Income Tax Appellate Tribunal - Delhi
Shri Balaji India Private ... vs Assistant Commissioner Of Income Tax, ... on 15 July, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. S. Rifaur Rahman, Accountant Member
ITA No. 5744/Del/2024 : Asstt. Year: 2019-20
ITA No. 5745/Del/2024 : Asstt. Year: 2020-21
ITA No. 5752/Del/2024 : Asstt. Year: 2021-22
Shri Balaji (India) Pvt. Ltd., Vs ACIT,
VPO Badshahpur, Near Arya Samaj Central Circle-1,
Mandir, Gurgaon-122017 Faridabad-121001
(APPELLANT) (RESPONDENT)
PAN No. AACCS5328Q
Assessee by: Sh. Anshul Mittal, Adv.
Revenue by : Sh. Mahesh Kumar, CIT-DR
Date of Hearing: 15.07.2025 Date of Pronouncement: 15.07.2025
ORDER
Per Satbeer Singh Godara, Judicial Member:
These assessee's three appeals ITA Nos. 5744, 5745 & 5752/Del/2024, for Assessme nt Years 2019-20, 2020-21 and 2021-22, arise against the CIT(A)-3, Gurgaon' s orders dated 21 s t & 22 n d October, 2024 passed in case Nos. 10964/2018-19, 10827/2019-20 and 10090/2020-21, in proceeding s u/s 143(3) r.w .s . 153A of the Income Tax Act, 1961 (in short "the Act"), respectively.
2. Heard both the p arties at length. Case files peruse d.
3. It transpires during the course of hearing that there arises the first and foremost legal issue of validity of sectio n 153A 2 ITA Nos. 5744, 5745 & 5752/Del/2024 Shri Balaji (India) Pvt. Ltd.
r.w .s . 143(3) assessme nts, all three fr amed on 21.03.2022 itself, for the precise reaso n that both the learned lower authorities had firstly conducted the search in questio n on 17.03.2021 in M/s Chhoker Group followed by the initia tion of the very proceedings against the assessee M/s Shri Balaji (India) Pvt. Ltd. here in who runs Balaji Ce ment store s at Badsha hpur under the p artnership of Sh. Ranjit Singh Yadav etc. It fairly emerges that the departmental authorities had found/seized the corresponding incriminating material allegedly indic ating bogus/sham transactions carried out by the assessee, which was used to arrive at the conclusion that it had executed bogus sales of Rs.1,87,95 ,997/- so as to asse ss commission co mponent thereupon @ 4%; coming to Rs.7 ,50,239/-, in both the lower proceedings.
3.1 It is in this factual backdrop that we put the Revenue to one question that since the impugned additio n(s) are based on the corresponding seized mater ial in M/s Chhoker Group having an independent search, the same would not form the correspond ing basis of the imp ugned addition in absence of either section 153C or section 148 proceedings against the appellant herein. It vehemently argues that given the fa ct that the assessee was confronted with the said se ized material, we ought to uphold the imp ugned asse ssment forming subject matter of adjudication.
3 ITA Nos. 5744, 5745 & 5752/Del/2024Shri Balaji (India) Pvt. Ltd.
4. We find no merit in the Revenue's foregoing veheme nt contentio ns . We make it clear at the cost of repetition that all what the le arned lower authorities have done is to first come across the alleged incriminating material in a different search followed by the very action in the assessee's case thereby framing section 153A assessments. We note in this factual backdrop that case law PCIT Vs. Anand Kumar Jain (2021) 432 ITR 384 (De l.) has concluded the instant issue in the assessee's favour and against the department that once no material is found/seized from a taxpayer's premises, no additio n based thereupon could be made in such assessment as under:
"4 . The R ev enue is aggrieved with t he afores aid impugned o rder a nd has fil ed the pres ent a ppeal under Secti on 260A of the Act , proposing t he following questi ons of law:
a. Whet her the ITAT is justifi ed i n del eting the additions made on ac count of bogus long term ca pital gai n on the ground t hat t he evidences found duri ng sea rc h at the premises of entry provider ca nnot be t he ba sis for ma ki ng additions i n assessment completed u/S. 153A in the c as e of be neficiary ignori ng the vital fact t hat there wa s a c ommon searc h u/s 132 conducted on the same da y i n both the cases of the entry provider a nd the benefic iary?
b. Whet her ITA T wa s justifi ed i n holding tha t mere fail ure of cross exami na tion of entry opera tor is fatal when copy of stat ement was provided to t he Ass ess ee a nd Ass esse e failed to discha rge the onus of providi ng the genui neness of L TCG especiall y in vi ew o f the apex court decisi on in t he c ase of State of UP vs. Sudhir Kumar Si ngh [A IR 2020 SC 5215]?
5. Mr. Ajit Sha rma, Sr. Sta ndi ng Couns el s ubmits t hat the ITA T has er red by holdi ng that the Ass ess ee 's premises wer e not sear ched, and t herefore notice under 4 ITA Nos. 5744, 5745 & 5752/Del/2024 Shri Balaji (India) Pvt. Ltd.
Secti on 153A coul d not ha ve been issued. He s ubmit s tha t ITAT ignored that the ass essment order i tself rev eals that a c ommon s ear ch was conduc ted at va rio us places o n 18t h N ovembe r, 2015, inc l udi ng a t the premises of the entry pro vider and the As sess ee and thus assess ment u/s 153A has been rightl y ca rri ed out. He further argues that ITAT erred in s etti ng as ide the as sessment order on the gr ound tha t no ri ght of cros s- exami ni ng Prad eep Ji ndal was a ffor ded to t he Ass ess ee. He argues that ther e is no st atutory right t o cros s- exami ne a person whos e s ta tement i s relied upon by AO, so l ong as t he As sess ee is provided wit h the s tatement and give n a n opportuni ty to rebut the s ta tement of the witness. The Asse ss ee has bee n pr ovided with a c opy of the st atem ent of Pra deep K uma r Jindal and t he ITAT has wrongl y noted to the c ontrary. Further more, the Asses see has fail ed to bring i n any evidenc e to dispute the fac tual position emergi ng therefrom a nd has theref ore f ailed t o establish a ny prejudice on acc ount of not getti ng the opportuni ty to cross -exami ne the witness. In view of the stat ement of Mr. Ji ndal , it w as inc umbent upon the Assessee to di schar ge t he onus of proof which had been s hi fte d on hi m. The revenue has sufficient material in ha nd in the na ture of the stat ements rec orded duri ng the searc h a nd therefor e, the Ass ess ee ought t o ha ve produced evi denc e to negate or to contra di ct the evidenc e c ollec ted by t he AO duri ng the c ours e of the s earch and assess ment proc eedi ng whic h followed thereafter. Mr. Shar ma a lso emphasis ed tha t t he s tat ement rec orde d under Secti on 132(4) of the Act can be relied up on for a ny purp ose in terms of the langua ge of the A ct and thus acti on under sec tio n 15 3A was justifi ed.
6. We hav e co nsider ed t he c ontentions of Mr. S har ma , howev er, we feel that the i nstant appeals d o not r aise any ques ti on of l aw, muc h less s ubsta ntial questi on of law for our considera tion. T he relev ant portion of the impugned or der reads as under:-
"5 . (...) We fi nd that the L d. Couns el for the as sess ee has dra wn our at tention towa rds the relevant po rtion of the judgm ent / decisi on of the Hon'bl e Supreme Court of India , Hon'ble Hi gh C ourts and vario us Benches of t he Tribunal on the l ega l issue on whi ch he argued , Ld. Counsel fo r the as ses s ee fur ther submitted tha t admit tedly from as sess ee's own premis es during searc h u/s. 132 of the Ac t no incrimi nati ng material was found a nd no a dvers e statement is t here on rec ord of the a ss ess ee u/s . 132(4) of t he IT Act and it is a n admitted fact before us tha t mere ba sis of un-c onfronte d stat ement of S h.5 ITA Nos. 5744, 5745 & 5752/Del/2024
Shri Balaji (India) Pvt. Ltd.
Pradeep K uma r Ji ndal rec orde d u/s. 132(4) of the Act in his own separate searc h acti on a nd on the basi s of unco nfr onted material for the s aid searc h u/s . 132(4), which in our c onsider ed opinion, ca nnot be made as a s ole basis for ma ki ng the additions u/s . 153A of the IT Act wit hout recourse of mandat ory and excl usive pr ovisions under the Act lik e u/s 153C of the Ac t whi ch specific ally cover ed the extant situati on. In our opini on, the decision of the Hon'bl e Supreme Cour t of India , H on'bl e High C ourts and the vari ous B enc hes of the Tribunal are direc tly applicabl e in the pres ent ca se wherei n t hey have adj udica ted a nd decided t he similar issue i n fav our of the ass ess ee by accepti ng the similar a rguments of the Ld. Counsel for t he a ssesse e. (... ) xx ... xx ... xx 5.1. As r egards t he arguments adva nced by L d. CI T(DR ) are co ncer ned, the sa me are not applicabl e in the pres ent ca se becaus e keeping in view the as sessment order pa ss ed by the AO we ha ve not s een fr om the proceedi ngs of t he AO rega rding providi ng any s tat ement of Sh. Pra deep Kumar Ji ndal t o the as sessee meaning t hereby the R ev enue Aut horities hav e not provided the statement o f S h. Pra deep Kuma r Ji ndal to the assess ee a nd also did not prov id e t he opportunity of cross exami na tion of S h. Pradeep K umar Ji ndal, on whi ch basis the a dditi on has bee n made and the provisions of S ec ti on 153A of the Ac t hav e been wro ngl y applied in the c ase of the as sessee. The refore, we do not fi nd a ny co genc y i n the arguments adva nce d by the Ld. CIT(DR) a nd the ca se laws cited by hi m i n s upport of his c ont ention are not applicable here."
7. The preliminary ques tion under considera ti on before us is whethe r a statement under Sec tion 132(4 ) constitutes i nc ri minati ng materi al for ca rr yi ng out as sessment under S. 153(A ) of t he A ct. A r eadi ng of the impugned order reveals t hat t he s ta tement of Mr. Ji ndal rec orde d unde r S ec ti on 132(4) forms t he founda tion of the ass ess ment carri ed out under Sectio n 153A of the Act. Tha t s tat ement alone cannot justify the a dditio ns made by the AO. Ev en if we acce pt the argument of the Revenue that the failure to c ross-exami ne the wi t ness did not prejudic e t he ass essee, y et, we disc ern from the rec ord t hat a part from t he s tate ment of Mr. Jindal, Revenue has fai led to produce a ny corrobora tive mat erial to justify the a dditio ns . On the c ontra ry we also not e t hat duri ng t he cours e o f the s ea rch, i n the stat ement ma de by the assess ee, he deni ed ha ving 6 ITA Nos. 5744, 5745 & 5752/Del/2024 Shri Balaji (India) Pvt. Ltd.
kno wn Mr. Jindal. Sinc e ther e was i nsuffic ient mat eri al to s upport the additions, t he ITAT del eted the sa me . This fi nding of fact, based on evi denc e calls for no inte rfer enc e, as we c a nnot re -appreciate evidenc e whi le exerci sing jurisdic ti on under sec tion 260A of t he Act.
8. N ext, we fi nd tha t, the ass es sment has been framed under s ec tion 153A, c ons equent to t he searc h acti on. The s c ope and ambit of s ection 153A is well defined. This court, i n C IT v. Kabul Cha wla,1 conc er ni ng the scop e of assess ment under Secti o n 153A, has la id out and summa rized the le gal position after ta ki ng i nto ac co unt t he earlier dec isions of this court as well as the decisi ons of othe r High C ourts and Tribunals . In t he s aid case, it was hel d t hat the existenc e of i nc rimi na ting mat erial found during the course of the sea rc h is a si ne qua non for ma ki ng additions purs ua nt t o a s earc h and seizure operation. In the ev ent no inc rimi na ting mat erial is found duri ng s earc h, no addi tion co ul d be ma de in res pect of the assess ments t ha t had bec ome fina l. Revenue's case is hi nged o n the statement of Mr. Ji nd al, whic h acc ordi ng to t hem is t he i ncriminati ng mat er ial disco vered duri ng the search action. This statement certa i nly has the evidenti ary val ue a nd rel eva nc e a s contemplated under the e xplanati on to s ecti on 132(4) of the Ac t. Howev er, this s tat ement c annot, o n a standalo ne basis, without r eferenc e to any o ther mat erial disc overed during s earc h and s eizur e ope rations, e mpower the AO to frame the bl oc k as sessment . This c ourt in Pri ncipal Commis sioner of Inc ome Ta x, Delhi v. B es t Infras tr ucture (India ) P. Ltd., has inter-alia hel d that:
"38. Fifthly , statem ents recorded under S ec tion 132(4) of t he Ac t do not by t hemselves c ons tit ute incrimi nating ma terial as ha s been explai ned b y this Court i n Ha rjeev Aggarwal."
9. In Commissioner of Inco me Tax v. Ha rj eev A ggar wal , this Cour t had hel d as foll ows:
"23. In vi ew of the set tled legal position, the firs t a nd foremos t issue to be addressed is whet her a stat ement rec orded under Section 132(4) of the Ac t woul d by its elf be sufficient to ass ess the inc ome, as disclosed by the Assessee i n its stat ement , under the Pro visions of C hapter XIV -B of the Act.
24. In our view, a pla in r eadi ng of Sectio n 158BB(1) of t he Act does not co ntempla te c om puting of undis closed i nco me s ol ely on t he ba si s of a st atement rec orde d duri ng the s earch. The words "evidenc e 7 ITA Nos. 5744, 5745 & 5752/Del/2024 Shri Balaji (India) Pvt. Ltd.
found as a resul t of se arch" would not ta ke withi n its sweep s tatements rec orded during s earc h and s eizure ope rations. How ev er, t he statement s rec orded woul d certa i nly c onstitute informa tio n and if s uc h informati on is rel ata ble to t he evidence or ma t erial found during s earch, the same co uld certai nly be us ed in evidence i n a ny proceedi ngs under t he Act as expr essly ma nda ted by virt ue of the explanation to Secti on 132(4) of the Act. H owever , s uc h statements on a s tand alone basis wit hout refer enc e to any other mat erial disc overed duri ng search and s eizure ope rations would not empower the AO t o mak e a bloc k as se ssment me rely beca us e a ny admiss ion was made by the Assess ee duri ng search ope ration.
25. (...) H owever , as s tat ed e arlier, a s tat ement on oa t h can o nl y be rec orded of a pers on who is found i n poss ession of books of acc ounts, doc uments , as s ets , etc. Plai nly , the intenti on of the Parliament is to permit s uch examinati on onl y where t he books of ac co unts, documents a nd asset s poss es se d by a person ar e rel eva nt for t he pur poses of the investigati on bei ng und ertak en. Now, if t he pr ovisions of Secti on 132(4) of the Act a re re ad in the c ontext of Secti on 158BB(1 ) read with S ecti on 158B(b) of the Act, it is at onc e clear t hat a stateme nt rec orded under Secti on 132(4) of the Act ca n be us ed i n ev idence for making a bloc k ass essment only if the said stat ement is made i n t he context of other ev idence or material discove red during the s earc h. A stat ement of a pe rso n, whi ch is not relat abl e to any incrimi nating docume nt or material found duri ng searc h and s eizure opera tion ca nnot, by its elf, tri gger a bl oc k ass essment. The undisclo s ed i nc ome of a n Assess ee has to be c omputed on t he basi s o f evidenc e a nd mat erial found during searc h. The s tatement rec orde d under S ec tion 132(4) of the Act may also be used f or maki ng the assessment, but only to the extent it is relata ble to the i ncrimi nating ev idence /material unea rthe d or found duri ng s earc h. In other words, the re must be a nexus bet ween the stat ement rec orded and the ev idence/material found duri ng s earc h i n or der to for an asses sment to be bas ed on the statement rec orded.
26. In C IT v . Sri Ramdas Motor Trans port L td., (1999) 238 ITR 177 (AP), a Division Be nch of A ndhra Pra desh High C ourt , rea di ng t he pr ovis i on of S ec tion 132(4) of t he A ct i n the context of disc overing undis closed i ncom e, e xplai ned that in cases whe re no unacc ounted doc uments or i nc rimi nati ng material is 8 ITA Nos. 5744, 5745 & 5752/Del/2024 Shri Balaji (India) Pvt. Ltd.
found, t he power s under S ection 132(4) o f the Ac t ca nnot be i nvoked. (...)
27. It is also nec ess ary to mention that the a fores aid inte rpretation of Secti on 132(4 ) of the Act must be rea d wit h the expl anatio n to S ecti on 132(4) of t he Ac t whic h expr essly pr ovides tha t the sc ope of exami nati on under Sec tion 132(4) of the Act is not limited only to the books of a ccounts or other ass ets or materia l f ound duri ng t he searc h. Ho wever, i n the context of Secti on 158BB(1 ) of the Act whic h expr essly restricts the computa tio n of undisclos ed income to t he evi denc e fo und during sea rch, the stat ement rec orded under Section 132(4) of the Ac t ca n form a basis for a block assessment only if s uc h stat ement relat es to any i ncrimi nati ng evidenc e of undis closed income une arthed during s ear ch a nd ca nnot b e the sol e basis for ma ki ng a bl oc k as sessment .
28. If the Revenue's cont ention that t he bl oc k as sessment ca n be frame d only on the basi s of a stat ement rec orded under Secti on 132(4) is acc ept ed, it would resul t in ignoring an importa nt check on the power o f the AO a nd woul d expose as se ss ees t o arbit rary asses sments bas ed only on t he st atem ents , whic h we are conscio us a re someti mes extrac ted by exerti ng undue influenc e or by c oercion. So metimes stat ements are re cord ed by offic ers in circumst a nc es whic h ca n mos t c haritably be descri be d as oppress ive a nd i n most s uch cases, are s ubs equently r etracted. Ther efore, it is necessa ry to ens ur e that s uc h stat ements, which are retracted subsequentl y, d o not form t he s ole basis for computing undisc los ed i nc ome of a n as sessee.
29. In Commissioner of Inc ome Ta x v. N ares h K umar Aggarwal: (2014) 3699 ITR 171 (T & A P), a Div ision Benc h of Telanga na a nd Andhra Pr adesh High C ourt held t hat a s tatement recorded under Secti on 132(4 ) of t he Ac t whic h is retracted ca nnot constitute a basis for an or der under Secti on 158BC of the Ac t. (...)"
10. Now, comi ng to the a spect viz the i nv oca tion of sec tion 153A on t he basi s of t he st atem ent r ec orded i n searc h ac tion a gains t a thi rd person. We may note t hat the AO has used t his sta teme nt on oa th rec orded i n the course of s earc h conduct ed i n the case o f a third pa rty (i. e., searc h of P radeep Kuma r Ji ndal) for maki ng the additi ons in t he hands of the as sessee. As per the ma ndate o f Sec tion 153C, if this statem ent was t o be construed as an i nc rimi nating ma terial belongi ng t o or 9 ITA Nos. 5744, 5745 & 5752/Del/2024 Shri Balaji (India) Pvt. Ltd.
pertai ning t o a pers on o ther tha n perso n s ea rc hed (as ref erred to in S ecti on 153A), then the o nly l egal rec ours e av ailabl e to the department was to pr oc eed in te rms of S ecti on 153C of t he Act by handi ng over the same to the A O who has j urisdictio n ov er suc h pers on. He re, the a ss essment has been framed unde r s ec tion 153A on t he bas is of alle ged i ncriminati ng mat er ial (bei ng the statement recor ded under 132(4) of t he Ac t). As noted abov e, the Ass esse e ha d no opport unity to cr oss-ex ami ne the said wit ness, but that a part, the ma ndatory procedure under s ec ti on 153C has not been followed. On this count al one, we fi nd no p erv er sity in the vi ew ta ken by t he I TAT. T herefore, we do not find any s ubs tantial question of la w t hat requi res our considera tio n.
11. Accor dingl y, the present appeals, a long with all pendi ng applic ati ons, a re dismis sed."
5. Learned CIT-DR lastly argues that the asses see had duly recorded it' s search statement through authorized person and admitted all of it's bogus/sham transactions. W e are of the considered view that not only the CBDT's twin landmark circular dated 10.03.2003 and 18.12.2014 have made it categorical clear that such search/survey admissions in absence of any supportive evidence hardly carry any sig nificance but a lso the ir lords hips above extracted decision also holds tha t mere search statement itself could not be termed as any incriminating material. We thus find mer it in the assessee's legal ground/arguments challenging validity of this three sec tion 153A assessme nts framed on 21.03.2022 which are hereby quas hed in very terms.
6. All other pleadings between the parties stand rendered academic.
10 ITA Nos. 5744, 5745 & 5752/Del/2024Shri Balaji (India) Pvt. Ltd.
7. These assessee's three appeals ITA Nos. 5744, 5745 & 5752/Del/2024 are allowed. A copy of this common order be placed in the respective case files.
Order Pronounced in the Open Court o n 15/07/2025.
Sd/- Sd/-
(S. Rifaur Rahman) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 15/07/2025
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR