Additions in unabated Section 153A assessments without

Additions in unabated Section 153A assessments without incriminating search material are unsustainable in law.

Issue

Additions in Unabated Years under Section 153A: Whether additions or disallowances (such as unsecured loans under Section 68 and related interest, and Section 69A/69C additions) can be sustained in Section 153A assessments for completed/unabated assessment years without any incriminating material found during the search.
Unexplained Money based on Digital Messages (Section 69A): Whether a substantial question of law arises regarding a Section 69A addition based on search-retrieved SMS/WhatsApp files when the addition was omitted from the assessment order’s total income computation and rejected on factual grounds by lower appellate authorities.
Disallowance of Interest Expense (Section 37(1)): Whether disallowance of interest expenses made on a purely notional basis alongside Section 68 additions gives rise to a substantial question of law.

Facts

A search under Section 132 was conducted at the assessee’s premises covering Assessment Years 2012-13 to 2018-19.
Assessments for AYs 2012-13 to 2017-18 were framed under Section 153A, and for AY 2018-19 under Section 143(3) read with Section 153A.
Unsecured Loans & Interest Disallowances: The Assessing Officer (AO) made additions under Section 68 for unsecured loans along with consequential disallowance of interest under Section 37(1), plus additions under Sections 69A and 69C across various years.
Incriminating Material Absence: The Tribunal deleted the additions/disallowances for completed/unabated assessment years on the ground that they were not backed by any incriminating material seized during the search.
WhatsApp/SMS Evidence: For AY 2017-18, the AO identified SMS/WhatsApp text files referring to transactions between the assessee, a third party (Maulik), and an accountant to calculate a ₹45.24 lakh addition under Section 69A. However, the AO inadvertently failed to include this sum in the final total income computation in the assessment order.
Interest Expense Disallowance: The CIT(A) and Tribunal concurrently found that the interest disallowances were made on a notional basis and deleted them.
The Revenue appealed before the High Court.

Decision

Additions in Unabated Assessments: In favor of Assessee. For completed/unabated assessment years framed under Section 153A, no additions or disallowances can be made in the absence of incriminating material seized during the search. No substantial question of law arises.
Unexplained Money Addition (Section 69A): In favor of Assessee. Given the concurrent factual findings of the CIT(A) and Tribunal—and the omission in the assessment order computation—no question of law arises, and the Revenue’s appeal on this ground is dismissed.
Notional Interest Disallowance: In favor of Assessee. Deletion of interest disallowances made on a notional basis is a purely factual finding, raising no substantial question of law.

Key Takeaways

Requirement of Incriminating Material for Section 153A: Reassessment of completed/unabated assessment years post-search must strictly be rooted in incriminating documents or assets found during the search; routine additions are legally impermissible.
Notional Disallowances Are Unenforceable: Disallowances of expenses (like interest) made on a speculative or notional basis without factual grounding cannot survive appellate scrutiny.
High Court Scope on Substantial Questions of Law: Concurrent factual determinations by the CIT(A) and the ITAT cannot be challenged in the High Court unless a substantial question of law or perversity is demonstrated.

HIGH COURT OF GUJARAT

Principal Commissioner of Income-tax (Central)

Sunit Sudhirbhai Chokshi^*

BHARGAV D. KARIA and Pranav Trivedi, JJ.

R/TAX APPEAL Nos. 140 of 2024 and others^†

JULY 6, 2026

Varun K. Patel for the Appellant. Parimalsinh Parmar for the Respondent.

JUDGMENT

Bhargav D. Karia, J. – Heard learned Senior Standing Counsel Mr.Varun K. Patel for the appellant and learned Senior Advocate Mr.Tushar Hemani assisted by learned advocate Mr.Parimalsinh Parmar for the respondent.

Tax Appeal No.140 of 2024:

1. This Appeal is preferred under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) by the appellant-Revenue, being aggrieved by the common Judgment and Order dated 8^th August, 2023 passed by the Income Tax Appellate Tribunal, Ahmedabad “A” Bench (for short ‘the Tribunal’) in Appeals, being IT(SS)A Nos.37 to 43/Ahd/2021 for Assessment Year 2012-13 to 2018-19 and IT(SS)A Nos.25 and 26/Ahd/2021 for the Assessment Year 2017-18 and 2018-19, filed by the Revenue before the Tribunal.

2. The Revenue has proposed the following substantial questions of law in Tax Appeal No.140 of 2024 for Assessment Year 2014-15 :

“(a) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has not appreciated the facts that incriminating documents were found at the premises of the assessee in the form of loose paper, digital data, WhatsApp chats from the mobile of the assessee, etc. in this case?

(b) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has not appreciated the facts that there were enough incriminating materials to infer that the sales were made in particular projects and cash was received by the assessee?

(d) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has not appreciated the facts brought on record by the AO in respect to unsecured loan lenders to prove that there were serious defects in respect to details submitted by the assessee?

(e) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.19,69,49,246/- u/s. 68 of the Act on account of unexplained cash credit and disallowance of Rs.77,21,384/- on account of interest expenses on unsecured loan, without appreciating the facts brought on record by the Assessing Officer?”

3.1. This Appeal pertains to the order passed under Section 153A of the Act due to search action carried out under Section 132 of the Act at the premises of the assessee on 11^th April, 2017. The Assessing Officer completed the assessment for Assessment Years 2012-13 to 2017-18 under Section 153A of the Act and for the Assessment Year 2018-19, under Section 143(3) read with Section 153A of the Act and made following additions/disallowance :

“[i] on account of receipt of On-Money by extrapolation, [ii] disallowance u/s.40A(3),

[iii] addition u/s. 69A, whatsapp messages

[iv] disallowance of commission expenses,

[v] addition u/s. 68 and

[vi] disallowance of interest expenses thereon, etc.”

3.2. For each of the years, additions are made as under, which were considered by the Tribunal :

IT(SS)A Nos./ Asst. Years	Challenge of Asst. made u/s. 153A	Extrapolation of On-Money on Sale of Flats	Disallowance u/s. 40A(3)	Addition u/s. 69A	Disallowance of Commission expenses	Addition u/s. 68 & Int. Ekp.
37/Ahd/21 2012-13	Yes, Ground Nos. 1-5	1,47,04,000/-	48,39,705/	5,00,000/-	–	–
38/Ahd/21 2013-14	Yes, Ground Nos. 1-5	6,13,76,000/-	–	–	–	–
39/Ahd/21 2014-15	Yes, Ground Nos, 1-5	1,29,60,000/-	–	–	4,92,373/-	19,69,49,246/ – Int. Exp. 77,21,384/-
40/Ahd/21 2015-16	Yes, Ground Nos. 1-5	4,46,00,000/-	–	9,11,000/-	3,90,525/-	15,62,10,036/ – Int.Exp. 1,13,44,489/-
42/Ahd/21 2016-17	No Grounds	15,52,60,402/-	–	–	Rs.10 crores (Whatasapp Conversation)	–
41/Ahd/21 2017-18	No Grounds	6,37,94,296/-	–	28,84,000/-	–	10,60,10,356/ -Int.Exp. 2,29,79,520/-
43/Ahd/21 2018-19	No Grounds	17,32,95,220/-	–		Trial Balance Difference 14,25,731/-	8,50,20,181 -Int. Exp. 1,07,57,213/-

3.3. For the Assessment Years 2012-13 and 2013-14, both the CIT (Appeals) and Tribunal have held that the addition made under Section 153A of the Act could not have been made in absence of any incriminating material by analyzing each of the seized material during the course of search and came to the conclusion that the Assessing Officer was not justified in making addition of on-money receipt on the basis of the incriminating material and restricted the addition at Rs.7,26,000/-, being 20% of Rs.36,30,000/-, admittedly received as on-money by the assessee towards profit element only.

4. Considering the decisions of both CIT (Appeals) and Tribunal, we are of the opinion that following substantial question of law arises for consideration of the impugned order of the Tribunal :

“Whether in the facts and circumstances of the case, the Tribunal has erred in law in upholding the order of the CIT (Appeals) for deleting the addition of on-money reflected from the incriminating documents by treating such documents as dumb documents pertaining to four construction projects of the assessee resulting into a perverse order?”

5. The above question will take care of the question Nos. a, b and c proposed by the Revenue and hence, the Appeal is admitted for consideration of the above question qua Nos. a, b and c are concerned.

6. So far as question Nos. d and e are concerned, the Assessing Officer has made addition under Section 68 of the Act on account of unexplained cash credit as well as dis-allowance of interest expenses on unsecured loan. Both CIT (Appeals) and Tribunal have deleted such addition on the ground that the same is not made on the basis of the incriminating material found during the course of search by relying upon the decision of this Court in case of Pr. CIT v. Saumya Construction (P.) Ltd. [2016] 387 ITR 529 (Gujarat) which is upheld by the Hon’ble Supreme Court in case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. 454 ITR 212 (SC).

7.1. Learned Senior Standing Counsel Mr.Varun Patel for the appellant submitted that the Hon’ble Apex Court in case of Abhisar Buildwell (supra), while upholding the decision of this Court in Saumya Construction (supra), has explained in paragraph No.11 read with paragraph No.14(iii) that in case any incriminating material is found during the course of search relating to unabated/ completed assessment, the Assessing Officer is justified in assuming the jurisdiction to assess or reassess the “total income” taking into consideration the incriminating material and the other material available, including the income declared in the returns. It was submitted that if such course is not adopted by the Assessing Officer when the assessment proceedings are initiated under Section 153A of the Act, the Revenue would be left without any remedy, if the assessment is restricted only with regard to the incriminating material and therefore, the Hon’ble Apex Court has clarified in case of Abhisar Buildwell (supra) in paragraph No.14(iii) that in a completed unabated assessment year, in which the completed/unabated assessment was framed and incriminating material is found, the Assessing Officer is required to determine the total income taking into consideration the incriminating material including the other material, which is found during the course of assessment, including the income declared in the Return of Income.

7.2. It was submitted that if the above decision of the Hon’ble Apex Court is not applied, then there will be two parallel assessment proceedings, one under Section 153A of the Act and the other, if any other material is found by the Assessing Officer, and then he would be required to initiate proceedings under Section 147 of the Act. Learned Senior Standing Counsel Mr.Varun K. Patel referred to and relied upon paragraph No.11 of the aforesaid decision to submit that the Hon’ble Apex Court, after considering the history of bringing on statute of Section 153A of the Act, in place of Section 158BC of the Act, has categorically observed that the legislative intention was to avoid two parallel assessments and in case of search, only the pending assessment/re-assessment proceedings are to be abated as per the second proviso to Section 153A of the Act by the Assessing Officer to frame the assessment/re-assessment for six years prior to the previous year, in which the search took place and the intention was not to reopen the completed/unabated assessment unless the incriminating material is found. It was therefore submitted that once the incriminating material is found for any of the completed/unabated assessment year, it should be open for the Assessing Officer to consider the other material, which would include the income declared in the returns, as held by the Hon’ble Apex Court. It was therefore submitted that the Assessing Officer was justified in making addition under Section 68 of the Act in respect of unsecured loans for which, the assessee failed to fulfill the three criteria, i.e. identity, creditworthiness and genuineness of the transaction and therefore, the CIT (Appeals) and Tribunal are not justified in deleting the addition.

8.1. On the other hand, learned Senior Advocate Mr. Tushar Hemani for the respondent-assessee submitted that the Hon’ble Apex Court has upheld the decision of this Court in case of Saumya Construction (supra) as well as the decision of the Hon’ble Delhi High Court in case of CIT (Central) v. Kabul Chawla [2016] 380 ITR 573 (Delhi) and therefore, the way in which, the learned counsel for the Revenue applies the decision of the Hon’ble Apex Court would be contrary to the ratio laid down by the Hon’ble Apex Court in case of Abhisar Buildwell (supra) wherein, it is held by the Hon’ble Apex Court in paragraph No.14(iv) that when no incriminating material is unearthed during the search, then the Assessing Officer cannot assess or reassess taking into consideration other material in respect of the completed/unabated assessments. It was further submitted that similar contention was raised by the Revenue before the Hon’ble Apex Court also, which is raised here in this case, and the same was turned down by the Hon’ble Apex Court in paragraph No.12 of the said decision.

8.2. Learned Senior Advocate Mr.Tushar Hemani placed reliance on the decision in case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC) to submit that Judgment of the Hon’ble Apex Court must be read as a whole and observations from the Judgment have to be considered in light of the questions, which were brought before the Court.

9. Having considered the submissions made by both the sides, it would be germane to refer to the decision of this Court in case of Saumya Construction (supra) wherein, this Court, considering the issue of material other than the incriminating material for the completed/unabated assessment, held as under :

“15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Subsection (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding.

16. Section 153A bears the heading “Assessment in case of search or requisition”. It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act.”

10. This Court also referred to and relied upon the decision of the Delhi High Court in case of Kabul Chawla (supra) wherein, it is held as under :

“38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed.”

11. The Hon’ble Apex Court applied the above decision to answer the question framed in paragraph No.5 of the Judgment in case of Abhisar Buildwell (supra), which reads as under :

“The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of the Assessing Officer to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i. e., whether any addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961 or not.”

12. Considering the submissions and the Scheme of the assessment in case of search and seizure under Section 132 of the Act or requisition under Section 132A of the Act, the Hon’ble Apex Court in the aforesaid case has held as under :

“11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the ‘total income’ in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the ‘total income’ for the entire six years period/block assessment period. The intention does not seem to be to reopen the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy.

12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub- section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law.

13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material.

14. In view of the above and for the reasons stated above, it is concluded as under:

(i)

that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A;

(ii)

all pending assessments/reassessments shall stand abated;

(iii)

in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns;

and

(iv)

in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.

Civil Appeal Nos.7738-7739/2021, 77367737/2021, 7732-7735/2021 and 7740-7743/2021

15. Insofar as the aforesaid Civil Appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar Sahson, Allahabad are concerned, these appeals have been preferred against the impugned judgment and order dated 06.09.2016 passed in ITA Nos. 270/2014, 269/2014, 15/2015, 16/2015, 268/2014 and 17/2015, as also, against the order dated 21.09.2017 passed in the review applications. It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to reopen the assessments made under Section 143(1)(a) or 143(3) of the Act, 1961 and to re- assess the total income taking notice of undisclosed income even found during the search and seizure operation.

15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed. In the facts and circumstances of the case, no costs.”

13. On perusal of the above dictum of law as annunciated by the Hon’ble Apex Court, it is clear that no addition can be made in respect of the completed assessments in absence of any incriminating material. The Hon’ble Apex Court has considered the similar contention, which is raised before us on behalf of the Revenue, in paragraph No.12 of the Judgment and has observed that if the submission of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the Assessing Officer can assess or reassess the income/total income taking into consideration the other material is accepted, then in that case, there will be two assessment orders, which is not permissible under law. The Hon’ble Apex Court has categorically observed that assessment under Section 153A of the Act is linked with search and requisition under Section 132 and 132A of the Act so as to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition and therefore, only in case where the undisclosed income is found on the basis of the incriminating material, the Assessing Officer would assume the jurisdiction to assess or reassess the total income even in case of completed/unabated assessment.

14. Considering the decision of the Hon’ble Apex Court, upholding the decisions of this Court as well as the Hon’ble Delhi High Court, it appears that the Judgment of the Apex Court has to be read as a whole rather than the way in which, the learned Counsel appearing for the Revenue is trying to apply the same by considering that when there is an incriminating material found for a particular assessment year, which is completed and has become unabated, the Assessing Officer can consider the same as a reopened assessment to reassess the income, which is already assessed or reassessed before the date of search. If such a contention is accepted, it would lead to a situation where the Assessing Officer shall be conducting re-assessment proceedings by making additions, other than the additions which are to be made on the basis of the incriminating material. The Hon’ble Apex Court has observed in paragraph Nos.11 and 14(iii) that in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the Assessing Officer has to frame the assessment or reassessment as the case may be meaning thereby that, if the assessment is already framed under Section 143 of the Act or it is framed under Section 147 of the Act but completed, the Assessing Officer has to frame the assessment under Section 153A of the Act to compute the total income taking into consideration incriminating material found during the course of search and other material, which is including the income declared in the returns and thereby, arrived at a computation of total income which does not mean that the Assessing Officer has to do re-assessment on the basis of any other material of the completed assessment, which is otherwise the search action of the Assessing Officer which would defeat the intention of the legislature that in case of search, only the pending assessment/re-assessment proceedings shall be abate and addition can be made only on the basis of the incriminating material found during the course of search.

15. It is also pertinent to note that the Hon’ble Apex Court, while holding that no addition can be made other than on the basis of the incriminating material found during the course of search, has taken care of the interest of Revenue by observing that when no incriminatory material is found in case of completed/unabated assessment, the Revenue is entitled to initiate re-assessment proceedings under Section 147/148 of the Act subject to fulfillment of the conditions mentioned therein. This observation made in paragraph No.11 of the Judgment clearly indicates that when there is no incriminatory material found by the Revenue, no addition can be made under Section 153A of the Act.

16. The contention of the Revenue that when incriminating material is found for a particular Assessment Year, though it is completed, additions can be made even on the basis of the non-incriminating material in possession of the Assessing Officer, is negated by the Hon’ble Apex Court, as observed herein above in paragraph No.12 of the Judgment.

17. Considering the above analysis and reasons, the question Nos. d and e, which are based on the non-incriminating material found during the course of search, the Assessing Officer could not have made additions by making re-assessment of the completed assessment and therefore, in our opinion, no question of law, much less any substantial question of law arises from the impugned order of the Tribunal and hence, the Appeal is dismissed qua question Nos. d and e are concerned.

Tax Appeal No.141 of 2024:

1A. In this Appeal, the Revenue has proposed the following questions of law:

(d)Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has not appreciated the facts brought on record by the Assessing Officer in respect to unsecured loan lenders to prove that there were serious defects in respect to details submitted by the assessee?

(e) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs. 15,62,10,036/- u/s. 68 of the Act on account of unexplained cash credit and disallowance of Rs.1,13,44,489/ – on account of interest expenses on unsecured loan, without appreciating the facts brought on record by the Assessing Officer?

(f) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition o Rs.9,11,000/-u/s. 69A of the Act on account of unexplained money without appreciating the fact brought on record by the Assessing Officer?”

2A. For question Nos. a to c, the Appeal is admitted for consideration of the following substantial question of law :

3A. So far as question Nos. d, e and f are concerned, the Appeal is dismissed in view of the reasons assigned in Tax Appeal No.140 of 2024 on similar facts.

Tax Appeal No.139 of 2024:

1B. In this Appeal, the Revenue has proposed the following questions:

“(a) Whether on the facts and circumstances of the case and in law, the learned ITAT has erred in not appreciating the facts that in this case incriminating documents were found at the premises of the assessee in the form of loose paper, digital data, WhatsApp chats from the mobile of the assessee, etc., in this case?

(b) Whether on the facts and circumstances of the case and in law, the learned ITAT has erred in not appreciating the facts that there were enough incriminating materials to infer that the sales were made in particular projects and cash was received by the assessee?

(c) Whether on the facts and circumstances of the case and in law, the learned ITAT has erred in deleting the addition of Rs.15,52,60,402/- made by the Assessing Officer on account of on-money payment?

(d) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has not appreciated the facts brought on record by the Assessing Officer in respect of commission income of Rs.10 Crores?”

2B. The appeal is admitted for consideration of the following substantial question of law :

Tax Appeal No.137 of 2024:

1C. In this Appeal, the Revenue has proposed the following questions of law :

“(a) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.6,66,98,296/- out of total addition of Rs.6,74,24,296/- on account of on-money receipt without appreciating the explanation made by Assessing Officer as envisaged by the Hon’ble Supreme Court in CIT v. H.M. Esufali H.M. Abdulali -, (1973) 90 ITR 271 (SC)?

(b) Without prejudice to above question, whether in the facts and circumstances of the case and in law, the learned ITAT is correct in allowing 80% of the on-money received on sale of Unit 4 @ Arman Green as expenditure and upholding only 20% of the amount, i.e. Rs.7,26,000/- as profit on such on-money received which had not been recorded in the regular books of the assessee and evidence had been found and seized during the course of search?

(c) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, Illegal and ex-facie perverse, because the learned ITAT has deleted the addition Rs.10,60,10,356/ -out of total addition of Rs.12,41,89,902/ – made u/s. 68 of the Act on account of unexplained cash credit without appreciating the fact that the assessee failed to establish the identity and creditworthiness of depositors and genuineness of transaction satisfactorily?

(d) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition u/s.68 of the Act, considering the recovery notice issued by the lenders to be genuine, despite the fact that in the statement u/s. 132(4), the assessee has affirmed that he does not know the depositors personally and the loans were received through the middlemen?

(e) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.2,29,79,570/- on account of disallowance of interest expenses, without considering the facts brought on record by the Assessing Officer?

(f) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.28,84,000/-out of total addition of Rs.45,24,000/-made by Assessing Officer u/s. 69A of the Act on account of unexplained money, without considering the facts brought on record by the Assessing Officer?”

2C. For question Nos.a and b are concerned, the Appeal is admitted for consideration of the following question of law :

3C. For questions c, d and e are concerned, the Appeal is dismissed in view of the reasons assigned in Tax Appeal No.140 of 2024 on similar facts.

4C. So far as question No.1 is concerned, the CIT (Appeal) as well as the Tribunal has arrived at concurrent findings of fact which read as under:

“12.6. Addition of Rs.28,84,000/-relating to the A.Y. 2017-18:

During the course of search, certain SMS message files were found making reference of monetary transactions. The AO relied on some of such messages between the Assessee, Maulik, Accountant wherein discussion of cash received from and paid to various person has been made. In view of conversations in such messages, addition to the extent of Rs.45,24,000/- was made by the AO, observing that the assessee failed to provide reasonable explanation with respect to transactions mentioned in such messages however by mistake such addition was not made in computation of total income at the end of assessment.”

5C. In view of the above findings of fact, no question of law arises and the Appeal is dismissed qua question No.1 is concerned.

Tax Appeal No.142 of 2024:

1D. This Appeal is arising out of the ascending appeal, where the Revenue has proposed the following questions of law:

“(a) Whether on the facts and circumstances of the case and in law, the learned ITAT has erred in deleting the addition of Rs.6,66,98,296/- out of total addition of Rs.6,74,24,296/- made by the Assessing Officer on account of on-money payment without appreciating the extrapolation made by the Assessing Officer as envisaged by the Hon’ble Supreme court in CIT v. H.M. Esufali H.M. Abdulali (SC) 1973 CTR (SC) 317, (1973) 90 ITR 271 (SC)?

(b) Without prejudice to the question above, whether on the facts and circumstances of the case and law, the learned ITAT is correct in allowing 80% of the on-money received on sale of Unit 4@ Arman Green as expenditure and upholding only 20% of the amount, i.e. Rs.7,26,000/- as profit on such on-money received which had not been recorded in the regular books of the assessee and evidence had been found and seized during the course of search?

(c) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT deleted the addition of Rs.1,37,96,000/- u/s.69C on account of unexplained expenditure and addition of Rs.91,70,000/-u/s.69A on account of unexplained money, without considering the facts brought on record by the Assessing Officer?

(d) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.28,84,000/-out of total addition of Rs.45,24,000/-u/s. 69A on account of account of unexplained money, without considering the facts brought on record by the Assessing Officer?”

2D. For question Nos. a and b, the Appeal is admitted for consideration of the following substantial question of law :

3D. So far as question Nos.c and d are concerned, the Appeal is dismissed in view of the reasons assigned in Tax Appeal No.140 of 2024 on similar facts.

Tax Appeal No.138 of 2024:

1E. In this Appeal, the Revenue has proposed the following questions of law :

“(a) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.17,32,95,220/ – on account of on-money receipt without appreciating the explanation made by Assessing Officer as envisaged by the Hon’ble Supreme Court in case of CIT v. H.M. Esufali H.M. Abdulali – (1973) 90 ITR 271 (SC)?

(b) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is illegal and ex-facie perverse, because the learned ITAT has deleted the addition Rs.8,50,20,181/- on account of unexplained cash credit without appreciating the fact that the assessee failed to establish the identity and creditworthiness of depositors and genuineness of transaction satisfactorily?

(c) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition u/s.68 of the Act, considering the recovery notice issued by the lenders to be genuine, despite the fact that in the statement u/s. 132(4), the assessee has affirmed that he does not know the depositors personally and the loans were received through the middlemen?

(d) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.1,07,57,213/- on account of disallowance of interest expenses, without considering the facts brought on record by the Assessing Officer?

(e) Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has deleted the addition of Rs.14,25,731/-on account of account of unexplained expenses made out of books, without considering the facts brought on record by the Assessing Officer?”

2E. For question Nos. a and b, the Appeal is admitted for consideration of the following substantial question of law :

3E. So far as question Nos. c and e are concerned, the Appeal is dismissed in view of the reason assigned in Tax Appeal No.140 of 2024.

4E. So far as question d is concerned, the same is a factual question and both the CIT (Appeals) and the Tribunal has deleted the addition, as the addition is made on the notional basis and therefore, no question of law can be said to have arisen and the Appeal is dismissed qua question No. d is concerned.

Tax Appeal No.467 of 2024:

1F. In this Appeal, the Revenue has proposed the following questions of law :

(a)

Whether on the facts and circumstances of the case and in law, the learned ITAT has erred in deleting the addition of Rs.80,00,000/- made by the Assessing Officer u/s. 69A of the Act on account of unexplained investment made on the basis of WhatsApp?

(b)

Whether in the facts and circumstances of the case and in law, the order of the learned ITAT is erroneous, illegal and ex-facie perverse, because the learned ITAT has directed the Assessing Officer to allow relief to the assessee to the extent mentioned in the CBDT’s circular No.1916 without appreciating that the said circular does not exempt the assessee from furnishing explanation regarding source of fund for such jewellery?

2F. The Appeal is admitted for consideration of the following substantial question of law :

“Whether in the facts and circumstances of the case, the Tribunal has erred in law in upholding the order of the CIT (Appeals) for deleting the addition of reflected from the on-money incriminating documents by treating such documents as dumb documents pertaining to four construction projects of the assessee resulting into a perverse order?”