DCIT, CIRCLE-1(1)(1), AHMEDABAD, AHMEDABAD V. DANARAM JIVARAM CHOUDHARY, AHMEDABAD

ITA 2049/AHD/2024

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had allowed the appeal of the assessee, Danaram Jivaram Choudhary, concerning the assessment year 2011-12. The AO had reopened the case based on information that the assessee had received a substantial amount of cash from M/s. Mudra Real Estate Pvt. Ltd., which was allegedly discovered during a survey. The CIT(A) found the reopening and subsequent assessment to be invalid, leading to the Revenue's appeal to the Tribunal. The Tribunal examined the validity of the assessment under Section 147 and the merits of the addition made under Section 69A of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716375 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: M. K. PATEL; AN; MS. MUDRA
• Keywords: Set aside; Validity of assessment; Borrowed satisfaction
• Section: 147

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 2049/Ahd/2024 (िनधा[रण वष[ / Assessment Year : 2011-12) DCIT Circle-1(1)(1), Ahmedabad बनाम/ Vs. Danaram Jivaram Choudhary 1, SPF Mill Estate, Near Kevalkanta Rakhiyal, Gujarat Bottling Char Rasta, Ahmedabad 380023 Öथायी लेखा सं./जीआइआर सं./PAN/GIR No. : ACVPC3833C (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Rignesh Das, CIT.DR Ĥ×यथȸ कȧ ओर से/Respondent by : Shri M. K. Patel, AR Date of Hearing 03/06/2025 Date of Pronouncement 21/08/2025 (आदेश)/ORDER PER SMT. ANNAPURNA GUPTA, AM: The present appeal has been filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 09.10.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2011-12. Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 2 – 2. Brief facts of the case are that the assessee had e-filed its return of income for the impugned year declaring total income of Rs.23,53,300/-. Thereafter, the AO was in receipt of information that the assessee had received an amount of Rs.5,21,76,599/- from an entity M/s. Mudra Real Estate Pvt. Ltd. in the impugned year. This information was made available to the AO from the office of the DDIT (Inv.), Unit-1(2), Ahmedabad and the information was to the effect that a survey action u/s.133A of the Act was carried out in the case of M/s. Mudra Finvest (Guj) Ltd. on 08.12.2016 during the course of which, several hard disks containing digital data in mobile phones, laptop, CCTVs and computers were impounded. These digital data on examination revealed to contain tally data of an entity M/s. Mudra Real Estate Pvt. Ltd., which was a group entity of the surveyed entity, M/s. Mudra Finvest (Guj) Ltd., in which, the assessee i.e. Shri Danaram Jivaram Choudhary was a Director alongwith others. The tally data of M/s. Mudra Real Estate Pvt. Ltd. was further stated to reveal ledger account of the assessee which reflected an opening outstanding balance of Rs.15,41,94,399/- and cash payments totaling to Rs.5,21,76,599/- to the assessee during the impugned year. On the basis of this information, the AO reopened the case of the assessee and, thereafter, went on to frame assessment making addition of the cash allegedly received by the assessee from M/s. Mudra Real Estate Pvt. Ltd. amounting to Rs.5,21,76,599/- u/s.69A of the Act. Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 3 – 3. The matter was carried in appeal before the Ld. CIT(A) where the assessee challenged the validity of the assessment framed as also the merits of the addition made. The Ld. CIT(A) found merit in the argument of the assessee both on the legal issue as well as merits of the case and allowed the appeal filed by the assessee. 4. Aggrieved by the same, Revenue came up in appeal before us raising following grounds: 1. \"Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting the addition of Rs. 5,21,76,599/-u/s. 69A of the Act., without appreciating the facts of the case?\" 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.\" 3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored?\" 5. Before us, arguments were made by both sides both on issue of the validity of assessment framed u/s.147 of the Act as well as on the merits of the addition made of cash found to have been paid to the assessee of Rs.5.21 Crores. 6. We shall first deal with the legal issue before us i.e. validity of the assessment framed u/s.147 of the Act. We have gone through the order of the Ld. CIT(A) and we find that he held the present assessment to have been invalidly framed in terms of Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 4 – provisions of Section 147 of the Act. We have noted from the findings of the Ld. CIT(A) that on perusing all the materials before him, i.e. 1. Reasons recorded in the case of the assessee; 2. The reply of the assesse to the notice issued to him u/s.147 of the Act; & 3. The order of the AO against the objection raised by the assessee to the reopening of the case. He found that; (1) There was no application of mind by the AO on the information which was given to him by the DDIT(Inv.), Unit- 1(2), Ahmedabad. That the AO’s satisfaction of income of the assessee escaping assessment was a mere borrowed satisfaction, the AO being found to have made no independent enquiry or investigation on the information which was passed on to him by the DDIT (Inv) regarding the assessee. (2) That there was no cogent material with the AO, except information of the DDIT(Inv.), establishing that cash amounting to Rs.5.21Crs had been paid to the assessee by an entity M/s. Mudra Real Estate Pvt. Ltd., as alleged in the information. Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 5 – 7. The basis with the Ld. CIT(A) for holding that there was no application of mind by the AO to the information in his possession is based on the fact that: i. The reasons supplied to the assessee reproduced at page 45 to 49 of his order mentions “draft” reasons for reopening assessment u/s.147 of the Act’. ii. The reasons merely reproduced information relating to the assessee received by the AO through the office of the DDIT (Inv.), Unit-1(2), Ahmedabad mentioned as ‘Annexure- A’. So much so that the reasons reproducing the information given to the AO also record payment of cash to another entity i.e. M/s. Akshar Builders and Developers by M/s. Mudra Real Estate Pvt. Ltd., besides recording information of cash payment allegedly made to the assessee. iii. That as per the information itself the ledger account found in the books of M/s. Mudra Real Estate Pvt. Ltd. for the impugned year related to one ‘Mr. Danabhai Choudhary’ while the assessee’s name was Danaram Jivaram Choudhary. iv. The Director of M/s. Mudra Real Estate Pvt. Ltd. Shri Sanjay Hundia had neither accepted nor denied about the cash transaction carried out with Danaram Jivaram Choudhary in his statement recorded. v. As per information, itself the AO, the cash paid to the assessee during the impugned year was on account of re- Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 6 – payment of loans taken by M/s. Mudra Real Estate Pvt. Ltd. from the assessee in the preceding year i.e. F.Y. 2008-09. vi. Shri Sanjay Hundia in his statement recorded on 25.01.2018 u/s.131(1A) of the Act had stated that M/s. Mudra Real Estate Pvt. Ltd. had no connection with the business premises which was surveyed and existence of such papers in the digital data was also denied. 8. It is evident from the above factual findings of the Ld. CIT(A) that he had arrived at a correct conclusion that the reopening was based on borrowed satisfaction and the AO had not applied his mind at all to the information in his possession for forming belief of escapement of income of the assessee. The Ld. CIT(A) has clearly recorded that the ledger of M/s. Mudra Real Estate Pvt. Ltd. found in the digital data itself during survey, based on which, the AO formed belief that the assessee had been paid cash of Rs.5.21 Crores during the year by M/s. Mudra Real Estate Pvt. Ltd., was never in the name of the assessee. It was in the name of one Danabhai Choudhary while assessee’s name is Danaram Jivaram Choudhary. The Director of M/s Mudra Real Estate Pvt. Ltd. had not admitted to the impugned transaction and had in fact denied the contents of the digital data. Moreover, the most damaging aspect is that as per the report of the DDIT (Inv.) itself the amount allegedly paid to the assessee by M/s. Mudra Real Estate Pvt. Ltd. was in the nature of re-payment of loans. All these facts, contained in the reasons recorded for reopening the Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 7 – case of the assessee itself by the AO, remained uncontroverted before us. Based on these facts, when the information apparently neither related to the assessee nor to any income for the impugned year, the AO surely could not have formed belief of any income of the assessee pertaining to the impugned year having escaped assessment 9. In the light of the same, we see no reason to disturb the findings of the Ld. CIT(A) that the AO had not applied his mind at all to the information in his possession while reopening the case of the assessee and he had carried out no investigation on the said information prior to forming belief of escapement of income of the assessee. We agree with the Ld. CIT(A) that the AO therefore could not have assumed jurisdiction to reopen the case of the assessee in the absence of a reasonable belief of escapement of income of the assessee . 10. The Ld.CIT(A) has also noted absence of any cogent material in the possession of the AO to hold that cash to the tune of Rs.5.21 Crores was received by the assessee from M/s Mudra Real Estate Pvt. Ltd. Therefore, we agree with the Ld.CIT(A) that dehors any information revealing assessee to have received any money from M/s Mudra Real Estate Pvt. Ltd. and without any cogent material in the possession of the AO confirming the said fact, even on merits there was no case for making any addition on Printed from counselvise.com ITA No. 2049/Ahd/2024 [DCIT vs. Danaram Jivaram Choudhary] A.Y. 2011-12 - 8 – account of money allegedly received by the assessee from M/s Mudra Real Estate Pvt. Ltd. 11. In view of the same, we see no merit in all the grounds raised by the Revenue before us and dismiss the same. 12. In the result, appeal filed by the Revenue is dismissed. This Order pronounced on 21/08/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/08/2025 S. K. SINHA True Copy आदेश कȧ Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT 4. आयकर आयुƠ(अपील) / The CIT(A)- 5. ǒवभागीय Ĥितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "