VINOD JAIN,BANGALORE V. DCIT, CENTRAL CIRCLE-2(2), BANGALORE

ITA 505/BANG/2025

AI Insights

The case involves Shri Vinod Jain, the appellant, who challenged the order of the Ld.CIT(A)-15, Bengaluru regarding the assessment year 2019-20. The primary contention arose from a search and seizure operation that led to the seizure of cash, silver, and gold, which the authorities treated as unexplained income and investments under sections 69 and 69A of the Income Tax Act. The appellant argued that the lower authorities erred in law and fact by not considering available explanations and relevant financial statements. The Tribunal found that the Ld.CIT(A) had not adequately addressed the legal grounds concerning the legality of the search and the assessment proceedings, leading to the decision to remit the case back for a comprehensive re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781984 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 10-03-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHWIN D GOWDA
• Assessee Lawyers: PRASHANTH G. S
• Keywords: Unexplained investment; Principle of natural justice; Search and seizure
• Section: 142(1); 69; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 505/Bang/2025 Assessment Year : 2019-20 Shri Vinod Jain, No. 1/103, Ahuja Chambers, Kumarakrupa Road, Bangalore – 560 001. PAN: AAUPV0575B Vs. The Deputy Commissioner of Income Tax, Central Circle – 2(2), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Prashanth G.S, CA Revenue by : Shri Ashwin D Gowda, Addl. CIT-DR Date of Hearing : 30-07-2025 Date of Pronouncement : 27-10-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the Ld.CIT(A)-15, Bengaluru dated 31/01/2025 in respect of the A.Y. 2019-20 and raised the following grounds: “1. That the order of learned lower authorities is bad in law in so far it is prejudicial to the interests of the appellant and erroneous in law and against the facts and circumstances of the case. A. Grounds on Cash Seized 2. That the learned lower authorities erred in law and on facts in treating the entire cash of Rs 26,59,685 found during the course of search as unexplained income when Printed from counselvise.com Page 2 of 6 ITA No. 505/Bang/2025 there was cash balance available with the appellant to the extent of Rs. 20,33,349 in the financial statements. 3. That the learned lower authorities erred in law and on facts in treating the entire cash of Rs 26,59,685 found during the course of search as unexplained income on the ground of preponderance and human probabilities. 4. That the learned lower authorities erred in law and on facts in not giving the credit of 20,00,000 cash seized by the department while computing the tax liability in spite of it appearing in 26 AS of the appellant for the assessment year 2019 – 20 5. That the learned lower authorities erred in law and on facts in levying higher 234B interest due to non- consideration of 20,00,000 credit appearing in 26 AS of the appellant for the assessment year 2019 — 20 B. Grounds on Sliver Seized 6. That the learned lower authorities erred in law and on facts in treating the silver articles of Rs 27,00,000 found during the course of search as unexplained investment when they were recorded in the financial statements of the appellant and his family members. 7. That the learned v erred in law and on facts in not giving the credit of 27,00,000 while computing the tax liability in spite of DD drawn in favour of Principal Commissioner of Income Tax (Central) wide DD No-000885 dated 14/12/2019 for assessment year 2019 — 20 8. That the learned lower authorities erred in law and on facts in levying higher 234B interest due to non- consideration of 27,00,000 credit which was DD drawn in favour of Principal Commissioner of Income Tax (Central) wide DD No-000885 dated 14/12/2019 for assessment year 2019 — 20. C. Grounds on Gold Jewellery Sized 9. That the learned lower authorities erred in law and on facts in not appreciating the fact that the gold seized was belonging to the ancestors and therefore, no evidence is available for purchase of the same. 10. That the learned lower authorities erred in law and on facts in not giving the benefit of CBDT Instructions No. Printed from counselvise.com Page 3 of 6 ITA No. 505/Bang/2025 1916, dated 11.05.1994 to appellant while determining the excess jewellery. 11. That the learned lower authorities erred in law and on facts in levying making charges of Rs. 15,82,312 on jewellery when the same shall be inclusive of the value of jewellery. Each of the above grounds is without prejudice to one another, the appellant herein seeks the leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify each or any of the grounds of appeal either before or at the time of hearing this appeal.” 2. The brief facts of the case are that the assessee is an individual and filed his return of income on 30/10/2019. Subsequently there was a search and seizure operation conducted in the case of M/s. Brindavan Roller Flour Mills Ltd., Mysore wherein the residence of the assessee was covered, in connection with the search proceedings with Group case of M/s. Vivek Agro Foods & Others group. Thereafter notice u/s. 143(2) was issued and the assessee filed the details called for. A notice u/s. 142(1) along with the Show Cause notice was issued on 12/08/2020. After considering the documents, the AO had proposed to treat the cash seized on 12/08/2020 as unexplained money u/s. 69A of the Act. The AO not accepted the explanations and added the cash seized at Rs. 26,59,685/- as unexplained money u/s. 69A of the Act. Similarly, the silver jewellery seized was accepted by the assessee and DD for a sum of Rs. 27,00,000/- was given after the prohibiting order executed. Therefore the AO treated the value of silver jewellery as unexplained investment u/s. 69 of the Act. 3. The Revenue also seized the gold jewellery valued at Rs. 96,77,770/- since the assessee was not able to substantiate with his books of accounts. The assessee not accepted the valuation of jewellery and the AO based on the govt. valuer and the admission given by the assessee, had treated the value of gold jewellery as unexplained investment u/s. 69 of the Act. Printed from counselvise.com Page 4 of 6 ITA No. 505/Bang/2025 4. As against the order, the assessee preferred an appeal before the Ld.CIT(A) and raised 15 grounds. The assessee also raised legal grounds 2 to 4 apart from the separate grounds raised for the cash, silver and gold jewellery seized. The assessee also appeared before the Ld.CIT(A) and filed his written submissions. The Ld.CIT(A) dismissed all the grounds. The Ld.CIT(A) also dismissed the legal grounds by stating that they are general in nature and therefore do not require any adjudication. 5. As against the said order, the assessee is in appeal before this Tribunal. 6. At the time of hearing, the Ld.AR submitted that the Ld.CIT(A) has not considered the legal grounds raised in Ground nos. 2 to 4 but dismissed the same as general in nature which shows that the Ld.CIT(A) has passed an illegal order. The Ld.AR also filed an application to admit the additional grounds. The assessee also filed a paper book enclosing all the documents and prayed to allow the appeal on the ground that the order of the Ld.CIT(A) is not a well considered one and also against the principles of natural justice. 7. The Ld.DR relied on the order of the lower authorities and prayed to dismiss the appeal. 8. We have heard the arguments of both sides and perused the materials available on record. 9. Before going into the merits of the case, let us first consider the allegation that the Ld.CIT(A) had not adjudicated the legal grounds raised by the assessee. We have perused the grounds of appeal filed by the assessee and as rightly contended by the Ld.AR, the assessee had raised legal grounds in ground nos. 2 to 4. In the said grounds, the assessee had attacked the search and the assessment proceedings as bad in law since no Printed from counselvise.com Page 5 of 6 ITA No. 505/Bang/2025 incriminating materials were seized at the time of search. Similarly, the assessee also questioned the legality of the assessment made without providing the satisfaction note. Therefore the said grounds raised by the assessee goes to the root of the matter and if the said grounds are accepted, there is no need to decide the appeal on merits. But unfortunately, the Ld.CIT(A) without adjudicating the said grounds had observed that the said grounds are general in nature and does not require adjudication. It shows that the Ld.CIT(A) had not considered the grounds properly and therefore the non-adjudication of the said grounds is a fatal one. 10. Further, we have also considered the additional grounds raised by the assessee and we are satisfied that the said grounds does not raise any new disputes not raised before the authorities and therefore we are accepting the additional grounds raised by the assessee. 11. In this matter, we have already held that the non-adjudication of the legal grounds by the Ld.CIT(A) is fatal and therefore we are setting aside the order of the Ld.CIT(A) and remit the entire issue to the file of Ld.CIT(A) for adjudicating all the grounds afresh, after hearing the assessee. We also direct the Ld.CIT(A) to consider the additional grounds raised by the assessee and adjudicate the same on merits, while deciding the appeal. 12. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 27th October, 2025. Sd/- Sd/- (LAXMI PRASAD SAHU) (SOUNDARARAJAN K.) Accountant Member Judicial Member Bangalore, Dated, the 27th October, 2025. /MS / Printed from counselvise.com Page 6 of 6 ITA No. 505/Bang/2025 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "