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Facts
A search and seizure action was conducted on 14/10/2020 in the case of Manoj Kumar Singh, and the Assessee's premises were also covered. No incriminating material was found at the Assessee's premises. The assessment under section 153A was initiated based on a statement of the Assessee's Director, which was later retracted.
Held
The Tribunal held that the initiation of assessment proceedings under Section 153A was bad in law as no incriminating material was found at the Assessee's premises. It was further held that additions cannot be made solely based on a retracted statement of the Director without any corroborative evidence.
Key Issues
Whether the assessment proceedings under Section 153A are valid when no incriminating material was found at the assessee's premises and the additions were based on a retracted statement of the Director.
Sections Cited
153A, 153(3), 45, 143(3), 132, 132(4), 131(1A), 153C, 147, 148, 68, 10(38), 69B
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Income Tax Appellate Tribunal, DELHI
Before: YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
Appellant Respondent Assessee by Sh. Mayank Patwari, Adv& Sh. Akash Ojha, Adv Revenue by Ms. Pooja Swaroop, CIT (DR) Date of Hearing 17/11/2025 Date of Pronouncement 14/01/2026 ORDER
PER YOGESH KUMAR, U.S. JM:
The captioned appeal is filed by the Assessee against the order of Commissioner of Income Tax (Appeals)-, 30-New Delhi [‘Ld. CIT(A)’ for short] dated 23/02/2024 pertaining to Assessment Year 2019-20.
The grounds of Appeal
are as under:-
1. On the facts and circumstances of the case and in law, the initiation of assessment proceedings and the issue/service of notice(s) are not in accordance with the provisions of the Act and therefore, the assessment order passed by the assessing officer is liable to be quashed and CIT(A) erred in not holding so.
2. On the facts and circumstances of the case and in law, the notice issued under section 153A is bad in law and without jurisdiction and accordingly the said notice and the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
3. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in-law, without jurisdiction and barred by limitation and CIT(A) erred in holding SO.
On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is non-est as it does not have valid DIN.
5. On the facts and circumstances of the case and in law, the addition of Rs. 27,99,00,000/- made by the assessing officer on the account of alleged long term capital gain u/s 45 of the Act is beyond the scope of provisions of section 153A of the Act and, therefore, the addition made by the AO is liable to be deleted and CIT(A) erred in holding so.
6. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition made by the assessing officer of Rs. 27,99,00,000/- on the account of alleged long term capital gain u/s 45 of the Act, and, therefore, the addition made by the A.O. is liable to be deleted.”
Brief facts of the case are that, the Assessee filed return of income under normal provisions of the Act at Rs. NIL and the income u/s 115JB of the Income Tax Act, 1961 ('Act' for short) was Rs. 10,69,45,558/-. The said return was processed u/s 143 (1) of the Act at book profit of Rs. 10,69,45,558/- to be taxed as per provisions of AMT/MAT. A search and seizure action u/s 132 of the Act was carried out on 14/10/2020 in the case of Manoj Kumar Singh, his Associates and various transacting parties. During the course of the said search, it was found that the said Manoj Kumar Singh entered into unaccounted cash transactions with the various persons/entities.
The premises/locker of the Assessee Company was also covered during the search operations. The assessment proceedings u/s 153A/153(3) of the Act was initiated against the Assessee and an assessment order came to be passed on 26/03/2022 by making an addition of Rs. 27,99,00,000/- on account of Long Term Capital Gain u/s 45 of the Act. Aggrieved by the assessment order dated 26/03/2022, Assessee preferred the present Appeal on the grounds mentioned above.
4. The Ld. Counsel for the Assessee vehemently submitted that during the search operation dated 14/10/2020, no incriminating material was seized in the Assessee’s premises and the impugned addition of Rs. 27,99,00,000/- u/s 45 of the Act was made only based on the statement of Sh. Subhash Chander Gupta, the Director of the Assessee Company, who denied the same while filing the return of income u/s 153A of the Act and also during the assessment proceedings. The Ld. Counsel further submitted that the addition has been made solely based on the alleged Excel-Sheet seized during the third party and the A.O. erroneously invoked the presumption u/s 132(4A) of the Act. Therefore, the Ld. Counsel submitted that in the absence of any incriminating material found during thecourse of search conducted in the Assessee’s premises, no addition can be made solely based on the statement recorded u/s 132(4) of the Act. The Ld. Counsel further submitted that it is an admitted fact that the search was carried out in the case of Sh. Manoj Kumar Singh and on the basis of incriminating material found thereon, search was carried out in the premises of the Company. However, in the search proceedings carried out at the premises of the Assessee, no incriminating material was found. Therefore, the A.O. committed grave error in passing the assessment order u/s 153A r.w. Section 143(3) of the Act and the proper provision should have been invoked by the A.O. was Section 153C of the Act. The Ld. Counsel has also relied on plethora of judicial precedents in support of his contention and sought for allowing the appeal.
Per contra, the Ld. Departmental Representative submitted that the Director of the Assessee Company himself admitted the transaction and the search has been conducted at the premises of the Assessee and the Assessee being a party for the transaction which has been confronted to the Assessee’s Director and the Assessee’s Director himself accepted the same. Further the Ld. Departmental Representative relying on the orders of the Lower Authorities and sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. A search and seizure action has been initiated u/s 132 of the Act on 14/10/2020 in the case of Manoj Singh, wherein certain Excel file namely ‘My data xlsx, Sunny xlsx’ amongst other were found and seized. Based on the said Excel Sheet found during the course of search and seizure operation conducted on Sh.
Manoj Kumar Singh, it is found that there were certain cash transactions made by the said Manoj Kumar Singh with the Assessee.
The premises/locker of the Assessee Company was also searched, however, admittedly no incriminating material were found and seized thereon. Statement of Sh. Subhash Chander Gupta, the Director of the Assessee Company has been recorded u/s 132(4) of the Act on 14/10/2020 and u/s 131(1A) dated 24/11/2020, wherein the said Subhash Chander Gupta admitted that he received the undisclosed cash of Rs. 27.99 Crore from Sh. Manoj Kumar Singh over and above the disclosed sale consideration of Rs. 21.50 crore of property at 5, 6 &7 at Udyog Vihar sold by the Assessee. It is pertinent to mention that the said statement has been retracted/denied by the Assessee/Director of the Assessee by way of filing the return of income u/s 153A of the Act and also during the assessment proceedings. As stated above, the search was carried out in the case of Manoj Kumar Singh and on the basis of incriminating material found and seized, a search was carried out in the premises of the Assessee company, however, in the search proceedings carried out at the premises of the Assessee, no incriminating material was found. Therefore, the proper recourse to the Revenue to initiate and frame assessment was u/s 153C of the Act and not u/s 153A of the Act.
In an identical case, the Bombay Bench of the Tribunal in the case of DCIT Vs. Aachman Vanijya Pvt. Ltd. reported in 2025 9173 Taxmann.com 391 (Mumbai Tribunal), held as under:-
“9. The undisputed fact is that, there is no incriminating material found and seized from the premises of the assessee to trigger the proceedings u/s 153A of the Act in respect of unabated years covered in the block period. Assessment for AY 2012-13 was completed on 30/09/2014, for AY 2013-14 on 31/03/2016, AY 2014-15 on 22/11/2016 and AY 2015-16, the time limit to issue notice u/s 143(2) of the Act expired on 30/09/2016 and no assessment proceedings were initiated u/s 143(3) of the Act. Thus, it is clear that the assessment years are unabated and, therefore, the ratio laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. [454 ITR 212] squarely applies, wherein the Hon’ble Supreme Court has held as under:-
“On a plain reading of section 153A of the Income-tax Act, 1961, it is evident that once a search or requisition is made, a mandate is cast upon the Assessing Officer 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 the 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 it. According to the provisions of section 153A, in a case of search under section 132 or requisition under section 132A, the Assessing Officer gets jurisdiction to assess or reassess the "total income" in respect of each assessment year falling within six assessment years. Under 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. According to sub-section (2) of section 132A, 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 subsection (1) of section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (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 a case of search, only pending assessment or reassessment proceedings shall abate and the Assessing Officer would assume jurisdiction to assess or reassess the "total income" for the entire six-year period or block assessment period. The intention does not seem to be to reopen completed or unabated assessments, unless any incriminating material is found with respect to the concerned assessment year falling within the six years preceding the search. Therefore, on a true interpretation of section 153A of the Act, in case of a search under section 132 or requisition under section 132A during which any incriminating material is found, even in a case of unabated or completed assessment, the Assessing Officer would have 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, where during the search no incriminating material is found, in the case of a completed or unabated assessment, the only remedy available to the Department would be to initiate reassessment proceedings under section 147 or section 148 of the Act, subject to fulfilment of the conditions mentioned in those sections, as in such a situation, the Department cannot be left with no remedy. If, even in a case of search where no incriminating material is found during the course of search, and the assessment is unabated or completed, the Assessing Officer were to assess or reassess the income or total income taking into consideration the other material, there would be two assessment orders, which shall not be permissible under the law. The second proviso to section 153A and sub-section (2) of section 153A would then be redundant. Rewriting provisions is not permissible under the law.
Thus in a case of search under section 132 or requisition under section 132A, the Assessing Officer assumes jurisdiction for assessment under section 153A; all pending assessments or reassessments shall stand abated. In case any incriminating material is found or unearthed, even in case of unabated or completed assessments, the Assessing Officer 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 Assessing Officer including the income declared in the returns; and in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or reassess taking into consideration the other material in respect of completed assessments or unabated assessments, meaning thereby, in respect of completed or unabated assessments, no addition can be made by the Assessing Officer in the absence of any incriminating material having been found during the course of search under section 132 or requisition under section 132A of the Act. However, completed or unabated assessments can be reopened by the Assessing Officer in exercise of powers under section 147 or 148 of the Act, subject to fulfilment of the conditions as envisaged or mentioned under section 147 or 148 of the Act and those powers are saved.”
10. Insofar as, the statement recorded during the course of search of other person, stand of the revenue that the same has to be considered as incriminating material, is also not tenable in the light of decision of Hon’ble Delhi High Court in the case of PCIT vs. PavitraRealcon (P) Ltd. reported in (2024) 340 CTR (Del) 225. The relevant portion of the decision reads as under:-
“17. We have heard the learned counsels appearing on behalf of the parties and perused the record.
The primary grievance which arises in the present appeals pertains to whether the Tribunal was right in deleting additions made under s. 68 of the Act by holding that no assessment could have been made on mere presumption of existence of incriminating material.
Undisputedly, during the period of search, no incriminating material appears to have been found. However, the Revenue proceeded to issue notice under s. 143(2) of the Act on the pretext of the statements of the Directors of the respondent-assessee companies recorded under s. 132(4) of the Act and material seized from the search conducted on Jain group of companies. The assessment order was also passed under s. 143(3) r/w s. 153C of the Act making additions under s. 68 of the Act.
However, it is an undisputed fact that the statement recorded under s. 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements.
In the case of KailashbenManharlalChokshi us. CIT (2008) 220 CTR (Guj) 138 : (2008) 14 DTR (Guj) 257: 2008 SCC Online Guj 436, the Gujarat High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph No. 26 of the said decision has been reproduced hereinbelow :
"26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under s. 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no Explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs: 6 lakhs on the basis of statement recorded by the AO under s. 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee." (emphasis, italicized in print, supplied)
Further, the position with respect to whether a statement recorded under s. 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT us. Harjeev Aggarwal (2016) 290 CTR (Del) 263 : (2016) 133 DTR (Del) 122 : 2016 SCC Online Del 1512, wherein, it was held that merely because, an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below :
"20. In our view, a plain reading of s. 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words evidence found as a result of search' would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to s. \132(4) of the Act. However, such statements on a stand alone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation." (emphasis, italicized in print, supplied)
In our opinion, the Act does not contemplate computing of undisclosed income solely on the basis of statements made during a search. However, these statements do constitute information, and if they relate to the evidence or material found during the search, they can be used in proceedings under the Act, as specified under s. 132(4) of the Act. Nonetheless, such statements alone, without any other material discovered during the search which would corroborate said statements, do not grant the AO the authority to make an assessment.
Also, the Supreme Court in the case of Principal CIT us. AbhisarBuildwell (P) Ltd. (2023) 332 CTR (SC) 385 : (2023) 225 DTR (SC) 105 : 2023 SCC Online SC 481, has clarified that in case no incriminating material is found during the search conducted under s. 132 of the Act, the AO will have no jurisdiction to make an assessment. The relevant paragraph is reproduced herein below :
"36.4. 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 s. 132. or requisition under s. 132A of the 1961 Act. However, the completed/unabated assessments can be reopened by the AO in exercise of powers under ss. 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under ss. 147/148 of the Act and those powers are saved." (emphasis, italicized in print, supplied)
This Court in the case of CIT us. Kabul Chawla (2015) 281 CTR (Del) 45 : (2015) 126 DTR (Del) 130: 2015 SCC Online Del 11555, has explicitly noted that the information/material which has been relied upon for assessment has to relate with the assessee. The relevant portion of the said decision is extracted herein below :
"(iv) Although s. 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously; an assessment has to be made under this section only on the basis of the seized material." (emphasis, italicised in print, supplied)”
In another judgment, the Hon’ble Delhi High Court in the case of PCIT vs. Anand Kumar Jain (HUF) [432 ITR 384], interalia held as under:- “10. Now, coming to the aspeci, viz., the invocation of section 153A on the basis of the statement recorded in search action against a third person, we may note that the Assessing Officer has used this statement on oath recorded in the course of search conducted in the case of a third party (i. e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than the person searched (as referred to in section 153A), then the only legal recourse available to the Department was to proceed in terms of section 153C of the Act by handing over the same to the Assessing Officer who has Ijurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under section 132(1) of the Act). As noted above, the assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the Income-tax Appellate Tribunal. Therefore, we do not find any substantial question of law that requires our consideration.”
Considering the facts of the case in totality, in light of the judicial decisions discussed hereinabove, we do not find any merit in the captioned appeals by the revenue. Therefore, we decline to interfere with the findings of the ld. CIT(A). Appeals by the revenue stand dismissed.”
Even in the present case, no incriminating material found or and seized in the premises of the Assessee and addition has been made based on the alleged incriminating material found and seized during the search conducted on 14/10/2020 in the premises of Shri Manoj Kumar Singh. Therefore, in our considered opinion, invocation of provision of Section 153A itself is bad in law.
Further, the basis for making the addition was the statement of the Director of the Assessee Company Shri Subhash Chander Gupta.
However, the said statement has been retracted/denied while filing the return of income u/s 153A of the Act and also during the assessment proceedings. It is also well settled law that mere statement of the Assessee without any supporting corroborative evidence cannot justify the addition.
The Hon'ble Supreme Court in the case of CIT vs. Mantri Share Brokers (P) Ltd. SLP (Civil) Diary No. 18434 of 2018, held that no addition u/s 69B of the Act can be made in the hands of an assessee where except statement of the Director of the assessee company offering additional income, there was no other material either in the form of cash, bullion, jewellery or document or in any other form to justify such additional income. Accordingly, the SLP, filed by the Revenue against the decision of Hon'ble Rajasthan High Court was dismissed.
11. Further in the case of Sanjay Singhal Vs. DCIT in dated 20/09/2021, the Co-ordinate Bench of the Tribunal, Chandigarh Bench, deleted the addition in the similar circumstances, which is reproduced as under:-
“However, during the course of hearing. Shri G. C. Srivastava has emphasised that in the case of Sanjay
Singal, he has voluntarily disclosed Rs.250 crores on account of bogus long term capital gain in the statement made under section 132(4) of the Act for the search carried out on 21 & 27-2-2014. He pointed out that not such voluntary disclosure was available in the case of Shri Brij BhushanSingal. According to the Id. Authorised representative, this disclosure was made by Shri Sanjay Singal on his behalf as well as on behalf of entire family. Therefore, he is bound with his disclosure which was not retracted On the other hand, the Id. Counsel for the assessee made reference to CBDT Circular Bearing no. 286/2003 dafed 103.2003 which has been further explained in the subsequent circulars The Board has emphasised that no disclosure be taken from the assessee and endeavour be made for collection of the material because according to the Board the Department used to take voluntary disclosure under section 132(4) of the Act and stopped further investigation. This type of declaration later on retracted by the assessee nor honoured in the return filed by them, and the department failed to corroborate such disclosure Thus, according to him, there is no disparity of such event on this point. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one. This presumption of admissibility of evidence is a rebuttable one, and if an assessee is able to demonstrate with the help of some material that such admission was either mistaken. untrue or based on misconception of facts, then solely on the basis of such admission no addition as required to be made. It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of addition, if the AD is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No. 286/2/2003 prohibiting the departmental officials from taking confession in the search. The CBDT is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. It is pertinent to observe that in a large number of authoritative pronouncements, it has been held that merely on the basis of declaration addition should not be made. The alleged declaration should be supported with unexplained expenditure or assets discernible in the seized material during the course of search, No such things was unearthed by the Revenue, therefore, decision relied upon by the Ld. CIT-DR in the case of Bhagirath Aggarwal Vs. CIT(Supra) is distinguishable on facts. This decision has already been considered by the Coordinate Bench while dealing with the case of father of the assessee.
81 After going through well-reasoned order in the light of material brought to our notice, we are of the view that issue in dispute in all these appeals is squarely covered by order of the Co-ordinate Bench in the case of Shri BrijBhusanSingal and others (supra), and hold that the long term capital gain declared by the assessee and claimed as exempt under section 10(38) are to be treated as genuine and they are not to be assessed as unexplained cash credit under section 68 of the Act.”
12. In view of the above discussions and reasoning and by relying on the judicial precedents mentioned above, we find no reason to upheld the order of the Ld. CIT(A). Accordingly, the addition made by the A.O. which has been confirmed by the Ld. CIT(A) is hereby deleted.
In the result, Appeal of the Assessee is allowed.
Order pronounced in the open court on 14th January, 2026