Abhishek Gupta vs DCIT

PER MANISH AGARWAL, AM :

The captioned appeals filed by the Assessee are arising out of the separate orders of the Commissioner of Income Tax (Appeals)-30, New Delhi [“Ld. CIT(A)”] both dated 31.10.2025 passed under s. 250 of the Income Tax Act, 1961 [the Act] emanating from different assessment orders dated 24.03.2022 passed by the Assessing Officer [“AO”] u/s 153A & assessment order 17.03.2022 passed by AO u/s 153A r.w.s. 143(3) of the Act for the Assessment Year 2019-20 and 2020-21 respectively.

Since both the appeals filed by the assessee are having common issues, therefore, both the appeals are decided by a common order.

First we take appeal of the assessee in ITA No. 7488/Del/2025 for Assessment Year 2019-20.

Brief facts of the case are that assessee has filed his return of income on 19.10.2019, declaring total income at INR 158870/-. A search and seizure action u/s 132 of the Act was carried out at the business and residential premises of the assessee. During the course of search from the possession of Subhash Chander Gupta, father of the assessee, one receipt cum agreement executed on 19.03.2021 was found and seized marked as Annexure A-1 pages 91 & 92. As per the said documents, assessee had entered into an agreement with one Shri Bittu Chawla for the purchase of Upper Ground and First floor at 307, Block-3, Paschim Vihar, New Delhi for total consideration of INR 4.79 crores. As per documents seized, assessee has paid INR 4.79 crores in cash on various dates. The image of these papers is reproduced at pages 3 to 5 of the assessment order. The AO observed that during the course of assessment proceedings, father of the assessee Shri Subhash Chander Gupta was confronted with these documents wherein he stated that the payments were made in cash out of the funds received from the sale of property by M/s Hector Enterprises Ltd. of which he was one of the Director. The AO further observed that when the assessee was confronted with the said documents, he was failed to explain the source of the said payments. Thus the AO has made the addition of INR 3.50 crores as cash paid during the year under appeal u/s 69A of the Act based on the dates found noted in the loose papers found during the search as referred above, and balance at INR 1.29 crores was added in subsequent Assessment year i.e. Ay 2020-21.

Against the said order, assessee preferred appeal before Ld.CIT(A) who vide impugned order dated 31.10.2025, dismissed the appeal of the assessee.

Aggrieved by the order of Ld. CIT(A), assessee has filed the present appeal before the Tribunal by taking following grounds of appeal:

In Grounds of appeal Nos. 1 to 4 assessee has challenged the jurisdiction assumed by the AO u/s 153A of the Act by ignoring the fact that the additions were made on the basis of documents found from the possession of third person therefore, proceedings should have been initiated u/s 153C of the Act.

Heard the contentions of both the parties at length and perused the material available on records. In the instant case, admittedly the documents i.e. receipt cum agreement was found and seized from the possession of Shri Subhash Chander Gupta, father of the assessee and when the said document was confronted, Shri Subhash Chander Gupta explained the nature of the said paper. The proceedings in the case of the assessee u/s 153A were initiated however, the addition was made solely on the basis of papers found from the possession of third party. The claim of the assessee is that since no incriminating material was found and seized from the possession of assessee thus no addition could be made for the documents found from the possession of third party. Under such circumstances, as per the provisions u/s 153C of the Act, the AO of the person searched must record his satisfaction and sent the material alongwith the satisfaction note to the AO of the assessee who then must record his satisfaction and thereafter the proceedings u/s 153C could be initiated. For this, reliance was placed on the judgement of Hon’ble Delhi High Court in the case of PCIT vs Anand Kumar Jani HUF [2021] 4 TMI 8.

It is true that additions have been made on the basis of loose papers /documents found during the course of search in the shape of receipt cum agreement from the possession of the assessee’s father Shri Subhash Chandra Gupta and no incriminating documents whatsoever were found / seized from the possession of assessee. The Hon’ble Delhi High Court in the case of PCIT vs Navin Kumar Gupta reported in 168 taxmann.com 574 has held that AO can validly re-opened the assessment u/s 147/148 even if the investigation involved the third party. In the instant case, though the assessment was completed u/s 153A however, as per the law laid down by Hon’ble Delhi High Court in the case of Shri Naveen Kumar Gupta (supra) based on the documents found from the possession of third party, the addition could be made in the hands of the assessee. Thus, by respectfully following the aforesaid judgement which is the latest judgement available on the issue after the judgment of Anand Kumar Jain HUF (supra) relied upon by the assessee, therefore, we are of the opinion that AO could have made the addition for the documents found from the possession of the third party in the hands of the assessee while completing the assessment u/s 153A of the Act more particularly when the proceedings in the case of the assessee were initiated u/s 153A as a result of same search and the documents referred was also found from the same premises where the assessee also resides. Accordingly, Ground of appeal Nos.1 to 4 raised by the assessee are dismissed.

Ground of appeal No.5 raised by the assessee is with respect to the confirmation of addition made u/s 69A of INR 3.50 crore by holding the same as cash payment made out of unexplained sources for acquisition of the property.

Before us, Ld. AR for the assessee submits that assessee has never made any such cash payment nor entered into any agreement for purchases of property with any Bittu Chawla. Ld. AR submits that AO has made the addition on the basis of statement of Shri Subhash Chander Gupta, father of the assessee, wherein he has stated that cash was paid out of the cash received from the sale of property by Hector Enterprises Ltd., wherein he was one of the director. Ld.AR submits that the AO has failed to verify the fact from the land revenue authorities whether assessee has ever purchased such property nor any effort was made to verify the facts from the seller Bittu Chawla. He further submits that Shri Subhash Chander Gupta has retracted from his statement and in the case of Hector Enterprises Ltd. owner of the property from the sale of which, the said cash was stated to have been received by Shri Subhash Chander Gupta, the Co-ordinate Delhi Bench of Tribunal in ITA No. 1692/Del/2024 vide order dt.14.01.2024 has deleted the additions therefore, Ld. AR for the assessee submits that no addition is to be made solely on the basis of such so-called retracted statement without any corroborative material or evidence brought on record by making independent inquiries or investigation by the AO.

On the other hand, Ld.CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that during the course of search, one document was found and seized from the possession of father of the assessee which clearly suggests that assessee has entered into an agreement for purchase of property from one Bittu Chawla and paid cash on various occasions. In the said document, the seller, Bittu Chawla has also issued the receipts of cash received by him therefore, the claim of the assessee that he has not made any payment is not correct and therefore, requested for the confirmation of the orders of the lower authorities.

Heard the contentions of both the parties at length and perused the material available on records. In the instant case, there was a search carried out in the case of the father of the assessee, Shri Subhash Chander Gupta from whose possession one agreement cum receipt was found marked as Annexure “A-1” at page 91 & 92 according to which the assessee has entered into an agreement for purchase of property at 307, Block-3, Paschim Vihar, New Delhi for a total consideration of INR 4,79 crore. As per the said paper, the assessee has paid a sum of INR 2.50 crores on 01.03.2019, INR 1.00 crore on 20.03.2019 and balance 1.00 crore was paid on 28.09.2019. During the course of search, statement of father of the assessee, Shri Subhash Chander Gupta were recorded wherein he stated that the said amount was paid out of the cash received of INR 27.99 crore from sale of property owned by Hector Enterprises Ltd. The AO has reproduced the relevant extract of statement at page 7 of the assessment order. It is further observed that assessee was also asked to explain the nature and source of such payments however, the assessee was not able to explain the same. The claim of the assessee is that he never purchased any such property nor has made any payment in cash to any Bittu Chawla. The assessee further claimed that the statement of his father, Shri Subhash Chander Gupta were retracted at a later stage and in the case of Hector Enterprises Ltd., addition made of INR 27.99 crore based on such admission have already been deleted by Co-ordinate Bench of Delhi ITAT in ITA No.1692/Del/2024 wherein the Co-ordinate Bench has held that “no addition could be solely on the basis of retracted statement without any corroborative statement”. It is observed by us that in the present case also though some document was found and seized from the possession of father of the assessee however, the said document was neither signed by the assessee nor any such property was ever purchased by the assessee. It is also a matter of fact that no effort was made by the AO to find out the real purchaser of the said property by making independent inquiry from the land revenue authorities, nor any inquiry was made for the seller Bittu Chawla. Merely on the retracted statement of father of the assessee, AO concluded that cash payment was made by the assessee for purchase of the said property.

Once such retracted statement has not been corroborated with any evidence collected after making independent inquiries or verification, no addition could be made in the hands of the assessee for such alleged investment. The Hon’ble Delhi High Court in the case of CIT vs Gian Gupta reported in 2014 (5) TMI 443 has held that “once it is established that no transaction was taken place, no addition could be made for this unexplained investment.” The relevant observations of Hon’ble High Court are reproduced as under:-

Further, the Hon’ble Delhi High Court in the case of CIT vs Kulwant Rai reported in 2007 (2) TMI 185 has held that “once the assessee has not signed the agreement in question, no liability can be attributed qua that agreement towards the assessee since he is not party of the agreement till he had signed the same”. The mere fact that this agreement was found in possession the assessee does not lead anywhere and accordingly, Hon’ble High Court has deleted the addition.

In the present case also the agreement found during the search was not signed by the assessee and since beginning of the proceedings assessee claimed that he has not entered into any such agreement for purchases of property which was never rebutted by the AO by bringing on record any contrary material collected through independent enquiry or investigation.

In view of the above discussions and considering the overall facts and circumstances of the case, we are of the considered view that the addition made by the AO should be deleted more particularly, when the document seized was not found from the possession of the assessee and assessee has never purchased any such property from Bittu Chawla nor the said document was signed by the assessee and therefore, the additions made is hereby, deleted. Ground of appeal No.5 raised by the assessee is thus allowed.

In the result, appeal of the assessee is partly allowed.

During the course of hearing, both parties have fairly admitted that the facts are similar as existed in ITA No.7488/Del/2025 for AY 2019-20 in assessee’s own case where part of the payments alleged as made for acquisition of the same property held as unexplained investment and addition was made. In this year also, remaining payment of INR 1.29 crore as found noted in the agreement found and seized from the possession of the father of the assessee, was held as unexplained and addition was made in the hands of the assessee. While deciding the appeal of the assessee in ITA No.7488/Del/2025 for AY 2019-20, we have deleted the addition so made by AO. Thus, by following the observations made and conclusion drawn by us in AY 2019-20 while deciding the assessee’s appeal in ITA No.7488/Del/2025 which are Mutatis Mutandis applicable to the facts of the present case, the addition made is hereby deleted. Accordingly, all the Grounds of appeal raised by the assessee are partly allowed.

In the result, appeal of the assessee is partly allowed.

In the final result, both appeals of the assessee in ITA Nos. 7488 & 7489/Del/2025 for Assessment Years 2019-20 & 2020-21 respectively, are partly allowed.