MALAY MULTANI,AHMEDABAD V. THE PR.CIT (CENTRAL), AHMEDABAD

ITA 1095/AHD/2025

AI Insights

The case involves an appeal by Malay Multani against the order of the Principal Commissioner of Income Tax (Central), Ahmedabad, which set aside the assessment order for the Assessment Year 2018-19 under section 263 of the Income Tax Act, 1961. The Principal Commissioner had deemed the original assessment order erroneous and prejudicial to the interests of the Revenue due to an alleged failure to properly investigate a transaction involving a cash payment of Rs. 4.2 crores for the purchase of TDR from Shri Rajesh Brahmbhatt. The Tribunal, after examining the arguments and evidence presented, concluded that the assessment had been adequately investigated and that the invocation of section 263 was not justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784527 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 16-05-2025
• Other Referred Cases: Malabar Industrial Co. Ltd. v. CIT, CIT v. Arvind Jewellers, CBI v. V.C. Shukla
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR
• Assessee Lawyers: VARTIKCHOKSHI
• Keywords: Set aside; Document seized; Documents seized; Search and seizure; Revision of order
• Section: 143(3); 263; 132; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1095/Ahd/2025 (Assessment Year: 2018-19) Malay Multani, 3, Prabhat Society,, Nr. Suvidha Shopping Centre, Ellisbridge, Ahmedabad-380006. [PAN :AEDPM2637 N] Vs. The Principal Commissioner of Income Tax(Central), Ahmedabad. (Appellant) .. (Respondent) Appellant by : Shri Vartik Chokshi, AR Respondent by: Shri Alpesh Parmar, CIT(DR) Date of Hearing 29.09.2025 Date of Pronouncement 14.11.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Principal Commissioner of Income Tax (Central), Ahmedabad, arising in the matter of the order passed under s. 263 of the Income Tax Act, 1961 (here-in-after referred to as \"the Act\") relevant to the Assessment Year 2018-2019. 2. The assessee has raised the following grounds of appeal: 1. On the facts and circumstances of the case, the order dated 30.03.2025 passed by the Ld.PCIT u/s.263 of the Act is bad in law and void ab inito. 2. On the facts and circumstances of the case, the Ld. PCIT erred in considering the order passed u/s.143(3) r.w.s by Addl. CIT, Central Range-2, Ahmedabad as erroneous and prejudicial to the interest of revenue and setting aside the same before the Assessing Officer. 3. On the facts and circumstances of the case, the Ld.PCIT erred in observing that the appellant has made payment of Rs.4.2 crore in observing that the appellant has made payment of Rs.4.2 crore in cash to Shri Rajesh Brahmbhatt for purchase of TDR and transaction of Printed from counselvise.com ITA No. 1095/Ahd/2025 Asst. Year : 2018-19 - 2– purchase was done by the assessee, either in an individual capacity or as a partner of the firm “M/s. Parshwa Infraventures” 3. The brief facts of the case are that the assessee filed his original return of income on 30.10.2018 declaring total income of Rs. 8,74,230/-. Subsequently, a search and seizure operation under section 132 of the Act was carried out on 15.10.2019 in the case of “Land Broker & Financier Group”. Based on certain documents found during the course of the said search, allegedly pertaining to the assessee, notice under section 153C was issued to the assessee on 26.10.2021. 4. The assessment under section 153C was completed on 24.03.2023 accepting the returned income. Later, the Ld. PCIT observed that the assessment was completed without proper enquiry or verification in respect of an alleged transaction of Rs. 4.20 crores relating to purchase of TDR from Shri Rajesh Brahmbhatt. Accordingly, the Ld. PCIT invoked section 263 of the Act and held that the assessment order passed under section 153C r.w.s. 143(3) was erroneous and prejudicial to the interests of the Revenue. The order was therefore set aside to the file of the Assessing Officer for fresh assessment. 5. Aggrieved by the order of the Ld. PCIT, the assessee is now in appeal before the Tribunal. 6. Before us, the Ld. AR submitted that the proceedings initiated under section 263 are bad in law and void ab initio for the following reasons: • The very foundation of the 153C proceedings was the loose material found at the premises of Shri Suresh Ranchhodbhai Thakkar. The same issue was examined during the course of assessment under section 153C, and after considering the assessee’s detailed explanation, the AO accepted the returned income. Printed from counselvise.com ITA No. 1095/Ahd/2025 Asst. Year : 2018-19 - 3– • The Ld. PCIT has alleged that the order passed under section 153C is erroneous. This, according to the assessee, implies that the approval granted under section 153D was also defective, rendering the assessment order itself invalid and “non-est”. A non-est order cannot be subject to revision under section 263. • Section 263 empowers revision only of valid assessment orders. Therefore, invoking section 263 against a void or invalid assessment is beyond jurisdiction. 6.1 The assessee relied on various judicial precedents including Malabar Industrial Co. Ltd. v. CIT (243 ITR 83, SC), CIT v. Arvind Jewellers (259 ITR 502, Guj), and decisions holding that once the Assessing Officer has made due enquiry and taken a possible view, the order cannot be revised merely because the PCIT has a different opinion. 6.2 The assessee further contended that the had specifically examined the issue during assessment proceedings. The statement of Shri Suresh Thakkar was recorded under section 131, and the assessee’s detailed reply dated 03.03.2023 explaining the seized material was considered before the Assessing Officer accepted the returned income. Therefore, the assessment order cannot be said to be passed without enquiry. 6.3 It was further argued that the alleged seized pages were mere rough jottings and “dumb documents” without any corroborative evidence linking the assessee. The name mentioned therein was “Malaybhai” and not “Malay Multani.” The alleged payment of Rs. 75 lakhs by cheque was disproved by producing bank statements showing no such transaction. 6.4 The assessee also contended that the seized material was found from the premises of a third party and, in the absence of any corroboration, could not be Printed from counselvise.com ITA No. 1095/Ahd/2025 Asst. Year : 2018-19 - 4– relied upon to draw any adverse inference. Reliance was placed on CBI v. V.C. Shukla (1998) Taxmann.com 2155 (SC), where the Supreme Court held that loose sheets found during search do not constitute reliable evidence unless corroborated by independent material. 7. The Ld. DR, on the other hand, supported the order of the Ld. PCIT. The Ld. DR argued that the seized materials reflect payment of monies by the assessee to Shri Rajeshbhai for purpose of TDRs. The Ld. DR argued that the deal for purchase of TDR was made in the month of January 2018 as an amount of Rs.50 lakhs was paid in the month of January, 2018 and an amount of Rs.3.7 crores was made on 28.02.2018. He argued that Shri Suresh R. Thakkar has given a categorical statement that in “Malaybhai” mentioned in the seize material refers to “Malay Shah”. The Ld. DR argued that the assessee is a parner with Shri Hemal Dhirenbhai Shah, s/o Shri Dhiren Ramanlal Shah in the firm M/s. Parshwa Infraventures and the said firm has purchased TDR from Safal Constructions Pvt Ltd. The Ld. PCIT at para No. 6, page no. 31, mentioned that firm on its own cannot carry out any transactions with any person. Any partner on behalf of the firm in his own as partner of the said firm does any transaction with another entity. The Ld. DR strongly argued that the Ld. PCIT has rightly held that assessee is a partner in M/s. Parshwa Infraventrues and thus the name “Malaybhai” referred in the seized documents points to the assessee “Malay Multani”. The Ld. DR argued that the payment of Rs.75 lakhs was actually made to banking channel and the ledger of M/s. Parshwa Infraventrues reflects such payment of Rs.75 lakhs made to M/s. Safal Constructions Pvt Ltd. Thus, the Ld. DR argued that it can be safely concluded that Rs.4.2 crores in cash was paid by the assessee for acquisition of TDR and the Assessing Officer has ignored clinging evidences found during the course of search and hence, the Ld. PCIT rightly invoked provisions of Section 263 of the Act. Printed from counselvise.com ITA No. 1095/Ahd/2025 Asst. Year : 2018-19 - 5– 8. Rebutting the arguments of the Revenue, Ld. AR argued that Shri Suresh Thakkar stated “Malaybhai” refers to “Malay Shah” who is partner of Shri Dhiren Ramanlal Shah, whereas the assessee is not a partner of Shri Dhiren Ramanlal Shah, nor he is a partner in any concern in which Shri Dhiren Ramanlal Shah is the partner. 9. Heard the arguments of both the parties and perused the material available on record. 9.1 With regard to the objections of the assessee that the order has been passed after taking the approval of the ACIT u/s 153D of the Act and hence treating the assessment order as erroneous by the PCIT makes the assessment order itself void ab initio are not acceptable, as administrative approval u/s 153D and subsequent passing of orders u/s 143(3) of the Act is one comprehensive procedure envisaged by the Act in passing an assessment order in such search cases (153A / 153C), hence the powers of the PCIT to invoke provisions of Section 263 are unfettered. 9.2 With regard to the merits of the issue, we find that page No.152 of the seized material mentioned at page No. 3 of the Ld. PCIT’s order headed as “Malaybhai”, 50=00 Jan 18, 370=00 28.02.2018. The Ld. PCIT has heavily relied on the statement of Shri Suresh Thakkar wherein he has allegedly stated that payments amounting to Rs.4.2 crores were made by Shri Malaybhai Shah to Shri Rajeshbhai of Safal for acquisition of TDR. Facts reveal that on 15.03.2023, during the assessment proceedings, the Assessing Officer has recorded the statement of Shri Suresh Thakkar u/s 131 who stated that, to the best of his memory, he does not recall making deal with someone named “Malay Shah” or “Malay Multani” (Question No. 6 of AO). The Ld. PCIT alleged that the monies were paid by the assessee and also subsequently it was alleged that the monies were paid by M/s. Parshwa Infraventrues. The Assessing Officer examined the Printed from counselvise.com ITA No. 1095/Ahd/2025 Asst. Year : 2018-19 - 6– bank account and found that no such payment was paid by the assessee. The Assessing Officer was duly satisfied after the examination of the bank statement. Before the Assessing Officer, Shri Suresh Thakkar has also filed two affidavits disputing that “Malaybhai” cannot refer to “Malay Multani”. While Ld. PCIT started the order u/s 263 alleging that the assessee has paid Rs.50 lakhs by cheque and Rs.3.7 lakhs in cash to Shri Rajeshbhai of Safal for acquisition of TDR, slowly the matter transformed into the allegation that the amounts have been paid by M/s. Parshwa Infraventures. The assessee is a partner with Shri Hemal Dhirenbhai Shah, S/o Shri Dhirenbhai Ramanlal Shah in the firm M/s. Parshwa Infraventures and the said firm has purchased TDR from Safal Constructions Pvt Ltd. For the sake of ready reference, the relevant part viz. para 6 page no. 31 of the order of the Ld. PCIT is reproduced as under:- ‘6. Facts of the case clearly show that the assessee is a partner with Shri Hemal Dhirenbhai Shah, son of Shri Dhirenbhai Ramanlal Shah in the firm M/s Parshwa Infraventures and the said firm has purchased the TDR from M/s Safal Construction Pvt. Ltd. It is true that the firm and individual are separate entities. However, firm on its own cannot carry out any transaction with any person. Any partner on behalf of the firm in his role as partner of the said firm does any transaction with another entity. It is a fact that the assessee is a partner in Parshwa Infraventures and thus the Malaybhai referred to in the seized documents is assessee only.’ 9.3 From the above, it is clear that though the Ld. PCIT firmly believed that the payments have been made by the firm namely M/s. Parshwa Infraventures, the alleged cash payment has been fastened to the assessee in his individual capacity. Thus, the order suffers from infirmities. In this case, we also find that the Assessing Officer has made enquiries, called for supporting documents, verified the evidences, and taken a credible view. The Assessing Officer has also recorded the statement of Shri Suresh Thakkar who denied linking of notings on the seized material to the assessee. The Revenue was unable to point out any specific enquiry that remained to be conducted by the Assessing Officer nor Printed from counselvise.com ITA No. 1095/Ahd/2025 Asst. Year : 2018-19 - 7– could the Revenue place on record any incriminating material from the search directly implicating the assessee. Keeping in view the entire facts, we hold that the order of the Ld. PCIT cannot be sustained. 10. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 14.11.2025. Sd/- Sd/- (SIDDHARTHA NAUTITAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 14.11.2025 **btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …. Words processed by Hon’ble VP on his PC on 10.11.2025… 2. Date on which the typed draft is placed before the Dictating Member 11 .11.2025 3. Other Member… 12 .11.2025 4. Date on which the approved draft comes to the Sr.P.S./P.S 13.11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 14.11.25 6. Date on which the fair order comes back to the Sr.P.S./P.S 14 .11.2025 7. Date on which the file goes to the Bench Clerk 14 .11.2025. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "