KUMAR SAURAV,PATNA V. DCIT, CENTRAL CIRCLE, NOIDA

ITA 5561/DEL/2018

AI Insights

The case involves an appeal by Shri Kumar Saurav against the order of the Commissioner of Income-tax (Appeals)-IV, Kanpur, which arose from an assessment order passed by the DCIT, Central Circle, Noida. The assessment was based on documents seized during a search operation under section 132 of the Income Tax Act, 1961, conducted on the premises associated with the Maconns, Meenu, and Yadav Singh Group in Noida. The primary legal issue in the appeal was the validity of the jurisdiction assumed under section 153C of the Act, which allows for the assessment of income based on seized documents. The Tribunal's decision focused on the adequacy of the reasons recorded for this jurisdictional assumption, ultimately finding them insufficient.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396470 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Singhad Technical Education Society, Saksham Commodities Ltd. vs. ITO, DCIT vs. UK Paints (Overseas) Ltd., Pavitra Realcon (P) Ltd. vs. ACIT, Pr. CIT vs. 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; SOMIL AGARWAL
• Keywords: Set aside; Document seized; Documents seized; Gift; Earning of tax free income
• Section: 132; 68; 2

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: C : NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.5561/Del/2018 Assessment Year: 2012-13 Shri Kumar Saurav, C/o Shanker Mehta, Naya Gaon, Guljarbagh, Patna – 800 007. PAN: CKLPS6721H Vs DCIT, Central Circle, Noida. (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta, Advocate & Shri Somil Agarwal, Advocate Revenue by : Shri Dayainder Singh Sidhu, CIT-DR Date of Hearing : 07.05.2025 Date of Pronouncement : 28.05.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 23.07.2018 of the Commissioner of Income-tax (Appeals)-IV, Kanpur (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeal No.CIT(A)-IV/KNP/11106/244-DCIT-CC-NOIDA/2016- 17 arising out of the appeal before it against the order dated 28.12.2016 passed ITA No.5561/Del/2018 2 u/s 153C/143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle, Noida (hereinafter referred to as the Ld. AO). 2. A search & seizure operation u/s 132 of the Income Tax Act, 1961 was conducted on 27.11.2014 in the case of Maconns, Meenu and Yadav Singh Group Noida covering its business premises and residences of Director their family members and other business associates concern and other key persons. During the course of search at the residence of Yadav Singh and Smt. Kusum Lata, A-38, Sector-27, Noida, allegedly various incriminating documents/loose sheets were found and seized. The assessee is one of the directors of M/s KS Ultratech Pvt. Ltd, group companies of Smt Kusum Lata. The case of the assessee was centralized and notice u/s 153C of the Act was shown to be issued on 13.07.2016 and the assessee filed return of income on 30.07.2016. subsequently, during assessment, addition on account of disallowance of exempt income claimed u/s 10(38) of the Act was made to the extent of Rs.5 lakhs and, further addition on account of unexplained unsecured loan/credit to the extent of Rs.34,63,890/- and addition on account of unexplained gift u/s 68 of Rs.11 lakhs and addition of Rs.72,97,500/- was made on account of transfer/sales of shares. Against this, the assessee had filed appeal before the ld.CIT(A) raising grounds on merits and also a ground on wrongful assumption of jurisdiction u/s 153C of the Act. ITA No.5561/Del/2018 3 3. Now, before us also, the ld. counsel for the assessee primarily argued on grounds No.1 and 2 questioning the assumption of jurisdiction u/s 153C of the Act. The ld. Counsel submitted that there is no mention in the reasons recorded as to how these seized documents is related to the assessee and what is the incriminating effect. The ld. counsel has relied the judgement in the cases of : (i) CIT vs. Singhad Technical Education Society, [2017] 397 ITR 344; (ii) Saksham Commodities Ltd. vs. ITO in W.P(C) 1459/2004 and CM A 6031/2024 dated 09.04.2024; (iii) DCIT vs. UK Paints (Overseas) Ltd., Civil Appeal No. 6634 of 2021 dated 25.04.2023, (SC); (iv) Pavitra Realcon (P) Ltd. vs. ACIT, 87 taxmann.com 142 (ITAT Delhi); & (v) Pr. CIT vs. Abhisar Buildwell (P.) Ltd., (2023) 454 ITR 212 (SC). 4. The ld. DR has relied the orders of the ld. tax authorities below submitting that incriminating documents in the form of EW4 was specifically mentioned. 4. As we go through the material on record, we find that the reasons recorded for assumption of jurisdiction u/s 153C of the Act have been reproduced by the ld.CIT(A) at page No.5 of the appellate order and, certainly, apart from mentioning that the seized documents EW-4, Annexure-1 related to ITA No.5561/Del/2018 4 the assessee, there is not a word as to how and what material content related to the assessee so as to allege that there was suppression of income. The satisfaction note is certainly not worded in accordance with the law requiring the AO assuming jurisdiction u/s 153C of the Act to show that the seized document pertained to the assessee and it should be further reflected as to how the income was not disclosed. The fact that in the reasons the ld. AO mentions that the cases of group are interconnected and required deep investigation to arrive at a logical conclusion, certainly establishes non-application of mind and not having sufficient material to have recourse to section 153C of the Act. Thus, we are inclined to allow ground No.2. The impugned order is set aside. The appeal of the assessee is allowed. Order pronounced in the open court on 28.05.2025. Sd/- Sd/- (S. RIFAUR RAHMAN) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28th May, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "