Pr. CIT v. Arunkumar Ramniklal Mehta

Case snapshot

Sections / provisions: 132; 153A; 69A

Questions before the Court / Tribunal

• Search assessment; HSBC Geneva accounts; absence of incriminating search material: The reported High Court ruling concerns additions to a completed search assessment based on pre-existing foreign-bank information rather than incriminating material found during the search. It also addresses whether the Revenue established the taxpayer's ownership of the foreign accounts for section 69A purposes.

Material facts and background

A. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was right in allowing the appeal filed by the assessee by relying on the decision of the Hon'ble Bombay High Court ignoring the fact that said issue was pending before the Hon'ble Supreme Court of India in various other Appeals? B. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was correct in narrowing down the scope of assessment u/s. 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during the search could be brought to tax? C. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was correct in holding that the scope of section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income like income relating to foreign assets that comes to the notice of the assessing Officer? D. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in holding that no addition u/s. 69A of the IT Act could be made ignoring the crucial facts of the case?

Similarly, the substantial question of law framed in Appeal being

Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was correct in allowing the appeal the addition of Rs. 1,79,000 as confirmed by the Ld. CIT(A) and dismissing the appeal filed by the revenue for relief granted by the Ld. CIT(A) to the extent of Rs. 200,12,56,838 being the addition made u/s. 69A of the I.T. Act 1961 which was based on a credible and specific piece of information received from another sovereign government?

At the outset, the Respondent pointed out that the questions

framed in ITXA No. 118 of 2020 arise in ITXA No. 132 of 2020 and the questions as framed in ITXA No. 132 of 2020 arise in ITXA No. 118 of 2020. Further, reference to the amount of Rs.1,79,000 framed in ITXA No. 132 of 2020 does not arise in the said appeal as explained hereafter. Since common issues are involved in both the Appeals they are being taken up together for hearing.

The Respondent-Assessee was a promoter and director in

various entities forming part of the Rosy Blue Group. His sources of income comprised of salary, house property and other sources. He filed his original Return Of Income for Assessment Year 2006-07 on 31.07.2006 declaring a total income of Rs.18,16,910. The said Return Of Income was processed by an Page 3 of 23 JULY 1, 2026 Darshan Patil

Appellant / assessee submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Revenue / respondent submissions

11. Mr. Jasani, learned counsel for the respondent/assessee has also placed reliance on the decision of the Division Bench of this Court of which one of us (G.S. Kulkarni, J.) was a member in Principal CIT vs. Welspun India Ltd. (2024) 167 taxmann.com 333 (Bom) wherein following the decision of the Supreme Court in Principal CIT vs. Abhisar Buildwell (P) Ltd. (supra) in similar circumstances, the Court dismissed the appeal filed by the Revenue observing that when no incriminating material was found to be an admitted position, no question of law had arisen for consideration of the Court, in view of the aforesaid settled position in law."

Court / Tribunal analysis and reasoning

taxmann.com 72 and CIT v. Gurinder Singh Bawa (2016) 386 ITR 438 (Bom), the Tribunal upheld the Assessee's contention that the additions as made by the AO based on the Base Note were not justified in the assessment made under Section 153A. In this regard, in paragraph 18 of the appellate order, the Tribunal observed as under: “18. In the above legal background, if you examine the facts of the present case, we found that the assessment for the impugned assessment year is unabated as on the date of search, which is because the assessment for the impugned year has been completed u/s 143 ( 1 )of the Act, and the time limit for issue of notice u/s 143(2) was expired much before the date of search i.e. 25/08/2011. It is also an admitted fact that tile addition made by the AO is not supported by any incriminating material found as a result of search. In fact, the AO made additions on the basis of 'Base Note' received by the government of India under exchange of information between French Government and Indian Government under the provisions of DTAA, and said Base Note was received prior to search. The sole reason for conducting search in the case of the assessee is information received...

asset. As in the present case, the Tribunal has found as a matter of fact that the Assessee was not the owner of the bank account, the balance wherein is sought to be assessed in his hands, and therefore, the addition cannot be sustained. In this view of the matter, even question D does not give rise to any substantial question of law was the submission. In fact, the Base Note, which is the only evidence relied upon be the Revenue itself, makes it clear that the bank accounts belonged to White Cedar Investments Ltd. and Ruby Enterprises Inc., was the argument of the Respondent.

“12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/ unabated assessment. As per the second proviso to section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not...

Operative decision and relief

(C) as referred to in ITXA No. 118 of 2020 are dismissed as not raising any substantial question of law, as the issue raised therein has been settled by the Page 22 of 23 JULY 1, 2026 Darshan Patil

judgment of the Hon'ble Apex Court as well as various judgments of this Court. Further, question (D) in ITXA No. 118 of 2020 and the question as raised in ITXA No. 132 of 2020 are also based on findings of facts given by the Tribunal which have not been controverted by the Revenue. Hence, the same do not give rise to any substantial question of law.

Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.

Authorities and precedents appearing in the judgment

• Warehousing Corporation (Nhava Sheva) Ltd. v. CIT (2015) 374
• Ltd. v. CIT
• CIT v. Gurinder Singh Bawa (2016) 386 ITR
• Corporation (Nhava Sheva) Ltd vs CIT (supra)
• Bombay High Court in the case of Murali Agro Products Ltd vs CIT (2014) 49 taxman.com 72
• CIT vs Gurinder Singh Bawa 386 ITR 483(Bom)
• Court in the case of PCIT v. Milan Kavin Parikh (2025) 181
• Principal CIT vs. Abhisar Buildwell Pvt Ltd 454 ITR 212 was
• In the case of PCIT v. Milan Kavin Parikh (supra)
• Supreme Court in Principal CIT vs. Abhisar Buildwell (P) Ltd. (2023) 454 ITR 212 wherein the
• Principal CIT vs. Welspun India Ltd. (2024) 167 taxmann.com
• Principal CIT vs. Abhisar Buildwell (P) Ltd. (supra) in similar

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Search assessment; HSBC Geneva accounts; absence of incriminating search material. The operative result is classified as Operative order controls. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Search assessment; HSBC Geneva accounts; absence of incriminating search material. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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