ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4), AHMEDABAD, AHMEDABAD V. BHARAT CHHAGANBHAI BHARWAD, AHMEDABAD

ITSSA 40/AHD/2025

AI Insights

The case involves appeals by the Assistant Commissioner of Income Tax against Bharat Chhaganbhai Bharwad concerning two assessment years, 2017-18 and 2019-20. The appeals arose from the orders of the Commissioner of Income Tax (Appeals) which had deleted various additions made by the Assessing Officer under sections 68 and 69A of the Income-tax Act, 1961. The additions were primarily based on documents seized during a search operation under 'Operation Star Alliance - Builder Group'. The Tribunal's decision focused on whether the additions were justified in the absence of incriminating material directly linking the assessee to undisclosed income or unaccounted transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790174 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 29-04-2025
• Other Referred Cases: PCIT v. Abhisar Buildwell Pvt. Ltd., PCIT v. Saumya Construction Pvt. Ltd., PCIT v. Friends Salt Works & Allied Industries
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASEEM L. THAKKAR; RIGNESH DAS
• Keywords: Unexplained cash credit; Income from undisclosed sources; Document seized; Documents seized; Search and seizure; Loose papers; Bogus
• Section: 143(3); 142(1); 153A; 68

Judgement Text

" आयकर अपील य अ धकरण, अहमदाबाद \u0012यायपीठ “C”, अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER I.T(SS).A. Nos. 40 & 41/Ahd/2025 Asstt. Years: 2017-18 & 2019-20 Assistant Commissioner of Income Tax, Central Circle-1(4), Ahmedabad Vs. Bharat Chhaganbhai Bharwad, D & C Metro HPCL Petrol Pump, N.H. No. 08A, Gopaldham Bavla, Ahmedabad PAN: AJYPB9139L (Applicant ) (Respondent) Assessee by : Shri Aseem L. Thakkar, A.R. Respondent by: Shri Rignesh Das, CIT-DR Date of Hearing 11.11.2025 Date of Pronouncement 28.11.2025 O R D E R PER MAKARAND V. MAHADEOKAR, ACCOUNTANTMEMBER: These two appeals by the Revenue arise out of separate orders of the Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as “CIT(A)”] for A.Ys. 2017- 18 and 2019-20, against assessments framed by the Assistant Commissioner of Income Tax, Central Circle-1(4), Ahmedabad [hereinafter referred to as “Assessing Officer or AO”] under section 143(3) read with section 153C of the Income-tax Act, 1961[hereinafter referred to as “the Act”]. Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 2– Facts of the Case 2. The common factual background, as culled out from the assessment orders, is that a search and seizure action styled as “Operation Star Alliance – Builder Group” was conducted on 26.09.2018 in the Classic Group and other builders. The residence premises of Shri Smit P. Kaneria were also covered. During search, a loose-paper file inventorised as Annexure A/1 was seized. The AO recorded that pages in this annexure inter alia referred to land at Village Bavla, District Ahmedabad, originally held by the assessee and later sold. Based on these seized papers, the AO issued notice under section 153Cand proceeded to make additions on the footing that cash or on- money had changed hands in relation to a proposed transaction with Classic Construction Co. and that the documentary sale price disclosed later did not reflect the true consideration. The AO also examined agricultural income claims and certain unsecured loans. 3. For the A.Y. 2017-18 the assessee had originally filed his return of income declaring total income of Rs. 13,85,590/- and agricultural income of Rs. 25,66,980/-.The said return was processed under section 143(1). Subsequent to a search conducted in the case of Classic Construction Group, certain incriminating documents belonging to the assessee were found and seized. During the course of assessment proceedings, the AO referred to page nos. 50 and 51 of Annexure A/1 seized during the search, being Term Sheet and Confirmation and Payment of receipt executed on Rs. 100/- stamp paperbetween Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 3– the assessee and M/s. Classic Construction Co. The document recorded receipt of an aggregate sum of Rs. 2,60,00,000/-, the break-up of which was noted by the AO as under: Sr. No. Date Transaction Amount (Rs.) Mode of Transaction as per Seized Paper Remarks 1 04.04.2016 1,00,00,000/- Cheque Amount received by the assessee from Classic Construction Co. 2 12.08.2015 40,00,000/- RTGS RTGS from Rajlaxmi Logistics (Guj.) Pvt. Ltd. 3 20.08.2015 26,00,000/- Mode not mentioned Amount received by the assessee 4 21.08.2015 10,00,000/- Mode not mentioned Amount received by the assessee 5 18.09.2015 10,00,000/- Cash Amount received by the assessee 6 20.09.2016 14,00,000/- Cash Amount received by the assessee 7 14.07.2016 60,00,000/- In pound sterling Amount received by the assessee Total 2,60,00,000/- In view of the seized document and the corroborating ledger confirmation, the Assessing Officer concluded that assessee had received substantial consideration from Classic Construction Co. during the relevant period. Out of the total receipts of Rs. 2.60 crore, payments through identifiable banking channels of Rs. 1.25 crore (cheques) and Rs. 25 lakh (recorded on 28.10.2016) were duly accounted for in the confirmation, leaving the balance as unaccounted the details are as under: Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 4– Sr. No. Date Transaction Amount (Rs.) Mode of Transacti on (as per seized paper) Remarks Assessment Year 1 12.08.2015 40,00,000/- RTGS Unaccounted transaction 2016–17 2 20.08.2015 26,00,000/- No mode mentione d Unaccounted transaction 2016–17 3 21.08.2015 10,00,000/- No mode mentione d Unaccounted transaction 2016–17 4 18.09.2015 10,00,000/- Cash Unaccounted transaction 2016–17 5 20.09.2016 14,00,000/- Cash Unaccounted transaction 2017–18 6 14.07.2016 60,00,000/- In pound sterling Unaccounted transaction 2017–18 Total 1,60,00,000 /- On the basis of the above, the Assessing Officer bifurcated the unaccounted receipts as follows: Sr. No. Assessment Year Amount (Rs.) 1 2016–17 86,00,000/- 2 2017–18 74,00,000/- 4. Accordingly, the Assessing Officer treated Rs. 74,00,000/- as pertaining to the present assessment year (A.Y. 2017–18) and added the same as unexplained money under section 69A of the Act. Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 5– 5. The Assessing Officer also observed that the assessee had claimed agricultural income of Rs. 25,66,980/- as exempt. The assessee was called upon to furnish evidence of ownership of land, crop details, yield, and sale receipts. The details furnished were incomplete and no verifiable bills or APMC receipts were produced. The Assessing Officer observed that the quantum of agricultural income shown was disproportionate to the size of landholding. Consequently, the entire agricultural income was treated as income from undisclosed sources. 6. From the audit report, it was further noted that the assessee had accepted unsecured loans of Rs. 3,50,000/- during the year. As no confirmations, PAN, or ITR details of the lenders were produced, the Assessing Officer treated the amount as unexplained cash credits under section 68. 7. For A.Y. 2019-20, the assessee filed his return of income declaring total income of Rs. 36,71,090/-On verification of the documents seized during the search, including pages 588, 71, and 73 of Annexure Bavla 2019, and on cross-verification with sale deed executed on 14.02.2019, the Assessing Officer noted that the subject land was sold by the assessee to M/s. Hariom Developers for a stated sale consideration of Rs. 2,34,00,000/-. The sale deed was executed between the assessee and M/s. Hariom Developers, wherein Smt. Dimple S. Kaneria signed as the authorised signatory of Hariom Developers and Shri Smitkumar P. Kaneria signed as a witness.The AO also noted that Smt. Dimple S. Kaneria is the wife of Shri Smitkumar P. Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 6– Kaneria, who is a key person of Classic Construction Group, which was covered during the search action. Thus, Hariom Developers was found to be a related concern of the Classic Group. 8. During assessment proceedings, the assessee submitted that a “term sheet” earlier found during search had been cancelled by mutual agreement and enclosed a copy of cancellation affidavit in Exhibit–5. However, on verification, the AO noted that the assessee had not furnished any registered cancellation deed, but only a self-affidavit, which could not be treated as a valid cancellation agreement. The AO therefore held that the said affidavit lacked evidentiary value and that the sale deed executed post-search was effectively in continuation of the Term Sheet dated 01.04.2016 found during search. The AO further observed that as per the seized Term Sheet, the total sale consideration for the subject land was Rs. 13,12,50,000/-, whereas the registered sale deed reflected consideration of Rs. 2,34,00,000/-. The AO concluded that the differential amount of Rs. 10,78,50,000/- (Rs. 13,12,50,000 – Rs. 2,34,00,000) represented unaccounted cash component received by the assessee outside the books of account. The AO treated the same as unexplained money under section 69A of the Act concluding that the assessee failed to offer any satisfactory explanation regarding the nature and source of this unrecorded cash receipt. During the assessment proceedings for the said A.Y. , the AO issued notice under section 142(1) dated 10.02.2023, directing the assessee to furnish full particulars of unsecured loans Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 7– accepted during the year, including name, address, PAN, confirmation, ITR, and bank statements of the lenders. In response, the assessee filed partial details vide letter dated 18.02.2023 and 17.03.2023. On verification of the same and the Form 3CD annexed to the tax audit report, the AO observed that the assessee had accepted unsecured loans aggregating to Rs. 2,20,76,020/- from six parties. The AO recorded that the assessee had not produced confirmations, ITRs, or bank statements for the above five parties and failed to establish their identity, creditworthiness, and genuineness of the loan transactions. Accordingly, the AO concluded that the assessee had failed to discharge the burden cast upon him under section 68.Consequently, the sum of Rs. 2,20,76,020/- was added to the total income under section 68. 9. The assessee declared agricultural income of Rs. 4,16,393/-. The AO issued notice under section 142(1) calling for details such as landholding particulars, crops cultivated, yield, bills of sale through APMC, and related expenses. The assessee submitted replyalong with a brief working and a few sample bills, contending that the agricultural income was duly supported by expenditure statements. However, on verification, the AO found that the assessee had not furnished complete details of landholdings, nor full proof of sale of crops or expenses incurred. The AO held that the assessee had failed to substantiate the agricultural income with verifiable evidence, and the receipts filed were disproportionate to the income Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 8– declared. The claim of exemption was therefore disallowed, and the sum of Rs. 4,16,393/- was treated as taxable income. 10. The AO observed from the audit report that employees’ contribution to PF amounting to Rs. 1,11,584/- had been deposited after the due date under the relevant Act. The AO held that delayed deposit of employees’ contribution was not allowable as deduction under section 36(1)(va). Accordingly, the AO disallowed Rs. 1,11,584/- and added it to the total income. For both assessment years, the assessee carried the matter in appeal before the learned CIT(A). The assessee questioned the validity of proceedings initiated under section 153C, contending that the satisfaction notes recorded by the AO of the searched party and the AO of the assessee did not demonstrate that any incriminating material pertaining to the assessee was found during the search of Classic Construction group / Star Alliance Builder group. The assessee relied on the contents of the satisfaction notes and submitted that the seized loose papers did not contain material relating to agricultural income, unsecured loans or any unexplained cash transactions. 11. For A.Y. 2017-18, the CIT(A) recorded the assessee’s case that the so-called Term Sheet with Classic Construction never fructified; that Rs. 1,25,00,000/- received by cheque was refunded by cheque well before the date of search; and that the land was ultimately sold as bare land to Hariom Developers for Rs. 2,34,00,000/- under a registered deed. The CIT(A) noted that the AO had not disproved the documentary evidence of Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 9– cancellation and refund and that, for an unabated year, addition under section 153C could be made only on the basis of incriminating material found in search. Applying the ratio of the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd. and of the Hon’ble Gujarat High Court in PCIT v. Saumya Construction Pvt. Ltd., the CIT(A) deleted the addition of Rs. 74,00,000/- under section 69A, deleted the addition of Rs. 25,66,980/- by way of denial of agricultural income exemption and deleted the addition of Rs. 3,50,000/- under section 68 for unsecured loan, holding that no incriminating material relatable to these issues existed and that the AO had not rebutted the evidence of cancellation and refund placed on record. The appeal was partly allowed. 12. For A.Y. 2019-20, the CIT(A) recorded that satisfaction notes were drawn both by the AO of the searched person and by the AO having jurisdiction over the assessee, and therefore the initiation under section 153C was upheld. On merits, the CIT(A) examined the Term Sheet and the subsequent registered sale deed, the confirmations and bank statements evidencing receipt and refund of Rs. 1,25,00,000/- by cheque, and found that the AO had not brought material to show receipt of any unaccounted cash or on-money. The addition of Rs. 10,78,50,000/- under section 69A was therefore deleted. The CIT(A) also deleted the addition of Rs. 2,20,76,020/- under section 68 observing that there was no incriminating material unearthed in search relating to such loans and that additions in section 153C proceedings must be supported by seized Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 10– incriminating material. The disallowance of agricultural income of Rs. 4,16,392/- was also deleted on similar reasoning. The disallowance of Rs. 1,11,584/- under section 36(1)(va) was, however, confirmed following the law that employees’ contribution paid beyond the due dates under the respective Acts is not allowable. The appeal was thus partly allowed. 13. Aggrieved by the orders of CIT(A) the revenue is in appeal before us raising following grounds in case of both the years: In IT(SS)A No.40/Ahd/2025 – A.Y. 2017-18 1. “In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.74,00,000/- u/s.69A of the Act being unexplained money without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the A.O. 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 Rs.3,50,000/- u/s.68 of the IT Act on account of bogus unsecured loan made by the AO without properly appreciating the decision of Hon'ble Gujarat High Court in Saumya Construction (81 taxmann.com 292) and decision of Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (454 ITR 212 SC) and ignoring the fact of the case that incriminating material found during the search and as per paragraph 15.1 of the decision of Hon'ble Supreme Court in M/s. Abhisar Buildwell Pvt Ltd, once undisclosed income is found on unearthing the incriminating material, the A.O. would assume jurisdiction to assess the total income even in completed/unabated assessment. 3. In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition on account of disallowance of exempt agricultural income of Rs.25,66,980/- made by the AO without properly considering the decision of Hon'ble Gujarat High Court in Saumya Construction (81 taxmann.com 292) and decision of Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (454 ITR 212 SC) and ignoring the fact of the case that incriminating material found during the search and as per paragraph 15.1 of the decision of Hon'ble Supreme Court in M/s. Abhisar Buildwell Pvt Ltd, once undisclosed income is found on unearthing the incriminating material, the A.O. would assume jurisdiction to assess the total income even in completed/unabated assessment. 4. The Revenue craves leave to add/alter/armed and/on substitute any or all of the grounds of appeal.” In IT(SS)A No.41/Ahd/2025 – A.Y. 2019-20 Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 11– 1. “In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.10,78,50,000/- u/s.69A of the Act being unexplained money without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO. 