VIRENDRA PRAKASH SHARMA,JAIPUR vs. DCIT CIRCLE (INTL TAX), JAIPUR, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 286/JP/2025 fu/kZkj.k o"kZ@Assessment Year : 2020-21 cuke Virendra Prakash Sharma DCIT, Vs. 1 Hotel Mahindra, Kanti Nagar, Circle (Intl. Tax) Opp. Polo Victory, Bani Park, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGWPS7454C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rajeev Sogani, CA & Shri Rohan Sogani, CA jktLo dh vksj ls@ Revenue by : Smt. Runi Pal, CIT (Th. VC) lquokbZ dh rkjh[k@ Date of Hearing : 26/06/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 16/07/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

By way of present appeal, the assessee – appellant challenges the order of assessment dated 20.01.2025 passed by 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 2020-21. That order of assessment was passed after passed under Section 144C(5) of the Act dated 12.12.2024.

2. In this appeal, the assessee has raised the following grounds: -

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

2.1 Vide application dated 25.06.2025 the assessee relying on the decision of apex court in the case of National Thermal Power Co Ltd. 229 ITR 383 (SC) raised the additional ground stating that all the facts related that ground is already on record. The additional ground raised reads as under: -

“In the facts and in the circumstances of the case and in law, the final assessment order dated 20 January 2025, passed by the learned Assessing Virendra Prakash Sharma vs. DCIT Officer under section 143(3) read with section 153C and section 144C(13) of the Income-tax Act, 1961, is bad in law, void ab-initio, and without jurisdiction, having been passed after the expiry of the mandatory period of limitation.”

3. Succinctly, the fact as culled out from the records is that a Search & Seizure action u/s 132 of the Act was conducted in the various cases of "OM KOTHARI group" of Jaipur on 13.07.2020. While that proceeding at the residential premises of key persons of that group i.e. Shri C.P. Kothari, Shri Sunil Kothari, Shri Vishal Kothari at Jaipur and Delhi, various incriminating documents were found as well as mobile phones and other digital devices were also found and seized. Imagine of these mobile phones, laptops and personal computers were done by the computer experts. Statements of these persons were also recorded. Also, statement of Shri Vimal Jain s/o Late Shri Padam Chand Jain, the Accountant of the group at Jaipur (one of the key employee of Om Kothari Group) was recorded. These incriminating materials/documents/ data reflect that the group along with other persons / associates is engaged in the business of real estate and was carrying out transactions of unaccounted receipt on sale of flats in "PALLACIA" project.

3.1 The documents and data so found and seized pertain to the assessee and these have bearing on the determination of total income of condition laid down in provisions of section 153C of the Act, notice was issued on 09.03.2023 by the Dy. Commissioner of Circle-1, Jaipur, 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 22.04.2023 declaring total income of Rs 59,43,840/- which is the same as declared in the original return of income. Hence, no additional income has been declared in the return of income filed in response to the notice u/s 153C of the Act.

3.2 Notice u/s 143(2) of the Act was issued on 06.12.2023. In compliance thereto, the assessee filed its reply on 19.12.2023 along with a copy of return of income filed in response to notice u/s 153C of the Act. The assessee is a Non-Resident Indian. Ld. AO based on the data extracted from the computer and mobiles etc. which was in large number, 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” from the outside parties. The actual rate of these flats, sold to parties, seems to be much higher than what is shown in the books of accounts. The difference is obviously taken in cash by the assessee group against the documents/chats/images found during the search. Since these amounts are paid in cash therefore, that part remained unaccounted and the same is not offered for taxation by the buyers. Evidence in the form of whatsapp chats retrieved from the mobile device of Shri Vishal Kothari have been presented, pertaining to unaccounted cash investments made by various buyers in the Pallacia project. Some of those message provided in the order of the assessment in support of the fact that “on money” was received in sale of flats on “Pallacia Project”. Ld. AO also noted that various incriminating documents have been discovered delineating a distinct separation between cash and cheque receipts.

3.3 Ld. AO thus based on the corroborated internal evidence depicated 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. Ld. AO on perusal of that evidence noted that it was list on the left side of S. NO.” Column, actual hand written rate of flats is recorded. That sheet make it absolutely 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 average selling rate which worked out at Rs. 12,000/- per square feet. the order of the assessment ld. AO applied that rate of Rs. 12,000 per square feet and thereby determined based on the evidence that the assessee has also in cash for the flat purchased by him. Therefore, he was given a show cause notice on 28.01.2024 requiring the assessee to show cause as to why the on money of Rs. 1,12,00,000/- may not be added as unexplained investment from the assessment and thereby asked to explain the source of the said investment.

3.5 Ld. AO relying on the 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”. On the left-hand side o 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 six Rs. 35+20 i.e. Rs. 55,00,000/- was received from Shri Virendra Sharma against the sale of flat in Pallacia. From that evidence ld. AO noted that the assessee Shri Virendra Prakash Sharma and his spouse paid Rs. 55,00,000/- in cash against the book of flat no. B- 31 which are not recorded in the books of account. Since, all the details and documents, evidencing the modus operandi of the business runs by company. Even the relied upon transaction note was also provided to the assessee along with the satisfaction note vide notice dated 26.12.2023.

3.6 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 has made cash payment 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. 2,08,725/- 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.

4. Aggrieved with that draft order the so made by the ld. AO assessee filed objection to that order before the Dispute Resolution Panel. Apropos the objection so raised the relevant finding of DRP reads as under :

DRP's Findings & Direction: 6.3 The case was assessed u/s 153C of the Act on the basis of information that assessee had made cash-payment of on-money towards purchase of a flat at Jaipur that was out of unaccounted funds. This specific information pointing out Virendra Prakash Sharma vs. DCIT tax-evasion by the assessee had been forwarded by the Investigation-wing of the Income-tax Department. While carrying out search operation at business/residential premises of the concerned Builder and its associates/affiliates, Department found that the assessee had made cash payment to the concerned Builder for purchase of apartment/flat that was not recorded in the books of accounts of the builder. The detailed enquiry clearly brought out that the concerned Builder was taking on-money from buyers on a consistent basis especially as the concerned building project 'PALACIA' was a high-end property wherein chances of introduction of unaccounted funds was considerably greater. During the course of assessment proceeding, assessee was duly confronted with the evidence gathered by the Department. Assessee in his defence stated that the per unit consideration paid by him in cheque was matching with the average unit value determined by the Department in case of other buyers (cash+cheque), hence, no credible case stood against the assessee. This contention of assessee is liable to be rejected because it is seen that the concerned Builder had started taking the booking for PALACIA property from FY 2012-13 onwards while assessee initiated the transaction with the builder in FY 2018-19 only. This is clearly established by the fact that by the time assessee had decided to purchase the apartment in 2018-19, the project was significantly complete and thus, assessee had paid Rs.5,54,99,480/- at one go on 29.06.2018 by cheque which constituted around 87 percent of the apartment cost. By that time i.e. FY 2018-19, the property would have seen a significant appreciation, hence, there is no merit in averment of the assessee (on basis of data pertaining to purchasers who had entered into the project much earlier), that the per unit rate reflected in cheque payment was the real cost of the apartment.

6.4 The second important objection by the assessee is that the loose slips, documents, Whatsup chats etc. found from a third party could not be attributed to him and ought to be considered as 'deaf and dumb' documents. The Panel is not in agreement with the contention of assessee because 'circumstantial evidence' clearly indicates otherwise. It is seen that the concerned Builder admitted to such unaccounted transactions in course of search and seizure operation and thereafter, also paid taxes on such unaccounted income. It is an undisputed fact that assessee along with his wife had agreed to purchase an apartment from the concerned Builder in their Pallacia project. Therefore, the documents relied upon by the Department cannot be treated as "deaf and dumb documents and transactions in the seized documents that pertained to the assessee definitely merited action under section 153C of the Act against him. The AO in his order has examined the different code-words used in the seized documents which clearly establish that the amounts reflected were in lakhs/crores. The name of the assessee is mentioned as 'Virendra Sharmaji. Suffixing of 'ji' in the narration matches with assessee's age being above 60 yrs.

6.5 Hence, considering the fact that all factual details related to the assessee in the impugned seized document are found to be correct there is no ambiguity in concluding that the reference therein in the seized document pertains/relates to the assessee.

6.6 The seized document under reference contains inflow/outflow statement of the Builder for the period 1/10 to 3/11 in which the inflows on the left hand side relate to cash receipts for various properties from different persons including the assessee. The specific narrations. pertaining to the assessee in the seized document are as under:

35 Virendra Sharmaji A2 20.....do

6.7 The mention of A2 in the seized document is of particular significance and is a clinching evidence that the transaction pertains to Sh. Virendra Sharma & his wife. This is because of the fact that office address of the Pallacia project of the builder is as under:

6.8 As the Pallacia project was built on plot A2, it clearly emerges that the impugned entry in the seized document mentioned supra, pertained to the assessee. This clearly establishes that assessee had paid on-money to the tune of Rs. 55 lakhs in two tranches of Rs. 35 lakh and Rs. 20 lakh towards the apartment at Pallacia project.

6.9 The Panel in support of its contention would like to rely upon decision of Hon'ble ITAT Delhi in the case of Hersh Win Chadha in I.T.A.Nos.3088 to 3098

83107/Del/2005 where the Hon'ble ITAT has elaborated how the circumstantial evidence can be used for purposes of the income-tax Act, as under-

"6.13. It would, at this stage, be relevant to consider the admissibility and use of circumstantial evidence in income tax proceedings. Circumstantial evidence is evidence of the circumstances, as opposed to direct evidence. It may consist of evidence afforded by the bearing on the fact to be proved, of other and subsidiary facts, which are relied on as inconsistent with any result other than the truth of the principal fact. It is evidence of various facts, other than the fact in issue which are so associated with the fact in issue, that taken together, they form a chain of circumstances leading to an inference or presumption of the existence of the principal fact. In the appreciation of circumstantial evidence, the relevant aspects, as laid down from time to time are -

(1) the circumstances alleged must be established by such evidence, as in the case of other evidence;

(2) the circumstances proved must be of a conclusive nature and not totally inconsistent with the circumstances or contradictory to other evidence.

(3) although there should be no missing links in the case, yet it is not essential that every one of the links must appear on the surface of the evidence adduced, some of these links may have to be inferred from the proved facts;

(4) in drawing those inferences or presumptions, the Authorities must have regard to the common course of natural events, to human conduct and their relation to the facts of the particular case.

(5) The circumstantial evidence can, with equal facility, be resorted to in proof of a fact in issue which arises in proceedings for the assessment of taxes both direct and indirect, circumstantial evidence can be made use of in order to prove or disprove a fact alleged or in issue. In fact, in whatever proceedings or context inferences are required to be drawn from the evidence or materials available or lacking, circumstantial evidence has its place to assist the process of arriving at the truth.

In the case at hand, the meticulous and elaborate enquiries by the Income-tax Department (the circumstantial evidence) have established beyond doubt that appellant indulged in payment of on money.

6.10 The case-laws filed by the appellant in his support have been duly considered. As such cases require factual verification of facts which are unique to each case, these case-laws cannot be applied in totality unless and until the facts are exactly similar. Appellant has failed to show facts of the case-laws so quoted by him are exactly similar to his case. Further, in recent years, in cases of accommodation of funds, higher Judiciary has increasingly been relying upon 'Doctrine of Fraud to uphold addition of such transactions. The higher Courts are of the view that where the assessee concerned has not maintained transparency in his financial transactions and has tried to circumvent the provisions of Income- tax Act then his case becomes considerably weakened and he cannot take refuge under the 'Rules of Evidence' and 'Burden of Proof" to seek relief. In the context of fake transactions, Hon'ble ITAT, Pune vide a recent judgment in the case of Splice Biotech Pvt. Ltd. In dated 27.09.2023 has applied the 'doctrine of fraud". The Panel would also like to place reliance on this case- law wherein it has been stated in no uncertain terms that such manipulations which abuse the provisions of the Income-tax Act cannot be allowed. The relevant portion of the judgment is quoted as under:

“9. …………..Further, the application of principle of the fraud under judicial Acts was considered by the Hon'ble Supreme Court in the case of Smt. Badami (Deceased) By her L.R. vs. Bhali in Civil Appeal No.1723 of 2008 dated 22.05.2012, wherein, the Hon'ble Apex Court held as follows: "20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others [AIR 1994 SC 853] this court commenced the verdict with the following words: ""Fraud-avoids all Judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree abtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a judgment/decree - by the first court or by the highest court has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings."

6.11 As far as transaction with the Builder is concerned, it is seen that assessee had entered into Builder-Buyer agreement in calendar year 2019 specifically on 04.01.2019. Therefore, the period mentioned in the seized document mentioned supraon basis of circumstantial evidence in all probability pertains to the period 1/10 to 3/11 of calendar year 2019 more so when the search action of the Department on the Builder concerned took place on 13.01.2020. It is a settled position of Income-tax jurisprudence that unless otherwise clearly established, the seized document pertains to transactions that took place in that specific financial year. Hence, the Impugned transaction of on-money is liable to be taved as unaccounted investment during the FY 2019-20. 6.12 In this case, the Panel had also issued notice proposing enhancement to the concerned assessee vide letter dated 06.12.2024. The details in the enhancement notice were as under:

“………..2. I am directed to inform that the Dispute Resolution Panel has reviewed your case and noted that their directions may potentially increase your tax liability for above referred assessment year. To ensure fairness and due process, you are being provided an opportunity to present your response or objections before the directions are finalized through online submission

In case of Sh. Virendra Prakash Sharma, in Draft Assessment Orders for AY 2015-16 to AY 2020-21, AO has proposed on addition of Rs 27,50,000/- in his hands for these years. Similar addition has also been proposed in tax-assessment of Smt. Renu Sharma, his wife. Upon due consideration of the matter, the Panel hereby proposes addition of entire on money of Rs.55,00,000/-in hands of Sh. Virendra Prakash Sharma in AY2020-21 as the relevant seized document is for the period 1/10 to 3/11 and search took place on the concerned builder on 13.07.20. These facts indicate that on money payment was made in FY2019-20.

6.13 In response of the same, assessee has furnished following reply on 09.12.2024-

"In this regard, the assessee humbly submits the following for your kind consideration:

1. Submission Regarding Enhancement of Rs. 55,00,000:

1.1. It is respectfully submitted that neither assessee nor his wife, Smt. Renu Sharma, made any payment in cash for the purchase of the flat from the developer. The entire consideration was paid by assessee's wife out of her bank account, and accordingly, the entire consideration has been paid through the banking channel.

1.2. No basis whatsoever has been provided by the Id. AO in alleging that the assessee and his wife paid "On Money" for the purchase of flot. There has been no corroboration whatsoever on the part of the id. AD. In this regard, detailed submissions have already been filed before the Hon'ble Panel, along with Form 354, which may please be considered.

1.3. Accordingly, there is no basis for addition made by the Id. AO in the draft assessment order, and such addition is factually and legally untenable.

1.4. Further, there is no evidence to substantiate that, during the year under consideration, "On Money" payment of Rs. 55,00,000 was made by assessee for the purchase of the flat. Accordingly, no addition, even for the year under consideration, can be made in the hands of assessee,

1.5. Without prejudice to the above, even if the amount of Rs. 55,00,000 is odded to the income of assessee for the year under consideration, le. AY 2020-21, appropriate relief may please be granted by deleting the additions made in other assessment years, wherein similar additions have been made by the Id. AD. Further, additions amounting to Rs. 27,50,000 have also been proposed to be mode in the hands of assessee's wife, Virendra Prakash Sharma vs. DCIT Smt. Renu Sharma. Since the entire addition of Rs. 55,00,000 is proposed to be made in the hands of assessee, the additions made in the hands of the wife of assessee for all the years, i.e. from AY 2015-16 to AY 2021-22, may kindly be directed to be deleted.

In view of the above, the notice of enhancement issued by the Hon'ble Panel is without any basis and is unjustified and no enhancement should be done in the present case……..”

6.14 The submission of the assessee has been considered critically but not found acceptable for the detailed findings of the Panel supra which clearly stablish that assessee had pald on money which was not reflected in the transactions disclosed to the department for AY 2020-21. The AO had made the addition by adding 27,50,000/- each in hands of Sh. Virendra Sharma and Smt. Renu Sharma solely in hands of Sh. Virendra Prakash Sharma. However, the Panel is of the view that since the seized document specifically contains name of Sh. Virendra Sharma, the entire addition of Rs. 55,00,000/- ought to be made in his hands only. Further, the AO has erroneously split the on-money payment as unaccounted income for different years on basis of 'project completion method". This basis of bifurcation is not very significant as AO did not have corresponding evidence that the concerned Builder was indeed collecting on money from building construction projects on basis of stage of completion. Hence, the Panel is of the view that methodology proposed by the AO for making the addition is required to be modified. The entire on-money payment of Rs. 55,00,000/- is required to be made in the hands of Sh. Virendra Sharma only in FY 2019- 20. On basis of factual position of the case, the Panel hereby confirms and enhances the proposed addition of Rs. 55,00,000/-Therefore, in consequence, as entire addition lies in hands of Sh. Virendra Sharma, the AO is hereby directed to delete the proposed additions from AYs 2015-16 to 2021-22 (except AY 2019-20 which is not under consideration before the Panel) and make the entire addition of Rs. 55,00,000/- solely in AY 2020-21 in his case.

7. Ground of objection 3: The assessee craves leave to add/alter any of the grounds of objections on or before the date of hearing.

DRP's Findings & Direction:

7.2 This ground is general in nature, hence does not require specific adjudication.

I. Assessee, an individual, has been residing outside India for many years and has been a non-resident under Section 6 of the Income Tax Act, 1961.

II. Assessee and his wife, Smt. Renu Sharma (also a non-resident), jointly purchased an immovable property – Flat No. B-31, Pallacia building, A-2 Prithviraj Road, C-Scheme, Jaipur, with a super built-up area of 5,600 sq. ft. (“the flat”).

III. Agreement to sale [PB: 27-67] was executed on 04.01.2019 with M/s Om Metals Consortium Pvt. Ltd. (“the developer”), and it was duly registered on that date. The agreed purchase consideration was Rs. 6,33,25,500 for the 5,600 sq. ft. flat. The break-up of which is as under:

Particulars Amount (Rs.) Basic Selling Price (Excluding GST) A 57,500,000 Less: Rebate for impact assessment B 2,240,000 (Discount) C [A-B] 55,260,000 Add: Corpus Fund Deposit (Rs. 250 per sq. 1,400,000 D ft x 5,600 sq. ft) Add: Deposit for Maintainence (Rs. 50 per E 280,000 sq. ft x 5,600 sq. ft) 56,940,000 Total Consideration (Excluding GST) F [C+D+E] GST on Basic Selling Price After Rebate G 6,385,000 Total Consideration H [F+G] 63,325,000 I [H/5600 Sq. Consideration Per Sq. Ft 11,308 Ft]

IV. Registered agreement to sale explicitly records the agreed price as Rs. 11,308 per sq. ft. (for 5,600 sq. ft.). The assessee, as mentioned in the above table, secured a discount of Rs. 22,40,000 (amounting to Rs. 400 per sq. ft.) on the listed price, thus arriving at the effective rate of Rs. 11,308 per sq. ft. Thus, if such discount were not considered, the gross rate would amount to Rs. 11,708 per sq. ft.

V. The entire consideration for the flat was paid by Smt. Renu Sharma (the assessee’s wife) through banking channel.

VI. Aforementioned factual position is undisputed by the lower authorities.

VII. JURISDICTION UNDER SECTION 153C a. Jurisdiction in this case was assumed under Section 153C pursuant to a search on the Om Kothari Group, on 13.07.2020, to which the developer belonged. b. Subsequently, Assessing Officer (“ld. AO”) recorded Satisfaction Note [PB: 1- 7] and issued notice, dated 27.03.2023 under Section 153C to the assessee, for AY 2015–16 to AY 2021–22, including the year under consideration.

VIII. DRAFT ASSESSMENT ORDER a. In the Draft Assessment Order dated 30.03.2024, ld. AO proposed to tax an alleged “on-money” investment relating to the flat. The allegation (drawn from certain WhatsApp chats and internal records of the developer group) was that a total of Rs 55,00,000, in cash, had been paid for the flat, over and above the payment made through banking channel. b. Ld. AO attributed, for the purpose of making addition, this Rs. 55 lakhs equally to the assessee and his wife – i.e. Rs. 27,50,000 in the hands of Shri Virendra Prakash Sharma and Rs. 27,50,000 in the hands of Smt. Renu Sharma. c. Furthermore, the draft order spread this amount over the relevant years based on the project’s stage of completion of the developer. Accordingly, alleged on-money was apportioned across different assessment years (AY 2015–16 to AY 2021–22). The table below, reproduced from the draft order and related computations, illustrates the allocation of the Rs.55,00,000 on-money (Rs.27.5 lakhs each for assessee and his wife) over the years (Page 20-21 of the draft order): On-Money Proposed Addition Proposed Addition Assessment Stage of Recognized in Year in Assessee’s in Smt. Renu Year Completion (Total) Hands Sharma’s Hands Rs. 30,34,900 2015–16 55.18% Rs. 15,17,450 Rs. 15,17,450 (approx.) 2016–17 59.34% Rs. 2,28,800 Rs. 1,14,400 Rs. 1,14,400 2017–18 61.72% Rs. 1,30,900 Rs. 65,450 Rs. 65,450 2018–19 70.02% Rs. 4,56,500 Rs. 2,28,250 Rs. 2,28,250 68.03% (due to escalation 2019–20 Rs. 0 Rs. 0 Rs. 0 of cost estimation of the project) 2020–21 77.61% Rs. 4,17,450 Rs. 2,08,725 Rs. 2,08,725 100% 2021–22 Rs. 12,31,450 Rs. 6,15,725 Rs. 6,15,725 (forced to 100%) Total (Flat) (Completion) Rs. 55,00,000 Rs. 27,50,000 Rs. 27,50,000 d. Draft assessment orders for the aforementioned years including the year under consideration were subsequently passed under Section 144C(1) for the assessee (and similarly for the wife of the assessee) on 30.03.2024, proposing the above additions. These draft orders were duly served on 31.03.2024.

IX. Dispute Resolution Panel a. The assessee, as well as his wife, filed objections against the draft orders before ld. Dispute Resolution Panel – 1, New Delhi, in accordance with Section 144C. Ld. DRP heard the combined objections of the assessee and the assessee’s wife and issued its directions on 12.12.2024. Key findings of ld. DRP and the assessee’s counter-arguments are discussed in a later section below. b. Ld. DRP directed ld. AO to make the entire addition of Rs. 55,00,000 in the hands of the assessee alone, and not in the hands of his wife. It was further directed to make the entire addition in the assessment year under consideration, i.e., Assessment Year 2020-21.

X. Final Assessment Order a. Pursuant to ld. DRP’s directions, ld. AO passed the Final Assessment Order under Section 153C r.w.s. 144C(13) on 20.01.2025. b. In this final order, ld. AO assessed the entire Rs.55,00,000 alleged on-money in the hands of the assessee alone, rather than splitting it with the assessee’s wife. c. In other words, the final order added the full amount of Rs. 55 lakhs to the assessee’s income (taxable as unexplained investment under Section 69, at the special rate under Section 115BBE). Aggrieved, the assessee is now before the Hon’ble ITAT. GROUNDS OF APPEAL

GROUND NO. ADDITION OF Rs.55,00,000 AS ALLEGED ON- MONEY 2 [Submissions apropos Ground No. 1 have been made subsequently]

1. SUBMISSIONS

1.1. During the course of assessment proceedings, assessee was confronted with three screenshots, purportedly seized during the search on the Om Kothari Group. These screenshots were relied upon by ld. AO as the sole basis for alleging that the assessee made an unaccounted cash payment of Rs. 55,00,000 towards purchase of the flat.

1.2. These screenshots have been annexed to the Paper Book [forming part of the satisfaction note] and are summarised below:

1.2.i Screenshots 1 and 2: These relate to general flat sale transactions of the developer and indicate alleged acceptance of part consideration in cash. However, nowhere in these screenshots does the name of the assessee or his wife appear. They are wholly irrelevant in the context of the assessee’s case.

