TaxTMI 
TaxTMI 
2026 (6) TMI 461
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....s return of income on 31.07.2020 declaring total income at Rs. 6,61,56,393/-. A search and seizure action u/s 132 of the Act was carried out on 04.01.2022 at various premises of ACE & Rudra group and residential premises of the assessee was also covered. During the course of search proceedings, some documents were found and seized from the possession of assessee and his son, therefore, case of the assessee was reopened by issue of notice u/s 148 on 17.03.2023. AS the AO, in seized document marked as "LP-1" it is noted that assessee alongwith three other persons purchased a property at C-32, Chandernagar, Ghaziabad for a total consideration of Rs. 3.26 crores which is to be paid in two parts i.e. Rs. 2.40 crores as per the circle rate and balance Rs. 86,00,000/- is mentioned as "B". The AO observed that it appears that amount of Rs. 86,00,000/- was paid in cash. Further in the same paper "Jagga Ji share" mentioned at 35% in the said property who paid "B" Rs. 20 lacs. AO further observed that "Jagga Ji" mentioned in the said paper is for the assessee as hos son Angad Singh has stated this fact in his statements recorded u/s 132(4) of the Act. Accordingly, the AO alleged that assessee....
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....n of the 3rd person wherein one document marked as "LP-1" containing noting that assessee had 35% share in the subject property and paid Rs. 20.00 lacs in cash. The AO based on these notings, made the addition in the hands of the assessee by observing that the assesse has made cash payment of Rs. 20,00,000/-. It is observed that the said property was not registered in the name of the assessee and the said document is neither signed by the assessee nor by any other person. It is further observed that AO made no enquiry whatsoever either from the seller of the property or by from other co-buyers whose names are appearing in the said paper to find out the true and correct nature of entry noted therein and merely on assumption and presumptions concluded that assessee had made the cash payment of Rs. 20.00 lacs. Since the subject property was never purchased by the assessee, no addition could be made for any alleged cash, if any, paid. 8. Ld. CIT(A) referred the provisions of section 292C as amended by Finance Act, 2008 which provides as under: "Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the po....
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....any enquiry from the third person from whom the payments were made, no addition could be made on the basis of loose paper without corroborate the same with any material/evidences. 13. The hon'ble Allahabad high court in the case of Ajay Gupta Vs. CIT reported in [2020] 114 taxmann.com 577 (All.) while reversing the decision of the Tribunal has held as under: 10. We have heard counsel for the parties and perused the material on record. It is not in dispute that two loose papers were found during search from the premises of assessee, however, during block assessment proceedings, the assessee had denied the documents and statement was recorded by Deputy Director of Investigation, he had submitted that he had no concern with the said documents, so seized. Further, the A.O. while passing the assessment order had only on basis of the loose papers found during search made addition to the undisclosed income of assessee while the entries of said papers remained uncorroborated. 11. This Court, in the case of CIT v. Shadiram Ganga Prasad, 2010 UPTC 840 has held that the loose parchas found during search at the most could lead to a presumption, but the department cannot dr....
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....atement by a Third Party without affording an opportunity for rebuttal or cross examination to the assessee is perverse. It was therefore the obligation of the A.O. to allow the appellant to cross examine the persons whose statements are relied upon in the interest of natural justice before embarking on a final view in this matter. 16. In the last, it is seen that in the case of Shri Angad Singh who has purchased the property, addition made was deleted by ld. CIT(A), and on the other hand addition for the same payment has been upheld in the hands of the assessee which is the contrary approach taken by the ld. CIT(A). In view of aforesaid facts and the discussions made, no addition could be made in the hands of the assessee for this amount, accordingly, the same is hereby deleted. 17. In the result, all the grounds of appeal of the assessee are allowed. The appeal of the assessee is allowed. ITA No.779/Del/2026 for AY 2021-22 18. Before us, Ld. AR for the assessee in support of the Ground of appeal No.1 submits that in the instant case, a search u/s 132 was conducted on 04.01.2022 which fallen in is Financial Year 2021-22 relevant to Assessment Year 2022-23. As per Expla....
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....of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the Ist day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person." 22. From the above, it is clear that where the search is conducted u/s 132 of the Act on or ....
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....The proposed new section seeks to provide that no order of assessment or reassessment or recomputation under the Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director, in respect of an assessment year to which clause (i), clause (ii), clause (iii) or clause (iv) of the Explanation 2 to section 148 apply. This amendment will take effect from 1st April, 2022." 27. It is thus clear that in case where search u/s 132 of the Act sis conducted on or after 01.04.2021, the assessment prior to the year of search should be completed by issue of notice u/s 148 of the Act and after obtaining the mandatory approval from the prescribed authority as provided u/s 148B of the Act. The Co-ordinate Bench of Delhi Tribunal in the case of Montage Enterprises Pvt. Ltd. (supra) by placing reliance of order in the case of Homelife Buildcon (P.) Ltd. Vs. DCIT, (2025) 176 taxman.com 614 (Chandigarh and further in the case of Jamna Das Nikkamal Jain Saraf Pvt. Ltd. vs. DCIT in ITA No.403/Chd./2025 dated 04.11.2025 held that the order passed withou....
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....gned assessment be quashed. 12. The Ld. CIT-DR Shri Manav Bansal opposed the contention, stating that the return for A.Y. 2022-23 was filed prior to the date of search, and validly selected for scrutiny under CASS. The AO was competent to complete the assessment u/s 143(3). 12.1 He contended that section 148B applies only to "re-assessment" and not to "regular assessments." The AO's approval from Addl. CIT, being in line with the CBDT Instruction No. 7/2022 dated 15.07.2022, fulfils the supervisory requirement. The DR also submitted that Homelife Buildcon is distinguishable, as the AO therein relied on third-party search data, whereas the present case is based on assessee's own seized material. 13. We have carefully considered the rival submissions and perused the record. It is undisputed that search u/s 132 was conducted on 24.11.2022, relevant to A.Y. 2023-24. Thus, A.Y. 2022-23 is one of the three preceding years under Explanation 2(iv) to section 148. The Explanation reads that if a search is initiated, "the Assessing Officer shall be deemed to have information suggesting escapement of income for the three assessment years immediately precedin....
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....e from the end of the financial year in which the return is furnished. In the present case the original return of income was filled on 4/11/2022 for the assessment year 202223 and 143 (2) was issued on 21/6/2023, therefore also the assessment was framed under 143(3) of the Act is not sustainable. In other words the time required for issuing the notice under 143(2) had already expired, and the revenue can not be allowed to issued issue 143(2) on 21.6.2023 after the search was carried out and notice had been issued on 21.6.2023 and assessment was framed under 143(3) of the Act. The relevant portion of section 143(3) reads as under:- 143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income tax authority, as the case may be, if considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce any evidence ....