MANOJ KUMAR DUGAR,ERODE V. ITO, WARD-1(1), ERODE

ITA 2170/CHNY/2025

AI Insights

The case revolves around an appeal by Shri Manoj Kumar Dugar against the order of the Learned Commissioner of Income Tax (Appeals) which upheld the addition of Rs. 25,00,000 as unexplained cash credit in the assessee's income for the Assessment Year 2013-14. The Income Tax Department had reopened the assessment based on information that the assessee had availed bogus unsecured loans. The Tribunal examined whether the reassessment was validly initiated beyond the four-year period and whether there was any failure on the part of the assessee to disclose material facts. The Tribunal concluded that the reassessment was not valid as the necessary conditions for reopening the assessment beyond four years were not met.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784637 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-08-2025
• Other Referred Cases: CIT v. Kelvinator of India Ltd. [320 ITR 561 (SC)], Foramer France v. CIT [264 ITR 566 (SC)], jurisdictional High Court decisions reported in 430 ITR 515 (Mad), 455 ITR 292 (Mad), 476 ITR 193 (Mad)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRYATI SHARMA
• Assessee Lawyers: S.SRIDHAR ERODE
• Keywords: Reassessment proceedings; Unexplained cash credit; Competent authority; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 68

Judgement Text

"आयकर अपीलȣय अͬधकरण,‘ए’ Ûयायपीठ,चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी मनु क ुमार ͬगǐर,ÛयाǓयक सदèय एवं Įी जगदȣश, लेखा सदèय क े सम¢ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 2170/CHNY/2025 िनधाᭅरण वषᭅ/Assessment Year:2013-14 Shri Manoj Kumar Dugar, SF 640, Thiganrai, Chikkahalli B.O, Madahalli, Erode – 638461. Vs. The Income Tax Officer, Ward 1(1), Erode PAN: ADWPD 2856N (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri S. Sridhar (Erode), Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. Pryati Sharma, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 30.10.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 10.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), (in short ‘the CIT(A), NFAC / Delhi dated 22.07.2025 for the Assessment Year (in short ‘AY’) 2013-14. 2. Brief facts of this case are as under the assessee, proprietor of M/s CM Mills, filed the return of income for the AY 2013-14 on 29.09.2013 admitting total income of Rs.2,18,950/-. The revenue is in possession of information that the assessee has availed bogus unsecured loans to the tune of Printed from counselvise.com -2 - ITA. No:2170/Chny/2025 Rs.25,000,00/- and accordingly it was seen in the return of income that the assessee had shown unsecured loan to the tune of Rs.2,15,01,903/- in which the loan of Rs.25,000,00/- received from Sri Mukesh Banka forms part of it. The tangible information and due verification of the return of income filed by the assessee for the AY 2013-14 led to the Assessing Officer to form opinion that the amount of Rs.25,000,00/- has escaped assessment. Therefore, on the basis of above information, case of the Assessee was reopened for assessment and notice under section 148 of the Act was issued on 27.03.2019 after recording reasons and obtaining the necessary approval of the competent authority. The assessee filed return of income declaring total income of Rs.2,18,950/- on 12.12.2019 in response to the notice under section 148 of the Act. The AO completed the assessment proceeding under section 143(3) read with section 147 of the Act by making addition of Rs.25,000,000/- as unexplained cash credit under section 68 of the Income Tax Act 1961. The ld. CIT(A) dismissed the appeal of the assessee on legal issue as well as on merits of addition. 3. The assessee has raised, inter alia, the following grounds:  That the learned CIT(A) has erred in upholding the validity of reopening u/s 147 of the Act.  That the CIT(A) failed to appreciate that the reassessment proceedings initiated beyond four years from the end of the relevant assessment year were invalid in law, there being no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.  That the addition of Rs.25,00,000/- as unexplained cash credits u/s 68 is unjustified, arbitrary and contrary to the facts and law. Printed from counselvise.com -3 - ITA. No:2170/Chny/2025 4. Before us, the ld. counsel for the assessee contended that there was no failure on his part to disclose fully and truly all material facts necessary for assessment. The loan was duly reflected in the books of accounts, confirmations were filed, and transactions were routed through banking channels. The reopening was initiated merely on borrowed satisfaction from another case (Banka Group), without any direct nexus to the assessee. The reasons recorded do not allege failure on the part of the assessee, which is a sine qua non for reopening beyond four years. Reliance was placed on several judicial precedents including CIT v. Kelvinator of India Ltd. [320 ITR 561 (SC)], Foramer France v. CIT [264 ITR 566 (SC)] and jurisdictional High Court decisions reported in 430 ITR 515 (Mad), 455 ITR 292 (Mad) and 476 ITR 193 Mad) holding that reassessment beyond four years is bad in law when there is no failure by the assessee to disclose material facts. 5. We have carefully considered the rival submissions and perused the records. It is undisputed that the original assessment was completed u/s 143(3) on 22.03.2016. The notice u/s 148 was issued on 27.03.2019, i.e., beyond four years. The recorded reasons do not mention any failure by the assessee to disclose fully and truly all material facts necessary for assessment. In such circumstances, the proviso to section 147 squarely applies. The Hon’ble Supreme Court in CIT v. Kelvinator of India Ltd. (supra) has held that reopening beyond four years is not permissible unless there is failure on the part of the assessee to disclose fully and truly all material facts. The so-called information derived from the search in Banka Group is subsequent information and cannot override the statutory condition precedent. The assessee had disclosed the loan in the balance sheet, and the Assessing Officer had the opportunity to examine the same in the original assessment. Therefore, it cannot be said that there was any failure on the part of the assessee. Accordingly, the reassessment proceedings initiated u/s 147 are held to be Printed from counselvise.com -4 - ITA. No:2170/Chny/2025 invalid and void ab initio. Since the reopening itself is held invalid, the consequential addition of Rs.25,00,000/- under section 68 cannot survive. 6. In view of the above discussion, the reassessment proceedings initiated u/s 147 are quashed. Accordingly, the appeal filed by the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in open Court on the 10th day of November 2025, in Chennai. Sd/- (जगदीश) (JAGADISH) लेखा सदèय/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) ÛयाǓयक सदèय/JUDICIAL MEMBER चेÛनई/Chennai, Ǒदनांक/Dated: 10th November, 2025. RSR, Sr.PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकर आयुƅ/CIT, Chennai /Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF Printed from counselvise.com "