GULSHAN HOMES AND INFRASTRUCTURE (P) LTD,NEW DELHI V. DR. MANOJ KUMAR, DCIT, CENTRAL CIRCLE-31, NEW DELHI

ITA 1595/DEL/2025

AI Insights

The case involves Gulshan Homes and Infrastructure Pvt. Ltd., which faced a search assessment under section 153C of the Income-tax Act, 1961, following a search operation on Shri Parveen Jain, a broker. The Income Tax Department alleged that incriminating materials, including WhatsApp chats and financial documents, linked the company to unaccounted cash transactions. The company contested the assessment, arguing that the materials did not pertain to it and that the proceedings were initiated without proper legal basis. The ITAT agreed with the assessee, noting that the satisfaction note for initiating the proceedings was based on incorrect assumptions and external materials, leading to the quashing of the assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777748 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2020-2021
• Appeal Filed On: 17-03-2025
• Other Referred Cases: SSP Aviation Ltd vs DCIT, Saksham Commodities Ltd vs ITO, DCIT vs Sunil Kumar Sharma, ITO vs Saksham Commodities Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: VINOD BINDAL
• Keywords: Additional evidence; Unexplained expenditure; Unexplained investment; Document seized; Documents seized; TDS; Search and seizure; Borrowed satisfaction
• Section: 132; 153A; 131; 69C

Judgement Text

"ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 1595/Del/2025 (Assessment Year: 2020-21) Gulshan Homes and Infrastructure (P) Ltd, Flat No. 7, 3rd Floor, Plot No. 4, Dayanand Vihar, Anand Vihar, SO, Delhi Vs. DCIT, Central Circle-31, Delhi (Appellant) (Respondent) PAN: AADCT7050K Assessee by : Shri Vinod Bindal, CA Ms. Rinki Sharma, ITP Revenue by: Shri Mahesh Kumar, CIT(DR) Date of Hearing 09/09/2025 Date of pronouncement 30/09/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.1595/Del/2025 for AY 2020-21, arises out of the ld. Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as ‗ld. CIT(A)‘, in short] in Appeal No. 30/10809/2019-20 dated 12.03.2025 against the order of assessment passed u/s 153C r.w.s. 153A of the Income-tax Act, 1961 (hereinafter referred to as ‗the Act‘) dated 27.03.2024 by the Assessing Officer, DCIT, Central Circle- 31, Delhi (hereinafter referred to as ‗ld. AO‘). 2. The assessee has raised the following grounds of appeal before us:- Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 2 ―1. The CIT(A) erred in law and on facts in confirming, in clear violation of the law, the impugned assessment order passed u/s 153C r.w.s. 153A of the Act by the AO on 27/03/2024, where the proceedings were initiated without there being any material found during an income-tax search conducted elsewhere pertaining to the assessee which could incriminate the appellant to initiate the proceedings u/s 153C of the Act. Thus, the impugned assessment order is void ab initio, lacks assumption of a competent lawful jurisdiction, and needs to be quashed at the threshold. 2. The CIT(A) erred in law and on facts in confirming the action of the AO (i) based on some WhatsApp chats, which cannot be considered as reliable information to initiate proceedings u/s 153C of the Act, much less to make any assessment u/s 153C/153A of the Act; and (ii) besides ignoring that the AO has failed to discharge his onus to support the allegation, as admittedly the impugned seized material does not demonstrate the same. Thus, the entire proceedings are bad in law and must be quashed. 3. The CIT(A) erred in law and on facts in not appreciating that the satisfaction u/s 153C of the Act needs to be based only on the information seized as it is and not on any post seizure enquiries conducted by any authority which is beyond the provisions of section 153C of the Act as has been confirmed by the Hon'ble Delhi High Court in SSP Aviation Ltd vs DCIT 2012- Thus, the TIOL-305-HC-DEL-IT. impugned satisfaction notes must be quashed. 4. The impugned assessment order is based on the void ab initio satisfactions recorded by the respective two AOs for the AYs 2015-16 to 2021-22 u/s 153C of the Act, in clear violation of the law, though there was no incriminating material at all gathered for any of the assessment years much less for the AY 2020-21, demonstrating complete lack of application of mind by the respective AOs to initiate proceedings u/s 153C of the Act and which must be quashed. 5. The CIT(A) erred in not declaring both the satisfactions notes are invalid as no separate satisfaction note for each of the AYs was made and recording a combined satisfaction note without identifying as to how the material relied therein pertained to all the AYs, demonstrates mechanical satisfaction with application of mind and therefore, must be quashed. 6. The CIT(A) erred in law and on facts in confirming the assessment order passed without allowing mandatory cross examination of the persons from whom not only the material relied on the assessment order was seized but also whose recorded statements have been relied for the purpose of assessment. Thus, the assessment order is void ab initio and must be quashed. 7. The impugned assessment order is based on invalid proceedings lacking quoting of the mandatory DINs in term of the circular No. 19/2019 of the CBDT at different Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 3 stages upto the assessment order. Thus, the same must be declared as illegal and no est. 8. The CIT(A) erred in law and on facts rather trying to prejudice to the Hon'ble Appellate Authorities by misquoting and incorrectly relying on the judgments of the Hon'ble Apex Court in the case of Sinhgad Technical Education Society 2017-TIOL-309- SC-IT (Para 6.3 of the CIT(A)'s order) and Chuharmal (1998) 172 ITR 250 (Para 10.3 of the CIT(A)'s order) whereas there were no such findings of the Apex Courts mentioned by him. Thus, basing his decision on clear incorrect appreciation, deserves to be reversed. 9. The CIT(A) erred in law and on fact in not appreciating that though no incriminating material was found even in respect of Mr Gulshan who admittedly is a separate assessee than the assessee-company, yet no satisfaction notes u/s 153C of the Act could be recorded at all in the case of the assessee by any of the AOs as whose name nowhere figured in any material relied. Thus, the same must be quashed. 10. The CIT(A) erred in law and on facts in confirming the addition of Rs 65,99,00,000/- holding that the assessee had received cash loans, though from the very much identified entities/persons in the impugned seized material relied where names of the lenders, nature of the transactions and their capacity to lend money itself stood proved. Thus, no addition could be made in respect of those cash loans in any manner which transactions the Revenue itself has proved in the assessment order in favour of the assessee. Thus, the addition should be deleted. 11. The CIT(A) erred in law and on facts in confirming the invocation of the provisions of section 69A r.w.s. 115BBE of the Act in respect of those cash loans without understanding as to the situs of application of the section 69A of the Act which is not to be applied on seized documents but only on detection of valuable assets including money. Thus, the said addition must be deleted as is based on the incorrect appreciation of the law.‖ 3. At the outset, the Ground No. 7 raised by the assessee treating the assessment order as invalid for non-quoting of the mandatory Document Identification Number (DIN) in terms of CBDT Circular No. 19/2019 dated 14-8-2019 was stated to be not pressed by the Learned AR. The same is reckoned as a statement made from the Bar and accordingly the Ground No. 7 raised by the assessee is hereby dismissed as not pressed. 4. We have heard the rival submissions and perused the materials available on record. The assessee company is engaged in real estate development and infrastructure projects. The preliminary facts which leads to the additions in the hands of the assessee Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 4 are that the original return of income was filed by the assessee company for assessment year 2020-21 on 30-1-2021 declaring total income of Rs 7,45,94,330/-. A search and seizure action under section 132 of the Act was conducted on 6-1-2021 on the premises of Hans Group and one Shri Parveen K Jain, wherein various incriminating materials and papers/ documents/ digital data were seized including certain WhatsApp chats and a hand written ―Interest Account‖ sheet dated November 2019 were extracted from the mobile phone of Mr. Parveen Jain. The income tax department contended that these materials revealed unaccounted cash transactions linked to the assessee‘s business operations. It was submitted that the assessee has been subjected to proceeding u/s 153C of the Act on the strength of a satisfaction note sent by the AO of Shri Parveen Jain (hereinafter referred to as ‗Jain‘) and then, the Learned AO of assessee recorded his satisfaction note , though admittedly, none of the information contains name of the assessee anywhere so as to assume jurisdiction u/s 153C of the Act. For the sake of convenience, the relevant whatsapp chats which is the subject matter of information allegedly belonging to assessee is required to be addressed. The relevant text of the chat dated 21-2-2020 as reproduced in Para 4 of the assessment order is as follows:- ‗ Bhai Ji, I would‘nt have written you this message but please Gulshan ji ko 1/- dilwa do. Mujhe unse aage bhi kaam lena hai. Regards‘ 4.1. Admittedly, the aforesaid whatsapp chat was exchanged between Shri Parveen Jain and Shri Sanjeev Gupta. This chat was understood by the income tax department that the said conversation pertain about payment to be made to Shri Gulshan Nagpal. Shri Parveen Jain was confronted about this chat during the course of search and in Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 5 response to Question No. 101, he stated that the said message is regarding payment of certain sum to Shri Gulshan Nagpal fro Shri Sanjeev Gupta. The relevant question and answer given by Shri Parveen Jain is reproduced below:- Q.No. 101. Please explain your chat dated 21.02.2020 with Sh. Sanjeev Gupta wherein you have forwarded: ‗ Bhai Ji, I would‘nt have written you this message but please Gulshan ji ko 1/- dilwa do. Mujhe unse aage bhi kaam lena hai. Regards‘ Ans. This is message regarding payment of certain sum to Sh. Gulshan Nagpal from Sh. Sanjeev Gupta. In following message Sh.Sanjeev Gupta has confirmed receipt of this money as well. I can‘t say with certainty that it is cash transaction or bank transaction. The Statement is temporarily suspended at 11.45 pm on 08.01.2021 for rest. 5. Further the Learned AO noted that an image was found from the phone of Sh. Parveen Jain received from Sh. Vaibhav Jain titled as ―Parveen Jain Intt A/c M/o November 2019‘. The sheet is reproduced below:- Parveen Jain Intt. A/c M/o Nov‘19 1. Sita Gupta - 5,40,000/- 2. Sanjeev Kr. Gupta - 7,00,000/- 3. Ashok Jain - 53,000/- 4. K.K.Gupta - 1,70,000/- 5. Sanjay Gupta - 3,60,000/- 6. S.C.Singhal - 1,80,000/- Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 6 7. Mama - 2,00,000/- 8. Seema Jain - 11,25,000/- 9. Sanjeev Gupta - 6,56,250/- ---------------- Total 39,84,250/- ---------------- 6. The learned AO noted that during the course of further analysis of the phone of Sh. Parveen Jain, an additional sheet bearing the name of 9 different individuals was found tabulated and typed giving insight into the account of the month of November 2019. The relevant sheet found is reproduced below:- 7. The learned AO noted that the interest amount mentioned in Column 7 above is the same as mentioned in the handwritten sheet titled as Intt A/c M/o November 2019. Based on this, the learned AO interpreted that the sheet leads to the conclusion that the loan amount is given through bank (Denoted by ‗B‘) and cash as well (Denoted by ‗C‘) and total is also written on which the interest amount is shown in Bank as well as in Cash (Denoted by B and C respectively). Upon this correlation, various individuals Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 7 were found and traced on Insights and other Income Tax database and firstly the interest shown as ‗B‘ wsa pursued to ascertain who is the party who is paying the amount. For example, Sita Gupta (PAN AEJPG9162J) was found to have received interest of Rs 10,80,000/- from Gulshan Homes Infrastructure Private Limited along with TDS deduction on the same. Based on this , Gulshan Homes Infrastructure Private Limited was cross checked to see if the name of the other p arties who are paid interest on the loan amounts by Gulshan Homes. The relevant details are highlighted below in the sheet, which establishes all the ‗B‘ interest receipts from Gulshan Homes and Infrastructure Private Limited. Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 8 8. 8. It was noted that Raj Kumar Gupta is husband of Sita Gupta, whose name though is not appearing the sheet found from the phone of Sh. Parveen Jain, ut the cumulative interest payments comes to Rs 21,60,000/-. If the same is divided by 12, the payment comes to 1,80,000/- which is the amount mentioned. Thus, establishing the entry no. 1 on the image found for the interest paid through banking channel clearly establishing the genuineness of the image and hisaab found on the phone seized during the course of search. Based on subsequent exchanges of whatsapp chats, the learned AO concluded that during the year under consideration, the assessee company had received amount of Rs 65,99,00,000/- in cash from various clients through broker Sh. Parveen K Jain and paid interest in cash amounting to Rs 4,78,14,240/- during the year under consideration. The assessee in reply to the show cause notice categorically denied all the allegations levelled thereon and stated that there was no receipt of any cash loans from any party to the tune of Rs 65.99 crores and categorically denied the payment of interest of Rs 4,78,14,240/- on loans out of the books. The assessee company requested the learned AO to supply the statement of the persons in whose case the search took place. The assessee also sought for cross examination of the deponents , who had deposed anything adverse to the assessee. It was categorically stated that the alleged documents reproduced in the show cause notice have got nothing to do with the assessee company. The learned AO noted that assessee company had requested for cross examination of Sh. Parveen Jain and Sh. Vaibhav Jain. Summons under section 131 of the Act dated 17-3-2024 were issued to assessee company, Sh. Parveen Jain and Vaibhav Jain to appear in person on 19-3-2024. The authorised representative of the assessee company attended in response to the summons. However, Sh. Vaibhav Jain and Sh. Parveen Kumar Jain did not attend the office on the date of personal appearance and hence they could not be cross examined by the assessee. This fact is duly noted by the learned AO in page 10 para 4.21 of the assessment order. The learned AO however noted that Sh. Sulekh Chand Singhal and Sh. Ashok Jain had accepted the contents of the seized material with regard to the cheque transactions in their assessments and accordingly concluded that the veracity of Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 9 the seized documents stands established. Accordingly, the learned AO proceeded to treat the cash loans allegedly received by the assessee company in the sum of Rs 65.99 crores from various clients through Sh. Parveen Jain as unexplained money under section 69A of the Act and also added a sum of Rs 4,78,14,240/- on account of payment of interest on loans as unexplained expenditure under section 69C of the Act and completed the assessment under section 153C of the Act in the hands of the assessee company. 9. The learned CITA upheld the additions made by the Learned AO in the search assessment framed under section 153C of the Act dismissing all the legal grounds and factual grounds raised by the assessee. 10. The learned DR before us vehemently submitted that the seized document found from the premises of Shri Parveen Jain (searched person) did contain certain handwritten sheets wherein the names of 9 loan creditors of the assessee company were reflected. The loan amounts taken by the assessee company from these 9 loan creditors through regular banking channels duly match with the entries reflected in the books of accounts of the assessee company. Hence the cash transactions reflected in the said seized documents also should be treated as genuine thereby the veracity of the seized documents as belonging / pertaining / relating to the assessee company herein stands established and accordingly the assumption of jurisdiction under section 153 C of the Act in the hands of the assessee company was validly made by the learned AO. He vehemently submitted that whatsapp chat is an admissible evidence and placed reliance on the decision of Hon‘ble Rajasthan High Court in the ccase of Giriraj Pugalia vs ACIT in Civil Writ Petition No. 3152 / 2025 dated 4-3-2025 in support of his contentions. The Learned DR on the issue of combined satisfaction note recorded by the Learned AO for Assessment Years 2015-16 to 2021-22 submitted that eventhough combined satisfaction note was recorded by the Learned AO, the Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 10 observations made therein pertain only to Assessment Year 2020-21 (i.e. the year under consideration). 11. It is not in dispute that the WhatsApp chats were exchanged between Shri Parveen Jain and Shri Vaibhav Jain. It is not in dispute that in the said WhatsApp chats, only the name of Gulshan Ji was mentioned and the name of the assessee company i.e. Gulshan Homes and Infrastructure Private Limited was not mentioned at all. Hence we are unable to comprehend ourselves to accept to the proposition of the revenue that the said Whatsapp Chats pertain / belong / relate to the assessee company herein. Hence initiation of proceedings under section 153C of the Act on the assessee company is flawed on this material / evidence. 12. Further, handwritten sheet styled as Parveen Jain Interest account for the month of November 2019 was also seized from the premises of Shri Parveen Jain during the course of his search. The said sheet contained 9 names and some of the names tallied with the loan creditors list of the assessee company. It is not in dispute that the assessee company had borrowed certain loans from some of the parties mentioned in the said hand written sheet. That alone does not automatically implicate the assessee to have done any wrong doing or to have done some cash transactions with the said loan creditors. We find that Shri Parveen Jain, when confronted with the said seized document during the course of his search, did not mention the name of the assessee company herein. With regard to the transactions reflected with the nine parties and the alleged cash component mentioned, the same could pertain to Shri Parveen Jain and the cash could have been received by him. It is pertinent to note that Shri Parveen Jain never stated that cash loans were given by these nine parties to the assessee company herein. Hence, there is absolutely no evidence to prove that cash was paid by these nine parties to the assessee company. It is also pertinent to note that no additions were made by the revenue in the hands of the lenders in respect of cash loans allegedly given by them to the assessee company. Further the date of receipt of cash loans, if Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 11 any, is also not emanating from the seized document. While this is so, how the AO of the searched person and the Learned AO of the assessee herein conclude that the said cash loans were received during the year under consideration. Shri Parveen Jain has been engaged by the assessee company only for arranging certain loans through regular banking channels, which has been duly done by him and which fact is also accepted by the department. Hence, even this interest account statement, which has been tabulated by the Learned AO in the assessment order cannot be said to have pertained /belonged /related to the assessee herein so as to warrant initiation of proceedings under Section 153C of the Act in the hands of the assessee herein. We also agree with the argument of Learned AR that the presumption under section 132(4A) read with section 292C of the Act would lie only on Shri Parveen Jain , from whose premises this seized document was found during search. Hence the AO of the searched person should have exhausted the legal remedy available to him by confronting the said seized document with Shri Parveen Jain and bring on record cogent evidences as to how Shri Parveen Jain had rebutted such presumption of seized document as not belonging / pertaining / relating to him. After fulfilling this process only, the AO of the searched person could have legally recorded satisfaction note that the seized document does not belong / pertain / relate to Shri Parveen Jain and that it belongs / pertains / relates to the assessee company herein. The genesis of initiating proceedings under section 153C of the Act is just limited to the alleged incriminating material as it was detected with no if and buts and without any enquiry by the AO of the searched person in respect thereof as he did not have any jurisdiction to assess it and could not at all make any comments thereon. Thus, here the AO of the searched person exceeded the legal mandate and foreclosed the objective satisfaction on the part of the AO of another person by recording a definite finding that cash has been exchanged to supress unexplained investments. No addition whatsoever has been made in the hands of the assessee for suppression of unexplained investments by the Learned AO in the assessment framed under section 153C of the Act. In this regard, the arguments advanced by the Learned AR before us by referring to Para 17 of the Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 12 judgement of Hon‘ble Jurisdictional High Court in the case of SS Aviation Ltd vs DCIT reported in 2012-TIOL-305-HC-DEL-IT is well founded, wherein it was held that ―the AO who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the AO having jurisdiction over the other person and thereafter it is for the AO having jurisdiction over the other person to follow the procedure prescribed by section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person.‖ 13. The Learned AR submitted before us that it has also been incorrectly stated in para 2 of the forwarding letter that incriminating material in respect of Gulshan Homes and Infrastructure Pvt Ltd was found from the mobile of Shri Parveen Jain, though actually no such material at all was found therein. In the mobile of Shri Parveen Jain, whatever material related to the assessee has been alleged was reference to some hisaab parchi/ draft agreement / agreement to sell etc where the name of the assessee did not at all appear in any manner and which was, thus, beyond the mandate of the section 153C of the Act.The same has also been repeated in the column 7(iv)and(v) of the proforma for recording satisfaction at Page no. 3 of Paper Book. Not only this, alien material like ‗During the course of assessment proceedings in the case of Parveen Kumar Jain and Jainco Ltd, it has been observed which was evident from his WhatsApp chat and images found in his mobile‘ has been mentioned. Further, the AO of the searched person finally concluded that ‗I am satisfied that action u/s 153C is required to be taken against GHIPL. Accordingly, the AO of Gulshan Homes and Infrastructure Pvt Ltd is being intimated to take action u/s 153C…‘. Patently, the AO of the searched person prejudged the issuance of notice under section 153C of the Act and practically, blocked objective consideration by the AO of the assessee herein. Further, the assessment proceedings in the cases of Parveen Kumar Jain and Jainco Ltd are irrelevant consideration at this stage of proceedings because, as per the specific mandate of the section 153C of the Act, the AO of the searched person was only and Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 13 only required to pass on the alleged seized material/ information without any comment by him thereon. He is not supposed to make any observations except that the said material / information pertains to the particular assessee. Not only this, para 2 of the assessment order states that satisfaction note was issued on perusal of the Appraisal Report which is an opinion of the Investigation wing and is totally irrelevant for this satisfaction note under section 153C of the Act as the same tantamount to a borrowed satisfaction and bad in law ab initio. Further, the cause of action is search in the case of Shri Parveen Jain, C-42 Preet Vihar Delhi and cloned data as per the Annexure A-5 of the Panchnama dated 10-1-2021 and any reference to any assessment proceedings, especially of Jainco Ltd is irrelevant and has no link with issuance of this satisfaction note in any manner. 14. We find that the observations made by the Hon‘ble Jurisdictional High Court in the case of Saksham Commodities Ltd vs ITO reported in 161 taxmann.com 458 (Del HC) are very much relevant in this regard as under:- “39. The principle that the AO of the searched person is only required to be satisfied that the documents or materials pertain to the \"other person\" at the stage of transmission of material or documents to the jurisdictional AO of the non-searched entity was reiterated in RRJ Securities. We deem it apposite to extract the following passages from that decision: \"13. The first and foremost step for initiation of proceedings under Section 153C of the Act is for the AO of the searched person to be satisfied that the assets or documents seized belong to the Assessee (being a person other than the searched person). The AO of the Assessee, on receiving the documents and the assets seized, would have jurisdiction to commence proceedings under Section 153C of the Act. The AO of the searched person is not required to examine whether the assets or documents seized reflect undisclosed income. All that is required for him is to satisfy himself that the assets or documents do not belong to the searched person but to another person. Thereafter, the AO has to transfer the seized assets /documents to the AO having jurisdiction of the Assessee to whom such assets/documents belong. Section 153C(1) of the Act clearly postulates that once the AO of a person, other than the one searched, has received the assets or the documents, he is to issue a notice to assess/re-assess Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 14 the income of such person - that is, the Assessee other than the person searched - in accordance with provisions of Section153A of the Act. …….. 63. On an overall consideration of the structure of Sections 153A and 153C, we thus find that a reopening or abatement would be triggered only upon the discovery of material which is likely to \"have a bearing on the determination of the total income\" and would have to be examined bearing in mind the AYs' which are likely to be impacted. It would thus be incorrect to either interpret or construe Section 153C as envisaging incriminating material pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the \"relevant assessment year‖. 64. In our considered view, abatement of the six AYs' or the \"relevant assessment year\" under Section 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs' that may form part of the block of ten AYs'. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the material gathered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material recovered is an aspect which would merit consideration in the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to \"have a bearing on the determination of the total income\". It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case may be. 65. We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs' immediately preceding the AY pertaining to the year of search and the \"relevant assessment year\". It is only once the AO of the non-searched entity is satisfied that the material coming into its possession is likely to \"have a bearing on the determination of the total income\" that a notice under Section 153C would be issued. Abatement would thus be a necessary corollary of that notice. However, both the issuance of Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 15 notice as well as abatement would have to necessarily be preceded by the satisfaction spoken of above being reached by the jurisdictional AO of the non-searched entity. 66. Therefore, and in our opinion, abatement of the six AYs' or the \"relevant assessment year\" would follow the formation of that opinion and satisfaction in that respect being reached. 67. On an overall consideration of the aforesaid, we come to the firm conclusion that the \"incriminating material\" which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search or the \"relevant assessment year\" would not justify a sweeping or indiscriminate invocation of Section 153C. 68. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs' and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments.‖ (emphasis supplied by us) 14.1. Further we find that the revenue had preferred Special Leave Petition (SLP) before the Hon‘ble Supreme Court against the aforesaid decision of Hon‘ble Jurisdictional High Court. The SLP was dismissed in the case of ITO vs Saksham Commodities Ltd reported in 170 taxmann.com 87 (SC). The Head Notes and the full order are reproduced hereunder:- “Section 153C, read with section 153A, of the Income-tax Act, 1961 - Search and seizure - Assessment of any other person - Assessment Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 16 year 2015-16 - High Court by impugned order held that section 153C would apply only to such Assessment Years where jurisdictional Assessing Officer is satisfied and has incriminating material for those Assessment Years and which may be concerned with disclosed and undisclosed income - High Court also held that it is only once Assessing Officer of non-searched entity is satisfied that material coming into its possession is likely to “have a bearing on determination of total income” that a notice under section 153C would be issued and abatement would thus be a necessary corollary of that notice - High Court further held that since in instant case section 153C was invoked in respect of Assessment Years for which no incriminating material had been gathered or obtained and satisfaction notes also failed to record any reasons as to how material discovered and pertaining to a particular Assessment Year was likely to “have a bearing on determination of total income” for year which was sought to be abated or reopened in terms of impugned notices, in such circumstances, proceedings initiated under section 153C would not sustain and impugned notice was to be quashed - Whether SLP filed by revenue against impugned order of High Court was to be dismissed - Held, yes [Para 3] [In favour of assessee] ORDER 1. Heard the learned counsel for the petitioners. 2. There is a delay of 124 and 127 days in filing the Special Leave Petitions respectively, which has not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same. 3. The Special Leave Petitions are, therefore, dismissed on the ground of delay as well as on merits. 4. Pending application(s), if any, stand disposed of.‖ 15. At this juncture, it would be relevant to note that the AO of the searched person recorded satisfaction note forwarding the said seized document to the Learned AO of the assessee on 3-8-2022. This is enclosed in Pages 1 to 4 of the Paper Book. It is pertinent to note that the assessing officer of the searched person while recording the satisfaction note for forwarding of seized material to the assessing officer of the assessee, had mentioned that the seized documents pertain to Gulshan Homes and Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 17 Infrastructure Private Limited (assessee herein) which was found from the mobile of Shri Parveen Kumar Jain. Similarly, in the proforma for recording of satisfaction about seized assets belonging to the person other than the person searched, the AO of Shri Parveen Kumar Jain had categorically stated that from the iPhone seized from Shri Parveen Kumar Jain, the contents written thereon pertain to Gulshan Homes and Infrastructure Private Limited reflecting unaccounted receipts on sale of property / advance and unexplained interest expenses as cash advance. In the said proforma, the AO of the searched person had also observed that Shri Parveen Kumar Jain had helped many persons including renowned builders in getting cash loans, purchase of property partly in cash and partly through cheque which was evident from the WhatsApp chat and images found in his mobile. It is pertinent to note that the AO of the searched person had recorded the satisfaction by making factual observations because only Gulshan Ji was mentioned in the WhatsApp chat and Gulshan Homes and Infrastructure Private Limited (assessee herein) name does not figure anywhere in the seized documents from iPhone mobile of Shri Parveen Kumar Jain. Accordingly, it could be seen that the AO of the searched person had indeed recorded factually incorrect satisfaction note while forwarding the same to the Learned AO of the assessee herein. This wrong satisfaction note was taken note by the Learned AO of the assessee herein by stating that he had verified and examined the same with the documents allegedly relatable to the assessee herein and had assumed jurisdiction under section 153C of the Act. 16. Now let us come to the satisfaction note recorded by the Learned AO of the assessee herein. The Learned AO of the assessee herein recorded satisfaction note on 15-12-2022 assuming jurisdiction under section 153C of the Act which is enclosed in Pages 5 to 15 of the Paper Book. It is pertinent to note that the Learned AO of the assessee had recorded single and consolidated satisfaction note for Assessment Years 2015-16 to 2021-22. For the sake of convenience, the last paragraph of the satisfaction Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 18 note dated 15-12-2022 recorded by the Learned AO of the assessee herein is reproduced below:- ―The above satisfaction notes recorded as the AO of the person searched has been placed on record. As AO of the person other than the searched person, I have also examined the above referred seized material and the contents of the same. After examining the entries in these documents, I am satisfied that these documents pertain to M/s Gulshan Homes and Infrastructure Pvt. Ltd. and entries appearing therein have a bearing on the determination of the income of M/s Gulshan Homes and Infrastructure Pvt. Ltd. In view of the same, I am satisfied that it is a fit case for initiating proceeding under Section 153C r.w.s. Section 153A of the I.T Act, 1961 for the assessment years 2015-16 to 2021-22.‖ 17. From the above, it could be seen that the Learned AO of the assessee herein had recorded consolidated satisfaction note for the Assessment Years 2015-16 to 2021-22. Whether recording of consolidated satisfaction note for various assessment years would prove fatal to the assumption of jurisdiction of the Learned AO and consequential framing of assessments under section 153C of the Act was subject matter of consideration by the Hon‘ble Karnataka High Court in the case of DCIT vs Sunil Kumar Sharma reported in 159 taxmann.com 179 (Karnataka) dated 22-1-2024, wherein it was held as under:- “53. Further, satisfaction note is required to be recorded under section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant/Revenue. 17.1. We find that the Special Leave Petition filed by the revenue before the Hon‘ble Supreme Court against the aforesaid judgement was dismissed which is reported in 165 taxmann.com 846 (SC). The relevant portion of the Head Notes and the order of Hon‘ble Apex Court is reproduced hereunder:- Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 19 “Section 153C, read with sections 132, 153 and 153A, of the Income- tax Act, 1961 - Search and seizure - Assessment of any other persons (General principles) - Assessment years 2012-13 to 2018-19 - High Court held that satisfaction note is required to be recorded under section 153C for each assessment year and where a consolidated satisfaction note had been recorded for different assessment years, it would vitiate entire assessment proceedings - Whether SLP filed against impugned order of High Court was to be dismissed - Held, yes [Para 3] [In favour of assessee] ORDER 1. Delay condoned. 2. Heard the learned Senior Counsel appearing for the appellants. 3. We are not inclined to interfere with the impugned judgment and order passed by the High Court of Karnataka at Bengaluru in Writ Appeal No. 831/2022 (T-IT) dated 22-01-2024/ Deputy Commissioner of Income-tax v. Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) . 4. The Special Leave Petition is dismissed. 5. Pending application(s), if any, shall stand disposed of. 18. The Learned AR before us vehemently argued that the satisfaction note prepared by the AO of the assessee is still more audacious. The imaged messages are reproduced therein and legible copy is reproduced in para 4.2 to para 4.7 of the assessment order and the name of the assessee nowhere figures in these messages. As shown in para 4.2, the impugned images were found from the mobile phone of Shri Parveen Jain received from his son, Shri Vaibhav Jain and it shows nine names, Sita Gupta to Sanjeev Gupta- but name of the assessee is not there at all. Identical is the situation in para 4.4 of the assessment order. The Learned AR stated that it is beyond any sane comprehension that when name of the assessee is not even mentioned in the alleged seized documents, how could, the AO of the searched person, be Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 20 satisfied that the alleged seized material belonged to the assessee or the alleged information pertained to the assessee. The reasons to rope in the assessee are contained in para 4.5 to para 4.10 of the assessment order. The sheets bearing the names of nine parties therein and definitely not of the assessee, was analysed by the revenue to come to the conclusion that the items denoted with ‗C‘ were cash entries and with ‘B‘ were bank entries. The revenue proceeded to examine the bank entries and certain individuals were found and traced on Insights and other Income-tax Database who were supposedly paying the impugned amount. Now, on examination of the matter related to Ms Sita Gupta, first out of the nine entries, the AO claimed to have detected that she had received interest from Gulshan Homes and Infrastructure Pvt Ltd -the assessee herein. The Investigation Unit thereafter and not the AO of the assessee, collected details etc. from the assessee company and as is mentioned in the para 4.15 of the assessment order, the total amount of the alleged cash receipt/ interest was interpolated which did not at all figure in the impugned seized WhatsApp chat. Noteworthy, the name of the assessee was not at all appearing in any seized material. The ld. Counsel further elaborated that the revenue has relied on a WhatsApp chat between Mr Praveen Jain and Mr Sanjeev Gupta as is mentioned in para 4.1 of the assessment order, where Mr Praveen Jain was requesting Mr Sanjeev Gupta to arrange 1/- for some Gulshan ji and not at all for the assessee company. This even does not say what is 1/- or whether it was arranged or not. It also does not at all mention whether it was cheque amount or cash amount. It is also not known whether the same was to be given only to which Gulshan ji (as the name of the assessee is conspicuously absent therein and no presumption at all could be derived that it belonging to the assessee) as loan in cash or for some property to be purchased by Mr Sanjeev Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 21 Gupta from the assessee or from some other entity belonging to the group of Shri Gulshan Nagpal, if at all, it was he. However, on confrontation by the revenue officer, Mr Sanjeev Gupta categorically stated that he did not know whether it was bank or cash. 19. The Learned AR then submitted that after receipt of the material from the AO of the searched person, the Learned AO of the assessee was required to be satisfied that the material sent by the AO of the searched person (cloned data of Shri Parveen Jain‘s mobile vide seized document reference Annexure A-5) or any information therein ever belonged/ pertained to the assessee herein. As against this patent position of law, the AO of the assessee has used data from the Appraisal report (para 2 of assessment order) as below in his satisfaction note: i. Para 4- Upon this corelation, various individuals were found and traced on Insight portal and other Income Tax database. ii. Para 5- Sita Gupta was found to have received interest from Gulshan Homes along with TDS…… iii. Para 8- From the TDS analysis above, it is clear that the amount of interest paid to Shikha is in 7 transactions…. iv. Para 9---further, additional evidences in the form of WhatsApp conversation between Sanjiv Gupta and Parveen Jain… v. Para 10-- Therefore, summons were issued to Gulshan Homes on 18/08/2021 (a date definitely prior to the satisfaction note of the AO of the searched person) to provide ledger account and interest payment details to parties against whom any bank account was reflected………The response received from Gulshan Home establishes the bank account transactions…. vi Para 11- Upon examining of various ledger accounts submitted on behalf of Gulshan Homes, the initial point of providing loan…. Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 22 vii Para 12 is sufficient proof that this satisfaction note is copy of Appraisal report. It is mentioned that „additionally AO may consider calculating the cash interest amount paid as addition in the hands of Gulshan…‟ and „the monthly interest and date of payment of principle amount is mentioned above for the perusal of AO‟. viii—Para13- it is clear that the sheet found is summary of undisclosed investments facilitated of various clients by Parveen in Gulshan Homes and he himself has invested through wife Seema Jain and person known as Mama.. ix. Para 14 – Further, Sh. Gulshan Nagpal was called on 16/09/2021 (a date definitely prior to the satisfaction note of AO of the searched person) for personal examination u/s 131(1A)… (emphasis supplied by us) 20. The Learned AR submitted that that the Learned AO of the assessee was only required to be satisfied vis-a vis the seized material handed over by the AO of the searched person without any reference to any other information or document even if in his possession received from any source. The satisfaction note based upon the appraisal report, data on Insight Portal regarding TDS of third parties, statements of Shri Gulshan Nagpal etc and therefore, is legally untenable and void ab initio. Moreover, this is not a satisfaction note to initiate any proceedings under section 153C of the Act but conclusions regarding undisclosed income drawn in a firm language. The Hon‘ble Supreme Court in Oryx Fisheries Pvt Ltd in Civil Appeal No. of 2010 (Arising out of Special Leave Petition (C) No.27615/08) on 29-10-2010 has held that:- ―28. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge- sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 23 vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony. 29. the stage of show cause notice itself. Such a close mind is inconsistent with the scheme of Rule 43 which is set out below. The aforesaid rule has been framed in exercise of the power conferred under Section 33 of The Marine Products Export Development Authority Act, 1972 and as such that Rule is statutory in nature. 31. It is of course true that the show cause notice cannot be read hyper- technically and it is well settled that it is to be read reasonably. But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show cause notice does not commence a fair procedure especially when it is issued in a quasi- judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence.‖ The ld. Counsel stated further that in fact, in the present case, the assessment order is substantially repetition of the satisfaction note. Gravamen of the above is that the AO was unable to arrive at the requisite satisfaction, solely based upon the seized material received but relied upon the external material which makes the entire proceedings bad in law ab initio.‖ 21. In view of the aforesaid observations and respectfully following the various judicial precedents relied upon hereinabove, we hold that the Learned AO had invalidly assumed jurisdiction under section 153C of the Act for more than one reason as detailed supra and hence the entire search assessment is hereby declared as void ab initio. Accordingly, the Ground Nos. 1,2,3,4,5,8 & 9 raised by the assessee are allowed. 22. Since the entire assessment is quashed , the adjudication of other grounds raised by the assessee on merits of the additions and non-granting of cross –examination of Printed from counselvise.com ITA No. 1595/Del/2025 Gulshan Homes and Infrastructure (P) Ltd Page | 24 the departmental witnesses , become academic in nature and hence need not be gone into. No opinion is hereby rendered on the same and they are left open. 23. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 30/09/2025. -Sd/- -Sd/- (VIKAS AWASTHY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30/09/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "