RAJESH KUMAR KEDIA,KOLKATA V. DCIT, CENTRAL CIRCLE-1(1), KOLKATA, KOLKATA

CO 26/KOL/2025

AI Insights

The case involves cross appeals by the Revenue and the assessee, Rajesh Kumar Kedia, against the orders of the Commissioner of Income-tax (Appeals), Kolkata, which pertained to the assessment years 2016-17 and 2019-20. The primary contention by the Revenue was the deletion of substantial additions made by the Assessing Officer (AO) under section 69A of the Income-tax Act, 1961, concerning unaccounted cash transactions and brokerage payments. The assessee, through Cross Objections, challenged the legality of the order passed under sections 147/143(3) of the Act. The Tribunal examined the materials and evidence presented, including the statements of finance brokers and the documents seized during the search operations, and found them insufficient to substantiate the Revenue's claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779693 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Appeal Filed On: 19-03-2025
• Other Referred Cases: Common Cause Vs. Union of India, V.C. Shukla vs. State, Commissioner of Income Tax (Central-II) Vs. D.K. Gupta, Ashwani Kumar Vs. ITO, CIT Vs. S M Agarwal, Ushakant N Patel vs CIT, ACIT Vs. Satyapal Wassan, PCIT vs Gaurang Bhai Promod Chandra Upadhyay, CIT vs Shadi Ram Ganga Prasad, CIT vs Vivek Aggarwal, PCIT vs Umesh Israni, CIT vs. Smt. Sunita Dhadda, Jesraj Jiwanram Vs. CIT, Commissioner of Income-tax, Jaipur -II vs. Vinayak Plasto Chem (P.) Ltd., Sanjay R. Shah vs. Income-tax Officer, ACIT Vs. Subhas Kumar Kedia, Girdhar Gopal Dalmia vs. UOI, Mohanlal Champalal Jain vs. ITO, Narayan prasad Bagaria vs. ITO, Excel Commodity and derivative private limited Vs. union of India & Ors., CIT vs. V.C. Shukla and Ors.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: S S.M SURANA; SUNIL SURANA; ARS
• Keywords: Set aside; Reassessment proceedings; Unexplained expenditure; Document seized; Documents seized; Reopening of assessment; Search and seizure; Loose papers; Opportunity of cross examination; Tangible material; Borrowed satisfaction
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA Nos.137 & 138/KOL/2025 (Assessment Year:2016-17& 2019-20) DCIT, Central Circle-1(1) Aayakar Bhawan Poorva, 3rd Floor, 110 Shantipally, Kolkata-700107, West Bengal Vs. Rajesh Kumar Kedia, Flat No.3C, Santosh, 9 Hungerford Street, Kolkata-700017, West Bengal (Appellant) (Respondent) PAN No. AEWPK6120K CO Nos. 25 & 26/KOL/2025 (Assessment Year: 2016-17& 2019-20) Rajesh Kumar Kedia, Flat No.3C, Santosh, 9 Hungerford Street, Kolkata- 700017, West Bengal Vs. DCIT, Central Circle-1(1) Aayakar Bhawan Poorva, 3rd Floor, 110 Shantipally, Kolkata-700107, West Bengal (Appellant) (Respondent) Assessee by : S/Shri S.M Surana & Sunil Surana, Ars Revenue by : Shri Sanat Kumar Raha, DR Date of hearing: 29.07.2025 Date of pronouncement: 17.10.2025 O R D E R Per Rajesh Kumar, AM: These Cross appeals preferred by the Revenue and assessee against the orders of the ld. Commissioner of Income-tax (Appeals), Kolkata-20 (hereinafter referred to as the “Ld. CIT(A)”] dated 26.09.2024 & 27.09.2024 for the AYs2016-17, 2019-20. Printed from counselvise.com Page | 2 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 A.Y. 2016-17 ITA No. 137/KOL/2025& CO No. 25/KOL/2025 02. The Revenue has challenged the deletion of addition by learned CIT (A) of ₹9,41,60,000/- as made by the learned AO u/s 69A of the Income-tax Act, 1961 (the Act) by ignoring the incriminating documents. Besides the Revenue has challenged the deletion of addition by learned CIT (A) in respect of brokerage payment against the cash loans to the tune of ₹17,60,000/- estimated by the AO at the rate of 2%, whereas the assessee by way of Cross Objection has challenged the legality of the order passed u/s 147/143(3) of the Act vide ground no.1 to 4, whereas from ground no.5 to 7 the assessee has supported the order of learned CIT (A) deleting the addition on merit. 03. First, we will take the Revenue’s appeal, challenging the deletion of addition on merits as well as the ground no.5 and 6 raised by the assessee supporting the deletion of addition by the learned CIT (A). 04. At the outset, we observe that there is a delay in filing the appeal by 46 days by the Revenue, for which condonation petition was filed. After perusing the contents of the condonation petition, we are of the view that the delay is for bonafide and genuine reasons and therefore condoned by admitting the appeal for adjudication. 05. The facts in brief are that the assessee filed the return of income on 26.07.2016, declaring total income at ₹9,78,820/-, which was processed u/s 143(1) of the Act on 30.08.2016 accepting the returned of income. Subsequently, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148A(b) of the Act, by passing the order u/s 148A(d) of the Act and thereafter, issuing notice u/s 148 of the Act on 11.04.2023. The case of the assessee was reopened based Printed from counselvise.com Page | 3 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 on the information available with the learned AO that during the course of search and seizure action u/s 132(1) of the Act at residential and business premises of Sanwaria and Kasera Group on 30.11.2018, and subsequent dates by the IT Investigation Kolkata, wherein huge incriminating documents were found revealing unaccounted cash transactions between the lenders and borrowers through these finance brokers. It was also stated that for entering into unrecorded cash loan transactions among parties, important documents called Ruka ( known as Hundi) was prepared by the borrower which was given by the borrower to the lender through finance broker. The Ruka is confirmatory document with signature of the receiver as guarantee to repay the lender. It was also stated that as per prevalent market practices some zeros within (sometimes 2 and sometimes 5 are suppressed in relation to the transactions of cash which was duly admitted by the finance brokers. Pravin Kumar Kashera in his statement recorded u/s 132(4) of the Act during the search. The learned AO also extracted the statement recorded in search from page no. 2 to page no.7 of the assessment order. The learned AO on the basis of said information came to the conclusion that the seized documents contained the name of the assessee who is reported to have invested unaccounted money to the tune of ₹8,80,00,000/- as cash amount through brokers. 06. The assessee is filed the return of income on 25.04.2023, in compliance to notice issued u/s 148 of the Act declaring total income at ₹9,78,820/-. Thereafter, the learned AO issued statutory notices including questionnaire calling upon the assessee to file details/ documents explaining the said unrecorded transactions which was replied by the assessee vide letter dated 10.08.2023, which is also extracted by the learned AO from Para no.5. In the said letter, the Printed from counselvise.com Page | 4 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 assessee denied to have made any cash transactions through Sanwaria and Kasera and challenge the authenticity of the documents relied upon by the learned AO and lack of credible and specific allegation against the assessee. The learned AO thereafter discussed the modus operandi in para no.6.1 of the assessment order, thereafter the learned AO reproduced the alleged unrecorded transactions on page no.15,16,17 and 18 of the assessment order. The learned AO in Para no.6.3 of the assessment order noted that the documents recovered from Uma Shankar Kasera Contained the name of the Rajesh Kumar Kedia in many places and also name of East India then concluded that both the entities were involved in advancing cash loans. Thereafter, the learned AO after extracting the materials seized on page no.21,22,23, noted that the assessee has advanced money to the tune of ₹8,80,00,000/-, which is unexplained within the meaning of section 69A of the Income-tax Act, 1961 (the Act) and after adding interest at the rate of 7%, which comes to ₹61,60,000/- a total addition of ₹9,41,60,000/- was made. At the same time, the learned AO also added brokerage at the rate of 2% which comes to ₹17,60,000/- as unexplained expenditure in the assessment framed u/s 147/143(3) of the Act dated 06.09.2023. 07. In the appellate proceedings, the learned CIT (A) deleted the addition after taking into consideration their replies, contentions and arguments of the assessee by observing and holding as under: - “I find that the grounds for making additions u/s 69A is the statement of Umashankar Kasera and Praveen Kumar Kasera and the papers found in the search in their cases who were the Finance Brokers. I have looked into the statements of the finance brokers. I find from the recorded statements, the copy of which was filed before me that the finance brokers have not named the assessee anywhere as lender or borrowers. The counter name of any borrower or lender has also not been stated in their statement. In fact the search party has not raised any question with regard to the identity of the assessee. Not a single transaction has been identified which can be related to the assessee. Printed from counselvise.com Page | 5 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 Some names are there in the statement of the brokers but the said names are not in any way connected with the assessee nor any link has been established with the assessee that they were borrowers from the assessee. The statement of the brokers is general statement accepting the mode and system of transaction in finance market. There was no copy of Rukkawhicih can be said to belong to the assessee. It is evident that there is absolutely no evidence whatsoever, to link the assessee with the investments found recorded by the finance Brokers in their papers. The AO has also not himselfsummoned the Finance Brokers inspite of specific request by the assessee to cross examine him. It shroud have been done to find the real Rajesh Kedia, the borrowers to whom money was lent, exact amount of money and the year to which the transactions related and other particulars. While making addition u/s 69A, there has to be some acceptable evidence to show that the assessee has in fact made investments which was not disclosed. I also examined the paper reproduced in the assessment order that there is no year of the transactions. No figure is stated in the papers except some symbols. The brokers and the investigation wing have deciphered symbols but there is nothing in the papers itself to give meaning to the figures. It cannot be found from the papers as to whether the amount was lent or borrowed the period for which the transaction was entered into, the rate of interest etc. I could not be able to find out any indulgence of the assessee in any of the documents found from the brokers. It is clear from the papers found that these papers are dumb documents. Nothing can be ascertained from these papers. There cannot be any dispute. It has been held in number of cases as has been cited by the assessee that addition cannot be made on the basis of dumb documents. Reference can be made to the following few judgements: - The case of Common Cause Vs. Union of India - 30 ITJ 197 (SC) may be citedwherein it was held as under:- …………………. In the case of V.C. Shukla (SC) it was held as under:- ………………… In the case of Commissioner of Income Tax (Central-II) Vs. D.K. Gupta [2008] 174 TAXMAN 476 (DELHI) ……. In the case of Ashwani Kumar Vs. ITO - 1999 (39) ITD 183 Delhi – ITAT ………… In CIT Vs. S M Agarwal (2007) 293 ITR 43 (Del) it was held that……… In the case of Ushakant N Patel vs CIT (2006) 6 ITJ 312 (Gujrat HC) …………………………. In the case of ACIT Vs. Satyapal Wassan (2007) 295 ITR (AT) 352 (Jabalpur)…………………….. Printed from counselvise.com Page | 6 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 On going through the copy of report sent to the assessee I find that similar assertions are also made in the report relating to assessee. Therefore, the issue is covered bythe judgement of the High Court which is binding. The addition thus made on the basis of dumb papers seized from Sanwaria and Kasera cannot be established. I also find from the excel sheet that about 25 transactions have been attributed to the assessee but from the papers found and copied in the assessment order the name Rajesh Kedia appears only in 11 to 12 places. The addition is thus not sustainable. It is to be noted that the statement of the Kasera also is of no help to the AO. Though there is no evidence, nor the name of the assessee in the statement, yet the statement alone is not sufficient to make the addition. There should be corroborative material to justify the addition. It can be seen that the AO have relied on the statement of the brokers with regard to the symbols. However apart from the statement of the broker there is no other evidence or Rukka to suggest that particular symbol represents particular amount. The AO has not called any broker or any borrower to bring evidence on record about the actual investment. In this regard, it is to be kept in mind that material seized in the form of some papers were found in the premises of third party. Hence, to draw presumption that the transactions were related to the assessee is not legally permissible in view of non-applicability of the provisions of section 132(4A)/292C of the Act to other than the searched person. The presumption as per section 132(4A)/292C of the Income tax Act is applicable when documents were found in the possession of the assessee and in that case, such documents and contents recorded therein can be considered as true and correct and it is the duty of the assessee to rebut the presumption. But, in assessee’s case the documents are found in the premises of third party, the presumption as contended in section 132(4A)/292C of the Act is not applicable. The judgement of Hon’ble Gujarat High Court in the case of PCIT vs Gaurang Bhai Promod Chandra Upadhyay in Tax Appeal No. 98, 100, 103 & 104 of 2020 is cited where it has been held that since the documents were not found or recovered from the possession of the assessee, no presumption u/s. 132(4A)/292C of the Act could be drawn against the assessee. The Hon’ble Patna High Court in Dharmaraj Prasad Bibhuti vs ITAT, Patna [2019] 109 Taxman.com 388, held that presumption u/s. 292C of the Act can be drawn only on such person whose possession or control any books of accounts, other documents, money, bullion, jewellery or other valuable articles or thing are found during the search. It is to be noted that evidentiary value could have been provided to the dumb papers, the statement of the finance brokers should have been recorded relating to thetransactions with the assessee and such statements should have been confronted to the assessee to give sanctity that these transactions had actually being taken place. It is evident that no such exercise has been carried out by the AO before making additions u/s. 69A of the Act. It was necessary when the assessee has denied that there are any transactions outside the books of account. In this regard, the decision of Hon’ble Allahabad High Court in CIT vs Shadi Ram Ganga Prasad, SP Kanodia and Smt. Premlatha Kanodia [2011] 9 Taxmann.com 193 (Allahabad) can be referred where it has been held that the Printed from counselvise.com Page | 7 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 loose papers found from the possession of a person during the search can be used to raise a presumption against the said person only. The Hon’ble High Court also held that, contents of the said loose sheets cannot be held against the parties whose names appear therein, unless the person from whose possession it was recovered admits in his statement that the entries in the loose sheet relate to the transaction made by such parties. Similar view has been taken by Hon’ble High Court of Delhi in the case of CIT vs Vivek Aggarwal [2015] 56 Taxmann.com 7, where it has been held that, no efforts were made by the department to establish the nexus of the assessee with the undated and unsigned printout found during the search and to corroborate the contents of the said printout to arrive at a definite conclusion that the assessee derives such alleged income. The Hon’ble High Court of Bombay in the case of PCIT vs Umesh Israni [2019] 108 Taxmann.com 437 held that, the entries of the loose papers which were seized were not corroborated with any other evidence on record and no enquiry or verification was made and thus, no additions can be made u/s. 69A of the Act. It can also be seen that the assessee made specific request to allow cross examination of the finance brokers. The AO has relied on the statements of the finance brokers even though there was no tangible material in respect of the assessee in such statements. Therefore, it was necessary to allow cross examination. Reference can be made to the judgement of Hon’ble High Court of Rajasthan in CIT vs. Smt. Sunita Dhadda (D.B. Income Tax Appeal No. 197/2012) (31.07.2017) where in it was held that cross examination was necessary when statement of third party was relied on. The Hon’ble Supreme Court dismissed special leave petition filed by the Department (CIT vs. Sunita Dhadda (Diary No (s). 9432/2018) (28.03.2018). The Hon’ble High Court of Bombay held that the appellant was entitled to cross examine them before any reliance is place on such statements. Therefore, there is no material at all to sustain the addition made by the AO u/s 69A on account of investments. Since the addition on account of investment is deleted, the other addition on account of interest on such investments and payment of commission is also deleted. In the nutsell, the appeal of the assessee is Partly Allowed.” 08. The learned DR vehemently submitted before us that the learned CIT (A) has grossly erred deleting the addition despite there being seized material which mentioned the name of the assessee as lender and also the fact that the finance broker Sanwaria and Kasera had admitted during the course of search while recording the statement Printed from counselvise.com Page | 8 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 u/s 132(4) of the Act that they were involved in arranging the cash loans between the borrowers and lenders by charging commission for which Rukas were entered into and handed over to the lenders which are a conformations qua the loans given and a guarantee for repayment of the said loans. The learned DR therefore prayed that the order passed by the learned CIT (A) giving the observations that the brokers having not named the assessee anywhere as lender or borrower and that there being no mention of period of the transactions , the observations were completely wrong and against the facts on record. Therefore, the order of learned CIT (A) may be reversed and order of the learned AO may be restored. 09. On the other hand, the learned Authorised Representative submitted that there are no evidences to show that assessee had ever made any investments by way of cash loans. The learned Authorised Representative submitted that it was the dissemination report of the investigation wing alone on the basis of which the department has concluded that the assessee had lent money to number of parties. The learned Authorised Representative stated that it is tried law that assessee cannot ask to prove the negative. The learned Authorised Representative submitted that it is for the department to bring the evidences on record to prove that investments were made by the assessee. Therefore, there was no evidence on record to justify the presumption of the learned AO. The learned Authorised Representative while supporting the order of the learned CIT (A) submitted that the learned CIT (A) has correctly analyzed the facts and have held that there was no evidence to show that investments were ever made by the assessee. The learned Authorised Representative also relied on the decisions as relied upon by the learned CIT (A) while deciding the merit on page no.14 of the appellate order. The learned Authorized Printed from counselvise.com Page | 9 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 Representative in defense of his argument relied on the decision of Jesraj Jiwanram Vs. CIT [1953] 24 ITR 245 (Gauhati)[03-02-1953], Commissioner of Income-tax, Jaipur -II vs. Vinayak Plasto Chem (P.) Ltd. [2014] 42 taxmann.com 43 (Rajasthan) [2014] 363 ITR 596 [04- 12-2013], Sanjay R. Shah vs. Income-tax Officer [2017] 88 taxmann.com 809 (Ahmedabad - Trib [02-09-2016]. The learned Authorized Representative therefore prayed that the additions were rightly deleted by the learned CIT (A). The learned Authorized Representative also submitted that the issue is squarely covered in favour of the assessee by the decision of the co-ordinate Bench in case of ACIT Vs. Subhas Kumar Kedia in ITA No.1648/KOL/2024 dated 24.04.2025, wherein the similar issue has been decided in favour of the assessee. 010. After hearing the rival contentions and perusing the materials available on record, we find that in this case the learned AO on the basis of dissemination report of the investigation wing noted that the assessee has entered into unrecorded cash transactions investing the undisclosed and unrecorded money to the various borrowers through brokers Sanwaria and Kasera. We note that the learned AO has not brought on any evidence on record to show that the assessee in fact was involved in any money lending by way of Rukasthrough finance brokersSanwaria and Kasera and only relied on the dissemination report of the Investigation Wing. We have also perused the evidences on record and also the statements recorded during the course of search on finance brokers Sanwaria and Kasera which has been extracted in the assessment order and find that nowhere finance brokers have ever stated the name of the assessee as lender of cash. We also note that no rukas were ever found and seized which corroborate the money lending by the assessee to various borrowers. Printed from counselvise.com Page | 10 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 Therefore, in absence of any corroborating evidences, the addition cannot be made on the basis of surmises and conjunctures. The case of the assessee is squarely covered by the decision ACIT Vs. Subhas Kumar Kedia in ITA No.of 1677/KOL/2024 vide order dated 17.04.2025, wherein similar issue has been decided in favour of the assessee by observing and holding as under:- “10. So far as merits of the case are concerned, we note that the assessee was stated to be the borrower of the money from various parties/entities aggregating to Rs.75.60 crores. We note that the AO has invoked the provisions of Section 69A of the Act while making the addition which is applicable to the assessee which is found to be the owner of money, bullion, jewellery or other valuable article and the assessee could not offer any explanation about the sources thereof. In the present case, the assessee is stated to be a borrower of cash loans from various parties and therefore , could not be said to be owner of money, bullion, jewellery or other valuable article. Accordingly we uphold the order of the ld. CIT(A) on this issue by relying on the decision of the coordinate bench of the Tribunal in the case of Nath Chatterjee v ITO ITA No. 298/Kol/2020 dated 25.2.2021. 11. We further note that the addition was made on the basis of probable suspicious transactions without any definite finding and the suspicious transactions did not mention the name of the assessee. In our opinion, no addition can be made on the basis of potential cash borrowings and possible or probable transactions. This issue has been settled by the Hon’ble Jurisdictional High Court in the case of Girdhar Gopal Dalmia v. UOI 150 taxmann.com 54 on the basis of the same search of Sanwaria and Kasera Group and held that addition based on the report of the Investigation Wing which is based on \"potential cash borrowings and 'possible' financial transactions is not called for and set aside the reassessment proceedings. We further note that the assessee had not been provided any opportunity of cross examination which was specifically requested by the assessee for cross examination of the persons whose statements have been relied upon by the department, thereby causing the miscarriage of justice. Besides, the reopening of the assessment has been made on the basis of borrowed satisfaction of investigation wing without any independent application of mind by the AO as there was no enquiry or application of mind by the AO to the information received from the Investigation Wing and thus on this score also the reopening of assessment is invalid and nullity in the eyes of law. Therefore, considering the above facts and circumstances and the various decisions discussed above, we are inclined to uphold the order of the ld. CIT(A) on merit also. Thus, the appeal of the revenue is dismissed.” 011. We also note that there was no materials before the learned AO except the general observations by the investigation wing through the Printed from counselvise.com Page | 11 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 dissemination report dated 15.11.2022. The said dissemination report simply stated that there was potential and probable investors and the assessee’s name was mentioned as only potential / probable investors. We also note that there is no ruka in the name of the assessee and the rukas referred in the said report were relating to different parties. The Para no.6 and 7 of the Report specifically stated as under:- \"This report may please be treated as indicative and not exhaustive. If any further clarification or documents, in this regard are required, it is requested to contact the Olo the ADIT(Inv) Unit 2-(4) Kolkata at e-mail id. Kolkata. [e-mail]. 7. This information requires further verification at your end. Thereafter necessary action, as applicable may be taken as per Income tax Act.\" 012. Therefore, we find that the learned CIT (A) has rightly deleted the addition on the ground that there was no material before the learned AO to make the addition and addition was made only on the basis of surmises and junctures. Accordingly, the appeal of the revenue is dismissed and the ground no.6 and 7 of the Cross Objections are allowed. CO No. 25/KOL/2025 013. The issue raised in ground no.1 to 4 is a legal issue and is against the invalid reopening of assessment by the learned AO u/s 147 of the Act. 014. The facts were already discussed and narrated in detail while disposing the Revenue’s appeal and ground no.6 and 7 of the Cross Objection of the assessee which are on merit. 015. After hearing the rival contentions and perusing the materials available on record, we find that notice u/s 148A(b) of the Act was issued on 17.03.2023, on the basis of search conducted in the case of Printed from counselvise.com Page | 12 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 some finance brokers on 30.11.2018, on the ground that assessee is a beneficiary of cash transactions. We note that there was no material except the general information and jotting down the information by the investigation wing and dissemination report dated 15.11.2022. The said report only stated the potential and probable investors and assessee’s name was only as a potential / probable investor. We note that no ruka in the assessee’s name was found and were mentioned in the said report as only rukas found were between Vikram Forging and Sunita Agarwal, Suresh Kumar Agarwal and Bajranglal Agarwala and Vikram Forging and Sunita Agarwal. The para no.6 and 7 of the said report has been extracted above which suggests that information requires further verification. However, the learned AO instead of doing further verification issued notice u/s 148A(b) of the Act. The learned AO relied on the statement of finance broker Shri Umashankar Kasera.We also note that none of the brokers named the assessee that they ever did any transaction with the assessee. Besides, there was no documentary evidences/ rukas in the name of the assessee nor there was any signature of the assessee. We note that notice was only issued on the basis of dissemination report which stated that it is only indicative and further enquiry is required to be made by the learned AO for taking action under the Income Tax Act. We also note that in the said report it was specifically stated in page no.18, the names of lenders were potential lenders and probable and therefore, the reopening on the basis of such vague information and therefore notice u/s 148A(b) of the Act on the basis of such vague information is bad in law. We also note that assessee has denied having any transaction with the said parties and requested for the cross objection. We note that though name of Shri Rajesh Kedia appeared in one place but how that was connected with the assessee was not explained. Printed from counselvise.com Page | 13 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 Similarly, there was no name of east India but in the notice issued u/s 148A(b) of the Act as well as order passed u/s 148A(d), the name of east India was stated along with all entries. We also note that there was no mention of year or dates and it is very surprising how the transactions were presumed to be relating to A.Y. 2015-16. The case of the assessee is squarely covered by the decision of Calcutta High Court in case of Girdhar Gopal Dalmia, wherein Hon'ble Court had held as under: - “8. From the above information, it is not clear as to how reopening of the assessment could have been resorted to. The report is as vague as possible as it states that possible financial transactions could be deduced and decoded from hard copies obtained from DDIT. Further. it says there is potential cash borrowed from various lenders and the probable names of the group have been mentioned and set out without any particulars. Assuming that material was available as annexures to the said report of the DDIT, such documents should have been made known to the assessee so as to enable them to give an effective reply. 9. As could be seen from the communication dated 21st January, 2022 referred theve ord more than one place the authority least oned the word \"potential\" and also the Mrk \"probable\". The Hon'ble Supreme Court in Lucknow Development Authority Versus Mika Gupta A.I.R. 1994 SC 787 considered the meaning of the word \"potential\". It was pointed out that the word \"potential\" has been defined in the Oxford Dictionary as \"capable of coming into being, possibility. In Black's Law Dictionary, it is defined as \"extending any possibility but not in Act\". It was further pointed out that the said word would mean to be naturally and probably expected to come into existence at some future time, though not now existing. \"Possibility\" has been defined in \"WHARTON\" to mean expectation, an uncertain thing which may or may not happen. Under the provisions of the Income Tax Act, tax is levied on the actual income of the previous year and the facts must be taken as they existed during the previous year. It is relevant to take note of the decision of the Hon'ble Supreme Court in Sir Kikabhai Prenchand Versus Commissioner of Income Tax (Central) Bombay, (1953) 24 ITR 506 (SC) page 506 wherein it was held that the State has no power to tax the potential future advantage and all it can tax is income, profits and gains made in the relevant accounting year. This decision if applied to the facts and circumstances of the case on hand, the only conclusion that can be arrived at is to hold that the reopening of the assessment was bad as it was based on certain alleged \"potential\" cash borrowings and certain alleged \"possible\" financial transactions. That apart, the assessing officer did not independently apply its mind to the information furnished by the DDIT which he is required to do while exercising the power to reopen an assessment.\" Printed from counselvise.com Page | 14 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 016. We also note that SLP filed by the department was also dismissed by the Hon'ble Supreme Court as reported in 464 ITR 393. Similarly, we find from the perusal of the order passed u/s 148A(d) of the Act that dump paper was copied in the said order which did not mention the year, name of the assessee, amount, whether money was borrowed or lent, signature of assessee, rukas in respect of the said entries and there being no statements of the brokers against assessee. The case of the assessee also find support from the decision of Hon'ble Apex Court in the case of CIT vs. V.C. Shukla and Ors. (1998) 75 ECR 48, wherein it has been held that on the basis of entries in the third party diaries , no adverse inference could be drawn against the assessee. Similarly, Calcutta High Court in case of Excel Commodity and derivative private limited Vs. union of India & Ors. in IA No. GA/1/2023 held as under: - “If such was the explanation given by the assessee, it was the duty of the Assessing Officer to consider the explanation and give reasons as to why it is not acceptable. However, the Assessing Officer only states that the assessee has failed to substantiate the alleged amount of escaped income of Rs. 25,00,000/- is a genuine transaction. The order passed under Section 148A(d) is a nonspeaking order, outcome of total non-application of mind and it also reveals that the Assessing Officer had no material to controvert the explanation offered by the assessee that Brightmoon Supply Pvt. Ltd. is a NBFC and loan was taken during the assessment year 2019-20 and repaid along with interest in the same year and this was substantiated by the assessee by producing the ledger copy of a loan account. Thus, we find it is not a case where the power under Section 148 of the Act could have been invoked by the assessing officer. Accordingly, the appeal is allowed.” 017. The case of the assessee also find support from the decision of Bomay High Courtin case of Mohanlal Champalal Jain vs. ITO reported in [2019] 102 taxmann.com 293 (Bombay) under similar circumstances has held as follows: - Printed from counselvise.com Page | 15 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 \"IT: Where Assessing Officer issued a reopening notice on ground that assessee had made transactions of huge amount in national/multi commodity exchange but he had not filed his return of income and assessee filed an objection that he had earned no income out of trading in commodity exchange and he had actually suffered loss and, therefore, he had not filed return of income, since, Assessing Officer had not looked into objections raised by assessee and proceeded ahead, impugned reassessment notice was unjustified\" 018. The said decision of the Bombay High Court was followed by the Calcutta High Courtin case of Narayan prasad Bagaria in ITA No. 2151/KOL/2018 dated 21.06.2019. Considering the above facts and the ratio laid , we are inclined to hold that the reopening of assessment has been made invalidly. Consequently, the cross objection of the assessee is allowed. A.Y. 2019-20 ITA No. 138/Kol/2025& CO No. 26/KOL/2025 019. The issue raised in ITA No. 138/Kol/2025 and CO No. 26/KOL/2025 are similar to ones as decided by us in ITA No. 137/KOL/2025 and CO No.25/KOL/2025. Accordingly, our decision would, mutatis mutandis, apply to the appeal of Revenue and CO of the assessee. Hence, the appeal of Revenue in ITA No. 138/KOL/2025 is dismissed and CO of the assessee is allowed. 020. In the result, the appeals of the Revenue are dismissed and the COs of the assessee are allowed. Order pronounced in the open court on 17.10.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:17.10.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 16 ITA Nos. 137 & 138/KOL/2025 CO Nos. 25 & 26/KOL/2025 Rajesh Kumar Kedia; A.Y. 2016-17 & 2019-20 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "