TaxTMI 
TaxTMI 
2026 (8) TMI 1643
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....d Representative, appeared on behalf of the assessee, whereas Shri Kiran Unavekar, Ld. CIT (DR), represented the Revenue. 3. The following questions have been referred for my opinion:- "1. Whether the impugned assessment order dated 24/12/2018 passed u/s. 143(3) r.w.s. 153C of the Income Tax Act, 1961 is bad in law on account of delay in recording the satisfaction by the Assessing Officer of the assessee? 2. Whether serious prejudice has been caused to the assessee for not providing the copy of the statement of the searched person and also for not providing the opportunity to cross-examine the searched person and, therefore, the assessment order is bad in law? 3. Whether the impugned additions made by the Assessing Officer and further confirmed by the Ld. CIT(A) are sustainable on merits?" Background:- 4. The factual matrix of the case leading to the issue was that a search and seizure operation u/s. 132 of the Act was carried out in the case of H.N. Safal Group on 04.09.2013. During the course of search, a hard disk marked as Annexure A-08 was seized from the premises situated at 7th Floor, Safal Profitaire, Corporate Road, Prahlad Nagar, Ahmeda....
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....ion of facts but differed on the legal consequences flowing therefrom. Since they could not arrive at a common conclusion, the questions reproduced hereinabove were referred to the Hon'ble President u/s. 255(4) of the Act. Submissions before the Third Member by the Representatives :- 9. The Ld. AR substantially reiterated the written submissions advanced before the Division Bench. It was argued that though the Assessing Officer of the searched person recorded satisfaction on 25.04.2017 and the same was received by the jurisdictional Assessing Officer on 01.05.2017, the jurisdictional Assessing Officer waited for nearly eleven months before recording his own satisfaction on 19.03.2018. Such unexplained delay, according to the Ld. AR, defeated the very object of section 153C and caused serious prejudice to the assessee by leaving practically no effective time for conducting a fair enquiry and granting meaningful opportunity of hearing before completion of assessment within the statutory limitation. 10. It was further argued that the Assessing Officer interpreted various coded entries appearing in the seized Excel sheet by relying upon the statement and explanation of the....
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.... the satisfaction in March 2018 thereof shall be treated as infructuous, unproductive and futile exercise and not to be entertained. The Ld. DR argued that the satisfaction note need not exactly tally with the addition made as the additions have been made after due enquires and much needed investigations. Hence, the amounts mentioned in the satisfaction is liable to be assessed based on evidences collected and the enquires made, ergo leading to variation of the amounts assessed. The Ld. DR argued that the transactions of purchase of property was a fact on record, undisputed and the details of the cheque payment, area, rate as appearing in the seized material found entirely matched with the registered sale deed. Therefore, it can be absolutely held that the addition has been rightly made by the Assessing Officer as recorded in the seized material. 13. I have carefully considered the rival submissions, examined the orders proposed by my Ld. Brothers, perused the material placed before me and considered the judicial precedents relied upon by both sides. Since the reference raises three independent questions, I propose to examine each of them separately. 14. The issue of recordin....
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....e Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-....
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....lled. This satisfaction forms the very foundation of the jurisdiction under Section 153C. In the absence of such satisfaction, or where the satisfaction is mechanical, vague or bereft of reasons, the jurisdiction assumed under Section 153C is rendered invalid in law, as the mandatory jurisdictional precondition remains unfulfilled. In the instant case, the Revenue has brought on record copy of the satisfaction recorded by the Assessing Officer of the searched person. It is found that the Assessing Officer of the searched person had categorically recorded his satisfaction that the information contained in seized document Annexure A-8 was in relation to Harpreet Singh Makhija in respect of Bungalow No.76, Safal Amrakunj Scheme acquired by him. Thus, the requirement of recording the satisfaction of the Assessing Officer of the searched person has been found to be absolutely fulfilled in this case. 19. As per the provisions, the Assessing Officer of the other person, to whom the information of the search documents pertained, was also required to record his satisfaction. A copy of the satisfaction recorded by the Assessing Officer of the assessee has also been brought on record. It i....
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....us, it could be found that the Assessing Officer of the searched person has recorded the satisfaction within one month of passing of the order. Hence, the allegation that the Assessing Officer of the searched person had taken almost 3 years and 8 months in recording the satisfaction, without considering the order of the ITSC falls flat. Once the matter is before the ITSC and on allowing of the applications, the proceedings before the Assessing Offices are kept in abeyance and the Assessing Officer of the searched person is refrained from taking any action in the case wherein the proceedings are pending before the ITSC. Hence, ignoring the proceedings before the ITSC and holding that there was inordinate delay in recording the satisfaction is against the facts on record. Keeping in view the entire facts narrated above, without any hesitation, it is hereby held that the Assessing Officer of the searched person has recorded satisfaction promptly within a month and hence no delay can be attributed. Since there was no delay on the part of the Assessing Officer of the searched person, the contention that the assessee suffered any notional or actual prejudice on account of the delay in re....
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....assessment commenced with reference to that date, and the assessment was required to be completed within the prescribed period, which, on the facts of the present case, expired on 31.12.2018. Significantly, the statute does not provide that the limitation period would commence from the date on which the jurisdictional Assessing Officer records his satisfaction. Nor does it contemplate that any delay in recording such satisfaction would enlarge or extend the statutory period available for completion of the assessment. Therefore, irrespective of whether the satisfaction was recorded immediately upon receipt of the seized material or at a later point of time, the terminal date prescribed for completing the assessment remained unchanged. It neither enlarged the jurisdiction of the Assessing Officer nor extended the limitation prescribed by law. 25. In the absence of breach of any statutory provision that the satisfaction must necessarily be recorded within a specified period from the date of receipt of the seized material, and in the absence of any demonstrable prejudice having been caused to the assessee, the mere lapse of time between the receipt of the seized material and the rec....
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....isions of section 153C of the Act, the date of handing over the books of account or documents to the AO of the other person is deemed to be date of search and thus the limitation under the Act had to be computed from the date of handing over of the seized documents. The provisions of section 153B of the Act stipulates that the assessment u/s. 153C of the Act has to be completed within a period of nine months from the end of the F.Y. in which the books of accounts were handed over u/s. 153C of the Act to the AO of the other person. Thus, by handing over the seized documents in the F.Y. 2017-18, the limitation date for completion of assessment u/s. 153C of the Act was extended and this action of the assessee was prejudicial to the assessee. However, it would relevant to consider as to for which years the proceedings could have been initiated u/s. 153C of the Act. The Hon'ble Gujarat High Court has held in the case of Anil Kumar Gopikishan Agrawal (supra) that the notices u/s. 153C of the Act was required be issued for the year in which the search was conducted and the earlier six assessment years. Accordingly, as per that decision the proceeding u/s. 153C could have been initiated fo....
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.... statement recorded from the searched person or any other person during the course of the search proceedings. On the contrary, the addition has been made solely on the basis of the incriminating seized documents, the contents whereof have been treated as sufficient and self-explanatory for drawing the impugned inference. 32. It is a settled principle of law that the right to seek a copy of a statement or to cross-examine a witness arises only where such statement constitutes the basis of the assessment or is relied upon by the Assessing Officer for making the addition. Where the assessment is founded exclusively on documentary evidence and no reliance is placed upon any oral statement, the question of supplying copies of such statements or granting an opportunity of cross-examination does not arise. The principles of natural justice cannot be invoked in the abstract but must be examined in the context of the material actually relied upon by the Assessing Officer. 33. In the present case, the assessee has not been able to demonstrate that any statement recorded during the search formed the foundation of the addition or that the Assessing Officer drew any adverse inference from....
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....iolation of the principles of natural justice, as no prejudice can be said to have been caused to the assessee. In the instant case, the Assessing Officer at para 5.1 of the Assessment Order clearly mentioned that the assessee's reply and contentions have duly considered. The Assessing Officer found that the chronological incidents/events regarding entire property transaction as elaborated by the assessee in its submission has similarity with the same as in information provided by the DCIT Central circle, Ahmedabad. During the assessment, the assessee was provided with all the data/seized material, satisfaction note copy and other desired details by the assessee on 12.10.2018 vide letter dated 12.10.2018. The Assessing Officer held that the assessee has not denied the payment of Rs. 67,33,500/- made by cheques towards land cost and Rs. 7,79,880/-towards construction cost during the year. The assessee has also not denied outstanding payments as mentioned in seized material & duly reflecting in the computer data & loose papers so impounded during the search and survey proceeding in case of safal group, hence the amount paid in cash has evidentiary value as much as the amount paid in ....
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....rtunity of cross-examination are devoid of merit and are, therefore, dismissed. Thus, the question No. 2, "2. Whether serious prejudice has been caused to the assessee for not providing the copy of the statement of the searched person and also for not providing the opportunity to cross-examine the searched person and, therefore, the assessment order is bad in law?" is answered in negative. 41. To clarify, it is hereby held that no prejudice has been caused to the assessee for not providing the copy of the statement of the searched person and also for not providing the opportunity to cross-examine the searched person as the assessment was not based on statements recorded of the searched person, but based on the material found and seized which has been duly provided to the assessee, the parity of the facts to the affairs of the assessee, reading of the documents as a whole, matching of the amounts mentioned, amounts paid in cheques, amounts paid in cash, bungalow number etc.. of the seized material on the ground realities and the true affairs of the assessee. Sustainability of the addition on merits: - 42. The principal contention of the assessee is that prope....
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....ing Officers referred to alleged on-money receipts of Rs. 70,00,000/-, whereas the Assessing Officer ultimately made an addition of Rs. 85,05,800/-. According to the Ld. AR, this discrepancy vitiates the assumption of jurisdiction under section 153C and renders the assessment unsustainable. 45. I am unable to accept the aforesaid contention. It is well settled that the satisfaction contemplated under section 153C is only a jurisdictional satisfaction. At the stage of recording such satisfaction, the Assessing Officer is merely required to be satisfied that the books of account, documents or assets seized during the course of search belong to, pertain to, or relate to a person other than the searched person and that the same have a bearing on the determination of the total income of such other person. The provision does not mandate that the Assessing Officer should, at that preliminary stage itself, conclusively determine or quantify the exact amount of undisclosed income liable to be assessed. 46. The process of recording satisfaction under section 153C is distinct from the assessment proceedings undertaken thereafter. The former merely enables the assumption of jurisdiction,....
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....ation and does not strike at the root of the jurisdiction assumed under section 153C of the Act. 50. Taking cue from the observations of the Division Bench, the Ld. AR argued that, since the impugned Excel sheet was neither recovered from the possession of the assessee nor belonged to the assessee, no burden could be cast upon the assessee to explain its contents. It was argued that no adverse inference could be drawn merely on the basis of such Excel sheets, particularly when their contents were allegedly susceptible to different interpretations. 51. The aforesaid contention is not acceptable. Acceptance of such an argument would render the very scheme of Section 153C of the Act otiose and redundant. The legislative intent underlying Section 153C is to empower the Assessing Officer to proceed against a person other than the searched person where books of account, documents or assets seized during the course of a search are found to pertain to, belong to, or contain information relating to such other person. If the mere fact that the incriminating material was not recovered from the physical possession of the assessee were held sufficient to absolve the assessee from explaini....
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....5.2013. Therefore, difference between the amount stated in the seized excel sheet and registered sale deed translates to Rs. 16,26,760/-. The bungalow is purchased by three persons jointly and share of respective co-owners is given as under: Name of Co-owner Share % Harpreetsingh J Makhija 50 Paramjeetkaur J Makhija 25 Jasbirsingh M Makhija 25 Total 100 Working of actual cost incurred to acquire the bungalow is works out to Rs. 1,53,96,496/-: Name of Co-owner Share in Rs. Harpreetsingh J Makhija 7698248 Paramjeetkaur J Makhija 3849124 Jasbirsingh M Makhija 3849124 Total 15396496 Following amount have been written below the following columns in the excel sheet: Description Chq Discount Post Dtd Chq 8800000 250000 Thus, total consideration paid by the appellant along with Co-owner through cheques together with post-dated cheques of Rs. 88,00,000/- and Rs. 2,50,000/-translates to as under: Particulars Amount Amount as paid as per Column 'Chq' 6000000 Post dtd Chq stated below Column 'Chq' 8800000 Post dtd Chq stated below Column 'Discount' 250000 Total....
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....total land value and construction value as appearing in this excel sheet is found to be as under: Sr. No Entry in code Code representing Amount 1 L Value Land Value 1,34,67,000 2 C. Value Construction Value 77,98,800 3 G. Value Gross value 2,12,65,800 4 Land Inst Q Land value payment by cheque 67,33,500 5 Land Inst Dis Land value paid in cash 67,33,500 6 Const Inst Q Construction instalment paid by cheque 7,79,880 7 Const Inst Dis Construction instalment paid by cash 7,79,880 8 % Percentage 20% 56. The seized material depicts that the total land value of the bungalow was Rs. 1,34,67,000/-, 50% of which was to be paid in cheque and balance 50% by cash. The construction cost of the bungalow was Rs. 77,98,800/- which was also to be paid equally in cheque and cash. The total cost (gross value) of the bungalow, including the cost of land and the construction cost, was Rs. 2,12,65,800/- and as per the agreement 50% of the amount was to be paid in cheque and balance 50% in cash. On the date of recording of this transaction, only 20% of the cost of construction was required to be ....
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....on in the hands of the assessee. 59. The order in the case of Saurin Shah in ITA No. 1813/Ahd/2025 and the order in the case of Abhipushp Properties Pvt. Ltd. in ITA No. 965/Ahd/2025, have been perused. In those cases, the assessees purchased a residential unit in Kalhar Blues and Greens project developed by M/s. NODPL. The addition was based on the statement of the Accountant which was not make available to the assessee. At paragraph No. 8.1 it clearly mentions that there was not specific mention or direct evidence linking the assessee to the alleged on-money transaction made to M/s NODPL; whereas, in the instant case, the excel-sheet seized and the deciphering thereof clearly proves the payment of on-money. Further, the case of Krishna Textiles Vs. CIT, 310 ITR 227, is distinguishable and the reasons have been given in this order above with regard to explanation of the source of payment made by the assessee found as per the seized material. In the case laws quoted by the Ld. AR, the excel-sheets have not been corroborated with any independent material, whereas in this case, the excel-sheet, the amount mentioned thereof, the cheque payments, the cash payments mentioned as "Dis"....
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.... satisfaction and a notice u/s. 153C of the Act was issued on 19.03.2018. In the course of assessment proceeding, the assessee had denied payment of any on-money towards purchase of the said property. The Assessing Officer had, however, noted that the total on-money payment in this transaction was Rs. 85,05,800/- out of which Rs. 9,92,420/-was outstanding. 2.1 The assessee did not deny the transaction of purchase of Bungalow No.76 in Safal Amrakunj Scheme. However, it was contended that no cash payment was made towards purchase of this property. The Assessing Officer had noted that as per the seized material, total amount of Rs. 2,12,65,800/- was payable by the assessee for purchase of Bungalow No.76 in Safal Amarkunj Scheme, out of which the amount payable by cheque was Rs. 1,35,13,380/- and the balance was to be paid in cash. The Assessing Officer further noticed that the consideration of Rs. 1,34,00,000/- was mentioned in the Sale Deed dated 14.05.2013 which almost matched with the cheque payments as appearing in the seized document. Further, the area and the rate per square yard as appearing in sale deed was also tallying with the seized material. The AO had, therefore, held....
