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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-29, Delhi [‘Ld. CIT(A)’ in short], in Appeal No. CIT(A), Delhi-29/10613/2019-20 dated 20.06.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’ in short) arising out of the assessment order passed u/s 143(3)/153C r.w.s 153A of the Income Tax Act, 1961 (‘the Act’ for short) for the Assessment Year 2020-21.
Brief facts of the case are that the return of income was filed on 31.12.2020 declaring total income at Rs. 16,89,75,110/-. The return was processed u/s 143(1) of the Act. A search and seizure operation was carried out u/s 132 of the Act in the case of Shri Amarjit Singh Bakshi, Kanwaljit Singh Bakshi and others. During the course of search, it was found that the assessee had sold a piece of land in terms of the sale deed executed on 10.07.2019 for a total consideration of Rs. 29,73,96,250/-however, there was a document found during the search, as per which the sale consideration was fixed at Rs. 37.51 crores. During the course of search, statements of one Satbir Mehlawat, broker were recorded wherein he stated the sale deed was executed for Rs. 29.74 crores and balance Rs. 7.77 crore were paid in cash. Accordingly, proceedings in the case of the assessee were initiated u/s 153C of the Act after recording the satisfaction. It was stated by the assessee that the differential amount represents the discount given to the buyer as there was no passage available to reach the land in question. The AO disbelieved the contention raised by the assessee and by placing reliance on the statement of the broker made the addition of Rs. 7,77,03,750/- is made to the total income. Besides this the AO has also disallowed the cost of acquisition while computing long-term capital gain and made the addition of Rs. 13,09,70,465/-. Accordingly totaling of the SSE was assessed at Rs. 37,76,49,325/-.
Against the said order, assessee preferred an appeal before the CIT(A) who vide impugned order dated 20.06.2025 has allowed the appeal of the assessee.
Aggrieved by the said order, the Revenue is in appeal before the Tribunal by taking following grounds of appeal
“1.On the facts and in the circumstances of the case and in law, the Ld. CITA) has erred in deleting the addition of Rs.7,77,03,750/- made under section 69A of the Income-tax Act, 1961, ignoring the incriminating material found during the search and the statement of the broker recorded u/s 132(4) admitting to cash payment, which clearly established receipt of unaccounted money by the assessee.
2.The Ld. CIT(A) has erred in deleting the disallowance of Rs. 13,09,70,465/- towards the indexed cost of acquisition claimed by the assessee while computing long-term capital gain, despite the fact that the variation in valuation and the underlying transaction. were based on material found during the search, and were rightly examined under the scope of section 153C.
3.That the order of the CIT (A) is erroneous and is not tenable on facts and in law.
4.That the grounds of appeal are without prejudice to each other.”
5.That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.
In support of grounds of appeal No. 1, ld. CIT DR vehemently supported the order of the AO and submits that there was a document found and seized during the course of search and statements of the broker awas also recorded wherein it is clearly stated that assessee has received cash of Rs. 7.77 crores from the buyer from the sale of land owned by the assessee. Ld. CIT DR further submits that in the instant case the assessee made wrong claim of discount whereas the document found during the search clearly speaks about payment of cash. Regarding assesses claim that there was a WhatsApp chat between the assessee’s husband and the buyer regarding the discount given on the said property, it is submitted by ld. CIT DR that no certificate u/s 65B was available and thus in absence of the valid certificate such chat cannot be relied upon, therefore the ld. CIT(A) has wrongly deleted the addition by placing reliance on such chat. It is therefore requested by ld. CIT DR that the addition made by the AO be restored.
On the other hand, the ld. AR for the assessee vehemently supported the order of Ld. CIT(A) and submits that during the course of search, WhatsApp chats were found between the sassy husband and the buyer. As per the said chat assessee’s husband had offered the discount of 16.25% on the agreed sale price due to the fact that there was no passage available to reach the said land. It is further submitted that the deal was finalized way back in 2018 however due to the fact that land was not approachable in absence of the passage, the buyer has agitated to make the payments to the seller and ultimately when the seller has offered the discount, the sale agreement was executed. Ld. AR further submits that in the case of the buyer a petition before the Hon’ble Settlement Commission was filed wherein no cash payment was admitted as additional income nor the Settlement Commission has taken any adverse view on this transaction and nor any addition on account of cash payment on the purchase of the said property was made in the hands of the buyer by the Settlement Commission. It is submitted by the ld. AR that once no action was taken by the revenue in the hands of the buyer for alleged cash payment at the time of purchases of property, it cannot be held that the seller i.e. the assessee had received any cash from the said buyer over and above the declared sale consideration. Ld. AR therefore requested for the confirmation of the order of the ld. CIT(A) in this regard.
Heard the parties and perused the material available on record. It is an admitted fact that there was some chat found during the course of search. Based on this chat statements of the broker were recorded, wherein the broker had stated that the difference between the amount stated in the chat and sale consideration as per sale deed is the cash amount received by the seller i.e. the Assessee. However, it is further observed that in the case of the buyer, petition was filed before the Settlement Commission and in final order by settlement Commission, no addition on this account has been made nor any additional income was offered by the buyer. It is further observed that there were WhatsApp chat available with the revenue as found during the course of search between the husband of the assessee and the buyer, according to the which seller had offered discount @16.25% and only after such proposal the buyer agreed to make the payment of the remaining consideration. It is incidentally be observed that the difference of Rs. 7.77. crores is equal to 25% of the original sale price agreed between the parties which has been alleged by the AO as cash payment. We find that ld. CIT(A) has appreciated these facts and deleted the addition by making following observations:
“6.Ground No. 1, 2, 3, 5 & 6: I have considered the facts and circumstances of the case. During the year under consideration, the appellant had sold a property at Sikanderpur, Ghosi, Gurgaon vide Sale deed dated 10.07.2019 at the total consideration of Rs. 29,73,96,250/- and surplus arising from the aforesaid sale was reported as Long Term Capital Gain ("LTCG") in the ROI after claiming indexed cost of acquisition thereof worked upon fair market value of said property as on 01.04.2001, since the said property was received by way of gift from her husband who had originally acquired the property in 1974.
6.1The Search u/s 132 was conducted at M/s Oriental South Delhi Hotel Pvt. Ltd., i.e. the buyer of the aforesaid property on 27.11.2019 where allegedly some incriminating material related to cash element involved in the aforesaid sale in the form of whatsapp conversation between the broker(s) of the respective buyer and selling side were found and statement of the broker of the buyer, i.e. Sh. Satbir Mahlawat, was recorded. Relevant portion of the statement of the broker has already been reproduced above as duly noted in the assessment order. As per the aforesaid statement, the broker explained the incriminating material in the form of handwritten sheet found at the time of search indicating an amount of Rs. 7,77,03,750/- to be a cash component which was received by the appellant from the buyer. 6.2 The broker had stated that the aforesaid cash component was agreed to be at 16.25% of the total consideration. Accordingly, in the impugned assessment order the AO made addition of the aforesaid cash component involved in the transaction as per seized material amounting to Rs. 7,77,03,750/- as unexplained money of the appellant u/s 69A of the Act, which was brought to tax as per section 115BBE of the Act.
6.3The aforesaid addition has been challenged by the appellant on Multiple reasons reproduced above, more particularly denying the reliability of the incriminating material along with statement of the broker found in search at the premises of the buyer. The appellant submitted:
(i)the sale deed,
(ii)a valuation report issued by a registered valuer, and
(iii)issue of passage to the property
6.4The AO in the assessment order did not consider the whatsapp chat between husband of appellant and promoter of the buyer company, thereby AO rejected the claim of discount in the said transactions. AO also discussed the issue of passage to the property but did not buy the claim of the appellant.
6.5Issue in the present appeal is whether there was discount on the property by the appellant to the buyer or there was cash receipt over and above the transaction by the registered deed. The appellant has submitted sale deed, valuation report and whatsapp chat between husband of appellant and promoter of the buyer company. Further, in buyers case of the cash payment the issue was before Hon'ble IBS wherein no addition was made in the case of buyer in respect of alleged cash transaction. On pursual of the Order passed by the Interim Board for Settlement (IBS), in case of M/s Oriental South Delhi Hotel Pvt. Ltd. wherein no reference has been made to any alleged cash transaction amounting to Rs. 7,77,03,750/-, and no addition was made in case of M/s Oriental South Delhi Hotel Pvt. Ltd. for the A.Y. 2020-21 on the payment of alleged cash. This contradiction further weakens the veracity of the allegation. Accordingly, by furnishing all relevant and material documents, the Appellant has not only complied with the requisite factual matrix but has also effectively discharged the burden of proof in establishing the correctness and legitimacy of the income declared in the return of income.
6.6Further, the AO did not bring any corroborative evidence which can supplement claim cash transaction in the alleged property. The claim of discount in the property seems feasible in the given circumstances of lack of passage to the property for which the evidence of legal dispute regarding with passage was before AO which were submitted by appellant vide dated 22.03.2023 during the assessment proceedings which AO ignored while framing the assessment order. Further, there was no addition in case of buyer about the alleged cash also strengthen the case of appellant. The same is further corroborated by WhatsApp chats between husband of the Appellant Sh. Narender Kumar Pasari and promoter of the buying group Sh. Amarjeet Singh Bakshi. As per the WhatsApp chats the seller offered discount of 16.25% on the initially discussed sale consideration of Rs. 35,51,00,000/- which was later on finalized at Rs. 29,73,96,250/- owing to non-presence of common passage. Also, no addition has been sustained in the hands of the buyer w.r.t such alleged cash payment. Therefore, the above grounds of appeal have force and same arc allowed and the addition made of Rs. 7,77,03,750/-is deleted.”
As observed above, before us the ld. CIT DR has failed to controvert the findings given by ld. CIT(A) nor any corroborating material was brought on record in support of the allegation that assessee has received cash payment over and above the declared sale consideration. Further the assessee has produced the valuation report from the registered valuer which has not been doubted by the assessing officer. Moreover, the issue of non-availability of the passage remained uncontroverted by the lower authorities. Except the so called statements of the broker and copy of the WhatsApp chat, Revenue has failed to establish that assessee has received cash payment by ignoring the fact that neither in the case of the buyer any addition was made nor any additional was offered before the Settlement Commission.
In the light of the above discussion and looking to the entirety of the facts and the circumstances of the case, we find that ld. CIT(A) has rightly deleted the addition and the said order is hereby uphold. The ground of appeal No. 1 of the revenue is dismissed.
In Ground of appeal No. 2, the Revenue has challenged the deletion of the addition of Rs. 13,09,70465/- made by disallowing the index cost of acquisition on the sale of aforesaid property.
Heard both the parties at length and produce the material available not record. It is observed that the AO has made the addition / disallowance of cost of acquisition solely for the reason that assessee had received the said property from her husband as gift and there was dispute whether the land was agricultural land or commercial / residential land. The assessee has taken the fair market value as on 01.04.2001 by considering the same as commercial / residential and filed the valuation report from Approved valuer in support of the claim of cost of acquisition. The revenue alleged that the subject land was agricultural land and the fair market value as on 01.04.2001 was replaced by the value taken by stamp value authority for agricultural land and made the disallowance. From the perusal of the order, it is observed that no incriminating material whatsoever was found / seized or referred in the assessment order with regard to claim of fair market value by the assessee as on 01.04 2001. Ths disallowance is made solely on the basis of the material already available on record and no incrementing material whatsoever was referred by the AO. The ld. CIT(A) appreciated these facts and deleted the disallowance by placing reliance on the judgment of hon’ble Supreme Court in the case of PCIT Vs. Abhisaar Buildwell reported in (2023) 454 ITR 212 (SC) and of the honorable jurisdictional high court and deleted the disallowance. The relevant observations of ld. CIT(A) are reproduced as under:
6.7As regards, the other grounds of appeal raised by the appellant challenging the disallowance of Rs. 13,09,70,465/- against indexed cost of acquisition of the aforesaid property sold during the year, I find that the said disallowance has no nexus with incriminating material found in search of third party, which formed the basis of initiating assessment proceedings for the present year through issue of notice u/s 153C pursuant to satisfaction note being recorded on 04.02.2022.
6.8As on the aforesaid date of satisfaction-note, the impugned assessment stood concluded / unabated, and therefore, the scope of said assessment was restricted to incriminating material found in Search, albeit of other party.
6.9Reliance has been placed on the following decisions:
- PCIT v. UK Paints: 2023 TIOL 58 SC IТ
- Singhad Technical Education Society: 2017 TIOL 309 SC IT
- PCIT v. Abhusar Buildwell (P) Ltd.: 149 Taxmann.com 399 (SC)
- Saksham Commodities Ltd.: 161 taxmann.com 485 (Delhi)
6.10The legal position that the scope of assessment u/s 153C with respect to concluded/unabated years is restricted to material found in search is no longer in doubt. The aforesaid position was originally explained by the Honble Supreme Court in the case of Singhad Technical Educational, Society (supra), which was again reiterated in UK Paints (supra). The said position was reaffirmed by the Hon'ble jurisdictional Delhi High Court in the case of Saksham Commodities (supra) against which SLP has also been dismissed by the Hon'ble Supreme Court.
6.11Applying the aforesaid legal position on the aforesaid issue of disallowance of indexed cost of acquisition, the same is found to have no nexus with any seized material to suggest variance of the fair market value of the land. The said variance is purely based on change of opinion on account of valuation for elaborate reasons given by the AO in the impugned order reproduced above, and the counter to the said valuation given by the appellant in the submission reproduced above. The arguments from both sides clearly reflect the difference of opinion in valuation sans any seized material, which is outside the scope of the powers of the AO available u/s 153C of the Act. Accordingly, the aforesaid additions/disallowance of Rs. 13,09,70,465/- is hereby deleted. As such, the ground of appeal Nos. 1, 3, 5 & 6 are allowed.
As observed by ld. CIT(A) and could be seen from the perusal of the assessment order, no satisfaction was recorded on this account nor any material whatsoever found/seized as a result of search was referred. Reliance is placed on the judgement of Hon’ble Delhi High Court in the case of RRJ Securities Ltd. reported in 128 DTR 57 (Del.) and also on the judgement of Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell P. Ltd. (supra) and on the judgment of Hon’ble Delhi High Court in the case of Kabul Chawla reported in (2016) 380 ITR 573 (Del). The Hon’ble Supreme Court in the case of PCIT vs Abhisar Buildwell (P.) Ltd. (supra) has held as under:-
"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."
In the light of the above discussion and by respectfully following the judgement of Hon’ble Supreme Court in the case of the Abhisar Buildwell (Supra), any addition made in the order passed u/s 153C of the Act without referring to any incriminating material is not sustainable and accordingly we find no infirmity in the order of ld. CIT(A) in deleting the addition made dehorse the incriminating material, which order is hereby confirmed. The ground of appeal No. 2 of the Revenue is dismissed.
The remaining grounds of appeal of the revenue are generally in nature and thus not adjudicated.
In the result, the appeal of the Revenue is dismissed.