ARUN MOHANLAL JOSHI,THANE V. ASST COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE 2(2), MUMBAI

ITSSA 1172/MUM/2025

AI Insights

The case involves multiple appeals by Arun Mohanlal Joshi against the orders of the Commissioner of Income Tax (Appeals) for the assessment years 2014-15 to 2021-22. The primary contention was regarding the additions made under section 69C of the Income Tax Act, which were based on unaccounted expenditure allegedly evidenced by seized documents. The appellant argued that the additions were made without proper verification and were based solely on presumptions. The Tribunal examined whether the additions were legally sustainable, given that the material used for the additions was obtained during a survey under section 133A, not a search under section 132, which is a prerequisite for assessments under section 153A.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652869 (ITAT-MUMBAI)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: CIT, Kanpur vs. Shadiram Ganga Prasad, Principal Commissioner of Income-tax, Central III v. KrutikaLand (P.) Ltd., NTPC vs CIT, Jute Corporation of India Ltd. Vs. CIT, UMT Spinning Company Ltd. Vs. CIT, PCIT vs Abhihsar Build Well(P) Ltd., CIT vs Kabul Chawla, Pr CIT vs MeetaGutgutia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: SATISH MODY
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences; Unexplained expenditure; Document seized; Documents seized; Block assessment; Loose papers
• Section: 147; 132; 153A; 69C; 133A

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, (JUDICIAL MEMBER) AND PRABHASH SHANKAR, (ACCOUNTAMT MEMBER) I.T.(SS).A.No. 1169 to 1176/Mum/2025 Assessment Year: 2014-15 to 2021-22 Arun Mohanlal Joshi 101/ADevidarshan Complex, Tembhi Naka, Thane 400601. PAN: ACOPJ9865E Vs Assistant Commissioner of Income Tax, Central Circle (2)(2), Mumbai (Appellant) (Respondent) Appellant by Shri. Satish Mody Respondent by Shri. Rajesh Kumar Yadav (CIT-DR) Date of Hearing 10.06.2025 Date of Pronouncement 16.06.2025 ORDER Per Bench: The present appeals have been filed by the assessee challenging the orders dated 20.12.2024, passed u/s. 250 of the Income Tax Act, 1961 („the Act‟), by the Ld. Commissioner of Income Tax (Appeals), for the assessment year 2014-15 to 2021- 22. \"1. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) erred in confirming the addition made by the Assessing Officer u/s 69C of the Act without considering the entire facts and submissions made by the appellant before the Ld. CIT(Appeals). 2. On the facts and circumstances of the case and in law, the Ld. Assessing Officer erred in making disallowance u/s 69C of the Income Tax Act on account of unaccounted expenditure merely on the basis of seized documents, without making any kind of verification of the entries 2 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi made therein, without making proper enquiries and collecting any material/corroborative evidence with respect to such expenditure. 3. On the facts and circumstances of the case and in law, the Ld. Assessing Officer erred in making disallowance u/s 69C of the Income Tax Act on account of unaccounted expenditure, when the statement given by the appellant during the course of search proceedings was retracted within reasonable time. Thus, the onus was heavily shifted on the Assessing Officer to prove with necessary supporting evidences that, the transactions recorded in the impounded material belongs to the assesse only and chargeable to tax as his undisclosed income. The Assessing Officer made disallowance without discharge the onus lies on him. Therefore, the addition made by the Assessing Officer is legally not sustainable. 4. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) erred in not following the ratio laid down by the judgement of Hon'ble Allahabad High Court in the case of CIT, Kanpur vs. Shadiram Ganga Prasad, 2010 UPTC 840 that presumption under Section 132(4A) is a rebuttable and not absolute. Therefore, once the appellant submitted a detailed plausible explanation in respect of seized material, then the onus shifted on the Ld. Assessing Officer to conduct some investigation to link these material with the appellant, which is a complete failure on the part of the Ld. Assessing Officer in this case. 5. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) erred in not following the ratio laid down by the judgement of Hon. Apex Court in the case of Principal Commissioner of Income-tax, Central III v. KrutikaLand (P.) Ltd. (SC) 2019 ITL 278: (2019) 261 TAXMAN 454 and in various other decisions of the Hon. Courts, as per which no addition can be made by the Assessing Officer only on the basis of seized material and without bringing on record material/evidence which conclusively shows that the undisclosed income belongs to the assesse. 6. On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) erred in not considering that, the appellant has retracted his statement recorded during the course of search proceedings within reasonable time and therefore, the Assessing Officer was duty bound to prove beyond doubt by collecting corroborative evidence that the transactions recorded in seized material belongs to the assesse only. The addition in the present case was made by the Assessing Officer only on presumption and without collecting an iota of material/evidence or conducting any enquiries during the course of assessment proceedings, which was failure on the part of Assessing Officer. The addition is therefore legally not sustainable. 3 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi 7. The Appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing.\" 2. Since all the issues involved in these appeals are common and identical, therefore, they have been clubbed, heard together and a consolidated order is being passed for the sake of convenience and brevity. We shall take up IT(SS)A No. 1169/Mum/2025 for AY: 2014-15 as lead case and the facts narrated therein. IT(SS)A No. 1169/Mum/2025, AY: 2014-15 3. At the very outset Ld. AR orally raised before us an additional ground to the effect that the order passed by the Ld. AO is bad in law and is not sustainable in the eyes of law. On the other hand, Ld. DR objected to the said additional ground raised by the assessee for the first time, that too without moving a written application. 4. We have heard the counsels for both the parties at length on the admissibility and maintainability of the additional grounds raised by the assessee. In fact, Ld. AR has drawn our attention to the facts of the case, wherein it has categorically been mentioned that “During the course of a survey proceedings u/s.133A of the Income Tax Act in the case of M/s. Raj Impex at Room No.101, 101A, Devidarshan Complex, Tembhi Naka,BhavaniChowk, Thane, Maharashtra-4000601, certain note books, diaries, lose papers were found and 4 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi impounded and placed and inventory of books and documents found and impounded from the survey premises.” 5. Therefore, according to the assessee, since it is a case of survey u/s.133A of the Act and the material was also impounded from the survey premises therefore, assessment could not have been framed u/s.153A of the Income Tax Act. 6. In our view, the assessee has raised a purely legal ground without reference to any disputed question of facts and the ground raised by the assessee goes to the roots of the case and for deciding the same, no new evidence or material is required. 7. We also notice that the additional ground challenging the legal validity of the impugned assessment order is purely legal in question and is consistent with the subject matter of the case and the opposite party will not be unduly prejudice. 8. Even Rule 11 of the ITAT Rules 1963, provides that the appellant, with the leave of the Tribunal can urge before it any ground not taken in the memorandum of appeal and the Tribunal while deciding the appeal is not confined only to the grounds taken in the memorandum of the appeal or taken by leave of the Tribunal under Rule 11. 9. Now the question arises, that when a specific legal ground is raised before the Tribunal with regard to the legality and maintainability of the impugned order, which goes to the roots of the case, then in our view, the Tribunal being the judicial body 5 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi cannot shut its eyes merely on the ground that the said legal ground has not been raised in writing. The entire provision of Rule 11, nowhere mandates of application to be in writing. However, the only requirement laid down under the rule is taking leave of the Tribunal, before urging any ground not taken is the memorandum of appeal and the Tribunal has been empowered with the powers of not confining only to the grounds taken in the memorandum of appeal, or taken by leave of the Tribunal under Rule. In other words, the Tribunal can decide the appeal on a ground neither taken in the memorandum of appeal nor by its leave. The only requirement is that the tribunal cannot rest its decision on any other ground unless the party who may be affected has had sufficient opportunity of being heard on that ground. 10. We are further of the view that appeals to the Tribunal are preferred u/s.254(1) of the Act, which provides that after hearing the contesting Parties, the Tribunal may pass such order that it thinksfit. In Section 254(1) of the Act, the usage of the words “Pass such order thereon as it think fit” gives very wide powers to the Tribunal and such Powers are not limited to adjudicate upon only the issues arising from the order appealed from. In our view any interpretation to the contrary would go again to the basic purpose for which the appellate powers are given to the Tribunal u/s 254(1) of the Act. 11. Therefore, a harmonious reading of Section 254(1) of the Act and Rule 11 of the rules coupled with basic purpose underlying 6 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi the appellate powers of the Tribunal, which is to deal with the question of legal interpretation and to ascertain the correct tax liability of the assessee, leaves no manner of doubt that the Tribunal while exercising its appellate jurisdiction, has discretion to allow to be raised before it New or Additional questions of law arising out of the record before it. 12. On this proposition of law, reliance is being placed on the decision in the case of UMT Spinning Company Ltd. Vs. CIT (2016) 74 taxmann.com 33(P&H). 13. Therefore, taking into consideration our above discussion and also keeping in view the principles laid down by Hon‟ble Supreme Court in the case of NTPC vs CIT 229 ITR 383 and Jute Corporation of India Ltd. Vs. CIT 187 ITR 688(SC) we allow the assessee to orally raise additional ground regarding the legality of the orders passed by the AO. 14. Since the additional ground raised by the assessee relates to challenging the legality and maintainability of the assessment order. In this regard, we have heard both the parties and perused the material available on record, Judgments cited before us and also perused the orders passed by the revenue authorities. From the records, we notice that the case of the revenue is that during the course of search action in the JMJ and AMJ group, a survey proceedings u/s 133A of the Income Tax Act, 1961 in the case of M/s Raj Impex at Room No. 101, 101A, Devi Darshan complex, Tembhi Naka, Bhawanichowk, Thane, 7 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi Maharashtra-400601, certain Note books, Diary, loose papers were found and impounded and placed and Inventory of books & documents found and impounded from the survey premises. The impounded diaries and note books are depicted below: - (A) The pages of the small pocket maroon color notebook (written pages from 1 to 15) placed as inventory of the books and documents found and impounded from the survey premises. (B) Yellow color small spiral notebook titled EKAL (written pages from 1 to 4) placed as inventory of the books and documents found and impounded from the survey premises. (C) Blue note book titled SUNDARAM (written pages from 1 to 6) placed as inventory of the books and documents found and impounded from the survey premises. (D) Loose papers found and placed as inventory of books and documents found and impounded from the survey premises. On the page no. 2, some calculation and transaction details in cash and cheque written by hand on 18.09.2018. 15. Now admittedly, the facts of the case are not in dispute, wherein we find that additions in these cases are not based on any seized material found during the course of search, which is crystal clear for the facts narrated by the AO in the order of assessment. 16. Admittedly, the said documents, were find in the course of Survey Action u/s.133A of the Act and has nothing to do with the search and the additions are based on the so called incriminating material that was found not in a search but in a survey, that too on the firm and not the individual. 17. Even On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is 8 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153 A of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 1324 of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or' requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub- 9 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 18. Section 153A bears the heading \"Assessment in case of search or requisition\". It is well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153 the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something found during the search or requisition viz., incriminating material which reveals 10 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi undisclosed income. Thus, while in view of the mandate of sub- section (1) of section 153 A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition, in case no incriminating material is found, as held by-the Rajasthan High Court in the case of Jai Steel (India)v. Asst. CIT (supra), the earlier assessment would have to be reiterated, in case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 19. We find that the additions made in the assessment order passed in the present case are not based on any incriminating material or documents found during search. In fact, the assessment order does not refer to any seized material or any incriminating material found during the course of search. This position of law (that addition u/s 153A/153C can be made only 11 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi on the basis of incriminating material etc. found during search), has been elaborated by the Hon'ble jurisdictional High Court in a plethora of cases as discussed above: CIT vs Kabul Chawla, 380 ITR 570 (Delhi) and Pr CIT vs MeetaGutgutia, 395 ITR 526(Delhi). 20. However, we find that the said documents were found during the course of survey action u/s.133A of the Act and has nothing to do with the seized material found during the search. 21. In this view of the nature, when in the order of assessment, there is no reference of any material found during search, thus no additions could have been made u/s 153A of the Act. Our this view is fully supported by the decision of the Hon‟ble Supreme Court in the Case of PCIT vs Abhihsar Build Well(P) Ltd. (2023) SCC online SC. 481. Wherein the Hon‟ble Supreme Court has expounded that no additions can be made when the assessment is farmed u/s.153A of the Act, dehors incrementing material found during the search. 22. Therefore, we are of the considered view that no incrementing material was found in this case during the course of search. Thus no additions u/s.153 of the act were warranted. Thus, we allow Additional ground raised by the assessee and direct the AO to delete the addition. 23. Accordingly, this ground raised by the assessee is allowed. 12 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi 24. Since we have allowed additional ground and deleted the additions, therefore, there is no need to adjudicate other grounds. 25. In the result, the appeal filed by the assessee is allowed. I.T.(SS).A.No. 1170 to 1176/Mum/2025 AY: 2015-16 to 2021-22 26. As the facts and circumstances in these appeals are identical to ITA No. 1169/Mum/2025 for the A.Y 2014-15 (except variance in figures) therefore it is not imperative to repeat the facts and grounds raised in the above appeals. Hence, the bench fills that on the decision taken by us in ITA No. 1169/Mum/2025 for the AY: 2014-15 shall apply ‘mutatis mutandis’ for these appeals also. Accordingly, the ground of appeal of the assessee are allowed in the above appeals as well. In the result, the appeals filed by the assessee are allowed. Order pronounced in the open court on 16/06/2025 Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) (ACCOUNTAMT MEMBER) (JUDICIAL MEMBER) Mumbai: Dated: 16/06/2025 Divya R. Nandgaonkar Stenographer Copy of the order forwarded to: (1)The Appellant 13 ITA No. 1169 to 1176/Mum/2025 AY 2014-15 to 2021-22 Arun Mohanlal Joshi (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt.Registrar) ITAT, Mumbai "