ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4), AHMEDABAD, AHMEDABAD V. SHAILESH KANTILAL MISTRY, AHMEDABAD

ITSSA 42/AHD/2025

AI Insights

The case involves appeals by the Revenue against the orders of the CIT(A) which quashed the assessments made under section 153C of the Income Tax Act for the Assessment Years 2019-20 and 2020-21. The assessments were based on alleged unaccounted cash transactions related to land deals involving the assessee, Shailesh Kantilal Mistry. The Revenue challenged the CIT(A)'s decision, arguing that the assessments were valid and the additions made were based on incriminating material. However, the CIT(A) found that the seized documents did not pertain to the assessee and that the additions were made without proper evidence or opportunity for cross-examination. The Tribunal upheld the CIT(A)'s decision, agreeing that the legal provisions for the assessments were not met and that the evidence used was insufficient to sustain the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777434 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Appeal Filed On: 29-04-2025
• Other Referred Cases: Vikram S. Bhatia v. CIT, Jasjit Singh v. CIT, CBI v. V.C. Shukla, PCIT v. Anand Kumar Jain, PCIT v. Pavitra Realcon Pvt. Ltd., Abhisar Buildwell Pvt. Ltd. v. ACIT, Olive Overseas Pvt. Ltd. & Nakshatra Business Pvt. Ltd. v. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHER SINGH
• Assessee Lawyers: BIREN SHAH
• Keywords: Unexplained expenditure; Unexplained investment; Document seized; Documents seized; Principle of natural justice; TDS; Search and seizure; Loose papers
• Section: 132; 153A; 69C

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘D’ ’ ’ ’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ]BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER IT(SS)A No.42 and 43/Ahd/2025 Asstt.Year : 2019-20 and 2020-21 Asstt.Commissioner of Income Tax, Aayakar Bhavan Cent.Cir.1(4) Ahmedabad. Shailesh Kantilal Mistry 14, Sanidhya Bungalows ISCON Ambali Road Bopal, Daskroi, Bhopal, S.O. Ahmedabad. PAN : AGBPM 8919 K (Applicant) (Responent) Assessee by : Shri Biren Shah, AR Revenue by : Shri Sher Singh, CIT-DR सुनवाई क तारीख/Date of Hearing : 23/09/2025 घोषणा क तारीख /Date of Pronouncement: 29/09/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: These appeals by the Revenue are directed against the orders of the Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as “the CIT(A)”] arising out of assessments framed by the Assistant Commissioner of Income Tax, Central Circle – 1(2), Ahmedabad [hereinafter referred to as “Assessing Officer or AO”] under section 153C of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for Assessment Years 2019-20 and 2020-21. Since common issues are involved in these appeals and arise out of a common set of facts, they were heard together and are disposed of by this consolidated order for the sake of convenience and brevity. Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 2 2. Facts of the Case 2.1 The relevant facts as emanating from the orders of the Assessing Officer, may be briefly noted. The assessee is engaged in the business of construction and development of residential and commercial properties. For Assessment Year 2019-20, the assessee filed his return of income under section 139(1) on 24.10.2019 declaring a total income of Rs. 3,08,81,900/-. The return was processed under section 143(1) on 25.11.2019. For Assessment Year 2020-21, the assessee filed his return of income on 06.02.2021 declaring an income of Rs. 68,09,600/-, which was similarly processed under section 143(1) on 07.12.2021. 2.2 A search and seizure operation under section 132 of the Act was conducted on 15.10.2019 in the case of one Shri Suresh Ranchhodbhai Thakkar, who is a land broker by profession. During the course of such search, certain incriminating material and digital data allegedly pertaining to the assessee was found and seized. Consequent upon recording of satisfaction under section 153C of the Act, proceedings were initiated in the case of the assessee for Assessment Years 2014-15 to 2020-21. The case was thereafter centralized under section 127 of the Act by order dated 28.02.2023. 2.3 For A.Y. 2019-20, the Assessing Officer, in the course of assessment proceedings, relied upon a WhatsApp image file seized from the mobile phone of one Shri Anand Keshubhai Patel, who was associated with the Popular Group. The said document allegedly reflected a transaction of land situated at Survey No. 66, Manipur Village, having an area of 36,363 square yards. According to the Assessing Officer, while the registered sale deed disclosed a Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 3 consideration of Rs. 90,00,000/-, the seized document showed that the actual consideration was Rs.5,87,66,400/-, worked out at the rate of Rs.9,900 per square yard. On this basis, the Assessing Officer alleged that the assessee had received unaccounted cash to the extent of Rs.4,97,66,400/- over and above the recorded sale consideration. The Assessing Officer further alleged that in respect of other properties at Makarba and Vejalpur, the assessee had invested substantial amounts in cash, namely Rs. 12.75 crore and Rs. 6.03 crore respectively, over and above the consideration disclosed in registered instruments. The assessment was framed making addition of Rs.4,97,66,400/- under section 69A of the Act and further Rs.9,60,000/- towards alleged unexplained brokerage expenditure under section 69C of the Act. 2.4 For A.Y. 2020-21, the Assessing Officer relied upon page 146 seized from the mobile phone of Shri Suresh Thakkar, which allegedly contained details of a transaction for purchase of 3000 square yards of land situated at TP No. 204, Gurjari Society, Makarba, Ahmedabad. The said document recorded the transaction value at Rs. 54,444 per square yard aggregating to Rs. 16.33 crore. The Assessing Officer further relied upon the statement of Shri Suresh Thakkar to the effect that the land was sold by one Shri Dhiren Bharwad and his family to the assessee for an amount of Rs. 17.23 crore, comprising cash of Rs.12.75 crore and cheque payment of Rs. 4.48 crore. The public records, however, disclosed that the registered deed was executed for a consideration of only Rs. 6 crore in the name of the assessee. The Assessing Officer also referred to draft affidavit and indemnity bond images seized from the premises of Dharinidhar Developers, which purportedly related to the same transaction. On the basis of such seized material and statements, the Assessing Officer concluded that Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 4 the actual consideration was Rs. 16.33 crore and therefore made an addition of Rs. 5,35,65,600/- under section 69B of the Act and further addition of Rs. 8,16,660/- under section 69C of the Act towards alleged unexplained brokerage expenditure. 2.5 The assessee carried the matter in appeal before the CIT(A). Before the appellate authority, the assessee raised jurisdictional objections challenging the very validity of proceedings under section 153C. It was contended that in terms of the first proviso to section 153C, the “date of search” in the case of a person other than the searched person is to be reckoned from the date of receiving the seized documents by the Assessing Officer having jurisdiction over such other person. In the present case, such date was 21.10.2021. In view of sub-section (3) of section 153C, it was urged that since the search was deemed to have taken place after 01.04.2021, no proceedings could have been validly initiated. It was further contended that no incriminating material pertaining to the assessee was found during the search, and that the documents relied upon by the Assessing Officer were unsigned, dumb documents, and not belonging to the assessee. The assessee also contended that no opportunity of cross- examination of the third parties, whose statements were relied upon by the Assessing Officer, had been afforded, and therefore the additions were unsustainable. 2.6 The learned CIT(A), after considering the submissions of the assessee and the material on record, held that the assessment framed under section 153C was invalid in law. Relying upon the decisions of the Hon’ble Supreme Court in Vikram S. Bhatia v. CIT and Jasjit Singh v. CIT, the CIT(A) concluded that for the purposes of section 153C, the date of search in the case of the assessee had to be reckoned as Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 5 21.10.2021, being the date on which the Assessing Officer of the assessee received the seized documents. In view of section 153C(3), the CIT(A) held that no assessment could be initiated in respect of searches deemed to be conducted on or after 01.04.2021. On this jurisdictional ground alone, the CIT(A) quashed the assessments for both the years under appeal. Without prejudice, the CIT(A) also examined the merits of the additions and found that the seized material did not pertain to the assessee and were merely unsigned WhatsApp images or rough notings. It was observed that the additions were made on the basis of uncorroborated third-party statements without granting cross-examination. The CIT(A), therefore, deleted the additions made by the Assessing Officer in both the assessment years. 2.7 For a clearer appreciation of the factual matrix, the relevant details of returns filed, assessment framed by the Assessing Officer, additions made, and the orders of the CIT(A) are tabulated as under: Particulars A.Y. 2019-20 A.Y. 2020-21 Return of Income Filed u/s 139(1) on 24.10.2019 declaring income of Rs. 3,08,81,900/- Filed u/s 139(1) on 06.02.2021 declaring income of Rs. 68,09,600/- Processing u/s 143(1) Processed on 25.11.2019 Processed on 07.12.2021 Assessment framed by AO u/s 153C u/s 153C Additions made by AO (i) Rs. 4,97,66,400/- u/s 69A (alleged unexplained money) (ii) Rs. 9,60,000/- u/s 69C (alleged brokerage) (i) Rs. 5,35,65,600/- u/s 69B (alleged unexplained investment) (ii) Rs.8,16,660/- u/s 69C (alleged brokerage) Date of AO’s Order 24.03.2023 21.03.2023 Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 6 Order of CIT(A) Quashed assessment u/s 153C(3) as invalid; without prejudice, deleted additions holding seized material to be dumb/uncorroborated Quashed assessment u/s 153C(3) as invalid; without prejudice, deleted additions holding seized material to be dumb/uncorroborated Date of CIT(A) Order 04.02.2025 05.02.2025 2.8 Aggrieved by the relief granted by the CIT(A), the Revenue is now in appeal before raising following grounds of appeal: In IT(SS)A – 42/Ahd/2025 for A.Y. 2019-20 i) In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in quashing the assessment proceeding u/s.153C of the Act by invoking provision of section 153C(3) of the Act by holding that the date of initiation of search would be considered as 21J02021, in view of first proviso of section 153C, grossly ignoring that this proviso is applicable only for the limited purpose of calculating the number of assessment years as per second proviso to subsection (1) of section 153A of the Act, and hence the decision is perverse and not in accordance with law. ii) The Ld. CIT(A) has erred in quashing the proceeding u/s,153C of the Act without considering the incriminating documents seized & satisfaction drawn by A.O. as per provision of section 153C of the Act. iii) 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.4,97,66,4001- 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. iv) The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal. In IT(SS)A – 43/Ahd/2025 for A.Y. 2020-21 i) In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in quashing the assessment proceeding u/s.153C of the Act by invoking provision of section 153C(3) of the Act by holding that the date of initiation of search would be considered as 21.10.2021, in view of Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 7 first proviso of section 153C, grossly ignoring that this proviso is applicable only for the limited purpose of calculating the number of assessment years as per second proviso to subsection (1) of section 153A of the Act, and hence the decision is perverse and not in accordance with law. ii) 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.5,35,65,600/- u/s.69B of the Act being unexplained investment without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO. iii) 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.8,16,660/- u/s.69C of the Act being unexplained expenditure without considering the incriminating documents found & seized during search and without appreciating the meticulous findings of the AO. iv) The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal. 3. During the course of hearing before us, the learned Departmental Representative (DR) reiterated the facts as recorded by the Assessing Officer in the assessment orders and submitted that incriminating material was found in the course of search which clearly demonstrated that the assessee was engaged in unaccounted cash dealings in respect of land transactions. 3.1 The learned DR drew our attention to the seized material referred to by the Assessing Officer in A.Y. 2019-20. It was explained that a WhatsApp image file, namely IMG-20180530-WA0003.jpg, was retrieved from the mobile phone of one Shri Anand Keshubhai Patel, an associate of Popular Group. This image contained the details of a land transaction pertaining to Survey No. 66, Manipur village. For the sake of clarity, the translated details are given below: Particulars Details Date 26.05.2018 Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 8 Seller Kartikbhai Patel Purchasers Amratbhai Patel, Dharminbhai Patel Location At/Po – Manipur, Old Survey No. 506, New Survey No. 66 Area 4963 Sq. Mtr. / 5936 Sq. Var. Nature Non-agricultural land Rate Rs. 9,900/- per Sq. Yards Tenure 4 Months Document Price Rs. 90,00,000/- Token Rs. 11,00,000/- in cash on 26.05.2018 Payment Schedule 31.06.2018 – Rs. 1.50 31.07.2018 – Rs. 1.50 31.08.2018 – Rs. 1.50 31.09.2018 – Remaining after document 3.2 The Assessing Officer compared the contents of the seized image with the registered sale deed and found that while the registered sale deed dated 24.10.2018 reflected a consideration of only Rs.90,00,000/-, the seized document mentioned the rate of Rs. 9,900 per square yard, working out to an aggregate consideration of Rs.5,87,66,400/- (5936 Sq. Yards X Rs.9,900/- Sq. Yard). For the sake of clarity, the details verified by the Assessing Officer from the land revenue department are given below: Particulars Details S.R.O. Sanand Seller Shri Shailesh Kantilal Mistry Purchasers (i) Green Impact Realty – 75% share (ii) Mitesh Amrutbhai Patel – 25% share Location Village Manipur Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 9 Survey / Block Details Survey No. 66 (Old Survey No. 506 Paiki) Block/TP No. 955 – Area: 0-49-63 hectare Block/TP No. 1214 – Area: 0-48-56 hectare Total Land Area 4963 sq. mtr. (approx. 5936 sq. var.) Document Value Rs. 90,00,000/- Date of Registration 24.10.2018 Document No. 12193 On this basis, the Assessing Officer concluded that the assessee had received on-money in cash to the extent of Rs. 4,97,66,400/- over and above the recorded value. 3.3 For A.Y. 2020-21, the learned DR pointed out that the incriminating material relied upon by the Assessing Officer included page No. 146 retrieved from the mobile of Shri Suresh Ranchhodbhai Thakkar. This page contained the details of a transaction relating to a plot of land admeasuring 3000 square yards in Gurjari Society, TP No. 204, Makarba, Ahmedabad. The seized page recorded the transaction at the rate of Rs. 54,444 per square yard, aggregating to Rs.16,33,32000/-. The statement of Shri Suresh Thakkar was also relied upon, wherein he had categorically stated that the land was sold by the family of Shri Dhiren Bharwad to the assessee for Rs.17.23 crore, comprising cash of Rs. 12.75 crore and cheque payment of Rs. 4.48 crore. It was further submitted that though the registered sale deed reflected consideration of only Rs. 6 crore, corroborative material was also found from the premises of Dharinidhar Developers, in the form of WhatsApp image files (IMG-20191002-WA0018 to 0020) containing unsigned draft affidavits/indemnity bonds relating to the same property. In his statement, Shri Dhiren Bharwad had also Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 10 confirmed that the seized draft affidavit pertained to the transaction of sale of the said land to the assessee. On this basis, the Assessing Officer concluded that the assessee had in fact invested Rs.16.33 crore in the property, out of which Rs. 12.75 crore was paid in cash and not recorded in the books. Brokerage expenditure of Rs.8,16,660/- was further noted to have been incurred in cash in respect of the same. 3.4 The learned DR further placed strong reliance on the admission made by the assessee himself in his written reply dated 17.03.2023, more particularly para 32 thereof. In the said reply, the assessee had, inter alia, stated as under: “In case your kind office takes an adverse view without accepting the above-referred facts and explanation then in that case no addition shall be made as proposed by your kind office. Your kind office is proposing to make addition of Rs. 496.77 lakhs and Rs. 1275 lakhs on account of on money received on sale of land survey no. 66 at Manipur and on money paid on purchase of land TP survey no. 204 at Makarba respectively. Here it may be noted that in case your kind office assumes that the Assessee has received on money on sale of land survey no. 66 then corresponding application of on money is to be considered for purchase of land TP survey no. 204. The cash received on sale land in FY 2018-19 is utilised for purchase of land in FY 2019-20 thus addition cannot be made for source of cash receipt as well as application of cash payment. It is submitted that the on money is considered as revenue receipt then any expenditure and/or investment out of such money cannot be treated as unexplained expenditure/investment.” 3.4 The learned DR argued that the above categorical admission clearly establishes two material facts: firstly, that on-money of Rs.4.96 crore was received by the assessee on sale of land at Manipur (Survey No. 66), and secondly, that a cash component of Rs.12.75 crore was paid by the assessee in respect of purchase of land at Makarba (TP Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 11 No. 204). It was emphasised that once such admission is made in writing by the assessee, the same constitutes the best evidence, and the assessee cannot subsequently retract or claim that no incriminating material existed. 3.5 The learned Departmental Representative also drew our attention to the dates of the assessment orders and submitted that the assessment for A.Y. 2020-21 was completed on 21.03.2023, while that for A.Y. 2019-20 was completed on 24.03.2023. It was emphasised that the Assessing Officer, while framing the assessments, had proceeded strictly in line with the proposal made by the assessee himself in para 32 of his written reply dated 17.03.2023. The Departmental Representative pointed out that the assessee, in unequivocal terms, suggested that if the addition on account of on-money received on sale of land at Manipur (Survey No. 66) is to be made, then the same should be treated as the source for the on-money paid for purchase of land at Makarba (TP No. 204). It was accordingly urged that the Assessing Officer has only adopted the working as per the assessee’s own admission and proposal, and the assessee cannot now turn around to challenge the very additions which were made on the basis of such proposal. 3.6 The DR accordingly urged that the orders of the CIT(A) deleting the additions deserve to be reversed. 3.7 In regard to the legal grounds, the learned DR submitted that the learned CIT(A) has erred in quashing the assessments by invoking section 153C(3) of the Act. It was argued that the CIT(A) wrongly reckoned the date of initiation of search as 21.10.2021, being the date of receipt of seized material by the Assessing Officer of the assessee and thereby held that no proceedings could be initiated. The DR Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 12 contended that such interpretation is contrary to law, as the first proviso to section 153C only provides for reckoning of the date of receiving seized material for the limited purpose of calculating the six assessment years in terms of the second proviso to section 153A(1). It was emphasised that the proviso does not in any manner nullify or bar the initiation of proceedings under section 153C itself. Thus, according to the DR, the decision of the CIT(A) is perverse and unsustainable in law. 4. Per contra, the learned Authorised Representative (AR) for the assessee strongly supported the impugned orders of the CIT(A). It was submitted that the CIT(A) has correctly quashed the assessments as being without jurisdiction in terms of section 153C(3) of the Act. The AR emphasised that the first proviso to section 153C clearly stipulates that the date of search in the case of a person other than the searched person shall be the date on which the Assessing Officer of such other person receives the seized material. In the present case, the Assessing Officer of the assessee received the documents only on 21.10.2021, which falls after 01.04.2021. In such a situation, by virtue of section 153C(3), the search is deemed to have been conducted on or after the 1st day of April 2021, and therefore the provisions of section 153C cannot be invoked. The AR pointed out that the CIT(A) has relied on this statutory mandate to quash the assessments, and the Revenue’s challenge is misconceived. 4.1 The learned AR, on the other hand, relied heavily on the orders of the learned CIT(A) and reiterated that the assessments framed under section 153C are without jurisdiction. It was submitted that the seized material relied upon by the Assessing Officer consisted of certain WhatsApp images allegedly retrieved from the mobile phone of Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 13 a third party, Shri Anand Patel, which did not pertain to the assessee. The AR invited our attention to the assessee’s detailed reply wherein a comparison was drawn between the contents of the alleged seized document and the actual registered sale deed. For ease of reference, the assessee had tabulated the same as under: Particulars Information as per Seized Document (page 8 of Satisfaction Note) Details as per Actual Sale Deed (dated 23.10.2018) Date of Transaction 26.05.2018 23.10.2018 Name of Seller Kartik Patel Shailesh Mistry Name of Buyer Amratbhai Patel and Dharminbhai Patel Green Impact Realty and Mitesh Patel 4.2 It was submitted that the above comparison itself demonstrated that the seized page does not relate to the assessee’s transaction and therefore cannot form the foundation for initiation of proceedings under section 153C. 4.3 The AR further pointed out that the assessee had specifically denied having made or received any cash payment in relation to the Manipur land transaction and clarified that no such transaction had taken place between the persons mentioned in the seized material. It was urged that the scanned pages relating to the alleged MOU had no evidentiary value, being only rough notings or unsigned documents, and could not be treated as incriminating material belonging to the assessee. Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 14 4.3 The AR thus submitted that the CIT(A) has correctly quashed the assessments by holding that the date of receipt of seized material by the AO of the assessee was 21.10.2021, and therefore, in view of section 153C(3), the provisions of section 153C could not have been invoked and even otherwise, the additions made were without any incriminating material belonging to the assessee, resting merely on third-party statements and unsigned loose papers. The AR accordingly prayed for upholding the well-reasoned orders of the CIT(A). 5. At the outset, we find that in both these appeals the primary controversy raised by the Revenue relates to the legality of the assessments framed under section 153C of the Act. Since the issue goes to the very root of the validity of the proceedings, it would be appropriate to deal first with the legal ground challenging the order of the learned CIT(A) in quashing the assessments under section 153C(3). 5.1 It is an undisputed position that the documents referred to by the Assessing Officer were received by the Assessing Officer of the assessee on 21.10.2021. The learned CIT(A) has taken a view that by virtue of the first proviso to section 153C, the date of search in the case of a person other than the searched person is to be reckoned as the date on which the Assessing Officer of such other person receives the seized documents. Since such date falls after 01.04.2021, the CIT(A) held that the provisions of section 153C were not available and, in terms of section 153C(3), the assessments are invalid. 5.2 The Revenue contended that the first proviso to section 153C is only for the limited purpose of computing the block of six assessment Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 15 years in terms of the second proviso to section 153A(1), and does not govern the initiation of proceedings under section 153C itself. In contrast, the Authorised Representative has strongly supported the interpretation adopted by the CIT(A) by pointing out that the statutory language of section 153C(3) read with its proviso makes it clear that where the seized documents are received by the Assessing Officer of the “other person” on or after 01.04.2021, the assessment has to be framed only under the new regime of section 153C, as substituted, and the old provision cannot be pressed into service. 5.3 The CIT(A), while quashing the assessments, has recorded a categorical finding that the date of receipt of documents being 21.10.2021, the case falls within section 153C(3), and therefore, initiation of proceedings under section 153C, as invoked by the AO, was not permissible. The CIT(A) observed that the first proviso to section 153C(1) creates a deeming fiction for determining the date of search in the case of a person other than the searched person. He relied on the judgement of Hon’ble Supreme Court in Vikram S Bhatia v. CIT (2023) 149 taxmann.com 123 (SC) where it was held that the effect of this proviso is that any reference to the date of initiation of search is to be construed as the date on which the Assessing Officer of the “other person” receives the seized books of account, documents or assets. In other words, the date of search in the case of the assessee has to be reckoned with reference to the date of such receipt by his Assessing Officer, and not the date on which the actual search took place in the case of the searched person. Applying this ratio to the facts of the present case, the CIT(A) noted that the Assessing Officer of the assessee received the seized material on 21.10.2021. Thus, by operation of law, the date of search in the case of the assessee is to be taken as 21.10.2021 and not the original Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 16 date of search as assumed by the Assessing Officer. This construction, according to the CIT(A), flows directly from the statutory language and has also been affirmed by the Apex Court in the above decision. 5.4 The CIT(A) further relied on the judgement of the Hon’ble Supreme Court in Jasjit Singh v. CIT [2023] 155 taxmann.com 155 (SC), wherein it was held that the proviso to section 153C was not enacted merely to address the question of abatement but also to ensure that the six-year block period is reckoned with reference to the date of receipt of the seized material by the AO of the other person. The Court rejected the Revenue’s contention that the proviso has a limited operation and instead adopted an interpretation that avoids undue hardship to the assessee who otherwise would be compelled to maintain records for disproportionately long periods. On this plain reading, the date of receipt of seized documents by the AO of the other person becomes the decisive factor for computing the date of search. 5.5 Having determined that the date of search for the assessee was 21.10.2021, the CIT(A) proceeded to examine the effect of sub-section (3) of section 153C, inserted by the Finance Act, 2021 with effect from 01.04.2021. This provision expressly states that nothing contained in section 153C shall apply in relation to a search initiated on or after 01.04.2021. The CIT(A) reasoned that since, in view of the first proviso, the date of search in the case of the assessee is to be deemed as 21.10.2021, the prohibition contained in section 153C(3) squarely applies. Consequently, no proceeding under the erstwhile section 153C could have been initiated in the case of the assessee after 01.04.2021. Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 17 5.6 In conclusion, the CIT(A) held that the initiation of assessment proceedings under section 153C in the case of the assessee was without jurisdiction and invalid in law. He categorically recorded that the Assessing Officer had erred in assuming jurisdiction under the old provisions of section 153C despite the fact that the receipt of seized material by him was on 21.10.2021. Accordingly, the assessments framed under section 153C were quashed, and grounds 1 to 4 of the appeal were allowed. 5.7 We have also noted the specific grievance of the Revenue that the first proviso is intended only for the purpose of reckoning the six assessment years as contemplated in the second proviso to section 153A(1), and not for deciding the validity of initiation of proceedings under section 153C. The Revenue further argued that the Assessing Officer had rightly initiated proceedings under the old provisions of section 153C inasmuch as the search was conducted on 21.10.2021 in the case of the searched person, and the seized material was thereafter duly handed over to the Assessing Officer of the assessee. The interpretation placed by the CIT(A), according to the Revenue, results in an anomalous situation where assessments otherwise validly initiated under section 153C are rendered void only on account of the technicality of the date of receipt of material. It was thus contended that the order of the CIT(A) is perverse and not sustainable in law. 5.8 On a careful consideration of the issue, we find no merit in the grievance of the Revenue. The language of the first proviso to section 153C(1) is unambiguous and creates a statutory deeming fiction that, in the case of a person other than the searched person, the “date of search” is the date on which the Assessing Officer of such other Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 18 person receives the seized books, documents or assets. This construction has been consistently affirmed by the Hon’ble Supreme Court in Vikram S Bhatia v. CIT (supra), wherein it was held that the proviso is determinative for reckoning the date of search in such cases. Further, in Jasjit Singh v. CIT (supra), the Apex Court has clarified that the proviso is not confined merely to the computation of six assessment years or the question of abatement but has a broader operation in fixing the date of search for the “other person” with reference to the receipt of material. 5.9 In the present case, it is an admitted position that the seized material pertaining to the assessee was received by the Assessing Officer only on 21.10.2021. Consequently, in view of the statutory proviso and binding judicial pronouncements, the date of search in the case of the assessee has to be reckoned as 21.10.2021. Once this position is accepted, the operation of section 153C(3), inserted by the Finance Act, 2021 with effect from 01.04.2021, squarely applies. This provision categorically enacts that nothing contained in section 153C shall apply in relation to a search initiated on or after 01.04.2021. Therefore, the initiation of proceedings against the assessee under the old provisions of section 153C is barred in law. 5.10 We are unable to accept the Revenue’s contention that the first proviso is applicable only for the limited purpose of reckoning the six assessment years as per section 153A(1). Such a restrictive construction is not borne out by the plain language of the proviso, which speaks of “reference to the date of initiation of search” and directs that it shall be deemed to be the date of receipt of seized material by the AO of the other person. The Hon’ble Supreme Court has squarely negatived the Revenue’s very argument in the case of Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 19 Jasjit Singh (supra), by holding that the proviso operates not merely to determine abatement but also to determine the date of search itself. At the cost of repetition, for the sake of completeness, we reproduce here the relevant para referred by the CIT(A) in his order at para 5.3.2 [CIT(A) order for A.Y. 2019-20)] : 9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under Section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third-party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts. 5.11 It is thus clear that the order of the learned CIT(A) is firmly grounded in the statutory scheme as well as binding judicial precedent. The finding that the assessments framed under section 153C are without jurisdiction and invalid cannot be faulted. We therefore uphold the order of the CIT(A) in quashing the assessments, and dismiss the grounds raised by the Revenue on this issue in case of both the appeals. Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 20 5.12 We now turn to the grounds raised by the Revenue challenging the deletion of additions sustained by the Assessing Officer in both the assessment years under appeal. The Assessing Officer had made additions on account of alleged on-money receipts and payments arising from certain land transactions, based on loose papers/images found in the mobile phone of a third party. The CIT(A) consistently applied the principle that loose papers, rough notings, or third-party documents without corroboration, signature, or cross-examination cannot form the sole basis of additions. 5.13 In case of A.Y. 2019-20, the CIT(A) noted that the AO had placed reliance on seized material found in the WhatsApp chat of Shri Anand Patel’s mobile phone. The AO had emphasized that the description of land, the sale price, and the registered sale deed matched the seized material. However, the CIT(A) held that beyond this WhatsApp chat, no corroborative evidence had been brought on record to substantiate the addition of Rs. 4,97,66,400/-. The assessee contended that the seized data did not pertain to him and that he had never paid brokerage to Shri Anand Patel. This fact was not rebutted by the AO. The CIT(A) recorded that the assessee had raised the issue of denial of cross-examination of Shri Anand Patel, whose digital data formed the basis of the addition. The AO neither produced Shri Anand Patel’s statement nor gave the assessee an opportunity to test its veracity. Relying on settled judicial principles, the CIT(A) agreed with the assessee that additions could not be sustained in the absence of cross-examination. The CIT(A) finally observed that the seized material from Shri Anand Patel’s mobile phone was an unregistered and unsigned rough noting, not even on stamp paper. In the absence of any independent inquiry by the AO or any corroborative evidence, Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 21 such loose paper could not be given evidentiary value. Therefore, the entire addition of Rs. 4,97,66,400/- was deleted. 5.14 In case of A.Y. 2020-21, the AO relied on the statement of Shri Suresh Thakkar recorded during search proceedings, who alleged that the assessee had purchased land from Dhiren Bharwad and family for Rs.17.23 crore, including Rs. 12.75 crore in cash. The AO matched this with the registered sale deed of 03.10.2019 reflecting Rs. 6 crore as the consideration and treated the balance as ‘on-money.’ The CIT(A) noted the assessee’s categorical submission that the seized WhatsApp images from Shri Suresh Thakkar’s mobile did not pertain to him. The assessee argued that the AO relied solely on third-party statements without corroboration and ignored the fact that the registered consideration of Rs. 6 crore was duly recorded in books, backed by sale deed, bank statements, and TDS compliance. The assessee also emphasized that no brokerage was paid to Shri Suresh Thakkar, proving that he was not involved in the transaction. The CIT(A) held that the seized material had no evidentiary value as it neither bore signatures, nor dates, nor the assessee’s name. Moreover, the AO had not examined Shri Suresh Thakkar in cross- examination, despite relying on his statement. 5.15 The CIT(A) highlighted that there was a material inconsistency between the seized notings and the actual sale deed. The seized papers named different sellers and buyers, whereas the registered document reflected Zeel Dipakbhai Mevada and the assessee. Such mismatch eroded the evidentiary weight of the seized notings. Importantly, the AO had not made any independent inquiries to reconcile these differences. The CIT(A) emphasized that the seized WhatsApp images were rough papers, not notarized or signed, and Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 22 therefore constituted \"dumb documents.\" In the absence of corroboration, no presumption u/s 132(4A) could be drawn against the assessee since the material was recovered from a third party’s device. The addition of Rs. 5,35,65,600/- was accordingly deleted, as the AO had failed to establish any nexus between the seized material and the assessee. 5.16 We have carefully considered the rival submissions and perused the orders of the lower authorities along with the material placed before us. The principal dispute relates to the additions made by the Assessing Officer on the basis of certain seized material and statements recorded from third parties during the course of search, which according to the Assessing Officer evidenced unaccounted ‘on- money’ transactions in the purchase and sale of immovable property. 5.17 It is a well settled proposition of law, as laid down inter alia by the Hon’ble Supreme Court in the case of CBI v. V.C. Shukla (1998) 3 SCC 410, and followed in subsequent decisions including those of the Hon’ble jurisdictional High Courts, that loose papers or unsigned notings recovered from third parties cannot by themselves constitute incriminating evidence unless supported by cogent corroborative material. The presumption under section 132(4A) or section 292C of the Act is confined only to the person from whose possession such documents are found and cannot be extended to implicate other persons. The CIT(A), in our considered opinion, has correctly applied this principle in the present case. 5.18 We also note that both in the case of Shri Anand Patel (A.Y. 2019-20) and Shri Suresh Thakkar (A.Y. 2020-21), the Assessing Officer has failed to provide the assessee any opportunity to cross- examine the said third parties, despite heavily relying on the material Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 23 seized from them. This goes to the root of natural justice. The law is well established that if an addition is founded on third-party statements, the denial of cross-examination vitiates the addition itself. 5.19 We have carefully considered the additional contention advanced by the learned Departmental Representative, wherein reliance has been placed on para 32 of the assessee’s written submission dated 17.03.2023. In the said reply, the assessee had urged that if, despite his explanation, the Assessing Officer were to take an adverse view, then the alleged “on-money” receipt on sale of Manipur land (Survey No. 66) may be telescoped against the alleged “on-money” payment on purchase of Makarba land (TP No. 204). The Department has argued that this constitutes a categorical admission of two facts, namely (i) the assessee received Rs. 4.96 crore in cash as “on-money” on sale of Manipur land, and (ii) the assessee paid Rs.12.75 crore in cash as “on-money” for purchase of Makarba land. It was contended that such admission being in writing, the Assessing Officer was justified in making the impugned additions, and the assessee cannot resile from the same at the appellate stage. 5.20 We are unable to agree with this contention. A careful reading of para 32 of the assessee’s reply makes it evident that the assessee had, at the forefront, denied the correctness of the allegation regarding any “on-money” transaction either in respect of Survey No. 66 at Manipur or TP No. 204 at Makarba. The so-called admission is in fact couched as an alternative plea in the nature of a protective argument, to the effect that if the Assessing Officer were to reject the explanation of the assessee and proceed to make addition on account of alleged on-money, then the principle of telescoping ought to be applied so as to avoid double taxation of the same source. It is a well- Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 24 established principle of law that an alternative plea cannot be construed as an admission of fact. The assessee, in the present case, never accepted the existence of on-money transaction; he merely submitted that even if the Department were to hold otherwise, then the consequential application of such cash should be telescoped against the receipt, so that the same amount is not taxed twice. The Hon’ble Courts have consistently held that such protective or alternative submissions are made to safeguard the assessee against the contingency of an adverse view and do not amount to binding admissions. 5.21 We also note that the learned CIT(A), while adjudicating the merits, has categorically held that there is no incriminating material on record to prove the assessee’s involvement in the alleged on-money transactions. The seized WhatsApp chats were from the devices of third parties, were unsigned, undated and uncorroborated. The Assessing Officer neither produced the third parties for cross- examination nor conducted any independent enquiry to substantiate the allegation. In the absence of legally admissible evidence, the foundation itself for the impugned additions does not survive. Once this finding has been returned on merits, the so-called alternative plea loses all relevance. 5.22 The reliance of the Department on the chronology of assessment orders also does not advance its case. The mere fact that the Assessing Officer proceeded on the basis of assessee’s alternative working does not dispense with the requirement of establishing, with cogent evidence, the existence of on-money transactions. The jurisdictional High Courts have time and again emphasised that additions cannot rest on conjectures, loose papers or untested statements, much less Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 25 on a conditional plea advanced by an assessee to avoid double jeopardy. 5.23 In view of the foregoing, we hold that para 32 of the assessee’s written reply dated 17.03.2023 cannot be read as an admission of on- money transactions, but only as a protective plea in the alternative. 5.24 Before we conclude, it is pertinent to record the submission of the learned AR who placed reliance on the recent decision of the Co- ordinate Bench of ITAT, Delhi in the case of Olive Overseas Pvt. Ltd. & Nakshatra Business Pvt. Ltd. v. DCIT in ITA Nos. 3310, 3330– 3335/Del/2023 & 3358–3361/Del/2023, order dated 08.10.2024. In that case, the Co-ordinate Bench held in categorical terms that mere statement of a person under section 132(4) of the Act in the course of search, by itself, cannot be regarded as incriminating material found during the search. The Tribunal, after referring to judgments of the Hon’ble Delhi High Court in PCIT v. Anand Kumar Jain (HUF) (ITA No. 23/2021, dated 12.02.2021) and PCIT v. Pavitra Realcon Pvt. Ltd. (ITA No. 579/2018, dated 29.05.2024), concluded that additions made solely on the basis of a confessional statement, without any supporting corroborative material discovered during search, are unsustainable in law. 5.25 Applying the same principle here, we find that the Revenue’s reliance on statement of third parties and also on para 32 of the assessee’s reply dated 17.03.2023 cannot cure the fundamental deficiency of absence of incriminating material. The so-called admission was an alternative plea, and even otherwise, the settled law is that statements recorded under section 132(4) cannot, standing alone, constitute incriminating material. The ratio of Olive Overseas squarely supports the assessee’s stand. The Hon’ble Supreme Court Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 26 in Abhisar Buildwell Pvt. Ltd. v. ACIT (2023) 149 taxmann.com 399 (SC), wherein it was laid down that in search assessments under section 153A/153C, no addition can be made unless it is based on incriminating material unearthed during the course of search qua the assessee. The Apex Court reiterated the principle that assessments cannot be disturbed merely on the basis of assumptions, presumptions, or statements without cogent seized evidence directly relating to the assessee. 5.26 We, therefore, uphold the order of the learned CIT(A) deleting the impugned additions and reject the Revenue’s grounds in case of both the appeals. 6. The next ground raised by the Revenue for A.Y. 2020–21 relates to the deletion of addition of Rs.8,16,660/- made by the Assessing Officer under section 69C of the Act on account of alleged unexplained expenditure. 6.1 The Assessing Officer proceeded on the footing that, “though the quantum of brokerage expenditure has not been specified by the assessee but Shri Suresh R. Thakkar himself has stated that as per prevalent market practice in real estate, brokerage @ 0.5% is charged when the aggregate deal value exceeds Rs. 10 crores”. On that basis, the Assessing Officer computed brokerage at 0.5% and, treating the same as not recorded in the books and source not explained, made the addition of Rs. 8,16,660/- under section 69C. This foundation is recorded by the CIT(A) at para 7.1 along with the assessee’s categorical stand that no purchase was executed “through” Shri Suresh Thakkar and no brokerage was paid by the assessee. Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 27 6.2 The learned CIT(A) has then examined the issue in detail. At para 7.2, the CIT(A) records a clear finding that the Assessing Officer has not independently substantiated that any brokerage was in fact incurred by the assessee. It is specifically noted that section 69C applies only when expenditure is actually incurred and the assessee fails to explain the source. In the present case, there is no evidence of any real expenditure; the alleged brokerage is assumed solely on the basis of the statement of Shri Suresh Thakkar. The CIT(A) further observes that such statement, in the absence of corroboration and without opportunity of cross-examination, “does not have any evidentiary value”. The CIT(A) also notes that the substantive issue on “on-money” investment in land has been decided in favour of the assessee, thereby undermining the very premise for a consequential brokerage claim. 6.3 In para 7.3, the CIT(A) concludes that the entire addition under section 69C of Rs. 8,16,660/- is to be deleted, since there is no proof of actual incurrence of expenditure and the addition rests on mere assumption. While reaching this conclusion, the CIT(A) has also noticed the legal position relied upon by the assessee, inter alia Lubtec India Ltd. [2009] 311 ITR 175 (Del.) and Suresh Chandra Kothari v. ITO [2009] 31 SOT 14 (Jodhpur), which hold that when the Revenue brings no evidence of the expenditure said to have been incurred, a notional or estimated figure cannot be sustained under section 69C. 6.4 On these facts, we find no error in the order of the CIT(A). Section 69C postulates two jurisdictional facts: first, that an expenditure is incurred; second, that the source thereof is not explained to the satisfaction of the Assessing Officer. Unless the Revenue first proves the factum of expenditure, the question of calling Printed from counselvise.com IT(SS)A No.42 & 43/Ahd/2025 28 upon the assessee to explain its source does not arise. Here, there is no bill, voucher, receipt, ledger entry, banking trail, or confirmation evidencing any brokerage outgo. The addition is founded purely on a generalised “market practice” statement of a third party and an ad hoc rate of 0.5 percent. Such a course is impermissible. 6.5 We also note that the statement relied upon is of a third party; the Assessing Officer did not produce the deponent for cross- examination, nor did he verify whether any brokerage service was rendered in the assessee’s transaction. Consistent with the CIT(A)’s reasoning and settled law, an uncorroborated third-party assertion cannot, by itself, justify an addition under section 69C. 6.6 In the totality of the above circumstances, the finding returned by the CIT(A) that the impugned brokerage addition is assumption- based and unsupported by evidence is unexceptionable. We therefore uphold the deletion of Rs.8,16,660/- under section 69C. 7. In the combined result, both the appeals by the Revenue are dismissed. Order pronounced in the Court on 29th September, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 29/09/2025 vk* Printed from counselvise.com "