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 Rs.2,20,76,020/- made by the AO on account of bogus unsecured loan without properly appreciating the decision of Hon'ble Gujarat High Court in Saumya Construction (81 taxmann.com 292) and decision of Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (454 ITR 212 SC) and ignoring the fact of the case that incriminating material found during the search proceedings and as per paragraph 15.1 of the decision of Hon'ble Supreme Court in M/s. Abhisar Buildwell Pvt Ltd, once undisclosed income is found on unearthing the incriminating material, the A.O. would assume jurisdiction to assess the total income even in completed/unabated assessment. 3. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition on account of disallowance of exempt agricultural income of Rs.4,16,392/- made by the AO without appreciating the decision of Hon'ble Gujarat High Court in Saumya Construction (81 taxmann.com 292) and decision of Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (454 ITR 212 SC) and ignoring the fact of the case that incriminating material found during the search proceedings and as per paragraph 15.1 of the decision of Hon'ble Supreme Court in M/s. Abhisar Buildwell Pvt Ltd, once undisclosed income is found on unearthing the incriminating material, the A.O. would assume jurisdiction to assess the total income even in completed/unabated assessment. 4. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,11,584/- u/s. 36(1)(va) of the Act made by the A.O. without appreciating the decision of Hon'ble Gujarat High Court in Saumya Construction (81 taxmann.com 292) and decision of Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (454 ITR 212 SC) and ignoring the fact of the case that incriminating material found during the search proceedings and as per paragraph 15.1 of the decision of Hon'ble Supreme Court in M/s. Abhisar Buildwell Pvt Ltd, once undisclosed income is found on unearthing the incriminating material, the A.O. would assume jurisdiction to assess the total income even in completed/unabated assessment. 5. The Revenue craves leave to add/alter/armed and/on substitute any or all of the grounds of appeal.” 14. During the course of hearing before us, the learned Departmental Representative (DR) reiterated the facts recorded by the Assessing Officer and submitted that the subsequent registered sale deed of the very property, which according to the Assessing Officer was executed on 14.02.2019, is in fact dated 25.12.2018 as borne out from the registered instrument. The learned DR further pointed out that the Assessing Officer had Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 12– noted that Hari Om Developers, in whose favour the property was ultimately sold, was a concern related to Classic Construction and formed part of the Classic Group. It was contended that the land in substance came to be acquired by the Classic Group through one of its sister entities. The learned DR also emphasised that the assessee did not produce the cancellation agreement of the Term Sheet before the Assessing Officer and only placed reliance upon an affidavit asserting that the Term Sheet stood cancelled. According to the learned DR, in absence of the primary contemporaneous document of cancellation and in view of the subsequent transfer taking place within the same group, the Assessing Officer was justified in drawing an inference that the difference between the consideration stated in the registered sale deed and the value recited in the seized Term Sheet represented unaccounted consideration liable to be assessed under section 69A of the Act. In response, the learned Authorised Representative (AR) reiterated that the understanding recorded in the Term Sheet stood cancelled and that all amounts received pursuant to the said understanding had been duly returned to the concerned parties. The learned AR invited our attention to the ledger accounts of the assessee as reflected in the books of the respective parties, demonstrating both the receipt and the subsequent return of the amounts. The ledger entries were further supported by the corresponding bank statements placed on record. The learned AR clarified that although the Assessing Officer recorded the date of the subsequent registered conveyance in favour of Hari Om Developers as 14.02.2019, the Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 13– agreement to sell with the said third party had in fact been executed on 25.12.2018. It was further pointed out that the stamp duty of Rs. 11,46,600/- on the said transaction of Rs. 2,34,00,000/- was paid on 16.08.2018, which conclusively established that the assessee had already taken a decision to alienate the land to a third party much prior to the date of search on 26.09.2018. According to the learned AR, these contemporaneous documents clearly demonstrated that the understanding contained in the Term Sheet had been abandoned and the land was not intended to be sold to Classic Construction. The learned AR placed reliance on the findings of the CIT(A) in support of his submissions. 15. We have heard the rival submissions and carefully perused the material available on record, including the assessment orders for both the years, the seized documents, and the detailed orders passed by the learned CIT(A). The common issue in Ground No. 1 of both the appeals of the Revenue pertains to additions under section 69A of the Act, made on the basis of a “Term Sheet / confirmation and payment receipt” found during the search in the Classic Group, and the consequential inference of alleged unaccounted consideration in respect of land at village Bavla held by the assessee. A.Y. 2017–18 – Addition of Rs. 74,00,000/- under section 69A 16. The material basis for the addition in this year is page nos. 50 and 51 of Annexure A/1, described by the Assessing Officer Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 14– as a Term Sheet and confirmation-cum-receipt executed on Rs. 100/- stamp paper between the assessee and M/s. Classic Construction Co. The seized document records receipt of an aggregate sum of Rs. 2,60,00,000/- from Classic Construction Co., with a detailed break-up of dates, amounts and modes already reproduced in the facts portion of this order. Out of the total Rs. 2.60 crore, the Assessing Officer treated Rs. 74,00,000/- as pertaining to the year under appeal and brought the same to tax as unexplained money under section 69A. 17. In appeal, the learned CIT(A) examined in depth the seized pages, the satisfaction notes recorded by the Assessing Officer of the searched person and the Assessing Officer of the assessee, as well as the ledger accounts and bank statements placed on record. He noted that the satisfaction note itself described Annexure A/1 as a loose paper file containing 116 pages, and that the pages allegedly belonging to or relating to the assessee were only specific loose sheets, including the impugned Term Sheet. On this basis, the learned CIT(A) first recorded a categorical finding that the present assessment year 2017–18 is an unabated year and, therefore, additions in proceedings under section 153C can be sustained only to the extent supported by incriminating material found during the course of search. In doing so, he relied upon the ratio of the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell (P) Ltd.[454 ITR 212], and the Hon’ble jurisdictional High Court in PCIT v. Saumya Construction (P) Ltd. [81 taxmann.com 292] and PCIT v. Friends Salt Works & Allied Industries[160 taxmann.com 676], that Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 15– completed assessments cannot be disturbed in the absence of incriminating material relatable to the year in question. 18. On the nature of the Term Sheet itself, the learned CIT(A) recorded that the assessee had specifically contended that the agreement with Classic Construction Co. did not materialise and the deal had to be cancelled, as a result of which the amount of Rs. 1,25,00,000/- received by cheque from Classic Construction Co. was returned. He further noted that all evidence in support of this fact had been placed on record, including confirmation from Classic Construction Co. and copies of bank statements evidencing both receipt and return of Rs. 1.25 crore, and that the Assessing Officer has not discredited the above evidence. 19. As regards the remaining amounts mentioned in the seized Term Sheet, the learned CIT(A) recorded the assessee’s explanation that the payments were, in fact, made by another concern namely Shree Rajlaxmi Logistics (Guj.) Pvt. Ltd. on behalf of Classic Construction Co., and that to the extent the money had been received through banking channels, corresponding confirmations and bank statements had been produced. The learned CIT(A) noted that all these facts had been brought on record, and the Assessing Officer has not brought anything on record to demolish the contentions raised by the appellant at the time of assessment proceedings. 20. The learned CIT(A) also accepted the assessee’s contention that the agreement recorded in the Term Sheet stood rescinded Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 16– much prior to the date of search and that all the payments, both of receipt and return, have been noted as prior to the date of search. He specifically observed that there was no allegation by the Assessing Officer that the reversal of the transaction was an afterthought or a fallout of the search. In a crucial finding, the learned CIT(A) observed that where an agreement stands cancelled, the natural corollary is that the money must be returned, and that in the present case the fact that the money has been returned is not in question. 21. On this factual matrix, the learned CIT(A) concluded that the seized Term Sheet, read with the subsequent evidence of cancellation and refund, did not constitute incriminating material evidencing any unexplained money in the hands of the assessee as on the date of search. He held that the addition has been made by the Assessing Officer without there being any incriminating material found during the search which could justify disturbing an unabated assessment. Placing reliance on Abhisar Buildwell, Saumya Construction and Friends Salt Works, he deleted the addition of Rs. 74,00,000/- under section 69A. 22. We find no infirmity in the findings of the learned CIT(A). The seized Term Sheet, viewed in isolation, may suggest a proposed transaction of Rs. 2.60 crore. However, once the assessee produced contemporaneous documentary evidence showing that the understanding did not fructify, that Rs. 1.25 crore received by cheque was in fact refunded by cheque, and Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 17– that the balance figures in the seized paper were either routed through and accounted in the books of Rajlaxmi Logistics (Guj.) Pvt. Ltd. or otherwise explained, the evidentiary value of the Term Sheet as “incriminating material” stands materially diluted. The Assessing Officer has not brought any cogent material on record to demonstrate that Rs. 74,00,000/- was actually retained by the assessee or represented any unexplained money on the date of search. In an unabated year, such addition cannot be sustained merely on presumptions or on a one-sided reading of a loose paper. 23. In our considered view, the learned CIT(A) has correctly applied the settled law that in proceedings under section 153C, where the original assessment for the year has attained finality, the scope of assessment is confined to income that can be reasonably inferred from incriminating material found during search. In the absence of such incriminating material, and particularly in view of uncontroverted evidence of cancellation and refund, the addition of Rs. 74,00,000/- under section 69A was rightly deleted. We, therefore, concur with the findings of the learned CIT(A) and uphold his order on this issue. A.Y. 2019–20 – Addition of Rs. 10,78,50,000/- under section 69A 24. For A.Y. 2019–20, the Assessing Officer invoked section 69A to make an addition of Rs. 10,78,50,000/- on the footing that the seized Term Sheet reflected total sale consideration for the Bavla land at Rs. 13,12,50,000/-, whereas the registered Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 18– sale deed in favour of Hari Om Developers showed consideration of only Rs. 2,34,00,000/-. According to the Assessing Officer, the difference represented unaccounted cash (on-money) received by the assessee. 25. The learned CIT(A) first examined the jurisdictional aspect and, after referring to the satisfaction notes of the Assessing Officer of the searched person and of the assessee’s Assessing Officer, upheld the initiation of proceedings under section 153C for this year. However, on merits, he carried out a detailed analysis of the seized material, the Term Sheet, the subsequent registered conveyance to Hari Om Developers and the financial records produced by the assessee. 26. The learned CIT(A) recorded that the assessee had contended that the Term Sheet dated 01.04.2016 was only an initial understanding, which did not culminate into an effective sale, that the amount of Rs. 1,25,00,000/- received earlier by cheque from Classic Construction Co. had been returned, and that the land was ultimately sold to a third party, M/s. Hari Om Developers, as bare land for Rs. 2,34,00,000/- under a registered deed. He noted that ledger accounts and bank statements evidencing both the receipt and refund of Rs. 1.25 crore had been produced before the authorities and that all these facts had been brought on record. 27. The learned CIT(A) also took note of the fact that, while the Assessing Officer treated Hari Om Developers as a related Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 19– concern of Classic Construction on account of common family connection, no material had been brought on record to show that the consideration of Rs. 2,34,00,000/- declared in the registered sale deed did not represent the full and true consideration received. As recorded by the learned CIT(A), there was no evidence of any cash found during the search, no parallel books or diaries indicating receipt of Rs. 10,78,50,000/- in cash, and no statement of any party admitting payment of such on- money. 28. The learned CIT(A) further noted that the seized Term Sheet itself referred to a proposed structure relating to the land, whereas the actual registered sale to Hari Om Developers was of bare land. He accepted the assessee’s contention that the transaction as per the Term Sheet stood cancelled prior to the search, and that the sale to Hari Om Developers was an independent transaction. In this context he also referred to the principle that assessment has to be framed on the basis of incriminating material found during search proceedings and not on conjectures and surmises. 29. In the proceedings before us, the learned DR laid stress on the fact that the land ultimately went to a concern connected with the Classic Group and that the assessee had not produced a formal registered cancellation deed, but only an affidavit asserting cancellation of the Term Sheet. According to the learned DR, the differential amount between the figure in the Term Sheet and the registered sale deed should be inferred as Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 20– unaccounted consideration. On the other hand, the learned AR took us through the ledger accounts of the assessee in the books of Classic Construction Co. and Rajlaxmi Logistics (Guj.) Pvt. Ltd., as well as the corresponding bank statements, to demonstrate that the advances received pursuant to the Term Sheet had been refunded. He also pointed out that the agreement with Hari Om Developers was entered into on 25.12.2018, that the stamp duty of Rs. 11,46,600/- on the stated consideration of Rs. 2,34,00,000/- had been paid on 16.08.2018, and that this sequence clearly showed that the decision to sell to a third party had been taken much prior to the search on 26.09.2018. 30. On a holistic consideration of the material, we find ourselves in agreement with the learned CIT(A). Even assuming that the Term Sheet, read by itself, indicates a proposed value of Rs. 13,12,50,000/-, the addition under section 69A can be sustained only if there is some cogent material to show actual receipt of unaccounted money by the assessee. The inference of Rs. 10,78,50,000/- as unexplained money rests entirely on the difference between a proposed value in the Term Sheet and the stated consideration in the registered sale deed, coupled with the fact that the ultimate purchaser is related to the Classic Group. In our view, this is not sufficient, in the absence of any corroborating evidence. 31. The assessee has produced ledger accounts and bank statements showing that advances received by cheque were Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 21– refunded. These are contemporaneous commercial records, and the learned CIT(A) has rightly observed that the Assessing Officer has not brought any material on record to discredit these documents or to show that the alleged cash component was actually paid and retained. Where the primary evidence indicates that the earlier understanding under the Term Sheet was abandoned, and where the subsequent sale has been carried out under a registered deed with stamp duty paid well before the date of search, the mere group connection of the purchaser cannot justify an addition of such magnitude under section 69A. 32. We also note that, unlike A.Y. 2017–18, the present year is an abated year and the Assessing Officer was in principle entitled to examine the total income. However, even in an abated assessment, additions must be founded on evidence and not on conjecture. The learned CIT(A) has correctly applied this principle in holding that the Term Sheet did not, by itself, prove the alleged on-money receipt and that, in the absence of any incriminating material demonstrating actual cash flow of Rs. 10,78,50,000/-, the addition under section 69A cannot be sustained. We find no reason to differ from this conclusion.Accordingly, we endorse the well-reasoned findings of the learned CIT(A) and uphold the deletion of the addition of Rs. 10,78,50,000/- under section 69A for A.Y. 2019–20. 33. In the result, on the common issue relating to additions under section 69A on the basis of the seized Term Sheet and Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 22– related papers, we uphold the orders of the learned CIT(A) for both assessment years 2017–18 and 2019–20. The corresponding grounds of appeal raised by the Revenue are dismissed. Other Additions u/s 68, Agricultural Income and u/s 36(1)(va) 34. We now take up the other issues arising from the separate grounds of appeal, namely the additions under section 68 and on account of agricultural income in A.Y. 2017-18, and the additions under section 68, disallowance of agricultural income and disallowance under section 36(1)(va) in A.Y. 2019-20, all in the backdrop of the legal position explained in Abhisar Buildwell (P) Ltd. and Saumya Construction (P) Ltd. 35. In both sets of grounds, the Revenue has strongly relied upon the decision of the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd. (supra), particularly paragraph 15.1, to contend that once undisclosed income is found on unearthing the incriminating material, the A.O. would assume jurisdiction to assess the total income even in completed/unabated assessment. Reliance has also been placed on the judgment of the Hon’ble Gujarat High Court in PCIT v. Saumya Construction Pvt. Ltd. (supra). 36. The assessee, on the other hand, has relied on the very same decisions, as also on PCIT v. Friends Saltworks & Allied Industries (supra), to submit that the sine qua non under section Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 23– 153C remains the existence of incriminating material “pertaining to” and “relatable to” the assessment year in question, and that in the case of an unabated year, no addition can be made dehors such incriminating material. According to the assessee, even going by the Revenue’s own reading of paragraph 15.1 of Abhisar Buildwell, the pre-condition is that “undisclosed income is found on unearthing the incriminating material”; only thereafter does the Assessing Officer get jurisdiction to assess or reassess the total income. If on facts there is ultimately no “undisclosed income” established on the basis of the seized material, the foundation for invoking the extended sweep of Abhisar fails. 37. In the present case, A.Y. 2017-18 is an unabated year and is governed by the stricter limb of Abhisar / Saumya, namely that completed assessments can be interfered with under section 153C only to the extent of income which can be directly traced to incriminating material found during search. A.Y. 2019- 20, though falling within the block of years covered by section 153C, stands on a slightly different footing; however, even for that year, the Revenue’s own reliance on paragraph 15.1 of Abhisar presupposes that some undisclosed income must in fact be found to have arisen on the basis of incriminating material before any broader jurisdiction can be claimed. 38. The Additions as per the grounds of appeal are: A.Y. Nature of Addition / Issue Section Amount (Rs.) 2017– Unsecured loans treated as 68 3,68,68,979/- Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 24– 18 unexplained cash credits 2017– 18 Agricultural income treated as income from other sources — 4,16,393/- 2017– 18 Late payment of employees’ PF contribution 36(1)(va) r.w.s. 2(24)(x) 1,11,584/- 2019– 20 Unsecured loans treated as unexplained cash credits 68 2,20,76,020/- 2019– 20 Agricultural income treated as income from other sources — 4,16,393/- 2019– 20 Late payment of employees’ PF contribution 36(1)(va) r.w.s. 2(24)(x) 1,11,584/- 39. We have carefully considered the rival submissions, the assessment orders, the detailed reasoning recorded by the learned CIT(A) for both assessment years, and the grounds urged by the Revenue. The DR supported the additions made by the Assessing Officer, whereas the AR placed reliance on the orders of the learned CIT(A), contending that no addition could be sustained in the absence of incriminating material found and seized during the course of search. 40. For both years, the Assessing Officer made additions relating to unsecured loans under section 68, denial of agricultural income exemption, and disallowance of delayed employees’ contribution to PF under section 36(1)(va). The central question requiring adjudication is whether such additions, in proceedings initiated under section 153C pursuant to a search on the Classic Group, can be made in respect of unabated/completed assessments without there being incriminating material found during search pertaining to these specific issues. Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 25– 41. The learned CIT(A) examined the satisfaction notes, the seized annexures and their contents, and recorded categorical findings that, except for the Term Sheet relating to land dealings, no seized document evidenced any unaccounted agricultural income, unsecured loans, or delayed PF contributions. The CIT(A), in verbatim findings, observed that there is no material on record to suggest that the agricultural income declared by the assessee was found to be false on the basis of any seized evidence and further that “there is no seized paper relatable in any manner to the unsecured loans recorded in the books of the assessee. With respect to section 36(1)(va), the CIT(A) held that the issue of delayed employees’ contribution is independent of search material and did not emanate from any document seized during search. 42. These findings are consistent with the settled position of law explained by the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd., wherein it was held that in case of unabated/completed assessments, additions cannot be made in section 153A / section 153C proceedings in the absence of incriminating material pertaining to the assessment year. The Court held that no addition can be made without reference to incriminating material found during search and further clarified that paragraph 15.1 relied upon by the Revenue only applies where incriminating material demonstrating undisclosed income has actually been found. The Hon’ble Gujarat High Court in PCIT v. Saumya Construction Pvt. Ltd. reiterated the same Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 26– principle that the Assessing Officer cannot disturb concluded matters unless specific incriminating material exists. 43. Applying the ratio to the facts on record, the seized Term Sheet and related loose papers pertain exclusively to the land transaction and do not relate to agricultural income, unsecured loans, or PF contribution. The Revenue has not controverted this factual finding of the CIT(A). No nexus, direct or inferential, has been demonstrated between the seized documents and these three additions. The additions under section 68 in both years were made solely because confirmations, PAN, and bank statements were not produced to the satisfaction of the Assessing Officer. Likewise, the denial of agricultural income was based on perceived insufficiency of evidence. These aspects fall squarely within the domain of regular assessments and cannot be imported into section 153C proceedings absent incriminating material. The law post Abhisar Buildwell does not permit expansion of the scope of assessment for concluded years. 44. Regarding employees’ contribution to PF, the CIT(A) in A.Y. 2017–18 deleted the disallowance for lack of incriminating material, but in A.Y. 2019–20 sustained the disallowance following the statutory provisions. However, the Revenue has not shown any seized material relating to delayed payment of PF in either year. Consistency with the principle enunciated in Abhisar Buildwell mandates that even such disallowance cannot Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 27– be made in the absence of seized incriminating material, as the issue is not arising from search. 45. For both assessment years, the additions made under section 68 in respect of unsecured loans and the disallowance of agricultural income are not based on any incriminating material found or seized during the course of search. The learned CIT(A) has correctly appreciated the settled legal position that in proceedings under section 153C for unabated years, additions can be sustained only when linked to incriminating material. The Revenue has not been able to demonstrate any perversity in these factual findings nor indicate any seized document supporting the impugned additions. The decision of the Hon’ble Supreme Court in Abhisar Buildwell and the judgment of the Hon’ble Gujarat High Court in Saumya Construction squarely support the view taken by the CIT(A). Accordingly, the deletion of the additions relating to unsecured loans and agricultural income for both years is upheld. 46. As regards the disallowance under section 36(1)(va), the absence of incriminating material equally applies. Since the issue does not emanate from search and there is no seized document relating to delayed employees’ contribution, such disallowance cannot survive in proceedings under section 153C for a completed assessment year. The reasoning adopted by the CIT(A) for deletion in A.Y. 2017–18 is consistent with law, and the same principle applies for A.Y. 2019–20. Consequently, the Printed from counselvise.com IT(SS)A Nos. 40 & 41/Ahd/2025 Bharat Chhaganbhai Bharwad Asst.Year 2017-18 & 2019-20 - 28– disallowance in A.Y. 2019–20 also fails on jurisdictional grounds. 47. Therefore, all additions other than those relating to section 69A, which are adjudicated in earlier part of the order, stand deleted for both years, and the Revenue’s grounds fail. 48. In the combined result, both the appeals of the Revenue are dismissed. This Order pronounced in Open Court on 28/11/2025 Sd/- Sd/- (SANJAY GARG) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad; Dated 28/11/2025 TRUE COPY आदेशक\u0017\u0018\u0019त\u001bल पअ े षत/Copy of the Order forwarded to : 1. अपीलाथ\b/ The Appellant 2. यथ\b/ The Respondent. 3. संबं\u000fधतआयकरआयु\u0016त/ Concerned CIT 4. आयकरआयु\u0016त(अपील) / The CIT(A)- 5. \u001aवभागीय त न\u000fध, आयकरअपील!यअ\u000fधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड'फाईल / Guard file. आदेशानुसार / BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad a.k. Printed from counselvise.com "