahuja and purchases by the Assessee in the VAT assessment in respect of all the parties were accepted. Further, the revenue has not doubted the quantitative details provided by the Appellant and has not pointed out any discrepancy in the same. The Respondent Revenue had denied the sales on the basis of 7 sample vehicle registration only despite the fact that the Assessee had provided 33 bills to the Assessing Officer and further the Assessee had submitted that the goods were purchased from these parties and has provided the registration certificate in respect of the other 26 vehicles. The total amount of the seven bills for which the AO had suspicion was for ₹ 53,72,955/- only. Undoubtedly the sale of the Assessee had not been doubted by the department. Once the sales of the Assessee have not been doubted and only a fraction of the purchase of ₹ 53,72,955/- was doubted then the entire purchase cannot be added in the income of the Assessee. In the light of the decision of the Hon’ble Gujarat High Court in the matter of Bholanath Polyfab [355 ITR 290],even the GP on the amount of sale of ₹ 53,72,955/- cannot be added in the hands of the Assessee as the sales made by Shri Madan Lal Pahuja and others were accepted by the department in the Assessment Order passed under Section 143(3) of the Act. Once the sales have been accepted in the hands of the seller, the same cannot be doubted in the hands of the purchaser.

1. Jurisdictional Defect: Single satisfaction note for multiple A.Ys., no satisfaction of seized material “having a bearing” on total income for A.Y. 2015–16.

2. Barred by Limitation: Search year should be computed from A.Y. 2023–24 (date of satisfaction note), making A.Y. 2015–16 beyond 6 years; alleged escaped income < ₹50L, so extended 10-year period inapplicable.

3. No Incriminating Material: Additions not based on material found during search; loose image and chats are “dumb documents”.

4. No Opportunity of Cross-Examination: Statements of third parties were relied on without giving a chance for cross-examination.

5. Violation of Natural Justice: Only 1 day given to respond to enhancement notice; DRP ignored detailed replies and adjournment requests.

6. DRP Overreach: Directed addition of cheque payments without any incriminating material—exceeds scope of 153C.

7. Source of Investment Explained: Payment from Capital Gains Account backed by sale of immovable property.” ADDITIONAL WRITTEN SUBMISSIONS-II ASSESSMENT ORDER DATED 21.01.2025 IS BARRED BY LIMITATION QUA SECTION 153B R.W.S. 144C OF THE ACT

24. That the assessment order dated 21.01.2025 is barred by Limitation as per section 153B r.w.s. 144C of the Act. Kindly consider the following chart in this regard. Relevant provision of the Sno. Date Particulars Act 01 27.03.2023 Notices u/s. 153C issued to the 153C assessee 02 30.03.2024 Draft Assessment Order passed by 144C(1) the Assessing Officer u/s. 144C(1) 03 26.04.2024 Application filed before Dispute 144C(2) Resolution Panel by the assessee 04 19.12.2024 Order passed by DRP u/s. 144C(5) 144C(5)

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 05 23.01.2025 Assessment Order passed by Assessing Officer u/s. 153C r.w.s. 153C r.w.s. 144C(13) 144C(13) 24.1. That on perusal of section 153B of the Act, it can be noticed that there is no period of exclusion provided therein towards the proceedings pending before DRP u/s. 144C of the Act. 24.2. That for ready reference section 144C(4) & 144C(13) of the Act are being reproduced hereinbelow: (4) The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order under sub- section (3) within one month from the end of the month in which,- (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. 24.3. That section 144C(4) provides the time limit within which the Assessing Officer is required to pass final Assessment Order in case the draft assessment order is accepted by an assessee or no objections are filed before DRP. 24.4. That section 144C(13) provides the time limit within which the Assessing Officer is required to pass final Assessment Order according to the directions given by DRP. 24.5. That no exclusion is provided for the period for which proceedings are pending before DRP. In absence of same, the assessment order dated 21.01.2025 is barred by limitation. Reliance in this regard, is placed upon:  Hon’ble ITAT, Hyderabad Bench in Syed Gulam Mohiuddin v. ITO (2024) 6 TMI 269vide its order dated 03.06.2024 [PB 367-373] has held: 8. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The assessee is a non-resident individual for the A.Y 2017- 18 and is an eligible assessee as per section 144C(15) of the I.T. Act, 1961. As per section 144C of the Act, the assessment of an eligible assessee shall be dealt with in accordance with the said provision. As per the provision of section 144C, in case of an eligible assessee, the Assessing Officer shall pass a draft assessment order and served on the assessee, if he propose to make any variation in his total income. The assessee, after receipt of draft assessment order shall have two options. As per sub section (2) of section 144C, on receipt of draft assessment order, the eligible assessee shall within 30 days file its acceptance of the variations to the Assessing Officer or file his objection, if any, to such variation with the DRP. If the eligible assessee file his acceptance to the Assessing Officer, then the Assessing Officer shall complete the assessment within one month from the end of the month in which the acceptance is received. In case an eligible assessee files objection before the DRP, then the DRP shall issue its direction & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur within 9 months from the end of the month in which the draft order is forwarded to the assessee. Thereafter, the Assessing Officer shall pass his final assessment order within one month from the end of the month in which such direction is received.

9. In the present case, there is no dispute with regard to the fact that the appellant has filed his objection against the draft assessment order passed by the Assessing Officer before the DRP. Therefore, in ordinary course, the extended time limit for completion of the assessment should be available to the Assessing Officer as per section 144C r.w.s. 153C of the I.T. Act, 1961. But, the argument of the learned Counsel for the assessee is that as per section 153(4) of the Act, the extended period of 12 months for completion of assessment is available only where a reference under sub section (1) of section 92CA is made during the course of the assessment or re-assessment, but not in a case where there is no reference to the TPO. We find force in the argument of the learned Counsel for the assessee for the simple reason that, as per section 153(2), the time limit for completion of assessment or re-assessment shall be 12 months from the end of the financial year in which notice u/s 148 was served. However, sub-section (4) of section 153 extends the said time limit by another 12 months notwithstanding anything contained in sub-section (1), (1A), (2), (3) and (3A) where a reference u/s 92CA)(1) is made during the assessment proceedings to the TPO. In other words, except the cases of the reference to the TPO, extended time limit of 12 months for completion of assessment is not available even in a case of Non-Resident assessment, even though the said assessment proceedings is covered u/s 144C of the Act. Since the extended time limit of 12 months is not available in the case of Non- Resident as per section 153(4) of the Act, in our considered view, the Assessing Officer ought to have completed the assessment as per the provisions of section 153(2) of the Act which is one year from the end of the financial year in which notice u/s 148 was served. In the present case, if we go by date of notice issued u/s 148 of the Act i.e. 30.03.2021, the time limit for completing the assessment u/s 147 was available up to 31/03/2022 and thus, the final assessment order passed by the Assessing Officer u/s 144 r.w.s. 144C dated 12.01.2023 is clearly barred by limitation.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.”

11. In this view of the matter and considering the facts and circumstances and also by following the decision of the Hyderabad Bench of the Tribunal in the case of Farooq Ali vs. Income Tax Officer (Supra), we are of the considered view that the assessment order passed by the Assessing Officer u/s 144 r.w.s. 144C(13) dated 12.01.2023 is barred by limitation and thus we quash the re-assessment order passed by the Assessing Officer.  Hon’ble ITAT, Hyderabad Bench in Maliha Syeda v. ITO (2025) 2 TMI 937vide its order dated 20.02.2025 [PB 374-379] has held: Validity of reassessment order as barred by limitation - arguments advanced by the assessee that the since the extended time limit of 12 months is not available in the case of Non-Resident as per sec.153(4), AO ought to have complete the assessment as per the provisions of sec.153(2) which is one year from the end of the financial year in which notice u/sec.148 was served - HELD THAT:-Since in the case of the assessee who is a Non-Resident during the impugned A.Ys. 2013-2014 and 2014- 2015, the Assessing Officer has completed the assessment on 25.05.2022 beyond the period of one year from the end of the financial year in which notice issued u/sec.148 dated 29.03.2021, therefore, the assessment order passed by the Assessing Officer cannot be sustainable in the eye of law. As relying on SHRI MIR IBRAHIM ALI [2024 (12) TMI 193 - ITAT HYDERABAD] we quash the assessment order passed by the Assessing Officer and allow the additional grounds raised

by the assessee.  Hon’ble ITAT, Chennai Bench in Ganesan Kannan v. ITO (ITA: 698/Chny/2024 vide its order dated 23.08.2024 [PB 380-399] has held:

7. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. The assessee is a non-resident individual for the A.Y.2018- 19 and is an ‘eligible assessee’ as per section 144C(15) of the I.T.Act, 1961. As per section 144C of the Act, the assessment of an eligible assessee shall be dealt with in accordance with the said provision. As per the provision of section 144C, in case of an eligible assessee, the Assessing Officer shall pass a draft assessment order and served on the assessee, if he propose to make any variation in his total income. The assessee, after receipt of draft assessment order shall have two options. As per subsection (2) of section & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 144C, on receipt of draft assessment order, the eligible assessee shall within 30 days file its acceptance of the variations to the Assessing Officer or file his objection, if any, to such variation with the DRP. If the ‘eligible assessee’ file his acceptance to the Assessing Officer, then the Assessing Officer shall complete the assessment within one month from the end of the month in which the acceptance is received. In case an ‘eligible assessee’ files objection before the DRP, then the DRP shall issue its direction within 9 months from the end of the month in which the draft order is forwarded to the assessee. Thereafter, the Assessing Officer shall pass his final assessment order within one month from the end of the month in which such direction is received.

8. In the present case, there is no dispute with regard to the fact that the appellant has filed his objection against the draft assessment order passed by the Assessing Officer before the DRP. Therefore, in ordinary course, the extended time limit for completion of the assessment should be available to the Assessing Officer as per section 144C r.w.s.153C of the I.T. Act, 1961. But, the argument of the learned Counsel for the assessee is that as per section 153(4) of the Act, the extended period of 12 months for completion of assessment is available only where a reference under sub section (1) of section 92CA is made during the course of the assessment or re-assessment, but not in a case where there is no reference to the TPO. We find force in the argument of the learned Counsel for the assessee for the simple reason that, as per section 153(2), the time limit for completion of assessment or reassessment shall be 12 months from the end of the financial year in which notice u/s 148 was served.

9. However, sub-section (4)of section 153 extends the said time limit by another 12 months notwithstanding anything contained in sub-section (1),(1A),(2),(3) and (3A) where a reference u/s.92CA(1) is made during the assessment proceedings to the TPO. In other words, except the cases of the reference to the TPO, extended time limit of 12 months for completion of assessment is not available even in a case of Non-Resident assessment, even though the said assessment proceedings is covered u/s 144C of the Act. Since the extended time limit of 12 months is not available in the case of Non-Resident as per section 153(4) of the Act, in our considered view, the Assessing Officer ought to have completed the assessment as per the provisions of section 153(2) of the Act which is one year from the end of the financial year in which notice u/s 148 was served. In the present case, if we go by date of notice issued u/s 148 of the Act i.e. 31.03.2022, the time limit for completing the assessment u/s 147 was available up to 31/03/2023 and thus, the final assessment order passed by the Assessing Officer u/s 144 r.w.s. 144C dated 19.01.2024 is clearly barred by limitation.

11. In this view of the matter and considering the facts and circumstances and by following the decision of the Hyderabad Bench of the Tribunal in the case of Shri Syed Gulam Mohiuddin vs. Income Tax Officer (Supra), we are of the considered view that the assessment order passed by the Assessing Officer u/s.144 r.w.s. 144C(13) dated 19.01.2024 is barred by limitation and thus we quash the re-assessment order passed by the Assessing Officer. Since, the assessee succeeds in legal issue, the other & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur grounds raised

on merit become academic in nature and therefore, are not being adjudicated.

12. In the result, appeal filed by the assessee is allowed. In light of above the impugned notice u/s 153C is illegal & deserves to be quashed & set-aside.”

10. The ld. AR subsequent to filing of the appeal has also filed an application on 20.05.2025 praying there to place on record additional documents, which reads as under:-

“That the assessee applicant wishes to place on record certain documents which are not there before the Assessing Officer / Dispute Resolution Panel.

3. Copy of notice dated 06.08.2024 issued by Deputy Commissioner of Income Tax, Central Circle 1, Delhi for A.Y. 2014-2015 u/s. 148A(b) of the Act in the case of Synod Farms and Infra Developers Pvt. Ltd.

4. Copy of order dated 31.08.2024 passed by Deputy Commissioner of Income Tax, Central Circle 1, Delhi for A.Y. 2014-2015 u/s. 148A(d) of the Act in the case of Synod Farms and Infra Developers Pvt. Ltd.

49. Copy of notice dated 31.08.2024 issued by DCIT, Central Circle 1, Delhi to Synod Farms and Infra Developers Pvt. Ltd. u/s. 148 of the Act 447-448 for A.Y. 2014-2015.

50. Copy of registered sale deed dated 29.01.2013 executed jointly by the 449-469 assessee appellant alongwith other family members.

12. On the other hand, ld. DR has relied upon & has justified the order dated 19.12.2024 passed by the DRP u/s. 144C(5) of the Act and there by she stood up for reasoned consequential Assessment Order dated & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 24.01.2025 passed by the ld. AO. She submitted that while search substantial payment of on-money transaction were revealed and hence, the addition made by the DRP for the year under consideration be sustained which is based on the material found during search. It was submitted that all the records relied upon were given to the assessee and thereafter the lower authority taken a view that the income on account of unexplained money is required to be assessed in the hands of the assessee. Further time was sought till 04.07.2025 by the ld. D/R to counter the arguments raised by the ld. A/R, which was granted by the Bench. However, no written submissions have been received till date.

14. Ground No. 1, 3 & 4 is decided as hereunder: A search & seizure action u/s. 132 of the Act was carried out at the premises of M/s. OM Kothari Group on 13.07.2020. During the course of search incriminating & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur documents in the nature of one image having “Details as on 17.04.2013” of flats sold in PALLACIA project was found from the mobile phone of Shri Vishal Kothari wherein name of the assessee appearing @ Sno.

20. As per satisfaction note recorded by the Assessing Officer, the searched person has accepted receipt of on-money in sale of flats and the image reflects bifurcation of cheque amount and on-money amount. This image is further corroborative with WhatsApp chats found from the mobile phone during the course of search & statements of Directors & other key persons of OM Kothari Group were recorded. The image also reflects that the assessee alongwith his wife Juhi Bhandari has purchased a residential flat for total sale consideration of Rs. 2,53,00,000/- and out of which Rs. 55,00,000/- was paid in cash as ‘on-money’. Since, assessee’s share in the flat purchased is 50%, his share of ‘on-money’ was alleged at Rs. 27,50,000/-. The relevant extracts of satisfaction note as recorded by the ld. Assessing Officer is as under:-

14.1. The ld. AO accordingly issued notices u/s. 153C for A.Y. 2015- 2016 to 2021-2022. Queries were raised to which replies were filed by the assessee appellant. The ld. Assessing Officer passed draft Assessment Order dated 30.03.2024 wherein addition of Rs. 27.50 lacs paid as on- money by the assessee was proposed to be added u/s. 69 of the Act in the hands of the assessee on the basis of % completion method as hereunder of the project “PALLACIA”:

A.Y. Amount of Addition 2021-22 615725 2020-21 208725 2019-20 0 2018-19 228250 2017-18 65450 2016-17 114400 2015-16 1517450 Total 2750000 & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 14.2. The assessee referred the matter to Dispute Resolution Panel wherein the DRP vide its order dated 19.12.2024 restricted the addition of Rs. 27.50 lacs to Rs. 11,69,050/- for A.Y. 2015-2016. While doing so DRP considered the enhancement of Rs. 1,20,10,610/- in A.Y. 2015-2016 towards the amount paid by the assessee by cheque to the builder, in absence of justification of source of payment.

“F. INCRIMINATING MATERIAL- CASCADING EFFECT? 48. In terms of the Second Proviso to Section 153A, all assessment or reassessment proceedings relating to the six AYs’ or the “relevant assessment year” pending on the date of search are statutorily envisaged to abate. Abatement is envisioned to be an inevitable consequence of the initiation of action under Section 153A. Neither issuance of notice nor abatement are predicated upon a formation of opinion by the AO of the searched person that the material is likely to impact the total income of that assessee. However, the spectre of abatement insofar as the “other person” is concerned would arise only after the jurisdictional AO has formed the requisite satisfaction of the material having “a bearing on the determination of the total income of such other person” and having formed the opinion that proceedings under Section 153C are liable to be initiated. It would be pertinent to bear in mind that Kabul Chawla was a decision rendered in the context of Section 153A. It was in the aforesaid backdrop that the Court significantly observed that once a search takes place under Section 132 of the Act, notice under Section 153A(1) would mandatorily issue. The abatement of assessment and reassessment pending on that date would, in the case of a Section 153A assessment, be a preordained consequence. However, and in light of what has been observed hereinabove, it is apparent that Section 153C constructs a subtle and yet significant distinction insofar as the question of commencement of proceedings or assumption of jurisdiction is concerned.

17.1. We have also perused 4th proviso to section 153A(1) alongwith Explanation 1 to section 153A(1) r.w.s. 153C of the Act. Assessing Officer can invoke extended period of limitation beyond the 6th year only under the condition that the alleged escaped income is more than Rs. 50.00 lacs. Admittedly total alleged escaped income qua assessee as per satisfaction note itself is Rs. 27.50 lacs for A.Y. 2015-2016 to 2021-2022, which too has been restricted by the DRP at Rs. 11,69,050/- for A.Y. 2015-2016 only. Hon’ble Supreme Court in the judgments relied upon by the ld. A/R has settled the controversy as to which year will be ‘search year’ qua ‘other person’. In the instant case, it shall be A.Y. 2023-2024 & it will not relate back to A.Y. 2021-2022, i.e., the year in which search was carried out at the premises of searched person. Hon’ble Supreme Court in Jasjit Singh (Supra) has held:

“9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 10. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under Section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.”

17.2. It is indisputable fact that while in the case of the searched person, the six year or the ten-year block period is to be computed with reference to the date of search, however, in the case of the other person, the six year or the ten-year block period is to be computed with reference to the date when the incriminating material is handed over to the jurisdictional AO of the “other person” & on the basis whereof the satisfaction note is recorded by him. Accordingly, the period of limitation for 6 years in the instant case would be computed in the instant case as hereunder:

A.Y. Year Particulars Remarks Satisfaction Note dated 27.03.2023 recorded by the AO 2023-24 1 qua the assessee & notice u/s. Within limitation irrespective 153C issued dated 27.03.2023. of allegation of escaped 2022-23 2 income, however, restricted to Search carried out premises of incriminating material 2021-22 3 OM GROUP on 13.07.2020 2020-21 4 & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur 2019-20 5 2018-19 6 2017-18 7 Barred by limitation, since 2016-17 8 admittedly alleged escaped income is less than Rs. 50.00 2015-16 9 lacs.

17.3. As a corollary, the notice issued u/s 153C and consequential assessment order passed u/s 153C for A.Y. 2015-2016 is vitiated in law and is required to be quashed & set-aside. Ground No. 1 of the assessee is thus allowed.

He further submitted that subsequently an order u/s. 148A(d) dated 31.08.2024 was passed in the case of M/s. Synod Farm and Infra Developers Pvt. Ltd. by the ld. Assistant Commissioner of Income Tax, Central Circle 1, Delhi for A.Y. 2014-2015 alleging therein that on- money paid by it relates to the date when agreement to sale was executed, i.e., during A.Y. 2014-2015. This order was passed after seeking sanction of ld. Principal Chief Commissioner of Income Tax-Central, Delhi. He further submitted that this shows that the department itself is taking contradictory stand in the hands of different assessees on the very same material. In the case of the assessee, the ld. Assessing Officer vide Draft Assessment Order has applied % completion method to allege payment of on-money from A.Y. 2015-2016 to A.Y. 2021-2022 and the DRP has held that since substantial payment has been made by the assessee during A.Y. 2015-2016, it is to be presumed that on-money has been paid during this year. He submitted that both the reasonings have no legal legs to & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur make the alleged additions. The ACIT, CC-1, New Delhi (having concurrence of PCCIT, Central, Delhi) has adopted the date when agreement to sale was executed with the builder to be the material date when alleged on-money has been paid. He further submitted that Hon’ble Delhi High Court in the case of Synod Farms and Infra Developers Private Limited v. CCIT (2025) 3 TMI 1438 vide its order dated 20.03.2025 has quashed the proceedings initiated against the said assessee for A.Y. 2014-2015 vide notice dated 31.08.2024, being barred by limitation by holding as under:

“The impugned notice was preceded by a notice dated 06.08.2024 issued under Section 148A(b) of the Act. The annexure appended to the said notice sets out the information which according to the Assessing Officer [AO] is suggestive of the petitioner’s income for the AY 2014-15 escaping assessment. The said notice indicates that on 13.07.2020 a search was conducted at various premises in connection with “Om Kothari Group” of Rajasthan. It was alleged that during the course of investigation, evidence was found regarding details of flats sold in a project named Pallacia and cash components collected from sale of such flats. It is also found that the petitioner was one of the purchasers of the flats in question and had purchased a flat bearing no.B-52 in the project Pallacia, admeasuring 7750 sq. ft. at the total sale consideration of ₹ 9,30,00,000/- [7750 sq.ft. at the rate of ₹ 12,000/- per sq.ft.]. It was alleged that the consideration of ₹ 2,32,50,000/- [7750 sq.ft. x ₹ 3,000/- per sq.ft.] was paid in cash as “on money”. The relevant assessment year in question (AY 2014-15) is beyond the period of ten years as contemplated under Section 153C read with Section 153A of the Act from the end of the assessment year. The petition is, accordingly, allowed and the impugned notice is set aside.”

18.1. It is settled law that burden lies upon the revenue to prove the payment of on-money on the part of the assessee. Assumption & & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur presumption have no place. It can be seen that on the basis of similar incriminating material, different stands have been adopted by different Assessing Officers with regards to the payment of on-money relates to which year. No material is forthcoming from the builder reflecting the date of receipt of on-money. No opportunity of cross examination has been granted to the assessee, which vitiates entire assessment proceedings as held by Hon’ble jurisdictional Rajasthan High Court in CIT v. Sunita Dhadda [2018] 406 ITR 220 (Raj). As a corollary, there is no basis to make allege that the incriminating material has any bearing in relation to A.Y. 2015-2016 and the addition of Rs. 11,69,050/- made by the ld. Assessing Officer deserves to be deleted. Ground No. 3 of the assessee is thus allowed.

& 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur He submitted that addition can be made only to the extent of incriminating material found during the course of search. He further submitted that surprisingly even the amount paid by cheque to the builder by the assessee during A.Y. 2013-2014 (Rs.32,16,408/-) & during A.Y. 2014-2015 (Rs. 5,39,282/-) has also been directed to be added during A.Y. 2015-2016. He submitted that exercise of enhancement powers by the DRP is against the principles of natural justice and is arbitrary and reflects non-application of mind.

19.1. Hon’ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd. & U.K. Paints (Overseas) Ltd. has held that addition u/s. 153A/153C has to be restricted to incriminating documents found during the course of search. Thus, though DRP has power to enhance, however, such powers can be exercised within the parameters laid down by the Hon’ble Supreme Court, i.e., it has to be restricted to incriminating documents found during the course of search. Enhancement has been proposed by the DRP on the ground that source of payment made by the assessee to the builder as per agreement to sale has not been explained, however, the said document is not incriminating material, thus we hold that the directions so issued by the DRP u/s. 144C(8) is bad in law. We have further perused the bank statements & registered sale deed executed by the assessee. The source of funds paid to the builder is the sale proceeds & 234/JPR/2025 Sharad Kumar Bhandari & Ors, Jaipur received by the assessee on sale of immovable property and the amount kept in the Capital Gains Account Scheme wherefrom the amount has been paid to the builder. The source is fully explainable. As a corollary, there is no basis to allege that the source of Rs. 1,20,10,610/- paid by the assessee to the builder is not explained and accordingly the addition so made deserves to be deleted. Ground No. 4 of the assessee is thus allowed.

20.1. Since, we have already allowed the Ground No. 1, 2 & 3 of the assessee, thus this ground remains academic in nature and hence is not being adjudicated.

In the result, both appeals of the assessee are allowed.

Order pronounced in the open Court on 13/08/2025.