SANJAY BHUTAN,PREET VIHAR, DELHI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -31, DELHI

ITA 1404/DEL/2024

AI Insights

The case involves an appeal by Sanjay Bhutan against the order of the Commissioner of Income Tax (Appeals) -30, New Delhi, which upheld the addition of Rs. 62.00 lacs to the assessee's income for the assessment year 2021-22. This addition was based on an unexecuted and unsigned agreement to sell, found in a WhatsApp chat on the mobile phone of a third party, Mr. Praveen Kr. Jain, during a search and seizure operation under section 132 of the Income Tax Act, 1961. The Tribunal noted that the material used for the addition was seized from a third party and not directly from the assessee, leading to the conclusion that the proper procedure under section 153C should have been followed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126224 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2021-2022
• Other Referred Cases: ITA No. 1439/Del/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: MUKUL GUPTA
• Keywords: Unexplained investment; Search and seizure; Satisfaction; Dismissed; Commissioner; Commissioner of Income Tax; Purchases; Deleted; 153C; Department
• Section: 143(3); 132; 153C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1404/Del/2024 (ASSESSMENT YEAR 2021-22) Sanjay Bhutan G-174, Preet Vihar Delhi-110029. PAN-ADGPB2181A Vs. Dy. CIT-31, Delhi. (Appellant) (Respondent) Assessee by Shri Mukul Gupta, Adv. Department by Shri Sahil Kumar Bansal, Sr. DR Date of Hearing 17/04/2025 Date of Pronouncement 23/04/2025 O R D E R PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)[CIT(A) in short] -30, New Delhi dated 31.01.2024, for assessment year 2021-22 in appeal No. 10126/2020-21. 2. Brief facts of the case are that assessee is an individual and filed his return of income originally on 05.020.2022 declaring total income at Rs. 1,40,020/- which was revised on 18.02.2022 at a figure of Rs.19,09,640/- A search and seizure action u/s 132 of the Income Tax Act, 1961 (the Act, in short) was carried out in the case of Hans 2 ITA No.1404 /Del/2024 Sanjay Bhutan vs. DCIT group of cases on 06.01.2021 where in the WhatsApp chats found from the mobile phone of Mr. Praveen Kr. Jain seized, an agreement to sell was found which is in relation to the purchases of residential property by the assessee jointly with his wife Smt. Ritu Bhuttan for a total consideration of Rs. 1.85 crores. This agreement was unsigned and unexecuted. Assessee along with his wife has purchased an immovable property for which the agreement was registered at Rs.61.00 lacs. The AO by alleging that the actual sale consideration paid was of Rs. 1.85 crores, hold the payment of balance consideration of Rs. 1.24 crores as paid in cash out of undisclosed cash and made the addition of assessee’s share of 50% which comes to Rs. 62.00 lacs in the order passed u/s 143(3) of the Act dt. 31/12/2022. Against such order assessee preferred appeal before the ld. CIT(A) who vide impugned order dismissed the appeal thus the present appeal is filed by the assessee before the Tribunal. 3. At the outset, the ld.AR of the assessee submitted that the document referred by the AO is neither signed nor executed and was a photo of agreement to sell found in the Whatsapp chat in the mobile phone of third party Shri Praveen K. Jain. Ld. AR further argued that if the said document is treated as document u/s 2(22AA) of the Act, the same should be considered in the case of the assessee only in the proceedings initiated u/s 153C of the Act. However, in the instant case, the addition is made in the order passed u/s 143(3) of the Act, thus is not in accordance with law and deserves to be deleted. He further submitted that similar addition of Rs. 62.00 lacs based on 3 ITA No.1404 /Del/2024 Sanjay Bhutan vs. DCIT the same WhatsApp chat was also made in the hands of Smt. Ritu Bhuttan, spouse of the assessee, who is the co-owner of the residential house under reference, where the same were deleted by the coordinate of bench of Tribunal in ITA No. 1439/Del/2024. Ld. AR thus requested for the deletion of the additions made u/s 143(3) of the Act. 4. Per contra, ld. CIT DR vehemently supported the order of the lower authorities and submitted that the contents of the agreement found in the mobile chat pertained to the purchases transaction carried out by the assessee. Thus, the action of the AO in treating the sale consideration mentioned therein as the actual sale consideration and making addition by treating the differential amount of declared consideration stated in the registered sale deed and the said agreement to sell as cash paid out of undisclosed sources is correct. She, therefore, prayed for the confirmation of the addition so made. 5. We have considered the rival submissions. From the perusal of assessment order, it is seen that no search was carried out in the case of the assessee and the material found / seized from the possession third party was made basis for making addition in the hands of the assessee. Such material was found in WhatsApp chat of mobile phone seized from the possession of Shri Praveen Kr. Jain, a third party. In such situation, the proper course of action as per law was that the ld. AO should initiate the proceedings u/s 153C of the Act, after recording his own satisfaction upon receiving the 4 ITA No.1404 /Del/2024 Sanjay Bhutan vs. DCIT satisfaction note and material from the AO of person searched. As the material relied upon by the AO was found and seized from the possession of third party, no addition could be made in the assessment framed u/s.143(3) of the Act based on such material. Under identical circumstances, in the case of spouse of assessee Smt. Ritu Bhuttan, the coordinate bench of Tribunal in ITA No. 1439/Del/2024 vide its order dt. 21.03.2025 deleted the additions made by observing as under: “2. Heard both the parties at length. Case file perused. 3. It emerges during the course of hearing that there arises the first and foremost issue of validity of the impugned section 143(3) proceedings/assessment dated 30.12.2022 itself. This is for the precise reason that the learned departmental authorities had carried out a search in question at the premises of Sh. Parveen K. Jain on 06.01.2021 thereby coming across the assessee’s alleged agreement dated 26.11.2020 indicating unexplained investment(s) adjudication before us. 4. forming subject matter of That being the case, we first of all note that the alleged agreement extracted at pages 2 to 3 in the Assessment Order had nowhere been signed by either of the parties thereon. The Revenue seeks to buttress the point that the departmental authorities had deciphered the same on the basis of whatsapp chats which formed part of the seized material as a “document” as per section 2(22AA) of the Act. 5. We are of the considered view in this factual backdrop that once the above alleged agreements formed part of the seized material, the impugned “normal” assessment could not be held as sustainable in law since not framed as per the specific provisions of section 153C(1) of the Act. We thus quash the same for this precise reason and the assessee’s all other remaining pleadings stand rendered academic in very terms. 6. This assessee’s appeal is allowed.” 6. In view of the above discussion and by respectfully following the judgement of the coordinate bench in the case of Ritu Bhutani 5 ITA No.1404 /Del/2024 Sanjay Bhutan vs. DCIT (supra), we are of the considered view that no addition could be made based on any incriminating material found from the possession of third party in the order passed u/s 143(3) of the Act. Accordingly, we delete the additions made in the hands of the assessee which is made in the assessment order passed u/s 143(3) of the Act. 7. In the result, appeal of the assessee is allowed. Order pronounced on 23.04.2025. Sd/- Sd/- (YOGESH KUMAR U.S.) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 23/04/2025 PK/Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "