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Judgment
PER MANISH AGARWAL, AM :
The present appeal is filed by assessee against the order dated 07.11.2025 passed by Ld. Commissioner of Income Tax (Appeals)-3, Noida [“Ld.CIT(A)”] in Appeal No. CIT(Appeals) Noida-3/10023/2020-21 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 30.03.2025 passed u/s 153C of the Act pertaining to Assessment Year 2021-22.
Brief facts of the case are that in this case of the assessee, proceedings u/s 153C were initiated as a result of search carried out in the case of Hans Group and in the case of Shri P.K. Jain on 06.01.2021 wherein certain digital evidences were found indicating that the assessee has made advances/investments in cash for booking and also received interest on such investments which both are not recorded in the books of accounts. Based on such evidences, the satisfaction note was recorded by the AO of the person searched and upon the receipt of the papers by the AO of the assessee, he also recorded his satisfaction and notice u/s 153C was issued to the assessee on 07.06.2023. In response, the return of income was filed by assessee on 21.06.2023 declaring total income at INR 2,61,21,430/-. Thereafter, notice u/s 143(2) of the Act followed by notices u/s 142(1) alongwith questionnaires were issued from time to time which were duly replied. The AO as per the WhatsApp messages, concluded that the assessee has received interest of INR 90.00 Lakhs on the undisclosed investment and further observed that the assessee has made unexplained investment of INR 7.35 crores with M/s Mahagun (India) Pvt. Ltd. for acquisition of the space in the complex constructed by them. Accordingly, the order was passed u/s 153C of the Act dated 30.03.2025 by making addition of INR 7.35 crores as undisclosed investment and further addition towards interest income of INR 90,00,000/- was made and thus the total income was assessed at INR 10,86,21,430/-.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 07.11.2025 has held that the addition of INR 7.35 crores is double addition as in immediately preceding Assessment year i.e. in AY 2020-21 addition on account of unaccounted investment in property of INR 7.50 crores was made which inter-alia includes this investment of INR 7.35 crores also. Therefore, Ld.CIT(A) had deleted the addition made and however, has uphold the addition of INR 90.00 Lakhs made on account of unaccounted interest income and thus partly allowed the appeal of the assessee.
Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.
Ground of appeal No.1, 2 & 3 raised by the assessee are with respect to the initiation of the proceeding u/s 153C of the Act on the basis of mechanical consolidated satisfaction note recorded for various assessment years.
Before us, Ld. AR for the assessee in support of the Ground of appeal Nos. 1 to 3 submits that proceedings u/s 153C were initiated by recording the satisfaction by the AO of the assessee dated 18.05.2023 wherein at page 1, common satisfaction note for various assessment years starting from AY 2016-17 to AY 2021-22 was recorded. Ld.AR submits that such consolidated satisfaction note recorded for different Assessment years is invalid satisfaction note and for this he placed reliance on the judgements of Hon’ble Karnataka High Court in the case of DCIT vs Sunil Kr. Sharma reported in [2024] 159 taxmann.com 179(Kar.) and submits that the said order is confirmed by Hon’ble Supreme Court by dismissing the SLP filed by the Revenue as reported in [2024] 18 taxmann.com 77 (SC). Ld. AR alternatively submits that in the case of the assessee in immediately preceding Assessment year, proceeding u/s 153C of the Act was initiated and an addition of INR 7.50 crores was made as undisclosed cash investment u/s 69B of the Act. Ld. AR drew our attention to the order of Co-ordinate Bench of the Tribunal in ITA No.4096/Del/2025 for AY 2020-21 wherein vide order dated 25.02.2026, the Co-ordinate Bench has held that the order passed u/s 153C of the Act is invalid and quashed the same. Ld.AR submits that facts being identical where by common satisfaction note, proceedings for both the assessment years were initiated u/s 153C of the Act and further additions were made of identical nature in both the were years. He thus, prayed that the proceedings so initiated u/s 153C of the Act for the year under appeal deserves to be held as invalid. He prayed accordingly.
On the other hand, Ld.CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that proceedings in the case of the assessee were initiated u/s 153C based on the material found and seized during the course of search carried out in the case of third person and it is not the case of the assessee that the said entries as found recorded in digital data was not related to him. Accordingly, Ld.CIT DR requested for the confirmation of the order of lower authorities.
Heard the contentions of both parties at length and perused the material available on record. At the outset, it is observed that based on the said common satisfaction note, additions on account of alleged undisclosed investment in M/s. Mahagun (India) Pvt. Ltd. of INR 7.5 crores was made besides an addition of INR 7.5 lakhs was also made on account of interest on such undisclosed investment in AY 2020-21. Based on the same common satisfaction note, by making similar allegations, additions of similar nature were made in the year under appeal.
The Co-ordinate bench of the Tribunal in the case of assessee itself in ITA No.4096/Del/2025 vide order dated 25.02.2026 has held the proceedings initiated u/s 153C as invalid and quashed the order so passed. The relevant observations of the coordinate bench as contained in para 11 to 16 of the order are reproduced as under:-
11.“We have heard the rival submissions and have perused the relevant material on record. We examined the satisfaction note vis a vis the seized digital image found and seized on the basis of which addition is made in the name of the assessee. For a proper perspective the satisfaction note is reproduced as under:
Satisfaction note u/s 153C of the Act in the case of Sh. Suresh Chand Gupta, R/o B-19, Devshree, Shambhu
Nagar, Railway Road, Meerut (PAN: AGOPG9710F)
A search & Seizure operation was conducted in the case of Shri Praveen Jain, one of the searched party of HANS Group on 06.01.2021 during which cloned data of Parveen K. Jain's mobile was found and seized from the premise at C-42, C Block, Preet Vihar, Delhi-92 containing images of slip having details of the unsecured loans given to Mahagun (India) Pvt. Ltd and interest received from Mahagun(India) Pvt. Ltd. by Sh. Suresh Chand Gupta and also containing the images of slip titled as JAINCO found from the Phone of Sh. Parveen Kumar Jain. Director of M/s Jainco Ltd. having details of the unexplained investment in cash in the Commercial Shops in Mahagun Marina Walk by 'Sh. Suresh Chand Gupta. On examination of digital data and information, it is noticed that the seized documents/digital data and information are related to Sh. Suresh Chand Gupta i.e. the person other than the searched person. Therefore, I am satisfied that the digital data and the information found during the course of search in the case of Shri Parveen Jain, Delhi belongs to Sh. Suresh Chand Gupta (PAN: AGOPG9710F). Further, on the basis of above mentioned digital data/information, it is noticed that Sh. Suresh Chand Gupta has made unexplained cash investments amounting to Rs. 7,50,00,000/- and received Rs. 7,50,000/- as unaccounted interest receipts during the A.Y. 2020-21 and also made unexplained cash investments amounting to Rs. 7,35,00,000/- and received Rs. 90,00,000/- as unaccounted interest receipts during the A.Y. 2021-22. Therefore, I am satisfied that this has bearing upon the determination of total income of the assessee and it is a fit case for action u/s 153C of the IT Act for A.Y. 2015-16 to 2021-22.
Dated: 18.05.2023 Asst. Commissioner of Income Tax Central Circle, Meerut
12.The satisfaction note specifically states that the seized image is related to and belongs to the assessee, Suresh Chand Gupta. We then examined the digital image seized from the mobile of Shri Praveen Kumar Jain as whatsApp image, and reproduced by the AO in his order at page 10 of his order, on the basis of which the addition is made. We find that the image has a title as "Mahagun", dated 13.05.20 having total 06 rows having 6 names making financial transactions wherein entry at S.No.04 is as under:-
Anshul 7,50,000X 3 22,50,000 (March/April/May)
The AO has concluded that the said “Anshul” is Suresh Chandra Gupta, who is father of “Anshul”. The assessee has contested this finding of the AO stating that there is no material to show that the assessee is father of Anshul.
13.We find that the assessing officer has ‘reasonably inferred’ that the transaction in seized image shows parties receiving interest on their investments made with M/s Mahagun India Pvt Ltd. The AO mere mention of the statement of Praveen K Jain where P K Jain admitted that he has saved the contact as Anshul, does not establish that transaction in the name of Anshul relates to or belongs to the assessee Suresh Chand Gupta. We do not find that the AO has established anywhere in his order that the name ‘Anshul’, appearing in seized image referred above, is the assessee Suresh Chand Gupta. Apart from holding that Suresh Chand Gupta is father of Anshul, the AO has not provided any document or corroborative evidence to relate the assessee with the said transaction. Even if it is accepted that Suresh Chand Gupta is father of Anshul, the AO has not substantiated with any cogent evidence as to how he has treated the transaction in the name of Anshul as being related or belonging to the assessee.
14.Further we find that the assessments of M/s Mahagun (India) Pvt. Ltd. for AYs 2020-21 and A.Y 2021-22 u/s 153C/143(3) of the Act, pursuant to the same search, has been completed by ACIT Central Circle-13 New Delhi vide orders dated 15.03.2024 and 30.12.2022 respectively. InA.Y.2021-22. the ACIT Central Circle-13 New Delhi has considered and adjudicated in assessment of Mahagun where the same whatsApp image of Rs.22,50,000/- has been held as unaccounted sale receipts by M/s Mahagun and 10% thereof i.e. Rs.2,25,000/- has been added as undisclosed business income in the hands of Mahagun. In A.Y.2020-21, there is no corresponding finding that Mahagun received Rs.7.50 Crore as investment and made interest payment of Rs.7.50 Lakh to assessee in the assessment of Mahagun. The assessment in the case of Mahagun has attained finality, a fact uncontroverted by the Revenue. 15. We therefore, in the light of above discussion, reiterate that the name of the assessee is nowhere mentioned in the seized material. The nature of entries of the said image has been interpreted by the Revenue itself in two different manner. We further find that there is no mention of word "investment" or "interest" or "rate of intt." @ 1% in the said image, hence adoption of such interpretation is sans any evidence or logic. Also, the AO has not furnished document/evidence or any basis/statement of Directors/personnel of Mahagun India Pvt Ltd or that of Praveen K Jain or Vaibhav Jain [the persons between whom this whatsApp image moved] suggesting/indicating that the entry in the said image refers to investment of 7.50 Crore with interest of Rs 7.50 Lakh @1%. Moreover, the seized image is not found/seized from the assessee, hence the presumption of Sec.292C is also not applicable on assessee. We further find that the images of 09 envelopes, referred by the AO in his order at page 8 & 9, are not related to assessee since, the name as "Anshul" or "Suresh Chand Gupta" is not mentioned on any of the envelope.
16.In view of the above factual matrix of the instant case, we are of the considered view that the name appearing on the image is that of "Anshul" and not of assessee "Suresh Chand Gupta". There is no other material which shows that the name "Anshul" used in the image is for assessee i.e. "Suresh Chand Gupta". The Assessing Officer finding that Anshul is mentioned for Suresh Chand Gupta since "Suresh Chand Gupta is the father of Sh. Anshul Gupta", is not corroborated with any evidence. In view of the same, the satisfaction note, where the AO has related the said image with assessee, Suresh Chand Gupta, is factually incorrect and is based on imaginary assumptions. The Satisfaction note therefore rendered fatal to the very assumption of jurisdiction and consequential framing of assessment u/s 153C of the Act for the assessment year 2020-21. Accordingly, the assessment made u/s 153C is held as invalid, unsustainable in law and therefore quashed. Ground 1 and 5.1 is allowed.”
As observed above, the facts in the year before us are identical with the facts of immediately preceding assessment year and based on the common satisfaction note, proceedings u/s 153C of the Act were initiated for both the assessment years, therefore, by respectfully following the observations made by the Co-ordinate Bench of Tribunal in assessee’s own case for AY 2020-21, we hold that proceedings so initiated u/s 153C of the Act as invalid and accordingly, consequent order passed is hereby, quashed. The Grounds of appeal Nos. 1, 2 & 3 raised by the assessee are allowed.
Since we have already allowed Grounds of appeal Nos. 1, 2 & 3 raised by the assessee and quashed the assessment order passed u/s 153C of the Act, the other Grounds of appeal raised by the assessee become academic hence, not adjudicated.
In the result, appeal of the assessee is allowed.