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

ITSSA 789/MUM/2025

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The case involves Jinesh Mansukhlal Dodhia, the appellant, who contested the additions made to his income assessment for the year 2017-18 following a search and seizure operation under section 132 of the Income-tax Act, 1961. The search was conducted on the premises of the 'Dodhia Group', including the assessee, on 27.11.2019. Subsequently, notices under section 153A were issued, leading to the reassessment of income. The Assessing Officer added a substantial amount to the assessee's income based on documents found during the search, which were related to 'Hundi' loans. The assessee challenged these additions both legally and on merits, but the Commissioner of Income-tax (Appeals) upheld the additions. The Tribunal, however, found procedural lapses in the application of section 153C, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396934 (ITAT-MUMBAI)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA CHANDEKAR
• Assessee Lawyers: SIMRAN DHAWAN
• Keywords: Search and seizure
• Section: 132; 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) IT(SS)A No. 789/MUM/2025 Assessment Year: 2017-18 Jinesh Mansukhlal Dodhia, 59/100 New Mavji Compound, Narpoli, Maharashtra-421302. Vs. DCIT-CC-3, Room No. 12, A Wing, 6th floor, Ashar IT Park, Thane West, Thane-400604. PAN NO. ALOPD 9311 L Appellant Respondent Assessee by : Ms. Simran Dhawan Revenue by : Mr. Rajendra Chandekar, CIT-DR Date of Hearing : 23/04/2025 Date of pronouncement : 28/05/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 30.12.2024 passed by the Ld. Commissioner of Income-tax (Appeals), Pune-11 [in short ‘the Ld. CIT(A)’] for assessment year 2017-18. In the grounds raised, the assessee has challenged the validity of the addition made in proceedings u/s 153A of the Income-tax Act, 1961(in short the Act) as well as addition on merit. 2. Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration on 08.03.2018 declaring total income and seizure action u/s 132 business as well as residential premises of the cases including the assessee on 27.11.2019 search action, notice u/s 153A of the Act was issued. In response, the assessee again filed the return of income on 29.01.2021 declaring total income at Rs.22,90,610/ assessment proceedings, the Assessing Officer observed that in the documents found during the course of search of Party No. AB indicate receipt of ‘Hundi The Ld. Assessing Officer asked the assessee to explain entry of said Hundi/ but the assessee explanation. In view of facts and circumstances, the Assessing Officer held the said amount of part of the total income under the provisions of section 69D of the Act r.w.s. 115BBE of the Act and also added interest @ 1.85% per month on such cash Rs.23,31,000/-. In this manner, the Assessing Officer made total addition of Rs.1,43,31,000/ 3. On further appeal, the assessee challenged the assessment proceedings on legal ground and also challenged the addition on Jinesh Mansukhlal Dodhia IT(SS)A No. 789/MUM/2025 Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration on 08.03.2018 declaring total income at Rs.22,90,610/-. Subsequently, a search and seizure action u/s 132 of the Act was carried out on the business as well as residential premises of the “Dodhia Group cases including the assessee on 27.11.2019. Consequent to the search action, notice u/s 153A of the Act was issued. In response, the assessee again filed the return of income on 29.01.2021 eclaring total income at Rs.22,90,610/-. In the course of assessment proceedings, the Assessing Officer observed that in the documents found during the course of search of Party No. AB Hundi’ loans amounting to Rs.1,20,00,000/ Ld. Assessing Officer asked the assessee to explain Hundi/cash loan was recorded in books of accounts but the assessee neither filed any detail nor provided n view of facts and circumstances, the Assessing ld the said amount of ‘Hundi’ loan of Rs.1,20,00,000/ part of the total income under the provisions of section 69D of the Act r.w.s. 115BBE of the Act and also added interest @ 1.85% per month on such cash/Hundi loan, which was computed at . In this manner, the Assessing Officer made total addition of Rs.1,43,31,000/-. On further appeal, the assessee challenged the assessment proceedings on legal ground and also challenged the addition on Jinesh Mansukhlal Dodhia 2 IT(SS)A No. 789/MUM/2025 Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration on 08.03.2018 . Subsequently, a search was carried out on the Dodhia Group” of onsequent to the search action, notice u/s 153A of the Act was issued. In response, the assessee again filed the return of income on 29.01.2021 . In the course of assessment proceedings, the Assessing Officer observed that in the documents found during the course of search of Party No. AB-3 loans amounting to Rs.1,20,00,000/-. Ld. Assessing Officer asked the assessee to explain whether recorded in books of accounts d any detail nor provided any n view of facts and circumstances, the Assessing loan of Rs.1,20,00,000/- as part of the total income under the provisions of section 69D of the Act r.w.s. 115BBE of the Act and also added interest @ 1.85% per which was computed at . In this manner, the Assessing Officer made total On further appeal, the assessee challenged the assessment proceedings on legal ground and also challenged the addition on merit. The Ld. CIT(A) dismissed both the ground validity of the addition made under 153A ground raised on the merit. Aggrieved, the assessee is in appeal before the Tribunal by way of challenging the finding of the Ld. CIT(A). 4. We have heard rival submissions of th the relevant materials on record referred to ground No. 1 of the appeal challenging validity of the addition of Hundi loan made in the Act and submitted that the mater Assessing Officer for making addition u/s 69D was not found from the premises of the assessee and therefore, no addition on the basis of said material could be made in the hands of the assessee otherwise then by way of invoking secti instant case, the Ld. CIT(A) has referred that addition made on the basis of the seized paper No. 1, 2, 3 and 4 of Bundle No. 5 Party No. AB-3. Before us, the Ld. counsel for the assessee has filed the Punchnama of the punchnama, said material has been seized from the premises 1001, Flix Tower, Opposite Asian Paints, LBS Marg, Sonapur Bhandup (West), Mumbai while executing Dodhia Synthetic Ltd., M/s Dodhi Vasupujya Filaments and M/d Kemox Corporation. The year under consideration is unabated assessment year as no Jinesh Mansukhlal Dodhia IT(SS)A No. 789/MUM/2025 merit. The Ld. CIT(A) dismissed both the ground addition made under 153A assessment as well as ground raised on the merit. Aggrieved, the assessee is in appeal before the Tribunal by way of challenging the finding of the Ld. We have heard rival submissions of the parties and perused the relevant materials on record. The Ld. counsel for the assessee referred to ground No. 1 of the appeal challenging validity of the addition of Hundi loan made in assessment completed u/s 153A of the Act and submitted that the material relied upon by the Assessing Officer for making addition u/s 69D was not found from the premises of the assessee and therefore, no addition on the basis of said material could be made in the hands of the assessee otherwise then by way of invoking section 153C of the Act. In the instant case, the Ld. CIT(A) has referred that addition made on the basis of the seized paper No. 1, 2, 3 and 4 of Bundle No. 5 Party No. 3. Before us, the Ld. counsel for the assessee has filed the Punchnama of the said premises. According to the said said material has been seized from the premises 1001, Flix Tower, Opposite Asian Paints, LBS Marg, Sonapur Bhandup (West), Mumbai while executing search warrant in case of M/s Dodhia Synthetic Ltd., M/s Dodhia Chem Tex Pvt. Ltd., M/s Vasupujya Filaments and M/d Kemox Corporation. The year under on is unabated assessment year as no proceedings were Jinesh Mansukhlal Dodhia 3 IT(SS)A No. 789/MUM/2025 merit. The Ld. CIT(A) dismissed both the grounds challenging assessment as well as ground raised on the merit. Aggrieved, the assessee is in appeal before the Tribunal by way of challenging the finding of the Ld. e parties and perused . The Ld. counsel for the assessee referred to ground No. 1 of the appeal challenging validity of the assessment completed u/s 153A of ial relied upon by the Assessing Officer for making addition u/s 69D was not found from the premises of the assessee and therefore, no addition on the basis of said material could be made in the hands of the assessee on 153C of the Act. In the instant case, the Ld. CIT(A) has referred that addition made on the basis of the seized paper No. 1, 2, 3 and 4 of Bundle No. 5 Party No. 3. Before us, the Ld. counsel for the assessee has filed a copy of said premises. According to the said said material has been seized from the premises 1001, Flix Tower, Opposite Asian Paints, LBS Marg, Sonapur Bhandup warrant in case of M/s a Chem Tex Pvt. Ltd., M/s Vasupujya Filaments and M/d Kemox Corporation. The year under proceedings were pending as on the date of the search and limitation for issuing notice u/s 143(2) of the Act also expir the unabated assessment incriminating material is found from the premises of the assessee. Undisputedly, the material relied upon for making addition u/s 69D has not been found from the prem circumstances, when incriminating material related to third party is found from the search of an assessee third party can only be made by way of section 153C r.w.s. 153A of the Act. For initiating pr Assessing Officer of the searched person satisfaction that the third person or it pertains to third person then the Assessing Officer of the third person is required to record satisfaction to the effect that said seized material of the third person, has not followed the procedure prescribed u/s 153C of the Act and therefore, the addition made in the hands of the assessee on the basis of the material found/seized during the search of another person cannot be sustained The ground no. 1 of appeal of the assessee is accordingly allowed 4.1 Since we have already allowed the appeal therefore, the grounds raised on the merit of the addition are Jinesh Mansukhlal Dodhia IT(SS)A No. 789/MUM/2025 pending as on the date of the search and limitation for issuing notice u/s 143(2) of the Act also expired on 30.09.2018 the unabated assessment, addition could have been made if any incriminating material is found from the premises of the assessee. Undisputedly, the material relied upon for making addition u/s 69D has not been found from the premises of the assessee when incriminating material related to third party is found from the search of an assessee, then addition in the hands third party can only be made by way of section 153C r.w.s. 153A of or initiating proceedings u/s 153C of the Act, the Assessing Officer of the searched person is required to record satisfaction that the relevant seized material either belongs to the third person or it pertains to third person then the Assessing Officer n is required to record satisfaction to the effect that said seized material is having impact or bearing on the but in the instant case, the Assessing Officer has not followed the procedure prescribed u/s 153C of the Act and refore, the addition made in the hands of the assessee on the basis of the material found/seized during the search of another sustained. Accordingly, we delete the addition. of appeal of the assessee is accordingly allowed Since we have already allowed the appeal on therefore, the grounds raised on the merit of the addition are Jinesh Mansukhlal Dodhia 4 IT(SS)A No. 789/MUM/2025 pending as on the date of the search and limitation for issuing ed on 30.09.2018.In case of addition could have been made if any incriminating material is found from the premises of the assessee. Undisputedly, the material relied upon for making addition u/s 69D ises of the assessee. In the when incriminating material related to third party is then addition in the hands third party can only be made by way of section 153C r.w.s. 153A of oceedings u/s 153C of the Act, the s required to record seized material either belongs to the third person or it pertains to third person then the Assessing Officer n is required to record satisfaction to the effect is having impact or bearing on the income but in the instant case, the Assessing Officer has not followed the procedure prescribed u/s 153C of the Act and refore, the addition made in the hands of the assessee on the basis of the material found/seized during the search of another . Accordingly, we delete the addition. of appeal of the assessee is accordingly allowed. on legal ground therefore, the grounds raised on the merit of the addition are rendered merely academic and therefore, we are not adjudicating upon at this stage. 5. In the result, the appeal of the assessee Order pronounced 1963 by way of placing Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 28/05/2025 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// Jinesh Mansukhlal Dodhia IT(SS)A No. 789/MUM/2025 rendered merely academic and therefore, we are not adjudicating In the result, the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the ITAT Rules, 1963 by way of placing result on notice board on 28.05.2025 Sd/ (RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Jinesh Mansukhlal Dodhia 5 IT(SS)A No. 789/MUM/2025 rendered merely academic and therefore, we are not adjudicating is allowed. under Rule 34(4) of the ITAT Rules, result on notice board on 28.05.2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "