ACIT, JAIPUR vs. UDAI BUILDHOME PVT LTD, JAIPUR

“(i) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in deleting all the additions made by A.O only on technical ground without giving any finding on the merits of additions?

(ii) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in holding notice u/s 153C invalid without appreciating that there is specific reference to incriminating seized in the satisfaction note recorded by A.O for the issue of notice u/s 153C ?

(iii) Whether on the facts and in circumstances of the case, the Id.CIT(A) has erred in deleting all the additions made by A.O without appreciating that the certain additions made by A.O are based on findings of proceedings? search/post search proceedings.

(iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceeding.”

revenue has raised following grounds: -

1 (i) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in deleting all the additions made by A.O only on technical ground without giving any finding on the merits of additions?

(ii) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in holding notice u/s 153C invalid without appreciating that there is specific reference to incriminating seized in the satisfaction note recorded by A.O for the issue of notice u/s 153C ?

(iii) Whether on the facts and in circumstances of the case, the Id.CIT(A) has erred in deleting all the additions made by A.Ο without appreciating that the certain additions made by A.O are based on findings of proceedings? search/post search

(iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceeding. revenue has raised following grounds: - to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd.

1. (i) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in deleting all the additions made by A.O only on technical ground without giving any finding on the merits of additions?

(ii) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in holding notice u/s 153C invalid without appreciating that there is specific reference to incriminating seized in the satisfaction note recorded by A.O for the issue of notice u/s 153C ?

(iii) Whether on the facts and in circumstances of the case, the Id.CIT(A) has erred in deleting all the additions made by A.O without appreciating that the certain additions made by A.O are based on findings of proceedings? search/post search proceedings?

(iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceedings.

revenue has raised following grounds: -

1.(i) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in deleting addition of Rs.3,60,22,825/- made by A.O u/s 68 and addition of Rs.90,057/-made by A.O u/s 69C without appreciating the facts discussed by A.O in the assessment order such as statement of director of loan giving company recorded u/s 132(4) and post search inquiry findings, which proved non genuineness of the unsecured loan claimed by assessee?

(ii) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in deleting addition of Rs.3,60,22,825/- made by A.O u/s 68 and addition of Rs.90,057/-made by A.O u/s 69C by only relying on different orders of Hon'ble ITAT given in case of other assessee without giving his own independent findings?

(iii) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

5.1 In response to the said notice(s), a return declaring a loss of Rs 6,79,047/- was filed by the Assessee on 13-09-2019. In the return of income originally filed by the Assessee u/s 139(1) of the Act on 30-09-2014 a loss of Rs. 15,29,861/- was declared. It is clear therefore, that in the income of Rs. 8,50,814/- pertaining to the relevant year has been declared by the Assessee which was not declared in the original return filed u/s 139 of the Act. The Assessee-company primarily derives its income from builder and construction. The proceedings of assessment of income were commenced by issue of notice u/s 143(2) of the Act on 09-10-2019. Later notice u/s 142(1) dated 09-10-2019 was also issued to the assessee and information and details pertaining to the case relevant to assessment of its income were called by means of a questionnaire. Later queries were raised vide notices under section 142(1) and/or Order Sheet Entries wherever deemed fit. The information furnished by the Assessee's Counsel was examined and placed on record.

5.2 The ld. AO in the assessment proceeding noted that the assessee has shown unsecured loan from various entities including M/s Inner Merchantile Pvt. Ltd. The year wise detail of the same is tabulated as under:

S. No. Related to AY Amount (in Rs.) 1 2014-15 5906725/- 5.2 Further, it is also observed that the assessee has not paid any interest to the lender company on the said unsecured loans. the company M/s Inner Merchantile Pvt. Ltd. it is found that the Company is not involved in any business activity. The company is showing its income mainly from interest, dividend, commission and capital gains only. The company has no business activity and despite the said company has shown a large amount in security premium account and using these funds for giving loans. The company is using their funds for investment in unlisted equity shares and providing loans only.

5.4 From perusal of the financials disclosed by the above companies, it is further observed that these are showing relatively high share premium and are almost exclusively utilizing all this capital for extending loans & advances and/or investing in unlisted equities. This is typical of paper companies that provide accommodation entries out of bogus unsecured loans and share premium in their accounts. Also, wild and unexplained fluctuations in the declared turnover of above referred Companies would also indicate that such companies have not been doing any genuine business but have been merely recording accommodative transactions shown to have been entered into by such persons in their accounts.

5.5 An enquiry was conducted by DDIT-2, Jaipur wherein an inspector was deputed for verification of business activity of the bogus companies Inspector report reveals that it is clear that the companies are not in existence in their registered addresses and holding offices but on those addresses a combined office of various companies were found, which is used only for receiving Dak (mail). Hence in the field enquiry as well as no business activities were found by these Companies from their registered addresses.

5.6 Further, the enquiry was conducted u/s 133(6) of the I.T. Act and notice was issued to the lender company on 17-12-2019 through ITBA on registered email of the company as well as speed post requesting certain details. However, no reply received till date which also further strengthens the fact that the company is does not exist at the address and company is only a paper company.

5.7 In view of the above discussion and evidence brought on record through various investigation and enquiry it is evident that M/s Inner Mercantile Pvt. Ltd. is a shell company which has no business activity and no existence. Thus, the unsecured loan shown by the assessee from M/s Inner Mercantile Pvt. Ltd. is accommodation entry only. Accordingly, assessee was show caused vide order sheet entry dated 18-12-2019 as unexplained cash credit u/s 68 of the I.T. Act.

5.8 In reply to the aforesaid SCN the assessee vide written submission through ITBA claimed that the company is regularly filing statutory return on ROC regularly and the assessee company has received the loan through cheque. Ld. AO considered the reply of the assessee but was not found tenable and this loan transaction was considered as Sham and thereby made an addition of Rs. 59,06,725/-.

5.9 While doing so he also made an addition of Rs. 14,766/- being the commission @ 0.25 % on acquiring the accommodation entry.

5.10 The assessee has shown cash credit under the head unsecured loan from Shri Pooran Mal Kanwat and the outstanding amount comes to Rs. 2,05,00,000/-. Ld. AO considered the ITR of lender Shri Pooran Mal Kanwat wherein the return of income filed by that lender was much below the amount advanced. Therefore, he holds a view that he is not a person of having credit worthiness to the extent of the huge loan therefore, the loan amount was considered as unexplained credit in the hands of the assessee.

5.11 Similarly assessee has also shown cash credit received from Shri Sitaram Meena for an amount of Rs. 5,89,52,868/-. Ld. AO considered the and the money advanced being huge. Ld. AO recorded that creditor wherein confirmed that the bank account from where that credit comes were operated by Shri Charansingh Khangarot. Considering that fact and various facts recorded in the order of the assessee ld. AO considering this loan as income of the assessee company.

5.12 Ld. AO noted the assessee company made an agreement in the name of Pooran Mal Kanwat who is the benimidar and paid amount of Rs. 1,60,00,000/- to the seller which includes cash of Rs. 40,00,000/-. Since the assessee failed to explain that source of Rs. 40 lac same was added as income of the assessee company.

5.13 The assessee has claimed that sum of Rs. 57,05,001/- was not paid by Shri Sita Ram Meena or the assessee company to the seller. Therefore, same was not reflecting in the assessee bank account. However, the same is not found convencing since in the sale agreement dated 06-11-2013 for sale consideration of Rs. 13,92,00,000/- and dated 07-11-2013 for consideration of Rs. 48,00,000/- these cheques have been duly mentioned as a part of sale consideration. The assessee has not furnished any documentary evidence such as modified sale agreement wherein the sale consideration has been subsequently reduced to the extent to the amount each for Rs. 19,01,667/- totaling to Rs. 57,05,001/-.

Therefore, sale consideration amounting to Rs. 57,05,001/-has been paid in cash by the assessee company which is held unexplained investment u/s 69 of the Act in the hands of the assessee company and added back to the total income of the assessee.

5.14 From perusal of the Profit and loss account of the company it is gathered that no revenue has been received from operation which clearly established that business was not commenced during the period.

Therefore, the expenditure incurred has to be capitalized. However, expenditure under head other expenses totaling to Rs. 6,79,047/- has been debited which is not allowable being capital expenditure. Therefore, the expenditure on account of other expenses totaling to Rs. 6,79,047/- are held capital in nature and was disallowed and added back to the total income of the assessee.

6. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:

4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The brief facts from the assessment order are that a search and seizure action u/s 132 of the Income Tax Act, 1961 ("the Act") and/or survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of Kiran Fine Jewellers Group on 02-03-2017. On being satisfied that the books of accounts or documents found and seized during the search belonged to a person other than the person in the case of whom the search u/s 132 of the Act was carried out, notice(s) under section(s) 153C of the Act dated 08-08-2019 was issued and served upon the Assessee, requiring him to file a true and correct return of income. Certain additions have been made in the assessment order. (ii) The appellant has argued that (1) Satisfaction of the Assessing Officer should be based on cogent material and should not be arrived at in a casual manner, (ii) Assessing Officer should record satisfaction in respect of each of the assessment years, (iii) Seized material should not only belong to /or should be related to the assessee but should also be of incriminating nature i.e should have a bearing on the determination of total income of the assessee, (iv) There was no satisfaction as to the seized material pertaining to the following assessment years as no reference to any seized material has been made either in any show cause notice or a questionnaire or even in the assessment order. (i). Α.Υ. 2014-15, (ii). A.Y. 2015-16, (iii), Α.Υ. 2017-18, (ίν). Α.Υ. 2018-19. (iii) Appellant has contended that For the assessment years (i). A.Y. 2014-15, (ii). Α.Υ. 2015-16, (iii). A.Y. 2017-18, (iv). Α.Υ. 2018-19, there is absolutely no material found during the course of search in the case of any person which either belongs to the appellant or contain any information about the appellant. Though in respect of assessment year 2014-15 in the assessment order the assessing officer has referred to some documents found during the course of survey action, however, impounding of documents whether incriminating or not does not give jurisdiction to the Assessing Officer to proceed u/s153C of the Act against the assessee. Therefore, assessment orders for the A.Υ. 2014-15, 2015-16, 2017-18 and 2018- 19 are liable to be quashed without even going into the merits of addition to the total income made by the Assessing Officer. There is absolutely no material for initiating proceedings u/s 153C of the Act for the above mentioned 4 assessments years of appeal. There is no reference to any material found during the course of search, in the entire assessment order, in any show cause notice issued to the appellant during the course of assessment proceedings and additions made to the income of the appellant are not based on any seized document. Therefore, the jurisdiction to assess the income of these 4 years u/s 153C of the Income Tax Act is clearly ousted. The appellant has also contended that:- to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. (a) No satisfaction note was recorded by the assessing authority for the assessment year under appeal before assuming jurisdiction u/s 153C of the Income Tax Act. In this regard the appellant has contended that:-

The Assessing Officer has miserably failed in mentioning in unequivocal terms w.r.t. which specific Books of accounts or documents found and seized during the course of search belonged to the assessee

The Assessing Officer has miserably failed in mentioning in unequivocal terms w.r.t. which books of accounts or document if any belonging to the assessee was seized during the course of search in whose case, as search and survey referred to by the Assessing Officer in the case of Kiran Fine Jewellers Group is not recognisable to law. The Assessing Officer is obligated to record his satisfaction with respect to the Books of accounts and documents belonging to the assessee, seized during the course of search action in the case of a person in whose case warrant u/s 132(1) of the income tax act was issued. Needless to say that "Kiran fine Jewellers Group' is not a person and no search and seizure action has been carried out in the case of "Kiran Fine Jewellers Group". The Assessing Officer is not sure of the identity of the person from whom the documents belonging to the assessee were seized.

The satisfaction is general, vague and does not satisfy the preconditions of section 153C of the Act so as to force the humble appellant to undergo the rigors of Section 153C of the Income Tax Act.

The Assessing Officer has not recorded satisfaction in respect of each of the assessment years before issuing notice u/s 153C of the Income Tax Act relating seized Books of accounts or documents to each assessment year separately.

The Assessing Officer has not recorded satisfaction about incriminating nature of the Books of accounts or document belonging to the appellant for each of the assessment years.

Absent any satisfaction as mandated u/s 153C of the Act, the very initiation of proceedings u/s 153C of the Income Tax Act is totally illegal, bad in law and without jurisdiction.

(b) No incriminating material belonging to the assessee was found during the course of search pertaining to the A.Y.2013-14. On this issue the appellant has contended that:-

In the assessment order the Assessing officer has referred to a sale agreement Pg 20-26 Exhibit -6 Annexure -A5 seized during the course of search at the premises of Sh Charan Singh Khangarot which is between Shri Prabhu and Shri Hari Narayan (sellers) and M/s Udai Buildhome Pvt Ltd (Buyer), the appellant. The alleged agreement to sale contains the signatures of the sellers but docs not Further, Assessing Officer has also referred to another document found from the premises of Sh Ashok Singh which is between Shri Prabhu and Shri Hari Narayan (sellers) and M/s Manokamna Buildsquare Pvt Ltd (buyer), though the Assessing Officer in the assessment order at Para 7.3 Pg 3 has wrongly mentioned the Buyer as M/s Udai Buildhome Pvt Ltd, the appellant herein. However, the Assessing Officer at Para (v) Pg 6 has corrected himself and clearly mentioned that the sale deed was executed between the sellers and M/s Manokamna Buildsquare Pvt Ltd, the buyer. Evidently, the said document does not in any way belong to or related to the appellant.

(iv) The satisfaction note of the assessing authority before issuing notices u/s 153C of the Act, as provided by the Id. AO vide DIN & Letter No: ITBA/COM/F/17/2024- 25/1068060932(1) to the appellant is as under:-

A search & seizure action u/s 132(1) of the I.T. Act, 1961 was carried out at the residential premises of Shri Charan Singh Khangarot situated at M-28, Income Tax Colony, Durgapura, Tonk Road, Jaipur, on dated 02-08-2017 wherein certain loose papers/registered sale deeds/agreement and other documents were found and seized and inventorized as Annexure-AS Exhibit-1to 6. These papers are copy of sale agreement dated 08.11.2012 executed between Shri Prabhu and Shri Hari Narayan s/o late Shri Sujya and Smt. Sanya Devi w/o Late Shri Sujya Gurjar, VillageGoner, Tehsil- Sanganer, Jaipur (Sellers) and M/s Udai Buildhome Private Limited, 302. Golden Sunrise Apartment, Lajpat Sunrise Apartment, C-Scheme, Jaipur for sale of immovable property admeasuring 04 bigha & 16 biswa situated in Khasra Nos. 1545/3473, 1814, 1815, 1818, 1819, 1820, 1821, 1822, 1824, 1825, 1827, 1828, 1829, 1830, 1831/3725, 1831, 1832, 1833, 1834 Village-Goner, Tehsil Sanganer, Jaipur at a total sale consideration of R.s 2,16,00,000/-ie, at Rs. 45,00,000/- per bigha. The said agreement was written on Rs. 1000/- stamp paper purchased by Mis Udai Buildhome Private Limited on 06.11.2012. A sum of Rs. 11,00,000/- was also stated to have been received in cash by the sellers of the land from M/s Udai Buildhome Private Limited and it is agreed upon to pay the remaining amount till 30.11.2012 and on receipt of remaining sale consideration, the sellers will get the sale deed registered in the name of company or in the name of any other person, firm, company or institute as directed by the purchaser company. Signature or thumb impressions of all the sellers are duly put on the sale agreement

Further, during the course of survey action conducted at the business premises of M/s F.S. Housing Private Limited, certain loose papers/sale deeds/documents etc. were found & impounded by the survey team. On perusal of page no. 61-66 of exhibit-08 of Annexure A contains the copy of registered sale deed dated 29.11.2012 executed for sale of land situated in Khasra Nos. 1545/3473, 1814, 1815, 1818, 1819, 1820, 1821, 1822, 1824, 1825, 1827, 1828, 1829, 1830, to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. 1831/3725, 1831, 1832, 1833, 1834 Village- Goner, Tehsil- Sanganer, Jaipur by Shri Prabhu and Shri Hari Narayan s/o late Shri Sujya and Smt. Sanya Devi w/o Late Shri Sujya Gurjar, Village- Goner, Tehsil- Sanganer, Jaipur in favour of M/s Udai Buildhome Private Limited, 302, Golden Sunrise Apartment, Lajpat Sunrise Apartment, C-Scheme, Jaipur for sale consideration of Rs. 1,23,97,500/-.

On perusal of both the documents vis-à-vis it is gathered that M/s Udai Buildhome Private Limited has executed a sale agreement with the sellers for sale of their immovable property situated at Village-Goner, Tehsil- Sanganer, Jaipur for total consideration of Rs. 2,16,00,000/- and a sum of Rs. 11,00,000/- was given as token money in cash to the land owner however registered sale deed was executed by the land owners in the name of M/s Udai Buildhome Private Limited at sale consideration of Rs. 1,23,97,500/- which is lower than the sale consideration reported in sale agreement. Thus, it is inferred that inferred the difference amount of Rs. 92,02,500/- (2,16,00,000/-1,23,97,500/-) was paid by M/s Udai Buildhome Private Limited to the land owners in cash which was not accounted in the regular books of accounts of the assessee company and was paid from its undisclosed sources.

I am therefore, satisfied that the document seized belong to M/s Udai Buildhome Pvt. Ltd. (PAN: AABCU5068J) other than the search person and have bearing on the determination of its total income. Hence notice u/s 153C of the I.T. Act, for the AYs 2012-13 to 2017-18 and notice u/s 142(1)/143(2) for AY 2018-19 are to be issued for the purpose of assessment and reassessment of income of M/s Udai Buildhome Pvt. Ltd. in accordance with provision of Section 153A of I.T. Act.

(v) From the perusal of the satisfaction note of the assessing authority recorded before the issuance of the present notice under section 153C of the Act it is noticed that it is a combined satisfaction note for the AYS 2012-13 to 2017-18 and the satisfaction was recorded with respect to the seized documents regarding the transactions in the immovable property and the dates of the documents are (i) sale agreement dated 08.11.2012. (ii) stamp paper purchased by M/s Udai Buildhome Private Limited on 06.11.2012, (iii) it was agreed upon to pay the remaining amount till 30.11.2012, (iv) registered sale deed dated 29.11.2012

The assessing authority has also noted in the satisfaction note that M/s Udai Buildhome Private Limited has executed a sale agreement with the sellers for sale of their immovable property situated at Village-Goner, Tehsil- Sanganer, Jaipur for total consideration of Rs. 2,16,00,000/- and a sum of Rs. 11,00,000/- was given as token money in cash to the land owner however registered sale deed was executed by the land owners in the name of M/s Udai Buildhome Private Limited at sale consideration of Rs. 1,23,97,500/- which is lower than the sale consideration reported in sale agreement. Thus, it is inferred that inferred the difference amount of Rs. 92,02,500/-(2,16,00,000/-1,23,97,500/-) was paid by M/s Udai Buildhome Private Limited to the land owners in cash which was not accounted in the regular

The above transaction pertains to the financial year 2012-13 and in this regard addition has also been made in the assessment order of the assessment year 2013-14. As per the satisfaction of the assessing authority which was arrived at on the basis of the above documents the notices under section 153C of the Act were issued for the years AYs 2012-13 to 2017-18. In the satisfaction note there is no reference to any seized material / transaction pertaining to any year other than the financial year 2012-13.

(vi) In the assessment order for the year under appeal the addition has been made with respect to the loan received by the appellant from Inner Mercantile Pvt. Ltd. In this regard it is noticed in the assessment order that an enquiry was conducted by DDIT-2, Jaipur wherein an inspector is deputed for verification of business activity of the bogus companies which includes the lender company M/s Inner Merchantile Pvt. Ltd. The Inspector report reveals that is clear the companies are not in existence in their registered addresses and holding offices but on those addresses a combined office of various companies were found, which is used only for receiving Dak (mail). Hence in the field enquiry as well as no business activities were found by these Companies from their registered addresses. Further, the enquiry was conducted u/s 133(6) of the I.T. Act and notice was issued to the lender company on 17-12-2019 through ITBA on registered email of the company as well as speed post requesting certain details. However, no reply was received which also further strengthen the fact that the company does not exist at the address and company is only a paper company.

Further, addition has been made in the assessment order with respect to the funds received from Shri Pooran Mai Kanwat. Further, during the course of post search enquiry statement of Shri Pooran Mai Kanwat recorded on oath u/s 131 of the Act wherein he was asked to explain debit and credit entries in the account no. 00203110000005475 held in Malyia Urban Cooperative Bank, Jaipur. In reply to the same he categorically admitted that his account was being used by Shri Charan Singh Khangarot and others. He further admitted that in the said account no transaction has been made as his individual capacity. He categorically admitted that the account was opened on the direction of Shri Charan Singh Khangarot and same was used by him.

(vi)-(i) From the perusal of the satisfaction note and of the assessment order, it is noticed that the issue on which the addition has been made in the assessment order is not referred in the satisfaction note. Further, in the discussion on the addition in the assessment order that there is no reference to seized material from the search and seizure action. to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. (vii) It is held by the Hon'ble Delhi High Court in the case of [2024] 161 taxmann.com 485 (Delhi) SAKSHAM COMMODITIES Ltd. v. INCOME TAX OFFICER as under:-

"37. Having noticed the rival contentions which were addressed, we firstly take note of the evident distinction that exists between Section 153A and Section 153C. They are clearly couched in language which is dissimilar. When we turn our gaze upon Section 153A, it becomes apparent that where a search is initiated or documents and books requisitioned, the AO is mandated to issue notice calling upon the searched person to submit a ROI in respect of each Ay falling within the six AYs' and for the "relevant assessment year". Upon submission of that ROI, the AO stands empowered statutorily to assess or reassess the total income of six AYs' immediately preceding the assessment year corresponding to the year of search and for the "relevant assessment year". The expression "relevant assessment year" has been duly defined by Explanation 1 placed in Section 153A and is explained to include those years which fall beyond the six AYs' spoken of earlier but not later than ten AYs' from the end of the AY relevant to the FY in which the search was conducted.

"2. 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 of the Income Tax Act, 1961 ["Act"], 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 v. Income Tax Officer, Ward 22(1), Delhi & Anr [2024 SCC OnLine Del 2551] and where while explaining the statutory imperatives of incriminating material we had held as follows: ……………………….

4. We find ourselves unable to pursue this line of inquiry which is suggested bearing in mind the obvious disputed issues of fact which arise. We also bear in consideration the following conclusions and observations as they appear in the satisfaction note as drawn. ……………………….

5. In view of the aforesaid, the writ petition partly succeeds. The impugned action under Section 153C of the Act, pertaining to AYs 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2020-21 are hereby quashed and set aside.

(viii) Hon'ble Supreme Court in the case of Commissioner of Income-tax-III, Pune v. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC)/[2017] 250 Taxman 225 (SC)/[2017] 397 ITR 344 (SC)/[2017] 297 CTR 441 (SC)[29-08- 2017] as under:-

"16. In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee.

(ix) It is held by the Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax (Central) - 2 v. Index Securities (P.) Ltd. [2017] 86 taxmann.com 84 (Delhi) [04-09-2017] as under-

"31. As regards the second jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the AYs whose assessments are sought to be reopened, the decision of the Supreme Court in Sinhgad to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. Technical Education Society (supra) settles the issue and holds this to be an essential requirement. The decisions of this Court in RRJ Securities and ARN Infrastructure India Ltd. v. Asstt. CIT [2017] 394 ITR 569/81 taxmann.com 260 (Delhi) also hold that in order to justify the assumption of jurisdiction under Section 153C of the Act the documents seized must be incriminating and must relate to each of the AYs whose assessments are sought to be reopened. Since the satisfaction note forms the basis for initiating the proceedings under Section 153 C of the Act, it is futile for Mr Manchanda to contend that this requirement need not be met for initiation of the proceedings but only during the subsequent assessment."

(x) It is held by the Hon'ble Madras High Court in the case of Agni Vishnu Ventures (P.) Ltd. v. Deputy Commissioner of Income-tax [2023] 157 taxmann.com 242 (Madras) [28-06-2023] as under:-

"79. Section 153C however requires the satisfaction of two conditions prior to issuance of notice:

(1)Recording of satisfaction by the Assessing Officer of the searched entities that some of the incriminating materials relate to a third party.

(i) Recording of satisfaction by the Assessing Officer of the third party that the incriminating materials have a bearing on the determination of the total income of that third party.

to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. 83. The construction of section 153 A and 153 C is consciously different and is seen to apply different yardsticks to an entity searched and a third party, such yardstick being more exacting in the case of the former. The process of assessment is demanding and an assessee, once in receipt of a notice, is bound by the stringent procedure under the Act, till finalisation of the process.

(xi) Further in the judgement of Hon'ble Supreme Court in the case of Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd. [2023] 150 taxmann.com 108 (SC)/[2023] 454 ITR 441 (SC)[25-04-2023], in para 1 and 3 the Hon'ble Supreme Court has held as under:-

1. In this batch of appeals, the assessments in case of each assessee were under section 153-C of the Income-tax Act, 1961 (for short, the Act'). As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of the matter, as such, the assessments under section 153-C of the Act are rightly set aside by the High Court. However, Shri N Venkataraman, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC), more particularly, paragraphs 11 and 13, has prayed to observe that the Revenue may be permitted to initiate re-assessment proceedings under section 147/148 of the Act as in the aforesaid decision, the powers of the re-

3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law.

(xii) In view of the above discussion and considering the ratio of the judgements cited by the appellant, before the issuance of notice under section 153C of the Act for any year, the assessing authority is required to record satisfaction and the satisfaction must refer to the seized material pertaining to / having information with respect to such year and the satisfaction should refer to the impact or implication of the same Le that the said seized material has a bearing on the determination of the total income of such year. On the basis of satisfaction and seized material which pertains to one year and leads to the inference of having a bearing on determination of total income of one year, the notices under section 153C of the Act cannot be issued for other years.

In the present case as discussed in para (v) and (vi) above, the seized material referred in the satisfaction note pertains to the AY 2013-14. The seized material does not quantify or specify any additional income with respect to the year under appeal. Further, there is no reference to seized material in the satisfaction note, with respect to the issue on which the addition has been made in the assessment order.

In view of the above discussion, the conclusion to be arrived at is that there is no valid satisfaction u/s 153C for the year under appeal and thus the jurisdiction assumed by the assessing authority in issuing the notice under section 153C is without any basis/authority and the implication of the same is that the notice under section 153C of the Act is without jurisdiction and the assessment order in question cannot be sustained.

Further, Hon'ble Supreme Court in the case of Deputy Commissioner of Income- tax v. U. K. Paints (Overseas) Ltd. [2023] 150 taxmann.com 108 (SC)/[2023] 454 ITR 441 (SC)[25-04-2023] in para 1 and 3 has held as under:-

3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law. (emphasis supplied)

In para 11 of the order in case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. ([2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC)/([2023] 454 ITR 212 (SC)(24-04-2023]), the Hon'ble Supreme Court inter-alia has held as under:-

"11. .........However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy."

In the present case the notice u/s 153C of the Act has been issued on 08-08-2019 after the recording of satisfaction. In this regard, when the AO of the searched assesse and other person (appellant) is same in that case the date of recording of satisfaction is treated as the date of transfer of records from the AO of searched person to the AO of the third person/appellant as the question of physical transmission of documents to himself does not arise. The Hon'ble Supreme Court in the case of Super Malls (P.) Ltd. v. Principal Commissioner of Income Tax, 8 New Delhi [2020] 115 taxmann.com 105 (SC)/[2020] 273 Taxman 556 (SC)/[2020] 423 ITR 281 (SC) [05-03-2020] has observed as under.-

"6.1 However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of section 153C of the Act is fulfilled. ……………………………………….”

As per the above judgement of Hon'ble Supreme Court, the date of 08-08-2019 would be deemed to be the date of search for the purpose of abatement as per to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. provisio in section 153C(1) and on this date no assessment was pending and the time limit to issue the notice u/s 143(2) of the Act had already expired. Thus subject to validity of notice, the addition could have been made only on the basis of incriminating material and other additions also if the addition on incriminating material was done.

Accordingly, it is held that the impugned notice and addition made in assessment order u/s 153C cannot be sustained. As per law, addition, if any, without the incriminating seized material, can be done by the learned assessing officer in re- assessment proceedings by issuance of notice under section 147/148 for a year not pending in scrutiny. Thus the notice u/s 148 could be issued. CBDT (ITJ Section) has issued Instruction No. 1 of 2023 dated 23-08-2023 vide F.No. 279/Misc./M-54/2023-ITJ on the subject "Implementation of the judgment of the Hon'ble Supreme Court in the case of Pr.CIT (Central-3) v/s Abhisar Buildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding. The learned assessing officer is directed to implement the law and ratio of the judgement of Abhisar Buildwell (supra) and U. K. Paints (supra), as referred above, and take appropriate action in the case of the appellant as per appropriately considering the said Instruction No. 1 of 2023 dated 23-08-2023 as per the facts of the case.

Accordingly, this ground of appeal of the appellant is hereby allowed in above terms.

Finding of ld. CIT(A) on merits of the dispute 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-

In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and also it has been held that the additions done by the learned assessing officer in the assessment order is not sustainable on the technical ground that the addition is not based on any seized material received from search action on the searched person. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.

6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and also it has been held that the additions done by the learned assessing officer in the assessment order is not sustainable on the technical ground that the addition is not based on any seized material received from search action on the searched person. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.

7.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and also it has been held that the additions done by the learned assessing officer in the assessment order is not sustainable on the technical ground that the addition is not based on any seized material received from search action on the searched person. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.

8.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and also it has been held that the additions done by the learned assessing officer in the assessment order is not sustainable on the technical ground that the addition is not based on any seized material received from search action on the searched person. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.

The brief facts are that a search and seizure action u/s 132 of the Income Tax Act, 1961 ("the Act") and/or survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of Kiran Fine Jewellers Group on 02-03-2017. On being satisfied that the books of accounts or documents found and seized during the search belonged to a person other than the person in the case of whom the search u/s 132 of the Act was carried out, notice(s) under section(s) 153C of the Act dated 08-08- 2019 was issued and served upon the Assessee, requiring him to file a true and correct return of income. In response to the said notice(s), a return declaring a loss of Rs 6,79,047/- was filed by the Assessee on 13-09-2019. on 30-09-2014 a loss of Rs. 15,29,861/- was declared. Therefore, in the return of income filed in response to notice u/s 153A of the Act, additional income of Rs. 8,50,814/- pertaining to the relevant year has been declared by the Assessee which was not declared in the original return filed u/s 139 of the Act.

The Assessee-company primarily derives its income from builder and construction. The proceedings of assessment of income were commenced by issue of notice u/s 143(2) of the Act on 09-10-2019. Later notice u/s 142(1) dated 09-10-2019 was also issued to the assessee and information and details pertaining to the case relevant to assessment of its income were called by means of a questionnaire.

The ld. AO in the assessment proceeding noted that the assessee has shown unsecured loan from various entities including M/s Inner Mercantile Pvt. Ltd. Further, it is also observed that the assessee has not paid any interest to the lender company on the said unsecured loans. That company is not involved in any business activity shows income mainly from interest, dividend, commission and capital gains only. Despite that said company has shown a large amount in security premium account and using these funds for loans. The company is using their funds for investment in that company is mere paper company. In view of that ld. AO hold that M/s Inner Mercantile Pvt. Ltd. is a shell company which has no business activity and no existence and therefore, the unsecured loan taken was considered as unexplained cash credit u/s 68 of the Act for Rs. 59,06,725/-. While doing so he also made an addition of Rs. 14,766/- being the commission @ 0.25 % on acquiring the accommodation entry. Ld. AO also added a cash credit obtained from Shri Pooran Mal Kanwat and the outstanding amount comes to Rs. 2,05,00,000/-. Similarly assessee has also shown cash credit received from Shri Sitaram Meena for an amount of Rs. 5,89,52,868/-. Both were added considering that they are not having credit worthiness. Ld. AO noted the assessee company made an agreement in the name of Pooran Mal Kanwat who is the benimidar and paid amount of Rs. 1,60,00,000/- to the seller which includes cash of Rs. 40,00,000/-. Since the assessee failed to explain that source of Rs. 40 lac same was added as income of the assessee company. The assessee has claimed that sum of Rs. 57,05,001/- was not paid by Shri Sita Ram Meena or the assessee company to the seller. Therefore, same was not reflecting in the assessee bank account.

However, the same is not found convincing since in the sale agreement dated 06-11-2013 for sale consideration of Rs. 13,92,00,000/- and dated duly mentioned as a part of sale consideration. The assessee has not furnished any documentary evidence such as modified sale agreement wherein the sale consideration has been subsequently reduced to the extent to the amount mentioned to be paid through cheque no. 2,34,812, 2,34,815, 2,34,818 each for Rs. 19,01,667/- totaling to Rs. 57,05,001/-.

From perusal of the Profit and loss account of since assessee has not offered any revenue from operation which clearly established that business was not commenced during the period. Therefore, the expenditure incurred must be capitalized. However, expenditure under head other expenses totaling to Rs. 6,79,047/- has been debited which is not allowable being capital expenditure and added back to the total income of the assessee.

The assessee challenges that finding before the ld. CIT(A) wherein he argued that (1) Satisfaction of the Assessing Officer should be based on cogent material and should not be arrived at in a casual manner, (ii)

Assessing Officer should record satisfaction in respect of each of the assessment years, (iii) Seized material should not only belong to /or should be related to the assessee but should also be of incriminating nature i.e should have a bearing on the determination of total income of the assessee, (iv) There was no satisfaction as to the seized material material has been made either in any show cause notice or a questionnaire or even in the assessment order. (i). Α.Υ. 2014-15, (ii). A.Y. 2015-16, (iii), Α.Υ. 2017-18, (ίν). Α.Υ. 2018-19. Therefore the assessee submitted that for these years no documents were found having any incriminating material.

All the additions which were made are already recorded in the regular books of accounts. Thus, there is absolutely no material found during the course of search in the case of any person which either belongs to the appellant or contain any information about the assessee-appellant. Though in respect of assessment year 2014-15 in the assessment order the assessing officer has referred to some documents found during the course of survey action, however, impounding of documents whether incriminating or not does not give jurisdiction to the Assessing Officer to proceed u/s 153C of the Act against the assessee. Therefore, assessment orders for the A.Υ. 2014-15, 2015-16, 2017-18 and 2018-19 are liable to be quashed without even going into the merits of addition to the total income made by the Assessing Officer. There is absolutely no material for initiating proceedings u/s 153C of the Act for the above-mentioned four assessments years of appeal. There is no reference to any material found during the course of search, in the entire assessment order, in any show proceedings and additions made to the income of the appellant are not based on any seized document. Therefore, the jurisdiction to assess the income of these four years u/s 153C of the Income Tax Act is clearly expelled.

As is evident that ld. AO has not recorded separate satisfaction note assuming the jurisdiction as per provisions of section 153C of the Act depicting the loose page having incriminating in nature. The ld. AO in a common satisfaction note failed to mention clearly showing what records or which specific Books of accounts or documents found and seized during the course of search belonged to the assessee whose case, as search and survey referred to by the Assessing Officer in the case of Kiran Fine Jewellers Group is not recognizable to law.

The Assessing Officer is obligated to record his satisfaction with respect to the Books of accounts and documents belonging to the assessee, seized during the course of search action in the case of a person in whose case warrant u/s 132(1) of the income tax act was issued.

Needless to say that "Kiran fine Jewellers Group' is not a person and no search and seizure action has been carried out in the case of "Kiran Fine Jewellers Group". The Assessing Officer is not sure of the identity of the Thus, the satisfaction note is nothing, but a general, statement and it does not satisfy the preconditions for invoking the action as per provision of section 153C of the Act. Thus, in the absence of satisfaction as mandated u/s 153C of the Act, the very initiation of proceedings u/s 153C of the Income Tax Act becomes illegal, bad in law and without jurisdiction.

Not only that the while going through the satisfaction note we note that it does not deal with incriminating material belonging to the assessee pertaining to the A.Y.2013-14. While referring to the various document found Assessing officer has referred to a sale agreement Page 20-26 Exhibit -6 Annexure -A5 seized during the course of search at the premises of Shri Charan Singh Khangarot which is between Shri Prabhu and Shri Hari Narayan (sellers) and M/s Udai Buildhome Pvt Ltd (Buyer), the appellant. The alleged agreement to sale contains the signatures of the sellers but does not contain signatures of assessee-appellant on it.

Therefore, the said document cannot be said belonging to the appellant.

Further, Assessing Officer has also referred to another document found from the premises of Shri Ashok Singh which is between Shri Prabhu and Shri Hari Narayan (sellers) and M/s Manokamna Build square Pvt Ltd (buyer), though the Assessing Officer in the assessment order at Para 7.3 However, the Assessing Officer at Para (v) Page six has corrected himself and clearly mentioned that the sale deed was executed between the sellers and M/s Manokamna Build square Pvt Ltd, the buyer. Evidently, the said document does not in any way belong to or related to the appellant. The satisfaction note of the assessing authority before issuing notices u/s 153C of the Act, as provided by the Id. AO stated that a search & seizure action u/s 132(1) of the I.T. Act, 1961 was carried out at the residential premises of Shri Charan Singh Khangarot situated at M-28, Income Tax Colony, Durgapura, Tonk Road, Jaipur, on dated 02-08-2017 wherein certain loose papers/registered sale deeds/agreement and other documents were found and seized and inventorized as Annexure-AS Exhibit-1to 6. These papers are copy of sale agreement dated 08.11.2012 executed between Shri Prabhu and Shri Hari Narayan s/o late Shri Sujya and Smt. Sanya Devi w/o Late Shri Sujya Gurjar, Village Goner, Tehsil- Sanganer, Jaipur (Sellers) and M/s Udai Buildhome Private Limited, 302. Golden Sunrise Apartment, Lajpat Sunrise Apartment, C-Scheme, Jaipur for sale of immovable property admeasuring 04 bigha & 16 biswa situated in Khasra Nos.

1545/3473, 1814, 1815, 1818, 1819, 1820, 1821, 1822, 1824, 1825, 1827, 1828, 1829, 1830, 1831/3725, 1831, 1832, 1833, 1834 Village-Goner, i.e, at Rs. 45,00,000/- per bigha. The said agreement was written on Rs. 1000/- stamp paper purchased by Mis Udai Buildhome Private Limited on 06.11.2012. A sum of Rs. 11,00,000/- was also stated to have been received in cash by the sellers of the land from M/s Udai Buildhome Private Limited and it is agreed upon to pay the remaining amount till 30.11.2012 and on receipt of remaining sale consideration, the sellers will get the sale deed registered in the name of company or in the name of any other person, firm, company or institute as directed by the purchaser company.

Signature or thumb impressions of all the sellers are duly put on the sale agreement. Further, while survey action conducted at the business premises of M/s F.S. Housing Private Limited, certain loose papers/sale deeds/documents etc. were found & impounded by the survey team. On perusal of page no. 61-66 of exhibit-08 of Annexure A contains the copy of registered sale deed dated 29.11.2012 executed for sale of land situated in Khasra Nos. 1545/3473, 1814, 1815, 1818, 1819, 1820, 1821, 1822, 1824, 1825, 1827, 1828, 1829, 1830, 1831/3725, 1831, 1832, 1833, 1834 Village- Goner, Tehsil- Sanganer, Jaipur by Shri Prabhu and Shri Hari Narayan s/o late Shri Sujya and Smt. Sanya Devi w/o Late Shri Sujya Gurjar, Village- Goner, Tehsil- Sanganer, Jaipur in favour of M/s Udai Buildhome Private Scheme, Jaipur for sale consideration of Rs. 1,23,97,500/-.

On perusal of both the documents vis-à-vis it is gathered that M/s Udai Buildhome Private Limited has executed a sale agreement with the sellers for sale of their immovable property situated at Village-Goner, Tehsil- Sanganer, Jaipur for total consideration of Rs. 2,16,00,000/- and a sum of Rs. 11,00,000/- was given as token money in cash to the landowner however registered sale deed was executed by the land owners in the name of M/s Udai Buildhome Private Limited at sale consideration of Rs.

1,23,97,500/- which is lower than the sale consideration reported in sale agreement. Thus, it is inferred that the difference amount of Rs. 92,02,500/- (2,16,00,000/-1,23,97,500/-) was paid by M/s Udai Buildhome Private Limited to the land owners in cash which was not accounted in the regular books of accounts of the assessee company and was paid from undisclosed sources. Therefore, ld. AO noted that he was satisfied that the document seized belongs to M/s Udai Buildhome Pvt. Ltd. (PAN:

AABCU5068J) other than the search person and have bearing on the determination of its total income. Hence notice u/s 153C of the I.T. Act, for the AYs 2012-13 to 2017-18 and notice u/s 142(1)/143(2) for AY 2018-19 income of M/s Udai Buildhome Pvt. Ltd.

From the perusal of the satisfaction note of the assessing authority recorded before the issuance of notice under section 153C of the Act it is noticed that it is a combined satisfaction note for the AYs 2012-13 to 2017- 18 and the satisfaction was recorded with respect to the seized documents regarding the transactions in the immovable property and the dates of the documents are (i) sale agreement dated 08.11.2012. (ii) stamp paper purchased by M/s Udai Buildhome Private Limited on 06.11.2012, (iii) it was agreed upon to pay the remaining amount till 30.11.2012, (iv) registered sale deed dated 29.11.2012. The assessing authority has also noted in the satisfaction note that M/s Udai Buildhome Private Limited has executed a sale agreement with the sellers for sale of their immovable property situated at Village-Goner, Tehsil- Sanganer, Jaipur for total consideration of Rs. 2,16,00,000/- and a sum of Rs. 11,00,000/- was given as token money in cash to the land owner however registered sale deed was executed by the land owners in the name of M/s Udai Buildhome Private Limited at sale consideration of Rs. 1,23,97,500/- which is lower than the sale consideration reported in sale agreement. Thus, it is inferred that the difference amount of Rs. 92,02,500/-(2,16,00,000/-1,23,97,500/-) which was not accounted in the regular books of accounts of the assessee company and was paid from its undisclosed sources. The above transaction pertains to the financial year 2012-13 and in this regard, addition has also been made in the assessment order of the assessment year 2013-14. As per the satisfaction of the assessing authority which was arrived at based on the above documents the notices under section 153C of the Act were issued for the years AYs 2012-13 to 2017-18.

The bench noted that in the satisfaction note there is no reference to any seized material / transaction pertaining to any year other than the financial year 2012-13. In the assessment order for the year under appeal the addition has been made with respect to the loan received by the appellant from Inner Mercantile Pvt. Ltd. In this regard it is noticed in the assessment order that an enquiry was conducted by DDIT-2, Jaipur wherein an inspector is deputed for verification of business activity of the bogus companies which includes the lender company M/s Inner Mercantile Pvt. Ltd. The Inspector report reveals that it is clear the companies are not in existence in their registered addresses and holding offices but on those addresses a combined office of various companies were found, which is used only for receiving Dak (mail). Hence in the field enquiry as well as no addresses. Further, the enquiry was conducted u/s 133(6) of the I.T. Act and notice was issued to the lender company on 17-12-2019 through ITBA on registered email of the company as well as speed post requesting certain details. However, no reply was received which also further strengthens the fact that the company does not exist at the address and the company is only a paper company.

Further, addition has been made in the assessment order with respect to the funds received from Shri Pooran Mai Kanwat. Further, while post search enquiry statement of Shri Pooran Mai Kanwat recorded on oath u/s 131 of the Act wherein he was asked to explain debit and credit entries in account no. 00203110000005475 held in Malyia Urban Cooperative Bank, Jaipur. In reply to the same he categorically admitted that his account was being used by Shri Charan Singh Khangarot and others. He further admitted that in the said account no transaction has been made as his individual capacity. He categorically admitted that the account was opened on the direction of Shri Charan Singh Khangarot and same was used by him and therefore, it has not relation with the assessee-appellant.

On going through the satisfaction note and of the assessment order, it is noticed that the issue on which the addition has been made in the material found suggesting this addition was not discussed. On the other hand, while making the addition in the assessment order did not discuss reference to any seized material found in that search.

With this discussion on the facts dealing with the merits of the issue now we proceed to check the legality of the assessment, and the addition so made in the hands of the assessee company. Since the assessment is made as per provision of section 153C of the Act it would be appropriate to deal with provision which reads as under:

Assessment of income of any other person. 153C.(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A: 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 153A shall 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 : to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. 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) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year— (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. (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. As is evident from the above provision of the Act that it is only when the transmitted documents and material reaches the desk of the jurisdictional AO that it becomes empowered to initiate action under Section 153C of the Act. This is evident from a plain textual reading of the above provision of the Act. That provision 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 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". This is manifested from the provision employing the expression "if, that Assessing Officer is satisfied.". It would therefore necessarily follow that the issuance of a notice under Section 153C is clearly not intended to be an inevitable consequence to the receipt of material by the jurisdiction AO. That the AO before commencement of action under Section 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. Thus, the issue of assessment u/s. 153C and its scope has already been decided by the apex court in the case of DCIT Vs. U. K.

Paints (Overseas) Ltd., 150 taxmann.com 108(SC) wherein the court while dealing with the issue held that :

In this batch of appeals, the assessments in case of each assessee were under section 153-C of the Income-tax Act, 1961 (for short, `the Act'). As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of the matter, as such, the assessments under section 153-C of the Act are rightly set aside by the High Court. However, Shri N Venkataraman, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd.[2023] 149 taxmann.com 399 (SC), more particularly, paragraphs 11 and 13, has to 1401 & 1486/JP/2024 ACIT vs. M/s Udai Buildhome Pvt. Ltd. prayed to observe that the Revenue may be permitted to initiate re-assessment proceedings under section 147/148 of the Act as in the aforesaid decision, the powers of the re-assessment of the Revenue even in case of the block assessment under section 153-A of the Act have been saved.

3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the re-assessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law.

Based on the discussion so recorded herein above and the various binding judgement so discussed here in above and in the decision of the ld. CIT(A) we see no infirmity in the order of the ld. CIT(A) when the scope of 153C does not empower the assessing officer to make the other addition we see no merits in the grounds so raised by the revenue and thereby all the three grounds raised by the revenue stands dismissed.

In terms of these observations, the appeal of the revenue in ITA no.

1399/JP/2024 stands dismissed.

1401 & 1486/JP/2024 is similar to the and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the revenue in this appeal Nos. 1400, 1401 & 1399/JP/2024. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in for Assessment Year 2014- 15 shall apply mutatis mutandis in the case of M/s Udai Buildhome Pvt. Ltd 1401 & 1486/JP/2024 for the Assessment Years 2015- 16, 2017-18 & 2018-19.

In the result, all the appeals of the revenue are dismissed.

Order pronounced in the open court on 10/03/2025.

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:- 10/03/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Asstt. CIT, Central Circle-02, Jaipur izR;FkhZ@ The Respondent- M/s Udai Buildhome Pvt. Ltd., Jaipur 2. vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 1399, 1400, 1401 & 1486/JP/2024) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत