JAGATJEET SINGH,DELHI vs. ACIT CENTRAL CIRCLE 28, DELHI

(d) Order of PCIT under Section 263 is bad in law as the PCIT has erroneously remanded the issue for fresh adjudication to the AO with the direction to carry thorough detailed enquiry on the issue in contravention to the decision laid down by Hon’ble Supreme Court in the case of Pr. Commissioner Of Income Tax-1, Chandigarh v. M/S. V- Con Integrated Solutions Pvt. Ltd (Special Leave Petition 2 | P a g e Jagatjeet Singh vs ACIT (Civil) Diary No. 13205/2025) dated 04.04.2025 wherein it held “The power under Section 263 of the Income Tax Act, 1961, can be exercised by the Commissioner of Income Tax, but by going into the merits and making an addition, and not by way of a remand, recording that there was failure to investigate.”

3. (a) The PCIT erred in not noticing that the same Para 2 “A survey action under Section u/s 133A of the Income-tax Act, 1961, (hereinafter referred to as the “Act”) was conducted on 01.09.2022 in the case of Baby Joy Group by the DDIT (Inv.), Unit-1(1), Delhi. A consequential survey vide authorization u/s 133A of the Act dated 01.09.2022 was carried out at the business premise of Sh. Jagatjeet Singh at (i) GN-6, Shivaji Enclave, Rajouri Garden, New Delhi- 110027 (ii) FC-68, Shivaji Enclave, Rajouri Garden, New Delhi-110027” of his order u/s 263 has been mentioned by AO in his order dated 31.03.2024 and show-cause notice dated 24.01.2024 DIN & Notice No :ITBA/AST/F/142(1)/2023-24/1060058762(1) incidentally in same Para 2 thus implying that the genesis of order u/s 263 is the same survey material which has already been examined by AO and hence, the assumption of jurisdiction by PCIT is bad in law.

(b) The PCIT erred in not noticing that AO, in his show- cause notice dated 12.12.2023 (bearing DIN & Notice No. ITBA/AST/F/142(1)/2023 24/1058671306(1)) and also on 24.01.2024 (DIN & Notice No :ITBA/AST/F/142(1)/2023- 24/1060058762(1)), vide para 6 and para 3(b) respectively asking for “Details of all movable and immovable properties owned by you individually or jointly with your family members indicating investment made during the relevant years and the assets, disposed of during the years.” that strongly proves the examination of properties including the examination of survey material as regards properties by AO, in response to which the Appellant had filed a response with respect to properties registered in his name, after which the AO accepted return filed by the Appellant.

(c) Ld. PCIT erred in not appreciating that the AO, while passing order under Section 143(3), at Paras 4 and 5, Ld. 3 | P a g e Jagatjeet Singh vs ACIT AO holds “4. ...notices u/s 142(1) of the Act were also issued to the assessee through ITBA on date 12.12.2023 and 24.01.2024.In compliance to the above statutory notices issued from time to time, the assessee filed submissions through e-filing portal on various dates. The submission filed by the eassessee is carefully examined and found to be acceptable.

5. After verification of the details furnished by the assessee and the material available on record, the total income of the assessee for the AY 2022-23 is computed as under…” Therefore it is incorrect to assume by the PCIT that the AO did not examine the survey records, whereas the AO in para 5 states that the records have been examined by him.

(d) The PCIT erred in not appreciating our reply dated 06.12.2024 (Para 1) (reproduced in Para 5 of order u/s 263) “the stated property was owned by the spouse of the assessee, therefore the AO has rightly decided not to make any inquiry in my case or to take any addition. Therefore, notice issued under section 263 of the Act is bad in law when there are two possibilities or when the officer decides not to make an addition in the hand of the assessee. Now again issuing the notice to the undersigned is a change of opinion.”

Without prejudice to Ground No 1, 2 and 3 the following grounds are also taken.

4. (a) The PCIT erred in not noticing in Para 3.1 of his order that property is registered in the name of appellant’s wife and the addition ought not be made in the case of the appellant and both are independent assessees.

(b) The PCIT erred in not appreciating that the soft data as mentioned in para 3.2 of order has already been examined by the AO as this data was found in survey u/s 133A (as is mentioned in Para 4 and 5 of 143(3) order by the AO), and the observation on the same material is merely a change of opinion. (c) The PCIT erred in not appreciating in para 3.3 of order that there is no admission by Sh. Jagatjeet Singh. 4 | P a g e Jagatjeet Singh vs ACIT (d) The PCIT erred in reaching a conclusion in para 3.4 of order “no suitable explanation could be provided by Sh. Jagatjeet Singh.” whereas he has simply stated that “ I need to reexamine the payments”

(e) The PCIT erred in reaching a conclusion in para 3.5 of order “Further, the demand note issued by the seller was in the name of the assessee, which demonstrated that the cash payment of 30 lacs was made by the assessee” without establishing the that demand note of 3rd party has actually been executed, without verifying the authenticity of demand note and without making any inquiry from the party who issued the demand note, and more-so, the loose documents have no evidentiary value as held in various decisions of Hon’ble court including Hon’ble Supreme Court in the case CBI v. V.C. Shukla 1998 taxmann.com 2155 (SC), CIT v. P.V. Kalyanasundaram [2007] 294 ITR 49 (SC).

5. (a) The PCIT erred in making observation in Para 5.2.1 of his order “In spite of having above information at the time of assessment proceedings, the AO has not made any enquiry or issued questionnaire/show cause notice to the assessee during the assessment proceedings.” whereas the same AO made multiple assessments of the entire group wherein each time the survey material has been examined as is evident from the questionnaires in each case, and the AO has specifically issued a questionnaire regarding details of properties of appellant.

(b) The PCIT erred in observing in Para 5.2.1 “Further the proposal for remedial action u/s 263 has been sent in this case by the same Assessing Officer who had passed order u/s 143(3) dated 31.03.2024 in the case of the assessee.” which in itself goes on to show that the AO has had a mere change of opinion and does not fall under the powers of Section 263 of the Act.

(c) The PCIT erred in making observation in Para 5.2.2 that the unaccounted cash payment (though not admitted) has been made by the Appellant although the documents relied upon have no authenticity being loose documents and without placing on record any corroborative evidence. 5 | P a g e

(d) The PCIT erred in Para 5.2.5 in declining cross- examination of Sh. Navin Verma whose whatsapp chat has been relied upon and thus acted in violation of the decision of Hon'ble Supreme Court in the case of Andaman Timber (127 DTR 241(SC)/ 281 CTR 241 (SC).

7. The appellant craves leave to add, alter, modify and withdraw any grounds of appeal before or during the appellate proceedings.”

4. Ld. AR has made detailed written submissions as well as oral arguments and has also filed a paperbook. The assessee has challenged the exercise of jurisdiction u/s 263 by the Ld. PCIT on several grounds. The written submissions are taken on record and the issues raised by the Ld. AR are summarized below:

(i) The impugned property was purchased in the name of the wife of the assessee and hence, no addition could be made in the hands of the assessee.

(ii) Whatsapp chat could not be treated as valid evidence on stand alone basis.

(iii) Detailed inquiries had been conducted by the AO while completing the assessment on returned income. Copies of detailed questionnaires issued by Ld. AO have been placed on record by the Ld. AR.

(iv) No inquiry was made by the Ld. PCIT and, therefore, in the absence of at least a minimal inquiry, the conclusion of the PCIT gets vitiated in the light of the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs Delhi Airport Metro Express Pvt. Ltd., 2017SCC Online Del 12959. Ld. AR has placed reliance on several other case laws in support of his above contentions.

7 | P a g e Jagatjeet Singh vs ACIT 4.1 On the other hand, Ld. DR has strongly relied on the order of Ld. PCIT. He has submitted that no inquiry was made by the Ld. AO and assessment was completed at returned income without taking into consideration the incriminating material found during the course of survey. Hence Ld. PCIT, after due consideration of the incriminating material gathered during the course of survey, has passed a detailed and speaking order demonstrating clearly that the order of Ld. AO was erroneous as well as prejudicial to the interest of the Revenue. Ld. DR has taken us through the order of Ld. PCIT wherein the documents as extracted from the iphone of the assessee have been reproduced which include the following:

(i) Demand Note dated 19.11.2021 of Rs. 44,75,000/- against purchase of Property Unit No. 11 in the project Airport City of M/S Realprix Infraconn. Pvt. Ltd. (ii) Confirmation Letter regarding payment of cash component.

(iii) extract of the statement of Shri Jagatjeet Singh recorded u/s 131(1A) at the time of survey.

4.2 After considering the assessee’s reply to the show-cause notice, Ld. PCIT in the order u/s 263 has observed as under:

“ 3. On perusal of the incriminating seized material and assessment records of this case for AY 2022-23, the following observation is made:

8 | P a g e Jagatjeet Singh vs ACIT 3.1 During the course of the survey proceedings, incriminating evidences were extracted from the chats of Sh. Jagatjeet Singh with Sh. Naveen Verma of M/s Realprix Infracon Pvt Ltd which indicated that Sh. Jagatjeet Singh had purchased property bearing address Unit No. 11 (Block-A) Dimensions in Residential Project "Airport City" in the name of his spouse Ms. Jasmine Kaur in FY 2021-22, against which cash payments had been made by the assessee.

3.2 During the perusal of the soft data, it was observed that there were multiple instances of chats wherein the deal regarding the purchase of the above- mentioned property had been discussed. The relevant extracts of the chats are given as under:

The above image, which is extracted from the iphone 11pro max of the assessee, is a demand note of Rs 44,75,000/- against the purchase of the property i.e. Unit no. 11 in the Residential Projects "Airport City" being developed by M/s Realprix Infracon Pvt. Ltd. The demand note dated 19.11.2021 raised against the assessee by M/s Realprix Infracon Pvt. Ltd. against the booking of Unit no. 11 in the Residential Projects "Airport City". As per this demand note, the property has been purchased for total amount of Rs 65 Lacs and a payment of Rs 25000 has already been made by the assessee. Further, it is mentioned in the demand note that an amount of Rs 44.75 Lacs are demand payable by the assessee on or before 15.12.2021 and for the rest payment of the Rs 20 Lacs payment schedule will be discussed. After receiving the payment in respect to the above demand note, a final detailed sheet was also shared with the assessee. That sheet is reproduced in 'Image VII'. 9 | P a g e

Image II

In this extract Sh. Naveen Verma is confirming that a welcome letter can be given after the payment in cash. Image V

In this extract, Sh. Jagatjeet Singh is confirming the payment of 5 lacs in cash and 2 lacs online against which two different receipts are being generated.

In this extract, Sh. Naveen Verma is ensuring Sh. Jagatjeet Singh that the cash component will be managed.

12 | P a g e Jagatjeet Singh vs ACIT In this extract, Sh. Naveen Verma is sharing expenditure sheets wherein a total cash payment of Rs 30 Lacs mentioned. Entry of cash component appears at serial numbers 4 and 6 amounting to Rs 5 Lacs and Rs 25 Lacs respectively. Data of this sheet corroborates with the demand note as mentioned above in 'Image I'.

In this extract, Sh. Naveen Verma is confirming the receipt of cash of Rs 15 lacs from Sh. Jagatjeet Singh.

3.3 The source of the cash payments amounting to Rs 30 lacs as per the images extracted from the mobile phone of Sh. Jagatjeet as above was enquired from him while recording of the statement u/s 131(1A). The relevant extracts of the statement of Sh. Jagatjeet Singh recorded u/s 131(1A) of the Income-tax Act, 1961, on 16.11.2022 in Room Number 004, Block-C, SPM Civic Centre, New Delhi is as under:

3.4 Thus despite being confronted with the chats which prove that the payments were made in cash against the said property, no suitable explanation could be provided by Sh. Jagatjeet Singh.

3.5 Furthermore, although the property has been purchased in the name of Ms. Jasmine Kaur, wife of Shri Jagatjeet Singh, the cash payment of 30 Lakhs for the acquisition of the property was made by the assessee, as indicated in the chat data obtained from Shri Jagatjeet Singh's mobile. Further, the demand note issued by the seller was in the name of the assessee, which demonstrated that the cash payment of 30 lacs was made by the assessee. Therefore, the source of the cash payment of Rs. 30,00,000/- for the purchase of property remained unexplained. and should have been added in the hands of the assessee under Section 69 of the act.

3.6 As per the statement of Sh. Jagatjeet Singh in paragraph 3.3 above, the year of the said transaction for purchase of property is mentioned as FY 2022- 23 relevant to AY 2023-24. However, on perusal of the incriminating chats, as mentioned in paragraph 3.2 above, it was noted that the year of the transaction is mentioned as FY 2021-22 relevant to AY 2022-23. Further, as per Image- VIII above, the cash payments of Rs. 5,00,000/- and Rs. 25,00,000/- have been made by the assessee during AY 2022-23 for purchase of the property.

7. Hence in view of foregoing, I satisfied and hold the assessment order in the case of Sh. Jagatjeet Singh (PAN ABIPL1327J) for A.Y. 2022-23 passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 on 31.03.2024 as erroneous and prejudicial to the interest of Revenue and therefore, set aside it for fresh adjudication by the Assessing Officer with the directions to carry out thorough and detailed enquiries on the issues as discussed above after giving an opportunity of being heard to the assessee. ”

5.1 Admittedly, the incriminating documents relating to cash payment of Rs. 30,00,000/- for purchase of property were extracted from the assessee’s iphone during the course of survey proceedings. During the statement recorded u/s 131(1A), the assessee was also specifically questioned regarding the same. However, during the course of assessment proceedings, there was no enquiry/examination of the issue as neither any of the questionnaires nor the assessment order contain any reference to the incriminating material evidencing cash payment by the assessee.

5.2 Ld. AR’s contention that the matter was also examined during the assessment proceedings is not acceptable. From a perusal of the notices and detailed questionnaires dated 12.12.2023, 24.01.2024 and the assessee’s replies to these questionnaires, it is clear that neither the Ld. AO raised any specific query in this regard, nor the transactions in cash have been explained in the written submissions filed by the assessee. 15 | P a g e Jagatjeet Singh vs ACIT 5.3 It has further been contended by the Ld.AR that since the property in question was purchased in the name of wife of the assessee, therefore, the Ld. AO had taken a view that no addition was liable in the hands of the assessee. After a careful perusal of the material before us including the questionnaires and the assessment order, we are unable to find any such view taken by the Ld. AO. Rather, no reference whatsoever to the transaction has been made anywhere by him. Thus, this contention of the Ld. AR is also found to be without any basis.

5.4 Another contention of Ld. AR that there was no valid chat so as to take action against anyone is also contrary to the facts on record. It is clear that the whatsapp messages contained images of the incriminating documents eg. demand note, confirmation letter etc. Ld. AR’s point that stand alone whatsapp chats are not valid evidences is well taken, however, the facts in hand are different as the supporting documents have also been found recorded in the whatsapp chat and, therefore, these cannot be disregarded as mere messages.

5.5 Lastly, Ld. AR has argued that the PCIT has not carried out even minimal enquiry and therefore, conclusion drawn by him is vitiated in the light of the decision of Hon’ble Jurisdictional High Court in the case of Delhi Airport Metro Express (supra).

5.6 We have perused the detailed questionnaire issued by the Ld. PCIT and are of the considered view that Ld. PCIT has conducted requisite enquiry after

As regards the decision of the Hon’ble Jurisdictional High Court cited by the Ld. AR, it is noted that the facts of that case were entirely different. In the case of Delhi Airport Metro Express, Ld. PCIT had simply referred to the CBDT Circular 9/2014 relating to claim of depreciation, in his order u/s 263 without pointing out as to how the depreciating claimed by the assessee and allowed by the Ld. AO was incorrect.

However, in the case at hand, Ld. PCIT has duly examined the incriminating material gathered during the survey proceedings as well as the statement of the assessee recorded u/s131(1A) and then issued a show-cause notice to the assessee containing relevant extracts. After considering the assessee’s reply, he has concluded after detailed discussion that the order of Ld. AO was erroneous and prejudicial to the interest of the revenue.

5.7 Further, Ld. AR’s reliance on the decision of the Hon’ble Apex Court in the case of PCIT-1, Chandigarh vs M/s. V-Con Integrated Solutions Pvt. Ltd. dated 04.04.2025 in SLP(Civil) Diary No. 13205/2025(SC) is also misplaced wherein it was held as under:

“ The assessee does not have control over the pen of the Assessing Officer. Once the Assessing Officer carries 17 | P a g e Jagatjeet Singh vs ACIT out the investigation but does not make any addition, it can be taken that he accepts the plea and stand of the assessee. XXX There is a distinction between the failure or absence of investigation and a wrong decision/conclusion. A wrong decision/conclusion can be corrected by the Commissioner of Income Tax with a decision on merits and by making an addition or disallowance. ”

In the present case, there has been no enquiry whatsoever, by the Ld. AO on the impugned transaction and, therefore, the fact at hand are entirely distinguishable. Since in the case of V-Con (supra) requisite investigation had been carried out as all these cases are distinguishable on facts from the present case. Similar is the case in respect of various other decisions relied upon by the Ld. AR.

5.8 After careful consideration of the facts and circumstances of the case, we are of the considered view that the case is squarely covered by clause (a) of Explanation 2 to the sub-section (1) of section 263 which reads as under:

“Section 263(1)Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be, shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner- (a) the order is passed without making inquiries or verification which should have been made;”

Order pronounced in the Open Court on 06-01-2026.