BHADRESH MANSUKHLAL DODHIA,BHIWANDI V. DCIT-CC-3, THANE, THANE

ITSSA 2219/MUM/2025

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The case involves appeals by the assessee, Bhadresh Mansukhlal Dodhia, against the assessments made under section 153A of the Income-tax Act, 1961 for three consecutive assessment years. The primary contention was that the additions made to the assessee's income were based solely on documents seized from third parties, specifically from the premises of M/s Viral Textile and Jinesh Enterprises, which were not under the direct control or possession of the assessee. The legal debate centered on whether such additions could be validly made under section 153A or should have invoked the provisions of section 153C, which specifically deals with the assessment of income of any other person from whom documents are seized. The Tribunal concluded that the Assessing Officer incorrectly assumed jurisdiction under section 153A, leading to the quashing of the assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788551 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 29-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYAPRAKASH R.SINGH
• Assessee Lawyers: SIMRAN DHAWAN
• Keywords: Unexplained investment; Document seized; Documents seized
• Section: 148; 143(3); 132; 153A; 68; 69; 15

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI NARENDER KUMAR CHOUDHRY (JUDICIAL MEMBER) IT(SS)A No. 2221, 2220 & 2219/MUM/2025 Assessment Year: 2014-15, 2015-16 & 2016-17 Bhadresh Mansukhlal Dodhia, 60/100 New Mavji Compound, Behind Ratan, Talkies Narpoli, Bhiwandi-421302. Vs. DCIT-CC-3, Room No. 12, A Wing, 6th floor, Ashar IT Park, Thane West, Thane-400604 PAN NO. AFHPD 2871 E Appellant Respondent Assessee by : Ms. Simran Dhawan Revenue by : Mr. Satyaprakash R. Singh, CIT-DR Date of Hearing : 04/09/2025 Date of pronouncement : 25/11/2025 ORDER PER OM PRAKASH KANT, AM These appeals by the assessee are arising from a common order dated 12.02.2025 passed by the Ld. Commissioner of Income- tax (Appeals), Pune-11 [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, 2015-16 and 2016-17, which arises from assessments completed under section 153A of the Income-tax Act, 1961 (“the Act”) for assessment years 2014-15, 2015-16 and 2016-17, raise common questions—both on jurisdiction and on merits. Given the Printed from counselvise.com overlapping facts, common seized material, and identical legal contentions, we heard all the appeals together and are being disposed of by this consol avoid repetition of facts. 2. The core issue urged before us is whether additions based solely on documents seized from third parties could validly be made in proceedings initiated under section 153A, or whether th statutory mandate of section 153C ought to have been invoked. The assessee has further questioned the nature of the additions sustained by the learned CIT(A) and the legality of converting additions originally made under section 69D into those under section 69. 2.1 In the present appeals, the assessee has assailed the validity of the assessments framed under section 153A of the Income Act, 1961 (“the Act”) both on jurisdictional grounds and on merits. The common legal grievance across all three appea additions have been founded exclusively upon documents seized from the premises of third parties. According to the assessee, such material, if at all capable of supporting any addition, could only have been acted upon by invoking the machine the Act. The assessee, therefore, challenges the very assumption of jurisdiction under section 153A. On merits, the assessee has further objected to the action of the learned CIT(A) in altering the statutory provision applied Bhadresh Mansukhlal Dodhia IT(SS)A No. 2221, 2220 & 2219/MUM/2025 overlapping facts, common seized material, and identical legal contentions, we heard all the appeals together and are being disposed of by this consolidated order for sake of convenience and avoid repetition of facts. The core issue urged before us is whether additions based solely on documents seized from third parties could validly be made in proceedings initiated under section 153A, or whether th statutory mandate of section 153C ought to have been invoked. The assessee has further questioned the nature of the additions sustained by the learned CIT(A) and the legality of converting additions originally made under section 69D into those under In the present appeals, the assessee has assailed the validity of the assessments framed under section 153A of the Income Act, 1961 (“the Act”) both on jurisdictional grounds and on merits. The common legal grievance across all three appea additions have been founded exclusively upon documents seized from the premises of third parties. According to the assessee, such material, if at all capable of supporting any addition, could only have been acted upon by invoking the machinery of section 153C of the Act. The assessee, therefore, challenges the very assumption of jurisdiction under section 153A. On merits, the assessee has further objected to the action of the learned CIT(A) in altering the statutory provision applied—namely, in sustaining the addition Bhadresh Mansukhlal Dodhia 2 IT(SS)A No. 2221, 2220 & 2219/MUM/2025 overlapping facts, common seized material, and identical legal contentions, we heard all the appeals together and are being idated order for sake of convenience and The core issue urged before us is whether additions based solely on documents seized from third parties could validly be made in proceedings initiated under section 153A, or whether the statutory mandate of section 153C ought to have been invoked. The assessee has further questioned the nature of the additions sustained by the learned CIT(A) and the legality of converting additions originally made under section 69D into those under In the present appeals, the assessee has assailed the validity of the assessments framed under section 153A of the Income-tax Act, 1961 (“the Act”) both on jurisdictional grounds and on merits. The common legal grievance across all three appeals is that the additions have been founded exclusively upon documents seized from the premises of third parties. According to the assessee, such material, if at all capable of supporting any addition, could only ry of section 153C of the Act. The assessee, therefore, challenges the very assumption of jurisdiction under section 153A. On merits, the assessee has further objected to the action of the learned CIT(A) in altering the in sustaining the addition Printed from counselvise.com under section 69 instead of section 69D character of the impugned amounts as unexplained investments. 3. We have heard the rival submissions and perused the record. The material facts are not in dispute. was conducted on 27.11.2019 in the Dodhia Group, including the assessee. Consequent notices under section 153A were issued for assessment years 2014 subject-matter of these appeals. The ass under section 143(3) read with section 153A on 30.09.2021, wherein additions of 2015-16), and ₹80,00,000 under section 69D along with under section 68 (AY 2016 3.1 The consistent case of the assessee is that the entire basis of the additions under section 69D is a set of “hundi papers” seized not from the assessee but from the premises of M/s Viral Textile, a proprietary concern of Shri another proprietary concern of Shri Ninesh Dodhia. It is contended that the alleged hundis, though assumed by the Assessing Officer to pertain to the assessee, were never seized from his premises and could have been acted upon only under section 15 Assessing Officer, however, proceeded on the premise that the seized documents belonged to the assessee and invoked section 153A alone. Bhadresh Mansukhlal Dodhia IT(SS)A No. 2221, 2220 & 2219/MUM/2025 under section 69 instead of section 69D—and has also disputed the character of the impugned amounts as unexplained investments. We have heard the rival submissions and perused the record. The material facts are not in dispute. A search under section 132 was conducted on 27.11.2019 in the Dodhia Group, including the assessee. Consequent notices under section 153A were issued for assessment years 2014-15, 2015-16 and 2016-17, which are the matter of these appeals. The assessments were completed under section 143(3) read with section 153A on 30.09.2021, wherein additions of ₹51,00,000 (AY 2014-15), ₹1,10,00,000 (AY 80,00,000 under section 69D along with under section 68 (AY 2016-17) were made. The consistent case of the assessee is that the entire basis of the additions under section 69D is a set of “hundi papers” seized not from the assessee but from the premises of M/s Viral Textile, a proprietary concern of Shri Viral Dhanani and Jinesh Enter another proprietary concern of Shri Ninesh Dodhia. It is contended that the alleged hundis, though assumed by the Assessing Officer to pertain to the assessee, were never seized from his premises and could have been acted upon only under section 15 Assessing Officer, however, proceeded on the premise that the seized documents belonged to the assessee and invoked section Bhadresh Mansukhlal Dodhia 3 IT(SS)A No. 2221, 2220 & 2219/MUM/2025 and has also disputed the character of the impugned amounts as unexplained investments. We have heard the rival submissions and perused the record. A search under section 132 was conducted on 27.11.2019 in the Dodhia Group, including the assessee. Consequent notices under section 153A were issued for 17, which are the essments were completed under section 143(3) read with section 153A on 30.09.2021, 1,10,00,000 (AY 80,00,000 under section 69D along with ₹75,00,000 The consistent case of the assessee is that the entire basis of the additions under section 69D is a set of “hundi papers” seized not from the assessee but from the premises of M/s Viral Textile, a and Jinesh Enterprises, another proprietary concern of Shri Ninesh Dodhia. It is contended that the alleged hundis, though assumed by the Assessing Officer to pertain to the assessee, were never seized from his premises and could have been acted upon only under section 153C. The Assessing Officer, however, proceeded on the premise that the seized documents belonged to the assessee and invoked section Printed from counselvise.com 4. We have carefully considered the rival submissions. For ready reference, the statutory text of section 153C the order: “Assessment of income of any other person. 153C. 69 [(1)] 70[Notwithstanding anything contained in section 147, section 148 where the Assessing Officer is satisfied that, (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, (b) any books of account or pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in books of account or documents or assets, be handed over to the Assessing Officer having jurisdiction over such other person] 72[and that Assessing Officer shall proceed against each such other person and issue notice and assess or r of the other person in accordance with the provisions of if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on t determination of the total income of such other person assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the referred to in sub-section (1) of 74 [Provided that in case of such other person, the reference to the date of initiation of the search under under section 132A tion 153A shall be construed as reference to the date of receiv books of account or documents or assets seized or requi Assessing Officer having jur 76 [Provided further made by it and published in the Official Gazette, specify the class or classes of cases Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made Bhadresh Mansukhlal Dodhia IT(SS)A No. 2221, 2220 & 2219/MUM/2025 We have carefully considered the rival submissions. For ready reference, the statutory text of section 153C has been reproduced in Assessment of income of any other person. 68 [Notwithstanding anything contained in section 148, section 149, section 151 and where the Assessing Officer is satisfied that,- any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, 71belongs to; or any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on t determination of the total income of such other person assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years section (1) of section 153A] :] that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition section 132A in the second proviso to 75[sub-section (1) of] shall be construed as reference to the date of receiv books of account or documents or assets seized or requi Assessing Officer having jurisdiction over such other person :] Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which earch is conducted or requisition is made 78[and for the relevant Bhadresh Mansukhlal Dodhia 4 IT(SS)A No. 2221, 2220 & 2219/MUM/2025 We have carefully considered the rival submissions. For ready has been reproduced in [Notwithstanding anything contained in section 139, and section 153, any money, bullion, jewellery or other valuable article or thing, documents, seized or requisitioned, pertains or pertain to, or any information contained therein, section 153A, then, the seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such [and that Assessing Officer shall proceed against each eassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 73[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or relevant assessment year or years that in case of such other person, the reference to the date or making of requisition section (1) of] sec- shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the isdiction over such other person :] that the Central Government may by rules 77 made by it and published in the Official Gazette, specify the class or in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which [and for the relevant Printed from counselvise.com assessment year or years as referred to in sub 153A] except in cases where any assessment or abated.] 79 [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub by the Assessing Officer having jurisdiction over such oth after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 and in respect of such assessment year (a) no return of income has been furnished by such other person and no notice under sub issued to him, or (b) a return of income has been furnished by such other person but no notice under sub and limitation of serving the notice under sub section 143 (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such such assessment year in the manner provided in 80 [(3) Nothing contained in this section shall apply in relation to a search initiated under documents or any assets requisitioned under the 1st day of April, 2021.] 4.1 A plain and harmonious reading of the provision leaves no room for doubt. Where the seized material “belongs to” or “pertains to” a person other than the person searched, the Assessing Officer of the searched person is statutorily mandated to hand over such material to the Assessing Officer having jurisdiction over t person”, who shall thereafter proceed strictly in accordance with section 153A as if search person’s case. The legislative scheme thus draws an explicit Bhadresh Mansukhlal Dodhia IT(SS)A No. 2221, 2220 & 2219/MUM/2025 assessment year or years as referred to in sub-section (1) of ] except in cases where any assessment or reassessment has [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such oth after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is section 132 or requisition is made under and in respect of such assessment year- no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 issued to him, or a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 and limitation of serving the notice under sub section 143 has expired, or assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such such assessment year in the manner provided in section 153A [(3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A the 1st day of April, 2021.]” A plain and harmonious reading of the provision leaves no for doubt. Where the seized material “belongs to” or “pertains to” a person other than the person searched, the Assessing Officer of the searched person is statutorily mandated to hand over such material to the Assessing Officer having jurisdiction over t person”, who shall thereafter proceed strictly in accordance with section 153A as if search-based proceedings were initiated in that The legislative scheme thus draws an explicit Bhadresh Mansukhlal Dodhia 5 IT(SS)A No. 2221, 2220 & 2219/MUM/2025 section (1) of section reassessment has [(2) Where books of account or documents or assets seized or section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is or requisition is made under section 132A no return of income has been furnished by such other person section 142 has been a return of income has been furnished by such other person but section 143 has been served and limitation of serving the notice under sub-section (2) of assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of section 153A.] [(3) Nothing contained in this section shall apply in relation to a or books of account, other section 132A on or after A plain and harmonious reading of the provision leaves no for doubt. Where the seized material “belongs to” or “pertains to” a person other than the person searched, the Assessing Officer of the searched person is statutorily mandated to hand over such material to the Assessing Officer having jurisdiction over the “other person”, who shall thereafter proceed strictly in accordance with based proceedings were initiated in that The legislative scheme thus draws an explicit Printed from counselvise.com distinction between material seized from the person (falling under section 153A) and material seized from a third person but relating to another assessee (falling under section 153C). Once Parliament has prescribed the specific route through which additions based on third assessment framed by bypassing this route is contrary to law and void ab initio. 4.2 In the present case, it is an admitted position on record that the alleged hundi papers were not seized from the premises of the assessee. These papers wer belonging to the Dodhia Group. The Assessing Officer was, therefore, obliged to record satisfaction under section 153C and proceed in accordance with that provision. The assumption of jurisdiction under section 153A patently without authority of law. Consequently, the assessments framed for AYs 2014- stand vitiated for want of jurisdiction. impugned assessments 4.3 In view of our decision on the legal issue, the other grounds whether relating to the alteration of the statutory provision by the learned CIT(A) or the merits of the additions academic and do not call for adjudication. Bhadresh Mansukhlal Dodhia IT(SS)A No. 2221, 2220 & 2219/MUM/2025 distinction between material seized from the person (falling under section 153A) and material seized from a third person but relating to another assessee (falling under section 153C). Once Parliament has prescribed the specific route through which additions based on third-party seized material are to be made, any assessment framed by bypassing this route is contrary to law and In the present case, it is an admitted position on record that the alleged hundi papers were not seized from the premises of the assessee. These papers were found at the premises of third parties belonging to the Dodhia Group. The Assessing Officer was, therefore, obliged to record satisfaction under section 153C and proceed in accordance with that provision. The assumption of jurisdiction under section 153A, without resort to section 153C, is patently without authority of law. Consequently, the assessments -15, 2015-16 and 2016-17 under section 153A stand vitiated for want of jurisdiction. We accordingly hold that the impugned assessments are unsustainable and are hereby quashed. In view of our decision on the legal issue, the other grounds whether relating to the alteration of the statutory provision by the learned CIT(A) or the merits of the additions—are rendered purely do not call for adjudication. Bhadresh Mansukhlal Dodhia 6 IT(SS)A No. 2221, 2220 & 2219/MUM/2025 distinction between material seized from the person searched (falling under section 153A) and material seized from a third person but relating to another assessee (falling under section 153C). Once Parliament has prescribed the specific route through which to be made, any assessment framed by bypassing this route is contrary to law and In the present case, it is an admitted position on record that the alleged hundi papers were not seized from the premises of the e found at the premises of third parties belonging to the Dodhia Group. The Assessing Officer was, therefore, obliged to record satisfaction under section 153C and proceed in accordance with that provision. The assumption of , without resort to section 153C, is patently without authority of law. Consequently, the assessments 17 under section 153A We accordingly hold that the are unsustainable and are hereby quashed. In view of our decision on the legal issue, the other grounds— whether relating to the alteration of the statutory provision by the are rendered purely Printed from counselvise.com 5. In the result, all the three appeals of the assessee are allowed. Order pronounced in the open Court on Sd/- (NARENDER KUMAR CHOUDHRY JUDICIAL MEMBER Mumbai; Dated: 25/11/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Bhadresh Mansukhlal Dodhia IT(SS)A No. 2221, 2220 & 2219/MUM/2025 In the result, all the three appeals of the assessee are allowed. ounced in the open Court on 25/11/2025. Sd/ NARENDER KUMAR CHOUDHRY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Bhadresh Mansukhlal Dodhia 7 IT(SS)A No. 2221, 2220 & 2219/MUM/2025 In the result, all the three appeals of the assessee are allowed. /11/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "