Piyush Bafna – [2025] 181 taxmann.com 957 (Article)
1. Introduction
The decision rendered by the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) in Veda Real Estate Corporation (P.) Ltd. v. DCIT, dated October 28, 2025 [2025] 180 taxmann.com 331 (Mumbai – Trib.), stands as a significant judicial pronouncement that addresses multiple critical dimensions of contemporary tax jurisprudence. This judgment, emanating from Assessment Year 2012-13 but decided in the context of the post-2022 faceless assessment regime, weaves together several strands of legal principle: the evidentiary value of materials seized during search operations, the procedural imperatives governing reassessment proceedings, the jurisdictional framework established by the Faceless Assessment Scheme under Section 151A of the Income-tax Act, 1961 (the Act), and the mandatory compliance with administrative circulars issued by the Central Board of Direct Taxes (CBDT).
What renders this decision particularly noteworthy is not merely its outcome—the deletion of additions aggregating Rs. 4,20,070 under Sections 69A and 69B of the Act—but rather the comprehensive analytical framework deployed by the Tribunal in scrutinizing the foundational premises of the assessment. The judgment represents a forceful reassertion of fundamental principles: that tax assessment must rest upon credible evidence rather than conjecture, that procedural safeguards are not mere formalities but jurisdictional prerequisites, and that the faceless assessment regime constitutes a mandatory framework that cannot be circumvented at the convenience of the revenue authorities.
This article undertakes a critical examination of the decision from multiple analytical perspectives: substantive evidentiary principles, procedural compliance, jurisdictional imperatives, and the broader implications for assessment practice. The analysis demonstrates that while the Tribunal’s decision is doctrinally sound and procedurally meticulous, it also exposes systemic deficiencies in investigative methodology and assessment practice that merit sustained attention.
2. Factual Matrix And Procedural History
A. The Search Operation and Seized Material
The genesis of the controversy lies in a search and survey operation conducted by the Investigation Wing of the Income Tax Department on October 7, 2021, at the premises of the Seksaria Group of Companies, which encompassed the assessee company, Veda Real Estate Corporation (P.) Ltd. The assessee, incorporated specifically for the acquisition of land parcels in and around Agarsure, formed part of this larger corporate conglomerate.
During the course of the search, the Investigation Wing discovered and seized certain Excel-based management information sheets from the laptop of Mr. Tarun Nandkumar Seksaria (TNS). These documents, according to the revenue authorities, contained notings suggestive of cash investment for the acquisition of land at Agarsure. The significance attributed to these Excel sheets by the Assessing Officer formed the primary evidentiary foundation for the subsequent additions.
Contemporaneously with the seizure of these documents, statements were recorded from TNS on October 9, 2021, and from Mr. Nandkumar Kudilal Seksaria (NKS), the principal person in charge of the Seksaria Group, on October 11, 2021, and subsequently on April 4, 2022. These statements, recorded under Section 132(4) of the Act during and immediately following the search, constituted the second pillar of the revenue’s case.
B. The Assessment and Appellate Proceedings
Drawing primarily upon the seized Excel sheets and the statements recorded from TNS and NKS, the Assessing Officer proceeded to make additions aggregating Rs. 4,20,070 under Sections 69A and 69B of the Act, characterizing these amounts as unexplained cash investment in land. The assessment order was passed on March 28, 2023.
Significantly, both TNS and NKS had formally retracted their statements before the Assessing Officer through written communications dated December 22, 2022, and February 7, 2023, respectively. The retractions were accompanied by detailed explanations asserting that: (i) they were unaware their statements would be used against the assessee company; (ii) the seized Excel sheets were not prepared by any director or employee of the assessee but were rather management information statements prepared by the late Mr. Pratap Daji Gambhir (PDG), who served as the land aggregator; and (iii) the figures in the Excel sheets represented estimates of costs, projections, and potential profits rather than actual cash payments.
The Commissioner of Income Tax (Appeals) [CIT(A)], by order dated April 15, 2025, confirmed the additions made by the Assessing Officer, albeit with certain modifications. The CIT(A)’s order dismissed the retractions as afterthoughts and upheld the evidentiary value of the seized materials and the original statements.
Aggrieved by the CIT(A)’s order, the assessee preferred an appeal before the ITAT Mumbai, raising both substantive grounds challenging the additions on merits and procedural grounds attacking the validity of the reassessment proceedings themselves.
3. Legal Issues Framed
The appeal before the Tribunal encompassed four distinct categories of legal issues, each raising fundamental questions of tax jurisprudence:
(1) Whether additions under Sections 69A and 69B could be sustained on the basis of Excel sheets found during search when: (a) the Excel sheets were admittedly not prepared by any director or employee of the assessee company but by an external land aggregator; (b) the statements of TNS and NKS, which purportedly explained the Excel entries, were contradictory to each other; (c) both statements were subsequently retracted with cogent reasoning; and (d) no independent corroborative evidence was adduced by the revenue to substantiate the alleged cash transactions.
(2) Whether the reassessment proceedings initiated under Section 148 were vitiated in law when the notice was issued by the Jurisdictional Assessing Officer (JAO) rather than the Faceless Assessing Officer (FAO) in contravention of the Faceless Assessment Scheme notified under Section 151A of the Act vide Notification S.O. 1466(E) dated March 29, 2022.
(3) Whether the assessment order was rendered invalid for non-compliance with CBDT Circular No. 19 of 2019 dated August 14, 2019, when the Document Identification Number (DIN) was generated and communicated only on March 30, 2023—two days after the assessment order dated March 28, 2023—thereby resulting in an assessment order that, at the time of its issuance, bore no valid DIN.
(4) Whether the notice under Section 148 dated January 27, 2023, was fundamentally defective when it proceeded on the premise that a search under Section 132 had been conducted on the assessee, whereas admittedly no search was ever conducted on the assessee itself (the search having been conducted on the Seksaria Group premises generally).
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