ACIT CENTRAL CIRCLE 2(3), AHMEDABAD V. SHIV SAGAR ENTERPRISE, AHMEDABAD

ITSSA 87/AHD/2024

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The case involves an appeal by the Revenue against Shiv Sagar Enterprise concerning an addition made under section 69 of the Income Tax Act, 1961, for alleged undisclosed investment in property. The addition was based on a WhatsApp chat found during a search operation, which the Assessing Officer (A.O.) interpreted as evidence of 'on-money' payment for property. However, the Commissioner of Income Tax (Appeals) reversed this addition, leading to the Revenue's appeal to the Tribunal. The Tribunal upheld the CIT(A)'s decision, emphasizing that no incriminating material was found at the assessee's premises, and the addition was based on presumption and not on concrete evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776226 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-09-2025
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 17-09-2024
• Other Referred Cases: Abhisar Buildwell P. Ltd. [2023] 454 ITR 212 (SC)
• Laws Referred To: Income Tax Act
• Court: TRIBUNAL
• Assessee Lawyers: ISSUE OF NOTICE US
• Keywords: Fair market value; Block assessment
• Section: 147; 143(3); 132; 153A; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member The ACIT Central Circle-2(3), Ahmedabad (Appellant) Vs Shiv Sagar Enterprise E-307, Sumel Business Park III, Opp: New Cloth Market, Ahmedabad-380054 PAN: ACUFS2682J (Respondent) Revenue Represented: Shri Sher Singh, CIT-DR Assessee Represented: Shri Dhinal Shah, A.R. Date of hearing : 20-08-2025 Date of pronouncement : 15-09-2025 आदेश/ORDER PER : NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:- This appeal is filed by the Revenue as against the order dated 18.07.2024 passed by the Commissioner of Income Tax (Appeals)- 12, Ahmedabad for the Assessment Year 2018-19 in the proceedings under section 153A of the Act. 2. The brief fact of the case is that the assessee M/s. Shiv Sagar Enterprise is a partnership firm and had filed its Return of Income for A.Y. 2018-19 on 23/07/2018 declaring total income of IT(SS)A No: 87/Ahd/2024 Assessment Year: 2018-19 Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 2 Rs.36,07,760/-. Subsequently, a search action u/s. 132 was carried out in the case of “Land Broker and Financer” Group on 15/10/2019 and the office premises of the assessee was also covered in the search. Thereafter, proceedings u/s. 153A of the Act was initiated in the case of the assessee by issue of notice u/s. 153A of the Act on 19/10/2020, in response to which, the assessee had filed return on 10/01/2020 declaring the total income at Rs.36,07,760/- as per original return. In the course of search at the premises of the assessee, a digital data namely “Nikhil Mail Data-Volume-2” being the back up of email was found and seized. At Page Nos. 23 to 54 of this data was a draft copy of sale deed of land bearing Survey No. 408/2, 412 and 413/2 situated at Zundal, Gandhinagar for an amount of Rs.5,61,50,000/- entered into between Shivam Associates (Purchaser) and Devendra Naranbhai Patel (Seller). It was found that this plot of land was subsequently purchased by the assessee for the sale consideration of Rs. 5,61,50,000/- as mentioned in the seized draft sale deed. 3. In the course of search at the residence of one Shri Suresh Ranchodbhai Thakkar, a whatsapp chat data was seized from the mobile phone of Shri Suresh Thakkar. This whatsapp chat was between Shri Suresh Ranchodbhai Thakkar and Shri Dhaval Thakkar in respect of the rate of a property which was adjacent to the property purchased by the assessee. It was found that the rate of the property mentioned in the whatsapp chat data was Rs.21000/- per sq. yd. The A.O. had reproduced the whatsapp chat in the assessment order on the basis of which, he concluded that the property purchased by the assessee was not at the correct Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 3 market price, considering the fact that the rate for the adjacent property was Rs.21000/- sq. yd. Accordingly, the A.O. had adopted the market rate of the property purchased by the assessee @ 21000/- per sq. yd. (being the rate as mentioned in whatsapp chat) and the sale consideration was worked out at Rs.37,60,68,000/-. As the assessee had disclosed purchase price of Rs. 5,61,50,000/- only in its account, the difference of Rs.31,99,18,000/- was considered by the A.O. as on-money paid by the assessee for the purchase of this property. Accordingly, an addition of Rs.31,99,18,000/- was made u/s. 69 of the Act and the assessment was completed u/s. 153A on 25-09-2021 at total of Rs.32,35,25,760/-. 4. Aggrieved with the order of the A.O., the assessee filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was allowed. 5. Now the Revenue is in appeal before us. Following grounds have been taken in this appeal: 1) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the order under section 153A r/w 143(3) of the Act is bad in law and not sustainable without considering the inference made by the A.O. purely based on the indicative but relevant incriminating material unearthed, seized during the search and post search operation. 2) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of undisclosed investment u/s. 69 r.w.s. 115BBE of Rs 31,99,18,000 on account of on money payment for purchase of land. 3) The Revenue craves leave to add/alter/amend and/or substitute any or all of the grounds of appeal. Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 4 6. Shri Sher Singh, the Ld. CIT-DR submitted that the Ld. CIT(A) had allowed relief to the assessee on technical ground that no addition could have been made in the hands of the assessee on the basis of the materials and evidences found and seized in the course of search from a third party. He submitted that the Ld. CIT(A) did not discuss the merit of the addition at all. According to the Ld. CIT-DR since the search was also conducted in the case of the assessee, the A.O. was competent to consider the seized materials found from the premises of the assessee and also the seized material found from a third party and, therefore, the addition was correctly made by the AO. The Ld. CIT-DR further submitted that the Ld. CIT(A) did not examine the merits of the addition and the fact that the property purchased by the assessee was not disclosed in the original return filed by the assessee, was not considered by him. He explained that had the search not been conducted, the entire investment in the property would have escaped assessment. 7. Per contra, Shri Dhinal Shah, the Ld. AR of the assessee submitted that no incriminating material was found in the course of search from the premises of the assessee. He submitted that after the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell P. Ltd. [2023] 454 ITR 212 (SC), it is a settled position that in case no incriminating material is found during search from the premises of the assessee, then no addition can be made on the basis of material seized from a third party. He explained that under such circumstances, the material found from a third party could be considered only by initiating proceedings under section 147 of the Act. He, therefore, strongly supported the Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 5 order of Ld. CIT(A) on this issue. On merits also, the Ld. A.R. contended that no addition was called for in this case. He explained that the assessee had purchased the land on 20-03-2018 whereas the whatsapp chat, relied upon by the A.O., was dated 30-09-2019. He, therefore, submitted that the A.O. was not correct in comparing the sale price of the property with the rate mentioned in whatsapp chat communication, which was made one and half year after the purchase of the property. The Ld. A.R. further submitted that in the course of search, no evidence for any on-money payment for the purchase of this property was found or seized from the premises of the assessee. Thus, the addition was based on mere presumption and not on any material facts. 8. We have considered the rival submissions. Since the search in this case was conducted on 15-10-2019 and the due date for issue of notice u/s. 143(2) for A.Y. 2018-19 had expired on 30-09- 2019, the case of the A.Y. 2018-19 was an abated assessment year. The Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) has held that no addition can be made in respect of completed assessments in the absence of any incriminating material. The conclusion recorded by the Apex Court in Para 14 of the order in the case of Abhisar Buildwell (supra) is as under: 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 6 (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. 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. The Hon’ble Apex Court has categorically held that the AO would assume the jurisdiction to assess or re- assessee the “total income” by taking into consideration the incriminating material unearthed during the search and the ‘other material’ available with the AO, including the income declared in the returns. The ratio of the judgement is that the incriminating material found during the search gives the AO the jurisdiction to assess or reassess the ‘total income’ u/s 153A of the Act of the unabated/completed assessment. In the absence of any incriminating material unearthed during the search, the AO would not have the jurisdiction to proceed in the Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 7 unabated/completed year(s), only on the basis of other material. 10. Thus, in the case of M/s. Abhisar Buildwell Pvt. Ltd. (supra) the Hon’ble Supreme Court held that in the case of an abated year, the materials found from a third party can be considered only if incriminating material is found from the premises of the assessee. In the present case, the only seized material found from the assessee, as referred in the assessment order, was Nikhil Mail Data- Volume-2 containing draft copy of sale deed of land. It is found that the sale consideration mentioned in this draft sale deed was Rs. 5,61,50,000/- and the assessee had purchased the land for the same amount, which was duly disclosed in the accounts. Therefore, this seized material cannot be considered as an incriminating material found from the assessee, as no addition could have been made on the basis of this seized document. In fact no addition was made by the AO on the basis of any material found from the premises of the assessee. Therefore, no addition could have been made by the AO on the basis of ‘other material’, in absence of any incriminating material found from the assessee during the course of search under section 132 of the Act. 11. The A.O. had relied upon the whatsapp chat communication seized from the mobile phone of a third party namely Shri Suresh Ranchodbhai Thakkar. The incriminating material found from the third party could have been considered by the A.O. only if certain addition was made in the hands of the assessee on the basis of Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 8 incriminating material seized from his own premises. As no incriminating material was found neither any addition was made on the basis of materials seized from the premises of the assessee, the Ld. CIT(A) had rightly held that the addition as made by the A.O. in the present case was not sustainable in view of the judgment of Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd (supra). Therefore, the findings of the Ld. CIT(A) is upheld and the ground taken by the Revenue in this regard is dismissed. 12. The second ground taken by the Revenue is regarding merit of addition of Rs. 31,99,18,000/- on account of on-money payment for purchase of land. In the course of search, no evidence for any on-money payment made by the assessee for purchase of this land was found. Thus this addition was not based on any material evidence but was made only on presumption. The A.O. had considered the whatsapp chat communication seized from the third party for arriving at the market value of property. The rate of Rs. 21000/- per sq. yd. mentioned in the whatsapp chat communication was not between the assessee and a third party but it was between two unrelated third parties. Further, the whatsapp chat communication was in respect of different plot of land and not in respect of the plot of land purchased by the assessee. In addition, the whatsapp chat communication was made on 30-09- 2019 which was almost one and half years after the purchase of land by the assessee. Considering the fact that the whatsapp chat data pertained to a much later period and did not relate to the transaction made by the assessee, no adverse inference could have Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 9 drawn in the case of the assessee on that basis. Further, the investment of Rs.5,94,72,440/- in “Zundal Plot” is also found disclosed in the balance sheet of the assessee as on 31st March, 2018, a copy of which has been brought on record. 13. Merely because certain rate was quoted in the whatsapp chat communication of much later period, the said rate can’t be considered as final rate for the purchase transaction of the assessee. The Revenue has not brought on record any evidence that any other property in the same locality was sold at the rate of Rs.21,000/- per sq. yd. or at a comparable rate. The principle of surrounding circumstances and preponderance of probabilities required any other instance of actual sale transaction at a comparable rate. In the absence of any such evidence, the rate of Rs.21,000/- as appearing in WhatsApp chat can’t be considered as sacrosanct. Neither the matter was referred by the AO to the DVO to find out the fair market value of the property. Further, if the property was purchased at a rate higher than as appearing in the sale deed, then certain evidence for payment of extra consideration should have been found in the course of search. As already mentioned earlier, no evidence of payment of any on-money in respect of the purchase consideration of the land, was found from the assessee in the course of search. If the Revenue wanted to tax the on-money payment, the burden was squarely on the Assessing Officer to establish that the assessee had paid on-money in this transaction. The seller of the property had also not admitted having received any on-money payment in this transaction. In the absence of any such evidence, the addition as made by the Assessing Officer Printed from counselvise.com I.T.(SS)A No. 87/Ahd/2024 A.Y. 2018-19 Page No ACIT VS. Shiv Sagar Enterprise 10 is based purely on suspicion and assumption of facts, which could not have been sustained. We, therefore, do not find any merit in the ground as raised by the Revenue. Therefore, the ground no. 2 as taken by the Revenue is dismissed. 14. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 15-09-2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 15/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "