HARJEET SINGH SAHNI,NOIDA V. DCIT, CENTRAL CIRCLE, GHAZIABAD

CO 39/DEL/2023

AI Insights

The case involves an appeal by the assessee, Harjeet Singh Sahni, against the order of the Commissioner of Income-tax (Appeals), Kanpur-4, which arose from an assessment order passed by the DCIT, Central Circle, Ghaziabad, following a search and seizure operation under section 132 of the Income Tax Act, 1961. The primary contention was the legality of the jurisdiction assumed by the AO under section 153A and the subsequent additions made to the assessee's income under sections 69 and 80IC. The Tribunal found that the additions were made without any incriminating material, relying solely on the return filed by the assessee and assumptions made by the AO, which was not permissible as per the settled legal position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474563 (ITAT-DELHI)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: CIT vs. Raj Kumar Arora, Pr. CIT v. Abhisar Buildwell (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: RAKESH GUPTA; SAKSHAM AGRAWAL
• Keywords: Question of law; Unexplained investment; Salary income; Search and seizure
• Section: 201; 132; 153A; 69; 80IC; 80IC

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1322/Del/2021 Assessment Year: 2011-12 DCIT, Central Circle, Ghaziabad. Vs Harjeet Singh Sahni, 4, ATS Village Green, Sector-93A, Noida, Uttar Pradesh – 201 305. PAN: AAWPS4765J CO No.39/Del/2023 (ITA No.1322/Del/2021) Assessment Year: 2011-12 Harjeet Singh Sahni, 4, ATS Village Green, Sector-93A, Noida, Uttar Pradesh – 201 305. PAN: AAWPS4765J Vs. DCIT, Central Circle, Ghaziabad. (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta, Advocate & Shri Saksham Agrawal, CA Revenue by : Shri Dayainder Singh Sidhu, CIT-DR Date of Hearing : 12.03.2025 Date of Pronouncement : 26.03.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 12.07.2021 of the Commissioner of Income-tax (Appeals), Kanpur-4 ITA No.1322/Del/2021 CO No.39/Del/2023 2 (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeals No.CIT(A)-IV/KNP/10665/2018-19 arising out of the appeal before it against the order dated 27.12.2018 passed u/s 143(3)/153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Central Circle, Ghaziabad (hereinafter referred to as the Ld. AO). The assessee has filed Cross Objections. 2. At the time of hearing, the ld. AR has submitted that the impugned assessment order was passed without any incriminating material and accordingly submitted that the grounds No.1 to 4 of the Cross Objections filed by the assessee be considered first before considering the appeal of the Revenue on merits. We are of the considered view that the question of assumption of jurisdiction on the basis of alleged incriminating material is a legal issue which certainly needs to be disposed first. The relevant grounds No.1 to 4 of the Cross objections are reproduced below:- “1. That having regard to the facts and circumstances of the case, the assumption of jurisdiction u/s 153A of the Income Tax Act, 1961 by Ld. AO is not in accordance with law and hence jurisdiction assumed is bad in law. 2. That in any case and in any view of the matter, action of Ld. AO in passing the impugned assessment order u/s 143(3)/153A is bad in law and against the facts and circumstances of the case and not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have deleted the additions made by Ld. AO in the assessment order inter alia on the ground that there was no incriminating material found as a result of search and the assessment attained finality. ITA No.1322/Del/2021 CO No.39/Del/2023 3 4. That in any case and in any view of the matter, action of Ld. CIT(A) in not deleting the additions made by Ld. AO in the assessment order also on the ground that there was no incriminating material found as a result of search, is bad in law and against the facts and circumstances of the case.” 3. The basic facts are that a search and seizure operation u/s 132 of the Act was conducted on 03.11.2016 at the premises of the assessee comprising M/s VVIP and SSG group of cases. The warrant was in the name of Shri Harjeet Singh Sahni and search operation u/s 132 was conducted at the residential premises of the assessee at Villa No.3, ATS Village Green, Sector-93A, Noida. In view of search operation, the group cases were centralized to DCIT, Central Circle, Ghaziabad u/s 127 of the Act. Notice u/s 153A of the Act followed by mandatory notices was issued. The assessee’s return for the year under consideration was filed at an income of Rs.13,01,487/-. The assessee during the year derived income from salary. The assessee furnished various information including statement of bank account that were looked into during the assessment proceedings. 4. During the course of proceeding of search u/s 132 of the Act the assessee was asked to provide the details of all immovable property in the name of group companies/individuals the details of other properties. It came to notice that during the year under consideration the assessee had purchased the property at Villa No.-4, Type-K, ATS Green Village, Sec-93, Noida, jointly with his wife Smt. Pummy Sahni on dated 06/06/2010 for Rs.5,85,00,000/-. Ld. AO observes that the above residential house is very luxurious and full of artifacts having ITA No.1322/Del/2021 CO No.39/Del/2023 4 lavish life style. The departmental valuation officer was requested by ld.AO to estimate the cost of investment in this house. The report of the DVO wasn’t received or relied. The assessee was requested to furnish year-wise details of investment for furnishing/innovation of this house. Allegedly the assessee has not furnished any information on this issue. Therefore, for the inspection/enquiry about the said property, an Inspector was deputed and a report was submitted by him. In his report the Inspector has estimated the value of said property about 7 to 8 Crore. In this regard, the assessee was required to explain the source of amount of purchase of property. Ld. AO mentions that the assessee failed to provide the explanations/information regarding the source of the investment. Ld. AO concluded that since, the property was purchased on 06.06.2010, it is quite likely that furnishing/innovation was done in FY 2010- 11. Therefore, in absence of any reply, half of the difference between report of inspector and amount of purchase of property which comes to Rs. 1,07,50,000/- {(8,00,00,000-5,85,00,000)/2} was added as unexplained investment to the total income of the assessee u/s 69 of the Act. 5. Further, an addition has been made by denying reduction u/s 80IC/80IE of the Act by the following relevant finding in para 5:- “5. From perusal of return filed by the assessee during the assessment proceedings, if came to the notice that the assessee has claimed an amount of Rs, 4,85,39,597/-- as deduction under section 80IC. In this regard, the assessee was requested to submit/explain his reply along with documentary evidence about the deduction claimed by him. In response to this the assessee has failed to provide any reply. The assessee has not furnished ITA No.1322/Del/2021 CO No.39/Del/2023 5 even the mandatory audit report in form 10CCB. Hence, it is held that the assessee has wrongly claimed, deduction u/s 80IC. It is also noticed that no scrutiny assessment for this year was made, Considering the facts of the case and in absence of the any cogent explanation/reply and documentary evidence, the deduction u/s 80IC/80IE amounting to Rs 4,85,39,557/- is not acceptable and the same is disallowed and added to- the total income of the assessee by treating if as concealed income. Penalty proceedings u/s 271(1) (c) are also considered to be initiated separately.” 6. We find that the ld.CIT(A) has not accepted the case of the assessee in regard to these grounds by relying the decision of the Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora (2014) 52 taxmann.com 172 (Allahabad). However, the law now stands settled in favour of the assessee by the judgement of the Hon’ble Supreme Court in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxman.com 399/293 Taxman 141/459 ITR 212. Thus, the findings of the ld.CIT(A) on the question of law are not sustainable. Very apparently, from the assessment order it can be made out that it was only on the basis of the return filed by the assessee the issue of deduction u/s 80IC of the Act was examined and denied and addition u/s 69 of the Act is only on basis of assumptions and conjecture. No specific material found during the search is relied. Thus, with regard to the additions, though deleted on merits by the ld.CIT(A), we are satisfied that the addition by way of deduction u/s 80I of the Act could not have been made in the absence of incriminating material and, thus, we sustain the aforesaid grounds. ITA No.1322/Del/2021 CO No.39/Del/2023 6 7. Thus, the ground no. 3 and 4 of the Cross Objection of the assessee are sustained and the CO is allowed and consequently, the impugned assessment is liable to be quashed. Resultantly, the appeal of the Revenue is dismissed. Order pronounced in the open court on 26.03.2025. Sd/- Sd/- (M. BALAGANESH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 26th March, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "