SH. NASRUDDIN,KOTA V. ITO, WARD-2(1), KOTA, KOTA

ITA 716/JPR/2025

AI Insights

The case involves Sh. Nasruddin, who challenged the order of the Learned CIT(A) regarding an addition of Rs. 6,81,750 to his income, deemed as unexplained investment. The addition was based on documents seized during a search operation at Shubham Group, Kota, which allegedly showed a discrepancy in the sale consideration of a property purchased by the assessee. The primary legal contention was whether the reassessment should have been conducted under section 153C of the Income Tax Act, which deals with the assessment of income of any other person based on seized documents, rather than under section 148. The Tribunal's decision emphasized the need to follow the correct procedural provisions when incriminating material is involved.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781589 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 30-04-2025
• Other Referred Cases: Shyam Sunder Khandelwal and others v. ACIT, UOI v. Ashish Agarwal, Rajeev Bansal's case
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: P.C. PARWAL
• Keywords: Set aside; Opportunity of being heard; Unexplained investment; Document seized; Documents seized; Reopening of assessment; Search and seizure; Loose papers
• Section: 147; 148; 153A

Judgement Text

"vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC-Bench” JAIPUR Jhxxuxks;y] ys[kk lnL;,oaJhujsUnzdqekj] U;kf;dlnL; ds le{k BEFORE: SHRIGAGAN GOYAL, AM& SHRI NARINDER KUMAR, JM vk;djvihyla-@ITA No.716/JPR/2025 fu/kZkj.ko\"kZ@AssessmentYear : 2016-17 Sh. Nasruddin 123, Opposite Bhartendu Samiti, Ladpura, Kota. cuke Vs. The ITO, Ward-2(1), Kota. LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: ADDPK1571E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri P.C.Parwal, C.A. jktLo dh vksjls@Revenue by: Shri Gautam Singh Choudhary, Addl. CIT lquokbZ dh rkjh[k@Date of Hearing :25/09/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 29 /09/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . Assessee-appellant has challenged order dated 25.02.2025, passed by Learned CIT(A), NFAC, relating to the assessment year 2016-17, whereby the appeal filed by the assessee, challenging assessment order dated 19.04.2023, has been dismissed, thereby upholding the only addition of Rs. 6,81,750/-, made due to unexplained investment made by the assessee. Printed from counselvise.com 2 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. 2. Arguments heard. File perused. Contentions 3. The only contention raised by the Ld. AR for the appellant before us is that in the appellate proceedings, the assessee-appellant had raised an additional ground challenging re-opening of assessment u/s 147 of the Act instead of proceeding u/s 153C of the Act, but, Learned CIT(A) did not record any specific findings, as regards the said contention and rather dismissed the appeal, while sustaining the addition. Further, it has been contended that this is a case, where some incriminating material is stated to have been seized from the other, but neither copies of the incriminating material were supplied to the assessee, nor assessment proceedings were conducted under section 153 C of the Act, and rather, same have been conducted under section 148 of the Act, and as such, the assessment order deserved to be set aside. 4. On the other hand, Learned DR for the department has submitted that this is a case where the Assessing Officer received only information and on its basis initiated proceedings against the assessee rightly under section 148 of the Act. Further, Learned DR has submitted that Learned Printed from counselvise.com 3 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. CIT(A) specifically dealt with the abovesaid legal ground raised on behalf of the appellant, and ultimately, dismissed the appeal. In this regard, Learned DR has referred to the relevant part of the impugned order. Learned DR has further submitted that case of the assessee was rightly re-opened under section 148A(d) in view of the decision by Hon’ble Apex Court in Ashish Agarwal’s case, for the reasons recorded and communicated to the assessee. Discussion 5. As finds mentioned in para 5.2 of the impugned order, in the written submissions dated 17.02.2025, submitted on behalf of the appellant,before Learned CIT(A), it was claimed that the Assessing Officer reopened the case of the assessee u/s 148 of the Act on the basis of incriminating documents found on search action at Subham Group, Kota. It was further contended that in such like case, any assessment against the other person based on the documentsseized in search of one person can be made only u/s 153C of the Act, and not u/s 148 of the Act. Printed from counselvise.com 4 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. 5. In para 5.2 and 5.3 of the impugned order, Learned CIT(A), NFAC, while dealing with the said legal additional ground observed in the manner as:- “5.2 During the appellate proceedings of the appeal dated 27.04.2023, the appellant apart from the above grounds, vide his submissions dated 17.02.2025 has submitted that the AO has reopened the case of assessee u/s 148 on the basis of the incriminating documents found in search of Shubham Group, Kota, and any assessment of a third person based on the document seized in search of other person can be made only u/s 153C and not under section 148. This is evident from the language of section 153C the head of which is \"Assessment of income of any other person\". This section starts with notwithstanding clause and overrides section 147 and 148. 5.3 Ostensibly, the documents were seized during the search and seizure operation of the Shubam Group and the statements were recorded from the Director of the Company Shri Ram Bhatia and surrendered undisclosed income of Rs. 81,13,500/-. As per the document, the assessee has purchased one flat No. E-27 size 1420 sq.ft. at Land Mark City Project jointly with Smt Salma of Rs.53,78,500/-whereas sale consideration of Rs.40,15,000/- was recorded in its books of accounts. The difference amount of Rs. 13,63,500/- being undisclosed investment and this property has been purchased jointly with wife share 50% equals to Rs.6,81,750/-has been added to the total income of the assessee.” 6. As per case of the department, a survey operation was conducted by the department at M/s Shubham Group, Kota, which led to seizure of documents; that only information was received from DCIT, Central Circle, Kota; thatas a consequence to the said search operation,it transpired that the assessee and Smt. Salma had purchased property of Rs. 53,78,500/- from the above said group, but, in the books of accounts, sale Printed from counselvise.com 5 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. consideration was recorded as Rs. 40,15,000/-, and as such, there was a difference of Rs. 13,63,500/-; and that in this situation, notice u/s 148 of the Act was rightly issued. The contention raised by Ld. DR for the department is that even though certain documents are stated to have been seized from Shubham Group, Kota, on search conducted by the department there, it was only on the basis of information received from DCIT, Central Circle, Kota vide letter dated 22.03.2019, that the Assessing Oficer issued notice u/s 148 of the Act to the assessee, and as such, there is no merit in the contention raised by Ld. AR for the appellant that the Assessing Officer should have issued notice u/s 153C of the Act, and not u/s 148 of the Act. 7. Ld. AR for the appellant has submitted that neither during assessment proceedings nor in the appellant proceedings, any such document, stated to have been seized during survey, was provided to the Assessee. 8. Record reveals that in response to the show cause notice issued on 14.02.2023, the assessee furnished reply dated 26.02.2023. Printed from counselvise.com 6 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. As per clause-(e) of sub para(ii) of para-2 of the reply, the assessee claimed that the difference in the amount of the value of the property sold, be not treated as unexplained income in his hand, the reason being that the department had not produced any such documents/ evidence which could establish that he had made payment “on money”, and that any nothings by the seller company cannot be treated as concrete evidence regarding payment of “on money” by the assessee. Accordingly, Ld. AR for the appellant has submitted that in the given situation, the matter need not be remanded to the Assessing Officer for decision afresh so as to provide reasonable opportunity of being heard. 9. We have gone through the assessment order. Admittedly, the assesseeand his wife jointly purchased flat No. E-27, of the size of 1420 sq.ft. at Land Mark City Project. In the assessment, there is no mention that after the assessee furnished above said reply to the show cause notice dated 14.02.2023, the Assessing Officer took steps to provide to the assessee copy of the incriminating material, regarding payment “on money” by the assessee. *In Shyam Sunder Khandelwal and others v. ACIT, decided on 19.3.2024, our own Hon’ble High Court, while dealing with the cases re-opened under Printed from counselvise.com 7 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. section 148, initiation of said proceedings based on incriminating material and documents, and statements recorded during proceedings, and provisions of section 153A to 153D of the Act observed the operating field of the sections 148 and 153A to 153D are different. * Here, it is not case of the department that for initiating proceedings under section 148, it had material other than the material seized during search of Shubham Group, as regards the sale consideration of flat sold by the said Company to the assessee and Smt. Salma, in their joint names, some loose papers recovered on search of, and inspection of books of accounts of the said company, which revealed that the sale consideration was recorded therein as Rs.40,15,000/-. Furthermore, Shri Ram Bhatia, one of the Directors of the said company is stated to have surrendered undisclosed income of Rs. 81,13,500/-on the basis of seized documents. As regards the allegation that the difference amount was found to have been paid by the assessee as “ on money” to the seller company, the case was re-opened under section 148 of the Act, in view of the above facts which were revealed on search conducted on Shubham Group, Kota, and on the basis of material available on the record of the said company. Printed from counselvise.com 8 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. 13. It is not case of the department that any incriminating material was recovered from the assessee on the abovesaid fact. 14. Further, it is not case of the department that no incriminating material was received by the concerned Assessing Officer from the DCIT, Central Circle, Kota vide letter dt.22.3.2019. No copy of said letter has been made available to us or made part of the assessment order. 15. In the given facts and circumstances, this being a case of search and seizure of incriminating material from Shubham Group, case of the assessee was re-opened under section 148 of the Act. 16. But, in view of the specific provisions to deal with such a situation i.e. recovery of incriminating material from the said group on search, and then re-opening of the case already completed as regards the assessee, the relevant provision was of section 153C of the Act and following the procedure provided u/s 153A. 17. In the given situation, we find merit in the contention raised by learned AR for the appellant that the case of the assessee is covered by the decision of our own Hon’ble High Court in Shyam Sunder Khandelwal and others’ case, where, notice issued under section 148 of the Act and the Printed from counselvise.com 9 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. impugned orders were quashed, granting the Revenue liberty to proced against the assesses in accordance with law. 18. At this stage, it would be relevant to refer to the observations made by Hon’ble Apex Court in Rajeev Bansal’s case-reported in (SC) 2024 ITL 4249, in particular para nos. 65 to 69, which dealt with the provisions of TOLA with section 149 of the Act. Therein, Hon’ble Apex Court while taking for instance a case of the assessment year 2013-14 observed that 6 years time limit under section 149(1)(b) of the old regime expired on 31.3.2020, but TOLA extended the period for issuing notice until 30.6.2021, given the difficulties that arose because of the COVID-19 pandemic. As per notifications dated 31.3.2021 and 27.4.2021 issued by the Central Government, operation of TOLA was extended by providing an extended time limit for completing actions under the Act till 30.6.2021. Hon’ble Apex Court clearly observed in para 68 of the said decision that on 1.4.2021, TOLA was still in existence, and the Revenue could not have ignored the application of TOLA and its notifications. Printed from counselvise.com 10 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. In para 69 of the decision, Hon’ble Apex Court, for instance, while referring to the time limit as provided under section 149(1)(a), in a case pertaining to assessment year 2017-18, observed that 3 years period expired on 31.3.2021, and further that expiry of time fell within the time period contemplated by section 3 of TOLA read with its notifications, and as such, the Revenue had time until 30.6.2021 to issue reassessment notice for the said assessment year. In para 72, Hon’ble Apex Court observed that the time limit for issuance of a reassessment notice, which fell for completion between 20.3.2020 and 31.3.2021 had been extended till 30.6.2021. Admittedly, here, fresh assessment proceedings were initiated against the assessee in view of decision in UOI v. Ashish Agarwal and the CBDT instructions contained in circular dated 11.5.2022, wherein it was stated that Hon’ble Court had directed the Assessing Officers to treat notice under section 148 of the Act as a show cause notice under section 148A(b) of the Act. Admittedly, this is a case where the scrutiny assessment completed by the A.O. earlier on 27.3.2022, but fresh notice only under section 148 of the Act was issued on 31.3.2021. Indisputably, available information was Printed from counselvise.com 11 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. provided to the assessee by way of opportunity afforded to the appellant of being heard, as per provisions of section 148A(b) of the Act. There is nothing on record to suggest that in reply to response of the assessee to the notice, the department supplied to the assessee copy of loose paper or copies of relevant books of the Group or that of disclosure made by one of the directors of said Group. The fact remains that this case of search and seizure on the said Group was re-opened against the assessee u/s 148 and not under the relevant provision i.e. 153C of the Act. No doubt, the directions in Ashish Agarwal extend to all the reassessment notices which were issued under the old regime during the period from 1.4.2021 and 30.6.2021, but, as discussed above, this is a case of search on a Group and re-opening of the assessment against the assessee on the basis of incriminating material recovered from the said Group, and as such covered by the provisions of section 153C of the Act. Therefore, the decision in Ashish Agarwal’s case does not come to the aid of the Revenue in this matter pertaining to re-assessment or re- opening of the matter u/s 148 of the Act. Printed from counselvise.com 12 ITA No. 716/JPR/2025 Sh. Nasruddin, Kota. Consequently, the impugned order passed by Learned CIT(A) deserves to be set aside. Result *As a result, this appeal is allowed and the impugned order passed by learned CIT(A) dismissing the appeal of the assessee is hereby set aside File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 29/09/2025. ¼xxu xks;y½ ¼ujsUnzdqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:-/09/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Sh. Nasruddin, Kota. 2. izR;FkhZ@ The Respondent- ITO, Ward-2(1), Kota. 3. vk;djvk;qDr@ Theld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File ITA No. 716/JPR/2025) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar Printed from counselvise.com "