Pune ITAT Deletes ₹4.02 Crore ‘On-Money’ Addition; Third-Party Statements and Dumb Documents Not Enough

DCIT Vs Karan Gupta (ITAT Pune)

Pune ITAT Deletes ₹4.02 Crore ‘On-Money’ Addition; Third-Party Statements and Dumb Documents Not Enough

The Pune ITAT upheld the deletion of an addition of ₹4.02 crore made under section 153C on account of alleged cash “on-money” paid for purchase of land at Savargaon, holding that no addition can be sustained merely on the basis of third-party statements, loose papers and presumptions without independent corroborative evidence.

The assessee, one of the co-purchasers of Savargaon land from the Kokani family, was alleged to have paid cash over and above the registered consideration. The addition was based on loose sheets found during search proceedings in the case of the sellers and on statements recorded from members of the Kokani family claiming receipt of on-money. Based on these materials, the Assessing Officer made an addition of ₹4.02 crore as unexplained investment.

The Tribunal noted that identical additions made in the hands of the other co-purchasers had already been deleted by coordinate benches. It observed that no incriminating material whatsoever was found during search in the hands of the assessee, and the seized documents from the sellers neither mentioned the assessee nor established any payment of on-money by him. The Tribunal also noted that during cross-examination, members of the Kokani family denied having received any on-money from the purchasers and stated that the additional income was offered merely to buy peace and avoid litigation.

Relying on earlier Tribunal decisions in the same land transaction, the ITAT reiterated that contradictory statements have little evidentiary value, “dumb documents” containing mere numerical notings cannot justify additions, and suspicion however strong cannot replace evidence. The Tribunal further held that the presumption under section 132(4A) applicable to searched persons cannot automatically be extended to third parties.

Accordingly, the Tribunal confirmed the CIT(A)’s order deleting the addition of ₹4.02 crore and dismissed the Revenue’s appeal. On the assessee’s cross-objection, the Tribunal restored to the CIT(A) the issues relating to approval under section 153D and the validity of a consolidated satisfaction note under section 153C for fresh adjudication.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal filed by the Revenue is directed against the order dated 03.12.2024 passed by Ld. CIT(A), Pune- 12 [‘Ld. CIT(A)’] for the assessment year 2014-15. The assessee is also in Cross Objection against the appeal of the Revenue.

2. First, we shall take up the appeal filed by the Revenue for adjudication.

ITA No.213/PUN/2025 :

3. The Revenue has raised the following grounds of appeal :-

“1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.4,02,62,258/- made by the AO for A.Y. 2014-15 in the case of the assessee without appreciating the fact that the addition made by the AO is based on the strong corroborative evidences in the form of the seized materials with logical and justifiable reasons to arrive at the addition of Rs.4,02,62,258/- pertaining to the assessee for A.Y. 2014-15 out of the total undisclosed cash transactions worked out at Rs.65,21,25,992/-in respect of the land dealing of the Savargaon plots of land by Thakker Group?

2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in rejecting the working of addition made by the AO on the basis of his findings that the members of Konkani family involved in sale transaction of Savargaon land had received 50% consideration in cheque and 50% In cash showing unaccounted cash transactions amounting to Rs.65,21,25,992/- which is included in the amount of Rs.11,94,19,700/- declared by the Kokani Group initially in the statement u/s.132(4) in the search action on the premises of Kokani Group?

3. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case.”

4. Facts of the case, in brief, are that the assessee is an individual and is in receipt of remuneration from a partnership firm and has furnished his return of income for A.Y. 2014-15 on 31.03.2015 by declaring an income of RS 35,16,960/-. A search and seizure action u/s 132 of the IT Act was conducted on 08.09.2015 in the case of the Kokani Group, Nashik. Pursuant to the said search, it was gathered that the assessee, along with five other entities, namely (i) M/s Thakker Apna Ghar Pvt. Ltd., (ii) M/s Thakker Housing Development Pvt. Ltd., (iii) M/s Thakker Gruh Nirman Pvt. Ltd., (iv) Dhananjay Marketing Pvt. Ltd., and (v) Asian Food Products Ltd., had jointly purchased land bearing Survey Nos.53/2, 54, and 55 situated at Savargaon, Taluka and District Nashik, admeasuring in aggregate 92 Acres and 20 Gunthas for an aggregate consideration of Rs.65,21,25,992/-, vide registered sale deed dated 05.07.2013 executed with 14 members of the Kokani family, Nashik. The assessee’s share in the said land was 8 Acres, for which consideration of Rs.5,64,00,000/- was paid. The assessee claims to be an independent party, not related to other co-owners of the property, who belongs to Thakkar Group, Nashik. During the search on the Kokani family members, certain loose sheets were found and seized. Based on the noting contained therein, the members of the Kokani family initially declared an income of Rs.8,58,19,700/- and thereafter upon further inquiry in the course of search declared further income of Rs.3,36,00,000/-. Thus, the total additional income declared was Rs.11,94,19,700/- in their respective statements recorded u/s 132(4)/131 of the IT Act, on account of alleged receipt of ‘on-money’ in cash stating that such amount was received from Thakkar Group in respect of the sale of the Savargaon land. The information in this regard was subsequently forwarded by the DDIT (Inv.) – I, to the Assessing Officer and accordingly, the Assessing Officer issued a notice u/s 153C of the IT Act to the assessee on 29.03.2018. The assessee e-filed the return of income for A.Y. 2014-15 on 31.10.2018 u/s 153C of the IT Act, declaring the same income as originally returned. Subsequently, notices u/s 143(2) and 142(1) of the IT Act respectively were issued to the assessee. After considering the reply and submissions of the assessee, the Assessing Officer proceeded to make year-wise additions on account of the alleged cash payment of on-money aggregating to Rs.5,64,00,086/-, of which an amount of Rs.4,02,62,258/- relates to year under consideration i.e. for assessment year 2014-15. Accordingly, the Assessing Officer vide order dated 31.12.2018 completed the assessment proceedings u/s 143(3) r.w.s. 153C of the IT Act by determining the income of Rs.4,37,79,218/- as against the income of Rs.35,16,960/- returned by the assessee. The above assessed income includes addition of Rs.4,02,62,258/- as unexplained investment being cash paid as on-money in the purchase of Savargaon land to Kokani family.

5. Being aggrieved with the above action of the Assessing Officer, the assessee preferred an appeal before Ld. CIT(A). After considering the reply and submissions of the assessee, Ld. CIT(A) deleted the impugned addition by placing reliance on judicial precedents, including the jurisdictional coordinate bench decisions passed in the cases of Dhananjay Marketing Pvt. Ltd. and Asian Food Products Ltd., and other coordinate bench decisions passed in the cases of (i) Thakker Housing Development Pvt. Ltd., (ii) Thakker Grih Nirman Pvt. Ltd., and (iii) Thakker Apna Ghar Nirman Pvt. Ltd. (being co-purchasers in respect of the same transaction involving alleged payment of ‘on-money’ in cash). While granting relief, Ld. CIT(A) deleted the addition and allowed the appeal of the assessee by observing as under :-

“5.6 In the present case, the appellant is one of the entities of the Thakker Group of Nashik. The appellant is one of the co-owners of the land purchased from the Kokani Group. The additions made in the case of the appellant is on identical facts and on the basis of the same seized documents as in the case of other co-owners. Thus, the above decisions of the Hon’ble ITAT, Pune in the case of co-owners Dhananjay Marketing Pvt. Ltd. and Asian Food Products Ltd are binding in the present case. The Hon’ble ITAT, Pune has deleted the entire addition on account of “on money” in the above cases. Respectfully following the decision of the Hon’ble ITAT, Pune, the addition made by the Ld. AO on account of “on money” payment is directed to be deleted.

5.7 Since the quantum relief has been granted in respect of grounds no. 8 & 9 of the appeal, the other related grounds no. 1 to 7 and additional grounds no. 1 & 2 do not require separate adjudication. Therefore, they are treated as dismissed for statistical purposes.”

6. It is the above order against which the Revenue is in appeal as well as the assessee is in Cross Objection before this Tribunal.

7. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book as well as case laws furnished by the assessee. In this regard, we find that the assessee along with five other persons purchased the property namely Savargaon land from the Kokani family and the Assessing Officer in the case of all the six purchasers made similar additions on identical grounds on the basis of alleged on-money payment to Kokani Group. The above additions made in the hands of all the purchasers were deleted by coordinate benches of this Tribunal in the case of 5 co-purchasers namely (i) Dhananjay Marketing Pvt. Ltd. vs. DCIT in IT(SS)A No.65/PUN/2017, (ii) Asian Food Products Ltd. vs. DCIT in IT(SS)A No.64/PUN/2017, (iii) ACIT vs. Thakker Housing Development Pvt. Ltd. in ITA No.2131/MUM/2021, (iv) ACIT vs. Thakker Grih Nirman Pvt. Ltd. in ITA No.2132/MUM/2021 and (v) ACIT vs. Thakker Apna Ghar Nirman Pvt. Ltd. in ITA No.2133/MUM/2021. We further find that while allowing the appeal of other co-owners, the coordinate bench of Mumbai Tribunal followed the decision of coordinate bench of Pune Tribunal in the case of Dhananjay Marketing Pvt. Ltd. vs. DCIT in IT(SS)A No.65/PUN/2017 and IT(SS)A No.69/PUN/2017 wherein the Tribunal confirmed the order passed by Ld. CIT(A) by observing as under :-

“IT(SS)A No.65/PUN/2017:

24. We have heard the rival contentions and perused the record. The only issue in the present appeal relates to the addition of Rs.2,58,20,476/- based on the statement given by third party namely Kokani group of companies during the course of search and seizure proceedings in their hands u/s 132(4) of the Act. Admittedly, no incriminating material suggesting the payment of on-money consideration to the vendors of the subject land was found as result of search and seizure action in the hands of appellant herein. We are conscious of the fact that for the purpose of assessment to tax for the assessment year under consideration, the incriminating material found as a result of search and seizure action has no relevance, as there is abatement with regular assessment proceedings, therefore, the addition, if any, need not be based on incriminating material found as result of search alone. All other evidence which is gathered by the Assessing Officer as a result of enquiries conducted by him can also be considered in regular assessment along with material found as result of search and seizure action. However, the additions, if any, can be made only based on the conclusive evidences brought on record by the Assessing Officer.

25. From the perusal of assessment order as well as Ld. CIT(A)’s order, it would suggest that the addition of Rs. 2,58,20,476/- was made/confirmed merely based on the statement given u/s 132(4) of the Act by the vendors of the property i.e. Kokani group that they received on-money payment of Rs.11,94,19,700/- on sale of lands.

26. We perused the copies of statement recorded u/s 132(4) of the Act from the vendors of the property. The same are placed at pages no.292 to 400 of the Paper Book filed by the appellant. The statements were recorded on 08.09.2015 u/s 132 of the Act during the course of search and seizure operation in the case of Kokani group. The statements were recorded from following persons.

(i) Mr. Fakruddin Sallauddin Kokani

(ii) Ms. Farzana Sallauddin Kokani

(iii) Ms. Noorbano Sallauddin Kokani

(iv) Mr. Aijaj Kutubuddin Kokani

(v) Mr. Tamizoddin Faridoddin Kokani

(vi) Mr. Imran Iftekhar Kokani

(vii) Nooruddin S. Kokani

(viii) Moinuddin Ziauddin Kokani

(ix) Mr. Rehana Tamizuddin Kokani

(x) Mr. Gulam Gaus Kokani

27. The abovementioned persons undoubtedly have stated that they received on-money receipt over and above the consideration stated in the sale consideration on sale of Savargaon land. However, it is significant to note that they never mentioned the name of the Thakker group nor find place anywhere in seized material.

28. We find from the record that the Thakker group of companies including the appellant were afforded an opportunity to cross-examine the vendors. During the course of such cross-examination, all of them categorically stated that they have not received any on-money consideration on the sale of Savargaon land from Thakker group and it was further stated that the additional income was offered only in order to buy peace of the Department. The statements of cross-examination were placed at page nos. 256 to 264 of the Paper Book filed by the appellant.

29. The vendors also filed an affidavit stating that the declaration of additional income was made only with an intention to buy peace of the Department and avoid further litigation and also denied the knowledge of receipt of the on-money consideration as the subject transaction of sale of land to Thakker was negotiable by two of the deceased family members namely, Moinuddin Ziauddin Kokani and Imran Iftekhar Kokani. The said affidavits were placed at page no. 265 to 291 of the Paper Book.

30. In the above factual backdrop, we are required to evaluate the evidentiary value of the statement given by the vendors u/s 132(4) of the Act during the course of search and seizure action in their premises. As stated (supra), there are clear contradiction in the statements given by the vendors. It is settled position of law that the contradictory statement has no evidentiary value and reference in this regard can be made to the decision of Hon’ble Supreme Court in the case of Dhirajlal Giridharilal vs. CIT, 26 ITR 736 (SC).

31. Furthermore, during the course of search and seizure action in the premises of the appellant group, no incriminating material was found suggesting the payment of any on-money consideration. It is also settled position of law that no addition can be made the merely based statement u/s 132(4) of the Act by third party in the absence of any incriminating material on record and reference can be made to the decision of Hon’ble Gujarat High Court in the case of PCIT vs. Kunvarji Commodities Brokers Pvt. Ltd., 432 ITR 150. In the light of the above discussion, we are of the considered opinion that the mere statement given by the vendors of the land u/s 132(4) of the Act, cannot form basis for making any addition in the hands of appellant.

32. Another important factor to be considered is the fact that the vendors had admitted equivalent additional income to the amount stated in the sale deed as the additional income. Undisputedly, the vendors of the properties i.e. Kokani group had disclosed additional income of Rs.65,21,25,992/- as additional income in the application filed before the Settlement Commission stated to be on account of sale of lands. It is significant to note that on perusal of page no.14 order dated 17.07.2018 passed by Settlement Commission in the case of Kokani group, it is clear that though they offered additional income of Rs.65,21,25,992/- an amount of Rs.52,34,32,696/- was claimed as deduction u/s 54, this fact casts doubt and bona-fides on the part of Kokani group in offering additional income.

33. Therefore, the question is whether abovementioned facts can form the basis to form an opinion that the appellant made an undisclosed investment in the purchase of property in the form of payment of on-money consideration. The answer is “No”. It is trite law that a finding in the assessment of one person is not conclusive in the assessment of another person in view of the settled position of law that material gathered in the assessment proceedings of one person is not legal evidence in the assessment of another person. Reference can be made to the decision of N. S. Choodamani vs. CIT, 35 ITR 676 (Kerala). The assessment of each person is separate and distinct and an addition is to be made only on the basis of independent corroborative evidence, brought on record by the Assessing Officer. It is trite law that the assessment is final and conclusive between parties and only in relation to assessment for the financial year for which it is made. Reference can be made decision of Hon’ble Supreme Court in the case of M.M. Ipoh & Ors. vs. CIT, 67 ITR 106 (SC).

34. This is underlying principle in the decision by Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd vs. CIT, 243 ITR 83, wherein the Hon’ble Supreme Court after referring to the earlier decision in the case of Smt. Taradevi Agrawal, 88 ITR 323 held that merely because of an assessment of income in the wrong hands is not bar to assess the same income in the right hands and failure by the Assessing Officer to assess the income in the right hands renders the assessment order erroneous.

35. Further, we notice that both Assessing Officer as well as CIT(A) misdirected themselves by applying presumption u/s 132(4A) of the Act. The provision of section 132(4A) incorporates the rule of evidence relating to material found during course of search. On plain reading of said provision, it is evident that it has application in the case of searched person, in whose hands the material was found and seized. The presumption envisaged under said provision cannot be extended to assessment of third party. The CBDT also recognized the principle that no addition can be made on mere statement made u/s 132(4) without bringing any corroborative evidence. The CBDT Circular reads as under :-

“Admissions of undisclosed income under coercion/pressure during search/survey – Instances/ complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light.

2. The Board has emphasized upon the need to focus on gathering evidences during Search/ Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.—Letter [F.No. 286/98/2013-IT (INV.II)], dated 18-12-2014.”

36. In the present case, the additions are made merely based on statement of third parties without bringing on record any corroborative evidence. No such addition can be made in the light of above discussed legal position.

37. The Hon’ble Supreme Court in the case of P.V. Kalyanasundaram, 294 ITR 49 (SC) in a case involving the identical facts wherein the vendors of the property admitted additional income in the original return of income and it was held that in the absence of any corroborative evidence in the hands of the buyers, no addition can be made. No doubt, the fact that the vendors had admitted additional income on-money on sale of land before the Settlement Commission though rises suspicious. Ipso facto, cannot form basis of addition in the hands of third person in the absence of any independent corroborative evidence. As held by the Hon’ble Supreme Court in the case of CIT vs. Daulatram Rawatmull, 53 ITR 574 even the circumstances raises suspicion, suspicion cannot take place of the evidence. That apart, the contentions of the appellant i.e. the assessee that the vendors had declared additional income only in order to escape the rigouts of the law to claim the benefits u/s 54 of the Act remains uncontroverted. Therefore, we are of the considered opinion that the fact that the vendors had disclosed additional income on account of sale of land as additional income before the Settlement Commission cannot form any basis for the addition in the hands of the appellant herein.

38. In the light of the above facts and legal position, we are of the considered opinion that the Department had failed to establish that the appellant had paid any on-money over and above stated consideration of the sale deed to the vendors of the property at the time of purchase of Savargaon land. Therefore, no addition can be made on the mere statement given by the third party. Therefore, the orders of the lower authorities are reversed, we direct Assessing Officer to delete addition of Rs.2,58,20,476/- for the assessment year under consideration.

39. In the result, the appeal of the assessee stands allowed.”

IT(SS)A No.69/PUN/2017:

47. We have head the rival submissions and perused the material on record and carefully gone through the orders of the lower authorities. The issue in the present appeal of the Revenue centres around the factual matrix of seized material in the case of vendors of the property i.e. 3 parties. The Assessing Officer had presumed that based on the material found and seized from the premises of the vendors of the land received on-money consideration from the respondent assessee and in its group companies in connection with the purchase of land at Savargaon. The question therefore which requires to be decided by us is that whether or not the Assessing Officer is justified in drawing such conclusion based on the seized material found and seized from the premises of the vendors. The Assessing Officer as well as the ld. CIT(A) had reproduced scanned images of the seized material which form the basis of the addition in the assessment. That apart the vendors had admitted before the Hon’ble Settlement Commission, the additional income in the form of undisclosed capital gains on sale of land equivalent to apparent sale consideration mentioned in the sale deed on the sale of Savargaon land. No doubt from the perusal of the seized material, the notings in the form of figures were found and in some cases the notings denotes incurring of expenditure on household items and development of land, and purchase of material by the vendor company.

48. We have carefully perused the seized material of which scanned images were reproduced in the assessment order as well as in the order of ld. CIT(A). One of such seized material is reproduced vide page No.27 of the impugned order vide para 6.7. On mere perusal of the said seized material, it is clear that this document contains some numeric figures on the left side as well as on the right side. Against the figures, finding on the left side of the page, an alphabet “T” was found. From the this it cannot be said that the document contains some transactions giving rise to the taxable income nor it indicate any date of any transaction nor does not indicate any names of the parties to the transaction. Therefore, this document cannot said to be a speaking one, can be termed as “dumb document”. So is the case in respect of the document reproduced at page Nos.28, 29 and 30 of the impugned order. The Assessing Officer based on the seized material had concluded that the vendors had incurred expenditure in the form of development, purchase of lands out of on-money received over and above the consideration stated in the sale deed from the buyers of the land i.e. the respondent-assessee herein and its group companies and then proceeded to make addition in the hands of assessee as undisclosed investment on purchase of lands.

49. It is also important to significant note that even the vendors of the land in the statement u/s 132(4) of the Act had only confirmed the receipt of the on-money to the extent of Rs.11,94,19,700/- altogether. They nowhere stated that they received on-money consideration from the respondent assessee or its group companies on sale of the land. Even on cross-examination also, they had denied to have received any on-money on sale of the subject land from respondent assessee. On the mere fact that the Department has found certain evidence in the form of loose sheets indicating incurring of certain expenditure on household items and development of lands and purchase of lands etc does not lead to conclusion that the respondent assessee or its group companies had paid on-money consideration, also considering the fact that the seized material indicates incurring of such expenditure much before the date of agreement of purchase i.e. July, 2013, no prudent person would have paid the on-money consideration much before i.e. 2 and 2/1 years before date of agreement of sale.

50. It is settled position of law that onus lies upon the Department to collect cogent evidence to corroborate the notings on the loose sheets. The additions cannot be made merely on the basis of notings on the loose sheet papers which are in the nature of “dumb documents” having no evidentiary value. The onus lies on the Department to collect the evidence to corroborate the notings on the loose sheets. In the present case, it is undisputed position that as a result of search and seizure action in the case of respondent-assessee and its group companies, no material whatsoever was seized and found indicating payment of on-money consideration at the time of purchase of the lands. Reliance in this regard can be placed on the following decisions:

i) Pr. CIT vs. Umesh Ishrani (2019) 108 taxmann.com437 (Bom)

ii) CIT vs. Atam Valves (P.) Ltd. (2009) 184 Taxman 6 (P&H)

iii) CIT vs. Maulikkumar K. Shah (2008) 307 ITR 137 (Guj)

iv) CIT vs. C.L. Khatri (2006) 282 ITR 97 (MP)

v) Pr. CIT vs. Kamlesh Prahladbhai Modi (2018) 94 taxmann.com356 (Guj)

vi) CIT vs. Shri Girish Chaudhary (2008) 296 ITR 619 (Del)

vii) CIT vs. Vivek Aggarwal (2015) 56 com7 (Del)

viii) CIT vs. Salek Chand Agarwal (2008) 300 ITR 426 (All)

ix) CIT vs. Dinesh Jain (HUF) 352 ITR 629 (Del)

51. We find that the conclusions reached by the Assessing Officer are merely based on presumptions and assumptions without bringing corroborative material on record. It is settled position of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material. Reliance can be placed in this regard on the following decisions:

i) Dhirajlal Girdharilal vs. CIT (1954) 26 ITR 736 (SC)

ii) Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC)

iii) CIT vs. Maharajadhiraja Kameshwar Singh of Darbhanga (1933) 1 ITR 94 (PC)

iv) Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC)

v) Umacharan Shaw & Bros vs. CIT (1959) 37 ITR 271 (SC)

vi) Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC)

52. Recently, the Hon’ble Delhi High Court in the case of CIT vs. Dinesh Jain (HUF), 352 ITR 629 after referring to the decision of the Hon’ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) held that no addition can be made taking into account notorious practice prevalent in the similar trade. The relevant findings vide para 14 and 15 are as under:

“………..

14. In Lalchand Bhagat Ambica Ram Vs. Commissioner of Income Tax, Bihar and Orissa (1959) 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessments on mere suspicion and surmise or by taking note of the notorious practices prevailing in trade circles. At page 299 of the report, it was observed as follows :

“Adverting to the various probabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf. “

15. This takes care of the argument of Mr. Sabharwal that judicial notice can be taken of the practice prevailing in the property market of not disclosing the full consideration for transfer of properties.”

53. The Hon’ble Supreme Court in the case of K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) held that the capital gains is intended to tax the gains of assessee not what an assessee might have gained and what is not gained cannot be computed as gain and the assessee cannot fastened with the liability on a fictional income. Similarly, the Hon’ble Supreme Court in the case of CIT Vs. Shivakami Co. (P.) Ltd. (1986) 159 ITR 71 (SC) held that unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis for making addition. In the present case, we do not find any material on record suggesting the payment of on-money consideration at the time of purchase of land by the respondent-assessee and its group companies. Therefore, it can be said that the Assessing Officer had failed to bring on record any reliable evidence to prove that the respondent assessee had made investment in purchase of lands over and above the stated consideration. Therefore, we do not see any perversity in the findings of the ld. CIT(A) in deleting the addition based on the seized material. The findings given by us in relation to the appeal filed by the assessee for the same year also equally holds good in respect of present appeal and therefore, we do not find any merit in the appeal filed by the Revenue and we dismiss the appeal. Accordingly, we dismiss the appeal filed by the Revenue.”

8. Respectfully following the above decision passed by coordinate bench of this Tribunal in the case of other co-owners (supra) wherein similar addition has already been deleted & also in the light of the fact that Ld. DR could not bring any adverse material on record in his favour, we are of the considered opinion that there is no error in the order passed by Ld. CIT (A) wherein Ld. CIT(A) while deleting the addition made by the Assessing Officer on account of alleged on-money payment, only followed, coordinate bench decisions passed in the case of other co-owners (supra). Accordingly, we do not find any infirmity in the impugned order passed by Ld. CIT(A), hence the same is confirmed. Thus, the grounds of appeal raised by the Revenue are dismissed.

9. In the result, the appeal filed by the Revenue in ITA 213/PUN/2025 for A.Y. 2014-15 is dismissed.

C.O. No.13/PUN/2025 :

10. The assessee has raised the following grounds in cross objection :-

“1. The learned CIT(A) erred in failing to adjudicate Ground No. 1, which challenged the validity of the initiation of proceedings under Section 153C and the issuance of notice based on information received from the DDIT (Inv)-1, Nashik. Therefore, it is prayed that the Notice issued under Section 153C and the consequential assessment order under Section 153C r.w.s. 143(3) be quashed as being bad in law. In M/s Super Malls Private Ltd (C.A. Nos. 2006-2007 of 2020 decided on 05.03.2020), the Supreme Court has held that proceedings under Sec 153C cannot be initiated unless the Assessing Officer (AO) of the searched person records a satisfaction note that the documents seized belong to a person other than the searched party.

2. The learned CIT(A) erred in failing to adjudicate Ground No. 2, which challenged the continuation of proceedings under Section 153C without furnishing a copy of the Satisfaction Note to the assesse. The failure to provide the Satisfaction Note violates the principles of natural justice. Therefore, it is prayed that the proceedings under Section 153C be held invalid and bad in law.

3. The learned CIT(A) erred in failing to adjudicate Ground No. 3, which challenged the reopening of a completed assessment for AY 2014-15 under Section 153C despite the absence of any incriminating material found against the assessee. In the absence of incriminating material, the invocation of Section 153C is unsustainable in law. Therefore, it is prayed that the Notice issued under Section 153C and the consequent assessment order under Section 153C r.w.s. 143(3) be quashed. In CIT v/s Abhisar Buildwell (P) Ltd (454 ITR 212 (SC)), it is held that if no incriminating material is found during a search, the completed assessment cannot be disturbed under Section 153C.

4. The learned CIT(A) erred in failing to adjudicate Ground Nos. 4 & 5, which challenged the arbitrary addition of Rs. 4,02,62,258/-and the assessment of total income at Rs. 4,37,79,218/- for AY 2014-15. Therefore, it is prayed that the deletion of the addition of Rs. 4,37,79,218/- be upheld. In PCIT v. Saumya Construction (P) Ltd. [(2016) 387 ITR 529 (Gujarat HC)], it is held that the additions cannot be made arbitrarily under Section 153C unless the seized documents directly establish undisclosed income.

5. The learned CIT(A) erred in failing to adjudicate Additional Ground No. 1, which challenged the assessment order passed in a ‘copy-paste’ manner by merely replicating the order in co-purchasers’ cases without any independent verification or application of mind. Therefore, it is prayed that the assessment order under Section 153C r.w.s. 143(3) be quashed for lack of independent reasoning. In Satish Kumar Lakhmani, the ITAT, C Bench, Kolkata (ITA No. 260/Kol/2019 decided on 21.04.2021) has held that the Order passed in a cut-paste manner is not a valid order.

6. The learned CIT(A) erred in failing to adjudicate Additional Ground No. 2, which challenged the validity of the assessment order passed without obtaining the mandatory approval of the JCIT as required under Section 153D. In the absence of such approval, the assessment order is void ab initio. Therefore, it is prayed that the assessment order under Section 153C r.w.s. 143(3) be quashed. In Indrajit Banerjee (272 CTR 88 (Cal H C)), the Calcutta High Court has held that it was the obligation of the Income Tax Officer to indicate in his order that he passed the order after obtaining requisite approval. Otherwise, the Order itself is incompetent, null & void.

7. The respondent craves leave to add, alter, amend, delete, or substitute any ground of cross-objection at any time before or during the course of the hearing.”

11. The assessee has also raised the following additional ground in cross objection :-

“7. Consolidated satisfaction note renders proceedings under section 153C of the Act invalid.

The assessment order passed under section 143(3) r.w.s 153C is bad in law and void ab initio as the learned Assessing Officers recorded consolidated satisfaction note in respect of various assessees’ as well as different assessment years, which vitiates the entire assessment proceedings as the same is not in accordance with the law.”

12. At the time of hearing of Cross Objection, Ld. AR did not pressed cross objection ground no.1, 2 & 5, hence the same are dismissed as not pressed.

13. With regard to cross objection ground no.3 & 4, we find that since we have already dismissed the appeal filed by the Revenue for assessment year 2014-15 wherein absence of incriminating material has been proved, therefore, these cross objection ground nos.3 & 4 becomes infructuous, hence dismissed.

14. With regard to cross objection ground no.6, we find that the same ground was also raised by the assessee before Ld. CIT(A) as additional ground no.2, however, the same was not adjudicated by Ld. CIT(A) since quantum relief was allowed in respect of ground no.8 & 9 raised by the assessee and therefore, additional ground no.2 was dismissed for statistical purposes.

15. With regard to above ground, we find that it is the claim of the assessee that mandatory approval u/s 153D of the IT Act was not obtained prior to passing of the impugned assessment order u/s 153C of the IT Act. In this regard, additional ground no.2 was raised before Ld. CIT(A) which was not adjudicated by Ld. CIT(A) since the appeal was already decided in favour of the assessee on merits of the case.

16. We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that the assessee placed reliance on coordinate bench decision passed in the case of Akil Gulamali Somji (2012) (137 ITD 94) and Indrajit Banerjee, 272 CTR 88 (Cal HC) wherein it was held that absence of approval u/s 153D of the IT Act renders the proceedings u/s 153C invalid. We find that there is nothing on record from which we can find out whether approval u/s 153D of the IT Act was obtained or not ?. We further find that as per section 250(6) of the IT Act, it is the duty of Ld. CIT(A) to decide each and every ground raised by the assessee and in the instant case admittedly Ld. CIT(A) failed to decide this additional ground no.2 which was raised by the assessee before him. Accordingly, we deem it appropriate to restore this additional ground no.2 (limited issue) back to the file of Ld. CIT(A) to adjudicate the additional ground no.2 which was earlier raised by the assessee before him with regard to approval u/s 153D of the IT Act prior to passing of assessment order u/s 153C of the IT Act.

Thus, this cross objection ground no.6 is allowed for statistical purposes.

17. With regard to cross objection ground no.7, wherein the assessee has challenged ‘Consolidated satisfaction note’, we find that the above legal ground was never raised before Ld. CIT(A) rather raised for the first time before this Tribunal. Therefore, in the light of judgement of Hon’ble Delhi High Court passed in the case of Divine Infracon Pvt. LTd. vs. PCIT [2025] 171 taxmann.com92 (Del) wherein para 13 it has been held that the Tribunal has no jurisdiction to proceed to decide the ground which did not arise from the impugned order passed by First Appellate Authority irrespective of such ground was raised in first appeal or not, we deem it appropriate to restore this ground challenge to ‘Consolidated satisfaction note’ also to the file of Ld. CIT(A), since for adjudication of additional ground no.2, the matter has already been restored to the file of Ld. CIT(A). Needless to state that Ld. CIT(A) shall decide both the above grounds after providing proper opportunity of hearing to the assessee. Thus, this cross objection ground no.7 is also allowed for statistical purposes.

18. In the result, the Cross Objection filed by the assessee is allowed for statistical purposes.

19. To sum up, the appeal filed by the Revenue is dismissed and the Cross Objection filed by the assessee is allowed for statistical purposes, as indicated above.

Order pronounced on this 19^th day of June, 2026.