SURESH CHAND GUPTA,DELHI V. DCIT,CENTRAL CIRCLE, MEERUT

ITA 4096/DEL/2025

AI Insights

The case involves an appeal by Shri Suresh Chand Gupta against the order of the CIT(A) - 3, Noida, which pertained to the assessment year 2020-21. The appeal was directed against the additions made to Gupta's income based on a satisfaction note under section 153C of the Income-tax Act, following a search operation in the case of Praveen Kumar Jain, a real estate agent. The search led to the seizure of digital data, which the Assessing Officer (AO) interpreted as evidence of unexplained cash investments and undisclosed interest income linked to Gupta. However, the Tribunal found that the satisfaction note was based on incorrect assumptions and lacked direct evidence linking Gupta to the seized materials, leading to the quashing of the assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841669 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2020-2021
• Appeal Filed On: 26-06-2025
• Other Referred Cases: Calcutta Knitwears vs. M/s Calcutta Knitwears, DCIT Vs. Sunil Kr. Sharma, SRS Panchratna Diamonds Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE I.E. SURESH; MAHESH KUMAR
• Assessee Lawyers: RAJ KUMAR
• Keywords: Business income; Unexplained investment; Sale consideration of property below Jantri Value; Document seized; Documents seized

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs. TheDy.C.I.T B-19, Shambhu Nagar Central Circle Meerut Meerut PAN – AGOPG 9710 F (Applicant) (Respondent) Assessee By : Shri Raj Kumar, CA Shri J.P. Sharma, CA Department By : Shri Mahesh Kumar, CIT-DR Date of Hearing : 05.01.2026 Date of Pronouncement : 25.02.2026 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the assessee is directed against the order of the ld. ld. CIT(A) - 3, Noida dated 19.06.2025 pertaining to A.Y 2020-21. 2. The assessee has raised the following grounds of appeal : Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 2 of 12 “1. That under the facts and circumstances, SAT Note of A.O. of searched person and A.O. of assessee are not legally valid and competent for initiating proceedings U/s. 153C. 2. That in the absence of any statutory requirement of obtaining approval of PCIT (Central) Kanpur for initiating proceedings U/s. 153C, the impugned proceedings being initiated in consequence and as a result of such approval is legally unsustainable. 3. That in the absence of certificate U/s.65B of the Indian Evidence Act, 1872, the information taken out from digital data cannot be used at all for impugned asstt. proceedings. 4. That under the facts and circumstances the approval U/s.153D by Addl. CIT Dtd.28.03.25 followed by asstt. order Dtd.30.03.25 is not as per law, without application of mind, mechanical and without referring to relevant records is invalid in law, which makes the impugned asstt. illegal and unsustainable in law. 5. That under the facts and circumstances, Ld. A.O. grossly erred in law as well as on merits in making addition of Rs.7,50,00,000/- U/s.69B as for alleged Unexplained cash investment in M/s Mahagun India (P) Ltd. 5.1 That under the facts and circumstances, Ld. A.O. grossly erred in law as well as on merits in assuming the name as \"Anshul\" as \"Suresh Chand Gupta\" i.e. assessee, hence, there is no justification for examining the noting's against the name of Anshul in the case of assessee. 5.2 That in the absence of providing relevant adverse material and legible copies thereof, in spite of repeated requests and not providing for the cross-examination for various persons as requested etc, no adverse view can be taken in respect of these materials. 6. That under the facts and circumstances, Ld. A.O. erred in law as well as on merits in making addition of Rs.7,50,000/- as alleged undisclosed Intt. Income. on alleged unexplained cash investments of Rs.7,50,00,000/- with M/s Mahagun India Pvt. Ltd.” 3. At the outset, the ld counsel of the assessee submitted that ground 2 in respect to approval of PCIT and ground 3 in respect to certificate u/s Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 3 of 12 65B of the Evidence Act are not pressed. We therefore dismiss the ground 2 and 3 as not pressed. 4. The facts in brief emerging out of the assessment order are that a search took place in the case of Praveen Kumar Jain of HANS group on 06.01.2021.Shri P.K. Jain was a real estate agent working under and name & style of Jainco Ltd. Alongwith his son Sh. Vaibhav Jain.In the course of search, certain digital device and digital image were found and seized. Thereafter, proceedings under section 153C was initiated against the assessee a person other than the searched person, and a notice u/s 153C dated 07.06.2023 was issued after recording a satisfaction note dated 18.05.2023. The assessment for the year under considerationwas completed u/s153C of the Income-tax Act, 1961 [the Act, for short]on the basis of information and material gathered during search on Praveen Kumar Jain by making the following additions, which were confirmed by the ld. CIT(A): Amount Nature 7,50,00,000/- U/s.69B as unexplained cash investment in M/sMahagun India (P) Ltd. 7,50,000/- Rs.7,50,000/- as undisclosed Intt. Income, on above investment for 01 month @1% per month. 7,57,50,000/- Total Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 4 of 12 5. The aforesaid addition is made on the basis of one handwritten whatsappdigital image found in mobile of Shri P.K. Jain, which is extracted in Assessing Officer order at Page 10. This image has the title as \"MAHAGUN\". It has a date as 13.05.20. This image has a title as \"Mahagun\", dated 13.05.2020.There are total 6 entries on the said image wherein at Item No.4, there is a name as \"Anshul\".The entry at S.No.04 is as under:- Anshul 7,50,000 X 3 22,50,000 March/April/May) The Assessing Officer has interpreted the above narrations as follows: \"Anshul\" means - assessee i.e. Suresh Chand Gupta. \"7,50,000 X 3\" means - per month intt. @1% per month for Mar./Apr/May 2020 \"22,50,000\" means intt. for 03 months paid in Mar., Apr & May 2020 by Mahagun. Further by reverse calculation, the AO calculated the principal investment of Rs.7.50 Crore made by assessee withMahagun India Pvt Ltd on which Mahagun India Pvt Ltdpays interest @1% per month.Thereafter, theAssessing Officer made addition of Rs.7,50,00,000/- u/s69B of the Act as undisclosed investment in the hands of the assessee and further made addition of Rs.7,50,000/- as undisclosed interest income received by the Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 5 of 12 assessee on such investment.Tax was charged u/s115BBE of the Act on addition of Rs.7.50crores and at normal rate on addition of Rs.7.50lakh. 6. Now the aggrieved assessee is in appeal before us. At the outset, the ld counsel of the assessee took up the legal issue of validity of satisfaction noteand ground 5.1 regarding the name of the assessee not appearing in the seized material. The ld AR vehemently submitted that the proceedings u/s153C of the Act have been wrongly initiated by assuming whatsapp image found from Shri Praveen K. Jain’smobile as relating to assessee i.e. Suresh Chand Gupta. However, in the said image, the name of Suresh Chand Gupta nowhere appears. Hence the initiation and recording of satisfaction note is based on wrong facts and wrong assumptions. 7. The ld. counsel for the assessee continued by taking up ground 1 regarding and challenged the legal validity of satisfaction note on three counts: that the Satisfaction Note was prepared after inordinate delay of 13.5 months from the date of completion of relevant assessment of searched person ie., Praveen Jain which cannot be considered as “immediately after the completion of assessment in the case of Praveen Jain” as mandated by the Hon'ble Supreme Court in the case of M/s Calcutta Knitwears[2014] 43 taxmann.com 446 (SC) and CBDT’s Circular No 24/2015 dated 31.12.2015. Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 6 of 12 8. Secondly, theSatisfaction Note was a single consolidated note for 07 years i.e.A.Υ.15-16 to Α.Υ.21-22 which is legally not valid. For this proposition the ld. counsel for the assessee relied on DCIT Vs. Sunil Kr. Sharma (2024) 159 taxmann.com 179 (Karnataka High Court) wherein it was held that consolidate satisfaction note recorded for different A.Ys would vitiate entire assessment proceedings and SRS Panchratna Diamonds Pvt. Ltd. - ITA No.218 & 219/Del/2023-Dtd.14.11.2025. 9. Thirdly, the satisfaction note does not evaluate year wise linkage between seized material and the escaped income. The Satisfaction Note does not mention the details of any Annexure, identification of seized slips, digital data and information in Satisfaction Note.It simply mentions unexplained cash investment of Rs.7.5 Cr. and further unaccounted interest receipts of Rs.7.5 Lacs in A.Y. 2020-21 and further cash investment of Rs.7.35 Cr. and unaccounted interest receipts of Rs.90 Lacs in A.Y. 2021- 22.Hence satisfaction notewas very casually and mechanically prepared, not competent for providing legally valid jurisdiction u/s153C of the Act. 10. Per contra the ld DR. heavily relied on the orders of the AO and the CIT(A). 11. We have heard the rival submissions and have perused the relevant material on record. We examined the satisfaction note vis a vis the seized Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 7 of 12 digital image found and seized on the basis of which addition is made in the name of the assessee. For a proper perspective the satisfaction note is reproduced as under: Satisfaction note u/s 153C of the Act in the case of Sh. Suresh Chand Gupta, R/o B-19, Devshree, Shambhu Nagar, Railway Road, Meerut (PAN: AGOPG9710F) A search & Seizure operation was conducted in the case of Shri Praveen Jain, one of the searched party of HANS Group on 06.01.2021 during which cloned data of Parveen K. Jain's mobile was found and seized from the premise at C-42, C Block, Preet Vihar, Delhi-92 containing images of slip having details of the unsecured loans given to Mahagun (India) Pvt. Ltd and interest received from Mahagun(India) Pvt. Ltd. by Sh. Suresh Chand Gupta and also containing the images of slip titled as JAINCO found from the Phone of Sh. Parveen Kumar Jain. Director of M/s Jainco Ltd. having details of the unexplained investment in cash in the Commercial Shops in Mahagun Marina Walk by 'Sh. Suresh Chand Gupta. On examination of digital data and information, it is noticed that the seized documents/digital data and information are related to Sh. Suresh Chand Gupta i.e. the person other than the searched person. Therefore, I am satisfied that the digital data and the information found during the course of search in the case of Shri Parveen Jain, Delhi belongs to Sh. Suresh Chand Gupta (PAN: AGOPG9710F). Further, on the basis of above mentioned digital data/information, it is noticed that Sh. Suresh Chand Gupta has made unexplained cash investments amounting to Rs. 7,50,00,000/- and received Rs. 7,50,000/- as unaccounted interest receipts during the A.Y. 2020-21 and also made unexplained cash investments amounting to Rs. 7,35,00,000/- and received Rs. 90,00,000/- as unaccounted interest receipts during the A.Y. 2021-22. Therefore, I am satisfied that this has bearing upon the Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 8 of 12 determination of total income of the assessee and it is a fit case for action u/s 153C of the IT Act for A.Y. 2015-16 to 2021-22. Dated: 18.05.2023 Asst. Commissioner of Income Tax Central Circle, Meerut 12. The satisfaction note specifically states that the seized image is related to and belongs to the assessee, Suresh Chand Gupta. We then examined the digital image seized from the mobile of Shri Praveen Kumar Jainas whatsapp image, and reproduced by the AO in his order at page 10 of his order, on the basis of which the addition is made. We find that the image has a title as \"Mahagun\", dated 13.05.20 having total 06 rows having 6 names making financial transactions wherein entry at S.No.04 is as under:- Anshul 7,50,000 X 3 22,50,000 March/April/May) The AO has concluded that the said “Anshul” is Suresh Chandra Gupta, who is father of “Anshul”. The assessee has contested this finding of the AO stating that there is no material to show that the assessee is father of Anshul. 13. We find that the assessing officer has ‘reasonably inferred’ that the transaction in seized image shows parties receiving interest on their Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 9 of 12 investments made with M/s Mahagun India Pvt Ltd. The AO mere mention of the statement of Praveen K Jain where P K Jain admitted that he has saved the contact as Anshul, does not establish that transaction in the name of Anshul relates to or belongs to the assessee Suresh Chand Gupta. We do not find that the AO has established anywhere in his order that the name ‘Anshul’, appearing in seized image referred above, is the assessee Suresh Chand Gupta. Apart from holding that Suresh Chand Gupta is father of Anshul, the AO has not provided any document or corroborative evidence to relate the assessee with the said transaction. Even if it is accepted that Suresh Chand Gupta is father of Anshul, the AO has not substantiated with any cogent evidence as to how he has treated the transaction in the name of Anshul as being related or belonging to the assessee. 14. Further we find that the assessments of M/s Mahagun (India) Pvt. Ltd. for AYs 2020-21 and A.Y 2021-22 u/s 153C/143(3) of the Act, pursuant to the same search, has been completed by ACIT Central Circle-13 New Delhi vide orders dated 15.03.2024 and 30.12.2022 respectively. InA.Y.2021-22. the ACIT Central Circle-13 New Delhi has considered and adjudicated in assessment of Mahagun where the same whatsapp image of Rs.22,50,000/- has been held as unaccounted sale receipts by M/s Mahagun and 10% Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 10 of 12 thereof i.e. Rs.2,25,000/- has been added as undisclosed business income in the hands of Mahagun.In A.Y.2020-21, there is no corresponding finding thatMahagunreceived Rs.7.50 Crore as investment and made interest payment of Rs.7.50 Lakh to assesseein the assessment of Mahagun. The assessment in the case of Mahagun has attained finality, a fact uncontroverted by the Revenue. 15. We therefore, in the light of above discussion, reiterate that thename of the assessee is nowhere mentioned in the seized material. The nature of entries of the said imagehas beeninterpreted by the Revenue itself in two different manner.We further find that there is no mention of word \"investment\" or \"interest\" or \"rate of intt.\" @ 1% in the said image, hence adoption of such interpretation is sans any evidence or logic. Also,the AO has not furnished document/evidence or any basis/statement of Directors/personnel ofMahagun India Pvt Ltdor that of Praveen K Jain or Vaibhav Jain [the persons between whom this whatsapp image moved] suggesting/indicating that the entry in the said image refers to investment of 7.50 Crorewith interest of Rs 7.50 Lakh @1%. Moreover, the seized image is not found/seized from the assessee, hence the presumption of Sec.292C is also not applicable on assessee.We further find that the images of 09 envelopes, referred by the AO in his order at page 8 & 9, are not Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 11 of 12 related to assessee since, the name as \"Anshul\" or \"Suresh Chand Gupta\" is not mentioned on any of the envelope. 16. In view of the above factual matrix of the instant case, we are of the considered view that the name appearing on the image is that of \"Anshul\" and not of assessee\"Suresh Chand Gupta\".There is no other material which shows that the name \"Anshul\" used in the image is for assessee i.e. \"Suresh Chand Gupta\".The Assessing Officer finding that Anshul is mentioned for Suresh Chand Gupta since \"Suresh Chand Gupta is the father of Sh. Anshul Gupta\", is not corroborated with any evidence. In view of the same, the satisfaction note,where the AO has related the said imagewith assessee, Suresh Chand Gupta, is factually incorrect and is based on imaginary assumptions. The Satisfaction note therefore rendered fatal to the very assumption of jurisdiction and consequential framing of assessment u/s 153C of the Act for the assessment year 2020-21. Accordingly, the assessment made u/s 153C is held as invalid, unsustainable in law and therefore quashed. Ground 1 and 5.1 is allowed. 17. As the legal issue is decided in favour of the assessee, no adjudication is made on other legal issues or on merits. 18. In the result, the appeal of the assessee in ITA No. 4096/DEL/2025 is partly allowed. Printed from counselvise.com ITA No. 4096/DEL/2025 [A.Y. 2020-21]) Shri Suresh Chand Gupta Vs DCIT Page 12 of 12 The order is pronounced in the open court on 25.02.2026. Sd/- Sd/- [MADHUMITA ROY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25th FEBRUARY, 2026. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Printed from counselvise.com "