MOHAMMED SULEMAN ABDUL HAKIM KOTHI,PANCHMAHAL V. THE DY.CIT, CENTRAL CIRCLE-2, VADODARA

ITSSA 30/AHD/2025

AI Insights

The case involves Mohammed Suleman Abdul Hakim Kothi, who appealed against the order of the Commissioner of Income-tax (Appeals)-12, Ahmedabad, concerning the assessment year 2015-16. The appeal was related to the addition of Rs. 12,78,252 to his income, which was deemed unexplained agricultural income. The addition was based on discrepancies between the agricultural income declared in Kothi's tax return and an affidavit found during a search operation at Kothi Steels Ltd., where Kothi was a director. The Tribunal's decision was influenced by the legal and factual findings that the affidavit was incriminating material and that the assessment under section 153A was valid.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783628 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-11-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 27-03-2025
• Other Referred Cases: Principal CIT v. Abhisar Buildwell (P.) Ltd., PCIT v. Anuj Bansal, Mehta Parikh & Co. v. CIT, Ahir Salt and Allied Products v. DCIT, Sanjay Gupta v. DCIT, Surjeet Singh Chhabra v. Union of India, Pullangode Rubber Produce Co. Ltd. v. State of Kerala
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: BIREN SHAH; OFFERING VAGUE
• Keywords: Rule of consistency; Search and seizure
• Section: 143(3); 132; 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T(SS).A. No.30/Ahd/2025 (Assessment Year: 2015-16) Mohammed Suleman Abdul Hakim Kothi, Salamat Society, Godhra, Panchmahal, Gujarat-389001 Vs. Deputy Commissioner of Income Tax, Central Circle-2, Vadodara [PAN No.ADQPK5287J] (Appellant) .. (Respondent) Appellant by : Shri Biren Shah, AR Respondent by: Shri R P Rastogi, CIT-DR Date of Hearing 12.08.2025 Date of Pronouncement 07.11.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-12, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 31.01.2025 passed for A.Y. 2015-16. 2. The assessee has raised the following grounds of appeal: “1. In law and in the facts and circumstances of the assessee’s case, the order passed by the learned CIT(A) u/s 250 of the Income-tax Act is bad in law. 2. In law and in the facts and circumstances of the case of the Assessee, the order u/s 250 of the Income Tax Act, 1961 passed by Ld. CIT(A) is without considering the facts of the case and responses filed by the assessee, is bad in law and deserves to be cancelled. 3. In law and in the facts and circumstances of the case of the Assessee, assessment under section 153A r.w.s. 143(3) of the Income Tax Act, 1961 in absence of incriminating material is bad in law and invalid. Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 2– 4. In law and in the facts and circumstances of the Assessee’s case, learned CIT(A) has erred in confirming the addition of Rs. 12,78,252 being 40% of Gross agriculture receipt declared by assessee in his Income Tax Return of Rs. 39,96,880. 5. In law and in the facts and circumstances of Assessee’s case, the CIT(A) ought to have deleted addition of Rs. 35,96,880/- made under section 69A of the Act in toto. 6. The assessee 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. The brief facts of the case are that a search and seizure operation under section 132 of the Income-tax Act, 1961 (“the Act”) was carried out in the case of the Kothi Group of Godhra on 05.11.2020, during which the premises of the assessee, Shri Suleman Abdul Hakim Kothi, were also covered. Consequent to the search, notice under section 153A of the Act was issued on 29.10.2021, in response to which the assessee filed his return of income on 12.03.2016 declaring a total income of Rs. 2,500/- and agricultural income of Rs. 36,76,380/-. The assessee is one of the directors of M/s. Kothi Steels Ltd. and other related companies. The case of the assessee was taken up for assessment under section 153A read with section 143(3) of the Act. 4. During the course of the assessment proceedings, the Assessing Officer (“AO”) noted that an affidavit dated 23.01.2016 was found and seized from the premises of Kothi Steels Ltd., in which the assessee had declared his monthly income at Rs. 24,000/- for financial year 2014-15 (relevant to A.Y. 2015-16), which came to Rs. 2,88,000/- per annum. The AO observed that there was a discrepancy between the said Affidavit and the agricultural income declared by the assessee in his return of income, which showed a gross agricultural income of Rs. 39,96,880/-. The AO treated this difference as unexplained and initiated inquiries into the genuineness of the Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 3– agricultural income claimed. The AO further observed that there was no documentary evidence of agricultural expenditure, such as fertilizer, seeds, pesticides, irrigation expenses, or labour payments. Referring to the “District-wise Area, Production and Yield of Important Food & Non- food Crops in Gujarat State (Years 2017-18 to 2019-20)” published by the Directorate of Agriculture, Government of Gujarat, the AO compared the assessee’s declared agricultural receipts with the average yield data for the Panchmahal district and held that the assessee’s declared income was highly excessive. It was also observed that all members of the assessee’s family were engaged in business, and no one was involved in agricultural operations. On this basis, the AO accepted only Rs. 4,00,000/- as genuine agricultural income and treated the balance Rs. 35,96,880/- as unexplained income under section 69A read with section 115BBE, and thereby computed the total assessed income at Rs. 35,99,380/-. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals)-12, Ahmedabad [CIT(A)], raising both legal and factual grounds. 6. Before the CIT(A), the assessee submitted that the assessment completed under section 153A of the Act was invalid in law as it was not based on any incriminating material found during the search. The affidavit relied upon by the AO, according to the assessee, was not recovered from his residential premises but from the premises of Kothi Steels Ltd. The assessee submitted that the affidavit was prepared for the limited purpose of obtaining bank finance for the company, and since agricultural income is exempt under the Act and not considered by banks Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 4– for creditworthiness, such income was not included in the affidavit. Therefore, the document could not be treated as incriminating material for section 153A proceedings. Reliance was placed on the judgment of the Hon’ble Supreme Court in Principal CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC), wherein it was held that completed assessments can be interfered with under section 153A only on the basis of incriminating material unearthed during the search. The assessee also challenged the approval granted under section 153D, contending that a single approval number (36/127) was used for multiple years and several group entities, which reflected mechanical approval without application of mind, rendering the proceedings void. The assessee relied on PCIT v. Anuj Bansal [2024] 165 taxmann.com 3 (SC), to argue that proper and independent approval must be obtained separately for each assessment year. Further, the assessee argued that since the affidavit was found at the premises of another entity, any addition could only be made under section 153C and not section 153A of the Act. On merits, the assessee contended that he had duly submitted copies of 7/12 extracts, crop details, sale bills, and confirmations of agricultural produce buyers to establish genuineness of agricultural income. The assessee submitted that that the AO had wrongly used average yield data of unirrigated land from the Directorate of Agriculture’s report for later years (2017-18 to 2019-20) instead of the relevant year (2014-15) and that his land was irrigated, as evident from the 7/12 records, which would result in higher productivity. The assessee also relied on the decision of CIT(A), NFAC in the case of his brother Shri Md. Firdos Abdul Hakim Kothi, who jointly owned the same agricultural land (109.521 acres), wherein for the same assessment year, a similar addition Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 5– was restricted to 40% of gross agricultural receipts, recognizing the genuineness of agricultural income. 7. After considering the submissions and material on record, the CIT(A) dealt with each ground as follows: On Ground Nos. 1 & 2, relating to the validity of the assessment under section 153A, the CIT(A) rejected the assessee’s contention that the addition was not based on incriminating material. The CIT(A) held that the affidavit found during the search was a legal document executed by the assessee, reflecting his income and assets as on 31.03.2015, which had a direct bearing on the determination of income for the relevant year. Hence, it constituted incriminating material within the meaning of section 153A. The fact that it was found from the premises of Kothi Steels Ltd., where the assessee was a director, did not detract from its evidentiary value, as the search covered the entire group. Relying on the decision of the Ahmedabad ITAT in Ahir Salt and Allied Products v. DCIT [IT(SS)A No. 6 & 7/RJT/2022, dated 12.06.2024], the CIT(A) held that incriminating material found during a group search can be used in the assessment of any person within the group to whom it relates. The contention regarding approval under section 153D being mechanical was also rejected in light of the decision of the Ahmedabad ITAT in Sanjay Gupta v. DCIT [IT(SS)A Nos.147 & 148/Ahd/2019 & others, dated 26.11.2024], holding that simultaneous approval for multiple years in a group case does not make the approval invalid if the facts are well known to the approving authority. Accordingly, Ground Nos. 1 and 2 were dismissed. On Ground No. 3, concerning the addition of Rs. 35,96,880/- under section 69A read with section 115BBE, the CIT(A) observed that the AO had erred in relying Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 6– on general agricultural yield data of later years without verifying the assessee’s actual evidences, such as 7/12 extracts and sale bills. The CIT(A) noted that the AO had accepted the ownership of agricultural land and the fact of cultivation but had disputed only the quantum of income. The CIT(A) further observed that in the case of the assessee’s brother, Shri Firdos Kothi, for the same assessment year and for the same agricultural land, his predecessor had held that only 40% of the gross agricultural receipts should be disallowed as unexplained income. Following this principle of parity, the CIT(A) held that the assessee’s agricultural expenses appeared meagre at Rs. 3,20,500/- and thus, applying the same ratio, restricted the addition to Rs. 12,78,252/-, thereby deleting the balance Rs. 23,18,628/-. Accordingly, Ground No. 3 was partly allowed. In the result, the CIT(A) held that while the assessment under section 153A was valid, the addition for unexplained agricultural income was excessive and required moderation. The CIT(A) accordingly restricted the addition to Rs. 12,78,252/- and deleted the balance. Thus, the appeal was partly allowed. 8. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 9. We have heard the rival contentions and perused the material on record. The primary controversy in this appeal relates to the addition made by the Assessing Officer under section 69A read with section 115BBE of the Income-tax Act, 1961, and the validity of the proceedings initiated under section 153A of the Act. We find that the learned Commissioner of Income- tax (Appeals) has passed a well-reasoned and detailed order after thoroughly examining the factual and legal issues raised by the assessee. The findings Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 7– recorded by the CIT(A) are cogent, based on evidence, and in conformity with the settled principles of law. The CIT(A) has correctly observed that the affidavit dated 23.01.2016, found during the course of search and seizure operation in the case of the Kothi Group, was executed by the assessee himself, duly notarized, and contained a declaration of his income and assets as on 31.03.2015. This affidavit, being a legal document affirming financial particulars on oath, constitutes incriminating material having a direct bearing on the determination of income for the relevant assessment year. The contention of the assessee that such affidavit was executed for the purpose of availing bank finance and, therefore, should be ignored, cannot be accepted. A sworn affidavit cannot be brushed aside by the assessee by offering vague and unsubstantiated explanations. The assessee, being a responsible person and a director in a company, is expected to understand the seriousness and gravity of a document executed under oath. Once such a statement is voluntarily made in writing and duly notarized, it binds the maker of the document. Reliance is placed on the decision of the Hon’ble Supreme Court in Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC), wherein it was held that an affidavit duly affirmed and uncontroverted has evidentiary value and cannot be disregarded without cogent material to the contrary. Further, the finding of the CIT(A) that the affidavit qualifies as incriminating material within the meaning of section 153A of the Act is in consonance with judicial precedents. The learned CIT(A) has correctly relied on the decision of the Hon’ble ITAT, Ahmedabad in Ahir Salt and Allied Products v. DCIT [IT(SS)A No. 6 & 7/RJT/2022, dated 12.06.2024], wherein it was held that incriminating material found during a common search on a group can be used against any entity or person covered in such search to whom it relates. The Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 8– argument that the affidavit was found at the premises of Kothi Steels Ltd. and not at the residence of the assessee does not render it inadmissible in proceedings under section 153A of the Act, since both the entities were part of the same group and covered under the same search operation. The contention of the assessee that the approval granted under section 153D was mechanical and without application of mind has also been rightly rejected by the CIT(A) in light of the decision of the Hon’ble ITAT, Ahmedabad in Sanjay Gupta v. DCIT [IT(SS)A Nos. 147 & 148/Ahd/2019 & others, dated 26.11.2024], which held that simultaneous approval in group search cases does not vitiate the proceedings if the approving authority was aware of the facts and circumstances of the case. We concur with the CIT(A) that there is no illegality or irregularity in the approval process in the instant case. 10. On merits, we find that the learned CIT(A) has taken a fair and balanced approach by partially confirming the addition to the extent of Rs. 12,78,252/- after allowing due consideration for reasonable agricultural expenditure and by following the principle of consistency with the appellate order passed in the case of the assessee’s brother, Shri Firdos Kothi, who jointly owned the same agricultural land. The CIT(A) has rightly held that while the existence of agricultural operations is not in dispute, the quantum of income declared was excessive and unsupported by verifiable evidence. The CIT(A)’s estimation, based on rational and comparable data, is a well- reasoned and judicious conclusion, calling for no interference. 11. The assessee’s attempt to dilute the evidentiary value of his own sworn affidavit by offering afterthought explanations is wholly untenable. The law does not permit an assessee to retract from a solemn declaration made on oath Printed from counselvise.com IT(SS)A No. 30/Ahd/2025 Mohammed Suleman Abdul Hakim Kothi vs. DCIT Asst.Year –2015-16 - 9– unless specific proof of mistake or coercion is established, which is not the case here. The Hon’ble Supreme Court in Surjeet Singh Chhabra v. Union of India [1997] 1 SCC 508 has held that a voluntary statement made by an assessee binds him unless proved otherwise. Similarly, in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), it has been held that though an admission is not conclusive, it constitutes strong evidence against the maker and the burden of proving it incorrect lies heavily upon him. The assessee in the present case has failed to discharge such burden. 12. In view of the above discussion, we find no infirmity or perversity in the order passed by the learned CIT(A). The findings are based on appreciation of evidence, consistent with law, and supported by judicial precedents. We, therefore, uphold the order of the CIT(A) in its entirety and find no merit in the appeal filed by the assessee. 13. Accordingly, the appeal of the assessee is dismissed. This Order pronounced in Open Court on 07/11/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 07/11/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "