DY. COMMISSIONER OF INCOME-TAX, JAIPUR V. RAKESH KUMAR JAIN, JAIPUR

ITA 860/JPR/2025

AI Insights

The case involves an appeal by the Revenue against the order of the ld. CIT (A), which had deleted the additions made by the Assessing Officer (AO) regarding undisclosed cash loans and interest income. The AO had initially made these additions based on information from a search and seizure operation at the premises of the Ramesh Manihar Group, which implicated the assessee, Mr. Rakesh Kumar Jain, in unaccounted financial transactions. The CIT (A)'s decision to delete these additions was influenced by a judgment from the Hon'ble Rajasthan High Court, which the Revenue challenged in this appeal. The Tribunal dismissed the Revenue's appeal, citing precedents and the specific legal provisions applicable to cases involving search and seizure.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793764 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 27-05-2025
• Other Referred Cases: Shyam Sundar Khandelwal vs. ACIT, Rajendra Kumar Mundra vs. ITA
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM
• Assessee Lawyers: MISS TWINKLE JAIN
• Keywords: Search and seizure; Competent authority; Bogus loan
• Section: 148; 142(1); 154; 132; 153A

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh xxu xks;y] ys[kk lnL;] ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 860/JPR/2025 fu/kZkj.k o\"kZ@Assessment Years : 2011-12 Dy. Commissioner of Income Tax, Circle(International Taxation), Jaipur. cuke Vs. Mr. Rakesh Kumar Jain 3-NA-30, Jawahar Nagar, Jaipur-302024. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAIPJ2543D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Miss Twinkle Jain, Adv. jktLo dh vksjls@Revenue by : Mrs. Alka Gautam, CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 12/08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 26/09/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the Revenue against the order of ld. CIT (A), Delhi-42, dated 29.03.2025 passed under section 154 r.w.s. 250 of the I.T. Act, 1961, for the assessment year 2011-12. 2. The assessee has raised the following grounds of appeal :- “1. 1 Whether on the facts and circumstances of the case and in law, the ld. CIT (A) is justified in deleting the addition made by the AO in the case of the assessee following the judgment dated 19.03.2024 delivered in the case of DBC WP No. 18363/2019 Printed from counselvise.com 2 ITA No. 860/JPR/2025 Mr. Rakesh Kumar Jain, Jaipur. titled as Shyam Sundar Khandelwal vs. ACIT and other connected matters by the Hon’ble High Court of Rajasthan, Jaipur bench, Jaipur ? The department has filed SLP in Hon’ble Supreme Court against the decision of the Hon’ble High Court in the case of the assessee for the AY 2015-16 & 2016-17. 1.2 Whether on the facts and circumstances of the case and in law, the ld. CIT (A) is justified in not deciding the matter on merit and further erred in not issuing any suitable direction to tax the escaped income ? 1.3 Whether on the facts and circumstances of the case and in law, the ld. CIT (A) is justified in deciding the matter on technical ground only ? 1.4 Whether on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals has erred in deleting the addition of Rs. 18,75,00,000/- made to the total income of the assessee and did not appreciate the findings of the AO that the assessee failed to furnish evidences to prove the source of his financial transactions ? 1.5 Whether on the facts and circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals has erred in deleting the addition of Rs. 73,70,000/- made to the total income of the assessee and did not appreciate the findings of the AO that the assessee failed to furnish evidences to prove the source of his financial transactions ? 2. The Appellant crave, leave or reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.” 3. The brief facts of the case are that the assessee is an Individual. In this case, on the basis of an information was received from the DCIT, Central Circle-3, Jaipur dated 29.03.2018, it was noticed by the AO that a search and seizure action under section 132 of the Income Tax Act, 1961 was conducted at the premises of Shri Ramesh Manihar Group and main premises at 303, Ratna Sagar, MSB Ka Rasta, Johari Bazar, Jaipur on 07.01.2016.The information revealed that the group Printed from counselvise.com 3 ITA No. 860/JPR/2025 Mr. Rakesh Kumar Jain, Jaipur. was indulged in cash loan finance on large scale. During the course of search, voluminous data comprising of excel sheets in pen-drives seized from the main office of the Ramesh Manihar Group at 303, Ratna Sagar, MSB Ka Rasta, Johari Bazar, Jaipur which consisted details of cash loans financed by the Ramesh Manihar Group. The information further revealed that the persons of the Ramesh Manihar Group, being Shri Ramesh Chand Maheshwari and Shri Manmohan Krishan Bagla were engaged as finance brokers for arranging cash loans between various borrowers and lenders which were not reflected in the books of accounts and that the brokerage received for such unrecorded cash transactions was also not offered for taxation by the group. As per the information received, names of lender were identified from the data seized, and it was established that the assessee was associated with the above group and had given unaccounted loans in cash to the tune of Rs. 18,75,00,000/- to various persons/concerns in F.Y. 2010-11 relevant to A.Y. 2011-12 and received interest income on these loans. Accordingly, the AO recorded reasons for escaped assessment and after taking approval of the competent authority, issued notice under section 148 of the IT Act, 1961 on 31.03.2018. The notice was duly served on the assessee on the same date. In compliance, the assessee filed his return of income on 12.04.2018. Notices under section 143(2) and 142(1) of the IT Act, 1961 along with questionnaire were issued Printed from counselvise.com 4 ITA No. 860/JPR/2025 Mr. Rakesh Kumar Jain, Jaipur. on 29.09.2018. During the course of assessment proceedings, the assessee had filed objection against the issue of notice under section 148 vide letters dated 08.05.2018 and 11.05.2018, which was duly disposed off by the AO. Thereafter, the AO after considering the reply of the assessee, passed the order under section 147/143(3) of the IT Act, 1961 vide order dated 26.12.2018 assessing the total income of Rs. 19,48,73,500/- by making additions on account of undisclosed cash loans of Rs. 18,75,00,000/- and interest earned of Rs. 73,70,000/- on these loans. Aggrieved by the assessment order, the assessee preferred appeal before the ld. CIT (A), who considering the judgment of Hon’ble Rajasthan High Court in DB Civil Writ Petition No. 18363/2019 dated 19.03.2024 allowed the appeal of the assessee. Now, aggrieved by the order of the ld. CIT (A), the assessee has come in appeal before the Tribunal on the grounds reproduced herein above. 4. We have heard the rival contentions and perused the material on record. At the very outset, we find that the case of the assessee is squarely covered by the decision of Coordinate Bench of the Tribunal, Jaipur in the case of Rajendra Kumar Mundra for the assessment year 2013-14 in ITA No. 960/JP/2025 dated 22.08.2025 wherein on the similar facts, the Coordinate Bench following the judgment of the Hon’ble Jurisdictional Rajasthan High Court in the case of Shyam Printed from counselvise.com 5 ITA No. 860/JPR/2025 Mr. Rakesh Kumar Jain, Jaipur. Sunder Khandelwal vs. Assistant Commissioner of Income Tax (2024) 161 taxmann.com 255 (Rajasthan), DB Civil Writ Petition No. 18363/2019 dismissed the appeal of the revenue. The observations and findings recorded by the Hon’ble Jurisdictional High Court in Shyam Sunder Khandelwal case (supra), need to be reproduced. Relevant portion of the judgment reads as under :- \"23. The reasons supplied in case in hand for initiation of proceedings under Section 147/148 are based on the incriminating material and documents including Pen Drives seized during the search carried out of the Manihar Group and the statements recorded during proceedings. From the information received the AO noticed that the loan advanced and interest earned thereon were unaccounted. In other words the basis for initiation of Section 148 proceedings is the material seized relating to or belonging to the petitioner, during the search conducted of Manihar Group. 24. In the case where search or requisition is made, the AO under Section 153A mandatorily is required to issue notices to the assessee for filing of income tax return for the relevant preceding years. The AO assumes jurisdiction to assess/reassess 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under Section 153C. The two pre-requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of Section 153A. 26. Special procedure is prescribed under Section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of Section 153A to 1530 have prevalence over the regular provisions for assessment or reassessment under Section 143 & 147/148. 27. Section 153A and 153C starts with non-obstante clause. The procedure for assessment reassessment in Section 153A, 153C in cases of search or requisition has an Printed from counselvise.com 6 ITA No. 860/JPR/2025 Mr. Rakesh Kumar Jain, Jaipur. overriding effect to the regular provisions for assessment or reassessment under Sections 139, 147, 148, 149, 151 & 153. 28. The language of explanation 2 to new Section 148 is akin to Section 153A and Section 153C. Corollary being that after seizing of operational period of Section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted Section 148. 29. The Department has not set up a case that for initiating proceedings under Section 148 it had material other than the material seized during the search of Manihar Group. The contention was that though the material with regard to unaccounted loan advanced by the petitioner was received, the earning of interest on unaccounted loan was derivation of the AO from the material received. The submission is that the derived conclusion cannot be acted upon under Section 153C. The submission lacks merit and shall defeat the concept of single assessment order for each of relevant preceding years for assessing 'total income' in case of incriminating material found during search or requisition. 30. The argument that by enactment of Section 153A to 153D has not eclipsed Section 148 does not enhance the case of respondent to initiate the proceedings under Section 148. On fulfillment of two conditions for invoking Section 153C the proceeding in accordance with Section 153A are to be initiated. The operating field of and Section 1534 to 153D and Section 148 are different Applicability of Section 153C in cases where the seized material related to or belonged to person other than on whom search is conducted or requisition made does not render Section 148 otiose. Section 148 shall continue to apply to the regular proceedings and also in cases where no incriminating material is seized during the search or requisition. 31. The other aspect of the matter is that under Section 153A and 153C, the total income' is to be assessed. The total income includes returned income (if any), undisclosed income unearthed during the search or requisitioning and information possessed from the other sources. For Illustration: An assessee had returned income of Rs.100, undisclosed Income of Rs.200 is unearthed during search and there is information from annual information statement of nondisclosure of income of Rs. 150/-, The AO under Section 153A and 1530 shall pass order dealing with income of Rs. 100+Rs.200+Rs.150, the total income being Rs.450/-. In cases where there is no unearthing of undisclosed income of Rs.200/-, the department can resort to proceeding under Section 147/148. 32. The argument that Section 153C can be invoked in case there is incriminating material for all the relevant preceding years and otherwise Section 148 is to be resorted to, is misplaced. On satisfaction of the twin condition for proceedings under Section 153C, the AO has to proceed in accordance with Section 153A. Notice is to be issued for filing of the retums for relevant preceding years and thereupon proceed to assessee or reassesses the 'total income'. It is not obligatory on the AO to make assessment for all the years, the earlier orders passed may be accepted. But once there is incriminating material Printed from counselvise.com 7 ITA No. 860/JPR/2025 Mr. Rakesh Kumar Jain, Jaipur. seized or requisitioned belonging or relatable to the person other than on whom search was conducted, Section 153C is to be resorted to. 40. In view of above discussion the notices issued under Section 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed against the petitioners in accordance with law.\" In the totality of facts and circumstances narrated herein above, and respectfully following the judicial precedents and the decision of the coordinate bench in the case, supra, we find no infirmity in the order of the ld. CIT (A). The same is upheld. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 26/09/2025. Sd/- Sd/- ¼ xxu xks;y ½ ¼MkWa-,l-lhrky{eh½ (GAGAM GOYAL) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 26/09/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- DCIT, Circle (International Taxation), Jaipur. 2. izR;FkhZ@ The Respondent- Mr. Rakesh Kumar Jain, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File ITA No. 860/JPR/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "