KULDEEP SALUJA,DELHI V. DCIT,CENTRAL CIRCLE-6, NEW DELHI

ITA 2460/DEL/2025

AI Insights

The case involves Kuldeep Saluja, the appellant, who contested the jurisdiction and the subsequent assessment order passed by the Deputy Commissioner of Income Tax (DCIT), Central Circle-6, New Delhi. The assessment was based on materials seized during a search operation under section 132 of the Income Tax Act, 1961, which implicated Saluja in receiving accommodation entries. The primary legal contention was the validity of the satisfaction note under section 153C, which the Tribunal found to be defective as it was a consolidated note for multiple assessment years and did not specifically identify entries related to Saluja.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833918 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 16-04-2025
• Other Referred Cases: DCIT vs Sunil Kumar Sharma [2024] 469 ITR 197 (Karnataka), Saksham Commodities vs ITO [2024] 161 taxmann.com 458 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: SOURAV ROHTAGI; RAJAT MITTAL
• Keywords: Additional evidence; Unexplained cash credit; Unexplained expenditure; Document seized; Documents seized; Principle of natural justice; TDS; Search and seizure; Accommodation entries
• Section: 143(3); 142(1); 132; 153A; 68; 69C; 139

Judgement Text

"ITA No.2460/Del/2025 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “B” BENCH: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.2460/Del/2025 [Assessment Year : 2015-16] Kuldeep Saluja B-5/23, Safdarjung Enclave, Near Dear Park New Delhi-110029. PAN-ABIPS7502C vs DCIT Central Circle-6 New Delhi APPELLANT RESPONDENT Appellant by Shri Sourav Rohtagi, CA & Shri Rajat Mittal, CA Respondent by Ms. Pooja Swaroop, CIT DR Date of Hearing 05.01.2026 Date of Pronouncement 06.02.2026 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by assessee against the order dated 26.03.2025 by Ld. Commissioner of Income Tax (A)-24, New Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-24/10990/2014-15 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 28.12.2021 passed u/s 153C r.w.s. 143(3) of the Act pertaining to Assessment Year 2015-16. Printed from counselvise.com ITA No.2460/Del/2025 Page | 2 2. Brief facts of the case are that the assessee had furnished original return of income u/s 139 of the Act on 31.08.2015, declaring income of INR 5,87,53,950/-. The case of assessee was completed u/s 143(3) of the Act at a total income of INR 6,02,38,546/- vide order dated 23.12.2017. A search and seizure action u/s 132 of the Act was carried out on 22.10.2016 in the Ashish Begwani Group of cases where he was found to be involved in facilitation of accommodation entry along with the Kolkata based entry providers Sh. Gopal Kumar Aggarwal and his son Sh. Vikas Kumar Aggarwal. Shri Ashish Bhegwani also admitted this fact in the statements recorded u/s 132(4) of the Act. On perusal of seized incriminating material i.e. Excel sheet containing list of beneficiaries and their transactions of accommodation entries taken from Shell companies, transaction pertaining to assessee were also found. Based on such information, satisfaction note, by the AO of the searched person was recorded on 24.03.2021 and seized material was handed over to the AO of assessee. Thereafter, notice u/s 153C was issued on 26.03.2021 and duly served upon the assessee. In response, the assessee filed return of income on 10.04.2021 at an income of INR 5,97,46,620/-. Further, notice dated 19.07.2021 u/s 143(2) was issued to the assessee and thereafter, various notices u/s 142(1) was issued to the assessee and in response to these notices, assessee filed replies. Thereafter, the AO vide assessment order dated 28.12.2021 passed u/s 153C r.w.s. 143(3) of the Act, made the addition of INR 5,00,00,000/- on account of unexplained credit u/s 68 of the Act and further addition of INR Printed from counselvise.com ITA No.2460/Del/2025 Page | 3 15,00,000/- on account of unexplained expenditure u/s 69C of the Act and assessed the income of the assessee at INR 11,12,46,620/-. 3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order dated 26.03.2025, dismissed the appeal of the assessee. 4. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:- 1. “BECAUSE the CIT(A) has erred in law and on facts in upholding the assumption of jurisdiction over the appellant under section 153C of the Act. 2. BECAUSE the CIT(A) has erred in holding that approval under section 153D has not been granted in a mechanical manner by the approving authority. 3. BECAUSE the CIT(A) has erred in not holding the assessment order and demand notice both dt. 28.12.2021 are invalid and deemed to have never been issued due to non-mentioning of DIN thereon. Without prejudice to above 4. BECAUSE the CIT(A) has erred in law and on facts in sustaining the addition of Rs. 5,00,00,000/- under section 68 as unexplained credit r.w.s. 115BBE of the Act. 5. BECAUSE the CIT(A) has erred in law and on facts in sustaining the addition of Rs. 15,00,000/- on account of estimated unexplained expenditure @ 3% for procuring accommodation entries solely on the basis of assumption, presumption and suspicion by invoking the deeming provisions of section 69C r.w.s. 115BBE of the Act. 6. BECAUSE the CIT(A) has erred in law and on facts and circumstances of the case in holding that opportunity of allowing cross examination to the appellant was not required, as sufficient opportunity was granted to the appellant. 7. BECAUSE the impugned additions have been made without granting the assessee a fair, proper and effective opportunity of Printed from counselvise.com ITA No.2460/Del/2025 Page | 4 being heard and as such the additions made are wholly untenable. 8. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice.” 5. Heard the contentions of both the parties and perused the material available on record. The claim of the assessee is that AO the persons searched and of the assessee are common and the “Satisfaction Note” recorded in the case of persons searched is reproduced at page 3 of the assessment order wherein the AO referred certain documents and the Excel Sheet however, nowhere in the “Satisfaction Note”, it is stated that which entry pertained to the assessee. The assessee further claimed that the “Satisfaction Note” of the AO of the assessee is reproduced at page 4 of the assessment order wherein again a reference is made of the Excel Sheet available at page 8 of the Annexure A-1 found from the premises of Nishant at 9-41(2), 2nd Floor, Kotla Mubarakpur, New Delhi however, nowhere in the “Satisfaction Note”, it is observed by the AO that these documents belonged or pertained to the assessee and further nowhere in the “Satisfaction Note”, any amount is referred nor the assessment year to which such entry pertained to is stated and common “Satisfaction Note” for all Assessment Years starting from 2011-12 to 2017-18 was made and thus, the “Satisfaction Note” is defective. 6. Reliance is placed on the judgement of the Hon’ble Karnataka High Court in the case of DCIT vs Sunil Kumar Sharma [2024] Printed from counselvise.com ITA No.2460/Del/2025 Page | 5 469 ITR 197 (Karnataka) which stood confirmed by Hon’ble Apex Court by dismissing the SLP. 7. On careful consideration of the facts, we find that AO has recorded the satisfaction as per “Satisfaction Note” appearing at page 4 and 5 of the assessment order where a table is reproduced however, nowhere in the “Satisfaction Note”, it is stated that which entry belonged to which assessment year. It is further observed that AO has referred certain entries tabulated at page 10 of the assessment order which allegedly related to the assessee in the shape of loans taken during the year under appeal. However, the fact that these loans were unexplained has not been established as the assessee has filed all the details with reference to such loans. These loans were taken through banking channels and all the necessary evidences were filed before lower authorities. The Co-ordinate Bench under identical circumstances in the case of Gulshan Homes and Infrastructure P. Ltd. vs DCIT in ITA No.1595/Del/2025 dated 30.09.2025 [Delhi Trib.] by placing reliance of judgement of Hon’ble Karnataka High Court in the case of Sunil Kumar Sharma (supra) and further on the decision delivered by the Jurisdictional High Court in the case of Saksham Commodities vs ITO [2024] 161 taxmann.com 458 (Delhi) has held that the jurisdiction assumed u/s 153C is defective and quashed the order. The relevant observations of the Co-ordinate Bench are reproduced as under:- “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 Printed from counselvise.com ITA No.2460/Del/2025 Page | 6 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 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 Printed from counselvise.com ITA No.2460/Del/2025 Page | 7 taxmann.com 846 (SC). The relevant portion of the Head Notes and the order of Hon’ble Apex Court is reproduced hereunder:- “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 satisfied that the alleged seized material belonged to the assessee or the alleged information pertained to the assessee. The Printed from counselvise.com ITA No.2460/Del/2025 Page | 8 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 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 Printed from counselvise.com ITA No.2460/Del/2025 Page | 9 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…. 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)… Printed from counselvise.com ITA No.2460/Del/2025 Page | 10 (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 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 Printed from counselvise.com ITA No.2460/Del/2025 Page | 11 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.” 8. In view of the facts of the case, we find that the case of the assessee is squarely covered by the decision of the Co-ordinate Bench of Delhi ITAT where the bench has followed the judgements of Hon’ble Jurisdictional High Court and of the hon’ble Karnataka High Court and held the satisfaction note as invalid. Thus, by respectfully following them, we hold that in the present case, the AO has assumed jurisdiction in the case of the assessee on the basis of invalid satisfaction therefore, the consequent assessment order passed is quashed. Accordingly, Ground of appeal No.1 raised by the assessee is allowed. 9. Since we have already allowed Ground of appeal No.1 raised by the assessee, the remaining grounds become academic. Printed from counselvise.com ITA No.2460/Del/2025 Page | 12 10. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 06.02.2026. Sd/- Sd/- (ANUBHAV SHARMA) JUDICIAL MEMBER Date:- 06.02.2026 *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "