RAGHAV KUMAR DHOOT,JAIPUR V. DCIT CENTRAL CIRCLE 1, JAIPUR

ITA 491/JPR/2025

AI Insights

The case revolves around the appeal by Sh. Raghav Kumar Dhoot against the assessment order passed by the DCIT, Central Circle-1, Jaipur, which was upheld by the CIT(A). The primary contention was the improper selection of the assessee's case for scrutiny under the guise of a survey, which did not actually occur. The assessee challenged the validity of the assessment order, arguing that it was based on a flawed application of the law and incorrect facts. The tribunal examined the procedural adherence to CBDT guidelines and the substantive merits of the additions made under section 68 of the Income Tax Act, ultimately finding in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714197 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: UCO Bank vs. CIT, CIT vs. Best Plastics Pt. Ltd., CIT vs. Smt. Nayana P. Dedhia, Agrawal Farm Equipments vs Income Tax Officer, Income-tax Officer vs. Vikram Sujitkumar Bhatia, Sheraton Apparels vs. ACIT, CIT vs. P. Mohanakala, Yadu Hari Dalmia vs. Commissioner Of Income-Tax, Delhi, CIT vs. Taj Borewells, Baladin Ram vs. CIT, CIT vs. Bhaichand H. Gandhi, CIT vs. Durga Prasad More, CIT vs. M. Ganpati Mudaliar, CIT vs. Sh. ParvinderVir Hans, CIT vs. Laxmandass Khandelwal, CIT vs. KrishnenduChoudhury, CIT vs. Jacob Export House, CIT vs. Mariamma Joseph
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH OJHA
• Assessee Lawyers: C.M. AGARWAL
• Keywords: Set aside; Business income; Opportunity of being heard; Transfer pricing; Retrospective amendment; Question of law; Unexplained cash credit; Unexplained expenditure; Unexplained investment; Salary income; Income from undisclosed sources; Peak credit; Period of limitation; Retraction; Principle of natural justice; Search and seizure; Loose papers; Competent authority; Initiation of penalty proceedings; Deemed to accrue or arise in india; Time period of passing order; Bogus loan; Procedural lapse; Bogus
• Section: 148; 143(3); 142(1); 271(1)(c); 132; 153A; 68; 131; 69; 69C; 234B; 133A; 40(a)(ia)

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 491/JPR/2025 fu/kZkj.k o\"kZ@Assessment Years : 2018-19 Sh. Raghav Kumar Dhoot B-9, Bais Godown Industrial Estate, Jaipur. cuke Vs. The DCIT, Central Circle-1, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGXPD1233F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri C.M. Agarwal, C.A. jktLo dh vksj ls@ Revenue by : Shri Rajesh Ojha, CIT- DR a lquokbZ dh rkjh[k@ Date of Hearing : 10/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 06/08/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee challenges the order of the Commissioner of Income Tax, Appeals-4, Jaipur [ for short CIT(A) ] dated 25.03.2025. The dispute relates to the assessment year 2018-19. Ld. CIT(A) passed that the order because the assessee challenged the order of assessment of income upon him passed u/s 143(3) of the Income Tax Act, 1961 (for short “Act”) Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 2 dated 18.04.2021 passed by DCIT, Central Circle-1, Jaipur [ for short AO] before him. 2. In this appeal, the assessee has raised the following grounds: - “1.On the facts and circumstances of the case and in law, Ld CIT(A) erred in upholding the validity of absolutely illegal assessment order dated 18.04.2021 passed by the Ld DCIT Central Circle-1 Jaipur u/s 143(3) of the Income Tax Act and in confirming the illegal addition of Rs. 7,45,60,400/- made by the Ld AO u/s 68 r.w.s. 115BBE of the Income Tax Act. 2. On the facts and circumstances of the case and in law, Ld CIT(A) erred in not declaring the assessment order u/s 143(3) of the Income Tax Act passed by the Ld Assessing Officer as null and void ab initio having been taken up for compulsory scrutiny u/s 143(3) allegedly for the reason of being a survey case and in complete violation of the extant Instructions of the CBDT issued for taking up the cases in scrutiny/compulsory scrutiny. 2.1 0n the facts and circumstances of the case and in law, Ld CIT(A) erred in not quashing the assessment order despite recording a specific finding of fact that no survey was conducted in the case of the assessee. 2.2 On the facts and circumstances of the case, Ld CIT(A) has grossly erred in law in devising a non-existent hypothetical analogy between the case of the person surveyed and material relating to other person found during survey with the statutory provisions of Section 153A and 153C of the Income Tax Act and thereby upholding compulsory scrutiny done by the Ld Assessing Officer in contravention of the CBDT Instructions. 2.3 On the facts and circumstances of the case and in law, Ld CIT(A) erred in not considering that the guidelines for selection of cases for compulsory scrutiny unambiguously provide for compulsory scrutiny of cases covered u/s 153A as well as 153C of the Income Tax Act but no compulsory scrutiny guidelines were issued for taking up cases where any material incriminating or otherwise was found in Survey carried out in the case of third person. 2.4 On the facts and circumstances of the case and in law, Ld CIT(A) erred in ignoring that the CBDT Instruction provides the case to be taken up for scrutiny with the prior approval of Pr CIT where information has been received by the Assessing Officer. Lacking approval from the Pr CIT, the action of the Ld Assessing Officer of suo moto taking up non- Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 3 survey case for compulsory scrutiny ought not to have been sustained. 2.5 On the facts and circumstances of the case Ld CIT(A) erred in law in not considering the judicial precedents cited before him which clearly and unambiguously laid down that assessment made u/s143(3) of the Income Tax Act in contravention of the Instructions of the CBDT issued for taking up cases under scrutiny, is a nullity. 2.6 On the facts and circumstances of the case Ld CIT(A) erred in law in holding that defect in the Notice u/s 143(2) of the Income Tax Act stands covered and remedied by Section 292BB of the Income Tax Act completely ignoring that the fact of selecting the case for scrutiny in the guise of 'Survey case covered under compulsory scrutiny' was made known to the appellant for the first time in the assessment order only and therefore, provisions of Section 292BB have no application at all. 3. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the addition of Rs. 7,45,60,400/- made by the Ld Assessing Officer under the provisions of section 68 r.w.s. 115 BBE of the Act when neither any Books of accounts were maintained nor the amounts were found recorded in the Books of accounts. 3.1 On the facts and circumstances of the case and in law Ld CIT(A) erred in confirming the addition of Rs 7,45,60,400/ made by the Ld Assessing Officer completely ignoring that the Ld Assessing officer himself recorded a finding of fact that the entries found during the course of survey are in respect of cash loan taken and repaid by the assessee. 3.2 On the facts and circumstances of the case and in law the Ld CIT(A) erred in not considering that deeming provisions of Section 68 or Section 69 or 69A, 69B or 69C cannot be applied to the receipt and payment of cash loans when the said cash loans are not referrable to either any entries in the Books of accounts or to any unaccounted expenditure or to any unexplained investment made by the appellant. 3.3 On the facts and circumstances of the case, the Ld CIT(A) erred in law in upholding the addition u/s 69A of the Income Tax Act when neither the AO invoked the provisions of Section 69A of the Income Tax Act nor the appellant was found in possession of any unexplained monies. 4. On the facts and circumstances of the case, the Ld CIT(A) erred in law in upholding the charging of Interest u/s 234B and initiation of penalty u/s 271AAC of the Income Tax Act by the Ld Assessing Officer. The appellant craves leave to add, amend or withdraw any of the grounds of the appeal during the course appellate proceedings.” Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 4 3. The brief facts of the case are that the assessee e-filed his return of income declaring total income at Rs. 11,35,640/- on 29/08/2018. The case was of the assessee was selected for scrutiny under CASS being survey case as noted by the ITO, Ward 4(4), Jaipur and notice under section 143(2) was issued on 26/09/2019 by the ITO, Ward 4(4). Jaipur. Subsequently, the case was centralized with ACIT, Central Circle-1, Jaipur based on an order u/s 127 of the Act vide order dated 07.01.2021 of Pr. CIT-1, Jaipur. Statutory notice as required under section 142(1) of the Act was issued on 07/02/2021 along with questionnaire, which was duly served upon the assessee through e-filing portal. In response thereto, the assessee filed its reply, details and submissions from time to time which were examined on test check basis and placed on record by ld. AO. The assessee is a director in the company M/s Dhoot Sangmermer Pvt. Ltd and derives income from salary, house property and income from other sources. 3.1 In the case of M/s Dhoot Sangmermer Pvt. Ltd, a survey under section 133A of the Act was carried out on 05/06/2018 and during the course of survey, certain papers were found at the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 5 business premises of the company which was inventorised by the survey party as Annexure A-(Exhibit No.02). Shri Raghav Dhoot, director of the company, was confronted with the papers so found and impounded during the course of survey and he was required to furnish his explanation regarding the same. He explained that the papers in Exhibit-2 relates to cash loans taken by him, in which the amount written in coded form where trailing last five zeros were suppressed and in some cases, two zeros were suppressed. This modus-operandi of cash transactions in taking loans and repayment thereof has been admitted by Shri Raghav Dhoot in his statement recorded during survey on 05.06.2018. 3.2 During the course of assessment proceedings, the impounded material was gone through by the ld. AO and he noticed that some of the transactions recorded in Exhibit-2 pertains to the period relevant to AY 2018-19, i.e. the year under consideration. Since these papers were impounded from the premises of the company, M/s Dhoot Sangamarmar Pvt. Ltd, explanation regarding these transactions were sought from the company by issuance of a show-cause notice dated 28/03/2021. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 6 3.3 In reply to the said show cause notice, the assessee company, vide letter dated 05.04.2021, confirmed that the details mentioned in Annexure A-Exhibit-2 pertain to Shri Raghav Kumar Dhoot and these details have no context with M/s Dhoot Sangmarmer Pvt. Ltd. 3.4 The assessee, Shri Raghav Dhoot, attended on 09.04.2021 and explained that the cash book prepared by him, which has been enclosed with his letter filed on 09/04/2021, is for the period 01/04/2017 to 05/06/2018, being the date of survey. He further stated that the transactions recorded in papers found and inventorised as per Exhibit-2 of Annexure-A during survey in the case of M/s Dhoot Sangmermer Pvt. Ltd relate to cash loans taken by him and these have been owned up by him as per letter dated 05/04/2021 filed in the case of the company. It is further stated that a cash book containing all the transactions has been prepared by him, as per which the peak of that balance comes negative amount of Rs. 1,52,98,000/- (as on 04/06/2018). 3.5 During the course of assessment proceedings, the assessee was asked to submit the complete details of creditors, i.e. name, address, PAN, return of income and bank statements to establish Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 7 the identity and creditworthiness of the creditors and genuineness of transaction. It was also show-cause as to if these details are not submitted by the assessee, then why the same should not be treated as unexplained credits and added to his income accordingly. 3.6 In response neither the assessee has filed reply on this issue, nor the complete details of creditors have been furnished as required. As the assessment being time baring case, it was not feasible to give further time to the assessee to make compliance. In view of the categorical admission made by the assessee that the exhibit-2 relates to cash loans taken by him, in which amounts are in coded form by suppressing two zeros, it is clear that the cash loans have been taken by the assessee and repayment has been made by him and the amounts mentioned therein are in coded form as admitted by him. The assessee as well as other directors of the company have also admitted that the company M/s Dhoot Sangmarmar Pvt. Ltd has nothing to do with the papers in Exhibit A-2 otherwise than admitted by them in their letter dated 05/04/2021. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 8 3.7 The assessee has further submitted that from the details given in Exhibit-2 of Annexure-A, it is evident that these are money borrowed by him and in such cases, nobody is willing to give confirmations and other details. This plea of the assessee is not acceptable as the primary onus to explain the credits is on the assessee by way of furnishing complete details of creditors to establish the identity and creditworthiness of the creditors and genuineness of transactions. Now with regard to the peak-working made by the assessee and the copy of cash book enclosed with the reply dated 09/04/2021, it is to be stated that the assessee does not have any satisfactory explanation for every credit or debit entry as per the cash book prepared, as admitted by him, the credit following a debit entry is treated as referable to the latter to the extent possible and \"peak\" of the credits needs to be treated as unexplained. In the instant case, the peak credit works out at Rs.7,45,60,400/- as on 30/11/2017, which is added to assessee's total income u/s 68 of the Act 4. Aggrieved, from the said order of assessment, assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee by giving the following findings on the issue:- Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 9 “4.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order, remand report and the rejoinder submitted by the appellant. The contentions/submissions of the appellant are being discussed and decided as under:- In these grounds of appeal the appellant has challenged that a valid notice under section 143(2) was not issued to the appellant. In this case the assessment has been done by the Id. DCIT, Central Circle-1, Jaipur. The appellant has contended that no notice under section 143(2) of the Act was issued by him. The appellant has contended that with respect to the notice under section 143(2) of the Act that the ITO, Ward-4(4), Jaipur on 26.09.2019 was not having the jurisdiction. Ground No. 1 of Appeal:- In the submissions made on the ground number 1 of the appeal, the appellant has contended that the only notice issued u/s 143(2) in this case was dated 26-09-2019 by the Income Tax Officer, ward 4(4) Jaipur. He was very well aware of the fact that he has no jurisdiction over the case of the assessee, therefore, he himself transferred the case of the assessee for the A.Y. 2018-19. The jurisdictional AO - DCIT, Central Circle-1, Jaipur completed the assessment without issuing and serving notice us 143(2) which is a mandatory requirement for completing the assessment u/s 143(3) of Act. The Honorable Supreme Court in the case of ACIT V. Hotel Blue Moon, reported in 321 ITR 362 (SC) has held that omission on the part of the authority to issue notice u/s 143(2) cannot be a procedural irregularity and the same is not curable and therefore, the requirement of notice u/s 143 (2) cannot be dispensed with. The appellant has further contended that in the following decisions the Hon'ble judicial authorities have held that the notice issued u/s 143 (2) by AO having no jurisdiction over the case of the assessee would not be valid and would not get any jurisdiction over the case of the assessee. They have held that the entire assessment proceedings are vitiated because of non service of jurisdictional notice u/s 143(2) within the period of limitation by the AO having jurisdiction over the case of the assessee. (i) Sun World Infrastructure (P) Ltd. WP (C) 1741/2015 & CM No. 3112/2015 Delhi High Court, DOJ- 05-03-2015, (ii) ITO v. M/s NVS Builders (P) Ltd., ITA No. 3729/Del./2012, ITAT Delhi reported in (2018) 169 ITD 679 (Delhi-Trib), (iii) Sh. ParvinderVir Hans V. ACIT, CO No. 04/ASR/2011, A.Y. 2007-08, (Arising out of ITA No. 88 (ASR)/2011 ITAT, Amritsar, DOJ-01-02-2016, (iv) KrishnenduChoudhury V. ITO, Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 10 (2017) 55 ITR (T) 52 (Kolkata-Trib), DOJ 18-11-2016., (v) CIT v/s Laxmandass Khandelwal [2019] 108 taxmann.com 183 (SC) In this regard reference is made to section 292BB of the Act:- Notice deemed to be valid in certain circumstances. 292BB. Where an assessee has appeared in any proceeding or co- operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b)not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. As per section 292BB of the Act where the notice was not served at all even those cases are statutorily deemed to be compliant with law that the required notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act. It is important that in the present case the proceedings were transferred under section 127 of the Act and on the date on which the notice under section 143(2) of the Act was issued by the ITO Ward 4(4) Jaipur on the date he was having the jurisdiction. It is held by the Hon'ble P&H High Court in Aravali Engineers (P.) Ltd. v. Commissioner of Income-tax [2011] 11 taxmann.com 291 (Punjab & Haryana)/[2011] 200 Taxman 81 (Punjab & Haryana) (Mag.)/[2011] 335 ITR 508 (Punjab & Haryana)/[2011] 237 CTR 312 (Punjab & Haryana) [09-12-2010] as under:- Section 292BB, read with section 143, of the Income-tax Act, 1961 Notice, Deemed to Be Valid in Certain Circumstances - Assessment year 1997-98 In proceedings before Tribunal, assessee raised a new plea that since notice under section 143(2) was not served within stipulated time, assessment was barred by limitation - Tribunal refused to entertain plea raised by assessee Whether in view of provisions of section 292BB, question of validity of notice could not be allowed to be Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 11 raised for first time in appeal Held, yes Whether, therefore, impugned order of Tribunal refusing to entertain assessee's plea, was to be upheld - Held, yes “7. As regards question (i), we do not find any reason to take a view different from the view taken by the Tribunal. No doubt that an appellate authority can allow a question to be raised for the first time even if such a question was not raised at a lower forum but the discretion to do so has to be exercised in the interest of justice in the facts and circumstances and not mechanically. Normally a question of fact may not be allowed to be raised for the first time as it may prejudice the other side. If such question is raised at the earliest opportunity, the other side can lead evidence which it may not be able to do if such a question is raised for the first time before the appellate authority. Of course, there can be no total bar on such question being allowed, if interest of justice so requires. In National Thermal Power Ltd.'s case (supra) it has not been laid down that in every case a question of fact can be mechanically allowed to be raised for the first time. The Madhya Pradesh High Court in CIT v. Premium Capital Market & Investment Ltd. [2005] 275 ITR 260/[2006] 151 Taxman 194 held that question of validity of notice may not be allowed to be raised for the first time in appeal. Subsequent legislative amendment adding section 292BB supports this principle. The question has, thus, to be answered against the assessee.\" (emphasis supplied) It is held by the Hon'ble ITAT in the case of Income-tax Officer v. Varia Pratik Engineering [2009] 120 TTJ 1 (Ahmedabad - ITAT) (30-09-2008] as under.- \"41. The assessee has fairly conceded before the CIT(A) as also before us that he has fully participated in the enquiry and the proceedings related to the assessment for the year under appeal. No material has been placed before us to show that any objection was raised before the AO in terms of the proviso to s. 292BB. In this view of the matter, it shall now be deemed in terms of s. 292BB that the notice which was required to be served as per the time provision of s. 143 (2) has been duly served upon the assessee in time in accordance with the relevant provisions of the Act and therefore the assessee stands statutorily precluded from taking any objection at this stage that the notice was not served upon him, or was not served upon him in time, or was served upon him in an improper manner. All his submissions in this behalf are therefore rejected.\" (emphasis supplied) The appellant has fully participated in the enquiry and the proceedings related to the assessment for the year under appeal. No material has been placed before me to show that objection was raised before the AO in terms of the proviso to s. 292BB. In this view of the matter, it shall now Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 12 be deemed in terms of section 292BB that the notice which was required to be served as per the time provision of section 143 (2) has been duly served upon the appellant in time in accordance with the relevant provisions of the Act and therefore the appellant stands statutorily precluded from taking any objection at this stage that the notice was not served upon him, or was not served upon him in time, or was served upon him in an improper manner. Alternatively, as per the law as specially mentioned in the Act, when the proceedings under the Act are transferred from one authority to the other authority the authority who receives the case of transfer is to continue the same from that stage itself. There is no requirement to issue fresh notice u/s 143(2) of the Act after the transfer of the case due to the order under section 127 of the Act. In the interest of principles of natural justice it is only required to provide opportunity of being heard to the assessee by the authority who has received the case of the assessee on transfer of jurisdiction. From the perusal of the submissions of the appellant and from the perusal of the facts as placed on record by the learned AO during the appellate proceedings to the remand reports, it is seen that no objection was raised by the appellant during the assessment proceedings and sufficient opportunities of being heard was provided by the learned AO who passed the assessment order. Even it is not the case of the appellant in the present appeal that the assessing authority who passed the assessment order did not provide him the opportunity of being heard. It is the principle of law as laid down by the Hon'ble Supreme Court that in accepting any plea of breach of principles of natural justice, such plea would be required to be tested on the aspect of prejudice, as observed in para 62 in case of Veena Estate (P.) Ltd. v. Commissioner of Income-tax [2024] 158 taxmann.com 341 (Bombay)/[2024] 461 ITR 483 (Bombay) [11-01-2024]. It is abundantly clear from the principles of law as laid down by the Supreme Court as noted above, that a technical plea of breach of principles of natural justice cannot be taken, unless a case of prejudice has been made out, and if no case of prejudice is made out, certainly a plea of breach of principles of natural justice would be a hollow plea or a plea in futility. This for the reason, that a person complaining of breach of principles of natural justice needs to show that curing such breach, would culminate the proceedings with a different consequence favourable to the assessee. It is only after considering such pleas, it would be a fair decision, rendering justice to the complainant, as observed in para 62 in case of Veena Estates (supra). It is principle of law as laid down by the Hon'ble Supreme Court in Natwar Singh v. Director of Enforcement [2010] 13 SCC 255, wherein the Supreme Court has observed that there can never be a technical Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 13 plea of breach of principles of natural justice and plea would be a realistic plea which can be proved on the principle of prejudice. It is a settled principle of law that any breach of the principles of natural justice cannot be addressed by a straight jacket formula. Any complaint of breach of principles of natural justice would be required to be considered in the facts of the case. When the facts of the case would demonstrate it, to be an undisputed position, that no real prejudice was caused to a party aggrieved by an order, being alleged to be breach of the principles of natural justice, the Court would certainly not interfere. Such complaint and/or a genuine grievance of the breach of principles of natural justice accompanied with the prejudice it would cause, is required to be made with utmost promptness. Any delay in making such complaint or raising a grievance would give rise to a position that such grievance is either not genuine or is belated and/or a technical plea being agitated. In Natwar Singh (supra), the Hon'ble Supreme Court while observing on the test of real prejudice, observed that there is no such thing as \"technical infringement of natural justice\", as what is necessarily to be seen is that there must have been caused some real prejudice to the complainant. It was observed that the requirements of natural justice must depend inter alia as involved in the facts and circumstances of the case and the nature of the inquiry, etc. (para 41 in case of Veena Estates (supra)) The relevant observations of the Hon'ble Supreme Court are required to be noted which read thus: \"26. Even in the application of the doctrine of fair play there must be real flexibility. There must also have been caused some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter to be dealt with and so forth. Can the Courts supplement the statutory procedures with requirements over and above those specified? In order to ensure a fair hearing. Courts can insist and require additional steps as long a such steps would not frustrate the apparent purpose of the legislation.\" The Id. AO has also relied upon the following judgements in his remand report which are found relevant and applicable to the facts of the case:- (1) Bal Chand Jain & Sons v. DCIT (2014) 221 Taxman 123 (All.) (HC) Provisions of sub-section 3 of section 124 bar an assessee from raising question of jurisdiction before First Appellate Authority or Tribunal if such an objection has not been raised before Assessing Authority at very first stage. (ii) CIT v. All India Children Care & Educational Development Society (2013) 357 ITR 134/(2014) 221 Taxman 5/264 CTR 532(All.) (HC) Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 14 -The Tribunal is not a competent authority to adjudicate upon the jurisdiction of the AO when it is not raised before the Assessing Authonty (iii) Abhishek Jain Vs. ITO (High Court of Delhi) CWP No. 11844/2016 (2018) 94 taxmann.com355(Delhi) Whether in terms of section 124(3)(b) assessee could not call in question jurisdiction of an Assessing Officer after expiry of one month from date of a service of reassessment notice upon him-Held, yes- 2.4 With regard to the contention of the assessee that the assessment completed is invalid in absence of notice u/s 143(2) by the DOT, Central Circle-1, Jaipur who had completed the assessment u/s 143(3) of the IT Act, 1961 on 18/04/2021, it is to be stated here that notice u/s 143(2) had already been issued by the ITO, Ward 4(4), Jaipur on 26/09/2019, against which no objection was raised by the assessee challenging the jurisdiction. The case was specifically assigned to DCIT, Central Circle- 1, Jaipur under section 127 of the Income Tax Act, 1961, vide order dated 07/01/2021 issued by the Pr. Commissioner of Income Tax-1, Jaipur. Since the Assessing Officer having jurisdiction over the case as on 26/09/2019 had already issued notice u/s 143(2) on 26/09/2019, which the assessee never challenged, there was no requirement for the DCIT, Central Circle-2, Jaipur, to whom the case was specifically assigned u/s 127 as per order dated 07/01/2021 issued by the Pr. CIT-1, Jaipur, to issue fresh notice u/s 143(2). Reliance is placed on the decision rendered by the Hon'ble ITAT, Lucknow A Bench, Lucknow in ITA NO.663/LKW/2013, wherein the Hon'ble Tribunal held as under :- \"..Having carefully examined the order of the lower authorities, in the light of rival submission, we find that the assessee has contended that the assessment was not framed by the competent Officer as he has not issued a notice u/s 143(2) of the Act. From the careful perusal of the assessment order, we find that during the course of assessment proceeding, jurisdiction was changed from one Officer to other Officer. Initially, the notice u/s 143(2) was issued within the prescribed period by Assessing Officer having jurisdiction over the assessee. Therefore, it cannot be said that the notice u/s 143(2) was not issued upon the assessee within the prescribed period. It is also evidence from the assessment order that during the course of assessment proceeding, jurisdiction was transferred from one officer to other officer and the subsequent officer has completed the assessment. Under these circumstances, we find no merit in the contention of the assessee that every time new Officer should issue a notice u/s 143(2) of the Act Whenever jurisdiction is transferred from one Officer to other Officer the subsequent officer shall continue with the proceeding from the stage left by the earlier officer. There is no requirement of law to issue a notice u/s 143(2) every time by the new Officer, we therefore, find no merit in the contention of the assessee and we accordingly reject the same.\" Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 15 Further the issue raised by the appellant regarding the transfer of case from one AO to the other AO has been not pressed by the appellant vide his communication dated 06.06.2024. The notice u/s 143(2) of the Act had already been issued by the ITO. It is not a case of no notice at all. A valid notice u/s 143(2) of the Act had already been issued by the ITO, Ward 4(4), Jaipur. When the notice was issued by the ITO he was having the jurisdiction and subsequently the case was transferred vide the orders under section 127 of the Act. And the receiving authority is entitled to continue the proceedings from the stage it has been received by him. Further any contention of the appellant gets covered and remedied by the application of section 292BB of the Act. The judgements relied upon by the appellant are in the context of different facts and also in the context of years when the section 292BB of the Act was not on the statute. Hence the ratio of such judgements is not applicable to the facts of the case of the appellant. In view of the above discussion this ground of appeal is hereby dismissed. Ground No. 2 of Appeal:- The appellant has contended with respect to the notice notice issued u/s 143(2) on 26.09.2019 that the ITO, Ward-4(4), Jaipur did not have jurisdiction to issue notice u/s 143(2) of the Act. However this contention of the appellant is not valid. The Id. AO in the remand report has stated that for the year under consideration, the assessee had filed return declaring gross total income of Rs. 13,13,808/- and total income of Rs. 11,35,640/-on 29/08/2018. Out of the gross total income of Rs. 13,13,808/- shown in the return, income under the head salary was of Rs. 11,04,000/-. As per \"The Gazette of India\" dated 20.10.2014 (copy enclosed) in respect to the Pr.CIT, Jaipur-2, and subsequent notification dated 15.11.2014, jurisdiction over assessees whose principal source of income is from \"Salary\" and whose first names begin with the alphabet \"O\" or \"R\" lies with the Addl./Joint CIT, Range-4, Jaipur having administrative control over the ITO, Ward 4(4), Jaipur, with whom the PAN of the assessee was lying and who had originally issued notice u/s 143(2) of the Act to the assessee. From the perusal of the facts of the case it is seen that the ITO, Ward 4(4), Jaipur was having the jurisdiction on the date on which notice u/s 143(2) of the Act was issued by him. Later on the jurisdiction of the case was transferred vide orders under section 127 of the Act. Accordingly the jurisdiction of such Assessing Officer is hereby upheld. Order was passed under u/s 127 of the Act by the Principal Commissioner of Income-tax-2, Jaipur dated 04/09.10.2019, through which jurisdiction over the case was assigned from Ward 4(4), Jaipur to DCIT/ACIT, Circle-2, Jaipur (later on Circle-1, Jaipur as per Gazatte Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 16 notifications on the jurisdiction issued in the year 2020). The appellant has submitted that that further order passed u/s 127 of the IT Act by Ld. PCIT-2, Jaipur vide which the case was transferred to the DCIT/ACIT, Central Circle-1. Jaipur was communicated to the appellant and the appellant has stated that \"Now in view of this fact we are not pressing this ground.\". Also, alternatively, it is held by the Hon'ble Delhi High Court in the case of Abhishek Jain v. Income-tax officer, Ward-55(1), New Delhi [2018] 94 taxmann.com 355 (Delhi)/[2018] 405 ITR 1 (Delhi) [01-06-2018] that in terms of section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section 148. It is held by the Hon'ble Punjab and Haryana High Court in the case of Subhash Chander v. Commissioner of Income-tax, Rohtak [2008] 166 Taxman 307 (Punjab & Haryana)/[2008] 218 CTR 191 (Punjab & Haryana) [07-12-2007] that :-Section 124 of the Income-tax Act, 1961 Assessing Officer Jurisdiction of -Assessment year 1992-93 - Whether in terms of section 124(3)(b), jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date of which he was served with a notice under section 142(1) or after completion of assessment, whichever was earlier - Held, yes In the present case the jurisdiction of ITO, Ward 4(4), Jaipur was not challenged by the appellant during the assessment proceedings and this has been reiterated by the learned AO in the remand report as well. Thus due to the application of section 124 of the Act, the jurisdiction of the ITO, Ward 4(4), Jaipur in issuing the notice under section 143(2) of the Act cannot be called in question at this stage. In view of the above discussion this (2nd) ground of appeal is hereby dismissed. Thereby, the grounds number 1 and 2 are stand dismissed.” 5.5 appellant as against the observations/findings of the AO in the assessment order, remand report and the rejoinder submitted by the appellant. The contentions/submissions of the appellant are being discussed and decided as I have considered the facts of the case and written submissions of the under:- The appellant has contended that DCIT, Central Circle-1, Jaipur has completed the assessment u/s 143(3)acquiring jurisdiction on the basis of order u/s 127 passed by the Pr.CIT-1 Jaipur on 6th, 7th Feb., 2021 through which the jurisdiction over the case of the appellant was transferred from DCIT, Circle-1, Jaipur to ACIT, Central Circle-1. Jaipur. The DCIT, Circle-1, Jaipur had no jurisdiction at all over the case of the appellant assesee. In this ground of appeal the appellant has challenged Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 17 the issue that the In the submissions on this ground of appeal the appellant has reiterated the submissions which have been made in the grounds number 1 and 2. On this issue remand report was called from the learned AO and the copy of the same was provided to the appellant. Order was passed under u/s 127 of the Act by the Principal Commissioner of Income-tax-2, Jaipur dated 04/09.10.2019, through which jurisdiction over the case was assigned from Ward 4(4), Jaipur to DCIT/ACIT, Circle-2, Jaipur (later on Circle-1, Jaipur as per Gazatte notifications on the jurisdiction issued in the year 2020). The appellant has submitted that that further order passed u/s 127 of the IT Act by Ld. PCIT-2, Jaipur vide which the case was transferred to the DCIT/ACIT, Central Circle-1, Jaipur was communicated to the appellant and the appellant has stated that \"Now in view of this fact we are not pressing this ground.\". In view of the above discussion and also considering the detailed discussion in adjudication in the grounds number 1 and 2 as above, this ground of appeal is hereby dismissed. 6.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order, remand report and the rejoinder submitted by the appellant. The contentions/submissions of the appellant are being discussed and decided as under:- The appellant has contended that the case of the appellant assesee was selected for scrutiny manually being survey case. As there was no survey u/s 133A in the case of the appellant, therefore, the case of the appellant was selected for scrutiny in violation of CBDT Instructions on the subject which are binding on AO. Therefore, the assessment deserves to be quashed/cancelled on this count. The appellant has contended that survey action is not carried out on him and hence his case could not have been picked up for scrutiny on the ground of survey. Circular or instructions given by the CBDT are binding in law on the authority under the Income Tax law on the question arising for consideration. The absence of a survey under Section 133A fundamentally nullifies the foundation for invoking the scrutiny guidelines, which explicitly necessitate the presence of actionable evidence or material unearthed during a survey. Appellant has asserted that no surrender of income was ever tendered by him, either contemporaneously with or subsequent to the purported survey proceedings. Consequently, the very notion of a \"retraction\" is rendered moot. Appellant has contended that 1. No survey was conducted in the case of asessee it is evident from authorization to conduct survey (Copy enclosed), 2. There was no impounding any Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 18 material from the assessee as there was no survey in the case of assesee and impounding was made from M/S Dhoot Sangemermer(P) Ltd and copy of impounding order is enclosed which clearly demonstrate the name of. 3. As there was no survey in the case there was not a possibility of any surrender and retraction there of, 4. No impounding order has been made in the name of assessee, 5. No surrender or retraction was made by assessee, 6. Return income for A. Y. 2018-19 is Rs. 11,35,640/- and in A.Y.2017-18 is Rs. 11,17,500/- The appellant has submitted that he is a salaried individual, and survey action and cannot be carried out on him as the survey can be carried out only in business premises. The appellant derives income exclusively from salary, with no engagement in any business or professional activity that would necessitate maintaining books of accounts under Section 44AA of the Income Tax Act, 1961 (\"the Act\"), Section 133A empowers tax authorities to conduct surveys specifically for verifying business- related financial records. From the perusal of the material placed on record it is seen that a survey action was carried out in the case of company M/s DhootSangmermer Pvt. Ltd. in which the appellant is Director and M/s DhootUdyog, wherein he is a partner. During the course of survey action the statements of the appellant were also recorded. Incriminating material was unearthed during the course of survey. The limited contention of the appellant that survey action was not carried out in his name i.e. survey authorisation was not in his name is found to be factually correct. However whether the same is the conclusive ground with respect to the scrutiny guidelines or not has been examined in the subsequent discussion in the adjudication of this ground of appeal. The Id. AO has submitted in the remand report on the issue that survey u/s 133 A of the Income Tax Act, 1961 was carried out on 05/06/2018 in the case of M/s Dhoot Sangmermer Pvt. Ltd. Jaipur & Makrana, wherein the assessee is a director and M/s Dhoot Udyog, wherein he is a partner. During the course of survey in the case of M/s Dhoot Sangmermer Pvt. Ltd, certain incriminating documents and papers were found and seized as per Annexure A (Exhibit 02). When confronted on this issue, ShriRaghav Dhoot, the assessee, admitted that the papers in Exhibit-2 relate to him only and these papers represent cash loans taken by him, in which the amount written is in coded form and where there was suppression. This modus-operandi of cash transactions in taking loans and repayment thereof was admitted by Shri Raghav Dhoot, the assessee, in his statement recorded during the course of survey on 05/06/2018. During the course of assessment proceedings, show-cause notice as issued to M/s Dhoot Sangmermer Pvt. Ltd and in response, the company, vide letter dated 05/04/2021 signed by all the directors of the company, confirmed that the papers in Annexure A Exhibit-2 pertain and Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 19 relate to Shri Raghav Dhoot only and the company M/s Dhoot Sangmermer P. Ltd has no context or connection with these papers. The assessee, Shri Raghav Dhoot, vide letter dated 05/04/2021, confirmed that the papers in Annexure A-2 (Exhibit-2) pertain and relate to him only and the company M/s DhootSangmermer P. Ltd has no context or connection with these papers. The copies of both these letters have been a part of the assessment order, vide page No. 9, 10 & 11. Appellant has contended that apparently, case of the appellant was selected under scrutiny on the basis of letter dated 24.09.2019 written by Addl CIT Range - 2 Jaipur to AddI CIT Range-4 Jaipur which was clearly not based on correct appreciation of the CBDT guidelines as well as the communication made by DCIT Circle-2 Jaipur. From the perusal of the submissions of the appellant and the assessment order and the remand report is of the learned AO, it is seen that considering the findings of the survey, it was communicated that it is necessary to pick up the case of both M/s DhootSangemermerPvt Ltd as well as Shri Raghav Dhoot, appellant for the A.Y.2018-19 under scrutiny and his satisfaction was communicated to the then AO of the appellant, the ITO Wd 4(4) Jaipur. The appellant has contended that the impounded material relied upon by the Ld. AO emanates solely from a distinct corporate entity, M/s DhootSangemermer (P) Ltd., as evidenced by the impounding order (enclosed herein). There exists no nexus between the appellant and the impounded material, which neither implicates the appellant directly nor bears relevance to his individual financial affairs. Reliance on third-party records, absent corroborative evidence directly implicating the appellant. constitutes an impermissible and arbitrary exercise of jurisdiction. Appellant has contended that selection of case for scrutiny under 'survey cases 'category of the CBDT guidelines, cannot be extended to any other case even if incriminating material relating to any other person was found and impounded during the course of survey proceedings. Assessing Officer could invoke any other provisions of the Income Tax Act like section 148 of the Income Tax Act in case he was satisfied about the escapement from tax of the income of the appellant, but no action u/s 143(2) of the Income Tax Act under the category of manual selection of case for scrutiny in survey cases could have been validly initiated by the Ld Assessing Officer. The appellant has argued that \"the principles of natural justice and procedural equity, integral to the circular, are evidently disregarded in the appellant's selection.\" From the perusal of the submissions of the appellant and the assessment order and the remand report is of the learned AO, the contentions of the appellant that impounded material relied upon in the assessment order of the appellant emanates solely from a distinct Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 20 corporate entity, M/s Dhoot Sangemermer (P) Ltd. is found to be incorrect, as it was explained by the appellant during the course of survey that the papers in Exhibit-2 relates to cash loans taken by him, in which the amount written is in coded form where trailing last five zeros were suppressed and in some cases, two zeros were suppressed. This modus-operandi of cash transactions in taking loans and repayment thereof has been admitted by ShriRaghav Dhoot in his statement recorded during the course of survey on 05/06/2018 Further, the contention of the appellant that there exists no nexus between the appellant and the impounded material, which neither implicates the appellant directly nor bears relevance to his individual financial affairs is also found to be factually incorrect as the impounded papers shows the unaccounted cash loan taken by the appellant. During survey the appellant admitted that the documents pertained to him. It is stated by the appellant that \"During the course of survey proceedings at business premises of DhootSangemermer (P) Ltd at 17,22Godown Industrial Area, jaipur, certain currency notes were found of different denomination i.e. of Rs. 5/- (One Note) Rs. 10/- (Two Note) On the currency notes, certain dates are written and these notes are duly signed by ShriRaghav Kumar Dhoot. On the back side of the said notes, name of a person Shri R.R. Garg is written. The above currency notes were impounded as per exhibit -01 of Annexure -A of impounding order U/s. 133A (3) (ia) dated 05.06.2018. During the survey action statement of ShriRaghav Dhoot was recorded and he was asked about these currency notes. In reply, assessee stated that these currency notes were related to the cash loans which were taken from some lenders through Shri R.R. Garg\". Also therefore further the contention of the appellant that reliance on third-party records, absent corroborative evidence directly implicating the appellant, constitutes an impermissible and arbitrary exercise of jurisdiction, is not relevant to the facts of the present case as in the present case incriminating material pertaining to the appellant was found during the course of survey action and further such impounded material is not third-party records but the records of the appellant. The contention of the appellant that selection of case for scrutiny under 'survey cases 'category of the CBDT guidelines, cannot be extended to any other case even if incriminating material relating to any other person was found and impounded during the course of survey proceedings - is being examined in next paragraphs. In this regard it is considered relevant to draw an analogy from the search and seizure action as in those cases there are procedures prescribed for assessment in case of person searched (section 153A or section 158BC) and also in case of other person if the information pertaining to such other person is found during the course of search Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 21 (section 153C or section 158BD). In case of survey, as per the nature of information discovered in the year to which such information pertains, the case can be either taken in scrutiny or consider for reopening under section 148 of the Act. In this background, it has been provided in the CBDT Instruction that the cases pertaining to a survey (subject to the conditions mentioned therein) will be eligible for scrutiny selection. Just like the search and seizure action, in case of survey also, it is common and likely that the information pertaining to other person can be found which may have bearing on the determination of total income of such other person. It is normal and logical and also as per the overall scheme of the Act that when the survey action is taken and the incriminating material is found, in that case action is taken in case of the persons surveyed and as well as the other person if the information pertaining to such other person is found during the course of survey. In this background in the CBDT Instruction, it has NOT been mentioned that the person in whose name the survey authorisation was made and survey has taken place will only be taken up for scrutiny, but it has been mentioned that the \"cases\" pertaining to \"survey\". In the present case the notice under section 143(2) was issued on 26/09/2019 and hence the could be selection guidelines dated 05.09.2019 were in force at the time. As per these guidelines the relevant para is as under:- \"Cases pertaining to Survey under section 133A of the Income-tax Act, 1961 ('Act') excluding those cases where books of accounts, documents, etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee has retracted from disclosure made during the Survey, such cases will be considered for scrutiny.\" Firstly, it is noted that the guideline refers to cases pertaining to one survey, as the term used is \"cases\" with respect to the cases to be picked up for scrutiny and the term used is \"survey\" and the term \"surveys\" has not been used. Thus the guideline itself allows the situation where multiple cases pertaining to one survey can be picker up for scrutiny on the basis of this guideline. Secondly, the guideline uses the term \"pertaining\" which is very wide in scope and does not limit the scope to the only case in which the survey has taken place. The guideline uses the term \"pertaining\" which expands the scope of this guideline to much beyond the assessee in whose name survey authorisation has taken place. In this regard it is interesting to draw an analogy to section 153C of the Act where the term \"pertain\" has been used, Section 153C came to be amended by Finance Act, 2015 w.e.f. 1- 6-2015 and the words \"belongs or belong to\" came to be substituted by Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 22 the words \"pertains or pertain to\". In this regard the Honourable Supreme Court has observed and held in the case of Income-tax Officer v. Vikram Sujitkumar Bhatia, [2023] 149 taxmann.com 123 (SC)/[2023] 293 Taxman 4 (SC)/[2023] 453 ITR 417 (SC) [06-04-2023] as under:- 4.1 It is submitted by Shri Nataraj, learned ASG that the amendment in section 153C was necessitated in view of the observation of the Delhi High Court in the case of Pepsico India Holdings (P.) Ltd. v. Asstt. CIT [2014] 50 taxmann.com 299/[2015] 228 Taxman 116 (Mag.)/2014 SCC Online Del 4155 whereby the High Court has observed that the words \"belongs or belong to\" should not be confused with the words 'relates to or refers to, the former being much narrower than the latter. It is submitted that it was held that therefore, the provision could not have been invoked unless the documents/material 'belong to the third party (other than the searched person). That in such a situation, where though incriminating material pertaining to a third party was found during search proceedings under section 132, the Revenue could not proceed against such third party in view of the observations of the Delhi High Court. Therefore, as such, the said observation of the Delhi High Court was coming in the way of suppressing the very mischief which the legislature intended to suppress. That therefore, vide Finance Act, 2015, w.e.f. 1-6 2015, section 153C has been amended by way of substitution to replace the words \"belongs or belong to\" with the words \"pertains or pertain to\" insofar as books of account and documents are concerned. 4.2 It is further submitted that there is a difference between the words or phrases \"belongs or belong to\" and \"pertains or pertain to\". It is submitted that the words \"pertains or pertain to\" are of much wider import than \"belongs or belong to\". That, therefore, the legislature has expanded the scope of operation of section 153C to include the situation where during search proceedings under section 132 of the Act, 1961, if incriminating documents/materials pertaining to a third party are found, the Revenue can proceed against such third party. 5.4 It is contended that in the present case, the amendment to section 153C by Finance Act, 2015 brings into the fold of section 153C of the Act, 1961, assessees, who were not so far covered by it, i.e., persons to whom books of account/documents pertain or relate to, and not just persons to whom it belong. That this widening, thus, affects substantive rights, as new assessees may now be proceeded against and hence the decision of this Court in the case of M.A. Merchant (supra) has rightly been applied by the High Court. 10.1 As observed hereinabove, in the pre-amended section 153C, the words used were \"belongs or belong to a person other than the searched person. In the case of Pepsico India Holdings (P.) Ltd. (supra), the Delhi High Court interpreted the expression \"belong to\" and observed and held that there is a difference and distinction between \"belong to\" and \"pertain to\". It was observed and held that on the basis of the registered sale Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 23 deed seized from the premises of the searched person, it cannot be said that it \"belongs to the vendor. Therefore, the High Court view gave a very narrow and restrictive meaning to the expression/word \"belongs to\" and held that the ingredients of section 153C have not been satisfied. To remove the basis of the observation made by the Delhi High Court in the case of Pepsico India Holdings (P.) Ltd. (supra), now, section 153C came to be amended w.e.f. 1-6-2015 by substituting the words \"belongs or belong to\" with the words \"pertains or pertain to\" insofar as the books of account and documents are concerned. Thus, having found that the observation made by the Delhi High Court in the case of Pepsico India Holdings (P.) Ltd. (supra) led to a situation where, though incriminating material pertaining to third party was found during the search proceedings under section 132, the Revenue could not proceed against the third parties, it was observed that the said observation made by the Delhi High Court in the aforesaid decision was coming in the way of suppressing the very mischief which the legislature intended to suppress, which necessitated the amendment in section 153C. Thus, it is a case of substitution of the words by way of amendment. (emphasis supplied) The term 'pertain' and its implication for taking up the case of other person for assessment has been discussed in the above judgement of honourable Supreme Court. The same meaning and implication and the ratio is applicable to the usage of the term 'pertain' (pertaining) in the CBDT Instruction regarding selection of the case for scrutiny. As has been discussed in the above judgement of honourable Supreme Court a situation had arisen where though incriminating material pertaining to third party was found during the search proceedings under section 132, the Revenue could not proceed against the third parties (which was remedied by using the terminologies of 'pertain'), similarly in the scrutiny selection requirements the interpretation adopted by the appellant would lead to a situation where the Revenue would not be able to proceed against the third party even if the incriminating material is found during the course of survey. The contention of the appellant that action under section 148 of the Act could have been taken is irrelevant and immaterial as when the time is available to take action under section 143(2) of the Act than there should not be a compulsion to take action under section 148 of the Act. Further such possibility was also available in the case of VikramSujitkumar Bhatia (supra) however the decision was given by the honourable Supreme Court in favour of the primary action (and not the alternate possible action under section 148 of the Act). The law is to be interpreted keeping in view the overall scheme of the Act. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 24 In the case of search and seizure action the above issue/limitation was remedied and addressed where \"belongs or belong to\" came to be substituted by the words\" pertains or pertain to\", and in the case of survey action in the scrutiny selection guidelines already the term 'pertain' (pertaining) has been used. The term \"pertaining\" is very much broader than the interpretation of adopted by the appellant of having been referring only to the person in whose name the survey action is taken place. This is proved from the discussion on the terminologies as referred in the judgement in the case of VikramSujitkumar Bhatia (supra). In the present case even though the survey was not in the name of the appellant, however, the survey action was carried out on a company and on a firm in which the appellant is director and partner respectively and further during the course of survey action statement of the appellant was recorded and further that during the course of survey action the appellant owned up the incriminating material which was found during the course of survey regarding the unaccounted cash loans. ShriRaghav Dhoot, attended before the Ld. AO on 09/04/2021 and explained that the cash book which has been enclosed with his letter filed on 09/04/2021, is for the period 01/04/2017 to 05/06/2018, being the date of survey. He further stated that the transactions recorded in papers found and inventorised as per Exhibit-2 of Annexure-A during the course of survey in the case of M/s Dhoot Sangmermer Pvt. Ltd relate to cash loans taken by him and these have been owned up by him as per letter dated 05/04/2021 filed in the case of the company. It is further stated that a cash book containing all the transactions have been prepared by him. Also, the company Dhoot Sangmermer Pvt Ltd. during its assessment proceedings, vide letter dated 05/04/2021, confirmed that the details mentioned in Annexure A-Exhibit-2 pertain to Shri Raghav Kumar Dhoot and these details have no context with M/s Dhoot Sangmermer Pvt. Ltd. The case of the appellant clearly pertains to the survey where incriminating material of the appellant was found and owned by him and also impounding was also done. It is important to note that impounding was also done in the survey in view of which the case of the appellant was taken up for scrutiny. Thus the case of the appellant pertain to survey in which impounding was done and thus the conditions of CBDT Instruction are fulfilled. Also, the legal provisions pertaining to the issuance of notice needs to be interpreted in a broader sense so as to allow full play to the provisions pertaining to the merits of the taxation of the income. Hon'ble Supreme Court in a recent judgment, in the case of Dalmia Power Ltd. (2020) 420 ITR 399 [Civil Appeal Nos.9496 to 99 Of 2019], reiterated this principle by holding that \"Rules of procedure have been construed to be the handmaiden of justice. 4 The purpose of assessment proceedings is to assess the tax liability of an assessee correctly in accordance with law.5\" [4. = Kailash v Nankhu (2005) 4 SCC 480; State of Punjab v Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 25 ShamlalMurari (1976) 1 SCC 719] [5. = National Thermal Power Co. Ltd. v. Commissioner of Income Tax, (1997) 7 SCC 489]. This justice- oriented approach has earlier been ordained in CIT v. Shelly Products (2003) 261 ITR 367 (SC) also. In Rani Kusum v. Kanchan Devi [2005] 6 SCC 705, after referring to the ratio in Kailash v. Nanhku [2005] 4 SCC 480, it was observed:- \"10. All the rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. 11. The mortality of justice at the hands of law troubles a judge's conscience and points an angry interrogation at the law reformer. 12. The processual law so dominates in certain systems as to overpower and The humanist rule of substantive rights substantial justice. that procedure should be the handmaid, not the mistress, legal justice compels consideration of vesting a residuary power in the judges to act ex debitojustitiae where the tragic sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, processual, as much as substantive. (See Sushil Kumar Sen v. State of Bihar [(1975) 1 SCC 774].) 13. No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner for the time being by or for the court in which the case is pending, and if, by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode. (See Blyth v. Blyth [(1966) 1 All ER 524: 1966 AC 643: (1966) 2 WLR 634 (HL)].) A procedural law should not ordinarily be construed as mandatory, the procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. (See Shreenath v. Rajesh [(1998) 4 SCC 543: AIR 1998 SC 1827]) 14. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.\" In view of the above also, the CBDT guidelines for selection of the case for scrutiny needs to be interpreted liberally. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 26 Also alternatively, without prejudice, the possible defect (if any) in the notice u/s 143(2) of the Act stand covered and remedied by the section 292BB of the Act. In view of the totality of the facts and circumstances of the case and the position as discussed above, the case of the appellant falls within the CBDT Instruction and the case has been rightly taken up for scrutiny. Accordingly this ground of appeal of the appellant is hereby dismissed.” Ground No. 5 Decision:- The contention of the appellant that the cash loans are not recorded in the books of accounts is found to be factually incorrect as it is specifically stated in the assessment order referring to the submissions of the appellant that the cash book was presented before the learned AO during the assessment proceedings wherein such cash loans were shown. Similar fact also been mentioned in the remand report by the learned AO. However this factual finding has not been addressed by the appellant neither in the appellant's initial submissions in the appeal nor in the rejoinder comments on the remand report. Thus it is a case of silent acceptance from the side of the appellant. The appellant has also contended that when the identity (PAN etc.), address, copy of ITR, Bank statement etc. of the creditors were not furnished by the appellant in that case the only legal course available to the Ld. AO is to disregard the exhibit and transactions mentioned therein. This contention is against the legal principles and against the public policy. This kind of approach is allowed no assessee will comply with the law as he will get away from the taxation by not submitting any details. The appellant submitted during the assessment proceedings that he was not getting the confirmation from the creditors. However this plea of the appellant also is a mere eye wash as apparently the details of the creditors were withheld purposely. It is seen that not only the confirmation but the address, PAN, contact details, etc. of the creditors were also not filed by the appellant. Even if the transactions were through banking channel and/or even if the transaction were recorded in the disclosed books of accounts even then the taxpayers are required to satisfy the conditions laid down in section 68 and 69 etc. of the Act. Merely because in the present appeal case, the loan transactions of the appellant are in cash and have been kept undisclosed and have been detected only during the course of survey action does not make the appellant eligible for some extra premium benefit or treatment regarding exemption from not complying with legal requirements and taxability under section 68, 69 and 69D etc. of the Act. It is a settled law that no premium can be awarded to the dishonesty. If the claim of the appellant is allowed that will tantamount to giving reward and premium to the money laundering practices. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 27 Nulluscommodumcaperepotest de injuriasuapropria meaning no man can take advantage of his own wrong is a maxim of law, recognized and established. It has been held by the Hon'ble ITAT in the case of Jas Raj Dhoka v. Income-tax Officer [2009] 29 SOT 66 (Jodhpur) (URO)/[2008] 119 TTJ 685 (Jodhpur) [10-09-2008] as under:- “19. In the appellant's case, it has been admitted that amounts recorded in the names of these persons are loans which have been utilized for repaying business loans of the assessee without recording the same in the regular books of account, it, therefore, follows that the appellant had an intention to keep a record of loans so taken by him where he made entries thereof in the diary found and impounded from his business premises. Such a diary having account of assessee's transactions shall be his \"books\", for the purpose of section 68 of the Act. We, therefore, do not subscribe to the view canvassed by the appellant and having confirmed the conclusion reached by learned CIT(A) in that regard find no merit in the ground in appeal raised by the appellant on that count as well. The credit so raised from seven such persons. therefore, has rightly been deemed as appellant's income. The ground in appeal, therefore, stands partly allowed for statistical purposes only. It is a settled law that there is no requirement under law with respect to section 68 of the Act that the AO is required to prove that the funds originally belonged to the assesse in whose hands the addition is being done. Onus is on the assesse to provide the identity, genuineness and creditworthiness w.r.t. the credits. The credits received may have been money of someone else that is immaterial. The AO is not to identify the source. Where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source (CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC)). Further source can also not be presumed (Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC)) Where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source (CIT v. M. Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC)). In the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977] it is held by the Hon'ble Supreme Court as under:- \"Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 28 entitled to treat it as taxable income. This was laid down as far back as 1958 when this court pointed out in A. Govindarajulu Mudaliar v. Commisioner of Income-tax [1958] 34 ITR 807, 810 (SC) that: \"There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. In the case of Kale Khan Mohammad Hanif v. Commissioner of Income- tax [1963] 50 ITR 1 (SC)[08-02-1963] it is held by the Hon'ble Supreme Court as under:- \"It seems to us that the answer to this question must be in the affirmative and that is how it was answered by the High Court. It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income: see A GovindarajuluMudaliar v. Commissioner of Income-tax [1958] 34 ITR 807 (SC) Referring to the above judgements of Hon'ble Supreme Court, it is held by the Hon'ble ITAT in the case of NavinShantilal Mehta v. Income-tax Officer, Ward-32 (2) (4), Mumbai [2018] 90 taxmann.com 16 (Mumbai - Trib.) as under:- \"3.2 As per section 68 of the Act, onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the credit entry contained in his books of accounts. The burden has to be discharged with positive material (Oceanic Products Exporting Co. v. CIT [2000] 241 ITR 497 (Ker.). The legislature had laid down that in the absence of satisfactory explanation, the unexplained cash credit may be charged u/s 68 of the Act. Our view is fortified by the ratio laid down in Hon'ble Apex Court in CIT v. P. Mohankala [2007] 291 ITR 278/161 Taxman 169. A close reading of section 68 and 69 of the Act makes it clear that in the case of section 68, there should be credit entry in the books of account whereas in the case of 69 there may not be an entry in such books of account. The law is wellsettled, the onus of proving the source of a sum, found to be received/transacted by the assessee, is on him and where it is not satisfactorily explained, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. Where the assessee failed to prove satisfactorily the source and nature of such credit, the Revenue is free to make the addition. The principle laid down in CIT v. M. Ganpati Mudaliar [1964] 53 ITR 623 (SC)A. Govinda Rajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) and also CIT v. Durga Prasad More [1969] 72 ITR 807 (SC) are the landmark decisions. The ratio laid down therein are that if the explanation of the assessee is unsatisfactory, the amount can Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 29 be treated as income of the assessee. The ratio laid down in CIT v. Daulat Ram Rawatmal [1973] 87 ITR 349 (SC) further throws light on the issue. In the case of a cash entry, it is necessary for the assessee to prove not only the identity of the creditor but also the capacity of the creditor and genuineness of the transactions. The onus lies on the assessee, under the facts available on record. A harmonious construction of section 106 of the evidence Act and section 68 of the Income Tax Act will be that apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of the creditors. In CIT v. Korlay Trading Co. Ltd. [1998] 232 ITR 820 (Cal.), it was held that mere mention of file number of creditor will not suffice and each entry has to be explained separately by the assessee CIT v. R.S. Rathaore [1995] 212 ITR 390/86 Taxman 20 (Raj.). The Hon'ble Guwahati High Court in Nemi Chandra Kothari v. CIT [2003] 264 ITR 254/[2004] 136 Taxman 213 held that transaction by cheques may not be always sacrosanct............ (Emphasis Supplied) From the above discussion it is clear that the credits received by the appellant remain unexplained in terms of identity, genuineness and creditworthiness and further that such credits were recorded in the cash book produced by the appellant during the assessment proceedings and such unexplained credits are taxable under section 68 of the Act. The calculation approach adopted by the learned AO is also found to be correct. Further alternatively and without prejudice, the unexplained cash received by the appellant is also the unexplained money with the appellant which is taxable under section 69A of the Act. It is held accordingly. In view of the above discussion this ground of appeal is hereby dismissed.” Ground No. 6 and 7 8.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order, remand report and the rejoinder submitted by the appellant. The contentions/submissions of the appellant are being discussed and decided as under:- In this ground of appeal the appellant has challenged the charge and computation of the interest u/s 234B of the Act. However the appellant has not submitted the calculation sheet done by the Id. AO which has been challenged in appeal. Thus the contention is liable to be dismissed. Further, in the several judicial pronouncements it has been held that the interest u/s 234B is automatic and this is to be mandatorily levied and the same isleviable on the assessed income. It is held by the Hon'ble Supreme Court in the case of Mansarovar Commercial (P.) Ltd. v. Commissioner of Income-tax [2023] 149 taxmann.com 178 (SC)/[2023] 293 Taxman 312 (SC)/([2023] 453 ITR 661 (SC)[10-04-2023] as under:- Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 30 III. Section 234A of the Income-tax Act, 1961 Interest, chargeable as (Statutory levy) Assessment years 1987-88 to 1989-90-Whether interest under section 234A for default in furnishing return of income is statutory interest leviable and payable and is mandatory and automatic Held, yes Whether therefore, interest levied as per working mentioned in income- tax computation form, forming part of assessment order was justified - Held, yes [Para 12.1] [In favour of revenue] The relevant extract of the judgement is as under- 12. Insofar as the submission on behalf of the respective assessees regarding levy of interest and the submission on behalf of the assessees that in absence of any specific order passed in the assessment order to levy interest, the interest could not have been levied, is concerned, the said issue as such is concluded against the assessees in view of the Constitution Bench decision of this Court in the case of Anjum M.H. Ghaswala (supra) as well as the subsequent decision in the case of Karanvir Singh Gossal (supra). The ITAT relied upon the decision of the Patna High Court in the case of Ranchi Club Ltd. (supra), however, the decision of the Patna High Court in the case of Ranchi Club Ltd. (supra) is held to be not good law, in view of the Constitution Bench decision of this Court in the case of Anjum M.H. Ghaswala (supra). 12.1 In the case of Anjum M.H. Ghaswala (supra), while dealing with the interest under the provisions of Sections 234A, 234B and 234C of the Income-tax Act, 1961, it is observed and held that the interest contemplated under the said provisions is mandatory in nature and the power of waiver or reduction has not been expressly conferred on the Commission. The same indicates that insofar as the payment of statutory interest is concerned, the same is outside the purview of the settlement contemplated in Chapter XIX-A of the Act. In the present case also, the levy of interest under section 234A for default in furnishing the return of income is mandatory and automatic. Section 234A of the Act provides that where the return of income for any assessment year is furnished after the due date or is not fumished, the assessee shall be liable to pay simple interest. Thus, interest under section 234A is statutory interest leviable and payable and therefore the decision of this Court in the case of Anjum M.H. Ghaswala (supra) shall be applicable with full force. Therefore, when the interest is levied as per the workings mentioned in ITNS 150 which is forming part of the assessment order, it is rightly held to be sufficient and good enough to charging interest. (See decision of this Court in the case of Bhagat Construction Co. (P.) Ltd. (supra)). 13. As regards the submission on behalf of the assessees that no substantial question of law was framed on levy of interest, at the outset, it is required to be noted that both the parties made submissions on levy of interest elaborately which have been dealt with and considered by the High Court in light of the Constitution Bench decision of this Court in the case of Anjum M.Η. Ghaswala (supra). Even otherwise, the said issue can be said to be incidental or collateral. Even otherwise, in view of the decision of this Court in the case of Anjum M.H. Ghaswala (supra) holding that the levy of interest under section 234A is statutory interest Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 31 and mandatory and automatic, thereafter the said issue cannot be said to be a question of law. It is held by the Hon'ble Jharkhand High Court in the case of Principal Commissioner of Income-tax v. Manoj Kapoor [2023] 156 taxmann.com 205 (Jharkhand)[16-08-2023] that interest under section 234A/section 234B has to be charged on assessed income and not on returned income of an assessee. The relevant para are as under- 15……………….. A bare perusal of section 234A shows that the interest has to be charged on the amount of the tax on the total income as determined under sub-section(1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount provided in section 234A(1) of the Act. Therefore, it is crystal clear that interest has to be charged on the assessed income and not on the returned income.......... ………….. 17. At this stage, it is also pertinent to mention here that the judgment of the coordinate Division Bench of this Court rendered in the case of Ajay Parkash Verma (supra), is not binding in other cases in relation to the issue of chargeability of interest under sections 234A & 2348 for the reason that in the said judgment the amendment brought by way of the Finance Act, 2001 in sections 234A & 234B were not considered when the period involved in the case of Ajay Prakash Verma was AY 2003-04. …………. 20. In the present case, the Ld. ITAT in its impugned judgment, relying on the aforementioned judgment of this Court passed in the case of Ajay Prakash Verma (supra), has erroneously held that the interest under section 234B could be charged on the returned income and not on the assessed income. The Ld. ITAT has not even considered the provisions of section 2348, as applicable during the period of AY 2015-16, which is relevant to the instant appeal. The said finding of the Ld. ITAT is totally contrary to the provisions of sections 234A and 234B as amended by the Finance Act, 2001 and the Finance Act, 2006. 21. Having regard to the aforesaid discussions, question of law Nos.2, 3 and 4 are decided in favour of the revenue and against the Assessee. It is held by the Hon'ble Punjab & Haryana High Court in the case of Jacob Export House v. Commissioner of Income-tax [2011] 10 taxmann.com 107 (Punjab &Haryana)/[2011] 199 Taxman 147 (Punjab & Haryana) (MAG)/[2011] 330 ITR 53 (Punjab & Haryana) [20-07-2010] that even if assessee, on a bona fide calculation, found that no advance tax was payable, still liability of interest under section 234B would be attracted on income assessed under section 143(1) or 143(3). The relevant para are as under:- 7. The matter is no longer res integra. This Court in Parkash Agro Industries' case (supra), while considering the effect of amendment to Explanation 1 retrospectively with effect from 1-4-1989 had held that an Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 32 assessee is liable to pay interest under section 234B of the Act on the amount of income assessed under section 143(1) or 143(3) of the Act and not on the basis of income declared in the return by the assessee. The relevant observations reads as under- It is held by the Hon'ble Kerala High Court in the case of Seapearl Enterprises v. Deputy Commissioner of Income-tax, Circle-l, Alleppey [2006] 155 Taxman 483 (Kerala)/[2007] 294 ITR 374 (Kerala)/[2006] 204 CTR 81 (Kerala) [16-12-2005] that Section 234A, read with section 234B, of the Income-tax Act, 1961 Interest -Chargeable as Whether interest under section 234A and section 234B is charged on assessed income and not on income returned by assessee Held, yes Whether amendment made to Explanation to sections 234A and 2348 by Finance Act, 2001 with retrospective effect from 1-4-1989 is merely clarificatory in nature, and even prior to such amendment interest was being charged under sections 234A and 2348 on assessed income and not on income returned by assessee - Held, yes The relevant para are as under:- From the main clause of sub-section (1) to section 234A itself it is clear that interest is to be charged with reference to the income determined under sub-section (1) of section 143(1) or on regular assessment as reduced by advance tax if any paid and any tax deducted or collected at source. What led to the above referred decision of the Patna High Court confirmed by the Supreme Court is on account of Explanation 4 provided to section 234A prior to its deletion by the impugned amendment. In fact interest referred to in the Explanation 4 which existed in section 234A prior to its deletion by the amendment has nothing to do with the said section. Therefore, simultaneous to deletion of Explanation 4 from section 234A, the Explanation is brought under section 140A of the Act. The substitution of Explanation to section 2348 is also intended to clarify the same position. The impugned amendments are therefore not for the purpose of reversing the decision of the Supreme Court as claimed by the petitioners, but are intended for the purpose of removal of doubt. An Explanation is generally provided to explain and clarify the scope of section. By the impugned amendment the Legislature only changed the basis on which decisions are rendered and therefore, after the amendments the decisions do not represent the law on the amendment provisions. The Supreme Court while upholding the amendment to section 80P of the Act with retrospective effect from 1-4-1968 in National Agricultural Co-operative Marketing Federation's case (supra) held that a test of length of time covered by retrospective opration cannot by itself necessarily be a decisive test. The question to be considered is whether the retrospectivity of the legislation leads to be a new levy causing an unforeseen financial burden on the affected persons. Similarly in R.C. Tobacco (P.) Ltd.'s case (supra) also the Supreme Court has held that what the court has to consider while considering the validity of retrospectivity of the legislation is whether it is ex facie discriminatory, or so unreasonable or confiscatory that happens to be violative of Articles Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 33 14 and 19 of the Constitution of India. In this context the court held that the factors generally considered relevant are the context in which retrospectivity was contemplated, the period of such retrospectivity and the degree of any unforeseen or unforeseable financial burden imposed for the past period. Apart from the solitary case decided by the Patna High Court and upheld by the Supreme Court, no other cases are reported challenging levy of interest based on assessed income. In fact no case has come to this Court whereunder interest demanded originally based on the unamended provisions were modified based on the amendment. In other words, even prior to the amendment interest was being charged under section 234A and section 2348 on assessed income and not on income returned by the assessee. Therefore, in practice, amendment has only sought to achieve a clarification consistent with the understanding of the law by the Department as well as the assessees generally. The decision of the Patna High Court upheld by the Supreme Court was only an exceptional case. Moreover, simultaneous to the impugned amendment, the limitation period for revision of assessment for levy of interest is not increased by any corresponding amendment. Standing Counsel reported that practically no case was reopened in Kerala based on the amendment because interest originally levied based on the unamended provisions were also with reference to assessed income. Above all, if there is any justifying circumstance for non-filing or belated filing of return or for non-payment or short-payment of advance tax, the Chief Commissioner of Income-tax is vested with powers under the circular issued by the Board of Direct Taxes to waive interest under section 234A and section 234B of the Act. Therefore, I do not find the retrospective effect of the amendment is any way arbitrary or oppressive as the levy is not absolute and to be subject to cancellation or reduction by the Chief Commissioner of Income-tax based on waiver applications which the petitioners or any assessee can file. I am also in agreement with the above referred decision of the Punjab & Haryana High Court wherein the Division Bench held that the amendment is calculated to clarify the ambiguity that was felt in the original provisions. In the circumstances, the Original Petitions are devoid of any merit and are dismissed. It is held by the Hon'ble Karnataka High Court in the case of Mahesh Investments v. Assistant Commissioner of Income Tax, Circle-1(1), Bangalore that where modified assessment order was passed consequent to setting aside earlier order by High Court, such order was to be considered as of regular assessment order for purpose of levy of interest under sections 234A, 234B and 234C. It is held by the Hon'ble ITAT in the case of Mariamma Joseph v. Assistant Commissioner of Income-tax [2024] 161 taxmann.com 633 (Cochin-Trib.) [28-03-2024] that where Assessment Officer completed assessment for A.Y. 2010-11 under section 153A on 28.03.2013, charging interest from 1-4-2010 to 31.3.2013 for 36 months, since income stood assessed at first instance u/s. 153A on 28-3-2013, it therefore was to be regarded as per regular assessment and therefore, Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 34 interest charged u/s. 234B upon this assessment for 36-month period from April, 2010 to March, 2013 was correct. The relevant para are as under:- 3.5 Interest shall accordingly be charged on the assessed tax computed with reference to the assessee's tax liability as determined pursuant to the appellate proceedings for the 36-month period, i.e., April, 2010 to March, 2013. The assessee's case is thus without basis on facts or in law. The AO is directed accordingly. If and where, however, we may add, the computation of interest chargeable u/s. 234B consequent to this order is at variance with that already computed by him, he shall provide opportunity to the assessee to raise objection/s, if any, and take same into account in his final computation. This is with a view to ensure that the interest u/s. 234B is charged to the assessee strictly in terms of this order, eschewing another round of litigation, which was wholly avoidable in view of the law in the matter being trite and well-settled. We decide accordingly. In view of the above detailed discussion, this ground no. 6 of appeal of the appellant is hereby dismissed. Adjudication of Ground No. 7 of Appeal:- The ground is general in nature. The grounds are pre-mature as these are against mere initiation of penalty proceedings. Penalty proceedings are independent proceedings and the appellant is required to make his submissions before the appropriate authority during the penalty proceedings. Accordingly, the ground of appeal raised by the appellant on this issue is treated as disposed off. 9. The last Ground of Appeal is as under: The appellant craves leave to add, amend or withdrawal any ground of appeal during the appellant proceedings. All the grounds of appeal are independent and without prejudice to each other. 9.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off. 10. In the result, the appeal of the appellant is dismissed.” 5. Feeling dissatisfied with that finding of the ld. CIT(A) the assessee preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the assessee, ld. AR of the assessee, has filed the written submissions which reads as follows :- Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 35 “Factual Background; The appellant is a salaried individual. Being a salaried person, the assessee is neither required to maintain any Books of accounts, nor was maintaining any Books of accounts either. Pursuant to the Notice u/s 143(2) of the Income Tax Act assessment under Section 143(3) of the Income Tax Act, 1961 was completed by the Ld DCIT Central Circle-1 Jaipur on 18.04.2021 by making an addition of ₹7,45,60,400/- under section 68 read with section 115BBE of the Act, treating the said amount as unexplained cash credit. The Ld. Commissioner of Income Tax (Appeals)-4 Jaipur vide order dated 25.03.2025, without appreciating the fundamental jurisdictional and legal errors in the assessment proceedings, confirmed the addition and also upheld the validity of the Notice u/s 143(2) of the Income Tax Act issued by the Ld AO and order u/s 143(3) passed by the Ld AO. The appellant has filed the present appeal before the Hon’ble Tribunal, raising both legal challenges to the validity of the assessment as well as objections on the merits of the addition made. The appellant is challenging the order of the Ld CIT (A) on the following grounds; “Grounds of appeal’ 1. On the facts and circumstances of the case and in law, Ld CIT (A) erred in upholding the validity of absolutely illegal assessment order dated 18.04.2021 passed by the Ld DCIT Central Circle-1 Jaipur u/s 143(3) of the Income Tax Act and in confirming the illegal addition of Rs. 7, 45, 60,400/- made by the Ld AO u/s 68r.w.s. 115 BBE of the Income Tax Act. 2. On the facts and circumstances of the case and in law, Ld CIT (A) erred in not declaring the assessment order u/s 143(3) of the Income Tax Act passed by the Ld Assessing Officer as null and void ab initio having been taken up for compulsory scrutiny u/s 143(3) allegedly for the reason of being a survey case and in complete violation of the extant Instructions of the CBDT issued for taking up the cases in scrutiny/compulsory scrutiny. 2.1 On the facts and circumstances of the case and in law, Ld CIT(A) erred in not quashing the assessment order despite recording a specific finding of fact that no survey was conducted in the case of the assessee. 2.2 On the facts and circumstances of the case, Ld CIT(A) has grossly erred in law in devising a non-existent hypothetical analogy between the case of the person surveyed and material relating to other person found during survey with the statutory provisions of Section 153A and 153C of the Income Tax Act and thereby upholding compulsory scrutiny done by the Ld Assessing Officer in contravention of the CBDT Instructions. 2.3 On the facts and circumstances of the case and in law, Ld CIT (A) erred in not considering that the guidelines for selection of cases for compulsory Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 36 scrutiny unambiguously provide for compulsory scrutiny of cases covered u/s 153A as well as 153C of the Income Tax Act but no compulsory scrutiny guidelines were issued for taking up cases where any material incriminating or otherwise was found in Survey carried out in the case of third person. 2.4 On the facts and circumstances of the case and in law, Ld CIT(A) erred in ignoring that the CBDT Instruction provides the case to be taken up for scrutiny with the prior approval of Pr CIT where information has been received by the Assessing Officer. Lacking approval from the Pr CIT, the action of the LD Assessing Officer of suo moto taking up non -survey case for compulsory scrutiny ought not to have been sustained. 2.5 On the facts and circumstances of the case Ld CIT(A) erred in law in not considering the judicial precedents cited before him which clearly and unambiguously laid down that assessment made u/s143(3) of the Income Tax Act in contravention of the Instructions of the CBDT issued for taking up cases under scrutiny, is a nullity. 2.6 On the facts and circumstances of the case Ld CIT(A) erred in law in holding that defect in the Notice u/s 143(2) of the Income Tax Act stands covered and remedied by Section 292BB of the Income Tax Act completely ignoring that the fact of selecting the case for scrutiny in the guise of ‘Survey case covered under compulsory scrutiny’ was made known to the appellant for the first time in the assessment order only and therefore, provisions of Section 292BB have no application at all. 3. On the facts and circumstances of the case and in law, the Ld CIT (A) erred in confirming the addition of Rs. 7, 45, 60,400/- made by the Ld Assessing Officer under the provisions of section 68 r.w.s. 115 BBE of the Act when neither any Books of accounts were maintained nor the amounts were found recorded in the Books of accounts. 3.1 On the facts and circumstances of the case and in law Ld CIT (A) erred in confirming the addition of Rs 7, 45, 60,400/ made by the Ld Assessing Officer completely ignoring that the Ld Assessing officer himself recorded a finding of fact that the entries found during the course of survey are in respect of cash loan taken and repaid by the assessee. 3.2 On the facts and circumstances of the case and in law the Ld CIT(A) erred in not considering that deeming provisions of Section 68 or Section 69 or 69A, 69B or 69C cannot be applied to the receipt and payment of cash loans when the said cash loans are not referable to either any entries in the Books of accounts or to any unaccounted expenditure or to any unexplained investment made by the appellant. 3.3 On the facts and circumstances of the case, the Ld CIT (A) erred in law in upholding the addition u/s 69A of the Income Tax Act when neither the AO invoked the provisions of Section 69A of the Income Tax Act nor the appellant was found in possession of any unexplained monies. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 37 4. On the facts and circumstances of the case, the Ld CIT (A) erred in law in upholding the charging of Interest u/s 234B and initiation of penalty u/s 271AAC of the Income Tax Act by the Ld Assessing Officer. The appellant craves leave to add, amend or withdraw any of the grounds of the appeal during the course appellate proceedings. submissions; I. Grounds on Jurisdictional Invalidity of the Assessment -Improper Selection for Scrutiny in Violation of CBDT Instructions (Gr No 1 to 2.6) (i) The appellant, a salaried individual. The impugned assessment order is not only procedurally defective but also substantively unjustifiable, being based on a flawed and arbitrary selection of the appellant's case for scrutiny. The action of the Ld. Assessing Officer is in direct contravention of the guidelines prescribed by the Central Board of Direct Taxes (CBDT) for selection of cases under the Computer Assisted Scrutiny Selection (CASS) system. The assessment was taken up for scrutiny allegedly on account of a survey, but no survey was ever conducted in the case of the appellant. This crucial fact is affirmed by the CIT (A) in his own order. In this regard, Ld Assessing Officer has recorded the following factual findings in the assessment order; “The case was selected for scrutiny under CASS being survey case and notice under section 143(2) was issued on 26/09/2019 by the ITO, Ward 4(4), Jaipur” (ii) The CBDT Instruction(s) issued for selection of cases for scrutiny under section 143(3) mandate that cases can only be taken up for compulsory scrutiny due to survey if a survey under section 133A is actually conducted in the case of the assessee. Alternatively, in case of information received from a survey on a third party, such scrutiny can be done only with prior approval from Pr CIT . (iii) In the present case: o There was no survey on the assessee. o The assessment was nonetheless taken up for scrutiny as a \"survey case.\" o There is no evidence on record of the mandatory approval of the Pr. CIT/Pr CCIT having been obtained before taking up the case. o Ld Assessing Officer himself was conscious of the fact that case of the appellant can be taken for scrutiny only with the prior approval of Pr CIT which is evident from his communication dated 24.09.2019 made to the ITO Ward 4(4) Jaipur, requesting for transfer of the case to him for seeking approval of the Pr CIT o ITO Ward 4(4) Jaipur without seeking approval of the Pr CIT or transferring the case to the Ld AO for obtaining approval of the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 38 Pr CIT, directly issued Notice u/s 143(2) of the Income Tax Act dated 26/09/2019 to the appellant. o Impugned assessment has been completed by the LD AO pursuant to the notice dated 26/09/2019 which was issued in violation of the extant binding instructions of the CBDT. (iv) Thus, the scrutiny itself is vitiated and the resultant assessment is a nullity in law, being in violation of binding instructions of the CBDT. (v) The appellant derives income exclusively from salary, with no engagement in any business or professional activity that would necessitate maintaining books of accounts under Section 44AA of the Income Tax Act, 1961 (“the Act”). Section 133A empowers tax authorities to conduct surveys specifically for verifying business-related financial records. The statutory language and intent clearly limit its applicability to business operations, stating: \"An income-tax authority may enter… any place where a business or profession is carried on…\" Thus, invoking Section 133A in this case constitutes a flagrant misapplication of statutory provisions and amounts to an ultra vires exercise of jurisdiction. Furthermore, the CBDT, through its guidelines governing scrutiny cases under the CASS mechanism, has emphasized adherence to risk-based parameters. The appellant’s case does not satisfy any condition warranting selection for scrutiny under the guise of a survey, reinforcing the procedural impropriety of the Assessing Officer’s actions. Such blatant disregard for statutory limitations and administrative guidelines undermines the principles of natural justice and renders the impugned action unsustainable in law. (vi) The CBDT guidelines regulating the selection of cases for scrutiny unequivocally prescribe those cases emanating from surveys under Section 133A of the Income Tax Act, 1961, must satisfy certain defined conditions prior to their selection. In the appellant's case, no survey was conducted under the said provision, rendering the application of scrutiny guidelines devoid of any legal substratum. Furthermore: 1.1. The absence of a survey under Section 133A fundamentally nullifies the foundation for invoking the scrutiny guidelines, which explicitly necessitate the presence of actionable evidence or material unearthed during a survey. 1.2. The impounded material relied upon by the Ld. AO emanates solely from a distinct corporate entity, M/s Dhoot Sangemermer (P) Ltd., 1.3. Reliance on third-party records, absent corroborative evidence directly implicating the appellant, constitutes an impermissible and Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 39 arbitrary exercise of jurisdiction. The Hon’ble Supreme Court, in CIT v. P.V. Kalyanasundaram (2007) 294 ITR 49, enunciated that reliance upon evidence gathered from third-party sources must meet rigorous evidentiary thresholds. The Court unequivocally held that third-party evidence cannot be invoked in a capricious manner for assessments, particularly in the absence of direct involvement or corroboration. In the instant case, the indiscriminate reliance upon unrelated third-party material coupled with the non-conduction of a survey underscores a glaring procedural impropriety. Such actions not only contravene statutory mandates and CBDT directives but also undermine the sanctity of quasi-judicial processes, warranting the annulment of the impugned assessment order. (vii) Absence of Surrender or Retraction: The appellant categorically asserts that no surrender of income was ever tendered by him, either contemporaneously with or subsequent to the purported survey proceedings. Consequently, the very notion of a \"retraction\" is rendered moot. The invocation of third-party records or statements, unaccompanied by corroborative evidence, does not ipso facto constitute surrender attributable to the appellant. It is well-established in jurisprudence that any alleged surrender must be voluntary, informed, and substantiated by credible evidence. Mere surrender elicited under duress, or predicated upon extraneous and unrelated material, is devoid of legal sanctity and cannot be upheld in judicial proceedings. Third-party records impounded during proceedings concerning unrelated entities lack evidentiary reliability and cannot, in any manner, be deemed indicative of the appellant’s income. In the absence of direct, cogent evidence implicating the appellant, any inference drawn by the Assessing Officer is legally untenable. Such reliance on unsubstantiated third-party evidence not only contravenes established legal principles but also transgresses the fundamental tenets of natural justice. Any admission or statement must be unequivocal and consistent with established facts. The appellant, therefore, urges that the Assessing Officer’s conclusions be held as procedurally flawed and devoid of merit. (viii ) Non-compliance with CBDT Instructions. The selection of the appellant’s case for scrutiny flagrantly contravenes the principles enunciated in CBDT Circular No. F. No. 225/402/2021/ITA-II, dated 10.09.2021. This circular serves as a cornerstone for procedural fairness under the Computer Assisted Scrutiny Selection (CASS) framework, stipulating that scrutiny cases must emanate from predefined risk parameters or actionable intelligence substantiated by credible evidence. In the instant case, the absence of any actionable material implicating the appellant renders the selection arbitrary, unsubstantiated, and violative of Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 40 statutory safeguards enshrined under the Income Tax Act, 1961. The circular unequivocally prescribes that only those cases satisfying specific benchmarks or where credible evidence demonstrates non-compliance with tax laws may be flagged for scrutiny. The principles of natural justice and procedural equity, integral to the circular, are evidently disregarded in the appellant's selection. This approach is further underscored by judicial precedents, wherein it was held that statutory powers must be exercised strictly within the boundaries delineated by law. The circular is binding upon the Assessing Officer under Section 119 of the Act, and any deviation there from renders the scrutiny process ultra vires and procedurally defective. The appellant thus submits that the selection of his case for scrutiny, in defiance of this binding directive, is an act of procedural overreach, warranting outright nullification (ix) Ld Assessing Officer, DCIT Circle-2 Jaipur vide his letter dated 24.09.2019 addressed to ITO Ward 4(4) Jaipur communicated that it is necessary to pick up the case of both M/s Dhoot Sangemermer Pvt Ltd as well as Shri Raghav Dhoot, Director for the A.Y.2018-19 under scrutiny so as to ensure that any unaccounted income does not escape assessment. He further mentions that letter for seeking approval of manual selection of the case of M/s Dhoot Sangemermer Ltd is being sent to the Pr CIT-1 Jaipur and as the jurisdiction over the case of Sh Raghav Dhoot should also lie with him, he requested ITO Ward 4(4) to transfer PAN to him. Since, jurisdiction over the case of the appellant was not lying with DCIT Cricle-2 Jaipur at that point of time; he could not seek approval of the Pr CIT for selection of the case of the appellant under scrutiny. Copy of this letter was also marked to Addl CIT Range- 2 Jaipur. Addl CIT Range-2 simultaneously wrote a letter to Addl CIT Range- 4 Jaipur for directing ITO Ward 4(4) Jaipur tor picking the case of Sh Raghav Dhoot for scrutiny first and thereafter transfers the PAN to DCIT Circle-2 Jaipur. Notice u/s 143(2) of the Income Tax Act was thereafter issued by ITO Ward 4(4) Jaipur on 26.09.2019. Assessment order clearly mentions the fact, selected under manual scrutiny being survey case. (x) Thus, it is evident that even the DCIT Circle-2 Jaipur was very much aware of the fact that the case of the appellant does not fall in the category of manual compulsory selection of cases and can only be taken under scrutiny with the approval of Pr CIT/CCIT. However, ITO Ward 4(4) Jaipur selected the case under manual scrutiny treating the case as “Survey case” whereas; no survey was carried out in the case of the appellant. Apparently, case of the appellant was selected under scrutiny on the basis of letter dated 24.09.2019 written by Addl CIT Range - 2 Jaipur to Addl CIT Range-4 Jaipur which was clearly not based on correct appreciation of the CBDT guidelines as well as the communication made by DCIT Circle- 2 Jaipur. (xi) Selection of case for scrutiny under ‘survey cases ‘category of the CBDT guidelines, cannot be extended to any other case even if incriminating material relating to any other person was found and impounded during the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 41 course of survey proceedings. Assessing Officer could invoke any other provisions of the Income Tax Act like section 148 of the Income Tax Act in case he is satisfied about the escapement from tax of the income of the appellant, but no action u/s 143(2) of the Income Tax Act under the category of manual selection of case for scrutiny in survey cases could have been validly initiated by the Ld Assessing Officer. Since, the selection of case for scrutiny is dehors the guidelines issued by the CBDT, the impugned Assessment order is liable to be quashed. 2. Applicability of Judicial Precedents; It is a well-settled law that instructions issued by the CBDT are binding on the income tax authorities as per the judgment of the Hon’ble Supreme Court in UCO Bank v. CIT [1999] 237 ITR 889 (SC).Courts and Tribunals have consistently held that assessments based on invalid scrutiny selection are liable to be quashed. (i) Hon’ble Punjab & Haryana High Courtin the decision dated 28 March 2023 in the case of Commissioner of Income Tax Rohtak Vs Crystal Phosphates Ltd in ITA NO.140 &141/2013 (O&M) held as under: “ The short question for consideration in the present appeals is, “whether as per CBDT instructions/guidelines, the case of the asessee was covered to be picked up for scrutiny, especially keeping in view that for the assessment year 2007-08, the income was 30% more than the total income declared for the past year i.e. 2006-07. ………….hence, for all intents and purposes, the authorities cannot select any case for detailed scrutiny against the circulars issued by the Board. ………After going through the impugned judgment(s), this Court is of the view that the in this case, the instructions issued by the CBDT have not been complied with in letter and spirit. The Tribunal has rightly allowed the appeal(s) of the assessee by appreciating the facts in the right perspective. Moreover, the Revenue has not led any cogent and convincing evidence to prove its case. No substantial question of law arises for consideration in these appeals.” (ii) Hon’ble Delhi High Court in the case of CIT Vs Best Plastics Pt Ltd reported in 295 ITR 256 (Del)held as under: “ 1. The Commissioner of Income-tax and the Income Tax Appellate Tribunal have both relied upon a decision of the Supreme Court in Commissioner of Custmos Vs Indian Oil Corporation Ltd to have that the circulars issued by the Central Board of Direct Taxes (CBDT) binding on the officers of the Income- tax department. To the same effect is the decision of the Supreme Court in UCO Bank V CIT. 2. The respondent-assessed's return was in the instant case taken up for scrutiny in violation of the Central Board of Direct Taxes circular according to Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 42 which if the returned income is 30 per cent, more than the income of the earlier assessment year, the case of the assessed should not be scrutinised under Instruction No. 1922 dated March 9, 1995, extended the operation of the circulars to the assessment year 1995-96 also as is evident from the following paragraphs appearing in the same: Under Board's Instruction No. 1917 dated June 3, 1994, certain categories of cases were kept outside the scope of sample scrutiny during the financial year 1994-95. On such category consisted of those assesseds who declared a total income for the assessment year 1994-95 that was more by 30 per cent, of the total income returned for the assessment year 1993-94 subject to the conditions that: (a) the income for both the assessment years exceeded the basic exemption limit; (b) the total income for the assessment year 1993-94 was Rs. 5 lakhs or less; and (c) the tax was fully paid for the assessment year 1994-95 before the return was filed. 2. Suggestions have been received to extend this scheme for the assessment year 1995-96 also. After considering them, it has been decided that the above norm of exclusion from sample scrutiny could be extended for the assessment} rear 1995-96 also in such cases where the following criteria are satisfied: (i) the income returned for the assessment year 1995-96 is at least 30 per cent, more than the total income returned for the assessment year'1994-95. 3. The assessment order passed by the assessing officer has in the light of the above been set aside by the Commissioner which order has been upheld by the Tribunal in appeal. No substantial question of law arises for our consideration in the light of the settled legal position emanating from the aforementioned judgments of the Supreme Court. This appeal accordingly fails and is hereby dismissed.” (iii) Hon’ble Andhra Pradesh High Court in the case of CIT Vs. Smt. Nayana P. Dedhia 270 ITR 572 (AP), affirmed the decision of the Tribunal, by holding as under: “A very short question is involved. Admittedly, the Department issued a circular by way of press release on March 12, 1996. These guidelines were regarding \"scrutiny assessment guidelines for assessment year 1996-97\". By these guidelines, it was notified that the Income-tax Department had decided not to select returns for the assessment year 1996-97 for detailed scrutiny, if the total income declared is at least 30 per cent more than the total income declared for the assessment year 1995-96. The case of the respondent before the Tribunal was that the Department had decided not to have detailed scrutiny for the assessment year 1996-97 if the income declared was at least 30 per cent more than the income declared in 1995-96, therefore, the assessment itself was bad. The Tribunal accepted this contention. However, learned counsel for the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 43 appellant submits that these instructions were not binding on the Tribunal or court or were not available for execution to any judicial authority. There is no dispute about the circular having been issued, which reads as under: …….. The conditions laid down in the circular are also fulfilled by the respondent and there is no dispute on that also. Now, the only question, which needs an answer, is, as to what is the status of these circulars. The circular had admittedly been issued by the Central Board of Direct Taxes under section 119(1) of the Act. What is the scope of such circulars should not detain us because of the authoritative pronouncement of the hon'ble Supreme Court reported in UCO Bank v. CIT [1999] 237 ITR 889. The Supreme Court noted (page 895)… The Supreme Court, in this judgment, which is clear from the paragraph quoted above, held in no uncertain terms that : (a) the authorities responsible for administration of the Act shall observe and follow any such orders, instructions and directions of the Board ; (b) such instructions can be by way of relaxation of any of the provisions of the section specified therein or otherwise ; (c) the Board has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act ; (d) the circulars can be adverse to the Income-tax Department, but still, are binding on the authorities of the Income-tax Department, but cannot be binding on the assessee, if they are adverse to the assessee ; (e) the authority, which wields the power for its own advantage under the Act, has a right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law by issuing instructions in terms of section 119 of the Act. This judgment leaves no room to doubt that the Tribunal was right in holding that the income-tax authorities could have not selected the case for detailed scrutiny in view of the circular issued by the Board.” (iv) Hon’ble Pune Bench of the Tribunal in S.F. Chogule Vs JCIT in ITA No 458/PN/2012 and ITA No 605/PN/2012 in the decision dated 21.12.2016 {183 TTJ 779 (Pune)} held that Scrutiny assessment made by AO was without jurisdiction and hence annulled as return manually selected for scrutiny without obtaining prior approval of Chief CIT being in violation of CBDT guidelines. Hon’ble Bench observed as under” “14. In the facts of the case, Survey under section 133A of the Act was carried out at the premises of assessee on 30.01.2008. During the course of Survey, the assessee made declaration of additional income of Rs. 45, 93,467/- which was offered as additional income over and above the income to be returned for the year under consideration. The assessee claims that it had disclosed the said additional income in its return of income wherein the return was filed declaring income of Rs. 81, 64,598/-. However, the perusal of computation of income reflected that net profit shown in Profit & Loss Account was Rs. 11,62,084/- and certain disallowances were made on account of personal expenses, capital expenses and disallowances under section 40(a)(ia) of the Act at Rs. 68,31,574/- and other disallowances and the income was aggregately shown at Rs. 85,69,672/- The Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 44 Assessing Officer and CIT(A) thus, were of the view that the assessee had not included the additional income of Rs. 45,93,467/-, where it had declared the business income at only Rs. 11,62,084/-, though it had filed the return of income declaring income of Rs. 81,64,590/-. The case of authorities below is that the assessee had not fulfilled the conditions laid down in the guidelines for taking up the case for scrutiny assessment year under consideration and hence, there was no merit in the claim of assessee that it had fulfilled the conditions laid down in guidelines. The whole gamut of arguments and discussion in the orders of Assessing Officer and CIT(A) is on this account that the assessee had not fulfilled the conditions relating to Survey cases for financial year and the case of the assessee could be picked up for scrutiny. The assessment order was passed on 09.09.2010 and the appellate order was passed on 04.01.2012. The assessee thereafter moved an application under the Right to Information Act, wherein a specific question asked was with regard to selection of scrutiny and other relevant information relating to assessment year 2008-09. The specific question asked by the assessee was whether its case was selected for scrutiny under CASS and in case it was not selected under CASS and why the same was picked up for scrutiny. The assessee also asked that under which norms the case was selected for scrutiny and whether relaxation in selection of cases in which survey action was carried out on fulfilling the criteria was available in the said norms or not. In reply, it was stated that the guidelines / instructions were followed and since the guidelines were confidential in nature, the copy of same could not be provided. In reply to the next question whether the case was selected under CASS, the categorical answer was ‘No’. The said RTI reply further stated that the case was selected for scrutiny in view of the guidelines contained in F.No.225/93/2009/ITA.II. 15. The said guidelines for selection of scrutiny were published and it was pointed out that the said guidelines were only for the use of Officers of Income Tax Department and the same could not be disclosed even under the RTI Act, 2005. The said application under the RTI Act and the order under the RTI Act are placed at pages 20 to 22 of the Paper Book. The assessee has also placed the copy of guidelines issued for scrutiny, copy of which is placed at page 23 of Paper Book. The said guidelines were for use of Income Tax Department, wherein selection criteria was provided which was applicable to all Income Tax returns at all stations. The guidelines vis-à-vis survey cases are provided therein and vide clause (g), it is provided that the Assessing Officer may select any return for scrutiny after recording reasons and after obtaining the approval of CCIT / DGIT. The cases under this category should be selected, if there are compelling reasons and cases not selected under CASS. These cases are watched by the CCIT / CIT for the quality of assessment. The said guidelines are as per F.No.225/93/2009/ITA.II. The reply under RTI also refers to the said guidelines and admittedly, these guidelines were used to select the case of assessee for scrutiny. Further, the assessee also filed on record letter dated 13.05.2013 issued by the ACIT, Circle (1), Sangli, wherein in reply to the letter of assessee, it has been informed that there is no record to show that previous approval of CCIT / DGIT was obtained to select the case manually for scrutiny for assessment year 2008-09. So, taking into consideration the said correspondence which has come into existence after the date of passing of assessment order and appellate order, the first thing to be taken note of is that the case of assessee was not selected for scrutiny in CASS which is the reply given in answer to RTI query as per letter dated 12.04.2012. The second aspect is that the case of assessee was selected for scrutiny in view of the guidelines contained in F.No.225/93/2009/ITA.II. The assessee has placed Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 45 the copy of said guidelines on record at page 23 of the Paper Book, wherein it is provided that the case of any assessee may be selected for scrutiny after recording reasons and after obtaining the approval of CCIT / DGIT. In other words, the case of assessee could be picked up for scrutiny manually but the same had to be after recording reasons for such an action and after obtaining the approval of CCIT / DGIT. However, the Assessing Officer vide letter dated 13.05.2013 has categorically mentioned that no previous approval of CCIT was obtained to select the case manually for scrutiny for assessment year 2008-09. In the above circumstances, where the order has been passed against the norms laid down by the CBDT vide its guidelines which were binding upon the Assessing Officer, then the order passed by the Assessing Officer is bad in law. The instructions issued by the CBDT are to be strictly followed by the authorities i.e. Assessing Officer and in the absence of the same, the assessment order passed in the case is annulled. Such is the proposition laid down by the Hon’ble High Court of Andhra Pradesh in CIT Vs. Smt. Nayana P. Dedhia (supra) and the Hon’ble High Court of Delhi in CIT Vs. Best Plastics (P) Ltd. (supra). In view thereof, we hold that where the Assessing Officer has failed to follow the guidelines issued for selecting the cases for scrutiny and in the facts of the present case, where the casewas selected manually for scrutiny, but no previous approval of CCIT was obtained, then the Assessing Officer lacks jurisdiction to carry out the scrutiny assessment in the present case and accordingly, assessment order passed by the Assessing Officer is bad in law. Hence, we hold so. Since the assessment order is held to be bad in law, the issue on merits becomes academic and the grounds of appeal raised by both the assessee and the Revenue in their respective appeals are in fructuous. The appeal of assessee is thus, allowed and the appeal of Revenue is dismissed.” (v) In Agrawal Farm Equipments vs Income Tax Officer on 26 August, 2004 (2004) 85 TTJ Jab 723 it was held: \"18. After hearing arguments of learned Authorised Representatives of both the parties, I am of the view that the assesses deserves to succeed. It is clear from the records that none of the conditions stipulated by the Board for taking up case for scrutiny are applicable on the assessee. The learned Departmental Representative has not been able to place before me any record showing approval of Chief CIT for selection of case for scrutiny. It is trite law that Board instructions/circulars being benevolent in nature are binding on Revenue and all the officers of IT Department are legally bound to follow the said instructions/circulars. A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation or from consistent past practice. The Board has widely publicised its intention in leading newspapers too and the learned Authorized Representative of the assessee filed a copy of news item in Economic Times dt. 9th March, 2001 placed at p. 30 of paper book wherein it was stated that IT Department has decided against scrutiny of tax returns for the second year in a row as a part of its drive to promote the image of an assessee- friendly tax Department. 19. In the light of above case laws and the doctrine of legitimate expectation, I hold that the AO was not justified in taking up the case of the assessee for scrutiny in violation of the promise contained in the said instructions. Though on this short ground, the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 46 assessment so framed deserves to be quashed (without any further consideration, however, I will take up the other grounds on merits also). I am supported in my view by the apex Court judgment in the case of NasnvneetlakJaveriv/s K.K.Sen AAC (1965) 56 ITR 198 (SC) and Hon'ble Madhya Pradesh High Court in the case of Assn. CIT v. Aradhna Oil Mills (2002) 30 ITC 446. I therefore hold that scrutiny case in violation of CBDT instructions are bad in law and I quash the assessment framed by the AO for all the three years. Appellant also relies on the following decisions; Mrs. Payal Kumai JagadhariV/s ITO ITA No. 23/Chd/2011 dated 24.02.2011 Decision dated 24.10.2024 of Hon’ble ITAT Delhi Bench in DCIT Vs Raja Arora in ITA No. 623/Del/2024. Ld CIT (A) confirmed the action of the LD AO in absolutely arbitrary and irrational manner - Ld CIT (A) recorded a specific finding of fact that no survey was conducted in the case of the assessee. However, Ld CIT(A) had drawn an absolutely illogical and irrelevant analogy in the case of the person surveyed and the appellant with the provisions of Section 153A and 153C of the Income Tax Act and upheld compulsory scrutiny done by the Ld Assessing Officer in contravention of the CBDT Instructions. Ld CIT(A) completely ignored that CBDT Instruction unequivocally provides for compulsory scrutiny of cases covered u/s 153A & 153C of the Income Tax Act, however, the Instructions does not provide for compulsory scrutiny by manual selection in case of persons who have not been subjected to Survey action even if any material, relating or pertaining or containing any information about any other person is found during the course of survey action. Ld CIT(A) had also not considered binding judicial precedents cited before him which clearly and unambiguously laid down that assessment made u/s143(3) of the Income Tax Act in contravention of the Instructions of the CBDT issued for taking up cases under scrutiny, is a nullity. Ld CIT (A) has neither distinguished any of the decisions cited before him. Ld CIT (A) further held that defect in the Notice u/s 143(2) of the Income Tax Act stands covered and remedied by Section 292BB of the Income Tax Act completely ignoring that the fact of selecting the case for scrutiny in the guise of ‘Survey case covered under compulsory scrutiny’ was made known to the appellant for the first time in the assessment order only and therefore, provisions of Section 292BB have no application at all. Moreover, the reliance placed by the Ld. CIT (A) on Section 292BB is wholly misplaced. The said provision applies to defects in service of notice, not to jurisdictional defects in selection for scrutiny or to the validity of the assessment itself. It is therefore, humbly submitted that the selection of the case of the appellant for scrutiny without obtaining approval of the worthy Pr CIT by the ITO Ward 4(4) Jaipur was improper and in contravention of the binding Instructions of the CBDT and therefore, order u/s 143(3) of the Income Tax Act passed by Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 47 the Ld Assessing Officer is invalid and should be quashed. It is prayed accordingly. II. Submissions on merit- Addition u/s 68 unsustainable on merits; Section 68 Not Applicable in the absence of Books of Accounts It is an undisputed fact on record that the appellant being salaried person is neither obligated to maintain any Books of accounts nor maintain any Books of accounts. Section 68 can be invoked only when: “ any sum is found credited in the books of an assessee maintained for any previous year…” Thus, in absence of such books, the provision cannot be applied, and the addition made under section 68 is bad in law. Provision of Section 68 of the Income Tax Act have been explained by the Hon’ble Supreme Court in the case of Commissioner Of Income Tax vs P. Mohanakala (2007) 291 ITR 278 (SC). Various principles governing the applicability of Section 68 of the Income Tax Act enunciated by the Hon’ble Apex Court may be gainfully reproduced as under: “In order to appreciate the contentions urged before us it would be appropriate to notice Section 68 of the Act which is re-produced: Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The question is what is the true nature and scope of Section 68 of the Act? When and in what circumstances Section 68 of the Act would come into play? That a bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessees; such credit has to be of a sum during the previous year; and the assessees offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessees in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessees of that previous year.” A detailed examination of true import of deeming provisions of Section 68 to Section 69D can be found in the decision of Hon’ble Delhi High Court in the case of Yadu Hari Dalmia vs Commissioner Of Income-Tax, Delhi [1980]126ITR48(DELHI) wherein the Hon’ble High Court held as under: “ 15. So far as the first question is concerned, we think that the answer should be in the affirmative. It is no doubt true that s. 69C which makes specific provision for this situation was inserted in the I.T. Act only with effect Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 48 from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975. But we are of opinion that the statutory provision was merely clarificatory and embodies a rule of evidence which is even otherwise quite clear. In the first place, we may point out that s 69B was in operation even during the assessment year 1970- 71. This section makes provision for a case where the assessed is found to have purchased or acquired an investment, bullion, jewellery or other valuable articles and the ITO finds that the amount expended on such acquisition exceeds the amount recorded in the books of account maintained by the assessed and the assessed offers no explanation about such excess or the explanation offered by him is not, in the opinion of the ITO, satisfactory, the excess amount may be deemed to be the income of the assessed for such financial year. The principle behind this section is equally valid where the expenditure incurred by the assessed is, not for the purpose of acquiring bullion, jewellery or other valuable articles but for some other purposes. It is well known that the whole catena of sections starting from s. 68 have been introduced into the taxing enactments step by step in order to plug loopholes and in order to place certain situations beyond doubt even though there were judicial decisions covering some of the aspects. For example, even long prior to the introduction of s. 68 in the statute book, courts had held that where any amounts were found credited in the books of the assessed in the previous year and the assessed offered no explanation about the nature and source thereof or the explanation offered was, in the opinion of the ITO, not satisfactory, the sums so credited could be charged to income-tax as income of the assessed of a relevant previous year. Section 68 was inserted in the I.T. Act, 1961, only to provide statutory recognition to a principle which had been clearly adumbrated in judicial decisions. The provisions of ss. 69 and 69A are likewise purely clarificatory in nature. It has been held under s. 69A that the section embodies only a rule of evidence and that it would be applicable even in respect of an assessment year prior to its insertion (see J. S. Parkay v. V. B. Palekar . On the same analogy, we think that it follows as a normal rule of presumption and evidence that where an assessed has, in fact, incurred certain expenditure end is not able to account satisfactorily for the same, an inference can be drawn that the expenditure or the unaccounted part thereof must have been met out of the undisclosed income of the previous year. The case of an item of proved expenditure is, in principle, no different from that of a cash credit. In both cases, the assessed is in possession of certain funds during the previous year the source of which he is unable or unwilling to explain satisfactorily. It is a matter entirely within the assessed's knowledge as to how the cash credits came to be introduced or the items of wealth came to be acquired or the expenditure was incurred and once it is postulated that such cash credit or investment or expenditure belongs to the assessed then his failure to explain the same or to explain it satisfactorily can constitute a reasonable ground for an inference that the source thereof must be an item taxable under the Act. Otherwise, if a non- taxable source or a capital item was utilised for the purpose in question, the assessed could and would easily have come forward with an explanation to the said effect and proved it to the satisfaction of the ITO. We are, therefore, of opinion. that the whole history of the introduction of ss. 68 to 69D and the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 49 judicial decisions bearing thereupon clearly establish the proposition that these sections are only clarificatory and that even otherwise an addition can be made towards income from undisclosed sources in respect, inter alia, of amounts of expenditure which the assessed is found to have actual incurred but not satisfactorily explained.” Thus, it is evident that unexplained cash credits in the Books of accounts can always be added to the total income of the assessee, since against every credit in the Books of accounts there is a corresponding asset too in the Books of accounts. Provisions of section 68 are mere clarificatory in this regard. Since asset is real, the corresponding liability should also be real too. In case the liability remains to be explained satisfactorily, the only presumption could be that assessee introduced his own income from undisclosed sources in the Books in the garb of credit entry. In those circumstances, Assessing Officer is duly empowered to invoke the provisions of section 68 of the Income Tax Act. However, in the case of the appellant there are no Books of accounts. There are entries of cash loans maintained in loose sheets which have been duly admitted by the appellant to be related to the cash loans taken by the appellant through Brokers. There is absolutely no dispute as to the fact that entries on loose sheets are in relation to the cash loans obtained by the appellant. So far as the question, what constitute Books of accounts is also concerned, this has been answered by the Hon’ble Bombay High Court in the decision in the case of Sheraton Apparels, Max Corporation And others vs Assistant Commissioner Of Income-Tax:, [2002]256ITR20(BOM).Though the decision has been rendered in the context of Section 271(1)( c) of the Income Tax Act, however, the principles laid down by Hon’ble Court duly apply to the Books of accounts mentioned in section 68 of the Income Tax Act. The observations of the Hon’ble High Court are as under: “ 28. In order to appreciate the scope of Clause (1) to Explanation 5, it would be necessary to understand the words in which they are appearing under the said Explanation. Before concentrating on the specific meaning thereof, in the light of the legislative intent behind Clause (1), let us see, what do you mean by \"books of account\". If \"books of account\" is considered in isolation, then, it may mean books in which merchants, traders and businessmen generally keep their accounts and are maintained for recording (a) all receipts and expenses with matters relating thereto; (b) all sales and purchases; and (c) the assets and liabilities. They are the documents and ledgers which must be prepared and kept by the business entity including the profit and loss account and the balance-sheet. In traditional terms, books means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. It may also be assumed that it connotes the intention that it should serve as a permanent record. At the same time, the term of account, i.e., to account, means to reckon, and it is difficult to conceive of any accounting which does not involve Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 50 either additions or subtractions or both of these operations of arithmetic. A book which contains successive entries of items may be a good memorandum book; but until those entries are totalled or balanced, or both, as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which noaccount is made at any time, is not a \"book of account\" in a commercial sense. 29. In different legislations the concept of books of account has been employed. One of such oldest legislation is the law of evidence. Section 34 refers to the words \"entries in books of account\". Section 34 has been interpreted by various High Courts including the apex court. The Supreme Court in the recent judgment delivered in the case of Ishwar Dass Jain v. Sohan Lal, has observed as under (headnote) : \"Under Section 34 sanctity is attached in the law of evidence to books of account if the books are indeed 'account books', i.e., in original if they show, on their face, that they are kept in the 'regular course of business'. 30. So, the account under Section 34 means accounts which are maintained in the regular course of business. 31. The income-tax legislation has been using the term \"book\" or \"books of account\" right from its inception. But, these terms are defined in the Act for the first time by the Finance Act, 2001, with effect from June 1, 2001. Section 2(12A) defines the said terms to mean: \"(12A) 'books or books of account' includes ledgers, day-books, cash books, account books, and other books, whether kept in the written form or as print- outs of data stored in a floppy, disc, tape or any other form of electromagnetic data storage device. 32. Then above definition appears to have been framed by the Legislature keeping in view the development of computer technology. If the newly inserted definition of books of account inserted in the Income-tax Act is examined in contrast to the definition given under Section 34 of the Evidence Act, it will be clear that the stringent requirements of Section 34 are not to be found in the said definition. Obviously, for the simple reason that the purposes of both the legislations are different. So far as the cases at hand are concerned, they relate to the assessment years 1984-85 to 1988-89; much prior to the period of introduction of the definition which was introduced for the first time under the Finance Act, 2001. 33. In order to appreciate the submissions keeping in view the facts of the present cases, one has to concentrate not only on the bare term \"books of account\" but also on the words in whose company the said term is appearing. The extracted sub-clause appearing here in below will have to be understood properly and appropriate meaning will have to be assigned keeping in mind the backdrop in which the concept of \"books of account\" is referred to in Sub- clause (1) of Clause (b) of Explanation 5. The words used are : Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 51 \"Such income is, or the transactions resulting in such income are recorded . . . in the books of account, if any, maintained by him for any source of income .. . before the said date. 34. The term \"books of account\" referred to in Sub-clause (1) of Explanation 5 to Section 271(1)(c) means books of account which have been maintained for determining any source of income. The term \"source of income\" as understood in the Income-tax Act is to identify or classify income so as to determine under which head, out of the various heads of income referred to in Section 14 of the Act, it would fall for the purposes of computation of the total income for charging income-tax thereon. Thus, the term \"books of account\" referred to in this relevant sub-clause of Explanation 5 would mean those books of account whose main object is to provide credible data and information to file the tax returns. A credible accounting record provides the best foundation for filing returns of both direct and indirect taxes. Accounting is called a language of business. Its aim is to communicate financial information about the financial results. This is not possible unless the main objectives of the books of account are to maintain a record of business : to calculate profit earned or loss suffered during the period of time, to depict the financial position of the business ; to portray the liquidity position ; to provide up to date information of assets and liabilities with a view to derive information so as to prepare a profit and loss account and draw a balance-sheet to determine income and source thereof. Thus, the term \"books of account\" referred to in Explanation 5 must answer the above qualifications. It cannot be understood to mean compilation or collections of sheets in one volume. The books of account referred to are those books of account which are maintained for the purposes of the Income-tax Act and not diaries which are maintained merely as a man's private record ; prepared by him as may be in accordance with his pleasure or convenience to secretly record secret, unaccounted clandestine transactions not meant for the purposes of the Income-tax Act, but with specific intention or desire on the part of the assessee to hide or conceal income so as to avoid imposition of tax thereon. 35. The words in Explanation 5 \"books of account, if any, maintained by him for any source of income\" are important words signifying the legislative intent embodied in the Explanation warranting grant of immunity from penalty. The legislative intent is to admit only those books of account maintained by the assessee on his own behalf as by their very nature and circumstances are maintained for the purposes of drawing the source of income. Therefore, when books of account are tendered for claiming the benefit of Explanation 5 to Section 271(1)(c) of the Act, it must be shown to be a book, that book must be a book of account, and on the top of it that must be one maintained for the purposes of drawing the source of income under the Income-tax Act. These essential requirements must be carefully observed while implementing tax legislation in the country where secret and parallel accounts based on frauds and forgeries are extremely common and responsibility of keeping and maintaining accounts for the purposes of the tax legislation is honoured in the breach rather than the observance.” Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 52 Facts relating to the addition- Most humbly it is submitted that during the course of survey proceedings at business premises of Dhoot Sangemermer (P) Ltd at 17,22 Godown Industrial Area , jaipur , certain currency notes were found of different denomination i.e. of Rs. 5/- (One Note) Rs. 10/- (Two Note ) On the currency notes, certain dates are written. On the back side of the said notes, name of a person Shri R.R. Garg is written. The above currency notes were impounded as per exhibit -01 of Annexure -A of impounding order U/s. 133A (3) (ia) dated 05.06.2018. During the survey action statement of the appellant was recorded and he was asked about these currency notes. In reply, appellant stated that these currency notes were related to the cash loans which were taken from some lenders through Shri R.R. Garg . It was further explained that the Rupee-5 note (on which date 03.03.2016 is written) denoted the cash loan of Rs. 5 Lakhs which he accepted through broker Shri R.R. Garg on 03.03.2016. It was also stated that the Rupee- 20 currency note (on which date 03.03.2016 is written) denotes the case loan of Rs. 20 Lakhs which assessee has taken through Shri R.R. Garg on 03.03.2016. He also explained the Rupee -10 currency note (on which date 03.03.2016 is written), similarly, denotes the cash loan of Rs. 10 Lakh which assessee has taken through Shri R.R. Garg on 03.03.2016 and the another Rupee -10 currency - Note (on which date 04.11.2015 is written ), similarly, denotes the cash loan of Rs. 10 Lakha which assessee has taken through Shri R.R. Garg on 04.11.2015. It was further submitted that these currency noted were given by him while taking the loan as memory (like hundi) and were returned back to him while the loans were repaid to the lender. Observations of the Ld Assessing Officer made in the assessment order are extracted as below: “3.4 The assessee, Shri Raghav Dhoot, attended on 09/04/2021 and explained that the cash book prepared by him, which has been enclosed with his letter filed on 09/04/2021, is for the period 01/04/2017 to 05/06/2018, being the date of survey. He further stated that the transactions recorded in papers found and inventorised as per Exhibit-2 of Annexure-A during the course of survey in the case of M/s Dhoot SangmermerPvt. Ltd relates to cash loans taken by him and these have been owned up by him as per letter dated 05/04/2021 filed in the case of the company. It is further stated that a cash book containing all the transactions have been prepared by him, as per which the peak of negative balance comes to Rs. 1,52,98,000/- (as on 04/06/2018). 3.5 During the course of assessment proceedings, the assessee was asked to submit the complete details of creditors, i.e. name, address, PAN, return of income and bank statements in order to establish the identity and creditworthiness of the creditors and genuineness of transaction. It was also show-cause as to if these details are not submitted by the assessee, then why the same should not be treated as unexplained credits and added to his income accordingly. 3.6 Neither the assessee has filed reply on this issue, nor have the complete details of creditors have been furnished as required. This being a time-barring Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 53 case, it is not feasible to give further time to the assessee to make compliance. In view of the categorical admission made by the assessee that the exhibit-2 relates to cash loans taken by him, in which amounts are in coded form by suppressing two zeros, it is clear that the cash loans have been taken by the assessee and repayment has been made by him and the amounts mentioned therein are in coded form as admitted by him. The assessees as well as other directors of the company have also admitted that the company M/s Dhoot Sangmarmar Pvt. Ltd has nothing to do with the papers in Exhibit A-2 otherwise than admitted by them in their letter dated 05/04/2021. 3.7 The assessee has further submitted that from the details given in Exhibit-2 of Annexure-A, it is evident that these are money borrowed by him and in such cases; nobody is willing to give confirmations and other details. This plea of the assessee is not acceptable as the primary onus to explain the credits is on the assessee by way of furnishing complete details of creditors to establish the identity and creditworthiness of the creditors and genuineness of transactions. Now with regard to the peak-working made by the assessee and the copy of cash book enclosed with the reply dated 09/04/2021, it is to be stated that the assessee does not have any satisfactory explanation for every credit or debit entry as per the cash book prepared, as admitted by him, the credit following a debit entry is treated as referable to the latter to the extent possible and “peak” of the credits needs to be treated as unexplained. In the instant case, the peak credit works out at Rs.7,45,60,400/- as on 30/11/2017, which is added to assessee’s total income u/s 68 of the Income-tax Act, 1961. The tax is to be charged u/s 115BBE of the Act.” From the facts as discussed above and the observations of the Ld AO made in the assessment order, there is no dispute to the fact that appellant was not maintaining any Books of accounts. During the course of survey at the premises of M/s Dhoot Sangmarmar Pvt Ltd certain loose papers relating to cash loans and repayment of such cash loans obtained by the appellant through brokers were found. During the course of assessment proceedings, the appellant prepared a cash Book of all these entries of loans obtained and loan repaid for the entire period i.e 1.04.2017 to 05.06.2018 to demonstrate the availability of cash for repayment as repayment has also been made through loans only. Section 68 of the Act specifically refers to the “sum credited in the Books of an assessee maintained for any previous year”. Thus it is evident that the cash Book prepared on the basis of entries of loans receipt and payment cannot be treated as “Books of account maintained for any previous year”. Evidently, the cash book was prepared during the course of assessment proceedings and is not a Book of account of any previous year as it contains the entries for the entire period for which cash loans were obtained and repaid till the date of survey. It is not even the allegation of the Ld AO that any sums have been found credited in the Books of accounts of the assessee, source of which assessee Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 54 failed to explain. Even during the course of assessment proceedings, books of accounts of the assessee were neither called by the Assessing Officer nor were examined by the Ld Assessing officer. The alleged sums treated as cash credits were not even found credited in the Bank accounts of the assessee either, so as to come under the reach of Section 68 of the Income Tax Act. Ld Assessing Officer merely invoked the provisions of Section 68 in respect of cash loans obtained by the appellant which Ld Assessing Officer himself admitting as loans. In this regard, following findings of the Ld Assessing Officer are reiterated: “In view of the categorical admission made by the assessee that the exhibit-2 relates to cash loans taken by him, in which amounts are in coded form by suppressing two zeros, it is clear that the cash loans have been taken by the assessee and repayment has been made by him and the amounts mentioned therein are in coded form as admitted by him.” Thus, it is evident that there are neither any Books of accounts of the assessee, nor any credit therein. Even the alleged amounts which Ld Assessing Officer himself accepting as cash loans are recorded in coded from. There can’t be any coded entries in the Books of accounts. When there are no Books of accounts, nor there is any credit which remained unexplained, the test of genuineness, identity and creditworthiness of the creditor etc cannot be applied to the documents found during the course of survey. In appellant’s case, the appellant through a Broker namely Sh R.P. Garg, obtained cash loans from various persons. A portion of these loans was also repaid along with interest thereon. Loans obtained by the assessee can never be treated as the income of the assessee. Source of advancing of such loan be it in cash or otherwise, has to be explained by the person advancing the loan. The said loans which do not from part of the Books of accounts of the assessee, which have neither been introduced in the books nor deposited in the Bank nor utilized for discharging any book debt or book liability, and neither found in the form of cash in hand with the assessee, can never be treated as income of the assessee under any provisions of the Income Tax Act. When LD AO was himself satisfied that the transactions mentioned in the exhibits are of loan taken and loan repayment, where remains the question of treating the same as unexplained credits. In case observations of the Ld AO made in the assessment order and reiterated in the remand report that assessee failed to discharge the onus by furnishing names, address, copy of ITR, Bank statement etc of the creditors is accepted, it is beyond imagination as to how any adverse view of the transactions mentioned in the exhibit can possibly be taken. If the Assessing Officer is not satisfied, the only legal course available to the LD AO is to disregard the exhibit and transactions mentioned therein. Where the question of any unexplained cash credits arises when there is no credit at the first instance. Under the income tax act, chargeability to tax is of real income accruing or arising to the assessee or the income received or deemed to be received by Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 55 the assessee. Cash loans obtained by the assessee which have never been introduced in the books of accounts, can under no circumstances be reckoned as income of the assessee. As submitted earlier and accepted by the LD AO also, the appellant obtained cash loans and also repaid loans and interest thereon. However, loans repaid during the year including the interest are not more than the loans obtained during the year. It is not the case of the Ld AO that the cash repayment of loans and interest made during the relevant year exceeded the amount of cash loan obtained by the assessee and thus the excess represent the income of the assessee from undisclosed sources. In the present case, loans repayment and payment of interest whatever has been made, has been made out of loans only. Provisions of section 68 are applicable when own undisclosed money is routed in the Books of accounts in the garb of loan/credits etc. There is no such allegation of the Ld Assessing Officer that the entries of loan and repayment of loan represent assessee’s own unaccounted money. In the circumstances, the absolutely arbitrary and illegal addition made by the Assessing Officer deserves to be quashed and it is prayed accordingly. The appellant also relies on following judicial pronouncements in support that provisions of section 68 read with section 115BBE of the Income Tax Act do not get attracted. It has been consistently held by various courts and Hon’ble Tribunal that since no books of account are maintained in the ordinary course of the business of the assessee, addition u/s 68 is not tenable in the absence of Books of accounts:  CIT v. Bhaichand H. Gandhi [1983] 141 ITR 67 (Bom).  CIT v. Taj Borewells [2007] 291 ITR 232 (Mad).  Sheraton Apparels Vs ACIT ,256 ITR 20 (Bombay)  Baladin Ram Vs CIT (71ITR 427) (SC) Findings of Ld CIT(A)- Ld CIT(A) made the following observations” “Even if the transactions were through banking channel and / or even if the transaction were recorded in the disclosed books of accounts even then the taxpayers are required to satisfy the conditions laid down in section 68 and 69 etc. of the Act. Merely because in the present appeal case, the loan transactions of the appellant are in cash and have been kept undisclosed and have been detected only during the course of survey action does not make the appellant eligible for some extra premium benefit or treatment regarding exemption from not complying with legal requirements and taxability under section 68, 69 and 69D etc. of the Act. It is a settled law that no premium can be awarded to the dishonesty. If the claim of the appellant is allowed that will tantamount to giving reward and premium to the money laundering practices. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 56 Nulluscommodumcaperepotest de injuriasuapropria - meaning no man can take advantage of his own wrong – is a maxim of law, recognized and established.” The observations of the Ld CIT (A) are totally misplaced. Observations that merely because in the present appeal case, the loan transactions of the appellant are in cash and have been kept undisclosed and have been detected only during the course of survey action does not make the appellant eligible for some extra premium benefit or treatment regarding exemption from not complying with legal requirements and taxability under section 68, 69 and 69D etc are absolutely contrary to the statutory mandate. Income tax Act nowhere provides for taxability of loan transactions, When bogus loans are introduced in the Books only then provisions of section 68 gets kicked in. Section 68 or any other provision nowhere mandates taxing the loan transactions as income or deemed income. Loans transactions detected during the course of search or survey action which have not been introduced in the Books of accounts can never be treated as bogus. It is only the discovery of cash loan transactions during the course of survey which gave rise to the present assessment proceedings. However, there can never be bogus unrecorded transactions. Transactions are genuine that’s why the same have been found during the course of survey. Thus, it is evident that the action of the Ld AO as confirmed by the Ld CIT (A) are absolutely illegal, irrational and illogical. Ld Assessing Officer as well as Ld CIT (A) are resorting to equivocation fallacy. On the one hand they are alleging that cash loan transactions were found during the course of Survey action on the other hand they are alleging that loan transactions are not genuine. It is beyond comprehension when loan transactions are not genuine, where comes the question of treating the same as appellant’s own income u/s 68 of the Income Tax Act. The survey action has not resulted into discovery of any unexplained monies with the appellant or undisclosed investment made by the appellant or unexplained expenditure made by the appellant. In case the income tax authorities believe that the cash loan transactions recorded in the loose sheets are not genuine, what action is required to be taken on the basis of those loose sheets. They have only to be disregarded for all intent and purposes. Provisions of Section 68 do not apply to cash loans whether recorded or recorded but to the credits be they be in cash or through Bank entered in the Books of accounts which could not be satisfactorily explained. B. No Valid Invocation of Section 69A or Section 115BBE- Ld CIT(A) while confirming the addition held that if addition is not sustainable under section 68, it is sustainable u/s 69A of the Income Tax Act. In this regard it is submitted that the Ld. AO has not invoked Section 69A in the assessment order. Even otherwise, there is no finding that the assessee was found in possession of any unexplained money. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 57 The Ld. CIT(A) has erroneously sought to justify the addition under Section 69A, which is impermissible since:  The AO did not invoke the said provision.  The factual ingredients of section 69A are not satisfied. Without valid application of section 68 or 69A, the application of section 115BBE (which is only a tax rate provision) automatically fails. C. Nature of Transactions remained as “Cash Loan” Even the Ld Assessing Officer in the assessment order accepts that the entries pertain to cash loan transactions – both borrowed and repaid. Merely because the entries were found in a third party survey, and referred to the assessee, does not make them undisclosed income unless they can be linked to the assessee’s unexplained assets or credits. Cash loans that are neither recorded in books nor found as unaccounted investments cannot be taxed under sections 68 or 69A. Submissions on grounds relating to charging of Interest and penalty consequent to invalid additions- Since the underlying addition is unsustainable, the interest charged under section 234B and the penalty initiated under section 271AAC are also liable to be deleted. The levy of penalty under section 271AAC is not automatic and must follow a valid and sustainable addition. In view of the above facts and submissions, the appellant respectfully prays that:  The assessment order dated 18.04.2021 passed under section 143(3) may kindly be declared null and void ab initio for being in violation of CBDT Instructions.  Without prejudice, the addition of ₹7, 45, 60,400/- made under section 68 r.w.s. 115BBE may kindly be deleted as it is legally unsustainable on merits.  Consequently, interest under section 234B and penalty initiated under section 271AAC may also be deleted.” 6. To support the contention raised in the written submission ld. AR of the assessee also filed a detailed paper book and the index of the paper book reads as follows:- Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 58 S. No. Particulars Page No. 1. Written submission 1-20 2. Notice u/s 143(2) 21-22 3. Impounding of books u/s 133A(3) & retention letter 23-24 4. Summon u/s 131 to Dhoot Sangemermer (P) Ltd. 25 5. Letter by Addl CIT Range-2 26 6. Letter of DCIT Circle-2 to ITO ward 4(4) 27-28 7. Copy of selection guidelines issued by CBDT 29-32 3(ii) 8. Income Tax Rohtak vs. Crystal Phosphates Ltd in ITA No. 140 & 141/2013 (O & M) (P&H) 33-34 Page 38 last para 9. CIT vs. Best Plastics Pt. Ltd. reported in 295 ITR 256 (Del) 41 Para3 10 CIT Vs. Smt. Nayana P. Dedhia 270 ITR 572 (AP) 42-44 Last para 11. S.F. Chogule Vs JCIT in ITA No 458/PN/2012 458/P and ITA No 605/PN/2012 45-52 Para 14 12. Agrawal Farm Equipments vs Income Tax Officer on 26 August, 2004 (2004) 85 TTJ Jab 723 53-58 Para 18 13. Mrs. Payal Kumai Jagadhari V/s ITO ITA No. 5 23/Chd/2011 dated 24.02.2011 59-64 Para 6 14. DCIT Vs Raja Arora in ITA No. 623/Del/2024 65-71 Para 11 15. Commissioner of Income Tax vs P. Mohanakala (2007) 291 ITR 278 (SC). 72-78 Last para 16. Yadu Hari Dalmia vs Commissioner Of Income-Tax, Delhi [1980] 126[TR48(DELHI) 79-87 Para 15 17. Sheraton Apparels, Max Corporation And others vs Assistant Commissioner Of Income-Tax:, [2002]2561TR20(BOM). 88-96 Para 28 18. CIT v. Bhaichand H. Gandhi [1983] 141 ITR 9 67 (Bom). 97-98 Para 5 19. CIT v. Taj Borewells [2007] 291 ITR 232 (Mad) 99-104 Para 6 20. Baladin Ram Vs CIT (711TR 427) (SC) 105-111 Last para 7. The ld. AR of the assessee in addition also argued that the case of the assessee was not covered under the survey proceeding but the reasons for taking up the case of the assessee under CASS based on the reasons that there was a survey case of the assessee. The very first reason for taking up the case of the assessee was on wrong facts and therefore, the whole proceeding is void ab initio as it violates the extensive guidelines issued by the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 59 CBDT. So far as the merits of the case ld. AR of the assessee submitted that the case of the assessee if considered to be loan transactions then why the peak is considered. There was no loose paper no other corroborative evidence were found. If the assessee’s case of cash loan or deposit the ld. AO should have initiated proceeding u/s. 269SS/T but no such proceeding were initiated all these facts shows that the revenue has failed to establish the allegation and thereby incorrectly charged the peak which cannot be added as income of the assessee when the ld. AO has already recorded a finding that the assessee has borrowed the money and repaid in that case the addition is required to be made of the unexplained loan and not of the peak income and thereby even on merits of the case the addition made is required to be deleted. 8. Per contra, Ld. DR supported the orders of the lower authority and raised the similar contention as raised in the orders. He vehemently argued that the case of the assessee was taken up for scrutiny as per the extensive guidelines of the board and therefore, there is no merits in the arguments of the ld. AR of the assessee. He also submitted that when the assessee owned up the transaction there is no room left for the assessee to deviate Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 60 from the admission so made. The ld. DR relying on the finding at page 50 stated that wherein the ld. CIT(A) considered the plea of the assessee but was not found tenable as the assessee in that very survey proceeding admitted that the documents pertained to him and that being the survey proceeding the case is covered by survey. As regards the addition of peak made in the assessment order the same was worked out based on the cash book submitted by the assessee and was worked out because the assessee has not explained the details of the credit and debit entries. Based on these arguments ld. DR relied upon the finding recorded in the orders of the lower authority. 9. We have heard both the parties and perused the materials available on record. Vide ground no. 2 the assessee challenged the issuance of notice u/s. 143(2) of the Act in the case of the assessee dated 26.09.2019. Since this ground is going to the root of the very validity of the assessment made based on the notice issued u/s 143(2) the same is considered for adjudication first. Ld. AR of the assessee drawing our attention to the notice issued u/s 143(2) of the Act by the Assessing Officer on 26.09.2019 is void ab initio having been issued in violation of the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 61 binding CBDT Instruction No. 04/2018. The said instruction reads as follows: Instruction No. 04/2018 Government of India Ministry of Finance Department of Revenue Central Hoard of Direct Taxes (ITA-II division) North Block New Delhi the 20th August 2018 To All Pr. Chief-Commissioners of Income-tax/Chief-Commissioner of Income-Tax All Pr. Directors-General of Income tax/Directors-General of Income-tax Sir/Madam, Subject: Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2018-2019-regd. 1. The parameters for manual selection of returns for Complete Scrutiny during financial year 2018-19 are as under.- (i) Cases involving addition In an earlier assessment year(s) on a recurring issue of law or fact- a. exceeding ₹ 25 lakhs in eight metro charges at Ahmedabad. Hengaluni, Chennai, Delhi. Hyderabad. Kolkata. Mumbai and Pune, while at other charges, quantum of add non should exceed ₹ 10 lakhs; b. It exceeding ₹ 10 crore In transfer pricing cases and where such an addition- 1. has become final as no further appeal was/has been filed; or 2. has been confirmed at any stage of appellate process In favour of revenue and assessee has not filed further appeal, or 3. has born confirmed at the 1st stage of appeal in favour of revenue or subsequently and further appeal of assessee is pending (ii) Cases pertaining to Survey under section 133A of the Income-tax Act. 1961 (‘Act’) excluding those cases where books of accounts. documents etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned Income of preceding assessment year. However, where assessee has retracted from disclosure made during the Survey, such cases will nut be covered by this exclusion. Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 62 (iii) Assessments In search and seizure cases to be made under section(s) 153A. 153C, 158B, 158BC & 158BD read with section 143(3) of the Act and also for return filed for assessment year relevant to previous year in which authorization for search and seizure was executed under section 132 or 132A of the Act. (iv) Returns filed in response to notice under section 148 of the Act (v) Cases where registration/approval under various sections of the Act such as 12A, 35(1)(ii)/(iii), 10(23C) etc. have not been granted or have been cancelled/withdrawn by the, Competent Authority, yet the assessee has been found to be claiming tax-exemption/deduction in the return. However, where such orders of withdrawal of registration/approval have been reversed/set-aside In appellate proceedings, those cases will not be selected under this clause (vi) Cases In respect of which information pointing out specific tax- evasion for the relevant year is given by any Government Department/Authority/Agency/Regulatory Body. However, before selecting a return for scrutiny under this criterion, Assessing Officer shall take prior administrative approval from concerned jurisdictional Pr. CIT/Pr.DIT/CIT/DIT. 2. Through Computer Aided Scrutiny Selection (CASS), cases are being selected in two categories viz. Limited Scrutiny & Complete Scrutiny in a centralized manner under CASS-2018. CASS is a system based method for scrutiny selection which identifies the cases through data-analytic and three-hundred sixty degree data profiling of taxpayers and In a non- discretionary manner. The list of these cases is being/has been separately Intimated by the Principal DCIT (Systems) to the concerned Jurisdictional authorities for further necessary action. 3. This may be brought to the notice of all concerned for necessary compliance. 4. Hindi version to follow. (Rohit Garg) Director-ITA.II, CBDT F.No. 225/282/2010/ITA.II Relying on the above criteria for selection of the case the ld. AR of the assessee submits that the CBDT in accordance with the provision of section 119 of the Act issued the above instructions Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 63 prescribing the Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2018-2019. He submitted that these instructions are binding on all the Income tax authorities. He with the above arguments stated that the case of the assessee was selected on the issue of “Survey under section 133A of the Act” whereas in fact in the case of the assessee there was no survey conducted. The bench also noted from the order of the ld. CIT(A) that on page 51 of his order in first para he observed as under: “The limited contention of the appellant that survey action was not carried out in his name i.e. survey authorization was not in his name – is found to be factually correct.” Even the ld. DR did not controvert this basic fact and therefore, the assessment framed on wrong notice u/s. 143(2) is required to be quashed. In fact, the survey was in the case of the company where the assessee was director. Therefore, the case of the assessee was covered under compulsory scrutiny on a presumption which was not there and therefore, considering that notice being in violation of CBDT instruction the assessment framed is required to be quashed. While placing that contention he relied upon the Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 64 decision of the Hon’ble Supreme Court in the case of UCO Bank vs. CIT (237 ITR 889) and Hon’ble Delhi High Court in the case of CIT Vs Best Plastics Pvt. Ltd., reported in 295 ITR 256 (Del) wherein the Hon’ble Delhi High Court has held as under : 1. The Commissioner of Income-tax and the Income-tax-Appellate Tribu- nal have both relied upon a decision of the Supreme Court in Commis- sioner of Customs v. Indian Oil Corpn. Ltd. [2004] 267 ITR 272 to have that the circulars issued by the Central Board of Direct Taxes (CBDT) binding on the officers of the Income-tax Department. To the same effect is the decision of the Supreme Court in UCO Bank v. CIT [1999] 237 ITR 889. 2. The respondent-assessee's return was in the instant case taken up for scrutiny in violation of the Central Board of Direct Taxes circular according to which if the returned income is 30 per cent more than the income of the earlier assessment year, the case of the assessee should not be scrutinised under Instruction No. 1922, dated 9-3-1995, extended the operation of the circulars to the assessment year 1995-96 also as is evident from the following paragraphs appearing in the same : \"Under Board's Instruction No. 1917, dated 3-6-1994, certain categories of cases were kept outside the scope of sample scrutiny during the financial year 1994-95. On such category consisted of those assessees who declared a total income for the assessment year 1994-95 that was more by 30 per cent of the total income returned for the assessment year 1993-94 subject to the conditions that : (a) the income for both the assessment years exceeded the basic exemption limit; (b) the total income for the assessment year 1993-94 was Rs. 5 lakhs or less; and (c) the tax was fully paid for the assessment year 1994-95 before the return was filed. 2. Suggestions have been received to extend this scheme for the assessment year 1995-96 also. After considering them, it has been decided that the above norm of exclusion from sample scrutiny could be Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 65 extended for the assessment year 1995-96 also in such cases where the following criteria are satisfied : (i)the income returned for the assessment year 1995-96 is at least 30 per cent more than the total income returned for the assessment year 1994-95.\" 3. The assessment order passed by the Assessing Officer has in the light of the above been set aside by the Commissioner which order has been upheld by the Tribunal in appeal. No substantial question of law arises for our consideration in the light of the settled legal position emanating from the aforementioned judgments of the Supreme Court. This appeal accordingly fails and is hereby dismissed. As the facts of the case on hand being identical with that of above case laws cited, we respectfully following the above said decisions thereby hold that the assessment framed by the Assessing Officer u/s 143(3) dated 18.04.2021 pursuant to the notice issued u/s 143(2) dated 26.09.2019 which was not on the reasons mentioned and thereby the same was taken up without valid reasons it violates CBDT instruction No. 04/2018 dated 20.08.2018 and thereby bad in law and void ab initio and the same is hereby quashed. Thus, ground no.2 raised by the Assessee is allowed. 10. Even otherwise as held in various cases that entries in the loose sheet are not books of account and therefore, merely on that loose sheet addition u/s. 68 of the Act and that of loan and that again on peak basis cannot be considered as income of the assessee. To support his contention, we get support of our view as Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 66 held by the apex court in the case of Common Cause (A Registered Society ) Vs. Union of India [ 77 taxmann.com 245(SC) ] wherein the apex court has held that : “20. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court. 21. We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, we have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of account but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily. We find the materials which have been placed on record either in the case of Birla or in the case of Sahara are not maintained in regular course of business and thus lack in required reliability to be made the foundation of a police investigation. 22. In case of Sahara, in addition we have the adjudication by the Income Tax Settlement Commission. The order has been placed on record along with I.A.No.4. The Settlement Commission has observed Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 67 that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disk and pen drive etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. It further observed that the department has no evidence to prove that entries in these loose papers and electronic data were kept regularly during the course of business of the concerned business house and the fact that these entries were fabricated, non- genuine was proved. It held as well that the PCIT/DR have not been able to show and substantiate the nature and source of receipts as well as nature and reason of payments and have failed to prove evidentiary value of loose papers and electronic documents within the legal parameters. The Commission has also observed that Department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. 23. It is apparent that the Commission has recorded a finding that transactions noted in the documents were not genuine and thus has not attached any evidentiary value to the pen drive, hard disk, computer loose papers, computer printouts. 24. Since it is not disputed that for entries relied on in these loose papers and electronic data were not regularly kept during course of business, such entries were discussed in the order dated 11.11.2016 passed in Sahara's case by the Settlement Commission and the documents have not been relied upon by the Commission against assessee, and thus such documents have no evidentiary value against third parties. On the basis of the materials which have been placed on record, we are of the considered opinion that no case is made out to direct investigation against any of the persons named in the Birla's documents or in the documents A-8, A-9 and A-10 etc. of Sahara.” In the light of that finding of the apex court the action of the ld. AO to tax the jotting of advance taken / given and that too of taxing the based on the loose sheet which were not be considered as regular books of account and thereby even on merits of the case taxing the peak of the loan transaction cannot be made in the hands of Printed from counselvise.com ITA No. 491/JPR/2025 Sh. Raghav Kumar Dhoot, Jaipur. 68 the assessee without proving that the assessee is either doing business in his individual capacity or that on behalf of the company. Therefore, without doing any inquiry and bringing any material on record even on merits of the case the addition of loan taken and given back as is evident from the record cannot be added and that on peak theory basis. Thus, even on merits that addition cannot sustain is directed to be deleted. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 06/08/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBkSM+ deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06/08/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Sh. Raghav Kumar Dhoot, Jaipur. 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-1, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 491/JPR/2025} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "