Income Tax Appellate Tribunal - Indore
Bhilai Properties Invesstments Pvt. ... vs Dcit, Central -1, Indore, Indore on 20 May, 2026
आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER
AND
SHRI B.M. BIYANI, ACCOUNTANT MEMBER
IT(SS)A No. 24/Ind/2024 (AY: 2011-12)
CO No. 25/Ind/2025 (AY: 2011-12)
DCIT-Central-1, बनाम/ Bhilai Properties
Indore Vs. Investment Pvt. Ltd.,
106A, Shyam Bazar,
Shyam Bazar, Street,
Kolkata
(Revenue/Appellant) (Assessee/Respondent)
PAN: AACCB1745J
Revenue by Shri Ashish Porwal, Sr. DR
Assessee by Shri V.N. Dubey, Adv. & AR
Date of Hearing 17.03.2026
Date of Pronouncement 20.05.2026
आदेश / O R D E R
Per Bench:
Feeling aggrieved by the order of first-appeal dated 28.12.2023 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal ["Ld. CIT(A)"], which in turn arises out of the assessment-order dated 18.12.2019 passed by learned ACIT, Central-1, Indore ["Ld. AO"] u/s 153A r.w.s. 143(3) of Income-tax Act, 1961 ["the Act"] for Assessment-Year ["AY"] 2011-12, the revenue has filed the captioned Appeal and the assessee has filed the captioned Cross-Objection.
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2. Brief facts, relevant to adjudication of present matters, as culled out from orders of lower authorities and submissions made by parties, are as under:
(a) The assessee in these matters is "Bhilai Properties & Investments Pvt. Ltd."
(b) A search u/s 132 of the Act was conducted by Income-tax authorities on 14.11.2017 at various premises of concerns/entities of "Associated Alcohols Group" of Indore (including assessee).
(c) Pursuant to search, assessments of all concerns/entities were framed u/s 153A/143(3) for various years ranging from AYs 2011-12 to 2018-
19, wherein certain additions were made. Basically, the case made out by authorities is such that the companies named (i) Accord Vanijya Pvt. Ltd., (ii) Bhilai Properties Investments Pvt. Ltd. (assessee), (iii) Novelty Realtors Private Limited, (iv) Moriya Merchandise Pvt. Ltd. and
(v) Eagle Agencies Private Limited [Hereafter referred to "investor-
companies"] sold their old/past investments held over a period of time by way of shares in other companies and utilised the sale-
proceeds received therefrom, partly for making re-investment in share capital or by way of giving loans to group companies named (i) Mount Everest Breweries Ltd., (ii) Associated Alcohols & Breweries Ltd. and
(iii) Springbok Properties Pvt. Ltd. [Hereafter referred to "investee-
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IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 companies"] and partly for other purposes. The Ld. AR for assessee has submitted following chart giving relevant data:
The AO did not accept the transactions of shares sold by investor-
companies (including assessee) and subsequent re-investment made in investee-companies. Accordingly, the Ld. AO made "substantive additions" in the hands of investee-companies. At the same time, Page 3 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 "protective additions" were also made in the hands of investor-
companies (including assessee) on account of unexplained cash credits u/s 68 r.w.s. 115BBE.
(d) In present matters pertaining to assessee, we are concerned with AY 2011-12 only. For this year, the Ld. AO made a 'protective addition' of Rs. 3,07,56,377/- in the hands of assessee while making 'substantial additions' in the hands of investee-companies.
(e) All companies, i.e. the investor-companies (including assessee) as well as investee-companies went in respective appeals before Ld. CIT(A). In the cases of investee-companies, the Ld. CIT(A) granted part-relief and thereafter those companies went in next appeals to ITAT. The co-ordinate benches of ITAT, Indore have further made a detailed analysis of facts and granted full relief to investee-companies.
Thus, the "substantive additions" made in the hands of investee-
companies stand fully deleted by CIT(A)/ITAT, Indore. The Ld. AR for assessee has submitted following chart giving data of investee-
companies:
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(f) Subsequently, the appeals of investor-companies (including assessee) have also been decided by Ld. CIT(A) wherein the Ld. CIT(A) has fully deleted the "protective additions" made by Ld. AO. The Ld. AR for assessee has submitted following chart giving data of investor-
companies (including assessee):
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(g) Now, the revenue is aggrieved by orders of Ld. CIT(A) giving relief to investor-companies (including assessee) and have come in next Appeals before ITAT. Further, the investor-companies (including assessee) have come in Cross-Objections. All appeals and cross-
objections of investor-companies (including assessee) were heard by this bench on the same day and are being disposed off by separate Page 6 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 orders of even date. Accordingly, this order in the case of assessee named "Bhilai Properties & Investments Pvt. Ltd."
Delay in assessee's Cross-objection:
3. There is a delay of 83 days in filing Cross-Objection. The assessee has filed an application for condonation of delay giving following reason:
"18. That the delay arised for the filing of present Cross Objection to the Hon'ble ITAT INDORE due to wrong advice of the counsel in relation to filing of the present Cross Objection in the appeal filed by the ACIT, Central Circle-1, Indore "that appeal filed by the department will automatically be dismissed by Hon'ble ITAT Bench as such appeal is squarely covered by the Judgement of this ITAT Indore in the case of group Company namely Mount Everest Breweries Limited". Hence, it is sufficient cause for the condonation of delay.
19. Further, the said delay in filing the present Cross Objection has been unintentional and inadvertent and if the same is not condoned, it would cause irreparable loss and injury to the Assessee/Appellant."
4. The reasoning given by assessee was discussed and the Ld. DR for revenue, though dutifully opposed against condonation of delay, but could not rebut the explanation given by assessee. We have considered assessee's explanation and in absence of any contrary fact or material on record, the assessee is found to have a "sufficient cause". The advice/mistake of counsel, acting bonafide, is a well-recognised ground for condonation of delay as the assessee should not be made to suffer. Further, the delay of 83 days is not inordinate or abnormal.
We find that the section 253(5) of the Act prescribes thus:
"(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period Page 7 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 referred to in sub-section (3) or sub-section (4), if it is satisfied that there was a sufficient cause for not presenting it within that period".
Further, long back the Hon'ble Supreme Court has settled in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever "substantial justice" and "technical considerations"
are opposed to each other, the cause of "substantial justice" must be preferred by adopting a justice-oriented approach.
In a recent judgement in the case of Inder Singh Vs. The State of Madhya Pradesh Special Leave Petition (Civil) No. 6145 of 2024, the Hon'ble Supreme Court has condoned delay of 1,537 days while holding so:
"14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation."
Thus, taking into account the facts of case, the reasoning advanced by assessee, the provision of section 253(5) and the above-cited decisions of Hon'ble Supreme Court, we take a judicious view, condone delay, admit Cross-Objection and proceed to adjudicate the same.
Merit:
5. The revenue has raised following grounds in appeal:
"1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 3,07,56,377/- on the ground that initiation of assessment proceedings for AY 2011-12 is incorrect as per section 153A(1) of the Income Tax Act, 1961 holding that for reopening beyond 6 years, the AO should have found an undisclosed asset and no undisclosed bank accounts were discovered during the course of the search on Page 8 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 the appellant which could have justified initiation of assessment u/s 153A for AY 2011-12?
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs 3,07,56,377/- made u/s 68, while holding that receipt of 'unexplained credit' through banking channel was not an 'asset' covered within the meaning of 'asset' as defined in Explanation 2 of 153A, erred in not appreciating that:
a) any receipt of 'unexplained credit' through banking channel could be only represented as money deposited in bank account at that point of time and such 'deposit in bank account' is already defined as "asset" in the said Explanation 2?
b) the group promoter has introduced group's own unaccounted money, which is an "asset", through various layering transactions?
c) Without prejudice to the above, Explanation 2 to 4th proviso to section 153A(1) does not provide 'exhaustive' list of "asset" but merely provides list of illustrative items of "asset"?
3. Whether on the facts and on the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 3,07,56,377/- made u/s 68 of the Act without discussion on merit?
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that initiating of assessment proceedings for AY 2011-12 is incorrect, ignoring that:
a) The assessee company is an identified shell company? b) the promoter of the group Shri Anand Kumar Kedia has admitted in
statement on oath u/s 132(4) that unaccounted income of the flagship company (Mount Everest Breweries Ltd. (MEBL)) has been routed/layered through various Kolkata based companies, including the assessee company, acquired by the group and further that the co- promotor Shri Prasanna Kumar Kedia in his statement has the above said statement and disclosure by the promoter?
c) the receipts of funds from the sale of investments has been gathered on the basis of seized imaged digital data and the same is attached/pasted in assessment order on page nos. 27 to 29?
d) around 30 companies were, along with the assessee, situated/registered at a common address at 106A, Shyam Bazar Street, Kolkata which were associate concerns of the assessee and most of these companies have meager business activities and further that the entire systematic way routing/layering has been described in the assessment order?
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e) these were involved in making investments in shares of similar paper companies which were subsequently liquidated (in the instant case 'sold' to a Kolkata based shell companies) at whimsical valuation and proceeds were applied for giving loans/advances to group concerns or for further layering?
f) [2017] 79 taxmann.com 184 (SC) in JRD Stock Brokers (P.) Ltd. and 2018-TIOL-138-SC-IT in UP Distillers Association Vs CIT vide which the importance of statement u/s 132(4) has been reaffirmed?
g) Without prejudice to the above, an addition in assessee's income relying on statements u/s 132(4) of the Group's promoter & co-promoter recorded during search operations cannot be deleted without assessee proving statements to be incorrect?
h) Without prejudice to the above, the retraction, if any, is hugely delayed by more than 2 years and in the facts and circumstances of the case, having regard to the materials on record, the assessee had failed to establish that the statements of its promoter had been recorded in the course of the search by using coercion, threat, or inducement?
6. On the other hand, the assessee has raised following grounds in Cross-Objection:
"1. The Ld. CIT(A) rightly allowed the ground of Appellant / Assessee that Learned Assessing Officer erred in issuing the notice dt. 24.04.2019 u/s 153A of the Act to the assessee without appreciating that no any incriminating document found during the course of search & seizure operation conducted u/s 132 of the Act in the premises on 14.11.2017, therefore the notice issued for making assessment beyond six assessment years u/s 153A of the Act is void-ab-initio.
2. The Ld. CIT(A) rightly allowed the ground of Appellant / Assessee that the Assessing Officer erred in issuing the notice u/s 153A to assessee without appreciating that the assessment u/s 153A can be made only on the basis of incriminating material found in the search.
3. The Ld. CIT(A) rightly allowed the ground of Appellant / Assessee that Learned Assessing Officer erred in initiation of assessment proceedings under section 153A of the Income Tax Act, 1961, even without having incriminating material found during the course of search conducted u/s 132 of the Act, on 14.11.2017 in the premises of the assessee. Therefore, the order passed u/s 153A of the Act, is bad in law ab-initio and same may be deleted
4. That Ld. CIT(A) rightly held that the reasons recorded by the Ld. AO for re- opening of the Assessment proceedings beyond the prescribed period of 6 years clearly shows that the AO has not mentioned the "undisclosed assets"Page 10 of 60
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IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 that were discovered during the course of search which necessitated initiation of reassessment proceeding u/s 153A for the AY 2011-12
5. The Ld. CIT (A) has rightly held that no undisclosed 'asset' in the form of immovable property, loans / advances or shares was discovered during the search.
6. The Ld. CIT(A) has correctly analysed held the fact that Assessing officer has admitted that the sale transaction of shares is duly reflected in the books of accounts of Appellant/Assessee and the same were also reflected in the bank statement of the Appellant.
7. That the Ld. CIT (A) has correctly held that the initiation of assessment u/s 153A for AY 2011-12 was unjustified as no undisclosed bank accounts were discovered during the course of search on the Appellant and the Ld. AO has made an incorrect interpretation on the term 'deposits in bank accounts' as per the explanation to the Fourth Proviso of section 153A.
8. That Ld. CIT (A) has correctly held that the facts relating to assuming jurisdiction as per Explaination-2 to 4th proviso of section 153A (1) of the Act are absent in the instant matter.
9. The Ld. CIT(A) correctly analysed the objection raised by the assessee that the Ld. AO erred in making the additions merely to justify the search and seizure operations conducted on 14.11.2017 merely on presumptions and without any substance.
10. The Ld. CIT (A) correctly observed that Ld. AO erred in making the addition of Rs. 3,07,56,377/- as unexplained cash credit u/s. 68 of the Act in respect of sale of investment, which was held by the company from over the years and the same has been reflected in the regular books of accounts of the assessee Company, duly supported by copy of Audited Accounts of assessee and group/associate concern reflecting the said investment, therefore deleted the addition.
11. That the Ld. CIT(A) correctly observed that Ld. AO erred in arbitrarily rejecting all written and/or oral explanations filed by the appellant during the course of assessment proceedings.
12. The Ld. CIT (A) has rightly held that the Ld. AO was not justified in initiating Assessment proceedings for the AY 2011-12.
13. That on the facts and circumstances of the case, the Ld. CIT(A) has rightly deleted the addition of Rs. 3,07,56,377/- for the AY 2011-12 on account of unexplained cash credit u/s 68 of the Act.
14. That the Appellant craves leave to add, amend, alter, delete, modify, withdraw and substitute any or all the above grounds of cross objection."
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7. The crux of the grounds raised by parties is such that the revenue is opposing the impugned order of first-appeal passed by Ld. CIT(A) whereas the assessee is supporting/defending the same.
8. Therefore, at the outset, we re-produce the impugned order passed by Ld. CIT(A):
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9. Thus, the Ld. CIT(A) has deleted the addition of Rs. 3,07,56,377/- on legal count that the initiation of assessment proceeding by AO u/s 153A for AY 2011-12 under consideration was not in accordance with the limitations laid down in the 4th Proviso to section 153A(1) read with Explanation 1 & 2 thereto. The Ld. CIT(A) has, however, not gone into the merit of the addition made by Ld. AO.
10. Accordingly, the exact controversy being contested by parties before us, is: Whether the Ld. CIT(A) was justified in holding that the assessment proceedings initiated by the AO u/s 153A for AY 2011-12, , which admittedly falls beyond six assessment years preceding the year Page 32 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 of search conducted on 14.11.2017, were not in accordance with the 4th proviso to section 153A(1) read with Explanations 1 and 2 thereto?
11. We have heard learned Representatives of both sides and carefully considered the case record including the orders of lower-authorities and the documents filed in Paper-Book. We have also considered the facts giving rise to the controversy in the light of relevant legal provisions and judicial precedents.
12. Before proceeding further, it would be apposite to briefly refer to the relevant statutory provisions:
"153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall--
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years :
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years:
XXX (2nd proviso and 3rd proviso are not reproduced being irrelevant) Page 33 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless--
(a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years;
(b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and
(c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017.
Explanation 1.--For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.
Explanation 2.--For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account."
13. In the above provision, we have emphasized the portion relating to extended jurisdiction for an immediate reference. On a plain reading of the same, it can be observed that the Explanation 1 defines the term "relevant assessment-year" as an assessment year beyond preceding six assessment-
years and the AY 2011-12 under consideration in present case is a 'relevant assessment year' for which both sides agree and there is no dispute. Then, the 4th proviso prescribes that no notice for assessment or reassessment shall be issued by the AO for the relevant assessment year unless the AO has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, has Page 34 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 escaped assessment. For this purpose, the term "asset" is defined in Explanation 2 as including immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.
14. It is noteworthy that the provision of extended jurisdiction beyond preceding six years was not there in original section 153A(1), it was subsequently brought by Finance Act, 2017. At that time, the "Memorandum explaining the provisions in Finance Bill, 2017"
explained the rationale of amendment as under:
"Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendment to section 153A and 153C The existing provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the Assessing Officer, and provisions of the said Act shall apply accordingly.
In view of the various representations received from stakeholders citing genuine hardships if the said provision is made applicable, it is proposed to omit clause (c) of section 197 of the Finance Act, 2016.
This amendment will take effect retrospectively from lst June, 2016.
However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including 132A cases) and the same is represented in the form of undisclosed investment in any asset, it is proposed that section 153A relating to search assessments be amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided upto the tenth assessment year if--
(i) the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in Page 35 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 one year or in aggregate in the relevant four assessment years(falling beyond the sixth year);
(ii) such income escaping assessment is represented in the form of asset;
(iii) the income escaping assessment or part thereof relates to such year or years.
It is however proposed that the amended provisions of section 153A shall apply where search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017.
It is also proposed to consequentially amend section 153C to provide a reference to the relevant assessment year or years as referred to in section 153A.
These amendments will take effect from lst April, 2017."
15. Subsequently, the CBDT also issued following Circular No. 2/2018:
"80. Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendments to section 153A and 153C.
"80.1 The provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the AO and provisions of the said Act shall apply accordingly.
80.2 In view of the various representations received from stakeholders, section 197 of the Finance Act, 2016, has been amended so as to omit clause
(c) of the said section.
80.3 Applicability: This amendment takes effect retrospectively from 1st June, 2016.
80.4 However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including section 132A cases) and the same is represented in the form of undisclosed investment in any asset, section 153A of the Income-tax Act relating to search assessments has been amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided up to the tenth assessment year if -
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(i) the AO has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years (falling beyond the sixth year);
(ii) such income escaping assessment is represented in the form of asset;
(iii) the income escaping assessment or part thereof relates to such year or years.
80.5 Applicability: The amended provisions of section 153A of the Income-tax Act shall apply where search u/s 132 of the Income-tax Act is initiated or requisition u/s 132A of the Income-tax Act is made on or after the 1st day of April, 2017.
80.6 Section 153C of the Income-tax Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income-tax Act.
80.7 Applicability: These amendments take effect from 1st April, 2017."
16. Thus, the mandate of Proviso 4th to section 153A is very clear that the extended jurisdiction shall apply only where the escaped income is represented in the form of asset. The Memorandum as well as CBDT Circular makes it further clear that the same shall apply 'where tangible evidence(s) are found during a search or seizure operation (including 132A cases) and the same is represented in the form of undisclosed investment in any asset'.
17. Hence, the existence of an undisclosed asset unearthed during the course of search constitutes the foundational jurisdictional fact for assumption of jurisdiction beyond the normal block period of six assessment years. Unless the statutory conditions prescribed in the 4th Proviso stand satisfied, the very assumption of jurisdiction would fail.
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18. In present case, the search and seizure operation was carried out on 14.11.2017. The assessment-order reveals that the Ld. AO assumed jurisdiction primarily on the basis that the assessee-company was allegedly functioning as a shell entity through which funds of the group were routed/ layered, that statements recorded u/s 132(4) of Shri Anand Kumar Kedia referred to such routing of funds through Kolkata-based entities including the assessee, and that certain digital data allegedly reflected movement of funds arising from sale of investments. Proceeding on that basis, the AO treated the receipts from sale of investments as unexplained cash credits and made a 'protective addition' of Rs. 3,07,56,377/- u/s 68 in the hands of assessee. However, on a careful perusal of the assessment-order as well as the findings recorded by Ld. CIT(A), we find that the transactions in question were admittedly routed through disclosed bank accounts and were also reflected in the regular books of account of assessee. Neither the assessment-order nor the material referred to before us demonstrates discovery of any undisclosed immovable property, undisclosed shares and securities, undisclosed loans and advances or undisclosed bank account contemplated under Explanation 2 to the 4th Proviso.
19. The principal contention of revenue is that once the impugned receipts were credited in bank accounts, the same would automatically fall within the expression "deposits in bank accounts" appearing in Explanation 2 and, therefore, constitute "asset" for the purposes of invoking extended jurisdiction beyond six years. We are unable to persuade ourselves to accept Page 38 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 such interpretation being canvassed by revenue. The expression "asset"
occurring in Explanation 2 cannot be read in isolation divorced from the scheme and context of section 153A, which is a special provision dealing with search assessments based upon discovery of undisclosed assets during search. The expression "deposits in bank accounts" appearing in Explanation 2 has necessarily to be understood in the context of undisclosed deposits unearthed during the course of search and not every banking transaction already disclosed in the regular books of account. Once the Ld. AO himself accepts that the transactions in concerned bank accounts were reflected in regular books, such disclosed entries cannot be elevated to the status of undisclosed asset merely because the AO subsequently entertained suspicion regarding their genuineness. If the interpretation suggested by revenue is accepted, every addition u/s 68 involving banking transactions, standing as recorded in regular books of accounts before search, would automatically extend the limitation prescribed u/s 153A, thereby rendering the safeguards consciously incorporated by legislature in the 4th Proviso wholly otiose. Such interpretation, in our considered view, cannot be approved.
20. The revenue has further placed heavy reliance upon statements recorded u/s 132(4) of Shri Anand Kumar Kedia to contend that the assessee was part of a systematic layering mechanism through which unaccounted funds of the group were routed. However, it is well settled that the impugned statements recorded during search, had been retracted by Page 39 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 Shri Anand Kumar Kedia immediately after search within 5 days. This factual point of retraction within 5 days stands conclusively admitted in the appeals of investee-companies decided by co-ordinate benches. Without prejudice, we also find that in the specific context of the 4th Proviso to section 153A(1), such statements by themselves cannot substitute the statutory requirement of discovery of an "undisclosed asset" represented in the forms specified in Explanation 2. The provision specifically contemplates existence of books of account, documents or evidence revealing escapement of income represented in the form of an asset. Mere allegations of routing or layering of funds, without discovery of any specific undisclosed asset belonging to assessee, cannot independently justify extension of jurisdiction beyond six years. The question whether the statements were subsequently retracted or not and whether such retraction was immediate or delayed, can at best pertain to the merits of addition but cannot cure the foundational jurisdictional defect arising from absence of undisclosed asset during search.
21. The revenue has also emphasized that the assessee was an identified shell company and that nearly thirty companies operating from a common address were allegedly engaged in layering transactions. In our considered view, these factual allegations may perhaps be relevant for examination on merits of the addition, but they cannot override or dilute the statutory condition/requirement expressly prescribed in the 4th Proviso to section 153A(1) for assumption of jurisdiction. For assumption of jurisdiction beyond six years, what is required by law is the discovery of an "undisclosed Page 40 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 asset" during search and such a statutory requirement remains unfulfilled in present case.
22. We further find that the Ld. CIT(A), after detailed examination of assessment-order, seized material and legal position governing the issue, has returned a categorical finding that no "undisclosed asset" satisfying the requirement of Explanation 2 to the 4th Proviso was discovered during the course of search. The revenue has not been able to place before us any material to demonstrate perversity in such factual finding given by Ld. CIT(A). Rather, the view taken by Ld. CIT(A) is consistent with the legislative intent underlying the restrictive framework introduced in section 153A as well as with the decisions rendered by co-ordinate benches in cases of investee-companies involving substantially similar controversy.
23. We may gainfully refer the order of co-ordinate bench of ITAT, Indore in ACIT (Central)-II, Bhopal Vs. M/s Asnani Builders and Developers Limited, IT(SS)A No. 82/Ind/2023, which decided similar controversy against revenue and in favour of assessee:
"4. We first take up Ground No. 2 and 3 which are legal grounds and deal with the illegality of assessment-proceeding undertaken by AO. In these grounds, the precise controversy is whether or not the AO has committed illegality in extending jurisdiction beyond 6th year and thereby making assessment for AY 2012-13 under consideration?
5. In order to decide this controversy, we need to take note of some relevant and concrete facts. The assessee was a land owner and M/s AHPL & ACPL were developers. The assessee (alongwith two other land owners) entered into a "Joint Venture Agreement (JVA)" with M/s AHPL & ACPL for development of a project named "Pebble Bay" on assessee's land (and on other owners' land). The JVA was on 'revenue sharing' basis. The department conducted two distinct searches, namely (i) the first search on 12.01.2018 on Shri Dilip Kumar Gupta / a business concern of Shri Dilip Gupta named "DG Homes & Realty Pvt. Ltd. (DGHPL)" and (ii) the second search on 16.05.2018 on Page 41 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 "Asnani Group" comprising of AHPL & ACPL. Shri Dileep Gupta/DGHPL was a marketing agent of AHPL & ACPL. During first search on Shri Dileep Gupta/DGHPL, the authorities seized a laptop containing certain MS Excel Sheets and documents marked as "LPS-01" and "LPS-02" which revealed that Shri Dileep Gupta/DGHPL made unaccounted collections from customers against booking/sale of 'Pebble Bay' project. Thereafter, during second search on 'Asnani Group', "LPS-7- Page no. 1 to 6" were seized from Shri Subham Gupta and "LPS-01 and LPS-02" were seized from Shri Dinesh Goswami. Shri Dileep Gupta was confronted with the seized material and his statements were recorded u/s 131 of the Act wherein he admitted that cash was collected in lieu of sale of houses of 'Pebble Bay' project and the same was handed over to the directors of M/s AHPL & ACPL. Based thereon, a view was framed that the assessee would have also received its share from M/s AHPL & ACPL. Therefore, a satisfaction note u/s 153C dated 28.06.2021 (Page 21-22 of Paper-Book) was made by AO assuming jurisdiction for extended four years (AYs 2009-10 to 2012-13) beyond normal period of six years (AYs 2013-14 to 2018-19) for assessment u/s 153A(1) by recording thus "..... I am satisfied that on the basis of documents discussed above, It is clear that in the case of the assessee there is income exceeding Rs. 50,00,000/- in aggregate (during the assessment-year 2009-10 to 2012-
13) has not been brought to tax." The satisfaction note was provided to assessee on 12.07.2021. The assessee filed objection to AO on 14.07.2021 (Page 23-28 of Paper-Book) on several grounds one of which was such that there was no escaped income in the form of asset and therefore the condition laid down in 4th Proviso to section 153A(1) is not satisfied. However, the AO turned down assessee's objection and passed assessment-order.
6. Before proceeding further, it is imperative to refer the provision of 153A(1) which reads as under:
"153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall--
(c) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(d) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years :
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years:
XXX (2nd proviso and 3rd proviso are not reproduced being irrelevant) Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless--Page 42 of 60
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(d) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years;
(e) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and
(f) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017.
Explanation 1.--For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.
Explanation 2.--For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account."
7. In the above provision, we have emphasized the portion relating to extended jurisdiction for an immediate reference. On a plain reading of same, it can be observed that the Explanation 1 defines the term "relevant assessment-year" as an assessment year beyond preceding six assessment-years and the AY 2012-13 under consideration in present case is a 'relevant assessment year' for which both sides agree and there is no dispute. Then, the 4th proviso prescribes that no notice for assessment or reassessment shall be issued by the AO for the relevant assessment year unless the AO has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, has escaped assessment. For this purpose, the term "asset" is defined in Explanation 2 as including immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.
8. It is noteworthy that the provision of extended jurisdiction beyond preceding six years was not there in original section 153A(1), it was subsequently brought by Finance Act, 2017. At that time, the "Memorandum explaining the provisions in Finance Bill, 2017" explained the rationale of amendment as under:
"Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendment to section 153A and 153C The existing provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the Assessing Officer, and provisions of the said Act shall apply accordingly.Page 43 of 60
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IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 In view of the various representations received from stakeholders citing genuine hardships if the said provision is made applicable, it is proposed to omit clause (c) of section 197 of the Finance Act, 2016.
This amendment will take effect retrospectively from lst June, 2016.
However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including 132A cases) and the same is represented in the form of undisclosed investment in any asset, it is proposed that section 153A relating to search assessments be amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided upto the tenth assessment year if--
(i) the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years(falling beyond the sixth year);
(ii) such income escaping assessment is represented in the form of asset;
(iii) the income escaping assessment or part thereof relates to such year or years.
It is however proposed that the amended provisions of section 153A shall apply where search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017.
It is also proposed to consequentially amend section 153C to provide a reference to the relevant assessment year or years as referred to in section 153A.
These amendments will take effect from lst April, 2017."
9. Subsequently, the CBDT also issued following Circular No. 2/2018:
"80. Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendments to section 153A and 153C.
"80.1 The provisions of clause (c) of the section 197 of the Finance Act, 2016 provide that where any income has accrued, arisen or been received or any asset has been acquired out of such income prior to commencement of the Income Declaration Scheme, 2016 (the Scheme), and no declaration in respect of such income is made under the Scheme, then, such income shall be deemed to have accrued, arisen or received, as the case may be, in the year in which a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the AO and provisions of the said Act shall apply accordingly.
80.2 In view of the various representations received from stakeholders, section 197 of the Finance Act, 2016, has been amended so as to omit clause (c) of the said section.
80.3 Applicability: This amendment takes effect retrospectively from 1st June, 2016.Page 44 of 60
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IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 80.4 However, in order to protect the interest of the revenue in cases where tangible evidence(s) are found during a search or seizure operation (including section 132A cases) and the same is represented in the form of undisclosed investment in any asset, section 153A of the Income-tax Act relating to search assessments has been amended to provide that notice under the said section can be issued for an assessment year or years beyond the sixth assessment year already provided up to the tenth assessment year if -
(i) the AO has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years (falling beyond the sixth year);
(ii) such income escaping assessment is represented in the form of asset;
(iii) the income escaping assessment or part thereof relates to such year or years.
80.5 Applicability: The amended provisions of section 153A of the Income-tax Act shall apply where search u/s 132 of the Income-tax Act is initiated or requisition u/s 132A of the Income-tax Act is made on or after the 1st day of April, 2017.
80.6 Section 153C of the Income-tax Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income-tax Act.
80.7 Applicability: These amendments take effect from 1st April, 2017."
10. Thus, the verdict of Proviso 4th to section 153A is very much clear that the extended jurisdiction shall apply only where the escaped income is represented in the form of asset. The Memorandum as well as CBDT Circular makes it further clear that the same shall apply 'where tangible evidence(s) are found during a search or seizure operation (including 132A cases) and the same is represented in the form of undisclosed investment in any asset'.
11. Having understood the legal provision, we now turn to the order passed by CIT(A) which is impugned in present appeal:
"3.1.1 I have considered the facts of the case, material evidences on record, written submission filed by appellant and to the facts and findings of the AO inter alia material brought on record. The appellant through its written submission has vehemently challenged the arbitrary approach of the AO by stating that the ld AO erred in opening assessment proceedings for AYs 2011-12 & 2012-13, beyond six years, in absence of any undisclosed asset. Search and seizure operation in the case of Shri Dileep Gupta was carried out on
12.01.2018. Another search proceedings was carried out in the case of Asnani Group on 16.05.2018. During the course of search proceedings in the case of Shri Dileep Gupta, one laptop was found and seized as LS-1, wherein, as per ld AO, systematic and meticulous records were found in 7 MS-Excel worksheet. However, during the course of search proceedings in the case of Asnani Group page no 1-6 of LPS-7 were found from premises of Shri Shubham Gupta and LPS-01 & LPS-02 were found from possession of Shri Dinesh Goswami. The ld AO on perusal of entire seized material observed that Shri Dileep Gupta had received cash on sale of houses in a JV project of appellant and AHPL & ACPL in the name and style of 'Pebble Bay'. The ld AO on the basis of seized material drawn a conclusion that the cash portion was handed over by Shri Dileep Gupta to ACPL & AHPL and AHPL & ACPL were in Joint Venture agreement with appellant, therefore, the cash portion would also Page 45 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 be handed over to appellant in ratio of their JV agreement. Considering, the supra facts, proceedings u/s 153C were initiated in the case of appellant after recording satisfaction note on 28.06.2021. Further, the ld AO vide the said satisfaction note has held that conditions laid down under 4th proviso to section 153A r.w.s 153C of the Act have been fulfilled and was having in possession of various incriminating documents representing escapement of income represented in form of asset which are forming part of balance sheet in more than Rs. 50 lakhs in the relevant AYs. Accordingly, the AO assumed jurisdiction in respect of 7th to 10th assessment year. Consequently, notice u/s 153C of the Act was issued for AYs 2009-10 to 2018-19 i.e. for ten assessment years within the meaning of Explanation 2 to 4th proviso of section 153A(1) r.w.s 153C of the Act.
3.1.2 Before moving forward, it is important to discuss provisions of section 153A r.w.s 153C of the Act. It is noted that until the insertion of Section 153A of the Act by the Finance Act, 2003, if any person was searched u/s. 132 of the Act, upto 31.05.2003, that person had to undergo the block assessment as per Chapter XIVB (special procedure for assessment of search cases) u/s 158BB of the Act; and thereafter, if, an assessee undergoes search u/s 132 of the Act, w.e.f 01.06.2003, the AO is empowered to issue notice u/s 153A of the Act to searched persons u/s 132 of the Act, for six assessment years preceding the searched assessment year and u/s 153C in the case of person whose document are found and seized from the premises of searched person. In the instant case, search proceedings u/s 132 of the Act were carried out in the case of Shri Dileep Gupta on 12.01.2018 and in the case of Asnani Group on 16.05.2018. The ld AO after recording satisfaction initiated proceedings u/s 153C in the case of appellant. Thus, ordinarily, the AO was well within his jurisdiction to issue notices u/s 153C of the Act in respect of six (6) assessment years preceding the year in which seized material pertaining to appellant was handed over to the jurisdictional Assessing Officer. Therefore, in terms thereof, the AO was competent to issue notices u/s 153C r.w.s 153A of the Act for the AYs 2013-14 to 2018-19. However, w.e.f 01.04.2017 fourth proviso was inserted by the Finance Act, 2017 in section 153A (1) of the Act, enabling an Assessing Officer of a searched person to issue notices u/s 153C r.w.s 153A of the Act for 'relevant assessment year or years' in terms of Explanation 1 of the fourth proviso to Section 153A(1) of the Act i.e. assessment years beyond the six (6) assessment years till tenth (10) assessment year preceding the searched assessment year (i.e. 7th to 10th AY's preceding the searched AY), provided that the essential conditions specified therein are satisfied. The relevant extract of provisions of section 153A(1) of the Act, as applicable to the present case is being reproduced below:
"Assessment in case of search or requisition 153A.
(1) Notwithstanding anything contained in sec139, 147, 148, 149, 151 and 153, in the case of a person where a search is initiated u/s132 or books of account, other documents or any assets are requisitioned u/s132A after the 31-5-03, the AO shall-
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the ROI in respect of each AY falling within 6 AYs (and for the relevant AY or years) referred to in clause(b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished u/s139;Page 46 of 60
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(b) assess or reassess the total income of 6 AYs immediately preceding the AY relevant to the PY in which such search is conducted or requisition is made (and for the relevant AY or years:
Provided that the AO shall assess or reassess the total income in respect of each AY falling within such 6 AYs (and for the relevant AY or years:
Provided further that assessment or reassessment, if any, relating to any AY falling within the period of 6 AYs (and for the relevant AY or years) referred to in this (sub- sec) pending on the date of initiation of the search u/s132 or making of requisition u/s132A, as the case may be, shall abate:
Provided also that the Central Govt. may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the AO shall not be required to issue notice for assessing or reassessing the total income for 6 AYs immediately preceding the AY relevant to the PY in which search is conducted or requisition is made (and for the relevant AY or years):
Provided also that no notice for assessment or reassessment shall be issued by the AO for the relevant AY or years unless-
(a) the AO has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to Rs.50 lakhs or more in the relevant AY or in aggregate in the relevant AYs;
(b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and
(c) the search u/s132 is initiated or requisition u/s132A is made on or after the 1-4-
17. Expl.-1.- For the purposes of this sub-sec, the expression "relevant AY" shall mean an AY preceding the AY relevant to the PY in which search is conducted or requisition is made which falls beyond 6 AYs but not later than 10 AYs from the end of the AY relevant to the PY in which search is conducted or requisition is made.
Expl.-2.- For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.
(2) If any proceeding initiated or any order of assessment or reassessment made u/s 153A(1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sec153(1), the assessment or reassessment relating to any AY which has abated under the second proviso to sub-sec (1), shall stand revived with effect from the date of receipt of the order of such annulment by the (Pr.CIT or) CIT: Provided that such revival shall cease to have effect, if such order of annulment is set aside.
Expl.- For the removal of doubts, it is hereby declared that,-
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(i) save as otherwise provided in this sec, sec153B and sec153C, all other this Act shall apply to the assessment made under this sec;
(ii) in an assessment or reassessment made in respect of an AY under this sec, the tax shall be chargeable at the rate or rates as applicable to such AY."
From specific reading of fourth proviso to Section 153A(1) of the Act, it can be seen that the jurisdiction u/s. 153C r.w.s 153A of the Act has been extended from seventh to tenth year, however, prohibits the AO to issue the notice u/s. 153C r.w.s 153A of the Act, unless the condition precedent therein is satisfied. The expression used is "no notice for assessment or reassessment shall be issued by the AO for the relevant AY/AYs"; and the relevant AY/AYs has been explained by the aid of Explanation-1 appended to it (7th-10th AY's preceding the searched year). Therefore, it is noteworthy that the fourth proviso to section 153A(1) bars the AO to issue notice u/s 153C r.w.s 153A of the Act for the assessment or reassessment of the 7th - 10th AY's unless he has in his possession evidence/material which revealed that income represented in the form of asset valued Rs. 50 lakhs or more has escaped assessment. So, the AO, in order to assume jurisdiction for the extended period (i.e. 7th to 10th AY preceding the searched year) should have material in his possession regarding income represented in the form of 'asset' valued Rs. 50 Lakhs or more which has escaped assessment, which will only enable the AO to assume jurisdiction u/s. 153C r.w.s 153A of the Act to issue notice for these extended AYs. For the definition of asset referring to 4th proviso to section 153A of the Act, Explanation 2 was also inserted w.e.f 01.04.2017. As per Explanation 2 to the 4th proviso to section 153A(1), the asset shall include (i) immovable property being land or building or both,
(ii) shares & securities, (iii) loans & advances and (iv) deposits in bank account. Thus, in nutshell, the AO can assume jurisdiction of cases for 7th year to 10th if he/she has in possession any books of account or other documents or evidence which reveal that the income representing asset defined in Expl-2 amounting Rs. 50 lakhs or more in single year or in aggregate in all the assessment years.
3.1.3 Before parting on the subject issue, the only fact needed to be examined is whether the AO was in possession of any asset being in the nature of (i) immovable property being land or building or both, (ii) shares & securities, (iii) loans & advances and (iv) deposits in bank account as defined in Explanation-2nd to 4th proviso to section 153A(1) by virtue of which he can assume jurisdiction for 7th to 10th assessment year. In the instant case, the AO has given following reasons to assume jurisdiction for 7th to 10th AYs:-
During the course of assessment proceedings, Sh. Vishan Asnani, Director of M/s Asnani Builders & Developers, attended the office and submitted ratio of Joint venture in "Pebble Bay Project", A Joint venture project between Amrit Colonisers Pvt. Ltd, Amrit Homes Pvt. Ltd. &Asnani Builders and Developers, between the land owners and developers. Based on this document, it is found that Asnani Builders at Developers Ltd. has its share as under-
Project Phase Share of M/s Asnani builders & Developers
Pebble Bay, Phase-I 33%
(Duplex)
Pebble Bay, Phase-I (Flats) 27%
Pebble Bay, Phase-II 19%
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IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 Further, on the basis of incriminating documents found and seized during the search of "Asnani Group" a list of unaccounted receipt of cash in "Pebble Bay Project" is prepared, which is as per enclosed chart (Annexure-A). As per this chart, cash component received during F.Y. 2010-11 and F.Y. 2011-12 is Rs. 15,13,37,650/- total share of J.V. Partners in M/s Amrit Colonisers Pvt. Ltd and Rs. 2,19,70,000/- in M/s Amrit Homes Pvt. Ltd.
As the share of cash component in the hands of assessee is 4,54,01,295/- in respect of J.V. with M/s Amrit Colonisers Pvt. Ltd On calculating the share of M/s Asnani Builders & Developers in F.Y. 2010-11 & F.Y. 2011-12, it is observed that cash component in the hand of M/s M/s Amrit Colonisers Pvt. Ltd (Phase-1 Duplex @ 33%, Phase-1, Flats @ 27%) and Rs 41,74,300/- in M/s Amit Homes Pvt. Ltd. (@ 19%) exceeds Rs. 50 Lakh, and land of M/sAsnanı Builders & Developers Ltd. has been used to create real estate assets:
XXX In view of the above, I am satisfied that on the basis of documents discussed above, It is clear that in the case of the assessee there is income exceeding Rs. 50,00,000/- in aggregate (during the assessment year 2009-10 to 2012-13) has not been brought to tax. Therefore, I am of the view that as per the provision of section 153A of the Act, scrutiny is necessary in respect of the extended period of A.Y. 2009-10 to 2012-13, which fall beyond 6 years from the end of the Assessment years, relevant to the previous year in which search is conducted.
It is apparent from the above that the AO has formed a belief that the appellant would also have received cash from Shri Dileep Gupta against sale of houses in 'Pebble bay' project. On perusal of assessment order, I find that the ld AO has basically relied upon page no 36 of LPS-7 which was found and seized from the premises of Shri Shubham Gupta, employee of M/s AHPL. The said loose for ready reference is reproduced hereunder:- XXX (scanned material) On perusal of the seized loose paper, I find that it only mentions amounts in coded format, the dates of alleged cash payments is completely missing, the details of actual amount paid, project wise amount paid to appellant are completely missing. The only name of the appellant was mentioned as '39% of Asnani builders to return back to ACPL outstanding 5817786'. The only inference which can be drawn is that a certain amount was returned back to ACPL by Asnani Builders. Thus, it cannot be conclusively held that amounts were handed over to appellant by either Shri Dileep Gupta or by AHPL/ACPL or any amount of alleged cash was received by appellant. On perusal of written submission, it has been transpired that the appellant before AO during assessment proceedings has raised objections against invocation of extended period of 7th to 10th year on 11.06.2021 which is as under:-
"We say that we have been provided copy of satisfaction note for reopening of the case of the assessee for the AY 2009-10 to AY 2012-13. Notices u/s 153C of the Income Tax Act, 1961 dated 12/07/2021 for the above assessment years have also been served upon the assessee-company.Page 49 of 60
Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 On the instructions of the management of the above named assessee- company, we prefer preliminary objections to above said satisfaction note & further proceedings u/s 153C for the AY 2009-10 to AY 2012-13 as under:
1. At the outset, it is submitted that the invocation of provisions of Section 153C for the extended period i.e. AY 2009-10 to AY 2012-13 and issuance of notices u/s 153C for the above said assessment years is bad in law and without jurisdiction.
2. On careful perusal of the above said satisfaction note, it is seen that the proceedings u/s 153C of the Act for extended period were initiated against the assessee company on the strength of following documents/material:
a. Alleged incriminating documents containing unaccounted receipts found and seized during the search of 'Asnani Group' pertaining to various phases of 'Pebble Bay Project'.
b. A Chart [referred as Annexure-A] forming part of satisfaction note prepared on the basis of above said alleged incriminating documents found and seized. c. An undetailed narration in the above said satisfaction note about creation of assets in the hands of the assessee company in form of land.
3. On perusal of above said documents, it is apparent that the name of the assessee company is not mentioned anywhere in the alleged incriminating documents. Further, the above said alleged documents do not suggest that 'alleged cash receipts' (if any) was ever been received by or on behalf of the assessee company. Further, these alleged documents neither pertain/belong to the assessee company nor have been seized from any premise of the assessee-company/its directors.
4. It is also relevant that management/directors of the assessee- company were never confronted with the above said alleged documents nor any opportunity to cross-
examine the relevant persons was ever provided to the assessee-company. In the interest of justice and fair play, we hereby request to provide the opportunity to cross- examine above persons before proceeding further in the case of the assessee company.
5. The above said satisfaction note suffers from basic legal defect in view of following facts:
a. Quantification of escaped income in the hands of the assessee- company and its year wise details are not mentioned anywhere in the satisfaction note. b. However, on perusal of above said alleged documents, it is apparent that any of the above document do not contain/suggest that any unaccounted money was ever been received by the assessee Company.
6. In view of provisions contained in section 153C(1)(b), document wise correlation of the seized document with the 'other person referred in section 153C' (in the present case, the assessee company] is sine qua non for reopening of the case of such 'other person' u/s 153C of the Act. There are various landmark judicial pronouncements in which the above legal position was supported. One such landmark judgment of Hon'ble Apex Court was pronounced in the case of Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 [SC].
7. In the above referred satisfaction note, it is stated that during the FY 2010-11 & FY 2011-12, a sum totaling to Rs. 4,54,01,295/- was received as 'cash component' by the assessee company which has escaped assessment. Further, the assessee company had used this 'cash component' to create real estate assets. In this regard, it is submitted Page 50 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 that the above contention stated in the satisfaction note is erroneous and baseless in view of the following facts:
a. As stated in earlier paras of this reply, there is no evidence regarding receipt of alleged 'cash component' by the assessee company in relevant period. Thus, the opinion regarding 'escapement of income' was based only on suspicion. b. No undisclosed asset [whether real estate asset or otherwise] wasfound during/after search proceedings. Thus, the findings recorded in 'satisfaction note' regarding 'use of alleged cash component in creating real estate asset' is not correct and is based on mere suspicion, conjecture and surmise.
8. Here, it is relevant to quote the relevant statutory provisions which are as under:
"153C. (1) [Notwithstanding anything contained in section 139, section 147, section 148, section 149 section 151 and section 153, where the Assessing Officer is satisfied that,-
a. any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or b. any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein,relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A] :)"
"Fourth proviso to section 153A(1) read as under.
Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless-
(a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years;
(b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.
Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.]"
On careful perusal of above statutory provisions, it is evident that:Page 51 of 60
Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 a. Before resorting to above provisions, the AO must have definite and cogent material in his possession that the income for relevant year/years aggregating to fifty lakh rupees or more has escaped assessment. Meaning thereby, that the above provisions cannot be invoked on mere suspicion of escapement of income in relevant years, or for the verification of entries in books of accounts of earlier years.
b. That escaped income should be represented in the form of an asset [being immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account).
The law makers [legislature] in their wisdom have meaningfully inserted the word 'escaped income represented in the form of an asset' in the statutory provision. It implies that if any incriminating material is in possession of the AO which signifies escapement of income, there must be evidences of corresponding asset being created out of escaped income.
Now, the question arises whether these provisions could be resorted to for verification of genuineness of entries in the books of accounts of earlier relevant years on the strength of information from Investigation Wing. The answer is 'NO' because in such situation, the AO do not have definite and cogent material in his possession to signify escapement of income unless due verification of entries of books of accounts of earlier year is made in the assessment proceedings. The statutory provisions referred above do not allow the AO to issue notice u/s 153C merely on suspicion or merely for verification purpose.
9. In the present case of the assessee-company, (i) There is no iota of evidence in the satisfaction note that the alleged cash component was received by the assessee company during the relevant period and such cash component was represented in the form of an asset (ii) From the language of the satisfaction note, it is apparent that the invocation of section 153C to the extended period was merely based on suspicion.
10. In view of above discussion, it is crystal clear that the above said invocation of provisions of section 153C to the extended period being for AY 2009-10 to AY 2012- 13 is bad in law being without jurisdiction.
In view of aforesaid, it is humbly prayed that your honor may kindly be pleased to decide preliminary objection as made herein above before proceeding further in the case of the assessee company."
The appellant vide its objection has mentioned that in the said seized documents the name of the appellant is completely missing and these does not suggest that any alleged cash receipts was received by appellant or was received on behalf of appellant. The impunged document does not belong to appellant and were also never confronted with the management of the appellant company. Hence, the above reasons for invocation of extended period holds no ground in given set of facts and circumstances. The appellant also contended that as per Explanation-2 of fourth proviso to section 153A(1) of the Act, there was no iota of evidence in satisfaction note that escaped income was represented in form of an asset. Therefore, the invocation of section 153C r.w.s 153A to extended period was merely based on suspicion and without jurisdiction. The appellant also made request before the AO to drop the proceedings for extended period or dispose of the objections raised by speaking order.
The AO vide letter dated 22.09.2021 had disposed off primary objections raised by the appellant. For ready reference the same is reproduced hereunder:-
Page 52 of 60Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 Vide letter furnished in this office on 22/06/2021, the assessee had raised objection to reopening of the case u/s 153C for the AY 2013-14 to AY 2019-20. Further, vide letter furnished in this office on 14/07/2021, the assessee had raised objection to reopening of the case u/s 153C for the extended period being AY 2009- 10 to AY 2012-13. The aforesaid objections are being disposed of as under:
"1. The assessee had contended that the name of the assessee company is not mentioned in the incriminating documents. It is further contended that the incriminating documents do not suggest that 'alleged cash receipts (if any) was ever received by or on behalf of the assessee company.
The objection of the assessee is not tenable in view of the page no. 36 of LPS-07 seized from the residence of Shri Shubham Gupta wherein the common account and share of the assessee company is duly mentioned.
2. It is contended by the assessee that the opportunity of cross examination of the persons from whom the incriminating documents were found and seized. Incriminating documents have been found and seized from the employees and offices of M/s Amrit Homes Pvt Ltd [AHPL] and Amrit Colonisers Pvt. Ltd. [ACPL] who are the JV partners and developer of the assessee company. Since, there is close business relationship between the assessee company and AHPL/ACPL, there is no necessity of affording opportunity of cross examination.
3. The assessee had contended that the invocation of provisions of Section 153C for the extended period is bad in law and without jurisdiction. The invocation of section 153C for the extended period is in accordance with the relevant provisions of the law as amended by Finance Act, 2017 since the income escaped assessment [on the strength of incriminating documents found and seized] amount to fifty lakh rupees or more in aggregate in relevant years. With the above comments, objections of the assessee to the satisfaction notes recorded u/s 153C dated 10/03/2021 & 28/06/2021 for the AY 2009-10 to AY 2019-20 are hereby rejected. It is also hereby clarified that with this reply to the assessee, no further objection on the discussed issues will be entertained by this office. Considering the above, the AO made additions on account of unexplained income u/s 69A of the Act by assuming jurisdiction, for 7th to 10th year, as per 4th proviso to section 153A(1)."
3.1.4 During appellate proceedings, the appellant reiterated the submission made/objection raised before the AO. It further submitted that the AO can assume jurisdiction for 7th to 10th AYs as provided in Expl. 2 to 4th proviso to sec 153A(1) of the Act only in a situation when he has evidence in his possession revealing that income valued Rs. 50 lakhs or more represented in form of asset has escaped assessment. Therefore, this jurisdictional fact should be present to assume jurisdiction for issuing notice u/s 153C r.w.s 153A of the Act for period beyond sixth assessment year upto tenth assessment year. Here, the AO has made additions on account of unexplained money u/s 69A qua which no concrete evidence was found which could have direct nexus of receipts of alleged cash by the appellant and generating undisclosed asset. Hence, jurisdictional fact is absent. In support of this proposition, the appellant has relied upon the decision of Hon'ble Apex Court in the case of Arun Kumar & others (2006) 12 SC 121 wherein it has been held that if the jurisdictional fact does not exist, the court, authority or officer cannot act. The appellant has relied upon Page 53 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 the decision of Hon'ble ITAT, Gauhati in the case of Goldstone Cement Ltd, ITA Nos 126 to 131/Gau/2020 order dated 10.12.2021 wherein addition of share capital pertaining to 7th to 10th AYs has been deleted as jurisdictional fact, as per Expl 2 to 4th proviso to section 153A(1) of the Act, was absent. The order of Hon'ble ITAT was also affirmed by Hon'ble High Court of Guwahati vide order in ITA No 7, 9 & 10 of 2022 dated 29.09.2023. Though, the decision of Hon'ble ITAT Guwahati was in context of Share application money and u/s 153A, however, the ratio laid down in the said judgment was on absence of jurisdictional fact viz. undisclosed asset within meaning of forth proviso to section 153A.
3.1.5 As evident from the above discussion, the AO has presumed that the appellant would have received cash component on sale of houses in its project 'Pebble bay' in the nature of undisclosed asset and has escaped assessment. The entire addition has been made on sheer assumption and presumption basis and having no co-relation with any iota of seized material. None of the items on the basis of which the AO assumed jurisdiction u/s.153A(1) of Act for extended period or additions made in the AYs under consideration falls under the following categories of asset as provided in Explanation.2 to 4th proviso of the section 153A(1) of the Act:
(i) Immovable property being land or building or both.
(ii) Shares and securities.
(iii) Loans and advances.
(iv) Deposits in the bank account.
As per rudimentary accounting concept, 'debit' denotes 'assets' and 'credit' denotes 'liability'. An asset represents an economic resource, either immovable or movable, having value, such as immovable property viz., land or building, investment held in shares and securities, loans & advances given and deposits in bank account. On the other hand, 'Liability' includes items such as share capital, reserves, loans obtained (secured as well as unsecured) etc. which cannot be characterized or classified as 'Asset'. Hon'ble ITAT Gauhati has dealt with this issue in detail in ITA Nos 126 to 131/Gau/2020 in the case of Goldstone Cements Ltd (order dated 10.12.2021). Relevant paras are reproduced hereunder:-
"8.12 It is a rudimentary accounting concept, that "debit" denotes "asset" and "credit" denotes "liability". An asset represents an economic resource, either immovable or movable, having value, such as immovable property viz., land or building, investment held in shares and securities, loans & advances given and deposits in bank account. On the other hand, 'Liability' includes items such as share capital, reserves, loans obtained (secured as well as unsecured) etc. which cannot be characterized or classified as 'Asset'. Similarly, items of 'expenses' or revenues in form of 'sales' / 'turnover' does not constitute 'asset'. This can be illustrated in the following manner ('Asset' below falls within the ambit of the fourth proviso to Section 153A of the Act):
Profit & Loss Account Particulars (Debit) Particulars (Credit) Expenses Revenues Balance Sheet Page 54 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 Liabilities (Credit) Assets (Debit) Share Capital/ Reserves/ Immoveable Property/ Loans & Loan/ Current Liabilities Advances/ Shares/ Bank Balance 8.13 The above view of ours get bolstered from reading of Explanation 2 appended to the fourth proviso, which defines 'asset', for the purpose of fourth proviso to Section 153A,to include i) immovable property, ii) shares and securities , iii) loans and advances & iv) Deposit in bank. Hence, where search action u/s 132 of the Act reveals that, (i) the assessee owns an undisclosed immovable property, or (ii) information has been gathered which shows that the assessee had given loans or advances outside the regular books or (iii) search has revealed unaccounted investments held by assessee in shares & securities, which do not form part of regular books of accounts or (iv) if undisclosed bank accounts having deposits, have been found in the course of search, pertaining to the 7th-10th AY preceding the search;
then having in his possession this jurisdictional fact, the AO may assume jurisdiction under the fourth proviso to Section 153A of the Act for the relevant seventh to tenth assessment year preceding the searched assessment year. Hence, the most important aspect is that, these 'assets' must have been found to be undisclosed or unaccounted, in the regular books of account maintained by the assessee, and discovered during the course of search, which otherwise would not have seen the light of the day but for the search, resulting in escapement of income.
8.14 As per our discussion, is to be kept in mind that, the term 'deposits in bank account' has to be considered with the term 'asset'. The term 'deposits in bank account' and 'asset' are to be understood in their cognate sense, as it takes their colour from each other, i.e., the more general is restricted to a sense analogous to the less general. Hence, the term 'deposits in bank account' denotes discovery of an 'asset' in the form undisclosed bank deposits, say fixed deposit bank a/c, savings deposit bank a/c, foreign deposit bank a/c etc. which is found to have escaped assessment in the 7th-10th AY preceding the search. It does not suggest or include any or all credits in bank accounts, which is disclosed and forms part of the regular books of accounts. To say, if any credits in a regular bank account, like sale proceeds/ loan / share capital etc. is found to be unexplained, then it may be a case of discovery of undisclosed 'income' / 'cash credit' but it does not suggest discovery of an undisclosed 'asset' by the Revenue so as to bring it within the teeth of the fourth proviso to Section 153A of the Act for invoking jurisdiction u/s 153A for the extended period.
8.15 Hence, from the above discussion, it is thus clear that Section 153A of the Act can be invoked only if the AO comes to a positive conclusion that he has in his possession documents or information revealing an undisclosed asset of the assessee qua the assessment year (7th to 10th) which is valued Rs. 50 lakhs or more. This, in our judgment is a foundational, fundamental or jurisdictional fact." Thus, the AO can assume jurisdiction as per Expl 2 to 4th proviso to section 153A(1) r.w.s 153C of the Act over the cases of 7th to 10th year only when during the course of search proceedings u/s 132 of the Act in the case of any third party it is found that any unexplained immovable property was owned by the assessee or unexplained loans and advances given by the assessee or unexplained investment was made by the assessee in shares and securities, or Page 55 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 unexplained deposits in bank account were made. Here, income, represented in form of asset, which has escaped assessment denotes the unexplained assets recorded in the books of account or undisclosed assets not recorded in the books of account. Also, to clarify that if any income which does not form part of books of account is found to be unexplained, then it may be a case of discovery of unexplained income/cash credit but it does not suggest discovery of an undisclosed asset. Undisclosed asset valued Rs. 50 lakhs or more has to be discovered during search and seizure proceedings pertaining to 7th to 10th year for assuming jurisdiction u/s 153A r.w.s 153C. Except the asset, other items of income viz. liability/credit, unexplained expenditure etc. has not been included in Explanation 2 to 4th proviso of section 153A. Meaning thereby, on the basis of unexplained cash credit/liability, the AO cannot assumed jurisdiction u/s 153C r.w.s 153A for the 7th to 10th assessment year. Hon'ble ITAT Gauhati in the case of Goldstone Cement Ltd (Supra) in para 8.11 has held that "......since the parliament has used expression 'income in the form of asset' and the definition of asset has been spelled out in the fourth proviso, this itself necessarily implies that the liability/items falling in the left side of the Balance Sheet stands excluded. For this view of ours, we rely on the legal Maxim for interpretation "Expressio Unius Est Exlcusio Alterius" which principle states that, express mention of one is the exclusion of other and this maxim has been accepted by the Hon'ble Supreme Court in GVK Industries Ltd. Vs. ITO [197 Taxman 337] (Constitution bench of 5 Supreme Court Judges). By express mention of 'Assets' and definition given to it specifically, it is implied that the Parliament silently excluded the items of 'revenue', 'expenditure' & 'liabilities' from its jurisdictional fact for invoking/assumption /usurpation of jurisdiction u/s. 153A of the Act for the seventh to tenth assessment year preceding the searched assessment year." The said order has also been affirmed by Hon'ble Gauhati High Court vide order in ITA No 07, 09 & 10 of 2022 dated 29.09.2023. In the present case, the AO has made addition of Rs. 1,32,15,017/- in AY 2011-12 and Rs. 3,70,53,568/- in AY 2012-13 on account of unexplained income u/s 69A of the Act and no addition on account of undisclosed asset has been made in the body of assessment order. As evident from the above discussion and decision of Hon'ble ITAT Gauhati in the case of Goldstone Cement Ltd (Supra) the alleged unexplained income is not an 'asset' within the meaning of Explanation 2 to 4th proviso of section 153A of the Act. It is also evident that the AO was not in possession of any evidence representing undisclosed asset valued at Rs. 50 lakhs or more. Hence, facts relating to assuming jurisdiction as per Explanation-2 to 4th proviso of section 153A(1) of the Act are absent in the case under consideration. The appellant has also placed reliance upon the decision of Hon'ble ITAT, Gauhati in the case of Goldstone Cement Ltd (Supra) wherein addition of share capital pertaining to 7th to 10 th AYs have been deleted as jurisdictional fact, as per Explanation-2 to 4th proviso of section 153A(1) of the Act, was absent. Through the issue in hand pertain to alleged unexplained cash income, however, the ratio in the supra decision is squarely applicable in the instant case. Respectfully, following the above decisions and discussion made herein above, I find that the AO was not justified in assuming jurisdiction over the extended assessment years of search period i.e 7th to 9th year and making impugned additions.
3.1.6 Accordingly, the additions of Rs. 1,32,15,017/- in AY 2011-12 and Rs. 3,70,53,568/- in AY 2012-13 on account of unexplained income u/s 69A are not in accordance with 4th proviso to section 153A(1) read with Explanation 1 & 2 of the Act and thus, legally cannot be sustained. Therefore, the above additions are, hereby, deleted. Therefore, appeal on this ground is allowed."
12. Thus, the CIT(A) has firstly analysed that the AO can extend jurisdiction beyond 6th years th upto 10 year only if there is 'income represented in the form of asset' for which 'asset' is defined to include immovable property being land or building or both, shares and securities, loans and advances, Page 56 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 deposits in bank account. Thereafter, he has analysed the facts of assessee's case at length and observed that in the present case of assessee, the AO has made addition on account of unexplained income and no addition on account of undisclosed asset has been made. Accordingly, he has concluded that the condition prescribed in 4th proviso to section 153A(1) is not satisfied. Finally, he has concluded that the AO was not justified in assuming jurisdiction over extended period.
13. Before us, Ld. DR for revenue has filed following Written-Submission to attack the order of CIT(A):
1. The assessee vide its first contention, has challenged the jurisdiction for framing assessment u/s 153C of the Act for the extended period i.e. beyond six years from the year of search. The assessee has submitted that the provisions of the section 153C read with fourth proviso to section 153A(1) of the Act provides for a mandatory condition 'escapement of income' of Rs. 50 lakhs or more represented in the form of asset for invocation of extended period.
1.1 In this regard kind attention of the Hon'ble Bench is invited to the definition of 'asset' as provided in Explanation 2 to 4th proviso of s. 153A(1) of the Act. For a ready reference, the definition is being reproduced herein below:-
"Explanation 2 - For the purpose of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account."
3.2.1 In view of the above, it is submitted that the term "asset" in Explanation 2 to Section 153A(1) of the Act should be construed as illustrative rather than exhaustive. This interpretation is supported by principles of statutory interpretation, legislative intent, and relevant judicial precedents.
3.2.2 That, on statutory interpretation, it is sub mitted that the cardinal rule of statutory interpretation dictates that where the legislature employs general words following specific and particular words, the general words should be construed to be of the same genus or species as the specific and particular words, unless there is a clear indication to the contrary. In the context of the Section 153A(1), the term "asset" is preceded by specific items such as "immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account". This clearly indicates that the term "asset" is intended to encompass items akin to those explicitly mentioned, implying an illustrative rather than exhaustive list.
3.2.3 The legislative intent behind the scheme of the assessment under the provisions of section 153A/153C of the Act is to provide the AO with broad powers to assess or reassess the total income of the assessee in whose case a search is carried out or in case of an assessee, in respect of which an incriminating document has been found and seized during the course of the search in any other person. This broad mandate requires an expansive interpretation of "asset" to include all forms of undisclosed income, thus supporting the objective of comprehensive tax enforcement and anti- evasion measures.
3.2.4 The provisions of section 69A of the Act treats unexplained money or cash at par with other assets such as bullion, jewellery and valuable articles clearly indicates that the legislature considers money or cash to be on an equal footing with other forms of Page 57 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 assets when it comes to undisclosed income. Therefore, undisclosed cash receipts such as those noted on the seized loose papers, should be treated similarly under the provisions of the Section s 153A and 153C, reinforcing that the term "asset" includes such undisclosed cash receipts.
3.2.5 The Hon'ble Apex Court in the case of CIT vs. Singad Technical Education Society (2017) 397 ITR 344 (S.C.) (although not directly addressing Explanation 2) has provided a broad interpretation of "documents" or "assets" found during search assessments, indicating that the term should be construed widely to ensure all forms of undisclosed income are captured.
3.2.6 In light of the principles of statutory interpretation, legislative intent, and judicial precedents, it is respectfully submitted that the term "asset" in Explanation 2 to Section 153A(1) should be interpreted as illustrative rather than exhaustive. Such an interpretation aligns with the objective of the Income-tax Act to ensure effective enforcement of tax laws and deter tax evasion.
3.2.7 In view of discussion made in above paras, the term "asset" should be construed as illustrative, it would include the amount of undisclosed cash receipts found noted on the seized loose papers. Therefore, the AO was justified in invoking the provisions of section 153C of the Act and framing the assessment in the case of the assessee for the extended period."
14. Per contra, Ld. AR for assessee made forceful submissions to defend the order passed by CIT(A). The arguments raised by Ld. AR are in line with the findings and observations made by the CIT(A), therefore we do not wish to repeat the same for the sake of brevity.
15. We have considered rival submissions of both sides and perused the orders of lower- authorities as well as the documents held in Paper-Book to which our attention has been drawn. The controversy before us is very specific i.e. whether the AO was legally justified in exercising jurisdiction for AY 2012-13 or not? So far as legal position is concerned, it is very clear from provision of 4th proviso to section 153A(1) that the AO can issue notice for assessment only to assessee or re-assessee the escaped income in the form asset. The Memorandum to Finance Bill, 2017 and CBDT Circular No. 2/2018 further says that the notice can be issued beyond sixth year only where 'tangible evidences are found during a search or seizure and the same is represented in the form of undisclosed investment in any asset'. Now, in this legal scenario, when we look into the facts of present case, we find that the AO has made addition on the basis that the assessee would have received its share in the unaccounted collections made by AHPL & ACPL from buyers. Thus, there is no 'asset' or 'investment in asset' found by authorities and there is no addition made by AO on the basis of 'asset' or 'investment in asset'. The whole addition is on account of presumed receipt of revenue-share from AHPL & ACPL which can only be an unrecorded revenue/sale of business. The CIT(A) has, therefore, passed a vehement order observing that there is no addition on account of any undisclosed asset and hence the condition laid down in 4th proviso to section 153A(1) is not satisfied. In arriving this conclusion, the CIT(A) has rightly relied upon the decision of ITAT, Gauhati in Goldstone Cement Ltd. ITA Nos. 126 to 131/Gau/2020 order dated 10.12.2021 (upheld by Hon'ble Gauhati High Court in ITA No. 07, 09 & 10 of 2022 dated 29.09.2023) holding that any sale proceed / loan / share capital, etc. found unexplained, may be a case of discovery of undisclosed income/cash credit but it does not suggest discovery of any 'asset' by Revenue so as to bring it within the teeth of fourth proviso to section 153A for invoking jurisdiction u/s 153A for the extended period. Ld. DR for revenue, in his Written-Submission re-produced above, has firstly mentioned that the definition of "asset" is inclusive and not exhaustive and thereafter gone to project that the legislative Page 58 of 60 Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12 intent behind section 153A is to provide the AO with broader powers to assessee or reassess the total income of the assessee in whose case a search is carried out and this broad mandate requires interpretation of "asset" as including "all forms of undisclosed income". So far as the point raised by Ld. DR that the term "asset" has inclusive definition and not exhaustive, we agree without any hesitation. But we are afraid to accept that the "asset" would include "all forms of undisclosed income". To be specific to the assessee's present case, Hon'ble Gauhati High Court has already accepted that unexplained sale-proceed cannot be treated as discovery of any 'asset' for the purpose of 4th proviso to section 153A(1). To the same effect is the view taken by Hon'ble Madras High Court in IDFC Ltd. Vs. DCIT, W.P. Nos. 23284 & 22737 of 2022 order dated 15.09.2023, while interpreting an identical provision in section 149, the relevant paras of order are as under:
"52. Additionally, the validity of the impugned proceedings have also to be tested on the anvil of the statutory condition in section 149 that the officer has in his possession, 'books of accounts or other documents or evidence which reveal that income chargeable to tax, presented in the form of an asset' has escaped assessment. This additional requirement flows from the reason that the notices have been issued beyond three years from the end of the relevant assessment years. In the present case, the petitioner argues that there is no such asset.
53. Per contra, the submission of the revenue is that the suppressed income/wrong claim of disallowances, will constitute an asset. The submission does not appeal for the reason that what the revenue has in this case are only the books of accounts and material furnished by the petitioner at the time of original assessment and there is no mention anywhere in the impugned proceedings about an 'asset' representing the income that is alleged to have escaped."
16. In view of above discussions, we do not find any infirmity, perversity or fallacy in the order of CIT(A) holding that in present case, the AO was not justified in assuming jurisdiction over extended assessment year. Therefore, we find no reason to interfere with the order of CIT(A) on this issue, the same is hereby upheld. Consequently, Ground No. 2 and 3 raised by revenue are dismissed.
17. Since we have dismissed legal grounds raised by revenue as a consequence of which the assessment proceeding undertaken by AO stands illegal, we need not adjudicate other grounds which are on merit. Those grounds have become academic at present and kept open.
18. Resultantly, this appeal is dismissed."
24. Therefore, we find no infirmity in the conclusion reached by Ld. CIT(A) that the initiation of proceedings u/s 153A for AY 2011-12 was without jurisdiction and contrary to the statutory mandate of law. Accordingly, we do not have any reason to interfere with the order of Ld. CIT(A); the same is hereby upheld.
Page 59 of 60Bhilai Properties Investment Pvt. Ltd.
IT(SS)A Nos. 24/Ind/2024 & CO No.25/Ind/2025 - A.Y. 2011-12
25. Since we have upheld the order of Ld. CIT(A) on the foundational legal issue relating to the validity of jurisdiction itself, the consequential assessment framed by AO for AY 2011-12 cannot survive. We also note that the Ld. CIT(A), having decided the issue in favour of the assessee on the jurisdictional ground, did not adjudicate the addition of Rs. 3,07,56,377/-
on merit. Therefore, in the situation, it is not necessary for us to examine the addition on merit, the same is left open/undecided at this stage.
26. In the final result, the Revenue's Appeal is dismissed and Assessee's Cross-Objection is allowed.
Order pronounced by putting up on notice board as per proviso to Rule 34(4) of ITAT Rules, 1963 on 20/05/2026 Sd/- Sd/-
(T.R. SENTHIL KUMAR) (B.M. BIYANI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore
िदनांक/ Dated : 20/05/2026
Patel/Sr. PS
Copies to: (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
UE Sr. Private Secretary
Income Tax Appellate Tribunal
Indore Bench, Indore
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