ASNANI BUILDERS AND DEVELOPERS LIMITED,BHOPAL V. ACIT (CENTRAL)-II, BHOPAL

ITSSA 14/IND/2024

AI Insights

The case involves M/s Asnani Builders & Developers Ltd, which appealed against the composite order of the Commissioner of Income Tax (Appeals-3), Bhopal, concerning the assessment years 2015-16 to 2018-19. The appeals were directed against the orders passed under section 153C read with section 143(3) of the Income Tax Act, 1961, which were challenged on grounds of jurisdiction, lack of document identification number (DIN), and violation of principles of natural justice. The Tribunal examined the validity of the proceedings initiated under section 153C following a search and seizure operation and found that the documents and evidence relied upon did not establish a direct link to the assessee's undisclosed income for the years in question.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36528 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 19-02-2024
• Other Referred Cases: Shri Shailendra Sharma Vs. ACIT (Central) Bhopal, ACIT (Central)-2, Bhopal Vs Shri Sanjeev Agrawal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR
• Assessee Lawyers: HITESH CHIMNANI
• Keywords: Set aside; Income from undisclosed sources; Document seized; Documents seized; Principle of natural justice; Search and seizure; Loose papers; Cancellation of registration; Opportunity of cross examination; Tangible material
• Section: 147; 143(3); 250; 48; 11; 153; 153A; 131; 22; 69A; 153C; 12

Judgement Text

"आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A Nos.11 to 14/Ind/2024 (Assessment Years: 2015-16 to 2018-19) M/s Asnani Builders & Developers Ltd, 509, Fifth Floor, Corporate Zone, Aashima Mall, Hoshangabad Road, Bhopal Vs. ACIT Central-2, Bhopal (Appellant / Assessee) (Respondent/ Revenue) PAN: AAFCA5950K Assessee by Shri Hitesh Chimnani, AR Revenue by Shri Ram Kumar, CIT-DR Date of Hearing 26.09.2024 Date of Pronouncement 25.10.2024 O R D E R Per Bench: These four appeals by the assesse is directed against the composite order dated 30.01.2024 of the Commissioner of Income Tax (Appeals-3), Bhopal for the Assessment Years 2015-16 to 2018-19 respectively. IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 2 2. Assessee has raised common grounds in these appeals except the quantum of addition; the grounds raised for the Assessment Year 2015-16 are reproduced as under: “1 That on the facts and in the circumstances of the case and in law, the impugned order passed under section 153C r w.s. 143(3) of the Income Tax Act. 1961 is erroneous and without jurisdiction. 2 That on the facts and in the circumstances of the case and in law, the impugned order passed by the Ld. AO under section 153C r.w.s 143(3) of the Income Tax Act, 1961 dated 28.09.2021 is non-est as the same was passed without any document identification number (DIN) as mandated by Circular No. 19/2019 dated 14.08.2019 and thus the said order deserves to be quashed. 3 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition u/s 69A of the Income Tax Act, 1961 without properly appreciating the facts of the case and the submissions made before him. 4 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition without giving assessee company an adequate opportunity of cross examination, which is in violation of principles of natural justice. 5 The appellant craves leave to add, amend, modify. or withdraw any of the grounds of appeals at the time of hearing.” 3. The assessee company is engaged in the business of builders and developers. During the years under consideration the assessee company continued to be in the business of construction, development and sale of residential houses. The assessee has also entered into a Joint Venture Agreement (JVA) with Amrit Homes IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 3 Pvt. Ltd (AHPL) & Amrit Colonisers Pvt. Ltd (ACPL) in respect of its land situated at Katara Hills, Bhopal for construction of row houses and flats under the project Peeble Bay on revenue sharing basis. There was a search and seizure action u/s 132(1) of the Act in Asnani Group on 16.05.2018. Pursuant to the search and seizure operation carried out on 16.05.2018 the A.O issued notice u/s 153C of the Act to the assessee for the assessment year 2009-10 to 2017-18. The A.O while framing the assessment u/s 153C of the Act for the Assessment Year 2011-12 to 2017-18 u/s 153C of the Act made additions on account of cash receipts from the customers against sales/bookings of housing plots by ACPL and AHPL in the project Peeble Bay. The A.O has relied upon the incriminating document found and seized from Shri Dileep Gupta during the course of search and seizure carried out on 12.01.2018 in case of M/s DG Homes and Realty Pvt. Ltd marked as LPS-1 & LPS-2. The assessee challenged the action of the A.O before CIT(A) but could not succeed. IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 4 4. Before the Tribunal the Ld AR of the assessee has submitted that the A.O has initiated the proceedings u/s 153C of the Act in pursuant to the search and seizure operation carried out in case of M/s Asnani group on 16.05.2018. He has referred to the satisfaction recorded by the A.O dated 10.03.2021 placed at page No.5 to 9 of the paper book and submitted that the A.O has not referred any incriminating material in the satisfaction note found or seized during the course of search and seizure carried out on 16.05.2018 but those documents were found from the laptop of Shri Dileep Gupta during the search and seizure action in case of M/s DG Homes and Realty Pvt. Ltd carried out on 12.01.2018. Therefore, the satisfaction recorded by the A.O is not valid as it is not based on the documents found during the course of search and seizure action dated 16.05.2018. Further even the seized documents being the Excel sheet taken from the Laptop of Shri Dileep Gupta it is not reflected any transaction of cash received by the assessee. The A.O has also referred to the statement of Shri Dileep Gupta but there is nothing incriminating against the IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 5 assessee. Thus Ld. AR has submitted that the assessee filed objections against the satisfaction note of the A.O which were disposed off by the A.O order dated 22.09.2021. Ld. AR has pointed out that the alleged seized documents contains the entries of residential units sold by M/s. ACPL and the payments received from the customers. Therefore, even if it is presumed that the cash was collected from the customers by AHPL/ACPL that itself would not lead to the conclusion that the said cash was received by the assessee. Hence, Ld. AR has submitted that prima facie the incriminating documents as referred in the satisfaction note do not reveal that the cash was received by the assessee company. There is no correlation/connection between the seized material and the assessee company as nothing incriminating is found in the seized material. Therefore, the assumption of jurisdiction u/s 153C of the Act by the A.O is bad in law for want of conclusive satisfaction based on the alleged seized material. The satisfaction note dated 10.03.2021 is not in accordance with the provisions contained in Section 153C of the Act. He has further pointed out that the AO IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 6 has disposed off the objections filed by the assessee vide order dated 22.09.2021 wherein he has referred to page 36 of LPS-7 but the said seized document was nowhere mentioned in the satisfaction note. Therefore, there is no reference of seized documents marked as LPS-7 in the satisfaction note and hence, the A.O has failed to establish any correlation of seized document with the assessee company at the time of recording the satisfaction. Record of satisfaction note with conclusive satisfaction of the A.O about the correlation of seized document and undisclosed income of the person other than the search person is an essential jurisdiction fact and precondition for assuming the jurisdiction u/s 153C of the Act. Ld. AR has submitted that the precondition of conclusive satisfaction about the correlation of the seized document and undisclosed income of the assessee is absent in the case of the assessee therefore, the assumption of jurisdiction itself is bad in law and consequential proceedings are also void-abinitio. He has further contended that even the addition made by the A.O is purely based on the presumption without any tangible material to show IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 7 that the assessee has received cash against the sale of residential units in the project Peeble Bay. The A.O has referred the seized material which is an Excel sheet contained the details of cash received by Shri Dileep Gupta who was the marketing agent of M/s. AHPL & ACPL. The assessee has contributed land in question owned by the assessee for the said project under the Joint Venture Agreement on revenue sharing basis but there is nothing in the seized material to show that the assessee received the alleged cash collected by Shri Dileep Gupta from the customers. Therefore, the addition has been made by the A.O purely on presumption without any evidence that the assessee has also received the cash. The AR has submitted that the only document which contains the name of the assessee in the abbreviated form is LPS-7 seized from the residence of Shri Shubham Gupta an employee of M/s. AHPL but the same does not pertains to the years under consideration. The said document is placed at page 36 of the paper book. Ld. AR has relied the decision of this Tribunal dated 24.06.2014 in case of Shri Shailendra Sharma Vs. ACIT (Central) Bhopal IT(SS)A No.30 & 31/ IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 8 Ind/2023 wherein the Tribunal has held that the incriminating material in the form of random sheets, loose papers etc are inadmissible as evidence. Further the A.O could not make any addition merely on the basis of suspicion howsoever, strong it may be. The AR has further submitted that the addition is made by the AO on the basis of documents seized from the possession of a third party and also based on the statement of third person but neither the seized document nor the statement was confronted with the assessee before the same was made basis of the addition by the A.O. Therefore, in the absence of giving an opportunity to the assessee to cross examine Shri Dileep Gupta the addition made by the A.O based on his statement is not sustainable and liable to be deleted. He has further contended that even in the statement of Shri Dileep Gupta nothing incriminating has been disclosed against the assessee. He has also relied upon the decision of this Tribunal in case of ACIT (Central)-2, Bhopal Vs Shri Sanjeev Agrawal ITA No.87/Ind/2021. 4.1 Ld. AR has further contended that the alleged excel sheet used by the A.O for the addition was found from the laptop of Shri Dileep IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 9 Gupta in a separate and distinct search proceedings therefore, this document falls in the category of electronic evidence. He has referred to Section 65B(2) of the Evidence Act and submitted that it envisages that unless a certificate required u/s 65B(4) of the Act is not produced, secondary electronic evidence being computer printout cannot be used in any proceedings. In the case of the assessee the alleged Excel sheet was neither found/impounded from any of the entity covered in the present search dated 16.05.2018 nor the said document is corroborated by any independent evidence or even certified u/s 65B(4) of the Evidence Act therefore, the same cannot be a basis of the addition made by the A.O. Hence, the addition made by the A.O is not sustainable and liable to be deleted. 5. On the other hand the Ld. DR has submitted that apart from LPS-1 & 2 found during the course of search carried out on 12.01.2018 an incriminating document LPS-7 was also found during the course of search and seizure action dated 16.05.2018 and therefore, there is a correlation with these two seized materials IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 10 leading the formation of belief that these documents pertains to the assessee and contains the transactions of cash receipts collected from the customers against the sale of residential units in the project Peeble Bay wherein the assessee is having a share in revenue as per the Joint Venture Agreement. All these surrounding facts and the transactions recorded in the seized material are sufficient to form the belief and satisfaction of the A.O that the income has escaped assessment in the hands of the assessee on account of share in the cash receipts collected from the customers. Apart from the seized material the statement of Shri Dileep Gupta as well as Shri Shubham Gupta were recorded during the course of search and seizure action and post search enquiries wherein it was un equivocally stated that he on behalf of ACPL & AHPL has received sale consideration against the sale of houses of different phases of project Peeble Bay. Further during the course of search and seizure action on 16.05.2018 cash receipt vouchers was found marked as LPS-7 from the possession of Shubham Gupta showing the cash receipt by the assessee. Thus the Ld. DR has submitted that even the said cash vouchers do not pertain to the year under IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 11 consideration but it proves that the cash was received from the sale of the project in question. He has relied upon the impugned order of A.O as well as CIT(A) and submitted that the addition has been made by the A.O based on the seized document which is an incriminating document showing out of book receipts and assessee’s share in the cash receipt as per the Joint Venture Agreement is taken by the A.O for making these additions. 6. We have considered rival submissions as well as relevant material on record. There was a search and seizure operation carried out u/s 132(1) of the Act in case of Asnani Group on 16.05.2018. During the search and seizure action some documents were found/seized and marked as LPS-7. Page 36 of the document was considered by the A.O as related to the assessee however, in the entries at page-36 of the LPS-7 pertains to the financial year 2011-12 and prior to that. The A.O has recorded his satisfaction u/s 153C of the Act placed at page No.5 to 9 wherein the A.O has made reference to the seized material as under: IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 12 IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 13 6.1 Thus it is clear that the A.O has made reference to (i) LPS 14,19 and 23 foundand seized from the office of Asnani Group (AHPL). (ii) The documents marked as LPS 1&2 found and seized from the residence of Mr. Dinesh Gupta (iii) The documents seized and marked as LPS 5,6,7 from the residence of Shri Shubham Gupta. 6.2 On the basis of these 3 sets of seized documents the A.O came to the conclusion that the assessee along with Amrit Homes Pvt. Ltd and Amrit Colonizers Pvt. Ltd entered into a Joint Venture Agreement and have agreed for development of land owned by the assessee for construction of residential units in the project Peeble Bay. The residential units were sold through Shri Dileep Gupta who was the marketing agent of ACPL and AHPL and collected the cash from the customers against the sales and bookings of the residential units. In the entire set of seized documents during the search and seizure action dated 16.05.2018 there was no mention of assessee except page No.36 of LPS-7 where the name of the IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 14 assessee is appearing against one entry. For the ready reference the said page No.36 of LPS-7 is reproduced as under: IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 15 6.3 This page contains the date up to 25.08.2012 which reveals that all the transactions were done up to 25.08.2012 and therefore, the said document does not pertain to the Assessment Years under consideration i.e. 2015-16 to 2018-19. Accordingly the proceedings u/s 153C cannot be initiated on the basis of a document which does not pertains to the assessment years under consideration and also it does not reveal any transaction for these assessment years. The another document which is relied upon by the AO is LPS 1&2 taken from the laptop of Shri Dileep Gupta seized during the course of search and seizure action carried out in case of D.G Homes and Realty Pvt. Ltd on 12.01.2018. The A.O has also relied upon the statement of Shri Dileep Gupta recorded in the post search inquiry relating to search dated 12.01.2018 therefore, even the said seized document LPS 1&2 are not found or seized during the search and seizure action carried out on 16.05.2018 on the basis of which the A.O has initiated the proceedings u/s 153C of the Act. Further the transactions contains in LPS 1 & 2 and particularly LPS-1 as relied upon by the A.O are only in reference to the cash collected by Shri Dileep Gupta, the Marketing agent of ACPL and AHPL responsible IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 16 for development and sale of the project on the land belonging to the assessee. In the statement of Shri Dileep Gupta recorded on 26.04.2018 u/s 131 of the Act in the post search inquiry he explained the nature of transactions recorded in the seized material LPS-1 and LPS-2. The relevant part of the said statement has been reproduced by the AO in para 9 of the assessment order: “9. Statement of Shri Dileep Kumar Gupta, the director of DG Homes and Realty Pvt Ltd and owner of the seized laptop, was recorded u/s 131 of the Income Tax Act, 1961 by the DDIT(Inv)-1, Bhopal on 26.04.2018. He was asked to explain the nature and content of information contained in the MS Excel Workbooks of his laptop. This statement of Shri Dileep Kumar Gupta dated 26.04.2018 in response to question no. 47 and 48 is reproduced below: Q. 47) Shri Dileep Kumar Gupta was required to explain the nature and purpose of preparing above data found from the excel workbook of his laptop LS-01. Ans. Shri Dileep Kumar Gupta stated that he had entered into agreements with Amrit Homes Pvt Ltd and Amrit Colonisers Pvt Ltd for marketing of the houses built by these companies, on commission basis. He further stated that according to the data of excel workbook, total cash received from the sale of houses built under Pebble Bay Project was Rs. 48,48,88,222/- till January 2018. Q 48) Shri Dileep Kumar Gupta was asked to furnish the duration in which total cash of Rs. 48,48,88,222/- was received from the sale of houses built under Pebble Bay Project. He was also asked to furnish the name of the persons who collected such sale proceeds in cash from the customers. Ans. He replied that Rs. 48,48,88,222/- in cash was collected from December 2010 to January 2018 from the purchasers against the sale of houses in different phases of the Pebble Bay Project of the AHPL and ACPL. This cash was collected by his company Dileep Gupta Homes and Realty Pvt Ltd under the marketing agreement with the AHPL and ACPL and the same cash was handed over to IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 17 the directors of AHPL and ACPL, namely Shri Pritpal Singh Bindra and Shri Mandeep Singh Bindra or their employees namely, Shri Dinesh Goswami, Shri Alok Jagani and Shri Shubham Gupta. So, from the facts mentioned above, it is very clear and established that part of the sale consideration in connection with Pebble Bay Project, were in the form of cash also. During the course of post search proceedings, some of the purchasers of the flat/ duplex in Pebble Bay Project, had given their statement in writing that they have paid cash in addition to payment through banking channel.” 6.4 Thus the A.O found relevant part of the statement in Question No.47 & 48. It is manifested from the part of the statement considered as relevant by the A.O that Shri Dileep Gupta received the cash from the customers against sales and booing of the residential units in the project Peeble Bay. He has further explained that the cash was collected by his company i.e. DG Homes and Realty Pvt. Ltd under the marketing agreement with AHPL & ACPL and the same cash was stated to be handed over to the Directors of AHPL & ACPL. Thus the transactions recorded in LPS 1&2 are not part of the seized document of the search and seizure action carried out on 16.05.2018 but the same was taken from the seized Laptop of Shri Dileep Gupta during the search and seizure action carried out on 12.01.2018 in case of D.G Homes and Realty Pvt. Ltd and none of the transactions are found between Shri IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 18 Dileep Gupta and assessee either recorded in the LPS 1&2 or revealed in the statement of Shri Dileep Kumar Gupta. Therefore, prime facie the LPS 1&2 cannot be considered as an incriminating material revealing any undisclosed income of the assessee before us. The contents of LPS 1&2 coupled with the statement of Shri Dileep Gupta do not establish any link or connection much less live/direct connection between the seized document and the undisclosed income of the assessee. Through these two set of document do not satisfy the condition of live link between the incriminating material and undisclosed income of the assessee for the assessment years under consideration. The Honble Supreme Court in case of CIT V/s Sinhgad Technical Education Society 397 ITR 344 upheld the judgments of Honble High Court as well as the decision of the Tribunal and held in para 14 to 22 as under: “14. We have bestowed our due consideration to the respective submissions of the counsel for the parties. 15. At the outset, it needs to be highlighted that the assessment order passed by the AO on August 7, 2008 covered eight Assessment Years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07 As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. Insofar as Assessment Year 2006- 07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, insofar as assessment under Section 153C read with Section 143(3) of the Act is concerned, it was in respect of Assessment Years 2000-01 to IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 19 2005- 06. Out of that, present appeals relate to four Assessment Years, namely, 2000-01 to 2003-04 covered by notice under Section 153C of the Act. There is a specific purpose in taking note of this aspect which would be stated by us in the concluding paragraphs of the judgment. 16. In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee 17. First objection of the learned Solicitor General was that it was improper on the part of the ITAT to allow this ground to be raised, when the assessee had not objected to the jurisdiction under Section 153C of the Act before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground. 18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT called that the ITAT had scanned through the Satisfaction Note and the material which was dis order of the ITAT culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 20 Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy. 20. In so far as the judgment of the Gujarat High Court relied upon by the learned Solicitor General is concerned, we find that the High Court in that case has categorically held that it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act. This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well. The judgment of the Gujarat High Court in the said case went in favour of the Revenue when it was found on facts that the documents seized, in fact, pertain to third party, ie the assessee, and, therefore, the said condition precedent for taking action under Section 153C of the Act had been satisfied. 21. Likewise, the Delhi High Court also decided the case on altogether different facts which will have no bearing once the matter is examined in the aforesaid hue on the facts of this case. The Bombay High Court has rightly distinguished the said judgment as not applicable giving the following reasons: \"8. Reliance on the judgment of the Division Bench of the High Court of Delhi reported in case of SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 346 ITR 177 is misplaced. There, search was carried out in the case of \"P\" group of companies. It was found that the assessee before the Hon'ble Delhi High Court had acquired certain development rights from \"P\" group of companies. Based thereon, the satisfaction was recorded by the Assessing Officer and he issued notice in terms of Section 153C. Thereupon the proceedings were initiated under section 153A and the assessee was directed to file returns for the six assessment years commencing from 2003-04 onwards. The assessees filed returns for those years but disclosed Nil taxable income. These returns were accepted by the Assessing Officer, however, in respect of the assessment year 2007-08 there was a significant difference in the pattern of assessment for this year also. the return was filed for Nil income but there were certain documents and which showed that there were transactions of sale of development rights and from which profits were generated and taxable for the assessment year 2007-08. Thus, the receipt of Rs.44 crores as deposit in the previous IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 21 year relevant to the assessment year 2008-09 and later on became subject matter of the writ petition before the Delhi High Court. That was challenging the validity of notice under section 153C read with section 153A. In dealing with such situation and the peculiar facts that the Delhi High Court upheld the satisfaction and the Delhi High Court found that the machinery provided under section 153C read with section 153A equally facilitates inquiry regarding existence of undisclosed income in the hands of a person other than searched person. The provisions have been referred to in details in dealing with a challenge to the legality and validity of the seizure and action founded thereon. We do not find anything in this judgment which would enable us to hold that the tribunal's understanding of the said legal provision suffers from any error apparent on the face of the record. The Delhi High Court judgment, therefore, will not carry the case of the revenue any further.\" We, thus, do not find any merit in these appeals. 22. We now advert to the implication of the fact which has been emphasised in para 15. As pointed out in the said para, the assessment order passed by the AO covers eight Assessment Years. Assessment done in six Assessment Years is under Section 153C of the Act. Assessment order is set aside only in respect of four such Assessment Years that too on the technical ground, noted above. This objection pertaining to the four Assessment Years in question does not relate to the other two Assessment Years, namely, 2004-05 and 2005-06. Likewise, this decision has no bearing in respect of assessment done qua Assessment Year 1999-2000 as well as Assessment Year 2006-07. The necessary consequence would be that insofar as the conclusions of the AO in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected by this judgment. It is, thus, clarified that this Court has not dealt with the matter on merits insofar as incriminating material found against the assessee or Mr. Navale is concerned. Pithily put, this Court has not given any clean chit to the assessee insofar as the finding of the AO to the effect that the assessee had been indulging in profiteering and collecting capitation fee is concerned. Whatever other repercussions are there, based on these findings, they can follow. This Court was not informed and, therefore, unaware of any challenge to the assessment order in respect of other four Assessment Years and outcome thereof. Wherever any such proceedings are pending, same would be considered without being affected by the outcome of these proceedings.” IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 22 6.5 Therefore, the A.O cannot invoke the provisions of Section 153C of the Act in respect of particular assessment years in the absence of any incriminating material disclosing any undisclosed income for those assessment years. Thus the jurisdiction of the AO u/s 153C of the Act is not beyond the seized material disclosing undisclosed income for the assessment years. The satisfaction of the AO u/s 153C of the Act is an essential condition for initiating the proceedings u/s 153C of the Act. The said satisfaction should be based on the incriminating material found and seized during the search to establish the correlation between the seized material and the undisclosed income of the person other than the searched person for the assessment years falling within the bracket of 6 years. Thus it is clear that if the seized material on the basis of which the A.O has recorded the satisfaction u/s 153C of the Act does not establish the correlation with the undisclosed income of the assessee for some of the assessment years out of the block of 6 years then the jurisdiction of the A.O is barred to initiate the proceedings u/s 153C of the Act in respect of those assessment years relating to which no undisclosed income is revealed or IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 23 deducted during the course of search or from the seized document allegedly belonging to the assessee. The CIT(A) has accepted this fact that LPS-7 does not belong to the assessment years under consideration and therefore, there is no link or live connection or correlation between the alleged seized material and the undisclosed income of the assessee for these assessment years. The assessee has also taken an objection about the admissibility of the Excel sheet taken from the laptop of Shri Dileep Kumar Gupta seized during the course of search and seizure action dated 12.01.2018 not related to the initiation of proceedings u/s 153C of the Act which is pursuant to the search and seizure action dated 16.05.2018. 6.6 The Ld. AR has also raised a strong objection against the admissibility of excel sheet as an evidence in view of Section 65B of the Evidence Act which requires that the evidence in the form of electronic record can only be used in the proceedings if a certificate u/s 65B(4) of the Evidence Act is produced. In the case in hand the department has not disputed that no such certificate has been IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 24 taken or available with the A.O in respect of the excel sheet marked as LPS-1. The CIT(A) has only made a reference to the judgment of Hon’ble Supreme Court in case of Chuharmal vs. CIT 172 ITR 250 wherein it was observed that the rules of evidence act do not apply strictly to proceedings under the Income Tax Act but that was only in respect of the admissibility of the evidence without undergoing the process of proving it as strictly as per the Evidence Act but not regarding the procedure to collect digital evidence in compliance of the provisions of Evidence Act. The safeguard u/s 65B is provided to avoid any manipulation or loosing the contents in the process of collecting the electronic record. The Visakhapatnam Bench of this Tribunal in case of Polisetty Somasundaram reported in 153 taxmann.comn 591 relied upon the by the Ld. AR of the assessee as held in para 39 to 46 as under: “39. We have heard both the parties and perused the material available on record and the orders of the Ld. Revenue Authorities on this issue as well as the submissions made by the Ld. AR and the Ld. CIT-DR. The CBDT has issued an Investigation Manual for the purpose of collecting Digital Evidence in the cases of search and seizure. In para 2.6.3 of the said Manual, the CBDT has advised that the procedure has to be in consonance with the provisions of section 65B of the Indian Evidence Act. For reference sake, we extract below the relevant para 2.6.3 of the Manual: \"2.6.3 Under Indian Evidence Act there are several references to documents and records and entries in books of account and their recognition as evidence. By way of the THE SECOND SCHEDULE to the IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 25 Information Technology Act Amendments to the Indian Evidence Act have been brought in so as to, incorporate reference to Electronic Records along with the document giving recognition to the electronic records as evidence. Further, special provisions as to evidence relating to electronic record have been inserted in the Indian Evidence Act, 1872 in the form of section 65A & 65B, after section 65. These provisions are very important. They govern the integrity of the electronic record as evidence, as well as, the process for creating electronic record. Importantly, they impart faithful output of computer the same evidentiary value as original without further proof or production of original. Accordingly, while handling any digital evidence, the procedure has to be in consonance of these provisions.\" 40. Further, we find that section 65B(2) of the Indian Evidence Act clearly specifies the following conditions with respect to obtaining of Digital Evidence both for primary and secondary evidences. The relevant extract of section 65B(2), (3) and (4) are as follows: \"(2) The conditions referred to in sub-section (1) in respect of a computer output shall be the following, namely: (a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over 181 that period by the person having lawful control over the use of the computer; (b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities; (c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and (d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether- IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 26 (a) by a combination of computers operating over that period; or (b) by different computers operating in succession over that period; or (c) by different combinations of computers operating in succession over that period; or (d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, - (a) identifying the electronic record containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that electronic record as may be appropriate for the purpose of showing that the electronic record was produced by a computer; (c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.\" 41. We find from the written submissions of the Ld. AR that the provisions of section 65B(2)(d) as extracted above was not followed by the Revenue. The Revenue failed to identify the primary system giving particulars of the device involved in the production of the data was produced by a computer. 42. Further, we have also considered the cases referred to by the Ld. AR. In the case of Vetrivel Mineral (supra) the Hon'ble Madras High Court has observed as under: \"24. As contended by the writ petitioners, when the entire assessment has been framed only on the basis of the so-called electronic record which are IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 27 said to be copies of Excel Sheet, Excel work note book etc., non-compliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law as held by the Supreme Court in the judgment Anvar P.V. case (supra). ''14. Any documentary evidence by way of an electronic record under the Evidence Act, in view of sections 59 and 65A, can be proved only in accordance with the procedure prescribed under section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under section 65B(2). Following are the specified conditions under section 65B(2) of the Evidence Act: (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity ; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. 15. Under section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) There must be a certificate which identifies the electronic record containing the statement; IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 28 (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 16. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17. Only if the electronic record is duly produced in terms of section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to section 45A opinion of examiner of electronic evidence. 18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under section 65B of the Evidence Act are not complied with, as the law now stands in India.'' 43. In the case of Anvar P.V (supra), the Hon'ble Supreme Court held their observations vide Paras 14, 15, 16, 17 & 18 to state that non-compliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law. Relying on the same ratio laid down by the Hon'ble Apex Court, the Hon'ble Madras High Court delivered its judgment in the case of Vetrivel Mineral (supra) vide para 24 of its order which is extracted herein above. Therefore, in our opinion there is no need to repeat the finding of the Hon'ble Supreme Court in the case of Anvar P.V. again for reference. 44. Now coming to the decision of the Hon'ble Supreme Court in the case of Arjun Pandit Rao Khotkar (supra) the Hon'ble Apex Court has observed as under: \"30. Coming back to Section 65B of the Indian Evidence Act, sub-section (1) needs to be analysed. The sub-section begins with a non-obstante clause, and then goes on to mention information contained in an electronic record produced by a computer, which is, by a deeming fiction, then made a IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 29 \"document\". This deeming fiction only takes effect if the further conditions mentioned in the Section are satisfied in relation to both the information and the computer in question; and if such conditions are met, the \"document\" shall then be admissible in any proceedings. The words \"…without further proof or production of the original…\" make it clear that once the deeming fiction is given effect by the fulfilment of the conditions mentioned in the Section, the \"deemed document\" now becomes admissible in evidence without further proof or production of the original as evidence of any contents of the original, or of any fact stated therein of which direct evidence would be admissible. 31. The non obstante clause in sub-section (1) makes it clear that when it comes to information contained in an electronic record, admissibility and proof thereof must follow the drill of section 65B, which is a special provision in this behalf - sections 62 to 65 being irrelevant for this purpose. However, section 65B(1) clearly differentiates between the \"original\" document - which would be the original \"electronic record\" contained in the \"computer\" in which the original information is first stored - and the computer output containing such information, which then may be treated as evidence of the contents of the \"original\" document. All this necessarily shows that section 65B differentiates between the original information contained in the \"computer\" itself and copies made therefrom - the former being primary evidence, and the latter being secondary evidence. 32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where \"the computer\", as defined, happens to be a part of a \"computer system\" or \"computer network\" (as defined in the Information Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with section 65B(1), together with the requisite certificate under section 65B(4).This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of Anvar P.V. (supra) which reads as \"…if an electronic record as such is used as primary evidence under section 62 of the Evidence Act…\". This may more appropriately be read without the words \"under section 62 of the Evidence Act,…\". With this minor clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to be revisited. 45. On careful perusal of the case laws cited above, we are of the considered view that the Revenue Authorities should mandatorily and scrupulously follow the conditions laid down under section 65B(2) and (4) of the Indian Evidence Act to render any documents to be valid in the eyes of law. In the IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 30 instant case, the investigation agency obtained a Certificate about the details of the pen drive and the person in whose custody it was seized. Except these details nothing was there in the Certificate and also the said Certificate was not completely filled up by the Ld. Revenue Authorities. Further, from the Certificate obtained under Indian Evidence Act which is placed in Page-11 of Paper Book-2, we find force in the arguments of the Ld. AR that it is not as per the conditions laid down u/s. 65B of the Indian Evidence Act. For the sake of reference, the Certificate is reproduced here in below: 46. After considering the decisions of the Hon'ble Supreme Court in the case of Anvar P.V (supra); Arjun Pandit Rao Khotkar (supra) and the judgment of the Hon'ble Madras High Court in the case of Vetrivel Mineral (supra) as well IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 31 as on perusal of the facts and circumstances of the case, we are of the considered we that the four conditions stipulated in section 65B(2) i.e., (a) to (d) along with section 65B(4) were not followed while obtaining the Certificate u/s. 65B of the Indian Evidence Act 1872 in the case of the assessee which are to be followed mandatorily. Therefore, we have no hesitation to hold that this Certificate is not a valid Certificate as prescribed under the Indian Evidence Act 1872 and hence cannot be enforced. Therefore, the Certificate obtained in the case of the assessee cannot be regarded as a legally valid certificate u/s. 65B of the Indian Evidence Act and the same has no recognition in the eyes of law. The information contained in the seized pendrive is could not be considered as admissible evidence as per the provisions of section 65B of Indian Evidence Act. Therefore, we are of the considered view that such inadmissible seized material is not sustainable in the eyes of law. Thus, the assessment order passed in the case of the assessee on 31-3-2022 is not a valid assessment order in the eyes of law and it deserves to be set aside.” 6.7 Therefore, the said seized document in the shape of excel sheet taken from the laptop of Shri Dileep Kumar Gupta cannot be considered as an admissible evidence in the absence of the procedure followed as required u/s 65B(4) of the Evidence Act.. In view of the facts discussed above we are of the considered view that the A.O has recorded the satisfaction to initiate the proceedings u/s 153C of the Act only on the presumption that the assessee has earned unaccounted income in the shape of cash receipt on sale of residential units and not on the basis of any tangible material reveal any undisclosed income of the assessee on this account. IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 32 Accordingly we hold that the initiation proceedings u/s 153C of the Act are bad in law and without jurisdiction. 6.8 On the merits of the addition the A.O has not conducted any enquiry during the course of assessment proceedings to ascertain whether the cash collected by Shri Dileep Gupta was finally share with the assessee or not. Further the A.O has not conducted any enquiry whether the parties to the joint venture of developing project have recorded the correct sales in their books of accounts or suppressed the sale to the extent of the cash collected by Shri Dileep Gupta. Even otherwise when the A.O has relied upon the document which is recovered from the third party along with the statement of Shri Dileep Gupta and made the addition on the basis of said seized document and statement of Shri Dileep Gupta without confronting the assessee or giving an opportunity to cross examine the person whose statement was relied upon by the A.O. Thus it is a clear case of violation of principle of natural justice as held by the Hon’ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise 62 taxman 3 in para 6 & 7 as under: IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 33 \"6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.\" 6.9 Therefore, there is a violation of principle of natural justice as the assessee was deprived of the information/evidence which was considered by the A.O while making the addition and passing the IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 34 assessment order. It is the duty of the A.O to disclose and inform the assessee of the material on the basis of which he is going to pass the order. The assessee has all rights to know the evidence and information which was to be used by the A.O against him so that he would prove his onus and produce the material to meet the information/evidence brought against him by the A.O. In the case in hand the A.O has made the addition solely on the basis of seized document and statement of Shri Dileep Gupta without confronting the assessee and also not given an opportunity to cross examine the witness whose statement is relied upon. Even the alleged incriminating material as well as the statement of Shri Dileep Gupta do not reveal any undisclosed income in the hands of the assessee on account of cash collected by him as neither the seized documents contains any transaction of undisclosed income in the hands of the assessee nor the statement of Shri Dileep Gupta disclosed any undisclosed income earned by the assessee on account of the alleged cash collection. Therefore, in the absence of any tangible material to establish that the assessee has earned undisclosed income for these assessment years the addition made IT(SS)A No.11 to 14/Ind/2024 M/s Asnani Builders & Developers Ltd, 35 by the A.O on presumption and assumption is not sustainable and the same is liable to be deleted. We order accordingly. 7. In result the appeal of the assessee is allowed. Order pronounced in open court / by putting up on notice board as per Rule 34 of ITAT Rules, 1963 on 25.10.2024. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 25.10.2024 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "