DCIT Vs Rajyog Buildtech Private Limited (ITAT Delhi)
Searched Together, Assessed Separately: ₹7.5 Crore Protective Addition Fails
The alleged property advance
A search conducted on 15 November 2017 covered the Sanjay Singhal Group, including Rajyog Buildtech Private Limited. A coordinated search also involved the OPG Group. The Assessing Officer (AO) subsequently assessed Rajyog under Section 153A for assessment years 2015–16 and 2016–17.
The dispute centred on an agreement under which Rajyog was to sell commercial space at Dheerpur, Delhi, to OPG Securities Private Limited for ₹21 crore. The records described an advance of ₹15.50 crore. The AO suspected that the apparent property advance was an accommodation entry: unaccounted cash allegedly supplied by Sanjay Singhal was said to have moved through the OPG Group and returned to Rajyog as an advance by cheque.
For assessment year 2015–16, the AO added ₹7.50 crore received as an advance during the relevant financial year to Rajyog’s income on a protective basis under Section 68. A corresponding substantive addition was made in Sanjay Singhal’s hands. The CIT(A) deleted Rajyog’s protective addition, and the Revenue appealed to the Delhi ITAT.
Where was the incriminating material found?
Although Rajyog itself was covered by a search warrant, the material on which this particular addition rested came from someone else’s premises. The AO relied on Excel sheets and a cash book recovered from the laptop of Saurabh Gupta, an employee associated with OPG Securities. The Tribunal referred to the panchnama and search warrant for those premises, which stood in the names of Sanjay Gupta and OPG Securities.
The Revenue argued that the searches were coordinated and that material found during them could be used in Rajyog’s Section 153A assessment. Rajyog’s response was that the source of the material still mattered. If the AO wanted to assess one person on the basis of material seized from another person’s premises, he had to follow the route prescribed by Section 153C.
The Tribunal accepted that distinction. Relying on the Delhi High Court decision in PCIT v. Anand Kumar Jain (HUF), it held that coordinated searches do not erase the statutory separation between Section 153A and Section 153C. On the facts recorded, the incriminating material underlying this addition was recovered from the OPG side, not from Rajyog’s own search. The Tribunal upheld the CIT(A)’s view that the Department could not use it in Rajyog’s Section 153A proceeding in the manner adopted.
This finding concerns the basis for the disputed addition. It should not be read as saying that Rajyog was never searched: the order expressly records that a search warrant was issued in its name.
The protective and substantive additions
The Revenue had a second objection. It said the CIT(A) had deleted Rajyog’s protective addition prematurely merely because the substantive addition against Sanjay Singhal had been confirmed by the CIT(A). At that stage, Singhal’s appeal was still pending before the ITAT.
By the time Rajyog’s appeals were heard, the position had changed. Rajyog produced a 21 January 2026 coordinate Bench order stating that the assessment proceedings in Sanjay Singhal’s case had been quashed. The Tribunal also referred to DCIT v. Artline Vinimay Pvt. Ltd. and the Delhi High Court decision in PCIT v. Electrical and Electronics India Ltd. concerning the survival of a protective addition when the corresponding substantive addition does not survive.
The Tribunal affirmed the deletion of the ₹7.50 crore protective addition for assessment year 2015–16. It applied the same reasoning to the connected appeal for assessment year 2016–17 and dismissed both Revenue appeals.
Reading the outcome carefully
There are two connected reasons in the order. First, the electronic material used against Rajyog had been found in a third party’s search, raising the Section 153C issue. Second, the addition in Rajyog’s hands was expressly protective, while the proceedings supporting the substantive addition against Singhal had subsequently been quashed.
The order does not undertake a fresh, detailed examination of whether the Dheerpur agreement was genuine or whether every payment from OPG represented a real property advance. Nor does the quashing of Singhal’s assessment necessarily amount to an affirmative finding that the alleged cash movement never occurred. The result is that the protective addition made through these proceedings was not sustainable.
Author’s comment
The case shows why the location and ownership of seized material must be traced even when several connected entities are searched on the same day. A group search may be coordinated as an investigation, but the assessment provisions still operate assessee by assessee. The warrant, panchnama, place of recovery and person from whose possession the electronic record was seized can determine the proper statutory route.
It also illustrates the need to track both sides of a protective assessment through appeal. The Revenue’s argument about prematurity was based on the status of Singhal’s case before the later Tribunal order. Once that order quashed the substantive assessment, the factual setting for Rajyog’s appeal had changed. For a comparable case, the current status of the substantive addition is therefore as important as the original assessment orders.
DCIT v. Rajyog Buildtech Private Limited, ITA Nos. 8174 and 8175/Del/2025, Delhi ITAT, order dated 28 September 2026.
Cases Discussed
- PCIT v. Anand Kumar Jain (HUF) (Delhi High Court), dated 03.03.2021 — Relied upon for the principle that material derived from a third-party search cannot be used against another assessee through Section 153A when the statutory route applicable to such material is Section 153C.
- DCIT v. Artline Vinimay Pvt. Ltd., 2024 (10) TMI 595 (ITAT Delhi), order dated 10.10.2024 — Coordinate Bench decision relied upon for the proposition that a protective addition does not survive where the corresponding substantive addition has ceased to survive.
- PCIT v. Electrical and Electronics India Ltd., [2023] 11 TMI 60 (Delhi High Court), dated 30.10.2023 — Cited in support of the principle that an addition made on a protective basis cannot survive where the substantive addition has been deleted.
- Sanjay Singhal — ITA Nos. 5418 to 5422/Del/2025, AYs 2012-13 to 2016-17 (ITAT Delhi), order dated 21.01.2026 — The assessee relied upon the subsequent coordinate Bench order quashing the assessment proceedings in Sanjay Singhal’s case, where the corresponding substantive addition had been made.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals by the Revenue are directed against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-24, New Delhi relevant to assessment years 2015-16 & 2016-17 respectively. Since both the appeals are interconnected, hence the same were heard together and are being disposed of by this common order for the sake of convenience by dealing with the facts of ITA No. 8174/Del/2025 (AY 2015-16), as a lead case wherein, the revenue has raised the following grounds for appeal.
i) On the facts and circumstances of the case, the learned CIT(A) has erred in non-holding the assessment under section 153A, invalid but thereafter failing to annul the assessment order. Once 153A jurisdiction is held to be invalid, the entire assessment ought to have been quashed.
ii) On the facts and circumstances of the case, the learned CIT(A) has erred in holding that proceedings ought to have been initiated under section 153C without observing that the seized material belongs to the assessee, as statutorily required.
iii) On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the protective addition merely on the ground that substantive addition in the hands of Shri Sanjay Singhal was confirmed by the CIT(A). The said substantive addition is under appeal before the ITAT and has not attained finality, hence, deletion of protective addition is premature and contrary to law.
2. The brief facts of the case are that a search and seizure action u/s. 132 of the Act was carried out in the Sanjay Singhal Group of cases on 15.11.2017 in FY 2017-18. A search warrant of authorization, u/s. 132, was issued in the name of M/s Rajyog Buildtech Pvt. Ltd. and M/s Som Hari Infrastructure Pvt. Ltd. to search premise at Flat No. 202, 25/33, 2nd floor, East Patel Nagar, New Delhi on 15.11.2017. Search in this case was initiated on 15.11.2017. Assessee had furnished his original return of income u/s. 139(1) of the Act on 30.9.2015 declaring total income of Rs. 8,90,520/- which was processed u/s. 143(1) of the Act on 30.3.2017. Since search was initiated in this case, notice under section 153A of the Act, was issued on 4.4.2019 and duly served. In response to the notice u/s. 153A, return of income was filed on 18.4.2019 declaring total income at Rs. 8,90,520/- without any change in the returned income as compared to return filed u/s. 139(1) of the Act. With respect to return of income dated 4.4.2019 filed in response to notice u/s. 153A of the Act, a notice u/s. 143(2) of the Act dated 1.5.2019 has been issued and duly served upon the assessee. Thereafter, notice u/s. 142(1) dated 30.5.2019 alongwith a questionnaire was issued and served upon the assessee to furnish details, documents. In response to these notices, Ld. AR for the assessee appeared and filed the details and documents as per records. The assessee was asked to explain on various issues mentioned in questionnaire vide notice u/s. 142(1) dated 11.11.2019 mentioned at page no. 2 to 9 of the assessment order and the reply thereof was reproduced at page no. 9 to 10 of the assessment order. AO noted that the assessee is a group concerns of Sh. Sanjay Singhal and alongwith Shri Amit Kumar Gupta. As per the TDS details of assessee, AO noted that an amount of Rs. 15.5 crores had been deducted by M/s OPG Securities Pvt. Ltd. and M/s Rajyog Buildtech Pvt. Ltd. had entered into an Agreement to Sell regarding the sale of space on the first floor of the plot in Dheerpur, Delhi held by the assessee. As per the agreement, claimed to be entered on 11.3.2015, for a sale consideration of Rs. 21.00 crores for which an advance aount of Rs. 15.50 crore was to be paid by M/s OPG Securities Pvt. Ltd.. In this regard, the statement of Sh. Sanjay Singhal was recorded by the ADIT, Unit5(4), New Delhi on 4.6.2018 during the post search investigations. As per his statement, the assessee had entered into an agreement to sell 14,000 sq.ft. of commercial space of M/s OPG Securities Pvt. Ltd. for a consideration of Rs. 21.00 crore on 11.3.2015, out of Rs. 15.50 crore was received from M/s OPG Securities Pvt. Ltd.. Further, AO noted that the cash books found from the laptop of Sh. Saurabh Gupta (employee and relative of Sh. Sanjay Gupta) contains the descriptions of the following amounts received from “Paandan” or Sh. Sanjay Singh which correspond to match with the cheques of purported advance given by OPG to Assessee. AO further noted that neither this advance has been returned nor any transfer of property has taken place between OPG and assessee. Further it was noted that there is very close temporal correlation between the cash paid by Paandan and receipts of cheques claimed as advance for property. Thus, AO noted that purported advance received against property by Assessee is clearly accommodation entry given by OPG. He further noted that the cash was received by Sh. Sanjay Gupta from Sh. Sanjay Singhal (Paanda) and thereafter cheques of the same amount were paid to M/s Rajyog Buildtech Pvt. Ltd. after deducting TDS. Thus, Rs. 15.50 crore shown in the book of assessee as advance against property from OPG Securities Pvt Ltd. have been obtained in lieu of cash provided by Sh. Sanjay Singhal. AO further noted that the assessee company is controlled and managed by Sh. Sanjay Singhal. AO noted that Sh. Sanjay Singhal has given cash to OPG Group in order to take advance against the property in assessee company by routing his unaccounted cash. Thus, the basis of the investigation and also after analyzing the submissions of the assessee, Rs. 7.50 crore received as advance against property by the assessee during FY 2014-15 remains unexplained cash credits in the hands of the assessee. Thus, he observed that the amount of advance against property is noting but it is assessee’s own unaccounted income which has been brought back in its books of accounts and need to be taxed as unexplained cash credit u/s. 68 of the Act. In view of above, AO issued show caused notice to the assessee to explain as to why advance against property in the FY 2014-15 should not be considered as your unexplained income added u/s. 68 of the Act. In response, assessee replied, which was considered by the AO and he observed that RS. 7.50 crore was received as advance against property from M/s OPG Securities Pvt. Ltd. during FY 2014-15 which is declared as bogus and added to the income of the assessee u/s. 68 of the Act. Therefore, this addition was made in the case of the assessee company on protective basis and the substantive addition has been made in the hands of Sh. Sanjay Singhal for the AY 2015-16 on account of treating the same as his unaccounted cash investment u/s. 69A of the Act. Against the aforesaid action of the Assessing Officer, assessee preferred the appeal before the Ld. CIT(A), who deleted the addition by holding that since substantive addition has been made in the case of Sh. Sanjay Singhal for AY 2015-16 which has been confirmed by him vide his order dated 5.8.2025, thus, consequently the protective addition stands deleted on merits by partly allowing the appeal of the assessee. Aggrieved, Revenue is in appeal before us.
3. Ld. CIT(DR) relied upon the order of the AO and submitted learned CIT(A) has erred in non-holding the assessment under section 153A, invalid but thereafter failing to annul the assessment order. Once 153A jurisdiction is held to be invalid, the entire assessment ought to have been quashed. He further submitted that Ld.CIT(A) erred in holding that proceedings ought to have been initiated under section 153C without observing that the seized material belongs to the assessee, as statutorily required. On merits, it was submitted that ld. CIT(A) has erred in deleting the protective addition merely on the ground that substantive addition in the hands of Sh. Sanjay Singhal was confirmed by the CIT(A). The said substantive addition is under appeal before the ITAT and has not attained finality, hence, deletion of protective addition is premature and contrary to law.
4. On the other hand, Ld. AR for the assessee submitted that ld.CIT(A) deleted the addition by holding that the addition was not based upon any incriminating material found during the course of search in the case of the assessee and he also held that if the AO relied upon the material seized from third party, he should have followed the provisions of section 153C of the Act, thus he submitted that there is no infirmity in the findings of the Ld. CIT(A) on this issue, hence, the action of the CIT(A) may be upheld by rejecting the grounds raised by the revenue. As regards merits of the case is concerned, Ld. AR submitted that substantive addition of Rs. 7.50 crore was made in the case of Sh. Sanjay Singhal, thus, the said protective addition did not survive as the assessment has been quashed in the case of Sh. Sanjay Singh by the Coordinate Bench of the Delhi Tribunal in ITA No. 5418 to 5422/Del/2025 (Ayrs 2012-13 to 2016-17) vide order dated 21.1.2026. In support of this contention, he relied upon the decisions of the Hon’ble Delhi High Court in the case of PCIT vs. Electrical and Electronic India Ltd. (2023) 11 TMI 67 and the ITAT Delhi Tribunal in the case of DCIT vs. Artline Vinimay Pvt. Ltd. 2024 (10) TMI 595 (ITAT Delhi).
5. We have heard the rival contentions and gone through the facts and circumstance of the case. We note that a search and seizure operation was conducted in Singhla Group on 15-11-2017 during which assessee was also covered under section 132 of the Income-tax Act. Accordingly, proceeding u/s. 153A read with section 143(3), was undertaken and wherein addition of Rs. 7.50 crore was made u/s. 69A of the Act vide order dated 31.12.2019. In this case, proceedings u/s. 153A of the Act has arising from the search operation on Sanjay Singhal Group. Simultaneously, the Department had undertaken coordinated search action u/s. 132 of the Act upon the OPG group, which was closely associated and had inter-wined multiple financial dealings with Sanjay Singhal Group. The addition is based on evidence of unaccounted cash income generated by the assessee, which was systematically transferred to OPG Securities Pvt. Ltd. for accommodation entries in the form of receipt of bogus advance paid to assessee by M/s OPG. The basis of addition was solely based on incriminating material from excel sheets/ cash book recovered from laptop of Sh. Saurabh Gupta, employee of M/s OPG Securities Pvt. Ltd.. Before the Ld. CIT(A) it was the argument of the assessee that the proceedings undertaken u/s. 153A r.w.s. 143(3) of the Act for AY 2015-16 is unsustainable, however, the same to be conducted under section `153C of the Act under the facts and circumstances of the case. However, the contention of the revenue that in cases of coordinated searches of a group, incriminating material been derived from an assessee covered u/s. 132 of the Act and could be utilized for assessment of another assessee also covered u/s. 132 of the Act. We note that it is well settled law that even in coordinate searches, incriminating material derived from third party premises could be assessed only under section 153C of the Act. This view is fortified by the decision of the Hon’ble Delhi High Court in the case of Anand Kumar Jain HUF dated 3.3.20212. In view of above it is undisputed fact that in this case the assessment was based upon incriminating material seized from the laptop of Saurabh Gupta, employee of M/s OPG Securities Pvt. Ltd. from its premises at 3072, Old Ranjeet Nagar, Street No. 4, Delhi, which is very much evident from Panchnama and Warrant of the said premises, which are in the name of Sanjay Gupta and M/s OPG Securities Pvt. Ltd.. Thus, in view of the aforesaid factual matrix and in our considered view, the Ld. CIT(A) has rightly held that even in coordinated searches, incriminating material derived from third party premises could be assessed only under section 153C of the Act, which does not need any interference on our part, hence, we uphold the same and reject the grounds raised by the revenue.
6. As far as merits of the case is concerned, we note that AO completed the assessment at income of Rs. 7,58,90,502/- instead of Rs. 8,90,520/- as returned by the assessee. It is noted that AO has made the protective addition of Rs. 7.50 crore on account of alleged unexplained cash credit u/s. 68 of the Act and therefore, the addition is not sustainable, as the substantive addition of Rs. 7.50 crore was made in the case of Sanjay Singhal for AY 2015-16 which was confirmed by the Ld. CIT(A) vide his order dated 5.8.2025, thus, consequently, he rightly deleted the protective addition made in the hands of the assessee. Further, during the hearing, Ld. AR has placed a copy of Tribunal’s order dated 21.1.2026 passed in the case of Sanjay Singhal and submitted that the protective addition also did not survive as the entire assessment proceedings in the case of Sanjay Singhal has been quashed by the Coordinate Bench of the Delhi Tribunal in ITA No. 5418 to 5422/Del/2025 (Ayrs 2012-13 to 2016-17) vide order dated 21.1.2026.
7. We further draw support from the decision of the Coordinate Bench in the case of DCIT vs. Artline Vinimay Pvt. Ltd. wherein, vide order dated 10.10.2024 on identical facts and circumstances, it has been held as under:
“Thus, it is abundantly clear that substantive addition has not survived. It is a settled law that if the substantive addition does not survive, the protective addition also does not survive. To support this view, we refer the decision dated 30th October 2023 of the Hon’ble Delhi High Court in the case of PCIT versus Electrical and Electronics India Limited, [2023] 11 TMI 60, wherein it has been held that the addition made on protective basis does not survive where the substantive addition has been deleted.”
8. Therefore, considering the factual and respectfully following the aforesaid legal precedents, we find considerable cogency in the finding of the Ld. CIT(A) that protective addition made in the case of the Assessee for assessment year 2015-16 is not sustainable. Hence, Ld. CIT(A) has rightly deleted the addition in dispute accordingly. Therefore, we affirm the order of the learned Ld. CIT(A) on the issue of merit in dispute and reject the ground raised by the Revenue. Accordingly, the Revenue’s ITA No. 8174/Del/2025 (AY 2015-16) stand dismissed.
9. In so far as ITA No. 8175/Del/2025 (AY 2016-17) is concerned, our aforesaid decision taken in assessment year 2015-16 will apply mutatis mutandis in this assessment year viz. AY 2016-17 as well. Accordingly, the Revenue’s ITA No. 8175/Del/2025 (AY 2016-17) also dismissed in the aforesaid terms.
10. In the result, both the Revenue’s Appeal are dismissed.
Order pronounced in the Open Court on 28-9-2026.
