TaxTMI 
TaxTMI 
2026 (8) TMI 942
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....erial found in the course of search in the case of appellant qua assessment year under reference. No addition ought to have made in absence of any incriminating material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC) 2. The Ld. CIT(A) erred on facts and in law in confirming addition made by Assessing Officer based on unsubstantiated documents seized in the course of search action on third party having no business transactions with the appellant in. assessment u/s 153A. Such additions are not permissible in assessment u/s 153A. Therefore, assessment made u/s 153A is without any valid jurisdiction. 3. The Ld. CIT(A) erred on facts and in law in not appreciating the contention of the appellant that unsubstantiated documents seized in the course of search action have no bearing on the assessment of income in the case of appellant read with provisions of section 132(4A) and section 292C of the Act. The entire addition is based on suspicion and suspicion alone. 4. The Ld. CIT(A) erred on facts and in law in not appreciating the contention of the appellant that addition based on documents seized in se....
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....of both the parties. The facts leading to the addition in the present case are that during the course of search at the residence of Shri Karsan Velji Patel, a diary was found wherein transactions in respect of sale/purchase of property allegedly relating to the assessee were found. The details of the seized material are reproduced at page 4 para 4.1 of the assessment order as under: Sr. No. Annexure/Page no. Details of Transaction 1 A-1/Page no.9 Rs. 5,00,000/- City square property 8311 Sq.yd. @ 950 paid as suthi to MHM for the purchase of property. 2 A-1/Page no.12 Rs. 73,95,000/- payable for Citi Square plots having area 8311 sq. yards for purchased at the rate of 950/- per square yards from Mahendra H. Morabia. 3 A-1/Page no.14 Rs. 67,36,000/- paid to Mahendra H. Morabia for plots whose area is 7616.69 sq. yards @ Rs. 950/- per sq. yards. Total Rs. 72,36,000/- Rs. 5,00,000/- already paid as Suthi remaining amount is paid. 4 A-3/Page no.125 Rs. 21,36,404/- Citi Sq. Plot No. AB-3 & 4, B-208 201 purchase from Mahendrabhai Morabia total sq. yards 2248.85 @ 950 total amount Rs. 21,36,404/- being 50% 1,50,000/- 08.02.2010 7,50,000/....
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....00/- amounting to Rs. 10,68,200/-. 7. With respect to the amount of Rs. 73,95,000/- and Rs. 72,36,000/- noted in the seized material and listed at S. No.2 & 3 above, the AO accepted the contention of the assessee that the said amounts related to the same plot of land measuring 8311 sq.yards and, therefore, he treated the actual transaction to be of Rs. 72,36,000/- and considered the same for addition. 8. The remaining amounts of Rs. 5 Lakhs and Rs. 9,925/- noted in the seized material/diary were also considered for making addition in the hands of the assessee, resulting in a total addition of Rs. 83,14,125/- being made to the income of the assessee as amounts received in transaction of plots of City Square property treating the same as undisclosed income of the assessee. The relevant finding of the AO in this regard are contained at page nos. 14 & 15 of the order as under: "So far as the transactions regarding Citi Square Plot No. AB-354, B 208 & 201 of Rs. 21,36,400/- is concerned, it is written in the seined diary that payment is made for 50% of the value of the property. The said facts have been confirmed from the seized dairy. Therefore the addition of Rs. 10,68,....
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....the person from whom it was found was never questioned about this material. He pointed out that Shri Rajendra V. Shah who allegedly had purchased this property was also subjected to search action, and though his statement was recorded during search, no questions were asked about the impugned transaction allegedly undertaken with the assessee. He further contended that even the assessee's statement was recorded u/s.131(1A) of the Act and the assessee all along denied having anything to do with these transactions. That the assessee repeatedly stated that he was not the owner of any of the property mentioned in the seized documents and no question, therefore, arose of the assessee having received any amount for the sale of the said properties. That with nothing else been on record with the Department corroborating the inference drawn from the seized material found during search on a third party there was no case at all for making addition based on such uncorroborated material in the hands of the assessee. Our attention was drawn to the submissions made by the assessee at para 10.2 of the CIT(A)'s order as under: '10.2 The appellant has raised various objection regarding the a....
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.... submitted that there are atleast 8 Mahendrabhai Morabia, he himself knows who live in the Bhuj area. Further, in this case he also states that the entire receipts cannot be taxed in his hands and only profits arising out of the same can be taxed. However, the AO has not bothered to ascertain the cost of acquisition of the said property to calculate the profits correctly. Even if he acted as broker of the said properties, he would have earned only 1 to 2% out of the overall sale. Thus his income from the transaction could be Rs. 83,141/- @ 1% and Rs. 1,66,283/- @ 2%. But in such circumstances, cogent reasons to hold the appellant to be a real estate agent need to be established and brought on record. Finally he submitted that the presumption under the Act, Sec.292C works in the case of the person from whose possession the incriminating material is seized. In this case the said documents were seized from the residence of Karsan Velji Patel and pertain to R V Shah purportedly a land broker. He has no connection with Shri R V Shah as has been held by the ITAT with respect to the case his wife Induben Morabia. Therefore, the said documents pertain to his transactions cannot be presumed....
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.... "10.3.1 On the issue whether 'MHM' recorded in Page 11, 13, 14 of Annexure A-1 and Mahendrabhai Morabia' recorded in Page-125, 133 of Annexure A-3 refers to him or some other person, the AO has stated that in the seized documents there are other incriminating material where the land referred to belonged to the wife of the appellant and his HUF and similar reference to 'MHM' was made. Thus it proves the connection of 'MHM to name Mahendra Harjivanbhai Morabia, the appellant. These references are detailed as under: i) In page no.8 of Annexure-Al, reference of payment to MHM for Plot No.7 Vardhman Nagar, Sukhpur of Rs 8,50,000/- is seen. The said property belonged to Smt. Induben Morabia. ii) Similarly, in page-23 of Annexure-A3 reference to sale of property by Mahendra H Morabia (HUF) through PoA Pranav C Upadhyay of vide plot No. 48, 75, 5, 26 and 6 to 9 is also seen. These plots were sold by Shri Mahendrabhai H Morabia in his capacity as Karta of the HUF had given the POA to Pranav C Upadhyay. This is proven by the copy of sale deeds with respect to these plots was adduced. 10.3.1.1 It is added that the AO of Smt Induben Morabi....
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....held 50% as part of the appellant and added back Rs 10,68,200/- in the hands of appellant. A further Rs 9925/- was added as document expenses by the appellant recorded in Page 133. The appellant has been evasive in his reply when queries regarding these properties were made while recording his statement. He has simply denied selling any property to Citi Square. But he has also not mentioned why these amounts were paid to him. He is also a director of Citi Square Properties Ltd during the period of time. His relation to Citi Square transactions is a fact proven from the records. Further Rajendra Virchand Shah also shows himself as owner of the company. He received the sums at various times but has not explained the nature and source of the same. Other entries in seized documents related to him and his family members are found to be true. The entries referred to here are also true. The appellant is held to have received the amounts of Rs. 72,36,000/- + Rs 10,68,200/- + Rs 9,925/-, Hence, I confirm the addition of Rs 83,14,125/-made by the Assessing officer as undisclosed income of the appellant." 11. Having considered the submissions of both the parties, We are in agreement with t....