MANOJ HARINARAYAN AGRAWAL,AHMEDABAD V. THE ITO, WARD-3(3)(2), AHMEDABAD

ITSSA 146/AHD/2023

AI Insights

This case involves an appeal by Manoj Harinarayan Agrawal against the order of the CIT(A)-11, Ahmedabad, concerning the assessment year 2012-13. The appeal was primarily based on the grounds that the Assessing Officer (AO) erred in issuing a notice under section 153C of the Income Tax Act, 1961, and in upholding the addition of unexplained investments based on documents seized from a third party without allowing cross-examination. The Tribunal considered the precedents set in similar cases, particularly Rajesh N. Desai vs. DCIT, where it was established that the seized materials did not directly pertain to the assessee's own financial dealings. The Tribunal's decision emphasized the need for specific identification of materials related to the appellant in proceedings under section 153C.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313942 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: Rajesh N. Desai vs. DCIT [IT(SS)A 150-15/Ahd/2023]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RITESH PARMAR
• Assessee Lawyers: BIREN SHAH; GULAB THAKOR; ARS
• Keywords: Unexplained investment; Document seized; Documents seized
• Section: 142(1); 132

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before Ms. Annapurna Gupta, Accountant Member And Ms. Suchita Kamble, Judicial Member Manoj Harinarayan Agrawal, 4, Ganesh Estate, Nr. Rly Crossing Sanand Road, Sarkhej, Ahmedabad PAN: AAGPA0695K (Appellant) Vs The ITO, Ward-3(3)(2) Ahmedabad (Respondent) Assessee by: Shri Biren Shah & Shri Gulab Thakor, ARs Revenue by: Shri Ritesh Parmar, CIT-D.R. Date of hearing : 24-04-2025 Date of pronouncement : 05-05-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 10-10- 2023 passed by CIT(A)-11, Ahmedabad for assessment year 2012-13. 2. The grounds of appeal are as under:- “1. In law and in the facts and circumstances of the appellant's case, the AO has erred in issuing notice u/s 153C of the Act for the year under consideration as there is no specific identification of materials being relatable to the appellant and therefore the proceedings initiated in the present case were bad in law. IT(SS)A No. 146/Ahd/2023 Assessment Year 2012-13 I.T(SS).A No. 146/Ahd/2023 Manoj Harinarayan Agrawal, A.Y. 2012-13 2 2. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding that assessment cannot be initiated on the basis of third-party statement or material seized from third parties or even based upon admission before Hon'ble Settlement Commission. 3. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding addition of alleged unexplained investments based upon documents found during the course of search at third party and such addition was made without allowing cross examination of such party. 4. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding validity of proceedings under Section 153C of the Act even though no satisfaction note of searched person was provided to Appellant. 5. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in upholding addition of alleged unexplained investment of Rs. 55,01,000/- when no such addition is called for. 6. Without prejudice to above, the Ld. CIT(A) while confirming alleged addition ought to have restricted the same at Rs. 37,66,500/- (being Rs. 1,75,77,000/- Rs. 1,38,10,500/-). 7. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” 3. A search action u/s. 132 of the Income Tax Act, 1961 was carried at the premises of HN Safal Group of Ahmedabad on 04-09-2013. During the course of search, annexure A-8 i.e. hard disc was seized from 7th floor Safal Profitaire, Prahlad Nagar, Ahmedabad which contains various details of various residential and commercial projects. In the same hard disc i.e. date Solitary Scheme of M/s. GSS Realty LLP was found which contains name of the client/customer, flat no. payment details, cheque and cash details of outstanding. In view of the same, the Assessing Officer of H.N. Safal Group was satisfied that the documents pertained to Smt. Nilima Kamlesh Jain has bearing on the determination of total income for the assessment year 2011- 12. As the assessee i.e. Manoj H Agarwal assessed with the present Assessing Officer, the said information along with I.T(SS).A No. 146/Ahd/2023 Manoj Harinarayan Agrawal, A.Y. 2012-13 3 relevant part of seized material and satisfaction note were forwarded to the present Assessing Officer. Accordingly, notice u/s. 153C of the Act was issued on 23-03-2018 and served upon the assessee on 24-03-2018. In response to the same notice, the assessee has not filed any written submission/reply. A reminder notice u/s. 142(1) dated 23-07-2018 and 06-11-2018 was issued to the assessee and in response to the same again the assessee did not respond. A show cause notice dated 28-11-2018 was issued to the assessee thereby asking as to why an amount of Rs. 1,75,77,000/- (including on money of Rs. 55,01,000/- should not be added to his total income on account of unexplained investment made in immoveable property. In response to the said show cause notice, Chartered Accountant and A.R. of the assessee furnished written submissions dated 03-12-2018 and further submitted that the return of income was filed 21-09-2012 u/s. 139(1) of the Income Tax Act and the same may be treated as return of income filed in response to the notice u/s. 153C of the Act. Notice u/s. 143(2) of the Act was issued to the assessee on 03-12-2018 and the same was served upon the assessee. The assessee has shown total income of Rs. 6,77,016/- earned from his property and business during the year under consideration. The Assessing Officer observed that as per seized documents/satisfaction note and other information belonging to the assessee the payment in excess of Rs. 1,38,10,000/- either by cheque/cash is denied by the assessee and the same was paid by him from loan of Rs. 95 lakhs received from DHFL Housing Finance and rest of the I.T(SS).A No. 146/Ahd/2023 Manoj Harinarayan Agrawal, A.Y. 2012-13 4 amount paid from HDFC account of his firm M/s. Singhal Brothers. The Assessing Officer further observed that HN Safal Group has admitted the additional income before the Settlement Commission for receipt of on money in respect of various schemes developed by it and accordingly the Hon’ble Settlement Commission passed the order u/s. 244D(4) of the Act. Thus, the Assessing Officer held that all the consequences of fund proved that the assessee has paid on money Rs. 55,01,000/- for purchase of Unit P-10, ground floor in Solitaire scheme developed by M/s. GSS Reality LLP and the assessee failed to disclose the source of such cash payment. Thus, the Assessing Officer made addition of the said amount as unexplained investment of the assessee. 4. Being aggrieved by the appellate order before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. As regards ground no. 4, the ld. A.R. submitted that same is not pressed. Hence, ground no. 4 is dismissed as not pressed. 6. As regards other grounds, the ld. A.R. submitted that ground no. 1 to 3 has been decided in case of Rajesh N. Desai vs. DCIT [IT(SS)A 150-15/Ahd/2023] and the same has been decided on the identical facts and in respect of the search of HN Safal Group held on 04-09-2013 itself. Thus, the ld. A.R. submitted that the seized materials found during the search operation conducted at the premises of the H.N. Safal Group in case of Manoj Harinarayan Agarwal I.T(SS).A No. 146/Ahd/2023 Manoj Harinarayan Agrawal, A.Y. 2012-13 5 has already been considered in case of Rajesh N. Desai and deleted the addition made on the basis of said seized documents. 7. The ld. D.R. relied on the order of the CIT(A). 8. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the Tribunal in case of Rajesh N. Desai (supra) has taken cognizance of the said material and found that the seized material has been verified and in fact if we see the Assessment Order in the present assessee’s case i.e. Manoj Harinarayan Agrawal, the seized material found in case of HN Safal Group is taken into account in assessee’s own case. The assessee in fact has explained the payment made to the respective parties by obtaining loan from DHFL Finance and HDFC Bank and the details were quoted by the Assessing Officer in para 4 in the assessment order itself. The Assessing Officer has totally ignored this fact in para 5.2 and has not at all commented on the assessee’s purchase of property and without giving satisfactory finding related to the assessee’s loan and the bank account details and simply relied on the seized material which is not at all applicable in assessee’s case. Thus, the decision of the Tribunal in case of Rajesh N. Desai (supra) is applicable in the present case. The ld. D.R. also could not point out any distinguishing facts in the present assessee’s case to that of the Tribunal’s decision. Hence, the appeal of the assessee is partly allowed. I.T(SS).A No. 146/Ahd/2023 Manoj Harinarayan Agrawal, A.Y. 2012-13 6 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 05-05-2025 Sd/- Sd/- (Annapurna Gupta) (Suchitra Kamble) Accountant Member Judicial Member Ahmedabad : Dated 05/05/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "