PAWAN MECHU,CHIRAWA V. DCIT CEN CIR 1, JAIPUR

ITA 74/JPR/2025

AI Insights

The case involves two appeals by Shri Pawan Mechu against the assessment orders passed by the DCIT, Central Circle-1, Jaipur, for the assessment years 2016-17 and 2018-19. Both appeals were related to the same issue of an addition of Rs. 1,05,51,000 made under Section 69 of the Income Tax Act, 1961, which was initially added on a protective basis in 2016-17 and substantively in 2018-19. The Tribunal examined the legality of these additions and the procedural correctness of the assessments made for both years. The Tribunal found that the protective addition in 2016-17 was unnecessary and that the substantive addition in 2018-19 was incorrectly upheld, leading to the setting aside of both assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717536 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 20-01-2025
• Other Referred Cases: CIT vs. Durgawati, CIT vs. Saraswati Devi, Jagannath Bawri v CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: VEDANT AGARWAL
• Keywords: Set aside; Unexplained investment; Salary income; Search and seizure
• Section: 142(1); 132; 69; 139

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Jh xxu xks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1458/JPR/2024 fu/kZkj.ko\"kZ@Assessment Year : 2016-17 Shri Pawan Mechu Surajgarh Road, Chirawa, Jhunjhunu. cuke Vs. The DCIT, Central Circle-1, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACGPM7067B vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 74/JPR/2025 fu/kZkj.ko\"kZ@Assessment Year : 2018-19 Shri Pawan Mechu Surajgarh Road, Chirawa, Jhunjhunu. cuke Vs. The DCIT, Central Circle-1, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACGPM7067B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Vedant Agarwal, Adv. jktLo dh vksjls@Revenue by: Mrs. Anita Rinesh, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing :13/08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 14/08/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . This common order is to dispose of the above captioned 2 appeals, as issue is involved in both the matters, and both the appeals have been argued simultaneously, on behalf of the parties. Printed from counselvise.com 2 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu 2. On 30.12.2021, the Assessing Officer passed assessment order, relating to the assessment year 2016-17 and thereby made an addition of Rs. 1,05,51,000/- on “protective basis” . 3. It may be mentioned here that an addition of the same amount i.e. Rs. 1,05,51,000/-, was made by the Assessing Officer vide separate assessment order of same date i.e. 30.12.2021, relating to the assessment year 2018-19, on “substantive basis”. In other words, regarding same amount, once addition was made in one assessment year on protective basis, but, in the other assessment year, addition for the same amount was made on substantive basis. That is how, the assessee, feeling aggrieved by the two assessment orders preferred two separate appeals before CIT(A). 4. Learned CIT(A), vide order dated 09.10.2024, disposed of the appeal filed by the assessee as regards the addition made on “protective basis”, relating to the assessment year 2016-17, making observations therein. 5. Vide order dated 16.11.2024, same Learned CIT(A) dismissed the other appeal, relating to the assessment year 2018-19, thereby sustaining the assessment order making “substantive basis” of the same amount i.e. Rs. 1,05,51,000/-. Printed from counselvise.com 3 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu 6. That is how, the assessee is in appeal before this Appellate Tribunal by way of two separate appeals. 7. Arguments heard. File perused. 8. It may be mentioned here that at the time of final arguments, when the appeals were taken on 13.08.2025, Ld. AR for the appellant presented an application with the prayer to raise two additional grounds. He also submitted written submissions on the grounds raised in two appeals. 9. The above said addition to the tune of Rs. 1,05,51,000/- has been made, while resorting to the provisions of Section 69 of the Act. As regards the assessment year 2016-17, addition of the said amount has been made on “protective basis”. As regard, the assessment years 2018-19, same addition of the same amount, under the same provisions has been made on “substantive basis” . What led to initiation of 2 separate assessment orders under section 153C of the Act? 10. In this regard, reference may be made to the following factual position made available by the Assessing Officer in the assessment orders:- “A search & seizure operation under section 132(1) of the Income-tax Act, 1961 (hereinafter \"the Act\") was carried out on 06.03.2018 in the case of \" SSS (Satyam, Sangani, Shaligram) Group\" of companies by the Investigation Directorate, Ahmedabad. During the search and seizure action, the residential premises of Shri Viral K Patel at B/104, Shaligram Flora, Near Sangini Banglows, Printed from counselvise.com 4 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu Opp. Shaligram-III, Thaitej, Ahmedabad was also covered u/s 132 of the Act. He is the key person of the said group handling cash transactions related to the M/s Satyam Developers Limited and its directors. During the course of search action, various incriminating documents and digital data was found and seized as per Annexure-1 to A-21. 2. In the case of the assessee information was forwarded by the JCIT(OSD), Central Circle-2(2), Ahmedabad along with satisfaction note recorded. Satisfaction Note was also recorded by the ITO, Ward-1, Jhunjhunu. Notice u/s 153C of the Act was issued on 31.03.2021 by the ITO, Ward-1, Jhunjhunu. In compliance to notice u/s 153C of the Act, the assessee filed his return of income on 15.04.2021 declaring total income of Rs. 26,21,200/-, which is the same as declared in the original return of income filed u/s 139 of the Act on 23.07.2016. Accordingly, Notice u/s 143(2) of the Act dated 20.04.2021 was issued by the ITO, Ward-1, Jhunjhunu. Thereafter, the case of the assessee was centralised to this Circle by Principal Commissioner of Income-tax-2, Jaipur vide DIN & Order No. ITBA/COM/F/17/2021-22/1034902342(1) dated 16.08.2021. 3. Notice u/s 142(1) of the Act was issued on 13.09.2021 along with questionnaire. The assessee furnished the required details, which have been examined w.r.t. to claims made in the return of income. 4. During the year under consideration the assessee declared income from salary, business or profession as well as income from 6. As per information received, the assessee had purchased an immovable property for Rs. 1,77,51,000/- out of which Rs. 1,05,51,000/- were paid in cash and Rs. 72,00,000/- paid thorugh banking channel. Query was made in this regard. The reply filed by the assessee have been considered, but not found acceptable. The Digital data in the LAPTOP of the key persons of the said group found during the course of search is having a great evidentiary value and from the data so extracted it was revealed that the assessee has made cash payment of Rs. 1,05,51,000/- against the purchase of property. ………… 6.1 During the course of search and seizure action in the case of \"Satyam Group\" statement of Shri Viral K. Patel from whose possession, the above mentioned data is recovered, were recorded and in reply to the question he accepted that the said data contain in the excel sheet contain details of payment received through Cheque as well as in cash.” Printed from counselvise.com 5 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu 11. After having observed thus, the Assessing Officer concluded that the assessee had paid the above said amount in cash, over and above transaction made through banking channel, and as such, this was a case which attracted provisions of section 69 of the Act. The Assessing Officer treated said investment as “undisclosed investment”. Why the same addition twice- once on “protective basis” and then on “substantive basis”, and that too in two different assessment years? 12. In this regard, as per the Assessing Officer, he was inclined to make addition on “protective basis” as cash payments of the said amount was made by the assessee in the financial year 2015-16, whereas, he was inclined to make the same addition on “substantive basis”, as purchase deed was got registered under the name of the assessee on 11.10.2017 i.e. during financial year 2017-18. 13. Ld. AR for the appellant has submitted that no substantive addition could be made as regards the assessment year 2018-19, as section 69 of the Act clearly provides that where the assessee has made investment, which is not recorded in the books of accounts or in respect of which no explanation is furnished by the assessee, and the investment remains undisclosed, the value of the said investment shall be deemed to be the Printed from counselvise.com 6 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu income of the assessee of such financial year, during which the investment is found to have been made. 14. Ld. AR for the department has not disputed that as per case of the department from the very beginning , the above said transaction by way of investment of the above said amount was made by the assessee during the financial year 2015-16, corresponding to the assessment year 2015-16. But, the contention raised by the Ld. DR for the department is that in such like cases where undisclosed investment is made during one financial year, and the sale deed is registered in some other financial year, as per practice, in respect of the first mentioned year i.e. during which investment is made, protective addition is made u/s 69 of the Act, whereas, as regards subsequent year, in which sale deed is got registered, addition is made on “substantive basis”. Accordingly, Ld. DR has defended both the assessment orders and the impugned orders passed by Learned CIT(A). 15. Section 69 of the Act needs to be reproduced for ready reference. It reads as under:- “Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee Printed from counselvise.com 7 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.” 16. As per above provision, the value of the unexplained investment, shall be deemed to be income of the assessee of the financial year “immediately preceding assessment year” during which the assessee made said unexplained investment. In the course of arguments, Ld. DR for the department has not disputed to the applicability of the provisions of section 69 of the Act in such circumstances/cases. 17. When from the very beginning, it is the case of the department that the unexplained investment was found to have been made by the assessee, in the financial year 2015-16, said investment is deemed to be the income of the assessee of the financial year 2015-16. Then, it remains unexplained as to how said addition could be made on “protective basis” as regards, the assessment year 2016-17? 18. As a result, the assessment order passed, while making addition as regards the assessee on protective basis deserved to be set aside. Interestingly, this very conclusion was arrived at by Learned CIT(A) himself Printed from counselvise.com 8 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu while dealing with the other appeal relating to the Assessment Year 2018- 19. In this regard, relevant portion of the impugned order relating to the assessment year 2018-19 reads as under:- “I agree with the ld. AO that as the purchase deed in the name of the assessee got registered on 11.10.2017 i.e. during the FY 2017-18, the substantive addition lies in AY 2018-19 and the same is accordingly upheld. In view of this above decision, the matching protective addition for the AY 2016-17 does not survive in consequence to this order / in appeal effect to this order. However in further appeal proceedings if it is held that the impugned income is not taxable in the AY 2018-19 in that case the matching protective addition done in the AY 2016-17 by Id. AO and upheld by me in appeal would revive as the substantive addition.” 20. From the above, it can safely be said that Learned CIT(A) was also of the view, taken by the Assessing Officer, that the deed having been got registered in the name of the assessee on 11.10.2017, the substantive addition was to be made in the assessment year 2018-19, and with said observations he arrived at the conclusion that the protective addition for the assessment year 2016-17 did not survive. So, it can safely be said that the assessment order for the assessment year 2016-17, making protective basis of the same amount Printed from counselvise.com 9 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu was in fact set aside, the reason being that the same did not survive, as observed by Learned CIT(A) himself. 21. Surprisingly, in the subsequent paragraph of the impugned order relating to the Assessment Year 2018-19, Learned CIT(A) made certain unexpected observations which, according to him, were to give effect to the first mentioned appeal before him, even after disposal of any appeal expected to be filed before this Appellate Tribunal. Learned CIT(A) observed that in case this Appellate Tribunal arrives at the conclusion that the said income is not taxable in the assessment year 2018-19, the protective addition made in the assessment year 2016- 17, by the Assessing Officer, would revive on substantive basis. In this regard, we may observe that law does not provide for any such observation by CIT(A). The Appellate Tribunal is required to give decision taking into consideration the establish facts and applying the relevant law/provisions. Similarly, the Assessing Officer and CIT(A) are also required to make observations as regards the facts established in the assessment proceedings and while applying the relevant provisions of law. In other words, neither the Assessing Officer nor Learned CIT(A) is expected to make any such observation which may lead to the conclusion that those Printed from counselvise.com 10 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu authorities were in dilemma regarding the findings, and conclusion arrived at by them and as regards the application of relevant provisions of law. In this case, the authorities below can safely be said to be in dilemma. At this stage, it may be mentioned that as per settled law when there is a doubt as to which person amongst two is liable to be assessed, parallel proceedings may be taken against both and (alternative assessments may also be framed, while a protective assessment is permissible, it not open to the appellate authorities to make a protective order. Law does not permit assessment of the same income successively in different hands. In this regard, reference may be made to decisions in CIT vs. Durgawati, 234 ITR 249; CIT vs. Saraswati Devi 212 ITR 445; Jagannath Bawri v CIT, 234 ITR 664. This is not a case where there was doubt as to which of the two persons was liable to be assessed. Learned CIT(A) was to arrive at a definite conclusion as to which of the two assessment orders was to be upheld. In the given situation, having regard to the provisions of section 69 of the Act reproduced above, the addition as regards the said amount i.e. only unexplained investment, could have been made or upheld only on Printed from counselvise.com 11 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu substantive basis and that too only in the assessment year 2016-17, and not relating to the assessment year 2018-19. Result 22. In view of the above discussion and findings, when Learned CIT(A) observed in the appeal relating to the assessment year 2016-17 that the said order did not survive, the appeal challenging order, relating to the assessment year 2016-17 was deemed to have been allowed. Consequently, the appeal ITA No. 1458/JPR/24 filed by the assessee relating to the assessment year 2016-17, and challenging said order passed by Learned CIT(A), actually passed in his favour, was not maintainable. It is so held. As regards ITA No. 74/JPR/2025, relating to the assessment year 2018-19, in view of the above findings, since the substantive addition was required to be made for the assessment year 2016-17, the impugned order passed by Learned CIT(A) upholding the substantive addition made for the assessment year 2018-19 is set aside. In view of the above conclusion arrived at by us, the additional legal grounds sought to be raised are not being taken up for discussion. Printed from counselvise.com 12 ITA No. 1458/JPR/2024 & 74/JPR/2025 Sh. Pawan Mechu, Jhunjhunu Copy of the common order be also placed in the file of connected appeal. Files of appeal be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 14/08/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 14/08/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Pawan Mechu, Jhunjhunu. 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-1, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File ITA No. 1458/JPR/2024 & 74/JPR/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "