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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per Bench:
The captioned six (6) appeals are filed by assessee against a single consolidated order of first-appeal dated 31.07.2024 passed by learned Commissioner of Income-tax (Appeals)-3, Bhopal [“CIT(A)”] which in turn arises out of a single consolidated assessment-order dated 16.07.2021 passed by DCIT, Central-II, Bhopal [“AO”] u/s 153A r.w.s 143(3) of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2013-14 to 2018-19.
The background facts leading to present appeals are such that a search u/s 132 was conducted by Income-tax authorities on 16.05.2018 on assessee pursuant to which the assessments of assessee for preceding six AYs 2013-14 to 2018-19 were framed u/s 153A r.w.s. 143(3) and assessment of AY 2019-20 relating to search-year was framed u/s 143(3) vide a consolidated assessment-order dated 16.07.2021. Presently in these appeals, we are concerned with preceding six AYs 2013-14 to 2018-19 wherein the AO completed assessments after making year-wise additions on account of assessee’s share in “cash collections” from project “Pebble Bay” done under a “Joint Venture Agreement (JVA)” entered by assessee with “M/s Amrit Homes Private Limited (AHPL)” and “M/s Amrit Coloniser Private Limited (ACPL)”. The AO has given year-wise working of additions on Page 13 of assessment-order in a tabular format. Aggrieved, the assessee carried matter in first-appeal and contested assessment-order on jurisdictional illegality as well as on merit but did not succeed. Now, the assessee has come in next appeal before us.
Since these appeals emanate from a single order of CIT(A) and identical grounds/facts/issues are involved; these all appeals were heard together at the request of parties and are being disposed of by this consolidated order for the sake of convenience, brevity and clarity.
4. The assessee has raised identical grounds in all six appeals. Hence, for reference purpose, we re-produce the effective grounds raised in first appeal of AY 2013-14 only:
“1. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in upholding the validity of the order passed by the Ld. AO under section 153A r.w.s. 143(3) of the Income Tax Act, 1961, which erroneous, without jurisdiction and bad-in-law.
2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition u/s 69A of the Income Tax Act, 1961 without properly appreciating the facts of the case and the submissions made before him.
3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition which was made without giving the assessee an adequate opportunity of cross examination, which is in violation of principles of natural justice.” Ground No. 1:
5. In this ground, the assessee claims that the assessment framed by AO u/s 153A is erroneous, without jurisdiction and bad in law.
6. During hearing, Ld. AR submitted that although the assessee has raised this ground in all six years but the assessee is pressing it for first four AYs 2013-14 to 2016-17 only. There was some discussion about AY 2014-15 whose return of income was not filed by assessee u/s 139 and the Ld. AR desired to take a call for this assessment-year and intimate to bench.
After hearing, Ld. AR has filed a letter accepting that the assessee has finally decided to press Ground No. 1 in three AYs 2013-14, 2015-16 & 2016-17 only. Thus, taking into account the submission of Ld. AR, this ground is Page 3 of 37 taken for adjudication in three AYs 2013-14, 2015-16 & 2016-17 only. For remaining years, this ground is dismissed as non-pressed/withdrawn.
7. Apropos to this issue, Ld. AR for assessee firstly carried us to assessment-order to apprise the facts. He carried us to Para 7 / Pages 2-13 of assessment-order and submitted that the assessee was a land owner and M/s AHPL and M/s ACPL were developers. The assessee (“Bhargavi Keshwani”) alongwith two other land owners named “M/s Asnani Builders & Developers Ltd” and “Deepti Asnani” entered into a JVA with AHPL & ACPL for development of a project named “Pebble Bay” on assessee’s land (and on other owners’ lands). The JVA was on ‘revenue sharing’ basis. The assessee’s share was just 3% in Phase-1 and 2% in Phase-2 of project. The Income-tax department conducted two distinct searches, namely (i) the 1st search on 12.01.2018 on Shri Dilip Kumar Gupta / a business concern of Shri Dilip Gupta named “DG Homes & Realty Pvt. Ltd. (DGHPL)” and (ii) the 2nd search on 16.05.2018 on AHPL & ACPL as also upon assessee. Shri Dileep Gupta/DGHPL was a marketing agent of AHPL & ACPL. During 1st search on Shri Dileep Gupta/DGHPL, the authorities seized a laptop marked as “LS-01” containing certain MS Excel Sheets and documents marked as “LPS-01” and “LPS-02” which revealed that Shri Dileep Gupta/DGHPL made unaccounted “cash collections” from customers against booking/sale of “Pebble Bay” project. Shri Dileep Gupta was confronted with the seized material and his statements were recorded u/s 131 of the Act on Page 4 of 37 26.04.2018 wherein, vide reply to Q.No. 47 & 48, he admitted that cash was collected in lieu of sale of houses of ‘Pebble Bay’ project and the same was handed over to the directors of AHPL & ACPL or their employees namely, Shri Dinesh Goswami, Shri Alok Jagani and Shri Shubham Gupta (the AO has re-produced Q.No. 47 & 48 of Statements of Shri Dileep Gupta on Page No. 4 of assessment-order). Thereafter, during 2nd search on AHPL & ACPL/assessee, “LPS-7-Page no. 1 to 6” were seized from residence of Shri Subham Gupta and “LPS-01 and LPS-02” were seized from residence of Shri Dinesh Goswami; the employees of AHPL & ACPL (the AO has re-produced these documents titled as “Receiving Voucher” on Page No. 9-12 of assessment-order). Taking into account statement of Shri Dileep Gupta and the aforesaid documents seized during searches, the AO framed a view that the assessee would have also received its 3% / 2% revenue share in cash collected from customers. Accordingly, when the AO show-caused assessee qua this issue during assessment-proceeding, the assessee denied having receiving any such share. However, the AO turned down assessee’s reply and passed assessment-order after making year-wise additions starting from AY 2013-14.
Having explained above background, Ld. AR contended that the AO has framed assessment u/s 153A upon assessee pursuant to 2nd search conducted upon assessee u/s 132. He submitted that the assessee is not against the assessment framed by AO u/s 153A since the same is as per
Page 5 of 37 statutory scheme of the Act. But the assessee’s grievance is that the additions made by AO in AYs 2013-14, 2015-16 & 2016-17 (these three years are unabated/completed assessment-years) without having any incriminating material are not valid. He submitted that the assessment- order clearly shows that the AO has taken into account three sets of material for making addition, viz. (i) “LPS-1” and “LPS-2” seized during 1st search carried on 12.01.2018 upon Dileep Gupta/DGHPL, (ii) the Statements of Shri Dileep Gupta recorded u/s 131 on 26.04.2018, and (iii) the “LPS-07-Pages 1 to 6” seized from Shri Subham Gupta & “LPS-01” and “LPS-02” seized from Shri Dinesh Goswami, employees of AHPL & ACPL, during 2nd search on 16.05.2018. But the material at (i) and (ii) were part of 1st search dated 12.01.2018 conducted upon Shri Dileep Gupta/DGHPL and not a part of 2nd search dated 16.05.2018 conducted upon assessee. Further, in the statements of Shri Dileep Gupta there is no wishper against assessee.
In reply to Q.No. 47 & 48 of statements, Shri Dileep Gupta has only stated that the cash was collected by his company “DGHPL” under the marketing agreement with AHPL & ACPL and the same was handed over to the directors or employees of AHPL & ACPL. He has nowhere stated that the cash was shared with assessee. Therefore, the material (i) and (ii) do not constitute “incriminating material” for the present assessments framed against assessee u/s 153A. Further, the material (iii), although found during
Page 6 of 37 2nd search, but the same is also not an “incriminating material” for assessee and in no case for AY 2013-14 onwards for three-fold reasons, namely:
(a) The seized documents have been scanned and re-produced by AO on Page No. 9-12 of assessment-order which are titled as “Receiving
Voucher”. They are dated 23.08.2011/07.10.2011/05.08.2011 pertaining to the previous year 2011-12 relevant to AY 2012-13 and not for AY 2013-14 onwards with which we are concerned.
(b) Those documents were seized from employees of AHPL & ACPL and not from assessee, and (c) Those documents nowhere contain the name of assessee.
Thus, Ld. AR contended that none of the material (i), (ii) and (iii) relied by AO constitutes “incriminating material” qua the present assessee for AY 2013- 14 onwards.
Ld. AR thereafter submitted that the AYs 2013-14, 2015-16 & 2016- 17 are in the nature of “unabated/completed assessment-years” because the returns of those years were filed u/s 139 on 19.03.2014, 23.11.2016 and 23.11.2016 respectively and accordingly the respective time-limits to issue notices u/s 143(2) expired on 30.09.2014, 30.09.2017 & 30.09.2017 before the date of search upon assessee (16.05.2018). Further, the assessment of those three years were not pending on the date of search upon assessee.
Page 7 of 37 Therefore, in absence of any “incriminating material” in possession of AO, as narrated above, the AO is legally wrong in making the impugned additions in the proceedings of section 153A. For this proposition, Ld. AR relied upon the decision in PCIT Vs. Abhishar Buildwell Pvt. Ltd. in Civil Appeal No.
6580 of 2021 dated 24.04.2023 (Supreme Court).
10. Per contra, Ld. DR for revenue opposed the submissions of Ld. AR and contended that the 1st search was conducted upon Shri Dileep Gupta/DGHPL who was marking agent for project Pebble Pay of which the assessee was also a JV partner. Thereafter, the 2nd search was conducted upon AHPL & ACPL and assessee. Hence, both searches must be considered as a wholesome search on entire group. He also carried us to Pages 26-54 of CIT(A)’s order wherein the CIT(A) has re-produced the Statements of Shri Subham Gupta & Shri Dinesh Goswami recorded during 2nd search from which it is clearly discernible that there was a nexus of Shri Dileep Gupta/DGHPL with the JV project. Further, in their Statements, Shri Subham Gupta & Shri Dinesh Goswami have also explained the modus operandi of business of project as well as receipt of cash collections from customers and sharing amongst JV partners. Thus, Ld. DR submitted that there is sufficient ‘incriminating material’ found by department during searched conducted to show that there was cash collection from customers and also sharing between JV partners. At that stage, the bench raised a query as to whether the Statements of Shri Subham Gupta & Shri Dinesh
Page 8 of 37 Goswami were recorded in presence of assessee or whether the assessee was given any opportunity of cross-examination? In reply, Ld. DR submitted that the Statement does not appear to have been recorded in the presence of assessee. He, however, remained silent over the second part of query i.e. whether opportunity of cross-examination was given to assessee.
11. Ld. DR then referred following para 14 of Abhishar Buildwell (supra):
“14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.”
[emphasis supplied]
12. Referring to underlined portion of Para 14(iii), Ld. DR contended that the Hon’ble Supreme Court has held that “the other material available with the AO” can also be utilised for making assessments of “unabated/ completed assessment years”. Therefore, the material available with AO against assessee, even if gathered during 1st search, was also a fit material.
13. In Re-joinder, Ld. AR re-emphasised that the material relied by AO was neither found in the search conducted upon assessee; nor collected from assessee; nor relates to the AYs 2013-14 onwards under consideration; and nor provided to assessee.
We have considered rival submissions of both sides. The AO has given details of assessments in Para 4 of assessment-order as under:
A.Y. Returned Total income Additional Date of filing Date of filing of income declared in income offered of return u/s return u/s (in Rs.) Return u/s (in 139(1) 153A 153A (in Rs.) Rs.)
2013-14 19.3.2014 3,93,450 30.01.2020 3,93,450 Nil 2014-15 Not filed N.A. 30.01.2020 12,620 Nil 2015-16 23.11.2016 Nil 29.01.2020 Nil Nil 2016-17 23.11.2016 2,04,18,940 29.01.2020 2,04,18,940 Nil 2017-18 30.03.2018 96,51,100 30.01.2020 96,51,100 Nil 2018-19 27.03.2019 90,46,490 30.01.2020 90,46,490 Nil 2019-20 06.03.2020 1,02,99,400 N.A. N.A. N.A Page 10 of 37
15. From above details, we find that the returns of AYs 2013-14, 2015-16 & 2016-17 were filed by assessee u/s 139 on 19.03.2014, 23.11.2016 and 23.11.2016 respectively. Therefore, the time-limits to issue notices u/s 143(2) expired on 30.09.2014, 30.09.2017 & 30.09.2017 respectively prior to the date of search upon assessee (16.05.2018). Further, as informed by Ld. AR there was no proceeding of assessment or re-assessment of those three years pending in case of assessee as on the date of search. Therefore, the AYs 2013-14, 2015-16 & 2016-17 are in the nature of “unabated/ completed assessment-years”. In so far as the non-existence of “incriminating material” and consequently entitlement of assessee to Abhishar Buildwell (supra)’s favourable decision is concerned, we find that the Co-ordinate Bench of ITAT, Indore has already decided this issue in the appeals of other JV partners “M/s AHPL” & “M/s ACPL”. The appeals were titled as “Amrit Homes Private Limited Vs. ACIT-Central-II, Bhopal - IT(SS)A No. 03 & 04/Ind/2024” and “M/s Amrit Colonisers Pvt. Ltd. Vs. ACIT-Central-II, Bhopal – IT(SS)A No. 05 to 08/Ind/2024” and have been decided vide separate orders dated 25.10.2024. The relevant paras of ITAT’s order in the case of “Amrit Homes Private Limited Vs. ACIT-Central-II, Bhopal - IT(SS)A No. 03 & 04/Ind/2024” are re-produced below:
“3. There was search and seizure action u/s 132(1) of the Act on 16.05.2018 in case of Asnani Group. The assesse company is also covered under the said search. In the assessment framed u/s 153A of the Act the AO made inter alia two additions on the basis of LPS1 & 2 on account of cash receipt for sale and booking of residential unit & statement of Shri Dileep Gupta and second addition was based on LPS-5 to 7. On Page 11 of 37 appeal the CIT(A) has deleted the addition made by the AO on the basis of LPS 5 to 7 being not related to the assessment years under consideration but confirm the addition based on LPS -1 & 2 which is an MS Excel Sheet taken from laptop of Shri Dileep Gupta seized during the course of search and seizure action in case of DG Homes & Reality Pvt. Ltd. carried on 12.01.2018 against which the assesse has filed these appeals.
4. Thus, the solitary common issue arises in these two appeals of the assesse is regarding the addition sustained by the CIT(A) based on the seized documents marked as LPS-1 & 2.
4.1 Before the tribunal Ld. AR of the assesse has submitted that the alleged seized document is a MS Excel Sheets taken from laptop of Shri Dileep Gupta during the course of search and seizure action dated 12.01.2018 in case of DG Homes & Realty Pvt. Ltd. Therefore, the said document was neither found or seized during the course of search and seizure action in the case of the assessee and hence, the same cannot be considered as an incriminating material for the purpose of assessment u/s 153A of the Act. Ld. AR has further submitted that the statement of Shri Dileep Gupta was recorded by DDIT Investigation on 26.04.2018 which has been relied by the AO for making the addition however, the assesse was neither supplied the seized documents and copy of the statement of Shri Dileep Gupta nor given an opportunity to cross examine Shri Dileep Gupta. Thus, the assesse was not even confronted with the alleged incriminating documents seized from 3rd party during a separate search and seizure action which is in violation of principles of natural justice. Even otherwise the Allegation in the statement of Shri Dileep Gupta was only to the extent that he has collected cash from the customers for sale and booking of the residential units in project Pebble Bay and the same was handed over to the directors of the assessee company as well as M/s Amrit Colonizers Pvt. Ltd. He has relied upon the judgment of Hon’ble Supreme Court in case of M/s Andaman Timber Industries v. CIT (2015) 281 CTR 241 (SC) as well as judgment of Hon’ble Delhi High Court in case of CIT vs. SMC Share Brokers Ltd. 159 Taxman 306. Ld. AR has also relied the judgment of Hon’ble jurisdictional High Court in case of Prakash Chand Nahta v. CIT 170 taxman 520 and submitted that without allowing the assesse to cross examined the witness, the addition made on the basis of the said statement is not sustainable and liable to be deleted.
4.2 Ld. AR has further submitted that even the alleged seized document was seized from the possession of the third party and in a separate search and seizure operation cannot be relied upon for making addition when the assesse was not confronted with the seized documents as well as statements of Shri Dileep Gupta. In support of his contention he has relied upon the decision of this Tribunal in case of ACIT vs. Shree Nakoda Construction Company in ITANo.48/Ind/2021.
Ld. AR has also questioned the admissibility of the said seized documents being excel sheet taken from laptop of Shri Dileep Gupta during a separate and distinct search and seizure action on the ground that the said evidence can be proved only in accordance with the procedure prescribed under section 65A and 65B of the Act Indian Evidence Act 1872. The evidence relating to electronic record as per the provisions of section 65B(4) cannot be accepted as an evidence unless a certificate in this respect is not produced. Since it is a secondary electronic evidence and therefore, it is mandatory to be certified as per provisions of section 65B(4) of the Act. In support of his contention he has relied upon the judgment of Hon’ble Supreme Court in case of Anwar PV v. B.K. Basheer (2014) 10SCC 473 as well as the judgment in case of Arjun Pandit Rao Khotkar v. Kailash Kushanrao Gorantyal (2020) 7 SCC 1. Ld. AR has also relied upon the decision of Mumbai Benches of the Tribunal in case of ACIT v. Anand Jaikumar Jain 147 taxmann.com 125. Thus, he has submitted that the addition sustained by the CIT(A) is liable to be deleted.
5. On the other hand, ld. DR has relied upon the orders of the authorities below and submitted that the seized documents LPS-1 & 2 contains various entries of cash receipt from the customers for sale and booking of the residential units in the project Pebble Bay. In the statement Shri Dileep Gupta has explained that he was working as marketing agent of assesse as well as M/s Amrit Colonizers Pvt. Ltd. and collected the cash which was handed over to the directors /key person of these companies.
6. We have considered the rival submissions as well as relevant material on record. The assesse company is engaged in the business of builders and developers. The assesse company along with Amrit Colonizers Pvt. Ltd. entered into joint venture agreement with M/s Asnani Builders & Developers Ltd. for development and sale of residential project namely Pebble Bay. The issue before us is confined only to the addition made by the AO on the basis of seized documents marked as LPS 1 & 2 being Excel Sheet taken from Laptop of Shri Dileep Gupta seized during the course of search and seizure action dated 12.01.2018 carried out in case of M/s D.G Homes & Realty Pvt. Ltd. Though the assesse was also subjected to search and seizure action u/s 132(1) but the same was carried out on 16.05.2018. Therefore, these are two separate and distinct search and seizure actions; one dated 16.05.2018 in case of the assesse and another dated 12.01.2018 in case of Shri Dileep Gupta and M/s DG Homes & Realty Pvt. Ltd. The addition made by the AO which was confirmed by the CIT(A) is undisputedly based on the said seized documents marked as LPS-1 & 2 as well as statement of Shri Dileep Gupta not related to the search and seizure action carried in the case of assesse can not be considered as an incriminating material for the purpose of framing assessment u/s 153A of the Act for A.Ys which were not pending on the date of initiation of search and seizure action dated 16.05.2018. The AO has given details of the return of income filed by the assesse for A.Ys.2015- 16 & 2016-17 as under:
XXX
6.1 Thus both these assessment years were not pending as on the date of search i.e. 16.04.2018 and consequently these are unabated assessments. LPS 1 & 2 are undisputedly neither found nor seized during the course of search and seizure operation in the case of the assesse but the same was taken from Laptap of Shri Dileep Gupta during the search and seizure dated 12.01.2018 in his case as well as M/s DG Homes & Reality Pvt. Ltd. Therefore, the said seized documents cannot be used for the purpose of framing assessment u/s 153A of the Act and that too for the assessment years which were not pending on the date of search and consequently not got abated by virtue of search and seizure action. At the most the said seized material could have been a basis for initiation of proceedings u/s 153C of the Act if it discloses an undisclosed income in the hands of the assesse. At this stage it is relevant to refer the judgment of Hon’ble Supreme Court in case of Pr. CIT, Central-3 v. Abhisar Buildwell (P.) Ltd. as reported in [2023] 454 ITR 212 (SC) wherein it has been held that no addition can be made in absence of any incriminating material found and seized during the course of search and seizure action for assessment years which are non-abated by virtue of search. The Hon’ble Supreme Court has considered this issue in case as under:
“9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961.
9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of ‘undisclosed income’ for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the ‘undisclosed income’ and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the ‘undisclosed income’ was chargeable to tax at a special rate of 60% under section 113 whereas income other than ‘undisclosed income’ was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the ‘undisclosed’ income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and Page 14 of 37 seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search.
On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under:
“153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132- A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1),
Page 15 of 37 shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, Section 153- B and Section 153- C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.”
As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the ‘total income’ in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the ‘total income’ for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. 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,
Page 16 of 37 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.
If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law.
For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material.
14. In view of the above and for the reasons stated above, it is concluded as under:
i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume
Page 17 of 37 the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv). in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.
Accordingly, the addition made by the AO and sustained by the CIT(A) on the basis of the alleged LPS 1 & 2 is not sustainable and liable to be deleted on this ground alone.”
16. The position of above cases decided by co-ordinate bench is at parity with the present assessee. In those cases also, the assessment were framed u/s 153A and additions were made. In first-appeal, the CIT(A) deleted additions made by AO on the basis of “LPS-5 to 7” found during 2nd search but confirmed the additions made by AO on the basis of “LPS-1 & 2” found in laptop of Shri Dileep Gupta in 1st search and the Statements of Shri Dileep Gupta recorded. However, on further appeal, the ITAT deleted even the additions sustained by CIT(A) on the basis of “LPS-1 & 2” found in 1st search and the Statements of Shri Dileep Gupta recorded in the light of Abhishar Buildwell (supra). Therefore, the decision of co-ordinate bench is directly applicable to present assessee.
17. Yet the appeal of one more JV partner “M/s Asnani Builders & Developers Ltd.” registered as IT(SS)A No. 11 to 14/Ind/2014 for AYs 2015-16 to 2018-19 has also been decided by co-ordinate bench vide order dated 25.10.2024 in assessee’s favour. The relevant portion of ITAT’s order reads as under:
“3. The assessee company is engaged in the business of builders and developers. During the years under consideration the assessee company continued to be in the business of construction, development and sale of residential houses. The assessee has also entered into a Joint Venture Agreement (JVA) with Amrit Homes Pvt. Ltd (AHPL) & Amrit Colonisers Pvt. Ltd (ACPL) in respect of its land situated at Katara Hills, Bhopal for construction of row houses and flats under the project Pebble Bay on revenue sharing basis. There was a search and seizure action u/s 132(1) of the Act in Asnani Group on 16.05.2018. Pursuant to the search and seizure operation carried out on 16.05.2018 the A.O issued notice u/s 153C of the Act to the assessee for the assessment year 2009-10 to 2017-18. The A.O while framing the assessment u/s 153C of the Act for the Assessment Year 2011-12 to 2017-18 u/s 153C of the Act made additions on account of cash receipts from the customers against sales/bookings of housing plots by ACPL and AHPL in the project Peeble Bay. The A.O has relied upon the incriminating document found and seized from Shri Dileep Gupta during the course of search and seizure carried out on 12.01.2018 in case of M/s DG Homes and Realty Pvt. Ltd marked as LPS-1 & LPS-2. The assessee challenged the action of the A.O before CIT(A) but could not succeed.
Before the Tribunal the Ld AR of the assessee has submitted that the A.O has initiated the proceedings u/s 153C of the Act in pursuant to the search and seizure operation carried out in case of M/s Asnani group on 16.05.2018. He has referred to the satisfaction recorded by the A.O dated 10.03.2021 placed at page No.5 to 9 of the paper book and submitted that the A.O has not referred any incriminating material in the satisfaction note found or seized during the course of search and seizure carried out on 16.05.2018 but those documents were found from the laptop of Shri Dileep Gupta during the search and seizure action in case of M/s DG Homes and Realty Pvt. Ltd carried out on 12.01.2018. Therefore, the satisfaction recorded by the A.O is not valid as it is not based on the documents found during the course of search and seizure action dated 16.05.2018. Further even the seized documents being the Excel sheet taken from the Laptop of Shri Dileep Gupta it is not reflected any transaction of cash received by the assessee. The A.O has also referred to the statement of Shri Dileep Gupta but there is nothing incriminating against the assessee. Thus Ld.
AR has submitted that the assessee filed objections against the satisfaction note of the A.O which were disposed off by the A.O order dated 22.09.2021. Ld. AR has pointed out that the alleged seized documents contains the entries of residential units sold by M/s. ACPL and the payments received from the customers. Therefore, even if it is presumed that the cash was collected from the customers by AHPL/ACPL that itself would not lead to the conclusion that the said cash was received by the assessee. Hence, Ld. AR has submitted that prima facie the incriminating documents as referred in the satisfaction note do not reveal that the cash was received by the assessee company. There is no correlation/connection between the seized material and the assessee company as nothing incriminating is found in the seized material. Therefore, the assumption of jurisdiction u/s 153C of the Act by the A.O is bad in law for want of conclusive satisfaction based on the alleged seized material. The satisfaction note dated 10.03.2021 is not in accordance with the provisions contained in Section 153C of the Act. He has further pointed out that the AO has disposed off the objections filed by the assessee vide order dated 22.09.2021 wherein he has referred to page 36 of LPS-7 but the said seized document was nowhere mentioned in the satisfaction note. Therefore, there is no reference of seized documents marked as LPS-7 in the satisfaction note and hence, the A.O has failed to establish any correlation of seized document with the assessee company at the time of recording the satisfaction. Record of satisfaction note with conclusive satisfaction of the A.O about the correlation of seized document and undisclosed income of the person other than the search person is an essential jurisdiction fact and precondition for assuming the jurisdiction u/s 153C of the Act. Ld. AR has submitted that the precondition of conclusive satisfaction about the correlation of the seized document and undisclosed income of the assessee is absent in the case of the assessee therefore, the assumption of jurisdiction itself is bad in law and consequential proceedings are also void-ab-initio. He has further contended that even the addition made by the A.O is purely based on the presumption without any tangible material to show that the assessee has received cash against the sale of residential units in the project Peeble Bay. The A.O has referred the seized material which is an Excel sheet contained the details of cash received by Shri Dileep Gupta who was the marketing agent of M/s. AHPL & ACPL. The assessee has contributed land in question owned by the assessee for the said project under the Joint Venture Agreement on revenue sharing basis but there is nothing in the seized material to show that the assessee received the alleged cash collected by Shri Dileep Gupta from the customers. Therefore, the addition has been made by the A.O purely on presumption without any evidence that the assessee has also received the cash. The AR has submitted that the only document which contains the name of the assessee in the abbreviated form is LPS-7 seized from the residence of Shri Shubham Gupta an employee of M/s. AHPL but the same does not pertains to the years under consideration. The said document is placed at page 36 of the paper book. Ld. AR has relied the decision of this Tribunal dated 24.06.2014 in case of Shri Shailendra Sharma Vs. ACIT (Central) Bhopal IT(SS)A No.30 & 31/Ind/2023
Page 20 of 37 wherein the Tribunal has held that the incriminating material in the form of random sheets, loose papers etc are inadmissible as evidence. Further the A.O could not make any addition merely on the basis of suspicion howsoever, strong it may be. The AR has further submitted that the addition is made by the AO on the basis of documents seized from the possession of a third party and also based on the statement of third person but neither the seized document nor the statement was confronted with the assessee before the same was made basis of the addition by the A.O. Therefore, in the absence of giving an opportunity to the assessee to cross examine Shri Dileep Gupta the addition made by the A.O based on his statement is not sustainable and liable to be deleted. He has further contended that even in the statement of Shri Dileep Gupta nothing incriminating has been disclosed against the assessee. He has also relied upon the decision of this Tribunal in case of ACIT (Central)-2, Bhopal Vs Shri Sanjeev Agrawal ITA No.87/Ind/2021.
4.1 Ld. AR has further contended that the alleged excel sheet used by the A.O for the addition was found from the laptop of Shri Dileep Gupta in a separate and distinct search proceedings therefore, this document falls in the category of electronic evidence. He has referred to Section 65B(2) of the Evidence Act and submitted that it envisages that unless a certificate required u/s 65B(4) of the Act is not produced, secondary electronic evidence being computer printout cannot be used in any proceedings. In the case of the assessee the alleged Excel sheet was neither found/impounded from any of the entity covered in the present search dated 16.05.2018 nor the said document is corroborated by any independent evidence or even certified u/s 65B(4) of the Evidence Act therefore, the same cannot be a basis of the addition made by the A.O. Hence, the addition made by the A.O is not sustainable and liable to be deleted.
On the other hand the Ld. DR has submitted that apart from LPS-1 & 2 found during the course of search carried out on 12.01.2018 an incriminating document LPS-7 was also found during the course of search and seizure action dated 16.05.2018 and therefore, there is a correlation with these two seized materials leading the formation of belief that these documents pertains to the assessee and contains the transactions of cash receipts collected from the customers against the sale of residential units in the project Peeble Bay wherein the assessee is having a share in revenue as per the Joint Venture Agreement. All these surrounding facts and the transactions recorded in the seized material are sufficient to form the belief and satisfaction of the A.O that the income has escaped assessment in the hands of the assessee on account of share in the cash receipts collected from the customers. Apart from the seized material the statement of Shri Dileep Gupta as well as Shri Shubham Gupta were recorded during the course of search and seizure action and post search enquiries wherein it was un equivocally stated that he on behalf of ACPL & AHPL has received sale consideration against the sale of houses of different phases of project Peeble
Bay. Further during the course of search and seizure action on 16.05.2018 cash receipt vouchers was found marked as LPS-7 from the possession of Shubham Gupta showing the cash receipt by the assessee. Thus the Ld. DR has submitted that even the said cash vouchers do not pertain to the year under consideration but it proves that the cash was received from the sale of the project in question. He has relied upon the impugned order of A.O as well as CIT(A) and submitted that the addition has been made by the A.O based on the seized document which is an incriminating document showing out of book receipts and assessee’s share in the cash receipt as per the Joint Venture Agreement is taken by the A.O for making these additions.
We have considered rival submissions as well as relevant material on record. There was a search and seizure operation carried out u/s 132(1) of the Act in case of Asnani Group on 16.05.2018. During the search and seizure action some documents were found/seized and marked as LPS-7. Page 36 of the document was considered by the A.O as related to the assessee however, in the entries at page-36 of the LPS-7 pertains to the financial year 2011-12 and prior to that. The A.O has recorded his satisfaction u/s 153C of the Act placed at page No.5 to 9 wherein the A.O has made reference to the seized material as under: XXX (scanned document)
6.1 Thus it is clear that the A.O has made reference to (i) LPS 14,19 and 23 found and seized from the office of Asnani Group (AHPL). (ii) The documents marked as LPS 1&2 found and seized from the residence of Mr. Dinesh Gupta (iii) The documents seized and marked as LPS 5,6,7 from the residence of Shri Shubham Gupta.
6.2 On the basis of these 3 sets of seized documents the A.O came to the conclusion that the assessee along with Amrit Homes Pvt. Ltd and Amrit Colonizers Pvt. Ltd entered into a Joint Venture Agreement and have agreed for development of land owned by the assessee for construction of residential units in the project Peeble Bay. The residential units were sold through Shri Dileep Gupta who was the marketing agent of ACPL and AHPL and collected the cash from the customers against the sales and bookings of the residential units. In the entire set of seized documents during the search and seizure action dated 16.05.2018 there was no mention of assessee except page No.36 of LPS-7 where the name of the assessee is appearing against one entry. For the ready reference the said page No.36 of LPS-7 is reproduced as under: XXX (scanned document)
6.3 This page contains the date up to 25.08.2012 which reveals that all the transactions were done up to 25.08.2012 and therefore, the said document does not pertain to the Assessment Years under consideration i.e. 2015-16 to 2018-19. Accordingly, the proceedings u/s 153C cannot be initiated on the basis of a document which does not pertains to the assessment years under consideration and also it does not reveal any transaction for these assessment years. The another document which is relied upon by the AO is LPS 1&2 taken from the laptop of Shri Dileep Gupta seized during the course of search and seizure action carried out in case of D.G Homes and Realty Pvt. Ltd on 12.01.2018. The A.O has also relied upon the statement of Shri Dileep Gupta recorded in the post search inquiry relating to search dated 12.01.2018 therefore, even the said seized document LPS 1&2 are not found or seized during the search and seizure action carried out on 16.05.2018 on the basis of which the A.O has initiated the proceedings u/s 153C of the Act. Further the transactions contains in LPS 1 & 2 and particularly LPS-1 as relied upon by the A.O are only in reference to the cash collected by Shri Dileep Gupta, the Marketing agent of ACPL and AHPL responsible for development and sale of the project on the land belonging to the assessee. In the statement of Shri Dileep Gupta recorded on 26.04.2018 u/s 131 of the Act in the post search inquiry he explained the nature of transactions recorded in the seized material LPS-1 and LPS-2. The relevant part of the said statement has been reproduced by the AO in para 9 of the assessment order:
“9. Statement of Shri Dileep Kumar Gupta, the director of DG Homes and Realty Pvt Ltd and owner of the seized laptop, was recorded u/s 131 of the Income Tax Act, 1961 by the DDIT(Inv)-1, Bhopal on 26.04.2018. He was asked to explain the nature and content of information contained in the MS Excel Workbooks of his laptop. This statement of Shri Dileep Kumar Gupta dated 26.04.2018 in response to question no. 47 and 48 is reproduced below:
Q.47) Shri Dileep Kumar Gupta was required to explain the nature and purpose of preparing above data found from the excel workbook of his laptop LS-01.
Ans. Shri Dileep Kumar Gupta stated that he had entered into agreements with Amrit Homes Pvt Ltd and Amrit Colonisers Pvt Ltd for marketing of the houses built by these companies, on commission basis. He further stated that according to the data of excel workbook, total cash received from the sale of houses built under Pebble Bay Project was Rs. 48,48,88,222/- till January 2018.
Q 48) Shri Dileep Kumar Gupta was asked to furnish the duration in which total cash of Rs. 48,48,88,222/- was received from the sale of houses built under Pebble Bay Project. He was also asked to furnish the name of the persons who collected such sale proceeds in cash from the customers.
Ans. He replied that Rs. 48,48,88,222/- in cash was collected from December 2010 to January 2018 from the purchasers against the sale of houses in different phases of the Pebble Bay Project of the AHPL and ACPL. This cash was collected by his company Dileep Gupta Homes and Realty Pvt Ltd under the marketing agreement with the AHPL and ACPL and the same cash was handed over to the directors of AHPL and ACPL, namely Shri Pritpal Singh Bindra and Shri Mandeep Singh Bindra or their employees namely, Shri Dinesh Goswami, Shri Alok Jagani and Shri Shubham Gupta.
So, from the facts mentioned above, it is very clear and established that part of the sale consideration in connection with Pebble Bay Project, were in the form of cash also. During the course of post search proceedings, some of the purchasers of the flat/ duplex in Pebble Bay Project, had given their statement in writing that they have paid cash in addition to payment through banking channel.”
6.4 Thus the A.O found relevant part of the statement in Question No.47 & 48. It is manifested from the part of the statement considered as relevant by the A.O that Shri Dileep Gupta received the cash from the customers against sales and booing of the residential units in the project Peeble Bay. He has further explained that the cash was collected by his company i.e. DG Homes and Realty Pvt. Ltd under the marketing agreement with AHPL & ACPL and the same cash was stated to be handed over to the Directors of AHPL & ACPL. Thus the transactions recorded in LPS 1&2 are not part of the seized document of the search and seizure action carried out on 16.05.2018 but the same was taken from the seized Laptop of Shri Dileep Gupta during the search and seizure action carried out on 12.01.2018 in case of D.G Homes and Realty Pvt. Ltd and none of the transactions are found between Shri Dileep Gupta and assessee either recorded in the LPS 1&2 or revealed in the statement of Shri Dileep Kumar Gupta. Therefore, prime facie the LPS 1&2 cannot be considered as an incriminating material revealing any undisclosed income of the assessee before us. The contents of LPS 1&2 coupled with the statement of Shri Dileep Gupta do not establish any link or connection much less live/direct connection between the seized
Page 24 of 37 document and the undisclosed income of the assessee. Through these two set of document do not satisfy the condition of live link between the incriminating material and undisclosed income of the assessee for the assessment years under consideration. The Hon’ble Supreme Court in case of CIT V/s Sinhgad Technical Education Society 397 ITR 344 upheld the judgments of Honble High Court as well as the decision of the Tribunal and held in para 14 to 22 as under: “14. We have bestowed our due consideration to the respective submissions of the counsel for the parties.
At the outset, it needs to be highlighted that the assessment order passed by the AO on August 7, 2008 covered eight Assessment Years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07 As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. In so far as Assessment Year 2006-07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, in so far as assessment under Section 153C read with Section 143(3) of the Act is concerned, it was in respect of Assessment Years 2000-01 to 2005-06. Out of that, present appeals relate to four Assessment Years, namely, 2000-01 to 2003-04 covered by notice under Section 153C of the Act. There is a specific purpose in taking note of this aspect which would be stated by us in the concluding paragraphs of the judgment.
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 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.
First objection of the learned Solicitor General was that it was improper on the part of the ITAT to allow this ground to be raised, when the assessee had not objected to the jurisdiction under Section 153C of the Act before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground.
18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the Page 25 of 37
record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT called that the ITAT had scanned through the Satisfaction Note and the material which was dis order of the ITAT culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred.
19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy.
In so far as the judgment of the Gujarat High Court relied upon by the learned Solicitor General is concerned, we find that the High Court in that case has categorically held that it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act. This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well. The judgment of the Gujarat High Court in the said case went in favour of the Revenue when it was found on facts that the documents seized, in fact, pertain to third party, ie the assessee, and, therefore, the said condition precedent for taking action under Section 153C of the Act had been satisfied.
Likewise, the Delhi High Court also decided the case on altogether different facts which will have no bearing once the matter is examined in the aforesaid hue on the facts of this case. The Bombay High Court
Page 26 of 37 has rightly distinguished the said judgment as not applicable giving the following reasons:
"8. Reliance on the judgment of the Division Bench of the High Court of Delhi reported in case of SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 346 ITR 177 is misplaced. There, search was carried out in the case of "P" group of companies. It was found that the assessee before the Hon'ble Delhi High Court had acquired certain development rights from "P" group of companies. Based thereon, the satisfaction was recorded by the Assessing Officer and he issued notice in terms of Section 153C. Thereupon the proceedings were initiated under section 153A and the assessee was directed to file returns for the six assessment years commencing from 2003-04 onwards. The assessees filed returns for those years but disclosed Nil taxable income. These returns were accepted by the Assessing Officer, however, in respect of the assessment year 2007-08 there was a significant difference in the pattern of assessment for this year also. the return was filed for Nil income but there were certain documents and which showed that there were transactions of sale of development rights and from which profits were generated and taxable for the assessment year 2007-08. Thus, the receipt of Rs.44 crores as deposit in the previous year relevant to the assessment year 2008-09 and later on became subject matter of the writ petition before the Delhi High Court. That was challenging the validity of notice under section 153C read with section 153A. In dealing with such situation and the peculiar facts that the Delhi High Court upheld the satisfaction and the Delhi High Court found that the machinery provided under section 153C read with section 153A equally facilitates inquiry regarding existence of undisclosed income in the hands of a person other than searched person. The provisions have been referred to in details in dealing with a challenge to the legality and validity of the seizure and action founded thereon. We do not find anything in this judgment which would enable us to hold that the tribunal's understanding of the said legal provision suffers from any error apparent on the face of the record. The Delhi High Court judgment, therefore, will not carry the case of the revenue any further."
We, thus, do not find any merit in these appeals.
22. We now advert to the implication of the fact which has been emphasised in para 15. As pointed out in the said para, the assessment order passed by the AO covers eight Assessment Years. Assessment done in six Assessment Years is under Section 153C of the Page 27 of 37
Act. Assessment order is set aside only in respect of four such Assessment Years that too on the technical ground, noted above. This objection pertaining to the four Assessment Years in question does not relate to the other two Assessment Years, namely, 2004-05 and 2005- 06. Likewise, this decision has no bearing in respect of assessment done qua Assessment Year 1999-2000 as well as Assessment Year 2006-07. The necessary consequence would be that insofar as the conclusions of the AO in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected by this judgment. It is, thus, clarified that this Court has not dealt with the matter on merits insofar as incriminating material found against the assessee or Mr. Navale is concerned. Pithily put, this Court has not given any clean chit to the assessee insofar as the finding of the AO to the effect that the assessee had been indulging in profiteering and collecting capitation fee is concerned. Whatever other repercussions are there, based on these findings, they can follow. This Court was not informed and, therefore, unaware of any challenge to the assessment order in respect of other four Assessment Years and outcome thereof. Wherever any such proceedings are pending, same would be considered without being affected by the outcome of these proceedings.”
6.5 Therefore, the A.O cannot invoke the provisions of Section 153C of the Act in respect of particular assessment years in the absence of any incriminating material disclosing any undisclosed income for those assessment years. Thus the jurisdiction of the AO u/s 153C of the Act is not beyond the seized material disclosing undisclosed income for the assessment years. The satisfaction of the AO u/s 153C of the Act is an essential condition for initiating the proceedings u/s 153C of the Act. The said satisfaction should be based on the incriminating material found and seized during the search to establish the correlation between the seized material and the undisclosed income of the person other than the searched person for the assessment years falling within the bracket of 6 years. Thus it is clear that if the seized material on the basis of which the A.O has recorded the satisfaction u/s 153C of the Act does not establish the correlation with the undisclosed income of the assessee for some of the assessment years out of the block of 6 years then the jurisdiction of the A.O is barred to initiate the proceedings u/s 153C of the Act in respect of those assessment years relating to which no undisclosed income is revealed or deducted during the course of search or from the seized document allegedly belonging to the assessee. The CIT(A) has accepted this fact that LPS-7 does not belong to the assessment years under consideration and therefore, there is no link or live connection or correlation between the alleged seized material and the undisclosed income of the assessee for these assessment years…”
In this case also, the co-ordinate bench has decided the issue of “incriminating material” in favour of assessee. This case is also at parity with present assessee. The only difference is that the assessee’s case had been subjected to assessment u/s 153A because of search conducted upon assessee on 16.05.2018 but in the case of “M/s Asnani Builders & Developers Ltd.” the assessments were framed u/s 153C because there was no search upon that JV partner. However, both this assessee and “M/s Asnani Builders & Developers Ltd.” were JV partners in the very same project [alongwith M/s AHPL & M/s ACPL] and identical additions (except change of figures due to change in revenue sharing ratios) have been made on the basis of very same materials. Thus, the issue of absence of “incriminating material” stands vehemently analysed and adjudicated by Co- ordinate Bench in favour of assessee in JV partner “M/s Asnani Builders & Developers Ltd.” and the same conclusion holds equal force for present assessee.
Accordingly, taking into account the vehement analysis already made by ITAT, Indore in aforesaid cases, we agree with the submission made by Ld. AR for assessee that none of the material (i), (ii) or (iii) constitutes “incriminating material” qua the present assessee and also qua the AYs 2013-14 onwards with which we are concerned. Therefore, the assessee is entitled to benefit of Abhishar Buildwell (supra) in unabated/completed
Page 29 of 37 assessment years, namely AYs 2013-14, 2015-16 & 2016-17. Accordingly, we hold that additions made by AO in these AYs are not sustainable in absence of incriminating material. Consequently, the Ground No. 1 raised by assessee is allowed in AYs 2013-14, 2015-16 & 2016-17. As mentioned earlier, for remaining years Ground No. 1 is dismissed as non-pressed/withdrawn.
Ground No. 2 & 3:
20. In these grounds, the assessee challenges the merit of the addition made by AO.
21. The Ld. AR for assessee submitted that the AO did not conduct any enquiry during assessment proceedings to ascertain whether the cash collected by Shri Dileep Gupta, if any, was finally shared with the assessee or not? Further, the AO has relied upon documents recovered from third parties and Statements of Shri Dileep Gupta without confronting assessee and without giving any opportunity of cross-examination of Shri Dileep Gupta to assessee. Further, the Statements of Shri Subham Gupta & Shri Dinesh Goswami, employees of M/s AHPL & M/s ACPL and not of assessee [though nowhere mentioned by AO in assessment-order but re-produced by CIT(A) in order of first-appeal] were neither recorded in presence of assessee nor any opportunity of cross-examination was given to assessee. Therefore, the decision of Hon’ble Apex Court in Andaman Timber Industries vs.
Page 30 of 37 Commissioner of Central Excise 62 taxman 3 directly applies to the case of assessee and the addition made by AO cannot be sustained.
Ld. AR submitted that the Co-ordinate Bench of ITAT, Indore has also decided this very issue in assessee’s favour in the case of another JV Partner M/s Asnani Builders & Developers Ltd. (supra). Therefore, the same adjudication shall follow in present assessee who was also a JV partner in the same project. Ld. AR relied upon following portion of ITAT’s order:
“6.8 On the merits of the addition the A.O has not conducted any enquiry during the course of assessment proceedings to ascertain whether the cash collected by Shri Dileep Gupta was finally share with the assessee or not. Further the A.O has not conducted any enquiry whether the parties to the joint venture of developing project have recorded the correct sales in their books of accounts or suppressed the sale to the extent of the cash collected by Shri Dileep Gupta. Even otherwise when the A.O has relied upon the document which is recovered from the third party along with the statement of Shri Dileep Gupta and made the addition on the basis of said seized document and statement of Shri Dileep Gupta without confronting the assessee or giving an opportunity to cross examine the person whose statement was relied upon by the A.O. Thus it is a clear case of violation of principle of natural justice as held by the Hon’ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise 62 taxman 3 in para 6 & 7 as under: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that Page 31 of 37 rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.
As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross- examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross- examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions."
6.9 Therefore, there is a violation of principle of natural justice as the assessee was deprived of the information/evidence which was considered by the A.O while making the addition and passing the assessment order. It is the duty of the A.O to disclose and inform the assessee of the material on the basis of which he is going to pass the order. The assessee has all rights to know the evidence and information which was to be used by the A.O against him so that he would prove his onus and produce the material to meet the information/evidence brought against him by the A.O. In the case in hand the A.O has made the addition solely on the basis of seized document and statement of Shri Dileep Gupta without confronting the assessee and also not given an opportunity to cross examine the witness whose statement is relied upon. Even the alleged incriminating material as well as the statement of Shri Dileep Gupta do not reveal any undisclosed income in the hands of the assessee on account of cash collected by him as neither the seized documents contains any transaction of undisclosed income in the hands of the assessee nor the statement of Shri Dileep Gupta disclosed any undisclosed income earned by the assessee on account of the alleged cash collection. Therefore, in the absence of any tangible material to establish that the assessee has earned undisclosed income for these assessment years the addition made by the A.O on presumption and assumption is not sustainable and the same is liable to be deleted. We order accordingly.”
[emphasis supplied] 23. Replying to this, Ld. DR for revenue firstly referred the impugned order of CIT(A), more particularly following para:
Page 73 of impugned order:
The appellant has claimed that opportunity to cross examine Shri Dileep Gupta and Shri Shubham Gupta was not provided by the AO. From the material available on record, it is established that Shri Dileep Gupta [being marketing agent of the ACPL] and Shri Shubham Gupta [being employee of the ACPL] are closely related to the JV and thereby it has direct linkage on the appellant (partner in JV) too. Therefore the cross examination would have been a mere formality.
Further, he contended that even if the cross-examination had not been provided to assessee, the AO has carried out entire proceeding of assessment as per procedure and non-providing of cross-examination cannot be a ground for nullity of order passed by AO. He submitted that the assessee could very well come before AO showing the points of his objections for which he needed cross-examination but the assessee has not taken any such step also. He also relied upon catena of decisions filed in a “Case Law Paper Book” and relying upon same, pleaded that cross- examination is not a right in all situations; that the cross-examination even if not provided would not result in a nullity of AO’s order; etc.
In rejoinder, Ld. AR firstly drew us to a letter dated 14.07.2021 filed by assessee to AO which is acknowledged by seal of AO’s office. This letter, placed at Pages 42-43 of Paper-Book, is scanned for an immediate reference:
Ld. AR pointed out that in Para 4 & 5 of above letter, the assessee made a specific request to AO to provide cross-examination but the AO has not acted upon assessee’s request. Adding further, Ld. AR submitted that the statement of Shri Dileep Gupta have been re-produced by AO in assessment-order and that too in a translated version from Hindi to Page 35 of 37 English and never provided to assessee. Ld. AR emphasised that the case of assessee is squarely covered by the decision of ITAT Indore in another JV Partner M/s Asnani Builders & Developers Ltd. (supra), which in turn relies upon the authoritative decision of Hon’ble Supreme Court in Andman Timber (supra). Therefore, the arguments raised by Ld. DR as well as case laws relied by Ld. DR cannot help revenue.
We have considered rival submissions of both sides and carefully examined the facts. After a careful consideration, we find that the issue raised in these grounds is already decided by ITAT, Indore bench in M/s Asnani Builders & Developers Ltd. (supra) which is a case of another JV partner in same project. The position of assessee so far this issue is concerned no different from M/s Asnani Builders & Developers Ltd. Therefore, we apply the very same conclusion as taken therein.
Respectfully, following the same we are inclined to allow Ground No. 2 and 3 in favour of assessee. So far as the observation made by Ld. CIT(A) that “the cross examination would have been a mere formality” and also the contention raised by Ld. DR against the assessee’s right or necessity of cross-examination is concerned, the same is well answered by Hon’ble Supreme Court in Para No. 6 of Andaman Timber (supra) itself (refer the underlined portion) wherein the Hon’ble Apex Court has categorically held that it is not for the adjudicating authority or even for Tribunal to see as to for what purpose the assessee needed cross-examination. Accordingly, we hold that the Page 36 of 37 additions made by AO in all six AYs 2013-14 to 2018-19 is not sustainable and the same is liable to be deleted. We order accordingly.
Resultantly, these appeals are allowed.
Order pronounced in open court on 26/09/2025