TaxTMI 
TaxTMI 
2025 (6) TMI 2114
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....assed u/s 147/143(3) of the Act on 30/12/2018 by the DCIT Central Circle 4(1) Mumbai which are similar to the additions made for the three AYs 2016-17 to 2018-19 passed u/s 153A of the Act vide orders dated 31/12/2019: Reasons of additions Amount (Rs) Cash loan to Nilesh Bharani Rs 25,00,000/- u/s 69 Notional interest earned u/s 56 Rs 66,00,000/- 3. In AYs 2013-14 to 2015-16 assessment orders passed u/s 153A/143(3) of the Act on 31/12/2019 by the DCIT Central Circle 4(1) Mumbai :- AY Reasons of additions Amount (Rs.) 2013-14 Bogus LTCG u/s 68 - scrip Confidence Finance & Trading Ltd 5,11,42,500/- Notional Commission u/s 69C 15,34,275/- 2014-15 Bogus LTCG u/s 68 - scrip 1,25,22,500/- Confidence Finance & Trading Ltd Notional Commission u/s 69C 3,75,675/- 2015-16 Bogus LTCG u/s 68 - scrip Greencrest Financial Services Ltd 3,30,86,741/- Notional Commission u/s 69C 9,92,602/- AYs 2016-17 to 2018-19 AY Reasons of Addition Amount (Rs.) 2016-17 Cash loan to Nilesh Bharani u/s 69 2,05,00,000/- Notional interest earned u/s 56 12,05,425/- 2017-18 Cash loan to Nilesh....
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....l of the income-tax department as is mentioned in para 2 of the assessment order in this appeal. Thereafter, the first notice u/s 143(2) of the Act for completing the reassessment for this assessment year was issued by the AO, Circle 4(1), Mumbai on 20/08/2018 and the first notice u/s 142(1) was also issued by the DCIT Central Circle 4(1) Mumbai as is mentioned in para 2 of the relevant assessment order. The said notice was also responded by the assessee on 06/09/2018 to the DCIT Central Circle 4(1) Mumbai. 6. Mr Vinod Bindal, the ld. Counsel of the assessee, submitted that though these facts are very much mentioned in the assessment order but herein the ld. AO deliberately avoided to mention at all the vital facts that the assessment jurisdiction over the case of the assessee was transferred to the ld. AO, Central Circle-4(1), Mumbai vide an assessment jurisdiction transfer order u/s 127(2) dated 17/01/2018 by the PCIT 27 Mumbai from the ACIT Circle 27(1) Mumbai and the notice u/s 148 on 29/03/20218 initiating these proceedings was issued by the ACIT Circle 27(1) Mumbai after the said transfer order became effective, since the ld. AO was well aware that the said notice issued o....
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....thereto whether deliberately or in ignorance of the facts / law, yet there was a bonafide reason for the assessee due to which the assessee could not object about the jurisdictional illegality of the notice issued u/s 148 of the Act before the AO. 9. The assessee categorically submitted that it is not a case where he has objected the jurisdiction of the ld.AO u/s 120 r.w.s. 124 of the Act but it is a case where the notice issued u/s 148 of the Act was issued by an ld.AO who did not have any assessment jurisdiction over the assessee as the same had already been transferred specifically in terms of the instruction no. 299/14/2013-DIR(Inv. III)- 605 dated 11/02/2013 issued by the Board that all search assessment must be assessed by the Central Circle charges. Therefore, the territorial jurisdiction specified u/s 120 of the Act with the ACIT Circle 27(1) Mumbai stood superseded by the specific directions as above and therefore, the consequent assessment jurisdiction transfer order u/s 127(2) of the Act was passed on 17/01/2018 before issuing the notice issued u/s 148 of the Act on 29/03/2018 by the erstwhile AO who had already been divested with assessment jurisdiction on the assess....
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.... 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. (4) 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 thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year. 11. The ld. Counsel stated that the above Explanation clearly shows that after transfer of the assessment jurisdiction u/s 127 of the Act from one AO to the another AO, all proceedings under this Act in r....
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....that by virtue of the incorporated structure and nature of activities of the said assessee, both the respective ld. AOs could assess the assessee and the assessee had no reason to object during the assessment proceedings as such. It is important to appreciate that in Kalinga (supra), no order at all was passed u/s 127 of the Act by the Competent Authority and there was no discussion, rather could not at all be on the same. 14. He further submitted that, thus, it is clear that the applicability of the section 124 including making objections therein within one month thereof is only in respect of the jurisdiction specified u/s 120 of the Act and not in respect any assessment jurisdiction over an assessee after his assessment jurisdiction was transferred by an order passed u/s 127 of the Act. There is no provision u/s 127 of the Act to file an objection where the jurisdiction has already been transferred. However, there is a provision of hearing when the assessment jurisdiction is being transferred out of city to some other city, and then a hearing must be granted by the PCIT before passing the assessment jurisdiction transfer order u/s 127(2) of the Act. In case, the same was not g....
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.... (ii) Bhagyaarna Gems & Jewellery (P.) Ltd. [2025] 171 taxmann.com 689 (Raipur -Trib.) [DoD: 31-01-2025] and same is the legal ratio in Mir Zardari Qureshi [2023] 151 taxmann.com 408 (Raipur - Trib.) where the order of the Hon'ble Apex Court in Kalinga (supra) was also considered and held as below: 38. On a careful perusal of Section 124 of the Act, it transpires that the same deals with the issue of "territorial jurisdiction" of an Assessing Officer. Ostensibly, sub-section (1) of Section 124 contemplates vesting with the A.O jurisdiction over a specified area by virtue of any direction or order issued under sub-section (1) and sub-section (2) of Section 120 of the Act. On the other hand, sub-section (2) of Section 124 contemplates the manner in which any controversy as regards the territorial jurisdiction of an A.O is to be resolved. Apropos, sub-section (3) of Section 124 of the Act, the same places an embargo upon an assessee to call in question the jurisdiction of the A.O where he had initially not raised such objection within a period of one month from the date on which he was served with a notice under sub-section (1) of Section 142 or sub-section (2) of Se....
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....were involved in the aforesaid case. (i) the assessee had in the aforesaid case challenged the notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar, as being without jurisdiction; (ii) the jurisdiction over the case of the assessee that was vested with ACIT, Corporate Circle- 1(2), Bhuwaneshwar was after filing of the return of income changed and got vested with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar; (iii) it was the assessee's case that as the jurisdiction to issue notice u/s 143(2) of the Act in its case was with Jt. CIT(OSD)(Exemption), Bhuwaneshwar, therefore, the impugned notice issued u/s 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar was without jurisdiction and, thus, was liable to be quashed; (iv) the Hon'ble High Court of Orissa considering the fact that the jurisdiction to issue notice u/s. 143(2) of the Act in the case of the assessee remained with the Jt. CIT (OSD) (Exemption), Bhuwaneshwar, therefore, held the impugned notice issued u/s. 143(2) of the Act by the ACIT, Corporate Circle-1(2), Bhuwaneshwar as having been issued without jurisdiction and thus, quashed the....
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....f an order u/s. 127(2)(a) of the Act where the assessee's case was transferred from one A.O to another, and the said AO's were not subordinate to the same Commissioner, had observed, that as required per the mandate of law, an agreement between the Director General, Chief Commissioner or Commissioner as the case may be, of the two jurisdictions is necessary. 48. We, thus, in terms of our aforesaid observations are of a firm conviction that as the assessee company had not called in question the jurisdiction assumed by the A.O, based on, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases, but had rather assailed the validity of the assessment order passed by the ITO-4(1), Raipur in absence of an order of transfer that was statutorily required to have been passed by the CIT-2, Kolkata u/s. 127 of the Act, therefore, it would not be circumscribed by the restriction contemplated under sub-section (3) of Section 124 of the Act. Accordingly, we are of a firm conviction that the judgment of the Hon'ble Supreme Court in the case of Kalinga Institute of Industrial Technology (supra) is disti....
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.... assessee before is that the assessment jurisdiction over the assessee had specifically been vested with the DCIT CC 4(1), Mumbai w.e.f. 17/01/2018 based on an assessment jurisdiction transfer order passed by the PCIT 27 Mumbai by transferring the same from the ACIT Circle 27(1) Mumbai after the income-tax search having been conducted on the assessee on 07/10/2017, any other assessing authority having jurisdiction whether territory based, activities based or structured based as specified u/s 120(3) including the erstwhile ld.AO ACIT Circle 27(1) Mumbai was completely barred to undertake any proceedings on the assessee as has been explicitly mentioned in the Explanation u/s 127 of the Act. In the Central Circle charges, the cases are transferred irrespective of any other base as above but only when there has been an income-tax search and in that case the jurisdiction criteria are altogether different as has been specified by the Board u/s 120(3) of the Act. We hold that after the transfer of the case u/s 127(2) to the DCIT Central Circle 4(1) Mumbai, the PCIT-27Mumbai on 17/01/2018 also had no legal powers to grant any sanction u/s 151 or to transfer/ deemed transfer the case at all....
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....ntral Circle 4(1), Mumbai. 21. In light of the factual matrix and legal authorities placed before us, the conclusion is inescapable: the notice issued under section 148 of the Act on 29.03.2018 by the ACIT, Circle 27(1), Mumbai, was vitiated by a jurisdictional infirmity so fundamental that it strikes at the very root of the reassessment proceedings. Once the competent authority namely, the PCIT- 27, Mumbai had transferred jurisdiction over the assessee to the DCIT, Central Circle 4(1), Mumbai by a valid and subsisting order under section 127(2) dated 17.01.2018, the erstwhile Assessing Officer stood wholly divested of the statutory authority to initiate any proceedings thereafter. The act of issuance of notice under section 148 by an officer bereft of such authority is not merely a procedural irregularity, it is a jurisdictional nullity. As the saying in jurisprudence goes, a foundation laid in sand cannot support the edifice of justice. 22. Jurisdiction under the Income-tax Act is not a matter of administrative convenience or post-facto regularisation; it is a condition precedent, a sine qua non for the lawful exercise of power. When the jurisdiction shifts by operation ....
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....re passed u/s 153A of the Act based only on the income-tax search conducted on the assessee on 07/10/2017. Whatever material has been referred to in the assessment order, during the course of search on 07/10/2017, was available with the authorised officer at the relevant time having being procured from extraneous sources in the income-tax searches elsewhere at different times and in none of those search warrants, the name of the assessee was appearing as per panchnamas or information of those searches placed on record. Thus, those searches were independent income-tax searches. The ld. AO's main reliance is based on the statements of the assessee recorded u/s 132(4) at the time of search which were later on retracted by the assessee on 09/12/2017 by filing an affidavit with the Investigation Unit Mumbai as his statements recorded during the search on him were not based on any incriminating material found in his premises but were based on the statements of third parties recorded elsewhere. Admittedly, the affidavit filed by the assessee on 09/12/2017 was not at all cross examined by the revenue. Thus, the correctness of its contents cannot be doubted at this stage now and the sam....
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....19 in the premises of Nisarg Nirman Group, a partnership firm where the assessee is a partner and not u/s 132(4) of the Act as there was no search at all then as is clear from the affidavit filed by the assessee placed in the PB page no. 22-26. The ld. Counsel stated that the AO has mentioned in para 7.5 of the assessment order that the assessee made a "non-satisfactory and evasive reply at the time of search". However, the statements of the assessee recorded u/s 132(4) of the Act, placed in the paper book, do not at all show any such question seeking any response much less anything to support the allegation of the ld.AO in the assessment order. 29. The ld. counsel also pointed out that the ld.AO has deliberately mentioned the facts incorrectly in para 7.5 of the assessment order, alleging that some statement u/s 132(4) of the Act of the assessee during the course of search action was recorded and then he copied some extract of the same on page no. 74 of the assessment order for the AY 2013-14. The ld.AO has deliberately avoided to copy the full statement which would have high-lighted the facts that the said statement was not at all recorded u/s 132(4) of the Act nor during the ....
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....mation received from the Investigation Wing about the claim of the assessee to have booked LTCG in Confidence Finance & Trading Ltd. This clearly indicates that the alleged addition is not at all based on any information found during the course of search in the premises of the assessee, otherwise, it would have been worded differently as not 'information received during the course of assessment proceedings' but as 'during the course of search in the case of the assessee'. Thus, undisputedly the same is based on some other material not found during the course of search in the premises of the assessee but in some survey later on somewhere else and is clearly beyond the scope of an assessment order passed u/s 153A of the for a completed assessment earlier. For this proposition, the assessee relied on the decision in ACIT vs Arun Aggarwal in ITA 253 and 254/LKW/2020 date of decision 20/10/2021. 32. The ld. Counsel also pointed out that on a plain reading of the assessment order, it is clear that the AO did not have any information except some half-baked report received from the Investigation Unit with no head and tail except a long-drawn story as copied in the ass....
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....at on this issue, the judicial pronouncements on existence of the law are clear which stipulate that to make any addition u/s 153A of the Act for an already completed assessment, any material relied 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 in their search warrants, 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 upto 31/03/2021 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. 37. The Ld. Counsel also submitted that if the revenue authorities really wanted to take cognizance of the said material in any manner in the hands of the assessee in completed assessments, th....
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.... 92. Accordingly, we hold that any incriminating information of any undisclosed income of the per sonnot 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 th....
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....o. 4785/Del/2015- (DOD- 23.01.2024) iv. Mr. Ritesh Rai vs DCIT - ITAT Chennai - ITA No. 811 & 812/Chny/2022 - (DOD- 19.07.2023) v. PCIT vs Meera Gupta - ITAT Delhi - ITA No. 403/2023 (DOD- 27.07.2023) vi. PCIT vs Kaushik Devjibhai Patel - (2023) 152 taxmann.com 462 (Gujarat) (DOD-04.05.2023) vii. PCIT vs Jay Ambey Aromatics - (2023) 156 taxmann.com 691 (SC) (DOD- 24/11/2023) viii. PCIT vs Oxygen Business Park (P)Ltd. (2023) 157 taxmann.com 175 (Delhi) (DoD08/12/2023) ix. Saksham Commodities Ltd vs ITO (2024) 161 taxmann.com 485(Delhi)confirmed by the Apex Court in SLP no. 51947/2024 vide order dated 16/12/2024. x. PCIT vs Pavitra Realcom Pvt Ltd (2024) 120 CCH 0035 (Delhi HC) xi. Hon'ble ITAT Mumbai "D" Bench in the case of Rajeshkumar Ramesh chandra Shah vs DCIT in ITA No. 5568 to 5573/Mum/2024 for AYs 2013-14 to 2018-19 DoD-31.01.2025, decision arising from the same search and on the 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) 40. We find that in respect of the addition made for the AYs 2013-14 ....
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....) Stock Brokers Ltd. on behalf of some of the beneficiaries, 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 ....
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.... Shri Koteshwar Rao in the documents pertaining to allotment 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 t....
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....provided in section 153C of the Act only and there could be several assessments 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/s 153C of the Act can arise upto 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 u/s 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 pas....
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....on 147, section 148, section 149, section151 and section 153, 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 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 section 153A, 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 the search under section 132 o....
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.... other person. The existing provisions contained in section 153C provide that in the course of an assessment proceeding, in the case of a person in whose case search action under section 132 or action under section 132A have 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, th....
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....arch on the assessee in order to proceed on the assessee in terms of section 153C of the Act. This view of ours is fortified by the decision of the Hon'ble Jurisdictional High Court in the case of CIT us RRJ Securities Ltd reported in 380 ITR 612 (Del) followed in Pr. CIT us RajBuildworth (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/s 153A 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. 29. 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 alre....
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....luded and untainted by the presence of any incriminating or seized material. To permit such additions would be to extend the scope of section 153A beyond its statutorily intended frontier, one which is firmly anchored in the existence of material unearthed during the search. Accordingly, these additions are liable to be, and are hereby, deleted. AY 2016-17 to AY 2018-19 44. Further, similarly for the AY 2016-17 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 later on 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) vid....
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.... relied upon as per the above chart. 46. For such additions in respect of the cash loans lent, the learned counsel of the assessee also placed reliance on the decision dated 31/01/2025 of the coordinate bench of the ITAT Mumbai in the case of Rajeshkumar Rameshchandra Shah in appeal nos. ITA 5568 to 5573/Mum/2024, followed in Rupal K Mehta in ITA no. 6191-6196/Mum/2024dated 27/02/2025 for six assessment years where orders were passed u/s 153A besides others where the facts of the alleged cash loans given to Nilesh Bharani were identical based on an income-tax search on Mr Nilesh Bharani as in this case, except to the extent that there the assessee denied any knowledge of any such transactions rather knowledge of Evergreen Enterprises as well but here the assessee on confrontation admitted in his statement u/s 132(4) to have arranged some cash loan transactions through Evergreen Enterprises and estimated the same around Rs 10 crores. The ld. Counsel also submitted that the assessee never admitted to have given any cash loan but only said he arranged loans for various entities of Sunshine group through Evergreen Enterprises. 47. In respect of these additions, the learned counse....
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....as well as the decisions rendered by the coordinate benches, we find ourselves in respectful agreement with the contention advanced by the learned counsel. The additions sought to be made solely on the basis of an uncorroborated statement of the assessee cannot, in law, be sustained-at least within the contours of assessment under section 153A of the Act. A solitary statement, unbacked by any cogent or credible material unearthed during the search, cannot, by any judicial reckoning, be construed as incriminating material. The absence of corroborative evidence renders such a statement insufficient to invoke or justify additions under the said provision. 51. It is now a well-settled proposition in jurisprudence, crystallised through the consistent pronouncements of various Hon'ble High Courts, that an addition cannot rest merely on the foundation of a statement or admission made by the assessee, when such a declaration is unaccompanied by any incriminating material discovered during the course of the search. In this regard, instructive guidance may be drawn from the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Pavitra Realcon Pvt. Ltd. and Others in ITA....
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....dence 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 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 section 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 Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation, [Emphasis supplied] 23. In our opinion, the Act does not contemplate computing of undisclosed income solely on the basis of statements made during a search. H....
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....ion 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]" 9. 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 recorded as evidence of undisclosed income. It is an undisputed fact that Mr. Nilesh Bharani is engaged in the business of finance, particularly in cash lending and borrowing, and has earned income in cash. However, based on the statement of the assessee, it is evident that the assessee merely advanced a lo....
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....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 recovered from the assessee indicating involvement of assessee in the alleged cash loan transaction or any other illegal activity. In fact, it is relevant to observe, in the statement recorded u/s. 132(4) of the Act, Shri Jagdish T Ramani, who allegedly was assisting Shri Nilesh Shamji Bharani in ....