TaxTMI 
TaxTMI 
2026 (4) TMI 339
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....sposed of by way of this consolidated order. For the sake of convenience, the facts as emanating from AY 2012-13 are taken as the lead year for the assessments made u/s 153A and for the AY 2011-12, separate findings rendered therein shall apply mutatis mutandis to the remaining years as well. 2. The assessee in the various grounds of appeal and additional grounds raised before us has primarily challenged the legality of the reassessment proceedings initiated under section 147 of the Act for the AY 2011-12 and the consequential additions made by the Assessing Officer. The grievance of the assessee, in substance, is that the reassessment proceedings initiated by the Assessing Officer are without jurisdiction and void ab initio. According to the assessee, the very basis of the reopening of assessment emanates from investigation material which arose in the context of search related proceedings and therefore, the assessment of such alleged escapement of income could only have been undertaken within the statutory framework governing search assessments. The assessee has further challenged the additions made on merits on account of alleged bogus long term capital gains and the consequen....
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....ncome Tax Act 1961 (in short 'the Act'). 2. In the instant, the Assessee has declared its total income of Rs. 66,83,960/- by filling its return of income dated 30.09.2011, which was processed u/s 143(1) of the Act, whereby the return filed by the Assessee was accepted and no scrutiny assessment was done. Subsequently, the case of the Assessee was reopened u/s 147 of the Act, after recording the following reasons:- "Information has been received from the Directorate of Investigation that an organized racket of generating bogus entries of LTCG in penny stocks has been unearthed is a result of investigation carried out throughout the country. As a result of this investigation, 64000 beneficiaries who have taken bogus entries of LTCG amounting to Rs. 38,000 crores have been identified. Sh. Kashyap K Mehta, having PAN: AAFPM4290H who is assessed in this charge has also availed of such an entry. The same is reflected in the return of Income filed by the assessee for AY 2011-12 by way of claim of exemption amounting to Rs. 5,22,02,762/- u/s. 10(38) of the Income tax Act, 1961. The Directorate of Investigation has made available various confessional statements of....
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....ashyap Mehta, the spouse of the assessee on identical facts/law, thereby breaking the principles of judicial discipline which require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities as enunciated by Apex Court judgement in UOI vs Kamlakshi Finance Corporation Ltd. Thus, the impugned appellate order and the original assessment order in appeal must be declared as illegal and void ab initio. 2. The CIT(A) erred in law and on facts in dismissing the following grounds of appeal taken / relating to the jurisdictional error occurred due to: a.) Non-issuance of the mandatory assessment jurisdiction transfer order u/s 127(2) of the Act by PCIT, while transferring assessment jurisdiction from the ITO Ward 27(3)(2) Mumbai to the ACIT 21(2) Mumbai. b.) Non-issuance of the mandatory intimation u/s 129 of the Act for change in the incumbent AO and never given to the assessee by the AO. c.) Framing the impugned assessment order by illegally assuming jurisdiction u/s 147 of the Act instead of the correct section 153A r.w.s. 153C of the Act, by relying on an incriminating information found by the ....
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....um/2019 decided on 28.07.2022 and Hon'ble Tribunal in that case has clearly held the assessment order u/s 147/143(3) as void-ab-initio being passed without assuming valid and legal jurisdiction u/s 153A of the Act. For completeness and ready reference, the conclusion drawn by the Hon'ble ITAT, is reproduced below. 18. We have heard the rival submissions and perused the relevant record available before us, on the issue of jurisdiction of the AO on both the counts as raised by assessee before us as discussed above and the relevant law on these points. First of all, in order to appreciate the issue raised by assessee in the aforesaid submissions, the provisions of the section 153A of the Act as were applicable during the relevant period need to be appreciated which was as below: 153A. (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 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall-....
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.... or in aggregate in the relevant assessment years; (ii) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and a. the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (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....
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....ed u/s148 was pending on the date of search. Thus, the AO should have treated the pending assessment proceedings initiated u/s 148 of the Act for this AY 2011-12 as abated, because it fell in the extended period of 4 relevant assessment years as per the provision brought from 1.04.2017. It is neither, the assessee's acquiescence nor the AO's discretion in this matter, because it is purely a matter of jurisdiction which needs to be acquired in accordance with the statute. It was incumbent upon the AO to pass order u/s 153A, as after the amendment if the AO is in possession of any document or other evidence which reveal that the income which has escaped assessment is more than Rs. 50 lakhs, which here in this Rs. 6.93 crores. The AO here in this case did not act upon in accordance with the law though specifically brought to his notice by the assessee in writing before completing the reassessment on 28/12/2017. The additional time of 4 years were specifically brought within the scope of relevant assessment years inserted by the Finance Act, 2017,w.e.f. 01/04/2017, if the income escaped assessment is more than Rs. 50 lakhs in terms of 4th Proviso. It is noteworthy that prior to the ena....
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....session only u/s 153A, which here in this case, AO has failed to comply with the mandatory requirement of law as brought in the statute and the Finance Act 2017 w.e.f. 01.04.2017. Because here in this case, search has taken place after the amendment, therefore the amended provisions was likely to be applicable. We, therefore, hold that the assessment order u/s 147/143(3) is void ab initio being passed without assuming a valid and legal jurisdiction u/s 153A of the Act and instead he has resorted to section 147 of the Act which he could not have and is hereby quashed. 8. Now coming to ground nos. 2 (a) and (b), the Assessee has also raised the issue that in the instant case, by transferring jurisdiction from ITO, Ward 27(3)(2) Navi Mumbai to the ACIT 21(2) Mumbai, neither the mandatory assessment jurisdiction transfer order has been passed u/s 127(2) of the Act nor the intimation u/s 29 of the Act, for change in the incumbent of AO was given to the Assessee. Therefore, the assessment order being void-ab-initio is liable to be quashed. 8.1 We find that the Hon'ble Tribunal in the case of Assessee's wife case i.e. Rupal Kashyap Mehta Vs. ACIT-21(2) (supra) also dealt....
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....ment, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. (3) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. Explanation.-In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued there under, means all pr....
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....diction, following the above jurisdictional High Court judgment the other grounds of appeal on merits become academic and have not been adjudicated. 28. In the result, the appeal filed by the assessee is allowed. 9. Though the Ld. DR supported the order passed by the Ld. Commissioner and also tried to demonstrate the exercise of valid jurisdiction by the AO in making the assessment order, however it is fact that identical issues/grounds as raised by the Assessee in this appeal, have already been dealt with by the Hon'ble Tribunal in the Assessee's wife case, wherein also the identical facts and circumstances existed on the basis of same search and seizure operation carried out on dated 06/10/2017, as involved in the instant case, therefore, respectfully following the said decision of the Hon'ble Tribunal, we are inclined to accept the grounds raised by the Assessee, which are legal in nature and consequently, quashing the assessment order itself being void-ab-initio. 10. Since, we have quashed the assessment order itself, therefore adjudication of the additions on merit would prove futile exercise, hence we are not adverting to. 11. In the result....
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....essment year. It was submitted that once a search under section 132 had taken place on 06.10.2017, the statutory provisions of section 153A stood triggered and any reassessment proceedings initiated under section 147 were liable to abate. According to the learned counsel, the reasons recorded for reopening themselves indicate that the alleged escapement of income was noticed during the search proceedings and therefore the reopening under section 148 dated 29.03.2018 was legally unsustainable. "Reasons to believe that income chargeable to Tax escaped assessment u/s 147 of the Income Tax Act: 1. Assessee filed return of income on 30.09.2011 declaring total income at Rs. 66,88,960/-. The return was processed u/s 143(1) of the Income Tax Act, 1961. The case had been reopened by issue of notice u/s 148 of the Act. Subsequently, assessment u/s 143(3) r.w.s 147 was completed on 28.12.2017 at an assessed income of Rs. 6,16,86,380/-. 2. Subsequently, in this case, information was received from the DDIT (Inv) Unit-1 Mumbai vide letter dated 19.03.2018 that during the course of search/survey u/ss 132/133A in the case of M/s Sunshine Housing & Infrastructure Pvt. Ltd....
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.... under section 148. However, the learned CIT-DR could not controvert the factual position that the reasons recorded for reopening were based on the information allegedly noticed during the search proceedings conducted on the assessee. 10. We have carefully considered the rival submissions and perused the material available on record. We have also examined the earlier order of the coordinate bench of the Tribunal rendered in the assessee's own case. From a careful analysis of the facts, it becomes evident that the entire reassessment proceeding culminating in the impugned order dated 28.12.2018 is founded upon the allegation that income exceeding Rs. 7.50 crores had escaped assessment on account of long-term capital gain claimed as exempt on sale of shares of the aforesaid companies and that such information had surfaced during the course of search on the assessee. Once such is the admitted factual position, the statutory scheme of section 153A becomes applicable and the Assessing Officer cannot resort to the general provisions of section 147. Respectfully following the earlier decision of the Tribunal in the assessee's own case, we hold that the Assessing Officer lacked jurisdic....
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....ose searches were independent income-tax searches. The AO‟s main reliance is based on the so-called statement of the assessee only recorded u/s 132(4) of the Act. 14. In the so-called statement recorded u/s 132(4) of the Act on 10/10/2017, the assessee was shown the statements recorded u/s 132(4) of the Act elsewhere to rebut while recording his statement in respect of the additions made to reject the claim of Long-term capital gains as exempt u/s 10(38) of the Act for the period relevant to the AY 2012-13, the assessee was asked the following questions: Q.25 Please state whether you or any of your family members have invested in the shares of D. B. (International) Stock Brokers Limited? Ans. Sir, I confirm that the following persons have invested in D. B. (International) Stock Brokers Limited: S.No. Name of person Years 1. Kashyap K. Mehta (self) A.Y.2011-12 2. RupalK.Mehta(wife) A.Y.s2011-12,2012-13 3. Kashyap K.MehtaHUF A.Y.s2011-12,2012-13 Q.26 Please state whether you or any of your family members have invested in the shares of Shree Nath Commercial & Finance Limited? Ans. Sir, I confirm that the ....
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....ployee in M/s Evergreen Enterprises. In his statement u/s 132(4) of the IT Act on 09.10.2017, he has admitted that this document contains the details of cash loan advanced to Nilesh Bharani, partner in M/s Evergreen Enterprises and finance broker, from Sunshine Group and cash loan repaid to Sunshine Group. Please offer your comments in this respect. Ans: I have seen this page. I admit that I have been giving cash loan to Nilesh Bharani, partner in M/s Evergreen Enterprises, which are recorded in this page as SS. I have also received interest in cash from Nilesh Bharani. I am unable to recollect the exact details of cash loan transactions. I have to check the facts regarding this with my records which are not with me. Please give me three days time by the end of which I will file the details of these cash transactions with Nilesh Bharani. Q.31 I am showing you the copy of Page No. 328 of Annexure A-1, which is seized from the premise 12, Sharda Sadan, 7, SG Marg, Dadar East, Mumbai office of M/s Evergreen Enterprises during the course of search action u/s 132 of the Income-tax Act. This seized document is confronted to Ashwin Rathod, employee in M....
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.... should have been found during the course of search in the premises of the assessee only and nowhere else. He categorically stated that if anything was found during the course of search in the premises of some other assessee where the name of the assessee did not figure at all, then the course of reassessment available with the Revenue Authorities have been specifically designed in the statute u/s 153C of the Act which is also para-materia and non obstante section as is the section 153A of the Act. These two sections were applicable at the relevant time only in respect of income-tax searches conducted either in the premises of the assessee or in the premises of someone else allegedly detecting incriminating material in respect of an assessee not searched. 19. If the Revenue really wanted to take cognizance of the said material in any manner in the hands of the assessee, then the course of the said reassessment lied elsewhere and not u/s 153A of the Act which in terms of the mandate of the Hon'ble Apex Court in Abhisar Buildwell (supra) is unambiguously defined as below in para 14 (iv): 14.(iv)in case no incriminating materialis unearthed during the search, the AO cannot....
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....nating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment /reassessment proceedings-initiated u/s 148 of the Actin respect of the said incriminating information found during the course of a search up to 31/03/2021 on some other assessee is illegal and is ab initio as the same can be considered only by taking recourse to the provisions of the section 153C r.w.s. 153A of the Act. Thus, the assessment of the said amount of LTCG, which was claimed to be exempt u/s 10(38) of the Act by the assessee, made u/s 147 of the Act is beyond the scope of section 147, albeit it can be roped in only u/s 153C. 93. If on overall appreciation of the scheme of assessment / reassessment of income after the income-tax searches on the assessee searched and also for the persons not searched based on detection of some incriminating information during the said searches conducted upto 31/03/2021, t....
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....T- ITAT Delhi ITA No. 4785/Del/2015- (DOD- 23.01.2024) v. Mr.RiteshRaivsDCIT-ITATChennai-ITANo.811&812/Chny/2022-(DOD- 19.07.2023) vi. PCITvsMeeraGupta-ITATDelhi-ITANo.403/2023 (DOD- 27.07.2023) vii. PCIT vs Kaushik Devji bhai Patel - (2023) 152 taxmann.com 462 (Gujarat) (DOD-04.05.2023) viii. PCITvsJayAmbeyAromatics-(2023)156taxmann.com 691 (SC) (DOD- 24/11/2023) ix. PCIT vs Oxygen Business Park(P)Ltd-(2023)157 taxmann.com 175 (Delhi) (DOD- 08/12/2023) x. SakshamCommoditiesLtdvsITO(2024)161taxmann.com485(Delhi)confirmedby the Apex Court in SLPno. 51947/2024 vide order dated 16/12/2024. xi. PCIT vs Pavitra Real com Pvt Ltd(2024)120CCH0035 (Delhi HC) xii. Hon'ble ITAT Mumbai "D" Bench in the case of Rajeshkumar Ramesh chandra Shah vs DCIT in ITA No. 5568to5573/Mum/2024forAYs2013-14to2018-19DoD-31.01.2025, the judgment arising from the same search and on identical facts(as in the case of assessee)has directed the AO to delete the additions in all the years under dispute (para 12 to 14, page no. 8 to 10) 4. We find that in respect of the addition made for the AY 2012-13by rejecting the LTCG, claimed exemp....
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....aries, however there is no allegation against the assessee. Similarly, from pages 27-36, the AO analysed the financials and price fluctuation in the scrip M/s Shree Nath Commercial & Finance Ltd. Identical to M/s D.B. (International) Stock Brokers Ltd., the statement of entry operators relied upon by the AO, who admitted to have provided accommodation entry in M/s Shree Nath Commercial & Finance Ltd., were recorded in the year 2015, i.e. much prior to the search/survey conducted at the residential premises of the assessee. Therefore, from afore-noted factual position, it is evident that the entire addition is based on the information received during the search carried out in case of some other persons. Further, from para-7.10 of the assessment order, it is also evident that the statement of the assessee was also recorded under section 132(4) of the Act pursuant to the information received during the search carried out in case of some other persons. In view of the aforesaid peculiar factual matrix of the present case, it is the plea of the assessee that the assessment should have been done under section 153C of the Act instead of the assessment order being passed under section 153A ....
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....t of preferential shares submitted to Ministry of Corporate Affairs (MCA), which was also not seized from the premises of the assessee. The investigation wing of Income Tax Department had gathered those informations from MCA and had confronted Shri Koteshwar Rao during the course of search. Shri Koteshwar Rao denied having affixed his signature thereon as he had resigned from the post of Director of MARL in the year 2012. However, from the statements recorded by the investigation wing of income tax department from various persons involved, it is evident that the signature of Shri Koteshwar Rao was indeed forged in the documents pertaining to allotment of preference shares to various persons including the assessee and his family members. At this juncture, it would be relevant to note that both Shri Koteshwar Rao as well as the assessee in their individual sworn statements had categorically denied having known each other. Hence it becomes evident that assessee was never involved in any of the forgery acts that had been carried out in the allotment of preference shares of MARL. But we find that the assessee was confronted by the revenue with those very same forged signed documents in ....
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....ents of the same assessee in addition to the single assessment u/s 153A of the Act for the relevant period on search on him. This is so because the cause of action u/s153C of the Act can arise up to 10 years when some incriminating information pertaining to the assessee is detected in searches elsewhere at different times which were not accessible to the revenue earlier. The assessment procedures under the two specific situations have, therefore, been categorically mandated by the legislature without any fetters and need to be followed by all the courts including the Hon'ble Supreme Court being a jurisdictional issue as has been held by the Hon'ble Supreme Court in S S Con Build Pvt Ltd reported in 293 Taxman 491 (SC) dated 4.5.2023 by following the earlier Apex Court judgment in Kanwar SinghSaini vs High Court of Delhi reported in (2012) 4 SCC 307. We find that undisputedly section 153C of the Act starts with a non obstante clause and both the AOs involved were bound to act as per this provision as term deployed therein is "shall". Accordingly, as per the law, no addition in an assessment order passed u/s 153A of the Act without following the mandatory route of section 153....
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....ing Officer is satisfied that,-- (a) Any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A: Provided that in case of such other person, the reference to the date of initiation of these arch under section 132 or making of requisition under section 132A in the second proviso to sub section (1 ) of....
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....essment proceeding, in the case of a person in whose case search action under section 132or action undersection 132Ahave been conducted, and whether the Assessing Officer is satisfied that the assets or books of account or documents seized belong to another person, then, the assets or books of account or documents seized shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person, if he is satisfied that the books of accounts or documents or assets seized have a bearing on determination on the total income of such other person. It is proposed to amend sub-section (1) of the said section so as to provide that where the Assessing Officer is satisfied that, (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned, shall be handed over to the As....
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.... is fortified by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs RRJ Securities Ltd reported in 380 ITR 612 (Del) followed in Pr. CIT vs Raj Buildworth (P) Ltd reported in 113 taxmann.com 600 (Delhi) and the SLP of the revenue dismissed by the Hon'ble Apex Court which is reported in 113 taxmann.com 601 (SC). Consequently, the period relevant to the Asst Year 2015-16 herein, when the impugned incriminating material was found in a search of a third person, got shifted from the scope of an assessment u/s153A of the Act to the provisions of the sections 153C of the Act being one of the six assessment year preceding the date of search in the case of the other person. 28. Thus, it could be safely concluded that in addition to the assessment order passed u/s 153A of the Act on the basis of an income-tax search conducted on the assessee, the impugned amount assessed in this assessment order as undisclosed / unexplained income, allegedly based on some incriminating material found elsewhere, with respect to the long term capital gain already declared in the return of income filed on 29/11/2015 could not be assessed in the said assessment order pas....
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....essee and which was also retracted by Mr Nilesh Bharani later vide his letter addressed to the Investigation Unit on 14/10/2017 when the husband of the assessee also retracted his statement recorded on 10/10/2017 as mentioned in foregoing paragraphs separately. The charts of the additions made are given below: Para 5.31 for alleged cash loan given 5.31. In the light of the above discussion, the cash loans given by the assessee to Shri Nilesh Bharani are assessed as undisclosed investment in loans amounting to Rs. 56,00,000/- for AYs 2014-15 to 2018-19, u/s 69 of the IT Act as detailed below. Assessment year Opening Balance Cash loan given during the year Cash loan received back during the year Balance outstanding cash loan Amtin '000 Amtin '000 Amtin '000 Amtin'000 2012-13 0 2013-14 0 0 2014-15 0 4200 4200 2015-16 4200 1400 5600 2016-17 5600 3100* 2500 2017-18 2500 2500 2018-19 2500 2500 Total 5600 3100 P....
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....al in any manner was also found from the assessee having been made any investment or having earned any interest income. He also said that these questions were raised on the husband of the assessee on the 5th day of the search, i.e. on 10/10/2017 when the alleged material/information had already been found in an independent income-tax search conducted in the premises of Mr Nilesh Bharani in the afternoon of 06/10/2017. The ld. counsel also said that no other material has been referred to in the assessment orders which could suggest any such undisclosed income. He also stated that physical presence of many Revenue Officers as per the Panchnamas for the 6 days (from 06/10/2017 to 11/10/2017) in the premises of the assessee without having found any material needing examination and confrontation with the assessee itself during the said search, demonstrate the clear mental pressure and harassment exerted to the husband of the assessee to pressurise him to sign on the dotted lines as recorded by the Revenue Officers on the 5th day of the search in their residence. Admittedly, the statement was also retracted by the assessee at the earliest thereafter on 23/10/2017 proves that the said sta....
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....ire statement has been typed in achronological manner of different issues and not in a manner the information found or is found and confronted. Such types of statements are typed after assimilating the alleged information in one serial form and then typed. This in entirety shows that the statement of the husband of the assessee relied by the Revenue is not a legal statement u/s 132(4) of the Act as was not tendered under the normal circumstances, was also not authenticated by the authorised officer before whom it was allegedly recorded so the Revenue is completely barred to take cognizance of the same against anybody including the deponent Kashyap K Mehta nor the assessee. 13. The contention of assessee also finds support from the legal pronouncements in CIT vs Lavanya Land (P) Ltd [2017] 83 taxmann.com 161 (Bombay), Aurum Platz (P) Ltd vs DCIT [2023] 152 taxmann.com 85 (Mumbai), CIT vs. Harjeev Aggarwal (2016) 70 taxmann.com 95 (Delhi) and PCIT vs Agson Global (P) Ltd [2022] 134 taxmann.com 256 (Delhi) holding that a statement recorded u/s132(4)of the Act per se not at all evidence, unless it is supported with any material gathered during the course of said search. ....
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....ssion. Hence, there is no reason not to disbelieve the retraction made by the Assessing Officer and 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 Assessing Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee. [Emphasissupplied] 22. Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal, 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 section 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 se....
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....this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned." 25. Also, the Supreme Court in the case of CIT v. Abhisar Buildwell (P) Ltd., has clarified that in case no incriminating material is found during the search conducted under Section 132 of theAct, 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 Section 132 or requisition under Section 132-A of the 1961 Act. 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]" 16. Similarly....
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....19 (para nos. 13 and 14), Rajesh Kumar Rameshchandra Shah in ITA 5568-5573/M/2024 dated 31/01/2025 (AYs 2013-14 to 2018-19) and Leshark Global LLP vs DCIT in ITA No. 3177/Mum/2025 to 3183/Mum/2025 for the 7 AYs 2012-13 to 2018-19 DOD 31.07.2025, delivered post the decision of the coordinate bench in the case of Ms Rupal Kashyap Mehta have also been considered. The relevant paras in the Deepak K Mehta (supra) decision are as below: "57. The relevant findings recorded by the coordinate benches, which squarely apply to the facts of the present case, are placed on record and are reproduced hereunder. 16. In Shantilal Savla - ITA No. 357 to 363/Mum/2025 DoD 22/05/2025 13. We have heard the rival submissions and perused the material available on record. The issue pertaining to the existence of incriminating material for the assumption of jurisdiction by the Ld. AO under section 153A of the Act has been duly challenged by the assessee before the Ld. CIT(A) and the Hon'ble ITAT. The incriminating material relied upon by the revenue was found at the premises of Mr. Nilesh Bharani and M/s Evergreen Enterprises, and the statements of the partners therein were record....
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....had retracted their statements. In fact, Shri Nilesh Shamji Bharani had filed an Affidavit before the A.O. in course of assessment proceedings completely denying the fact of cash loan transaction and had explained that the entries appearing in the seized document, in reality, represents the cash given to him by his father. 13. When the assessee as well as Shri Nilesh Shamji Bharani and other individuals have denied of alleged cash transaction in subsequent events, the duty of the A.O. was to gather more corroborative evidence to establish on record that the entries appearing in the seized material actually represent cash loan transaction of the assessee. However, except the seized material and the statements recorded u/s. 132(4) of the Act from some third-party individuals, the A.O. has absolutely no other evidence on record to corroborate the alleged cash loan transaction of the assessee. Pertinently, though, during the time search and seizure operation was carried out in case of M/s. Evergreen Enterprises and Shri Nilesh Shamji Bharani, a search and seizure operation was also carried out in case of the assessee, however, not a single piece of incriminating material was r....
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....17 to 2018-19, the additions were made by the AO by working out the unexplained cash loan given by the assessee to one Mr Nilesh Bharani relying on some information found in a different search and premises of Mr Nilesh Bharani where the name of the assessee was not there in any panchnama by stating that since Mr Nilesh Bharani had admitted in his statement recorded u/s 132(4), receipt of such cash loan from the assessee outside the declared sources in the return of income of the assessee is to be assessed u/s 153A. The said fact was though initially partly admitted by the assessee without actually quantifying the same, yet lateron also retracted by him through an affidavit filed on 09/12/2019 and Mr Nilesh Bharani later also retracted his statement recorded u/s 132(4) vide his letter addressed to the investigation Unit on 14/10/2017. The charts of the additions made are given below: Para 5.33 for alleged cash loan given in the assessment orders 5.33 In the light of the above discussion, the cash loans given by the assessee to Shri Nilesh Bharani are assessed as undisclosed investment in loans amounting to Rs. 29,34,00,000/- for AY 2012-13 to 2018-19, u/s 69 of the....
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.... search from the premises of the assessee in support of the additions, made for the quantum amounts of the alleged cash loans given and the estimated interest thereon in all AYs as per chart herein above is deleted. We direct accordingly to delete the additions as above. 19. Leshark Global LLP vs DCIT in ITA No. 3177 to 3183/Mum/2025 (DoD: 31/07/2025) (relevant paras) 10. Upon a careful consideration of the facts of the case, the rival submissions, and the material available on record, we find that the core issue arising in the present appeals pertains to the additions made under Section 69 of the Act towards alleged cash loans purportedly advanced by the assessee to one Mr. Nilesh Bharani and his associates, as well as the notional interest computed thereon under Section 56. It is undisputed that these additions are founded solely upon certain loose sheets, coded ledger extracts, and statements recovered and recorded during the course of search proceedings conducted not on the assessee but in the case of a third party, namely, Mr. Nilesh Bharani and entities associated with him. 11. As rightly contended by the learned counsel for the assessee, Shri Vinod....
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.... of the binding ratio laid down by the Hon'ble Supreme Court in PCIT vs. Abhisar Buildwell Pvt. Ltd. [(2023) 149 taxmann.com 399 (SC)], which held that no addition can be made under Section 153A in respect of unabated assessments in the absence of incriminating material found during the search on the assessee, and following the aforementioned consistent judicial pronouncements of the Co-ordinate Benches, we hold that the additions made in the present case resting entirely on documents recovered from the search conducted in the case of Mr. Nilesh Bharani are legally untenable. The Revenue has neither invoked nor complied with the provisions of Section 153C, and hence, the assumption of jurisdiction under Section 153A in respect of these additions stands vitiated. Consequently, the additions made under Section 69 of the Act across all the assessment years under appeal are hereby directed to be deleted. 15. Consequentially, the additions made under Section 56 of the Act towards notional interest income on the said alleged cash loans quantified and tabulated by the Assessing Officer in paragraphs 5.29 and 5.30 of the assessment order for A.Y. 2012-13 are devoid of any independ....
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.... arithmetically detailed, does not meet the threshold of legal sustainability. 27. Accordingly, the additions made under section 56 of the Act towards notional interest on the alleged cash loans are devoid of legal and factual basis and are liable to be deleted. 28. We have given our thoughtful consideration to the rival submissions advanced by the parties, carefully perused the orders of the authorities below and the material placed on record, and examined the statutory scheme governing assessments consequent to search as well as the judicial precedents cited at the bar. At the very threshold, it is important to bear in mind that the jurisdiction exercised by the Assessing Officer in the aftermath of a search is not unbridled but is circumscribed by the statutory framework contained in sections 153A and 153C of the Act. These provisions constitute a self-contained code dealing with assessment or reassessment of income discovered as a consequence of search and seizure operations. Therefore, the existence of incriminating material found during the course of search assumes pivotal significance in determining the permissible scope of additions in assessments framed under section....
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....t has categorically held that in respect of completed or unabated assessments, no addition can be made under section 153A in the absence of incriminating material found during the course of search. The ratio of the said decision leaves no manner of doubt that the power under section 153A is not intended to provide a fresh opportunity to the Assessing Officer to revisit completed assessments de hors any search-related material. The jurisdiction under section 153A is intrinsically linked with the incriminating material unearthed during search and cannot be expanded to include issues or materials unconnected with the search. 31. Another significant factor which lends considerable weight to the assessee's contention is that the controversy arising in the present appeals has already been examined by the coordinate bench of this Tribunal in the case of Mrs. Rupal Kashyap Mehta, who is the spouse of the present assessee. The said decision arises out of the same search proceedings and is founded on the identical set of facts and materials which have been relied upon by the Revenue in the present case. The Tribunal, after examining the entire search matrix and the nature of materials rel....
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.... assessee to one Mr Nilesh Bharani relying on some information found in a different search and premises of Mr Nilesh Bharani where the name of the assessee was not there in any panchnama by stating that since Mr Nilesh Bharani had admitted in his statement recorded u/s 132(4), receipt of such cash loan from the assessee outside the declared sources in the return of income of the assessee. The said fact was not admitted by the assessee and which was also retracted by Mr Nilesh Bharani later vide his letter addressed to the Investigation Unit on 14/10/2017 when the assessee also retracted his statement recorded on 10/10/2017 as mentioned inforegoing paragraphs separately. The charts of the additions made are given below: 5.31. In the light of the above discussion, the cash loans given by the assessee to Shri Nilesh Bharani are assessed as undisclosed investment in loans amounting to Rs. 4,50,00,000/- for AY 2014-15 to 2018-19, u/s 69 of the IT Act as detailed below. Assessment year Opening Balance Cash loan given during the year Cash loan received back during the year Balance outstanding cash loan Amtin '000 Amtin '000 Amtin '000 Amtin'00....
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....ani, though there was no such evidence in the alleged material relied upon as per the above chart. 37. Therefore, after perusing the paragraphs 16 to 27 of the appellate order of the coordinate bench, reproduced herein as above in the case of Ms Rupal Kashyap Mehta, wife of the assessee, where the facts were absolutely identical arising out with same search having the same material based on the statement of the assessee only and the other orders of the Tribunal relied by the ld. Counsel of the assessee as above which were also the fallout of the search on Mr Nilesh Bharani, all the additions made in all the above 5 assessment years as tabulated herein above in para 15 for the alleged cash loans given and estimated interest thereon are deleted. 38. In view of the foregoing discussion and respectfully following the consistent line of judicial precedents rendered on materially identical facts arising out of the same search proceedings, we hold that the additions made by the Assessing Officer in the impugned assessment orders cannot be sustained. In so far as assessment year 2011-12 is concerned, the reassessment order passed under section 143(3) read with section 147 is liable t....