VAIBHAV JAIN,DELHI V. DCIT CENTRAL CIRCLE 3, DELHI

ITA 4824/DEL/2025

AI Insights

The case involves appeals by Vaibhav Jain against the orders of the Commissioner of Income-tax (Appeals)-23, Delhi, which upheld the additions made by the Assessing Officer under sections 69 and 69A of the Income-tax Act, 1961, for the assessment years 2020-21 and 2021-22. The additions were based on alleged undisclosed loans and interest transactions with Mahagun (India) Pvt. Ltd., inferred from seized data during a search operation. The Tribunal examined whether the materials used by the Assessing Officer to initiate proceedings under section 153C constituted credible and specific incriminating evidence. The Tribunal concluded that the materials did not meet the legal standards required for such proceedings, leading to the quashing of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 789013 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 06-08-2025
• Other Referred Cases: Raghav Kumar Versus ACIT, CC 29 Delhi
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: C. S. ANAND; VAISHNAVI YADAV; ASTHA SHARMA
• Keywords: Tangible material
• Section: 143(3); 142(1); 69

Judgement Text

"P a g e | 1 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER ITA Nos. 4823 & 4824/Del/2025 (Assessment Years: 2020-21 & 2021-22) Vaibhav Jain C/o CA Naveen Jain 460, F.I.E. Patparganj Industrial Aread, Delhi – 110092 Vs. DCIT, Central Circle-3 E-2, ARA Centre Jhandewalan Extension New Delhi – 110055 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: ADHPJ4957B Appellant .. Respondent Appellant by : Sh. C.S. Anand, Adv. & Ms. VaishnaviYadav, Adv. & Ms. Astha Sharma, Adv. Respondent by : Sh. Dayainder Singh Sidhu, CIT, DR Date of Hearing 19.11.2025 Date of Pronouncement 28.11.2025 O R D E R PER ANUBHAV SHARMA, JM: These are appeals preferred by the Assessee against the common order of the Ld. Commissioner of Income-tax (Appeals)-23, Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for Printed from counselvise.com P a g e | 2 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) short) in appeals filed before him against the different orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 153C r.w.s143(3) of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’) for AYs. 2020-21 & 2021-22. 2. Heard and perused the records, the issues involved in the two appeals have common background in context to the facts as well as the law relied, therefore, they are being adjudicated together and the facts and impugned findings for AY 2020-21 shall be considered and narrated wherever relevant. 3. The first issue raised by the ld. Counsel is challenging the reasons recorded for assumption of search assessment u/s 153C of the Act. The facts are that the assessee had e-filed his ITR on 30.11.2020 declaring a total income of Rs.3530670/- . The AO had issued a notice dt. 3.04.2023 u/s 153C {PB:02}. Thereafter, the AO hadcommenced the assessment proceedings by issuing notice dt. 27.06.2023u/s 142(1) of the Act. The assessee had filed a letter dt. 29.06.2023 to the AO, asking for copies of the satisfaction notes & other connected documentsand e-filed his ITR on 30.06.2023 declaring same total income of Rs.3530670/-. Then vide SCN dt.27.12.2023, fixing compliance for 02.01.2024, the AO had asked the Printed from counselvise.com P a g e | 3 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) assessee to explain as to why an addition be not made u/s 69 of the Act at Rs.78750000/- and u/s 69A at Rs.787500/-. The assessee vide letter dt. 01.01.2024, requested the AO to provide copies of satisfaction notes & other connected documents and thenvide letter dt. 08.01.2024, the AO had provided copies of satisfaction notes & other connected documents. Thereafter, the assessee had responded to the SCN and then again vide SCN dt.31.01.2024, the AO had asked the assessee to explain as to why an addition be not made u/s 69 at Rs. 78750000/- and u/s 69A at Rs. 787500/- . The assesseevide letter dt. 07.02.2024, responded to the SCN but AO was not satisfied and the AO had passed the assessment order dt. 19.02.2024 u/s153C rws 143(3) making addition u/s 69 at Rs. 78750000/- and u/s 69A at Rs. 787500/-. 4. Assessee went in appeal before ld. CIA(T) and vide letter dt.05.11.2024, the assessee had made submissions before the CIT(A) { copy made available at PB:68-78} alongwith various attachments {copy made available at PB: 02, 03-07, 33-37, 38-43, 174-196, 197-212 & 213- 226}. The CIT(A) had sought report from the AO vide his letter dt.08.11.2024 on the issue relating to loan given {copy made avaialbePB:227} and vide his letter dt.06.12.2024 on the issue relating to images/chats appearing in the assessment order { copy made available at Printed from counselvise.com P a g e | 4 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) PB:228-229}. After a gap of more than 5 months, vide letter dt. 27.05.2025 the AO had submitted his Report to the CIT(A) { copy made available at PB:230-245}. Upon getting copy of the AO's report, vide letter dt.07.06.2025, the assessee had submitted his Rejoinder to the AO's report dt. 27.05.2025 {copy made available at PB:79-89}.However, vide impugned order assessee’s appeal was dismissed. 5. Now what comes up from the contention of ld. Counsel is that in regard to these to AYs, the assessment was not pending hence these are case of unabated assessments. The contention of ld. Counsel is that initiation of the proceedings u/s 153C was not based upon any definite incriminating material. What can be seen is that in the Satisfaction Note dt.20.01.2023, the AO had mentioned the incriminating material to be; \"Cloned data of Sh.Parveen K Jain's mobile I-phone marked as Annexure A-5 found and seized from the premise at C-42, C-Block, PreetVihar, Delhi-110092 containing images of slip having details of the unsecured loan given to Mahagun (India) Pvt. Ltd. by Sh. Vaibhav Jain\".{PB: 36-37}. 6. Ld. Counsel contends that such averment of the AO is incorrect, in as much as nothing is mentioned regarding the amount of Rs. 78750000/- having been advanced bySh. Vaibhav Jain (the assessee Printed from counselvise.com P a g e | 5 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) herein). To determine this controversy as to if there was at all incriminating material to form basis of reasoning for assumption of jurisdiction u/s 153C of the Act, and as to how this figure of Rs.78750000/- was surfaced our attention was invited towards the image of the handwritten sheet scanned copied in assessment order in para 4.3 of the assessment wherein a figure of 787500 was appearing against the name Vaibhav Jaindetailed as ‘787500x3 March/April/May2362500’. On thebasis of the said image, the AO had presumed that the assessee had earned interest income of Rs. 787500/- for the month of March 2020 and thereafter by making a reverse working to find out the amount on which the interest of Rs. 787500/- could have been earned, the AO had assumed that the principal amount would be Rs.78750000/- (Rs.787500/-multiplied by 100). 7. Now admittedly these being a case of unabated assessment, the requirement of existence of third-party incriminating material is sine qua non for valid assumption of jurisdiction u/s 153C of the Act. It is settled law that the material/evidence relied upon by the AO for assuming jurisdiction u/s 153C must be credible, specific, speaking and also that the truthfulness of the same must be accepted/affirmed by the third party. It was pointed out that no addition was made in the case of M/s Printed from counselvise.com P a g e | 6 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) Mahagun (India) Pvt. Ltd. for AY 2020-21, in as much as the assessment was completed u/s 153C on the very same search vide assessment order dt.15.03.2024. The alleged incriminating material does not mention any context or background of figures scribed and very specifically the amount of Rs.78750000/- is nowhere mentioned. The allegation being of undisclosed loan and interest makes it vital to know date & year of advancing such amount by the assessee to M/s Mahagun (India) Pvt. Ltd., which is absent. 8. In this context it comes up that vide the letter dt.08.11.2024 issued by the CIT(A) to the AO {copy available at PB: 227} theCIT(A) had specifically asked the AO to furnish complete details of(i) the amount of loan given; (ii) the date(s) on which loan was given; and (iii) the mode of loan given. Attention was also invited towards the letter dt. 06.12.2024 issued by the CIT(A) to the AO {copy available at PB: 228-229} wherein the CIT(A) had stated- “In view of the above, you are hereby directed to specify as to how such images/chats have any bearing on the case of the appellant and also to provide the document/ material, if any, on the basis of which it may be held that the appellant named Shri Vaibhav Jain had paid Rs. 7,87,50,000/- to M/s MahagunRealestatePvt. Ltd. during FY 2019-20. Printed from counselvise.com P a g e | 7 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) Please also state whether any action is taken in the case of sh.VaibhavJain son of sh. Praveen k Jain, on the basis of above seized material, if yes, please submit factual report in that regard.” 9. On the basis of aforesaid communication of ld. CIT(A) itself it is clear that actually at the time of recording the reasons the AO was not aware as to what is the ascertained incriminating material. It is not just the physical evidence in the form of a document but the content of the document that should make out incriminating material found in the search of other person to be made basis of recording reasons and assumption of jurisdiction. Thus formation of belief that the assessee had advanced such amount of Rs. 78750000/- to M/s Mahagun (India) Pvt. Ltd. or invested such amount of Rs. 78750000/- with M/s Mahagun (India) Pvt. Ltd. during FY 2019-20 (AY 2020-21) was on mere assumption and interpolation of figures scribed on alleged incriminating material and thus the assumption of jurisdiction u/s 153 C of the Act is vitiated. 10. It further comes up that in the case of Raghav Kumar Versus ACIT, CC 29 Delhi vide ITA No. 3214 and 3215/DEL/2025 a co-ordinate bench by order dated 15.10.2025 has taken into consideration a similar piece of circumstance in which too the search pertained to HANS group and Shri Praveen K Jain, was also covered. The coordinate bench has held third Printed from counselvise.com P a g e | 8 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) party material must be specific, speaking and must clearly bring out the details of undisclosed transaction. The same set of material relied by AO was not found to be tangible material or incriminating material establishing anything adverse against that assesse. Thus we are of considered view that here too the assumption of jurisdiction u/s 153C of the Act is not backed by any incriminating material. 11. Connected to the aforesaid issue is the challenge of approval granted u/s 153D of the Act. The ld. CIT(A) has dismissed this ground while stating that \"The absence of a prescribed format or explicit reasoning in the assessee in the approval does not invalidate it, as Section 153D does not mandate such formalities\" and \"Further, the appellant has not furnished any arguments or any evidence in support of the ground of appeal\". 12. We are of considered view that had the Addl. CIT, Central Range-1 Delhi while granting the approval applied its mind then the issue raised by ld. CIT(A) during appeal proceedings, by way of aforesaid, query should have been first got addressed by the Addl. CIT, Central Range-1 Delhi, from the AO. Thus it is not a case of valid approval in terms of Printed from counselvise.com P a g e | 9 ITA Nos. 4823 & 4824/Del/2025 Vaibhav Jain (AYs: 2020-21 & 2021-22) section 153D of the Act. Hence from this angle too, the additions made are liable to be deleted. 13. Accordingly we are inclined to allow grounds no. 2(a) and 6 of appeal for AY 2020-21 and findings squarely apply to appeal for AY 2021-22 covering the corresponding grounds. The appeals are thus allowed and impugned additions stands quashed. Order Pronounced in the open court on 28.11.2025 Sd/- (Krinwant Sahay) Sd/- (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 28.11.2025 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "