Kimaya Buildtech LLP Vs DCIT (ITAT Delhi)
The appeal was filed by the assessee against the order dated 09.02.2026 passed by the Commissioner of Income Tax (Appeals)-3, Gurgaon, arising from an assessment order dated 09.05.2022 under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2021-22. The assessee, a limited liability partnership engaged in real estate development and sale, had filed its return declaring total income of ₹1,32,05,340.
The assessment originated from information received following a search conducted under Section 132 in the case of M/s. Blomstrende Buildwell Pvt. Ltd. Group. During the search, digital data and WhatsApp chats were seized from Shri Amit Chauhan, allegedly relating to the sale of property situated at W-15, GK-1, Delhi, and certain loan transactions. The Assessing Officer alleged that although the registered sale deed reflected consideration of ₹9 crore, the actual sale consideration was ₹13.50 crore, with ₹4 crore allegedly received in cash. The Assessing Officer also referred to WhatsApp chats indicating an alleged accommodation loan entry of ₹20 lakh. The assessee denied receiving any cash consideration or accommodation entry, maintained that the property had been sold for ₹9 crore through a registered sale deed, and disputed the allegations. Nevertheless, the Assessing Officer added ₹4 crore to the assessee’s income, which was subsequently confirmed by the CIT(A).
Before the Tribunal, the assessee raised both legal and factual grounds. On the legal issue, it contended that since the assessment was based entirely on material seized from a third party during a search, the proceedings ought to have been initiated under Section 153C instead of Section 143(3). The assessee relied upon several judicial precedents interpreting the first proviso to Section 153C and the procedure applicable where documents relating to a person other than the searched person are relied upon. It submitted that the jurisdiction of the assessee had been transferred to the Central Circle on 22.10.2021, and therefore the assessment should have followed the statutory procedure prescribed under Section 153C.
On merits, the assessee argued that the addition rested solely upon the statement of Shri Amit Chauhan and WhatsApp chats recovered from his mobile phone. It submitted that the relevant WhatsApp chats were either not supplied or were unrelated to the transaction in question. It further contended that no evidence of cash receipt was discovered during the search and that during cross-examination, Shri Amit Chauhan admitted he had been engaged by one Shri Gagan, was not the broker in the transaction, and had received ₹25 lakh from Shri Gagan. The assessee also pointed out inconsistencies in Shri Amit Chauhan’s statements, including the discrepancy between the alleged consideration of ₹13.50 crore and the registered sale deed value of ₹9 crore, which together with the alleged cash payment totalled only ₹13 crore, leaving an unexplained difference of ₹50 lakh. It further submitted that no enquiry had been conducted from the buyers, whose registered sale deed confirmed payment of ₹9 crore.
The Revenue supported the assessment, contending that proceedings under Section 143(3) were valid because the relevant search fell within the assessment year under appeal. It argued that the WhatsApp chats corroborated the cash payment and that Shri Amit Chauhan had confirmed the transaction in his statement recorded under Section 132(4).
The Tribunal examined the registered sale deed, bank statements evidencing receipt of ₹9 crore through banking channels, the statements recorded under Section 132(4), and the cross-examination of Shri Amit Chauhan. It noted that the sole basis for the addition was Shri Amit Chauhan’s statement alleging receipt of ₹4 crore in cash. The Tribunal observed that the alleged figures themselves were inconsistent, as the stated consideration of ₹13.50 crore did not reconcile with the registered consideration of ₹9 crore and the alleged cash payment of ₹4 crore, resulting in an unexplained difference of ₹50 lakh which was never reconciled by the Assessing Officer. During cross-examination, Shri Amit Chauhan also altered his version by stating that an agreement to sell for ₹13.50 crore had been torn at the time of registration, but no documentary evidence supporting this assertion or any evidence regarding cash payments was produced.
The Tribunal further observed that the WhatsApp chats had been recovered from a third party. Referring to Section 132(4A), it held that the statutory presumption applies against the person from whom the documents are recovered and cannot be extended against a third party without corroborative material. It held that the assessee was not required to explain WhatsApp chats found in the possession of another person in the absence of supporting evidence. The Tribunal also noted that the Assessing Officer had not produced any corroborative evidence establishing receipt of cash over and above the registered consideration. Relying upon the Hyderabad Bench decision in SVS Projects India Private Limited, the Tribunal reiterated that additions based solely on third-party documents require corroborative evidence and cannot rest merely upon rebuttable presumptions applicable to the searched person. It also referred to decisions recognising that additions based only on third-party statements without supporting material cannot be sustained and that documentary evidence such as a registered sale deed cannot be ignored without credible corroborative evidence.
After considering the entire material, the Tribunal held that the addition of ₹4 crore had been made solely on the basis of Shri Amit Chauhan’s statement and WhatsApp chats recovered from his possession, without any corroborative evidence linking the assessee to the alleged cash receipt. The Tribunal therefore deleted the addition of ₹4 crore. Since the appeal succeeded on merits, it held that the legal ground challenging the validity of assessment under Section 143(3) instead of Section 153C had become academic and did not adjudicate that issue. Accordingly, the appeal of the assessee was allowed.
Recent Cases Discussed
- SVS Projects India Private Limited Vs. The Assistant Commissioner of Income-Tax (ITAT Hyderabad), ITA No. 2139 to 2141/Hyd/2025, order dated 30.04.2026
- Subhash Chander Gupta vs. ITO, ITA No. 768/CHD/2024 dated 07.04.2025
- CIT vs. Jasjit Singh (SC), [2025] 173 taxmann.com 575
- Raja Varshney vs. DCIT, ITA No. 1459/Del/2024
- PCIT(Central) vs. Tarun Devcon (P.) Ltd. (Madhya Pradesh), [2024] 169 taxmann.com 257
- M/s. Maple Destinations and Dreambuild Pvt. Ltd. vs. DCIT (Delhi Tribunal), [2024] 162 taxmann.com 156
- PCIT vs. Ojjus Medicare (P.) Ltd. (Delhi HC), [2024] 161 taxmann.com 160
- ITO vs. Vikram Sujitkumar Bhatia (SC), (2023) 149 taxmann.com 123
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal is filed by assessee against the order dated 09.02.2026 passed by Ld. Commissioner of Income Tax (A)-3, Gurgaon [“Ld. CIT(A)”] in Appeal No. 10077/CIT(A)-3/GGN/2020-21 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 09.05.2022 passed u/s 143(3) of the Act pertaining to Assessment Year 2021-22.
2. Brief facts of the case are that the assessee is a limited liability partnership engaged in the business of development of sale of real estate. The return of income was field on 11.12.2021, declaring total income of INR 1,32,05,340/-. The notice u/s 143(2) was issued on 23.02.2022 and duly served upon the assessee. Based on the information received as a result of search carried out in the case of M/s. Blomstrende Buildwell Pvt. Ltd. Group of cases on 15.01.2021 u/s 132 of the Act, certain digital data were found and seized from Shri Amit Chauhan at 105, SPS Residency, Vaibhav Khand, Indirapuram, Ghaziabad which were inventoried as Annexure A-1. According to which there were certain chats between Shri Amit Chauhan and Shri Manish Wadhwa relating to property at W-15, GK-1, Delhi and further with respect to the transaction between Shri Rajeev Channa, partner of assessee firm and Shri Amit Chauhan relating to the loan transaction with M/s. Sunny Chemical. Accordingly, the AO issued a show cause notice on 22.04.2022 wherein the assessee was asked to file the reply on the issue. The assessee stated that it had sold a property situated at basement and ground floor, W-15, G.K.-1, Delhi to Shri Manish Wadhwa and Ms. Mamta Wadhwa for INR 9.00 crores in terms of Sale Deed executed. However, in the statements recorded during the course of search u/s 132(4), Shri Amit Chauhan stated that actual consideration for the said property was INR 13.50 crores and INR 4.00 crores were paid in cash by the buyers to the appellant and he got commission of INR 25.00 Lakhs on this transaction. The AO further observed that, based on WhatsApp chat found from the mobile of Shri Amit Chauhan that appellant LLP has taken accommodation entries of loan of IR 20.00 lakhs. In reply, the assessee has denied of any such accommodation entry of loan and further submits that the property was sold by it for INR 9.00 crores as per Sale Deed executed and no cash was received. The assessee further stated that in the cross-examination, Shri Amit Chauhan stated that he was the broker of the buyers received commission from one Shri Gagan. The AO however, has made the addition of INR 4.00 crores in the hands of the appellant LLP and accordingly, the income was assessed at INR 5,32,05,340/-.
3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order dated 09.02.2026, dismissed the appeal of the assessee.
4. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking various grounds of appeal mentioned in the appeal memo.
5. Before us, in support of Grounds of appeal Nos. 2 (a) & 2(b), Ld.AR for the assessee made a detailed submissions wherein it is stated that addition has been made in the hands of the assessee solely based on the statements of third party and whatApp chat found from his mobile and therefore, proceedings in the case of the assessee should have been initiated u/s 153C of the Act. Ld.AR has made a detailed written submissions and further placed reliance on the judgment of Hon’ble Supreme Court as well as Hon’ble Jurisdictional High Court thus, the relevant contents of the written submissions are reproduced as under:-
5. “Based above, the assessment in the case of the assessee was framed u/s 143(3) of the Act which is invalid and bad in law as the correct procedure make assessment u/s 153C of the Act only. This fact was also agitated by the assessee before the Ld. AO and the same is evident at Page 6 of the assessment order.
6. We wish to draw your goodself’s kind attention to the provisions of section 153C of the Act which provides for assessment of income in the case of persons other than the person searched and the same are reproduced as under:
(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 1534, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 1534.
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents seized or requisitioned by the Assessing Officer having jurisdiction over such other person:
7. As per the provisions of section 153C of the Act, the case of a person, other than as referred to in section 153A of the Act, shall be reopened u/s 153C of the Act for 6 A.Y’s immediately preceding the Ay relevant to the PY in which search is conducted or requisition is made by the AO of the person searched to the AO of other person.
8. In the case of the assessee, the jurisdiction of the assessee was transferred to Central Circle on 22.10.2021 which depicts that the date of requisition made by the AO of the searched person to the AO of the other person Le. the assessee falls in AY 2022-23 and 6 immediate previous Ays shall be assessed u/s 153C of the Act, whereas, the case of AY 2021-22 of the assessee has been assessed u/s 143(3) of the Act which is invalid and bad in law and deserves to be quashed. This view has been affirmed by the Hon’ble Apex Court in the following cases
ITO vs. Vikram Sujitkumar Bhatia as reported in (2023) 149 taxmann.com 123 (5C)
As per the proviso to section 153C as inserted vide the Finance Act, 2005, and the effect of the sold proviso is that it creates a deeming fiction wherein any reference made to the date of initiation of search is deemed to be a reference made to the date when the Assessing Officer of the non-searched person receives the books of account or documents or assets seized etc. Thus, in the instant case, even though the search under section 132 was initiated prior to the amendment to section 153C with effect from 1-6-2015, the books of account or documents or assets were seized by the Assessing Officer of the non-searched person only on 25-4-2017, which was subsequent to the amendment, therefore, when the notice under section153C was issued on 4-5-2018, the provision of the low existing as on that date, Le, the amended section153C shall be applicable. [Para 10.3)
As per the ratio laid down in this judgment, the
CIT vs. Jasjit Singh as reported in [2025] 173 taxmann.com 575 (SC)
“INCOME TAX: Review petition dismissed against order of Supreme Court that application of first proviso to section 153C(1) would not be confined to question of abatement, but also with regard to date from which six year period was to be reckoned in respect of which returns were to be filed by third party and thus, period for which other persons Le assessees were required to file returns, would commence only from date when materials were forwarded to their jurisdictional Assessing Officer”
Similar view has also been taken by jurisdictional Delhi High Court and Delhi Tribunal and other tribunals also and the same are enlisted as under:
CIT vs. RRJ Securities Ltd. as reported in [2015] 62 taxmann.com 391 (Delhi HC)
In terms of proviso to section 153C, a reference to the date of the search under the second proviso to section 1534 has to be construed as the date of handing over of assets/documents belonging to the assessee (being the person other than the searched) to the Assessing Officer having jurisdiction to assess the said assessee. Further proceedings, by virtue of section 153C(1) of the Act, would have to be in accordance with section 1534 of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under section 153C would also have to be construed with reference to the date of handing over of assets/documents to the Assessing Officer of the assessee
Seema Jain vs. DCIT in ITA No. 1206/Del/2024 (Delhi)
We find that the assessee had challenged the validity of assessment framed u/s 143(3) of the Act for the Asst Year 2021-22 before us on a general ground. However, in order to provide more clarity, she has raised the aforesaid additional grounds that since the search material of a third party is being used against her, then the right course of action on the assessee would be in terms of section 153C of the Act as the date of search in the hands of the assessee differs from that of Shri Parveen Kumar Jain. This law is already settled by the decision of Hon’ble Supreme Court in the case of CIT vs Jasjit Singh reported in 2023 (10) TMI 572 dated 26.9.2023 in favour of the assessee. The relevant observations of Hon’ble Supreme Court in this regard are as under:-
9. it is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the dote from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso to Section 153/c)(1) is confined in its application to the question of abatement.
10. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials of the search party, under Section 132 – would take his own time to forward the papers and materials belonging to the third party, concerned A.O. In that event if the date would virtually “relate bock” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third-party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.
11. For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.
Raja Varshney vs. DCIT as reported in ITA No. 1459/Del/2024
From the above discussion the date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by Ld AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. Therefore the assessment order dated 29-12-22 passed u/s 143(3) of the Act is bod in law and liable to be quashed and quashed accordingly.
PCIT vs. Ojjus Medicare (P.) Ltd. as reported in [2024] 161 taxmann.com 160 (Delhi HC)
INCOME TAX: Block period was to be computed from date of receipt by Assessing Officer of non-searched person of books or documents or assets seized or requisitioned, where date of handing over of documents was not available, date of issuance of satisfaction note by Assessing Officer under section 153C would be pertinent for purpose of first proviso to section 1530(1)
PCIT(Central) vs. Tarun Devcon (P.) Ltd. as reported in [2024] 169 taxmann.com 257 (Madhya Pradesh)
Section 153C read with sections 143, and 68, of the Income-tax Act, 1961-Search and seizure-Assessment of any other person (Scope of provisions) Assessment year 2014-15-Assessing Officer passed order under section 143(3) and made addition under section 68 on account of unsecured loan received by assessee Tribunal opined that material found during search of person was handed over to Assessing Officer having jurisdiction over assessee and thus, assessment should have been made under section 153C-Tribunal, thus, deleted addition made by Assessing Officer – Revenue contended that there was no basis for Assessing Officer to proceed under section 153C, since no incriminating material in relation to assessee was found during search conducted as per seized material handed over to Assessing Officer-Whether Tribunal was justified in annulling assessment made under section 143(3) and deleting additions made under section 68- Held, yes [Para 44) (in favour of assessee)
9. Further, as per the provisions of section 153C of the Act, as reproduced in Para 6 above, there is a specific procedure to make assessment in the case of persons whose data is recovered from the premises of persons covered u/s 153A of the Act which includes recording of satisfaction of the AO of person searched as well as satisfaction of AD of the other person. After recording such satisfaction, issuance of notice u/s 153C of the Act is mandatory and any assessment framed without following such procedure deserves to be quashed. This view is also strengthened from the judgment of Subhash Chander Gupta vs. ITO in ITA No. 768/CHD/2024 dated 07.04.2025 wherein it has been held as under:
We have taken cognizance of the alleged seized material (extracted supra) as well as the belief formed by the AO while recording the reasons for re-opening of the assessment. According to the Revenue, this paper pertains to the assessee. The information contained in this paper is regarding payment of Rs.13 Cr to the assessee. Thus, this also pertains to the assessee, in such situation, to our mind, the AD ought to have initiated the proceedings under Sect ion 153C. In other words, AO of the searched person le. AQ of Shri Sanjay Bansal or of the Trust should have recorded satisfaction that information contained in loose paper pertains to the assessee and act ion against the assessee deserves to be taken under Section 153C because income has escaped assessment in the hands of the assessee. Such satisfaction ought to have been transmitted to the AO of the assessee and only thereafter, assessment could have been made. No act lon under Section 147/148 could be token against the assessee because Sect ion 153C starts with a non obstante clause namely, notwithstanding anything contained in Section 139/147. Thus, Section 147/148 has no bearing if proceeding required to be taken against the assessee under Sect ion 153C of the Income Tax Act. The AO has failed to follow the mandatory procedure required to be followed, hence, assessment order is not sustainable and accordingly, is quashed. For our above view, we are fortified by the judgements relied upon by the Id. Counsel for the assessee and taken note by us in paragraph No. 7 of this order. The Act contemplated a procedure which is required to be followed mandatorily and which has not been followed by the AO. Therefore, it is humbly submitted that the assessment order passed by the AO under section 143(3) for the AY 2021-22 suffers from a fatal illegality and is thus void ab initio, as it contravenes the mandate of section 153C of the Act. Therefore, the impugned assessment order deserves to be quashed as being made without jurisdiction.
10. Therefore, in view of above, it is concluded that the assessment order passed u/s 143(3) of the Act is invalid and deserves to be quashed on the following issues:-
a) There is no search at the premises of the assessee.
b) That alleged information in the case of the assessee has been received from the premises of ta third person who is not known to the assessee. c) The mandatory procedure of section 153C of the Act has not been followed and instead assessment has been framed under incorrect section Le 143(3) of the Act.”
6. On merits of the additions, Ld. AR for the assessee submits that the sole basis for the addition of Rs. 4.00 crores was the alleged statement of Shri Amit Chauhan and WhatsApp chat recovered from his mobile, however, the same was never supplied to the assessee despite of the repeated requests and the WhatsApp chat which are supplied to the assessee are not related to the issue in hand. Ld.AR submits that the AO has made the addition of INR 4.00 crores by ignoring the fact that no evidence was found as a result of search except the so-called statement of Shri Amit Chuhan of receipt of cash of INR 4.00 crores by the appellant LLP or in its partner. Ld.AR further drew our attention to the cross-examination of Shri Amit Chauhan wherein he clearly stated that he was appointed by one Shri Gagan and he was not broker in the transaction. As per Ld. AR, Shri Amit Chauhan has no relation whatsoever either with the buyer or seller and had received INR 25.00 Lakhs from one Shri Gagan, therefore his statements has no relevance in absence of any corroborative material.
7. Ld. AR further submits that in the cross-examination, Shri Amit Chauhan further stated that the sale deed was finally registered for INR 8.5 crores as against the agreement to sale for 13.5 crores and further cash of Rs. 4.00 crores was paid in cash. Ld. AR submits that the difference was of 5 crores (13.5-8.5) however, no reconciliation of the same was ever made by the AO. Ld. AR further submits that the AO has not made any enquiry from the buyers who as per the registered sale deed confirmed the payment of Rs. 9.00 crores as recorded in the registered Sale Deed. It is also a matter of fact that the lower authorities have not recorded any statement of the buyer as well as seller and merely on the basis of third-party statement have no locus standi transactions, additions have been made. He therefore, requested for the deletion of the additions made.
8. On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of lower authorities and submits that in the instant case, the order was passed u/s 143(3) of the Act as the date of search fallen in the assessment year under appeal and, therefore, there is no requirement to issue the notice u/s 153C of the Act in the instant case. Ld. CIT DR submits that Ld.CIT(A) in para 11.1 & 11.2 has clearly stated that WhatsApp chat corroborates with the payments of cash therefore, the AO has rightly made the additions. Moreover, Shri Amit Chauhan in his statement recorded u/s 132(4), has stated that the deed was registered in his presence and confirmed the WhatsApp chat. Ld.CIT DR submits that AO has rightly made the addition which was confirmed by Ld.CIT(A) and therefore, requested for the confirmation of the same.
9. In re-joinder, Ld.AR for the assessee placed reliance on the judgment of Hon’ble Jurisdictional Supreme Court in the case of CIT vs Jasjit Singh reported in [2025] 173 com575 (SC) and submits that in the instant case, search was not carried out in the case of the assessee company and was carried out any other case and when the document is found from the possession of the third person, the assessment should have been completed u/s 153C of the Act. With respect to the documents relied upon in the shape of WhatsApp chat, Ld.AR placed reliance on the judgement of Co-ordinate Bench of Hyderabad Tribunal in the case of SVS Projects India Private Limited Vs. The Assistant Commissioner of Income-Tax in ITA No.2139 to 2141/Hyd/2025 order dated 30.04.2026 wherein Co-ordinate Bench has held that where the addition has been made on the basis of third-party evidences, corroborative material must have been brought on record for making the additions. He requested accordingly.
10. Heard the contentions of both the parties at length and perused the material on record. The legal Grounds of appeal taken by the assessee are with respect to the initiation of proceedings u/s 143(3) as against section 153C of the Act as the documents relied upon was seized or requisitioned for the person other than the person referred in section 153A of the Act. Further, on merits, the claim of the assessee is that the statements recorded of the third party based on the WhatsApp chat found from the possession of third was made the sole basis without bringing any corroborative material on record.
11. From the record, it is observed that assessee has sold the property situation at Plot No.15, Block-W, G.K-1, New Delhi and Sale Deed was got registered on 26.08.2020 for a total sum of INR 9.00 crores. The payment was made through banking channel and duly recorded in the registered Sale Deed which is placed at pages 1 to 22 of the Paper Book. The evidences of the payment of INR 9.00 crores in the shape of bank statement of the assessee are placed at pages 24 to 31 of the Paper Book. The solitary basis for making the addition is the statement of Shri Amit Chauhan recorded u/s 132(4) at the time of search on 15.01.2021 in his own case wherein he stated that actual consideration for property sold by the appellant company was INR 13.5 crores and INR 4.00 crores were paid in cash.
12. Here it is relevant to state that Shri Amit Chauhan in the aforesaid statement had stated that property was sold at INR 13.50 crores and cash of INR 4.00 crores were given and the remaining amount was given through cheque as per registered Sale Deed however, there is a difference of INR 50.00 Lakhs as the Sale Deed got registered for INR 9.00 crores and if alleged cash payment of 4.00 crores is added total consideration comes to INR 13.00 crores whereas Shri Amit Chauhan has stated that the property was sold at INR 13.5 crores and no re-conciliation or observations were made by the AO with respect to the difference of INR 50.00 Lakhs. It is further observed that an opportunity of cross-examination of Shri Amit Chauhan was allowed to the appellant on 12.07.2021 wherein Shri Amit Channa, partner of appellant has attended the proceedings and cross-examine Shri Amit Chauhan, where he had changed his stand and stated that he was appointed by one Shri Gagan and had not directly involved in the transaction though he was present when the deed was registered. From the perusal of statement of Shri Amit Chauhan during the cross-examination, it is observed that he has stated there was an agreement to sale of actual consideration of INR 13.50 crores which was torn on the date of registry however, neither any evidence to support such bald statement was brought on record nor any details of cash payments made by the buyers to the appellant was ever brought on record. Merely on the basis of statement of Shri Amit Chauhan, addition has been made in the hands of the assessee.
13. Here it is important to note that the document under reference in the shape of WhatsApp chat was found from the possession of 3rdparty, Shri Amit Chauhan who had stated that the cash consideration of INR 4.00 crores was transferred however, no corroborative evidence was brought on record. In terms of section 132(4A) of the Act, the presumption is available against the person who made such statement and is rebuttable in case where the same are used against any 3rd Such presumption cannot be used against the assessee who is the third party without bringing any corroborative material on record and the assessee is not required to explain the contents of the documents in the shape of WhatsApp chat found or the so-called statements.
14. As observed above, AO has not brought on record any corroborative evidence to support the allegation that assessee has received cash consideration from the sale of property over and above the declared consideration as per registered sale deed. The similar issue was come for consideration before the Co-ordinate Bench of Hyderabad Tribunal in the case of SVS Projects India Private Limited Vs. The Assistant Commissioner of Income-Tax (supra) wherein the Co-ordinate Bench has discussed the issue presumption u/s 132(4A) of the Act. The relevant contents from para 15 to 17 of the said order are as under:-
15. “We have gone through the relevant arguments of learned counsel for the assessee and we found that, the additions made by the AO are on the basis of documents found from the premises of a third party. It is a well-established principle of law by the decisions of various Courts that the documents found from the premises of a third party, the rebuttable presumption as per section 132(4A) and section 292C of the Act, is not applicable. Therefore, it is necessary for the AO to support the addition with further corroborative evidence in cases, where any addition is made on the basis of third party information. In case there is no corroborative evidence, then there is no scope for making addition on the basis of third party evidence, because the presumption under section 132(4A) is not applicable and the assessee is not required to explain the said documents.
This principle is supported by the decision of the Hon’ble Gujarat High Court in the case of PCIT Vs. Gaurang Bhai Pramod Chandra Upadhyay (supra), wherein the Hon’ble High Court clearly held that since the documents were not found or recovered from the premises of the assessee, no presumption under section 132(4A) r.w.s 292C of the Act, could be drawn against the assessee in such circumstances. A similar view has been taken by the Hon’ble High Court of Patna in the case of Dharmaraj Prasad Bibhuti Vs. ITAT, Patna reported in (2019) 109 taxmann.com 388 (Patna), wherein it was held that the presumption under section 292C of the Act, can only be drawn against such person from whose possession or control any books of accounts or other documents, money, etc. are found during the course of search. The sum and substance of the ratio laid down by various courts is that the rebuttable presumption under section 132(4A) r.w.s. 292C of the Act, cannot be pressed into service against the assessee with regard to material seized during the course of search from the premises of a third party, unless there is corroborative evidence. Therefore, in our considered view, the addition made by the AO on the basis of third party evidence without any corroborative evidence cannot be sustained.
16. Further, the documents found during the course of search are claimed to have been recorded by M/s. Vamsiram Group by truncating last two zeros. The AO has arrived at the above conclusion from the statements recorded from Shri Chandrasekhar Atla and Regu Venkata Vara Prasad, who during the course of search recorded statements under section 132(4) of the Act, wherein they deposed that the entries contained in the diary have been recorded by truncating last two zeros. The AO, on the basis of statements recorded from two individuals, has reached a conclusion that the entries in the diary have been recorded by truncating last two zeros and accordingly added two zeros to the amounts recorded therein and arrived at total cash payments alleged to have been received by the assessee company from M/s. Vamsiram Group Builders. Once again, we do not subscribe to the reasons given by the AO for the simple reason that, the loose sheets found during the course of search from third party premises were neither in the handwriting of the assessee nor containing any signature of the assessee. Once the documents are neither in the handwriting of the assessee nor bearing any signature of the assessee, then on the basis of third party statements without any confrontation to the assessee for its rebuttal, the additions cannot be made. In the present case, no such corroborative documentary evidence by way of signed receipts or otherwise was unearthed during the course of search and there is no reference to any corroborative evidence in the assessment order. Although the AO sought to rely upon the statements of the employees of M/s. Vamsiram Group as corroborative oral evidence, the said statements lack any evidentiary value, because these statements were retracted subsequently. Further, there is no specific question about the payment made to the assessee company was put to the Managing Director of M/s. Vamsiram Group or to the employees of M/s. Vamsiram Group Builders, therefore, the generalized statements recorded from the employees cannot be considered as conclusive evidence to allege cash payments made to the assessee company by M/s. Vamsiram Group. Therefore, in our considered view, in the absence of any corroborative evidence and merely on the basis of statements of two individuals, additions cannot be made.
17. We further note that, the maker of the statement is answerable to the contents, however, unless the said documents are found in the premises of the assessee, the assessee need not to explain the said documents and is also not answerable to the statements of third parties. In the present case, neither the AO has brought on record any corroborative evidence to support the statements of the third parties nor confronted the said statements of the third party to the assessee company for its rebuttal. Since the assessee denied any cash receipts from M/s. Vamsiram Group and further, the AO does not have any evidence to support the finding that the entries contained in the diary represent unaccounted cash of the assessee company, in our considered view, merely on the basis of statements of third parties, no addition can be made. This legal position has been laid down by the Hon’ble Delhi High Court in the case of CIT Vs. Sant Lal (supra) wherein it has been held that where the diary was found from the premises of a third party allegedly containing entries including the assessee, no addition can be made based on the said entries, since the diary was neither found from the premises of the assessee nor was in the handwriting of the assessee and the Revenue failed to produce cogent evidence to link the assessee to the diary. A similar view has been taken by the Hon’ble Allahabad High Court in the case of CIT Vs. Shadiram Ganga Prasad Charitable Trust, Smt. Prema Lata Kanodia and Shri S.P. Kanodia reported in (2011) 9 com119, wherein it was clearly held that in the absence of corroborative evidence, no adverse inference can be drawn from the entries against the assessee. Therefore, in our considered view, the additions made by the AO and sustained by the Ld. CIT(A) by estimating profit @ 10% on total receipts cannot be sustained.”
15. In the case of CIT vs Mantri Share Brokers (P.) Ltd. reported in [2018] 96 com280 (SC), the Hon’ble Supreme Court has dismissed the SLP filed against the order of Hon’ble Rajasthan High Court wherein the additions were deleted made solely on the basis of statement of Directors without bringing on record any corroborative material either in the form of cash, bullion, gold, jewellery or documents justifying the said statement.
16. The Co-ordinate Bench of Delhi Tribunal in the case of M/s. Maple Destinations and Dreambuild Pvt. Ltd. vs DCIT reported in [2024] 162 com156 (Del.Trib.) in para 17 has observed that “AO has ignored documentary evidence in the shape of registered Sale Deed and without having any corroborative documentary or credible oral evidence, AO should not have made the addition”. The relevant observations in para 17 & 18 are as under:-
17. “In the present case, the addition has been made by the AO ignoring the documentary evidence in the form of registered sale deed which being a best evidence for finding the actual sale value and in the absence of any other material to show the transactions involved in cash outside the sale consideration mentioned in the sale deed and in the absence of any corroborative documentary or credible oral evidence, the AO should not have made addition. The said view of ours is fortified by the decisions of Apex Court in CIT Vs. Motors & General Stores Pvt. Ltd. (1967) 66 ITR 692 (SC) and those in CIT Vs. K. C. Agnes (2003) 262 ITR 354 (Ker) and Paramjit singh Vs. ITO (2010) 323 ITR 588 (P &H).
18. The addition has been made not based on any document or material which could suggest that cash was earned by the assessee from any source or that any under handed cash payment was involved in the sale of transaction. Further considering the fact that the entire addition made by the AO based on the statements of the 18 ITA No.1509/Del/2018 Maple Destinations and Dreambuild Pvt. Ltd. vs. DCIT witnesses which have been retracted thereafter and no opportunity of cross examination was granted by the AO and in the absence of any corroborative material on record, the AO could not have made any addition and the Ld. CIT(A) should have deleted the addition. Thus, in our considered opinion the Ld. CIT(A) committed error in upholding the addition made by the AO. Thus, we find merit in the ground No.2 of the assessee, accordingly, we delete the addition made by the A.O. by allowing Ground No. 2 of the Assessee.”
17. As observed in the instant case, the addition made solely on the basis of statement of Shri Amit Chauhan and no corroborative material/evidences have been brought on record to support the allegation that a sum of INR 4.00 crores was paid to the appellant by the buyers in addition to the amounts stated in the registered Sale Deed, more particularly, when there were differences in the figures stated by Shri Amit Chauhan in the statement and such difference was never reconciled and the addition was made.
18. Looking to the entirety of the facts and circumstances of the case and overall discussions made here in above, the addition made by AO of INR 4.00 crores is hereby, deleted.
19. Since we have deleted the addition by allowing the assessee’s Ground of appeal taken on the merits of the addition therefore, legal Grounds of appeal taken by the assessee regarding initiation of the proceedings u/s 143(3) of the Act became academic hence, not adjudicated.
20. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 08.07.2026.
