TaxTMI 
TaxTMI 
2026 (2) TMI 755
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....nd without contemporaneous evidence, can override the evidentiary value of such statements in the absence of any allegation of coercion or mis-recording therein. 4. Whether the Ld. CIT (A) has erred in law in holding that nominal shareholding of the assessee precludes the addition of the entire amount of cash receipt of Rs. 100 crores in his hand u/s 69A of the Act, ignoring the factual matrix indicating beneficial ownership and control of Sh. Gaurav Dalmia on the entities involved in the transaction. 5. Whether the Ld. CIT (A) has erred in applying principles of consistency from other assessments, i.e., Rakesh Aggarwal's case, contrary to the settled law that each assessment is to be judged independently based on specific evidence applicable to the assessee in question. 6. Whether the Ld. CIT (A) is correct in law in relying on the valuation report submitted by the assessee, valuation of the shares on DCF method, ignoring the fact that: * there were flaws in the valuation report as pointed out in the assessment order, and * the valuation report does not hold significance when the incriminating material relating to unaccounted cash c....
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....y connected with the Dalmia Group and who was covered under the same search on the same day. The scanned copy of the seized document is reproduced at Page 3 of the Assessment Order and it contains details of amounts received by various entities/persons of Dalmia Group. 6. The ld. counsel for the Revenue placed reliance on the decision in the case of K. Krishnamurthy V. Deputy Commissioner of Income-tax [2025] 171 taxmann.com 413 (SC) for the proposition that assessment u/s 153A can be based on the materials found anywhere in the search. In view of the above judgment of Hon'ble Apex Court, the seized documents "Aexited" (Page No.14 of ANNEXURE A-1), seized from the residence of Shri Rakesh Aggarwal, falls within the expression 'found in the course of search' and, therefore, assessment under section 153A of the Act is valid and legal as per the provisions of the Income-tax Act, 1961 [the Act, for short]. Thus, it was prayed that the additional ground raised by the assessee under rule 27 may not be admitted. 7. Regarding Additional Ground No. 2 the ld. counsel for the Revenue submitted that Rule 27 of the ITAT Rules enables a respondent (i.e., the assessee) to suppor....
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....wide amplitude. It does not mean documents found in the assessee's premises alone during the search. At times, search of an assessee leads to a search of another individual and/or further investigation/interrogation of third parties. All these steps and recoveries therein would fall within the expression 'found in the course of search'. 10. In the above decision, the hon'ble Supreme Court widened the scope of expression 'found in the course of search' to include documents seized from person other than searched person. In view of the above judgment of Hon'ble Apex Court, the seized documents "Aexited" (Page No.14 of ANNEXURE A-1) seized from the residence of Shri Rakesh Aggarwal falls within the expression 'found in the course of search' especially when the said Shri Rakesh Aggarwal was an employee of the assessee and was covered under the same search. We therefore hold that the assessment under section 153A of the Act, made on the basis of document seized from Rakesh Agarwal, is valid and legal as per the provisions of the Income-tax Act, 1961 [the Act, for short]. We are of the view however, whether the material found is incriminating or not, goes to the roo....
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.... the residence of Shri Rakesh Aggarwal, an employee of the assessee who was searched along with the assessee. The AO held that the assessee has received unaccounted cash of Rs. 100,00,00,000/- on account of sale of shares of Landmark Hi Tech Development Private Limited('LHDPL') to Uppal Chadha Hi Tech Developers Pvt Ltd. On appeal, the ld. CIT(A) vide order dated 31.03.2025, deleted the entire addition so made by Assessing Officer. 14. Aggrieved, the Revenue is in appeal before us. The assessee as well has filed additional ground as above under Rule 27. As the assessee's additional ground 1 goes to the root of the matter, we take up the assessee's issues first. 15. The assessee, in support of his ground has made the following submission on legal issues as well as on merits: "2.1 It is now well settled law that no addition can be made in the proceeding u/s 153A of the Income Tax Act, unless any incriminating material qua each assessment year is found from the premises of the appellant. In the impugned order ld of the Income Tax Act on the basis of noting found during the course of search from the residence of Shri Rakesh Aggarwal (third party), kindly see page....
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....d income and in the original assessment there was no addition to returned income. Since it is an unabated assessment and as such addition cannot made in the impugned order in the absence of incriminating material found during the course of search. Reliance is placed in this regard on the following judicial ruling: - a) PCIT vs Abhisar Buildwell (P) Ltd. (SC) reported in 454 ITR 212 b) Commissioner of Income Tax, (Central) III Vs Kabul Chawla ITA no 707/2014, (Delhi High Court) reported in 380 ITR 573. c) CIT Vs Singhad Technical Education Society (SC) 397 ITR 344 d) Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (Delhi HC) reported in 395 ITR 526. 2.5 The aforesaid judgments have also been noted by learned CIT (A) at pages 60 and 61 of his order, further, even the fact that the entries so mentioned in the alleged seized document are recorded in the books of accounts of various entities of Dalmia groups have been noted by learned CIT (A) at pages 40 to 55 of his order, even then the learned CIT(A) failed in his duty in quashing the impugned assessment order so made, however, gave full relief on merits. ....
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....1 Landmark Realtech Pvt Ltd 6,433,180 94.70 2 Plus One Realtors Pvt Ltd 350,250 5.16 3 Mr. Gaurav Dalmia (Assessee) 5,000 0.07 4 Mrs. Sharmila Dalmia 5,000 0.07 Total 6,793,430 100.00 3.3 It may be observed that vide agreement dated 12.06.2013, LRTPL and others (Gaurav Dalmia, Sharmila Dalmia and Plus One Realtors Pvt Ltd) were to sell 67,93,430 shares of LHTDPL during FY 13-14, in a phased manner, to Uppal Chadha Hi-Tech Developers Pvt. Ltd at Rs. 515.20 per share having an aggregate consideration of Rs 350 crores. In pursuance to the aforesaid agreement, LRTPL and others (Gaurav Dalmia, Sharmila Dalmia and Plus One Realtors Pvt Ltd) sold shares and offered the resulting income in AY 2014-15 to AY 2016-17. The sale of shares took place as under: A.Y. No. of shares Consideration (Rs.) @515.20 per share 2014-15 49,43,782 254,70,36,486 2015-16 10,65,597 54,89,95,574 2016-17 7,84,051 40,39,43,075 Total 67,93,430 350,00,00,000 3.4 From the perusal of the above it is important to note the following facts: - i) Landmark Realtech Pvt Ltd (LRTPL) purchased....
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....ntral) - III Vs Kabul Chawla ITA no 707/2014, (Delhi High Court) reported in 380 ITR 573. c) CIT Vs Singhad Technical Education Society (SC) 397 ITR 344 d) Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (Delhi HC) reported in 395 ITR 526. ix) On merits and as per Section 56(2)(viia) read with Rule 11UA(1)(c)(b), Net Asset Value is required to be worked out and NAV of share is Rs 200 per share. x) As such the rate of share of Rs 515.20 per share at which shares of Landmark Hi Tech Development Private Limited have been sold by Landmark Realtech Pvt Ltd is above the fair market value of share worked out as per section 56(2)(viia) read with Rule 11UA and as such, substitution of value by learned AO on DCF basis is unjustified and untenable in law. 3.5 It may also be observed that the Id AO relied upon the following statements recorded during the course of search of Mr Rakesh Agarwal, Mr SN Pareekh and Mr. Naresh Ghai, who all retracted the statements recorded during search and explained the circumstances under which the statements were recorded during the course of search i.e. under extreme duress and coercion. L....
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.... the order passed u/s 143(3) for A Y 2021-22. 3.8 From the perusal of the order for A Y 2021-22 (para no 7.4 of order) of Shri Mridu Hari Dalmia it may be observed that it has been admitted by ld AO that: i) Cash found during search pertains to A Y 2021-22 ii) The cash found is not related to wave group as the addition has been made by Id AO in respect of cash found during search separately. In view of the above the Id AO wrongly made adverse observation on the basis of cash found during search the addition in respect of which has been made separately in the A Y 2021-22 in the hands of Shri Mridu Hari Dalmia. On analysis of the entire assessment order nowhere it is brought by the IdAO that if such huge amount was received by the assessee in cash, where and how it was deployed. Had the assessee actually received such huge sum of cash, it would have deployed it somewhere which IdAO has not been able to evidence by way of any cogent material or supporting documents. This also supports that no such cash receipt of 100 crores was made by the assessee. 3.9 Without prejudice to above, reliance is placed on the findings of learned CIT (A) (kindl....
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....the basis of this document and the statements recorded during the course of search of Mr Rakesh Agarwal, Mr SN Pareekh and Mr. Naresh Ghai, the AO related the addition of Rs. 100,00,00,000/- to unaccounted cash received, on the sale of shares of Landmark Hi Tech Development Private Limited ('LHDPL') to Uppal Chadha Hi Tech Developers Pvt Ltd. 18. For the purpose of adjudication on the issue, it is necessary to first ascertain certain facts of the instant case. We find the assessee for AY 2016-17, had filed its original return on 17.08.2016 which was revised on 22.03.2017. The return was scrutinized and an order u/s 143(3) was passed on 19.12.2018 accepting the returned income. 19. Subsequently, a search in the case of the assessee was conducted on 17/03/2021. As the assessment in the instant case was completed u/s 143(3) of the Act vide order dated 19.12.2018 at returned income, and no notice 148 was issued, no proceedings were pending and therefore the AY 2016-17 becomes an unabated assessment. With the law laid down by the hon'ble Supreme Court in PCIT vs Abhisar Buildwell (P) Ltd, it is no longer res-integra that in the case of unabated assessment year, the additio....
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....PL was sold @ Rs 515.20 per share totaling to Rs 350 crore whereas the sales price of the shares of LHDPL should have been Rs. 651.22 per share totaling to 450 crore. The AO has considered this difference of Rs 100 crore as cash received by the assessee which is reflected in the said entry no 31 of the seized document. Such a conclusion is based on statement of Rakesh Agarwal who stated u/s 132(4) that the entry reflects payment to Dalmia group in cash from Wave Group. As per the statements, this amount was received by Rakesh Agarwal and given to SN Pareekh, cashier of the Dalmia Group and confirmed by Naresh Ghai, GM Finance of Dalmia Group. 22. On examination of the various entries on the said page, we find that the AO has accepted amount received vide entries from Sr no 1 to Sr no. 30 and Sr no. 32 as explained and duly reflecting in the assessee books of account. With respect to entry at sr. no. 32, the assessee explained that the same is on account of investment in JM Financial Mutual Fund which was made through banking channel and is not unaccounted transaction. As evidence for the same, the assessee submitted copy of account statement and the relevant portion of bank stat....
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....ment of Shri S N Pareek. 26. As far as statement of Rakesh Agarwal is concerned, we find from the statement of Rakesh Agarwal that he had prepared the impugned seized document for calculation of bonus/commission income for arranging the various deals as reflected in entry 31 of the said document. The AO of Rakesh Agarwal, who was the same AO as that of the assessee, did not consider the bonus/commission part of the statement as income in the hands of Rakesh Agarwal. Thus the AO again only partially relied on the statement of Shri Rakesh Agarwal. We therefore are inclined to endorse the CIT(A)'s view that the AO himself was convinced that the statements given u/s 132(4) by Rakesh Aggarwal; SN Pareekh and Naresh Ghai were given under undue pressure and without free will and therefore were not reliable. We also add that the AO nowhere demonstrated that statement given by Rakesh Aggarwal; SN Pareekh and Naresh Ghai are backed by any cogent/corroborative evidence. The only evidence relied upon by the AO, is the seized document A-1 which contrary to the AO's assessment, contains entries which are all duly recorded as part of the books of account of the assessee. 27. The judicial in....
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....s, or proceedings stemming from it are automatically null and void, we hold that the assessment framed u/s 153A in the instant case is invalid and bad in law as the same is devoid of any incriminating material. This finding, it is needless to add, is in accordance with the decision of the Hon'ble Supreme Court in PCIT vs. Abhisar Buildwell (P) Ltd (supra). Accordingly, the Additional Ground 1 raised under Rule 27 is allowed. 30. The assessment u/s 153A has been held as bad in law herein above on legal ground therefore, the grounds of appeal of the Revenue on merits is not adjudicated upon and is dismissed as academic and infructuous. 31. In the result, additional ground 1 under Rule 27 of the assessee is allowed and appeal of the Revenue in ITA No.4162/DEL/2025 is dismissed. Order pronounced in open court on 29.01.2026. ============= Document 1 A Exiled Paymert made PANDA CALCULATIONS Rs OFOT 2,54,00,000 43 Mit GD 3,75,00,000 37.0F 2/550 ALKTPE 1,50,00,000 931 LLHPL 35,00,000 Forme Total 8,14,00,000 Interest received SI. No. Name of Entity Received From Amount(Rs.] 1 DFOT ATS Housing 12,33,69,863 2 DIOT Anand Divine 8,41,43,836....