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....tings appearing in excel sheet to be true and correct. It is a trite law that third party statements are not binding on the third person and such statements per se are not incriminating. 6. The Ld. CIT (A) erred on facts and in law in refusing the appellant to allow cross examination of searched persons though specifically demanded by the appellant. 7. The Ld. CIT (A) erred on facts and in law in accepting adverse inference drawn by the Assessing Officer against the appellant even though presumption u/s. 132(4A) and u/s. 292C cannot be drawn against the appellant who is not a searched person. 8. The Ld. CIT(A) erred on facts and in law in upholding addition made of Rs. 85.05.800/- u/s. 69 on the basis of unsubstantiated excel sheet claimed to be found in the course of search being alleged 'on money' payment for purchase of residential bungalow. Notings and jottings in excel sheets cannot be made basis for making addition of alleged undisclosed income as held by Hon'ble Supreme Court in Common Cause vs. UOI 394 ITR 220 (SC)." Submission of the Assessee 5. Shri Sakar Sharma, Ld. AR of the assessee, submitted that there was invalid assumpti....
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....-8 pertained to Harpreetsingh Jasbirsingh Makhija, (PAN: AMFPM8575M) and had accordingly intimated the matter to his Assessing Officer (ITO, Ward - 3(3)(2)) along with copy of his satisfaction, soft copy of the seized data and soft copy of relevant portion of the appraisal report. On the basis of this information, the Assessing Officer of the assessee (ITO, Wad - 3(3)(1), Ahmedabad) had recorded his satisfaction under Section 153C of the Act on 19.03.2018 and had accordingly issued notice under Section 153C of the Act on the same day. The Ld. CIT-DR submitted that the satisfaction was recorded by the Assessing Officer in the same F.Y. in which the information was received from the Assessing Officer of the searched person, and this did not cause any prejudice to the assessee. On merits, the Ld. CIT-DR submitted that the on-money payment of Rs. 85,05,800/-was appearing in the seized excel sheet and the addition was rightly made by the Assessing Officer as the source of the same was not explained by the assessee. He further submitted that the transaction of purchase of property was not denied by the assessee and the cheque payment, area, rate etc. as appearing in the seized data was f....
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....r person : Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has....
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....ategorically recorded that the seized documents pertaining/relating to the assessee had a bearing on the determination of the total income of the assessee for the A.Y. 2012- 13. Thus, the requirement of recording satisfaction of the AO of the other person is also found fulfilled in the present case. Therefore, the ground taken by the assessee in this respect is dismissed. Delay in recording of satisfactions: 9. The assessee has contended that the proceeding u/s. 153C of the Act was initiated after inordinate delay. It is found that the satisfaction by the AO of the searched person was recorded on 25.04.2017 which was received by the AO of the other person (assessee) on 01.05.2017. The AO of the assessee had recorded his satisfaction on 19.03.2018. We will have to examine the delay in recording the satisfactions by the AO of the searched person as well as by the AO of the assessee. Delay by the AO of the searched person: 10. The contention of the assessee is that the search was conducted in HN Safal Group on 04.09.2013 and the limitation for completion of search assessment was 31.12.2015. The searched persons had approached the Income Tax Settlement Commission (ITSC) ....
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....o examine the documents and for recording his satisfaction u/s. 153C of the Act on 25.04.2017 in the present case is found to be reasonable. We don't find delay in recording of satisfaction by the AO of searched person, as contended by the assessee. 10.3 The contention of the assessee is that that satisfaction recorded by the AO of searched person was not in accordance with the timeline prescribed by the Hon'ble Supreme Court, in the case of Calcutta Knitwears (43 taxmann.com 446). It was observed in that case, in the context of section 158BD of the Act, that the satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; (b) along with the assessment proceedings under section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. In the present case the AO had recorded his satisfaction within one month from the end of month in which the assessment proceeding was completed. The word 'immediately' does not put a burden on the AO to rec....
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....The Hon'ble Gujarat High Court has held in the case of Anil Kumar Gopikishan Agrawal (supra) that the notices u/s. 153C of the Act was required be issued for the year in which the search was conducted and the earlier six assessment years. Accordingly, as per that decision the proceeding u/s. 153C could have been initiated for A.Y. 2014-15 (year of search) and earlier six years. However, the Hon'ble Supreme Court has held in the case of CIT vs. Jasjit Singh, (155 taxmann.com 155), that in the proceedings u/s. 153C of the Act, the six years has to be counted from the date of handing over the documents to the AO of the other person and not from the date of search. Since the documents were handed over to the AO of the assessee on 01.05.2017, this date has to be considered as the date of search and accordingly proceeding u/s. 153C could be initiated for A.Y. 2018-19 (year of search) and earlier six years. Accordingly, on being handed over the documents in the F.Y. 2017-18, the AO of the assessee was precluded from initiating proceeding u/s. 153C of the Act in respect of one of the earlier years, pertaining to which certain documents might have been found. Thus, the delay in recording th....
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....roviding copy of statement of the searched person as well as allowing opportunity for cross-examination, it is found that the Assessing Officer did not rely on any of such statement in the assessment order. Rather, the addition has been made on the basis of entries available in the seized documents which are self-explanatory. When the AO did not rely on any statement for making the addition, there is no question of providing copy of the statement and also an opportunity for cross-examination. Hence, the grounds taken by the assessee in this regard are dismissed. On merits of addition 14. As regarding merits of the addition, the contention of the assessee is that property was purchased jointly in three names and, therefore, the Assessing Officer was not correct in making the addition in the hands of the assessee only. Further, the assesse had also denied having made any on-money payment in cash. According to the assessee the seller of the property did not prefer any settlement application and, therefore, there was no question of any admission by Safal Estates. It was further submitted that income admitted by the searched person before the Settlement Commission was not binding ....
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....t that the figure of Rs. 85,05,800/- as referred in the satisfaction was appearing in the seized excel sheet and the AO had categorically recorded that the seized document had a bearing on the determination of total income of the assessee, there was no infirmity with the satisfaction as recorded by the AO. In fact, the AO had also duly analysed the entries in the excel sheet, which were in codes, in his satisfaction. 17. In the course of hearing, we had sought a clarification regarding re-conciliation of cheque payment and on-money payment as appearing in the seized excel sheet. The assessee has submitted the following explanation in this regard: As per excel sheets brought on record and as per interpretation of authorities below cost of bungalow as well as alleged amount of 'on money' translates as under: (i) Cost of Bungalow as per Column 'Due' was Rs. 1,50,26,760/- (ii) Cheque amount was 50% at Rs. 75,13,380/- breakup of which is given as under: Column of sheet Amount Rce. Q 6000000 Ch. Q O/s 1513380 Total 7513380 Cash amount was 50% at Rs. 75,13,380/- breakup of which is given as under: Column of sheet Amount ....
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....ich indicates that booking was originally made by some investor who was code named as 'VB' who appears to have made entire investment in cash. Later on when actual buyer came, investor exited with profit from the builder. This assertion of the appellant gets support from the fact that one of the co-owner Jasbirsingh M Makhija had paid brokerage of Rs. 3,00,000/-through cheque which first buyer from the builder is not required to pay. The builder kept control over net amount receivable and appears to have allowed investor to exit only on receipt of total agreed consideration from the actual buyer which is evident from the following Column of sheet Amount Ch. Q O/s 1513380 Less: Disc O/s -992420 O/s 520960 As per excel sheet excess amount of Rs. 9,92,420/- was paid in cash. No person would make 'on money' payment in excess than that agreed with the builder for which no receipt is issued by him. The amount of cash was returned to the investor as soon as payments were received from the actual buyer. This is the reason amount of Rs. 85,05,800/-got reduced to Rs. 70,00,000/- as per 'NEW SHEET' referred to in the Exhibit-1 ....
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..... 1,50,26,760/- represented total amount due as on 21.01.2012, which included the cost of land and 20% of construction cost. 20. The details of payment against the total payable of Rs. 1,50,26,760/-as on 21.01.2012, is also founded recorded in the excel sheet. The payment was to be made in the ration of 50:50. Accordingly Rs. 75,13,380/- was payable by cheque and the total cheque payment of Rs. 60,00,000/- till that date was shown in the column "RCE Q" and the balance of Rs. 15,13,380/- was shown as "chQ O/s." i.e. cheque outstanding. On the other hand, against the balance amount of Rs. 75,13,380/- to be paid in cash, the assessee had made excess payment of Rs. 85,05,800/- which was appearing in column "Dis". The excess cash payment of (9,92,420) was shown as "Dis. O/s" in the excel sheet which was to be adjusted with future instalments of cash payment. It is thus crystal clear from the excel sheet that total cash payment made by the assessee as on 21.01.2012 was Rs. 85,05,800/-. The assessee in his explanation has tried to misguide by wrongly projecting the total value of the property at Rs. 1,50,26,760/- only. Considering the entries of the excel sheet, the AO had rightly cons....
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....ed for statistical purpose. 23. In the result, the appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on this 07th April, 2026. 07-04-2026 SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER For the Appellant : Shri Sakar Sharma, AR For the Respondent : Shri Alpesh Parmar, CIT_DR ORDER Per Sanjay Garg, Judicial Member: I have gone through the order of the Ld. Brother Shri Narendra Prasad Sinha, Accountant Member, however, despite my best efforts and with due humility, I could not convince myself with some of the observations/findings of the Ld. Brother and after mutual discussion, I proceed to give my own observations/findings on such issues. The facts of the case are not repeated here for the sake of brevity. 2. Issue relating to validity of the assessment order passed u/s. 153C of the Income Tax Act, 1961 - Delay in recording the satisfaction by the AO of the Assessee :- The undisputed facts are that the Assessing Office (AO) of the searched person had recorded his satisfaction on 25/04/2017 which was received by the AO of the Assessee on 01/05/2017. However, the AO ....
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....to grant opportunity to the assessee to rebut the same and also cross-examine the searched person whose explanation/statement relating to such documents was relied upon by the AO, then, in my view, serious prejudice has been caused to the assessee. This becomes more relevant when the AO of the searched person had taken almost 3 years and 8 months in recording the satisfaction against the assessee from the date of search, i.e. 04-09-2013. The satisfaction by the AO of the assessee has been recorded on 19-03-2018, i.e. almost 4 years 6 months after the date of search. The assessment of the assessee for the last six years gets opened u/s. 153C of the Act from the date of receipt of the seized documents from the AO of the searched person by the AO of the assessee. The sword of reopening of the assessment for six years cannot be kept hanging on the neck of the assessee (other than the searched person) for indefinite period as it will give unjustified authority/powers to the AO over the assessee which can be exploited either for the undue benefit or loss to the assessee. The law demands that there must be certainty about the future legal course of action by the AO and the inordinate dela....
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....see. Therefore, serious prejudice has been caused to the assessee for not providing him the copy of the statement of the searched person and opportunity to cross-examine him. 4. Sustainability of the additions on merits:- As discussed by my Brother Ld. Accountant Member, that, in this case, as per the sale-deed, the property was purchased jointly in three names including the assessee, however, the AO has passed the assessment order and made the entire additions on account of 'on-money' in the name of the assessee only. No assessment u/s. 153C of the Act has been carried out in the name of other two co-owners. The fact, itself, shows that the AO has not properly applied his mind to the facts and circumstances of the case and this fact supports my view that the assessment has been made in a hurried manner as there was less time for the AO to properly apply his mind to the entire facts and circumstances of the case. Further, there is a serious discrepancy about the quantum of the amount paid allegedly as 'on-money'. Though in the satisfaction recorded u/s. 153C of the Act, the AO of searched person as well as the AO of the assessee has referred the amount of 'on-money' at Rs. 70....
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....g material was found. This fact also shows that the admission by M/s.Safal Estates for offering the amount for was not solely dependent upon the incriminating material found during the search action especially the excel-sheet. 4.1. It is pertinent to mention here that in relation to the same search action carried out in the case of H N Sufal Group on 04/09/2013, the addition was made in the hands of another purchaser/assessee; namely, Kashish Gaurav Chandani and the Co-ordinate Ahmedabad Bench of the Tribunal in IT(ss)A No.147/Ahd/2023 dated 04/06/2024, titled as Kashish Gaurav Chandani vs. ITO under somewhat similar circumstances, has deleted the addition, after relying upon the decision of the Hon'ble Jurisdictional Gujarat High Court in the case of Kaushik Manubhai Majithia in Tax Appeal No.20 of 2024 06/03/20254 (Guj.) order dated 06/03/2024, by observing as under:- "6.1. The Ld.AR further stated that while confirming the addition the Ld.CIT(A) has relied on the excel-sheet found at the time of search and seizure at the premises of H N Safal Group. It was also based on the fact that one of the groups entity Manushi Land Developers LLP from whom assessee purchased pl....
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.... returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated." 6.5. We have heard the submissions of both parties and perused the material on record. It is noted that the AO made the addition solely based on the seized data and statement of the searched person, who paid the taxes on admission of such undisclosed 'on-money' in cash. Such addition was made without affording an opportunity to the assessee to cross-examine the person, whose statements were relied upon. This is against the principles of natural justice. 6.6 Furthermore, the payments made by cheque aggregating to Rs. 9,34,250/- were duly recorded in the assessee's books of a....
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....ased the above property. The total sale consideration of Rs. 99 lakhs were paid by both the parties. Thus the Assessing Officer initiated the assessment proceedings only against one co-owner without making verification of the seized material which is not sustainable in law. There is no other evidence or seized material found by the Department for making the addition on account of on-money of Rs. 20 lakhs and Rs. 67 lakhs paid by the assessee for the Asst. Years 2011-12 & 2012-13 respectively. 5.2. On an identical case, the Hon'ble Gujarat High Court in the case of ITO Vs. Bharat A Mehta reported in [2015] 60 taxmann.com 31 wherein it was held as follows: "Section 69 of the Income-tax Act, 1961- Unexplained Investment (Investment in property). Assessment year 1992-93-Assessee purchased a bunglow in a housing scheme from a builder firm during search, partners of said firm admitted having received certain amount as on money from buyers of bunglows in said scheme-On basis of that material Assessing Officer made certain addition under section 69 to income of assessee on account of on money paid to builders. On appeal, Tribunal deleted addition holding that revenue ....
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....r since in Settlement Commission proceeding full value of 1/3rd share had been accounted for, Le Rs. 44.84 crores, any addition could not be made to assessee's income in absence of any concrete evidence -Held, yes Paras 12 & 13 in favour of assessee" 5.5. Jurisdictional High Court in the case of Heirs and Legal Representatives of Shri Laxmanbhai S Patel vs. CIT 327 ITR 290 (Guj has observed as follows: " The legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross-examination, the addition is made the same is required to be deleted on the ground of violation of the principles of natural justice. This is clearly stated by the Hon'ble Supreme Court in the case of Kishinchand Chellarum (supra) wherein it is stated that before the Income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine. Except the statement of Shri Kantilal M. Patel and Sin Rameshaha, there was no other evidence available with the dep....
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....e entrees in the said excel-sheet were not straight away clear to observe that the said entries referred to as "Discount" would mean the amount paid in cash. Moreover, there is no clarity of the amount allegedly paid by the assessee as 'on-money' as the AO initially mentioned it as Rs. 70 lakhs and again on the basis of his interpreting of the same entries in the excel-sheet, has alleged 'on-money' of Rs. 85,05,800/-. Further, even before the Settlement Commission, the income offered by the seller was not solely on the basis of excel-sheet. Under the circumstances and in view of the discussion made above and in the light of the case-laws, as referred to above, the addition in this case solely on the basis of the alleged in corroborated excel-sheet is not sustainable and the same is ordered to be deleted. 5. In the result, appeal of the assessee stands allowed. 18-08-2026 SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER For the Appellant : Shri Sakar Sharma, AR For the Respondent : Shri Alpesh Parmar, CIT-DR ORDER Final order in conformity with majority decision: Whereas the captioned appeal was heard by the Division Bench o....