Page No. 3 of Satisfaction Note [PB: 3] Page No. 3 of Satisfaction Note [PB: 3] Left side of the Table mentions alleged payment of consideration in cash, along with cheque

Page No. 4 of Satisfaction Page No. 4 of Satisfaction Note [PB: 4] Left side of the Table mentions alleged payment of consideration in cash, along with cheque

1.2.ii Screenshot 3: This screenshot contains a cryptic reference to Screenshot 3: This screenshot contains a cryptic reference to Screenshot 3: This screenshot contains a cryptic reference to “Virendra Sharma Ji A2” “Virendra Sharma Ji A2”. Relying solely on this entry, it has been . Relying solely on this entry, it has been alleged by ld. alleged by ld. AO that the assessee paid Rs. 55,00,000 (Rs. 35 lakhs AO that the assessee paid Rs. 55,00,000 (Rs. 35 lakhs + Rs. 20 lakhs) in cash for the purchase of the flat. + Rs. 20 lakhs) in cash for the purchase of the flat. + Rs. 20 lakhs) in cash for the purchase of the flat.

Page No. 5 of Satisfaction Note [PB: 5] Page No. 5 of Satisfaction Note [PB: 5]

1.3. It is respectfully submitted that this inference is wholly unwarranted and It is respectfully submitted that this inference is wholly unwarranted and It is respectfully submitted that this inference is wholly unwarranted and based on an unauthenticate unauthenticated, unverifiable internal document that lacks all d, unverifiable internal document that lacks all characteristics of admissible evidence. characteristics of admissible evidence. The screenshot in question is a “dumb The screenshot in question is a “dumb document”, both factually and legally, and its reliance is untenable for the reasons document”, both factually and legally, and its reliance is untenable for the reasons document”, both factually and legally, and its reliance is untenable for the reasons mentioned below.

1.4. No Evidence beyond an No Evidence beyond an unsigned “Dumb Document”:

1.4.i The only “evidence” cited against the assessee is a rough internal The only “evidence” cited against the assessee is a rough internal The only “evidence” cited against the assessee is a rough internal ledger/screenshot supposedly found in a WhatsApp chat of a third party (an ledger/screenshot supposedly found in a WhatsApp chat of a third party (an ledger/screenshot supposedly found in a WhatsApp chat of a third party (an employee of the Om Kothari Group) [PB: 5]. This document contains an entry employee of the Om Kothari Group) [PB: 5]. This document contains an entry employee of the Om Kothari Group) [PB: 5]. This document contains an entry “Virendra Sharma Ji A2 arma Ji A2”, which ld. AO has interpreted as Rs. 35,00,000 in cash, ”, which ld. AO has interpreted as Rs. 35,00,000 in cash,

1.4.ii Crucially, this screenshot is not dated, not signed, and is neither authored by nor addressed to the assessee. It bears no acknowledgment or reference traceable to the assessee. The screenshot itself acknowledges “image without date.” There is no way to determine when, by whom, or in what context it was created.

1.4.iii Such unverifiable and self-serving documents, especially when found on third-party devices, have consistently been held to be “dumb documents”. In absence of signature, date, authorship, or direct linkage, they carry no evidentiary value.

1.4.iv It is submitted that ld. AO provided no concrete justification or basis whatsoever for arbitrarily assuming that the figures mentioned in the screenshot were suppressed by five zeros. Such an interpretation lacks any corroboration or logical support and is therefore wholly unjustified and unsustainable.

The registered sale deed, executed on 04.01.2019, irrevocably crystallised 1.4.v the consideration at Rs. 5,91,80,000 for Flat No. B-31; once this deed was signed, the assessee and the developer were legally bound to that figure and nothing more. If any “on-money” were ever to be demanded, it would necessarily have been extracted before that date, i.e. in F.Y. 2018-19. The WhatsApp screenshot on which the Department now relies is undated; yet ld. DRP, without a shred of supporting material, presumes it belongs to F.Y. 2019-20—nine months after the deed, when no sane purchaser would remit fresh cash against an already-registered sale.

1.5. Assessee’s Name Nowhere in Statements or Corroborative Evidence:

1.5.i The Department recorded statements of multiple individuals during the search, including Shri Vimal Jain, the accountant of the developer group and Shri Vivek Kothari [PB: 68-115]. None of these individuals named the assessee or his wife as having made any cash payment or as being involved in on-money transactions.

1.5.ii Even during post-search enquiries, the developer or its officials did not name the assessee. No direct or indirect confirmation was obtained from any 1.5.iii There is no deposition, admission, or confessional statement linking the assessee to any unaccounted cash transaction. The assessee’s name does not appear in any seized ledger, diary, cash book, or record—except in this solitary, unverifiable screenshot.

1.6. All Funds Official – No Unaccounted Cash Trail:

1.6.i It is undisputed that the entire purchase consideration of Rs. 6,33,25,500 was paid by the assessee’s wife exclusively through banking channel. The same is fully documented in the registered Agreement to sale and corroborated by corresponding bank statements and TDS details.

1.6.ii The addition is thus entirely unbacked by any real-world cash movement, and is premised solely on an isolated, unauthenticated line in a computer printout, with no supporting cash trail whatsoever.

1.6.iii It is pertinent to note that both the assessee and his wife have undisputedly been non-residents for several years and had no source or means for generating cash income in India. Given this undisputed factual position, the onus was squarely upon ld. AO to demonstrate conclusively that the assessee had indeed made the alleged cash payments. This burden has not been discharged at all by the Revenue. The addition, therefore, has been made purely on conjectures and surmises without any concrete evidence or corroboration, rendering it legally unsustainable.

1.7. No Seized Record of Actual Payment or Receipt:

1.7.i There is no receipt, no voucher, no signed acknowledgment, and no cash ledger of the developer acknowledging receipt of Rs. 55 lakhs from the assessee. Not a single contemporaneous document evidences that any such payment was ever made.

1.7.ii The rough screenshot being relied upon is, at best, an internal projection or expectation, and not evidence of actual transaction. It is not a record of a concluded financial event.

Virendra Prakash Sharma vs. DCIT 1.7.iii It is a settled principle that the entries in private records or loose sheets must be supported by tangible corroboration—such as statements, receipts, cash found during search, or actual money trail. None exists in this case.

1.8. No Identification of Assessee in Statements of different persons– Absence of Cross-Examination

1.8.i The entire basis relied upon by ld. AO for making the addition of Rs. 55,00,000 to the income of the assessee is the statement of Shri Vimal Jain [PB: 68-92], an employee and accountant of the developer group, wherein he is said to have accepted that cash/on-money was received in the sale of flats in the Pallacia project. However, it is submitted that this statement, even if taken at face value, does not mention the name of the assessee or his wife anywhere.

1.8.ii The statement of Shri Vimal Jain contains general remarks about the practice of accepting on-money in real estate transactions by the developer group. However, there is no reference whatsoever to any cash payment being received from either Shri Virendra Prakash Sharma or Smt. Renu Sharma.

1.8.iii There is no assertion in the said statement that: • Any on-money was received from the assessee. • The reference to “Virendra Sharma Ji A2” in the rough document pertains to the assessee. • Any transaction of cash payment was made by the assessee in relation to the said flat.

1.8.iv Further, no independent inquiry was conducted by ld. AO to verify or establish the identity of the person referred to in the document as “Virendra Sharma Ji A2”. No statement was recorded from Shri Vivek Kothari, Shri Vimal Jain, or any other person associated with the developer group to confirm that the reference was to the assessee. There is no corroborative evidence or basis to infer that the vague reference pertains to the assessee. It is purely conjectural.

1.8.v Crucially, during the course of assessment proceedings, the assessee was not granted any opportunity to cross-examine either Shri Vimal Jain or Shri Vivek Kothari, whose statements and devices are the alleged source of incriminating material. This constitutes a gross violation of the principles of natural justice.

Virendra Prakash Sharma vs. DCIT 1.8.vi Hon’ble Supreme Court in the case of Andaman Timber Industries (CIVIL APPEAL NO. 4228 OF 2006) categorically held that denial of cross-examination amounts to denial of fair hearing and is a serious flaw in adjudication. It was held that statements relied upon to draw adverse conclusions must be subjected to cross-examination if so requested.

1.8.vii Here, despite repeated requests [AO Final Order Page 16, Para 7.7], no such opportunity was granted to the assessee. Ld. AO never summoned or examined any person, including those whose statements or materials were being relied upon to implicate the assessee. The entire addition is thus based on untested third-party assertions and unauthenticated documents, without confronting the assessee with any primary or corroborating witness.

1.8.viii In view of the above, it is submitted that the addition suffers from both: • Evidentiary infirmity, as there is no direct statement or documentary proof linking the assessee with the alleged on-money; and • Fundamental infirmity, due to denial of the right to cross-examination. 1.9. WhatsApp Chats – holding no evidentiary value:

The screenshots relied upon by ld. AO/ ld. DRP are nothing more than 1.9.i extracts of WhatsApp chats recovered from mobile phones of employees of the developer group—devices that were neither owned nor controlled by the assessee.

Under Sections 65A and 65B of the Indian Evidence Act, 1872, an 1.9.ii electronic record (or any paper print-out thereof) is admissible only if the original electronic media is produced or a valid section 65B(4) certificate—specifying the device, the manner of extraction and affirming the record’s integrity—is placed on record.

1.9.iii Hon’ble Supreme Court in Anvar P.V. v. B.K. Basheer (2014) 10 SCC 473 and reiterated in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal [2020] 7 SCC 1 has held that “secondary electronic evidence” (such as screenshots) is wholly inadmissible in the absence of such a certificate, and a tribunal cannot look into it for any purpose. No 65B certificate, hash value, or chain-of-custody document has been filed here; consequently, the chat extracts fail at the threshold of admissibility.

1.9.iv In Central Bureau of Investigation v. V.C. Shukla (1998) 3 SCC 410, provisions of Section 34 of the Evidence Act, was considered for the purposes of the expression "entries in books of account", "books of account". In this case, which is also known as 'Jain Hawala Diaries case", Hon’ble Supreme Court came to the conclusion that entries in notebooks are admissible evidence u/s. 34 of the Evidence Act but loose sheets of papers are not "books" and hence entries in loose sheets of papers are not admissible evidence at all. Apex Court came to the conclusion that entries in books of accounts has "probative value" and "corroborative evidence", the Court on the facts came to the conclusion that entries made in Jain Hawala Diaries though admissible u/s. 34, but truthfulness, thereof, was not proved by any independent evidence.

1.9.v In Common Causes v. UOI [2017] 394 ITR 220 (SC), it was held that Entries in loose papers/ sheets are irrelevant and inadmissible as evidence. Such loose papers are not “books of account” and the entries therein are not sufficient to charge a person with liability. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is incumbent upon the person relying upon those entries to prove that they are in accordance with facts. Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses. A man cannot be allowed to make evidence for himself by what he choose to write in his own books behind the back of the parties.

1.9.vi In the case of Sahitya Housing (P.) Ltd., certain entries were found in Pen-Drive on the basis of which additions were made. Hon’ble ITAT, Hyderabad Bench held that unsubstantiated material found in the Pen-Drive cannot be considered, in the hands of the assessee, as conclusive evidence, so as to make addition towards unexplained credit. While so holding, it referred to the ratio of decision in the case of CBI vs. V.C. Shukla (1998) 3 SCC 410.

1.9.vii Thus, extracts as relied upon by ld. AO are nothing but dumb documents, not admissible as evidence and on the basis of which no addition can be made in the hands of the assessee. The aforementioned legal position has also been upheld by the Hon’ble Jaipur Bench in the case of Prakash Chand Kothari, ITA NO. 1298/JP/19.

1.10. Onus u/s Section 68 vis-à-vis u/s Section 69

1.10.i Ld. AO has made the addition invoking the provisions of Section 69. For invoking the provisions of Section 69 heavy burden lies on ld. AO to prove:- 1. That investment has taken place, and 2. The investment is owned by the assessee.

1.10.ii It is pertinent to note the difference of burden under Section 68 vis-à-vis Section 69. If a credit entry is found in books of the assessee, entire burden lies on the assessee to prove identity, credit-worthiness and genuineness of the said creditor.

• As against this, if any on-money payment is alleged to be in the name of the assessee which as per the Department is not recorded in the books of the assessee, the burden is on the Department to first prove its allegation by way of impeccable evidences.

• It is well settled that the burden is on the person who makes allegation and to discharge such burden the said person has to lead positive evidences. Mere fact that there were certain entries found from records of third party, it is not sufficient to make additions on grounds that assessee had made such payment.

• Even the assessee has not been identified nor is there any allegation/acceptance by the developer that in the documents found, there were deposits received by him from the assessee.

• Without examining the persons, who allegedly received on-money payment, and without obtaining due confirmations from them, even the factum of investment is not proved. What would be the case of the Department, if the developer for the so-called alleged on-money receipts, refuses to ever having received from the assessee? Without agreeing, if the on-money payment is not proved, what is the point in tracing and taxing the person who allegedly has paid the amount?

• Hon’ble Gujarat High Court in the case of Ushakant Patel (2006) 282 ITR 553 (Guj) held that the burden of proof that the investment in the asset not recorded in the books of account is on the revenue.

Virendra Prakash Sharma vs. DCIT • Unsubstantiated material found with the third party cannot be considered as conclusive evidence so as to make additions, towards unexplained investments, in the hands of the assessee. Undisputedly no other material has been brought to the fore by the Department, suggesting any such on-money having been given by the assessee to certain other alleged person.

• Inspite of specific request no cross examination of the third party who have accepted that the developer has received on-money was allowed to the assessee.

• Hon’ble Bombay High Court in the case of Lavanya Land (P) Ltd. (2017) 297 CTR (Bom.) 204 held that if the entries on loose sheet of paper, found during search, are not corroborated by any other evidence, no addition can be made.

• In the case of Sahitya Housing (P.) Ltd., certain entries were found in Pen-Drive on the basis of which additions were made. Hon’ble ITAT, Hyderabad Bench held that unsubstantiated material found in the Pen-Drive cannot be considered, in the hands of the assessee, as conclusive evidence, so as to make addition towards unexplained credit. While so holding, it referred to the ratio of decision in the case of CBI vs. V.C. Shukla (1998) 3 SCC 410.

• In the case of Aarti Colonizers Company, certain incriminating material in the form of data stored in electronic medium was found in search conducted on the partners of the assessee firm. On the basis of such electronic evidences, additions were made in the hands of the assessee firm. Such additions were subsequently deleted by Hon’ble ITAT, Raipur Bench, vide its order dated 01.07.2019, in to180/RPR/2014. It was observed by the Hon’ble Bench, that no material was found to show that the amount contained in the data was paid by the assessee firm at any point of time. Resultantly, in the absence of any corroborative evidences no addition can be made.

1.11. Ld. DRP’s Findings and Assessee’s Rebuttals

Ld. DRP, in its Direction, made certain observations while upholding the addition. The assessee respectfully rebuts each of those key findings, as under:

1.11.i Rejection of Assessee’s Contention on Purchase Price:

• The assessee had submitted before ld. DRP that he had agreed to purchase the flat at an effective consideration of Rs. 11,708 per sq. ft., but subsequently

• It was demonstrated that this effective price was very close to the figure of Rs. 12,000 per sq. ft., the rate at which the Income Tax Department alleged flats in the project were being sold (Rs. 8,000 by cheque plus Rs. 4,000 by cash).

• The registered Agreement to sale, executed and registered on 04.01.2019, irrevocably fixed the total consideration for the flat at Rs. 11,308 per sq. ft. (after a disclosed discount of Rs. 400 per sq. ft.). Once a Agreement to sale is executed, the parties are legally bound by the stated price; subsequent market movements are irrelevant. The assessee’s wife’s major instalments in F.Y. 2018-19 were merely in fulfilment of that already-agreed consideration. Consequently, ld. DRP’s suggestion that prices must have risen between the project launch in F.Y. 2012-13 and payment in F.Y. 2018-19—and that the assessee therefore paid additional on-money—is wholly misconceived.

• Further, the Department itself adopted Rs. 12,000 per sq. ft. as the “standard” all-inclusive rate (Rs. 8,000 by cheque + Rs. 4,000 in cash). The contracted gross rate of Rs. 11,708 per sq. ft. (before rebate) is already on par with that benchmark; had prices truly escalated beyond Rs. 12,000 by 2018-19, the Department would logically have used a higher base in its own working.

• By ignoring these undisputed facts and offering no supporting data or comparative analysis, ld. DRP has rejected the assessee’s submission on mere conjecture—an approach that is unjustified, unsustainable, and contrary to settled principles that bind revenue authorities to evidence, not speculation.

1.11.ii Erroneous Reliance on Developer’s General Admission:

• Ld. DRP has incorrectly relied upon the general admission by the developer that cash transactions had taken place in the project, and that the developer had subsequently paid tax on undisclosed income during search proceedings.

• It is respectfully submitted that a general admission by a developer or builder regarding acceptance of cash payments cannot automatically implicate the assessee specifically. Ld. DRP failed to establish any direct nexus between the general disclosure made by the developer and the specific allegation of on-money paid by the assessee or his wife.

• The fact that in the case of the developer, the developer has accepted the on- money, unaccounted cash receipt and has paid tax on it, has no impact on the case of the assessee.

• Hon’ble ITAT Mumbai Bench in the case of Sh. Anil Jaggi [2018] 89 taxmann.com 266 (Mumbai - Trib.) held as under:-

“…. We have deliberated on the fact that sh. Nirahjan Hiranandani in his statement recorded on oath in the course of the search & seizure proceedings had confirmed that the amount aggregating to Rs. 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which was offered as additional income under sec 132(4) and thereafter offered as such for tax in petition filed before the settlement commission. We are of the considered view that there is substantial force in the contention of the ld. AR that mere admission of the amount recorded in the pen drive as the additional income by Sh. Niranhjan Hiranandani, falling short of any such material which would inextricably evidence payment of “on Money” by the assessee would not lead to drawing of adverse inference as regards the investment made by the assessee for the purchase of the property under consideration….”

• Admission of developer being in receipt of on-money for the flats, no way establishes that "Virendra Sharma Ji A2" is no one else but the assessee, Shri Virendra Prakash Sharma or that on-money was paid by the assessee or his wife for purchase of the flat.

• Reliance is placed on the under noted cases, having similar factual matrix, wherein, some incriminating documents (pen drives) were seized from one Shri Chetan Gupta allegedly containing details of approx 148 people, whose money and wealth, allegedly, was administered by the said Shri Chetan Gupta. Additions were made in the case of persons, based on entries in such Pen-Drives. However, in the below mentioned cases, such additions were deleted by the appellate authorities:- o Raninder Singh, • It is a trite law that no addition can be made on the basis of documents found from third party without examining the third party and linking the contents of the documents obtained from such third party. Reliance is placed on the below o Bangodaya Cotton Mills Ltd. V. CIT 224 CTR 62 o DCIT V. Mahendra Ambalal Patel 40 DTR 243 o Prakash Chand Nahta V. CIT 301 ITR 134 o CIT V. Salek chand 300 ITR 426 (All) o SMC Share Broker Ltd. 288 ITR 345 (Del) o JMD Computers 20DTR 317 o Amarjit Singh Bakshi 263 ITR 217 o Krishna Textiles 11 DTR 217 o A.N. Dyaneswaran {2008} 214 CTR (Mad) 482

1.11.iii Unjustified Identification of "Virendra Sharma Ji A2" with the Assessee:

• Ld. DRP, without any valid or concrete basis, has concluded that the entry "Virendra Sharma Ji A2" found in an unauthenticated WhatsApp chat extract refers exclusively to the assessee.

• To justify this inference, ld. DRP mentioned that the suffix "Ji" implied a person of age over 60, matching the assessee’s age. Such inference is completely arbitrary, without logical foundation, and not supported by any legal principle or evidence on record.

• It is reiterated that ld. DRP has provided no basis whatsoever—neither in the draft assessment order nor in the final assessment order—to conclude that the reference was exclusively to the assessee.

• The name "Virendra Sharma" is quite common, and the mere suffix "Ji" cannot logically or legally establish identification with the assessee. Ld. DRP’s assumption that "Ji" necessarily indicates age over 60 is entirely speculative and without factual foundation. Even in that particular sheet there are lot of references where “Ji” has been mentioned.

1.11.iv Unsubstantiated Reliance on Location "A2":

• Ld. DRP has sought to treat the cryptic entry “Virendra Sharma Ji A2” in a WhatsApp screenshot as conclusive proof that the message relates to the assessee’s purchase of Flat No. B-31 in the Pallacia Building, Plot A-2, Virendra Prakash Sharma vs. DCIT Prithviraj Road, C-Scheme, Jaipur. This inference is wholly unfounded. The notation “A-2” merely denotes the overall plot on which numerous flats and ancillary facilities have been constructed; it does not identify any specific unit, much less Flat B-31.

• Within Plot A-2 there are multiple flats and scores of individuals—buyers, contractors, suppliers, interior decorators, site supervisors—who may be referenced informally as “Virendra Sharma Ji A-2.” The Department has ignored this undeniable probability and, without a shred of corroborative evidence, leapt to the conclusion that the entry must relate only to the assessee, Shri Virendra Prakash Sharma.

• Crucially, the screenshot does not mention the flat number B-31, the assessee’s initials, PAN, or any other unique identifier. No statement, ledger, receipt, or bank trail links the entry to the assessee’s transaction. By presuming identity on the strength of a common surname plus a generic plot reference, ld. DRP has engaged in pure conjecture—an approach that is arbitrary, baseless, and legally untenable.

1.11.v Inapplicability of Judicial Precedent (Harsh Chadha case):

• The present decision of Hon’ble ITAT, Delhi Bench, is delivered on a different factual context. In this case the Hon’ble ITAT, Delhi Bench, was considering a case of commission income in the hands of the assessee paid to assessee by bofors. The circumstantial evidences did suggest that assessee was representing bofors in India including maintaining/operating key bank accounts of bofors and, trail of his transfer of funds was demonstrated by ld. AO which facts were not in dispute. In the present case, the lower authorities have arbitrarily presumed— without any direct or indirect evidence, basis, or corroboration—that a vague and rough entry found during search pertains specifically to the assessee. Such inference is wholly unjustified and devoid of any factual or legal basis.

1.11.vi Grossly Arbitrary and Unfounded Assumption of ld. DRP regarding the Year of the Screenshot

• Ld. DRP has made a blatantly arbitrary assumption, entirely devoid of any factual, legal, or logical basis, by concluding that the undated screenshot having the mention of ‘1/10 to 3/11’ relied upon by the Revenue must pertain to the Financial Year 2019–20 solely because the search on the developer took place during that period.

• Such presumption by ld. DRP is legally unsustainable - as it represents a manifestly unreasonable and perverse approach to adjudication. Ld. DRP, without examining any witness or obtaining corroborative testimony from any relevant party, has unilaterally imposed its assumption that the screenshot must relate to the year of search, despite the explicit admission on record that the document is undated.

1.11.vii Denial of Cross-Examination and Violation of Natural Justice:

• Ld. DRP has completely ignored and disregarded the assessee’s repeated requests for cross-examination of Shri Vimal Jain and Shri Vivek Kothari, whose statements and devices form the foundation of the Revenue’s case.

• It is a settled principle of law, as repeatedly upheld by the Hon’ble Supreme Court in cases such as Andaman Timber

Industries (supra), that denial of cross-examination constitutes a gross violation of natural justice and renders reliance on such untested statements impermissible.

• Ld. DRP’s refusal to provide cross-examination opportunity has severely prejudiced the assessee’s rights and renders the addition legally untenable.

1.11.viii Direction to ld. AO Without Any Concrete Basis:

• Ld. DRP has directed ld. AO to make the entire addition of Rs. 55,00,000 in the assessment year under consideration (AY 2020-21), without giving any concrete reasoning or proper justification for such consolidation.

• Ld. DRP failed to provide any logical or evidentiary foundation for making such direction. The direction to make such an addition in a single year, merely on presumptions and without any factual or legal support, is wholly unjustified.

In light of the above, the addition of Rs.55,00,000 is completely unjustified. The assessee prays for deletion of the addition in full. The on-money allegation is baseless and not backed by legally sustainable evidence. GROUND NO. 1 INVALID ASSUMPTION OF JURISDICTION UNDER SECTION 153C 1. SUBMISSIONS

1.1. Failure to Provide Satisfaction Note of ld. AO of the Searched Person:

1.1.i The assessee had objected from the outset that ld. AO did not furnish the satisfaction note recorded by ld. AO of the searched person (the Om Kothari Group entity) as required for Section 153C proceedings.

1.1.ii Despite specific requests, the satisfaction note of the search-party’s ld. AO was not provided to the assessee during the proceedings. This is a serious jurisdictional lapse. The law mandates that ld. AO of the searched person must record satisfaction that seized material belongs to or pertains to the other person (assessee herein), and only then can Section 153C be invoked.

1.1.iii The assessee’s letter dated 18.12.2023 [PB: 8-17] (in response to notice under 153C) explicitly raised this objection, emphasizing that in absence of being provided a copy of the satisfaction recorded by ld. AO of the searched person, the initiation of proceedings is vitiated.

1.2. No Mention of Assessee’s Name in Incriminating Material:

1.2.i The so-called incriminating documents relied upon in the Satisfaction Note do not even name the assessee. In fact, the images from the mobile phone of Mr. Vishal Kothari [PB: 3-4] appended to the satisfaction note contained a list of individuals allegedly involved in on-money transactions, but the assessee or his wife do not appear anywhere in those lists.

1.2.ii The absence of the assessee’s name in any seized document was highlighted in the objections. It was submitted that nowhere in the seized material is there a reference to the assessee having paid any on-money. As stated in the objection letter: “There is no evidence whatsoever implicating the assessee or his wife, directly or indirectly, substantiating the allegation of ‘on money’ having been paid by them.”

1.2.iii Such material, which does not even identify the assessee, cannot form a valid basis for assuming jurisdiction under Section 153C against him.

1.3. All Purchase Transactions Were Through Banking Channel: 1.3.i It was repeatedly submitted that the entire purchase consideration for the flat was paid via cheques/banking channel, and duly reflected in the registered

1.3.ii The payment schedule (as per the agreement) and bank statements were furnished to ld. AO, showing that from the initial booking advance in June 2018 to subsequent installments, the entire Rs.6.33 Cr. was accounted for through bank transfers.

1.3.iii This undercuts the very basis for the allegation of undisclosed cash changing hands.

1.4. Contract Price as per Agreement – Rs.11,308 per sq. ft., No Unaccounted Mark-up:

1.4.i The registered Agreement to Sale itself documented the agreed rate at Rs.11,308 per sq. ft. (for 5,600 sq. ft). The objections pointed out that this price was fully in line with the market and the project’s prevailing rates. There was no evidence of any extra consideration being agreed to.

1.4.ii In fact, as mentioned earlier, the assessee negotiated a discount of Rs.22,40,000 (Rs.400 per sq. ft.) on the list price, which brought the effective rate to Rs.11,308/sq. ft. If one were to ignore the discount, the gross rate would have been Rs.11,708/sq. ft., which is not far from the Rs.12,000/sq. ft. average that the Department claims was the “going rate” including cash.

1.4.iii Thus, the recorded consideration itself was nearly at par with the alleged market rate, leaving no plausible gap for an underhand payment.

1.5. Department’s Shifting Goal-Posts Expose a Fishing Expedition

1.5.i At the draft-stage, at the time of issuing notice u/s 153C, ld. AO invoked a wholly different theory: he alleged that every buyer in Pallacia paid Rs. 4,000 per sq. ft. in cash over and above an “official” Rs. 8,000 per sq. ft. cheque price, and on that basis proposed to tax Rs. 4,000 × 5,600 sq. ft. = Rs. 2.24 crore in the assessee’s hands.

1.5.ii When the assessee demonstrated—by a simple arithmetic submission dated 18.12.2023 in response to notice u/s 153C—that such a claim would push his effective purchase price to an absurd Rs. 15,308 per sq. ft. (far beyond the 1.5.iii Instead, at the final stage it conjured a new story: a lump-sum “on-money” of Rs. 55,00,000 supposedly paid by the assessee. Even this fresh allegation is economically incoherent—adding Rs. 55,00,000 to the registered price yields an average of ≈ Rs. 12,920 per sq. ft., still higher than the Rs. 12,000 “standard rate” the Revenue itself adopts, whereas the contract rate actually paid by the assessee (Rs. 11,708 per sq. ft.) sits squarely in line with that benchmark.

Such flip-flopping—first inventing a Rs. 2.24 crore cash component and, 1.5.iv when that collapsed, seizing upon a stray Rs. 55 lakh figure—betrays a predetermined intent to fasten some addition, any addition, at any cost. The Revenue’s shifting positions, unsupported by consistent evidence or logic, reveal that the proceeding is nothing more than a fishing expedition and underscore why the impugned addition cannot stand. In view of the above the proceedings as initiated by ld. AO u/s 153C deserve to be quashed in to-to.

ADDITIONAL AO FINAL ORDER PASSED DATED 20.01.2025 BARRED GROUND BY LIMITATION

1. SUBMISSIONS

1.1. This submission respectfully contends that the AO Final Order dated 20.01.2025, passed by ld. AO under section 143(3) read with section 153C of the Income-tax Act, 1961 for the AY 2020-21, is patently illegal, without jurisdiction, and a nullity in law. The order is demonstrably barred by limitation, having been passed nearly ten months after the expiry of the mandatory and non-extendable time limit prescribed under section 153B of the Act.

1.2. The undisputed chronology of events establishes that the statutory deadline for passing the final assessment order in this case was 31.03.2024. Ld. AO, however, passed the final order only on 20.01.2025. This delay is fatal to the validity of the assessment. Ld. AO appears to have proceeded under the erroneous belief that passing a draft assessment order under section 144C of the Act within the statutory time limit was sufficient to stop the running of the limitation period. This view has been decisively rejected by the judiciary.

Virendra Prakash Sharma vs. DCIT 1.3. The legal position has been settled by Hon’ble Madras High Court in the case of Roca Bathroom Products (P.) Ltd. [[2022] 140 taxmann.com 304 (Madras)]. The unequivocal principle laid down is that the procedural timelines contained within section 144C of the Act are subservient to, and must be completed within, the overriding and absolute limitation period prescribed by section 153B. The provisions of section 144C do not grant an independent or additional period of limitation. Therefore, the entire assessment, including the proceedings before ld. DRP, must conclude within the outer deadline set by section 153B. As this mandatory condition has been breached, the impugned order is void ab initio and deserves to be quashed.

1.4. FACTUAL MATRIX AND LIMITATION ANALYSIS

The challenge to the assessment order on the ground of limitation is founded on the following undisputed facts and a plain reading of the statutory provisions.

1.4.i Chronology of Undisputed Events

The material dates and events relevant for the determination of the limitation period are as follows: ● Notice under section 153C issued: 27.03.2023 ● Draft Assessment Order under section 144C passed: 30.03.2024 ● Ld. DRP Directions under section 144C(5) issued: 12.12.2024 ● Final Assessment Order under section 144C(13) passed: 20.01.2025

1.4.ii Limitation-Analysis

● The following table presents a systematic analysis of the statutory timelines as applicable to the facts of the present case. It demonstrates conclusively that the final assessment order was passed beyond the permissible time limit.

● The computation of the outer time limit is based on the third proviso to section 153B(1) of the Act (as amended by the Finance Act, 2016). The notice under section 153C was issued on 27.03.2023, which signifies that the books of account or documents were handed over to ld. AO of the "other person" (the assessee) during the Financial Year 2022-23. Accordingly, the time limit for completing the assessment is twelve months from the end of the financial year in which such handover took place. This results in an absolute deadline of 31.03.2024.

Table: Limitation Analysis for AY 2020-21

Outer Time- Statutory Controlling Prescribed Actual Date Compliance Limit Date Conclusion Step Provision Time-Limit of Action by ld. AO (Computed) Handover of FY 2022-23 N/A Trigger for document (Inferred Assumed in Section 153C (Trigger N/A limitation s to ld. AO from notice FY 2022-23 event) period of "other date) person" Must be Passing of passed Draft order Draft Section within the 31.03.2024 30.03.2024 Yes passed Assessme 144C(1) overall time within time. nt Order limit for the final order. Ld. DRP 9 months directions Issuance from end of Section passed of ld. DRP month of 31.01.2025 12.12.2024 Yes 144C(12) within its own Directions forwarding procedural draft order. limit. Passing of 12 months Final Section from end of Assessme Passed ~10 153B(1), FY of 31.03.2024 20.01.2025 NO nt Order months late. third proviso handover of (Overall documents. Limit) Complied Passing of 1 month with the Final from end of procedural Assessme Section month of window, but nt Order 31.01.2025 20.01.2025 Yes 144C(13) receipt of this window (Post-ld. ld. DRP cannot DRP directions. extend the Window) overall limit. The final Section 153B order must Final read with be passed Conclusio Roca within the TIME- n on 31.03.2024 20.01.2025 NO Bathroom absolute BARRED Validity of Products deadline of Order (supra) section 153B.

1.5.i Based on the factual chronology and the computation presented in the table above, the absolute and non-negotiable deadline for passing the final assessment order for AY 2020-21 under section 153B(1) of the Act was 31.03.2024. The final assessment order, having been passed on 20.01.2025, is thus hopelessly barred by limitation.

1.5.ii It is a cardinal principle of tax law that a statutory time limit for assessment is not merely directory but mandatory and jurisdictional. Any action taken or order passed after the expiry of the prescribed period is a nullity in the eyes of the law, as it is passed without the requisite jurisdiction. The final order in the present case is therefore void ab initio and must be quashed on this ground alone. 1.6. The Ratio Decidendi of Roca Bathroom Products (supra) Establishes the Primacy of the Overall Limitation Period

1.6.i The central legal issue in this matter—the interplay between the procedural timelines of section 144C and the substantive limitation period of section 153/153B—has been authoritatively settled by in Roca Bathroom Products (P.) Ltd. (supra) The Court was confronted with the precise question of whether the timeline for completing ld. DRP process under section 144C operates in addition to, or must be contained within, the overall time limit for assessment under section 153.

1.6.ii Hon’ble High Court ruled unequivocally that the provisions are not mutually exclusive and that the outer time limit prescribed under section 153 is absolute. Hon’ble Court held that the entire assessment process, which includes the reference to ld. DRP and the passing of the final order pursuant to its directions, must be completed within the time frame stipulated by section 153. Hon’ble Court reasoned that the non-obstante clause in section 144C(13) cannot be interpreted to extend the life of the assessment proceedings beyond the period mandated by Parliament in section 153.

1.6.iii This judicial interpretation is firmly anchored in the legislative intent behind the introduction of section 144C. The Explanatory Notes to the Finance (No. 2) Act, 2009, which inserted section 144C, explicitly state that the provision was created to "facilitate expeditious resolution of disputes" and provide a "mechanism for speedy disposal of their cases so as to attain finality". An interpretation that allows ld. DRP process to add several months to the assessment timeline would run directly contrary to this stated objective of speed and certainty. The ruling in this case, therefore, not only represents a correct textual interpretation but also gives full effect to the purpose for which ld. DRP mechanism was established.

1.6.iv Applying this settled legal position to the facts of the assessee's case leads to an inescapable conclusion. Ld. AO passed the draft assessment order on 30.03.2024, a mere two days before the absolute statutory deadline of 31.03.2024. This action reveals ld. AO's flawed premise: that the issuance of a draft order was sufficient to meet the limitation deadline, thereby "stopping the clock" and allowing for a further period to complete ld. DRP proceedings and pass the final order.

1.6.v As established by the binding precedents in the above case, this understanding is legally untenable. The law required ld. AO not merely to issue a draft order, but to ensure that the entire assessment, including ld. DRP process, was completed and the final assessment order was passed on or before 31.03.2024. The passing of the final order on 20.01.2025 is, therefore, an action without jurisdiction, rendering the order a nullity.

In view of the above the final order passed by ld. AO is barred by limitation and deserves to be quashed.

S. Particulars Page No. No. 1 Copy of satisfaction note recorded by ld. AO of the assessee 1-7 2 Copy of reply of the assessee dated 18.12.2023 submitted before ld. AO 8-17 3 Copy of reply of the assessee dated 21.03.2024 to the show cause notice 18-26 submitted before ld. AO 4 Copy of sale deed of the flat purchased by the assessee 27-67 5 Copy of statements of Shri Vimal Jain and Shri Vivek Kothari 68-115

On merits he submitted that the image is without any reference to the year of payment and the reference to the flat number. Various statement were recorded and the assessee was not given an opportunity to cross examine the contention of the third party statement relied upon. The DRP taken a view that the search was in July and therefore, the payment made is required to be added in the year under consideration. Whereas the assessee has made registration of the property on 04.01.2019 the cash payment if any is alleged to have been paid it should be in that year and not made even on merits for the year under consideration. He also submitted that all the payment made were made from the income sourced outside India and the assessee has no source of income in the year under consideration and since there is no source no addition can be made. As regards the square feet rate, he also submitted that the rate of booking is 11,700 along with the discount offered the same meet with the other alternative arguments of the revenue and even on that count no addition can be made. He also submitted that the assessee was also not given the satisfaction note of the search person.

8. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He vehemently argued that the digital records were made available to the assessee wherein the recording of the cash payment is very well available. 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. As regards the share of property and payment of cash he name and thereby he supported the action of the lower authority.

As the assessee has purchased flat No. B-31 in the Building named “Pallacia” which was developed by M/s Om Metals Consortium Private Limited. The premises of that developer and their group concerns were subject to the search and seizure as per provision of section 132 of the Act.

Record reveals that in the case of the assessee notice u/s. 153C of the Act was issued to the assessee. Before doing so the ld. AO recorded a satisfaction note dated 27.03.2023 which was placed on record at page 1 to wherein the relied upon image reproduced the bench noted that at page 4 the name of the flat purchase is shown to Shri Avnish Bedi against the flat no. B-31. Whereas at page 5 against the name of Virendra Sharma flat no.

A 2 is written. Thus, the loose incriminating paper relied upon in the case of the assessee differs for two reasons against the unit no. B-31 the name of the Person written differently written and against the name of Shri Virendra Shara the unit number is written is different. The bench failed to find the connection of the assessee with that of the on-money transaction recorded on this page which relates to the purchase of the flat by the assessee.

The bench also noted that on the one hand revenue says that the rate of flat in the building including the cash and cheque portion is about Rs.

12000/- per sq.ft. The relevant part of the observation as recorded by the ld. AO in his order reads as follows:

“4.3.2 Similarly, at Sr no. 13, against Trilok Chand Makhija the rate of flat mentioned is 8000+4000 wherein the word “cash” is recorded against 4000, which clearly means that the actual consideration of this flat was Rs. 12000 per sq.ft. out of which Rs. 8000 was agreed to be paid through cheque and Rs. 4000/- was agreed to paid in cash.”

Thus, it has been argued before us that the rate as was accepted by the revenue to be the fair value including the cash and cheque as discussed herein above. As against that rate of flats the assessee has already paid at sum of Rs. 11,308. The relevant working as is available from the submission [ based on the page 33 of the paper book ] reads as under :

Particulars Amount (Rs.) Basic Selling Price (Excluding GST) A 57,500,000 Less: Rebate for impact assessment B 2,240,000 (Discount) 55,260,000 C [A-B] Add: Corpus Fund Deposit (Rs. 250 per sq. D 1,400,000 ft x 5,600 sq. ft) Add: Deposit for Maintainence (Rs. 50 per 280,000 E sq. ft x 5,600 sq. ft) Total Consideration (Excluding GST) F [C+D+E] 56,940,000 GST on Basic Selling Price After Rebate G 6,385,000 Total Consideration 63,325,000 H [F+G] I [H/5600 Sq. Consideration Per Sq. Ft 11,308 Ft] Thus, after considering the above working of price per sq.ft with that of the rebate for Rs. 22.40 [ page 33 ] the effect rate comes to Rs. 11,708/- { Rs.

11,308/- plus Rs. 400 discount [ 22,40,000 / 5600 sq.ft. ] } come to Rs. 11,708/- as against that the sale rate as decided in the above para by the ld. AO the effective amount remains at Rs. 16,35,200/- [ (12,000 less 11,708=292) * 5600 ]. Thus, even if we considered the amount the difference with that of the rate determined does match the allegation of having paid on money based on the facts available on record. not paid any consideration, but all the money has been paid by his wife.

Even though this fact is on record, an addition was made in the hands of the assessee for the whole amount. While doing so the ld. AO made the addition based on the completion of the stage of completion for the alleged difference of Rs. 55,00,000/-. When the matter was carried out before the DRP the same was directed to be added in the hands of the assessee for the year under consideration.

Be that it may so looking to the facts as discussed that the loose paper wherein the flat number written is of the other person. The name of the person Shri Virendra Sharma written the flat number differs. We also note that the rate of the flat as paid by the assessee with that of the determined at Rs. 12,000 revenue nearly matches and there was not much difference as alleged by the revenue. In the light of the facts as discussed herein above we do not find any reason to sustain the addition of Rs.

55,00,000/- made in the hands of the assessee and thereby ground no. 2 raised by the assessee is allowed. available on record the technical ground no 1 and additional ground raised by the assessee become academic in nature and does not require finding.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 16/07/2025.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 16/07/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Virendra Prakash Sharma, Jaipur 2. izR;FkhZ@ The Respondent- DCIT, Circle (Intl. Tax), Jaipur vk;dj vk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 286/JP/2025) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत