SH. KAPIL TANEJA,JAIPUR V. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, JAIPUR

ITA 578/JPR/2025

AI Insights

The case involves Kapil Taneja, the appellant, who contested the reassessment of his income for the assessment year 2017-18 by the DCIT, Circle-01, Jaipur. The reassessment was based on a ledger found during a search at the premises of another individual, Ajay Gangwal, which allegedly contained details of unreported F&O transactions by Taneja. The primary legal issues revolved around the validity of the reassessment proceedings under sections 147 and 148 of the Income Tax Act, the applicability of section 153C, and the procedural adherence to the principles of natural justice, including the right to cross-examine and the requirement of a DIN (Document Identification Number) on notices. The Tribunal's decision emphasized the need for adherence to legal procedures in reassessment cases, particularly when they involve third-party information and unverified documents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717462 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 12-04-2025
• Other Referred Cases: GKN Driveshafts (India) Ltd. vs. ITO, UOI vs. Ashish Agarwal, Rajeev Bansal vs. ACIT, Hexaware Technologies Ltd. v. ACIT, Sh. Shyam Sunder Khandelwal Vs. ACIT, Tirupati Construction Company Vs. ITO, Mettler Toledo India (P.) Ltd. v. Assistant Commissioner of Income-tax, Navita S. Hetampuria v. Income-tax Officer, Pooja Vaibhav Shah v. Assistant Commissioner of Income-tax, Sundaram Multi Pap Ltd. v. Assistant Commissioner of Income-tax, Vidhyadhar Shetty v. Income-tax Officer, Surya Cotspin Ltd. v. Principal Chief Commissioner of Income-tax, Ram Narayan Sah v. Union of India, Ashok Kumar Batwani Talwandi, G. Koteswara Rao v/s DCIT, Rajat Shubra Chatterji vs. ACIT, Prakash Chand Kothari, Sh. Navrattan Kothari Vs. ACIT, PCIT vs. RMG Polyvinyl (I) Ltd, PCIT vs. Meenakshi Overseas (P) Ltd., CIT vs. Odeon Builders (P.) Ltd, CCE Vs. Andaman Timber Industries
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GORAV AVASTHI; STATING BELOW
• Assessee Lawyers: TARUN MITTAL
• Keywords: Set aside; Difference of opinion; Change of opinion; Reassessment proceedings; Business expenditure; Question of law; Bogus purchase; Period of limitation; Reopening of assessment; Capital Gains; Principle of natural justice; Search and seizure; Accommodation entries; Transactions in derivatives; Reason to believe; Futures and options; Opportunity of cross examination; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 142(1); 153A; 139; 37(1)

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 578/JP/2025 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 Kapil Taneja 58, Cosmo Colony, Vaishali Nagar, Jaipur cuke Vs. DCIT Circle-01, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACRPT2364B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Tarun Mittal, CA jktLo dh vksj ls@ Revenue by : Sh. Gorav Avasthi, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 17/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 11/08/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM On being aggrieved by the order of the National Faceless Appeal Centre, Delhi [ for short CIT(A) ] dated 28/02/2025 the above named assessee – appellant preferred the present appeal. The dispute relates to the assessment year 2017-18. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated Printed from counselvise.com 2 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT 24.05.2023 passed under section 147/144B of the Income Tax Act, [ for short “AO”] by Assessment Unit of Income Tax Department [ for short AO]. 2. In this appeal, the assessee has raised following grounds: - 1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the action of ld. AO in re opening the assessment u/s 147 arbitrarily. 1.1. That the ld. CIT(A) grossly erred in confirming the action of ld. JAO in passing orders u/s 148A(d), 148A(b) of the Act as well as issuing notice u/s 148 of the Act as proceedings pertaining to re-assessment under Section 148A and 148 of the Act should be initiated in a faceless manner provided u/s 144B of the Act, failure in doing so by the ld. JAO leads to violation of the provisions contained u/s 151A of the Act. Thus, the orders so passed u/s 148A(b) and 148A (d) of the Act by JAO & subsequent notice issued u/s 148 of the Act by him is against the law and void-ab-initio. 1.2 That the ld. JAO erred in issuing the notice u/s 148 without mentioning DIN which is against the law and thus the proceedings of reassessment u/s 147 is bad in law and deserves to be quashed. 1.3 Without prejudice to above, that, the Ld. CIT(A) further erred in confirming the action of ld. AO in reopening the assessment u/s 148 of the Act. However in the instant assessee case was reopened solely on the basis of information received during the course of search & seizure carried out in the premises of some other assessee. Thus the legally permissible course would be to invoke provision of sections of 153C of the Act and therefore consequential order passed u/s 147 of the Act is bad in law and deserves to be quashed. 1.4. That, the Ld. CIT(A) has further erred in confirming the action of ld. AO in reopening the assessment, beyond the specified time line. Thus, the reassessment proceedings initiated is time barred and entire proceedings are void ab initio. 1.5. That the ld. CIT(A) has further grossly erred in confirming the action of ld. AO in deciding the case without disposing the objection raised by assessee against the reopening of the assessment which is against the principle of law and judgement of Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO and others (2003) 259 ITR 19 (SC) 1.6. That, the Ld. CIT(A) further erred in confirming the action of ld. AO in reopening the assessment u/s 148 of the Act solely on the basis of information received during the course of search & seizure carried out in the premises of some other assessee and without independent application of mind and without Printed from counselvise.com 3 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT providing adequate opportunity. Thus, the action of the Ld. CIT(A) in confirming the reopening of the assessment u/s 148 and upholding the consequent reassessment order so passed deserves to be held bad in law. 2. On the facts and in the circumstances of the case and in law, ld. CIT (A) has grossly erred in confirming the action of ld. AO in making addition of Rs.1,52,364/- u/s 69A made by ld. AO by alleging the same as unexplained money in the hands of assessee arbitrarily. 2.2. That, ld. CIT(A) has further erred in confirming the addition of Rs. 1,52,364/- solely on the basis of information obtained during search at the premises of third party and without even providing legible copies of such information and also trades (alleged as fictitious), though specific request was made to provide complete details. Hence the addition so sustained deserves to be deleted. 3. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 3. Succinctly, the fact as culled out from the records is that the revenue was in possession of the information pursuant to S,earch & Seizure operation was carried out in the case of Shri Ajay Gangwal on 02.08.2017, wherein ledger account of the assessee, Shri Kapil Taneja was found and seized wherein transaction of Future & Option (F&O) was of Rs. 94,06,544/- are found which were not reflected in the return of income for the year under consideration. During the course of investigation proceedings, the assessee could not establish source of such alleged transactions in F&O. As per ledger account, the assessee made profit of Rs 152,364/- [ 47,62,289 + 17,165-46,27,090] from these transactions during the year which is not recorded in books of accounts of the assessee. Printed from counselvise.com 4 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Considering that fact the case of the assessee was re-opened for assessment proceedings vide order dated 26.07.2022 passed u/s 148A(d) of the Income Tax Act, 1961. Record reveals that the assessee filed return of income for AY 2017- 18 u/s 139 (4) on 01.11.2017 declaring total income of Rs 85,45,820/-. The return, in response to notice u/s 148, also contains same income. Ongoing through return of income filed by the assessee for AY 2017-18, it is noticed that income from above transaction/above income has not been included in ITR filed by the assessee. Shri Ajay Gangwal in his application before Settlement Commission has accepted the fact that these transactions pertains to share transactions carried out in Futures and Options segment trading of NSE terminal jointly by the assessee and himself. As that ledger account reflects transactions of Rs. 94,06,544/- in F&O which are found to be not reflected in the return of income for the considered year and were made out of the books of accounts. During the course of investigation proceedings, the assessee could not establish source of such alleged transactions in F&O. As per ledger account, the assessee had made profit of Rs 152,364/-47,62,289 + 17,165-46,27,090] from these transactions during the year which is not recorded in books of account of the assessee. In this regard a notice u/s 142(1) was issued to assessee on 16.01.2023 Printed from counselvise.com 5 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT asking to submit his explanation with relevant documentary evidence to establish that such transactions are recorded in his books of account for the year under consideration. The assessee filed reply dated 30.01.2023, wherein he stated that he was carryout the business of Trading and Investment in Shares during the year and also earned income from Interest, Cargo handling charges, clearing and forwarding agent service, Transportation Service etc. With regards to the merits of the case, he stated that transaction, as above, is not related to him as far as he knows and he is not aware why his name is listed on the ledger received during search operations in the case of Shri Ajay Gangwal. He added that as he is not involved in the transaction listed in the said ledger, hence no such transaction is reflected in his Books of Accounts as well. Ld. AO noted that the submission of the assessee denying his involvement in F&O trading through NSE was found to be untenable. As per the submission of assessee and the financials shared in the submission, it is learnt that the assessee was actually into trading of derivatives (Futures & Options) and certain figures are disclosed in his P&L account as well. Further, the department has received information directly from National Stock Exchange containing details of sales of derivatives (F&O) carried out by assessee during the year. However, the assessee has failed to submit complete Printed from counselvise.com 6 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT information as he did not clarify his association with Mr. Ajay Gangwal and did not provide any details regarding F&O trading carried out though NSE on his own to establish one to one correspondence between the trading receipts/purchase vis-à-vis the values declared in P&L as well as ITR. It indicates that the assessee has been deliberately avoiding to submit any details of F&O trading and his involvement with Mr Ajay Gangwal as such transactions are not listed in his books of accounts. Ld. AO issued a specific show cause notice dated 02.05.2023 u/s 144B proposing addition of such profits as his income for the year under consideration, under relevant provisions of the Income Tax Act. Despite providing reasonable time to respond, the assessee remained non-complaint to the said notice and hence did not submit any explanation from his end. Considering the information at hand and enquiry carried out, ld. AO noted that assessee was engaged in Trading of F&O on NSE during the year, however, it has failed to comment on its association with Ajay Gangwal and simply denied his involvement with the transactions in ledger found in Ajay Gangwal's possession, however, the ledger clearly indicates his name only. Further, this fact is accepted by the assessee that profits identified from the said ledger does not forms part of his income as they are not related to him, but could not prove beyond doubt. Thus the assessee's response clearly Printed from counselvise.com 7 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT reveals that such profit are not disclosed in financials and hence not offered for taxation during the year as well. Ld. AO thus noted that though the assessee denied his involvement with the transactions undertaken with Shri Ajay Gangwal, the profit of Rs 1,52,364/- remained unexplained in the hands of assessee is required to be charged and therefore, it was considered as unexplained income of the assessee brought to tax u/s 69A of the Act. 4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: 5.1 Decision: I have carefully considered the relevant and material facts on record, in respect of this ground of appeal, as brought out in the assessment order. During the assessment proceedings, AO observed that the assessee had unexplained money from F & O trading amounting to Rs. 1,52,364/-. The assessee failed to give a satisfactory reply and provide any required details. Hence, the A.O. completed the assessment and passed order u/s. 147/147B of the Income-tax Act dated 24.05.2023 Assessing total Income at Rs. 86,97,184/-. 5.2. It is further noted and as detailed in preceding para above that during the appellate proceedings, the appellant has not furnished any substantial evidence in support of its grounds of appeal. The appellant has challenged the addition in the different grounds of appeal. However, the appellant has not furnished any substantial written submission or documentary evidence in support of its grounds of appeal challenging the addition. The appellant has also not submitted any copy of its written submission or documentary evidence filed during the assessment proceedings. The onus lies on the appellant to support any claim by bringing in cogent documentary evidence. In absence of any substantial written submission or documentary evidence in support of its grounds of appeal, I have no basis to take a contrary view in the appellate proceedings as I have no reason to interfere with the assessment order. As such, I do not find any infirmity in the order of Printed from counselvise.com 8 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Assessing Officer. Therefore, Addition of Rs. 1,52,364/- is hereby sustained on merits. 6. In the result, the appeal is Dismissed. 5. Feeling aggrieved by that order of the ld. CIT(A) the assessee is in appeal before this tribunal challenging the finding of the ld. CIT(A) on the grounds as reproduced herein above. To support the various grounds so raised by the assessee, ld. AR of the assessee, has filed the following written submissions: “Brief facts of the case are that assessee is an individual, filed his return of Income u/s 139(4) of the Act for the year under consideration on 01.11.2017 declaring total income at Rs. 85,45,820/- (APB 01). Subsequently, case of assessee was reopened vide issuance of notice u/s 148 dated 30.06.2021 (under erstwhile scheme of Reassessment, prevailing prior to the date when Finance Act 2021 came into force), on the basis of some information stated to have been received during the course of search & seizure operation carried out in the case of Shri Ajay Gangwal on 02.08.2017. Thereafter, consequent upon the decision of Hon’ble Supreme Court in the case of UOI vs. Ashish Agarwal dated 04/05/2022, proceedings initiated vide notice dated 30.06.2021 were dropped and fresh notice was issued u/s 148A(b) on 28.05.2022 in accordance with new law on Re-opening as applicable w.e.f. 01.04.2021. As per notice issued u/s 148A(b), case was reopened for the sole reason that during the course of search in the case of Shri Ajay Gangwal a ledger pertaining to assessee was found & seized, as per which it is alleged that assessee had undertaken F&O transaction of Rs. 94,06,544/-. Assessee vide reply dated 11.6.2022 (APB 39 - 42) filed in response to notice u/s 148A (b), wherein he given an affidavit to ld. AO stating that he has never undertaken any F&O transaction and ledger found during the course of search at Shri Ajay Gangwal is not pertaining to him. Further he also challenged the authenticity of Ledger as same was neither clear nor sealed & signed. However the same were not appreciated and the order was passed u/s 148A(d) of the Act and accordingly notice u/s 148 was issued. In reassessment proceedings, assessee once again stated that he has never under taken any F&O transaction with Shri Ajay Gangwal and challenged the authenticity of the Printed from counselvise.com 9 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT ledger. However, ld.AO brushed aside the submission made by assessee arbitrarily and completed the assessment vide order dated 24.05.2023, whereby ld. AO made the addition of Rs. 1,52,364/- by alleging the same as unexplained Net profit earned in F&O transaction by assessee (Rs. 47,62,289/- + 17,165/- - 46,27,090/-). Aggrieved of the addition so made, assessee has preferred present appeal before the ld. CIT(A), NFAC, wherein ld. CIT(A) dismiss the appeal of assessee company without commenting on the legal ground taken by the assessee. Relevant para of order of ld. CIT(A), NFAC, is reproduced as under— “5.2. It is further noted and as detailed in preceding para above that during the appellate proceedings, the appellant has not furnished any substantial evidence in support of its grounds of appeal. The appellant has challenged the addition in the different grounds of appeal. However, the appellant has not furnished any substantial written submission or documentary evidence in support of its grounds of appeal challenging the addition. The appellant has also not submitted any copy of its written submission or documentary evidence filed during the assessment proceedings. The onus lies on the appellant to support any claim by bringing in cogent documentary evidence. In absence of any substantial written submission or documentary evidence in support of its grounds of appeal, I have no basis to take a contrary view in the appellate proceedings as I have no reason to interfere with the assessment order. As such, I do not find any infirmity in the order of Assessing Officer. Therefore, Addition of Rs. 1,52,364/- is hereby sustained on merits.” Aggrieved by the order of ld. CIT(A), assessee has preferred an appeal before your honours. With this background, groundwise submission is made as under— Ground of Appeal No. 1 to 1.2: In these grounds of appeal, assessee has challenged the validity of the opening of reassessment proceedings u/s 148 of the Act. Brief facts of the case are that assessment has been reopened on the basis of information received during the course of search in the case of Shri Ajay Gangwal, wherein a ledger pertaining to assessee was found & seized, as per which it is alleged that assessee had undertaken F&O transaction of Rs. 94,06,544/-. On the basis of such information, it was alleged by ld.AO that the assessee has earned unexplained net profit of Rs. 1,52,364/- from trading in F&O Transaction. With this background, reopening of assessment is challenged on following issues: Printed from counselvise.com 10 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT (i) After considering the judgement of Hon’ble Supreme Court in the case of Rajeev Bansal, notice issued u/s 148 of the Act is barred by limitation. (ii) Reopening by jurisdictional Assessing officer and by Faceless Assessing Officer, which is contrary to the specific provisions of section 151A (iii) Notice u/s 148 being issued without mentioning DIN. (iv) Since the reopening is done on the basis of information received during the course of search at third party, than it should be done as per the provisions of 153C of the Act. (v) Reassessment is completed without disposing the objection raised by the assessee. (vi) Reassessment is opened solely on the basis of ledger found during search in the case of Shri Ajay Gangwal, without application of independent mind and without providing opportunity to cross examine. Detailed submission on above issues is made as under— Reassessment is time barred by Limitation At this juncture to determine whether assessee case is time barred by limitation or not, your honours kind attention is invited to the relevant para of the judgments of Hon’ble Supreme Court in case of Rajeev Bansal reported in 167 taxmann.com 70 — “108. The Income-tax Act read with TOLA extended the time limit for issuing reassessment notices undersection 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021under the old regime. Ashish Agarwal ( supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: \"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.\"] Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal ( supra ) is that the time surviving under the Income-tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or Printed from counselvise.com 11 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021.110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.” On perusal of judgement of Hon’ble Supreme Court in the case of Rajeev Bansal, in order to determine the validity of notice issued u/s 148 of the Act one need to determine the surviving period, which is tabulated as under— S. No Details of Notice issued Date of Notice APB Remark 1. Notice issued u/s 148 30.06.2021 WS page no 21 2. Notice u/s 148A(b) along with material relied upon 28.05.2022 & 27.06.2022 34 – 38 & 43 – 47 In compliance of Hon’ble Apex Court judgment in Printed from counselvise.com 12 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT issued on UOI Vs Ashish Agarwal). 3. Reply file by Assessee 11.06.2022 & 04.07.2022 39 – 42 & 48 – 49 4. Surving period available to Revenue 1 Day Day Includes only 30.06.2021 as per para 108,111 &112 of Judgment of Hon’ble Supreme Court in the case of Rajeev Bansal 6. Date of Issue of notice u/s 148 under new regime 26.07.2022 50 – 55 Beyond the Surving Period * Notice u/s 148 of the Act should have been issued on or before 05.07.2022 in the case of assessee by following the judgement of Hon’ble Supreme Court in the case of Rajeev Bansal. On perusal of aforesaid table it is evident that order u/s 148A(d) of the Act & Notice u/s 148 of the Act should be passed/issued by 05.07.2022. However in the case of assessee order u/s 148A(d) of the Act & Notice u/s 148 of the Act were passed/issued on 26.07.2022 which is beyond the prescribed limit. Thus the notice issued u/s 148 of the is barred by the limitation and therefore consequential order passed u/s 147 of the Act is void-ab-initio and addition so made deserves to be deleted outrightly. Reassessment is done in violation to provisions of section 151A of the Act In this regard it is submitted that assessment in the present case has been reopened as well as completed without following provisions of section 151A, which provides procedure for “Faceless assessment of income escaping assessment” while issuing the notice u/s 148 of the Act. Kind attention of your goodself is invited to notification no.18/2022 dated 29.03.2022 issued by CBDT in terms of section 151A, para 3 of which provides that notices for assessment/re assessment/re-computation under Faceless Assessment Scheme shall be issued through “Automated Allocation , in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee.”, i.e. by FAO, whereas, in the case of assessee company notice u/s 148 as well as u/s 148A have been issued by DCIT Circle 1 Jaipur, i.e. Jurisdictional Assessing Officer (JAO). Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. v. ACIT, Circle 15(1)(2), Mumbai and others [2024] 162 taxmann.com 225 (Bombay), has held that there is no question of concurrent jurisdiction of JAO and FAO for Printed from counselvise.com 13 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT issuance of reopening notice under section 148 or even for passing assessment or reassessment order and it is only FAO which could issue notice under section 148 and not JAO. Hon’ble Bombay High Court in the above case has went on to hold that when an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income-tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice. Some other cases wherein this position of law laid above, has been followed by the Hon’ble Bombay High Court are: Ganesh Nivrutti Jagtap v. Assistant Commissioner of Income-tax [2024] 166 taxmann.com 168 (Bombay) Held: Where notice issued under section 148A (b) and section 148 in respect of returns filed by assessee was not issued by a Faceless Assessing Officer (FAO), as was required by provisions of section 151A, proceedings initiated under section 148 would not be sustainable Dosch Pharmaceutical (P.) Ltd. v Income-tax Officer [2024] 166 taxmann.com 216 (Bombay) Held: Where Assessing Officer issued on 30-6-2021 a notice under section 148 in case of assessee-company for relevant assessment year 2015-16, since said notice was issued after expiry of six years from end of relevant assessment year, same was barred by limitation and, thus, it was to be quashed and set aside Held: Only Faceless Assessing Officer can issue notice under section 148 and not Jurisdictional Assessing Officer. Jatinder Singh Bhangu v. Union of India [2024] 165 taxmann.com 115 (Punjab & Haryana) Held: Scheme of faceless assessment applies from stage of show cause notice under section 148, and its object would be defeated if such notices are issued by Jurisdictional Assessing Officer. Printed from counselvise.com 14 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Mettler Toledo India (P.) Ltd. v. Assistant Commissioner of Income-tax [2024] 165 taxmann.com 541 (Bombay) Held: Where reassessment notice was issued by jurisdictional Assessing Officer and not by faceless Assessing Officer, as was required by provisions of section 151A read with Notification No. 29/2022, dated 29-3-2022, since JAO had no jurisdiction to issue impugned notice, proceedings initiated under section 148 would were to be quashed Navita S. Hetampuria v. Income-tax Officer [2024] 165 taxmann.com 424 (Bombay) Held: Where reassessment proceedings were initiated by jurisdictional Assessing Officer and not by Faceless Assessing Officer as required under section 151A, such proceedings were to be quashed. Paras Mahendra Shah v. Union of India [2024] 165 taxmann.com 546 (Bombay) Held: For a notice to be validly issued for reassessment under section 148, jurisdictional Assessing Officer has no jurisdiction to issue impugned notice, same is to be issued by Faceless Assessing Officer as is required by provisions of section 151A Pooja Vaibhav Shah v. Assistant Commissioner of Income-tax [2024] 165 taxmann.com 725 (Bombay) Held : Where re-assessment notice was issued by jurisdictional Assessing Officer and not by Faceless Assessing Officer as required by provisions of section 151A, impugned notice was to be quashed and set aside Pravina Jagdish Patel v. Income-tax Officer [2024] 164 taxmann.com 659 (Bombay) Held: Where notice under section 148 was issued by Jurisdictional Assessing Officer (JAO) and not by a Faceless Assessing Officer (FAO), as is required by provisions of section 151A, impugned notice issued by JAO would be quashed Reliance Jio Infocomm Ltd. v. Deputy Commissioner of Income-tax [2024] 165 taxmann.com 547 (Bombay) Held: As per provisions of section 151A under faceless assessment scheme notice under section 148 can be issued only by a Faceless Assessing Officer and not by a Jurisdictional Assessing Officer. Sundaram Multi Pap Ltd. v. Assistant Commissioner of Income-tax [2024] 164 taxmann.com 608 (Bombay) Held: Where notice under section 148 and order under section 148A(d) was passed by Jurisdictional Assessing Officer (JAO) and not under mandatory Printed from counselvise.com 15 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT faceless mechanism, reopening proceedings initiated under section 148 were to be quashed Vidhyadhar Shetty v. Income-tax Officer [2024] 165 taxmann.com 265 (Bombay) Held: Where notice under section 148 was issued by jurisdictional Assessing Officer and not by a Faceless Assessing Officer, same was not in compliance with section 151A(2) and, thus, impugned notice was to be quashed and set aside. Surya Cotspin Ltd. v. Principal Chief Commissioner of Income-tax [2024] 166 taxmann.com 265 (Punjab & Haryana) Held: Notice issued by JAO under section 148 and re-assessment proceedings initiated thereafter without conducting faceless assessment as envisaged under section 144B were contrary to provisions of law and same were to be quashed. Ram Narayan Sah v. Union of India [2024] 163 taxmann.com 478 (Gauhati) Held: Where in notice under section 148 issued upon assessee, name of Income Tax Officer who was Assessing Officer had been reflected, impugned notice reflecting name of concerned Income Tax Officer was contrary to provisions of section 151A and schemes framed thereunder, whereby Income Tax Authority was required to undertake these proceedings in a ‘faceless’ manner, and accordingly, department was to be directed to withdraw impugned notice and issue fresh notices if permissible under law as per scheme read with section 151A. In view of abovementioned judgments, it is submitted that in the present case, notice u/s 148 was issued by JAO, i.e. DCIT Circle 1 Jaipur and not through automated allocation as provided in Notification No. 18/2022, dated 29-3-2022 r.w.s. 151A, which is not in accordance with provisions of section 151A of the Act and the same deserves to be quashed and set aside. In view of above, it is submitted that initiation of re assessment proceedings is not in accordance with law as notices u/s 148A and 148 as well as order u/s 148A(d) have been passed by JAO instead of FAO, which is not in accordance with specific provisions of statue. It is thus prayed that the consequential order passed u/s 147 is bad in law and deserves to be quashed. Printed from counselvise.com 16 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Notice issued u/s 148 of the Act is without DIN It is further submitted that the notice u/s 148 dated 30.07.2022 is invalid and bad in law as the same has been issued without a DIN. Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. is reproduced as under: Section 148, read with section 148A, of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Notice without DIN) - Assessment years 2013-14 to 2015-16 - Assessee, engaged in information technology consulting, software development and business process services, filed its return of income - Same was accepted and assessment was completed under section 143(3) - Subsequently, Assessing Officer issued a reopening notice under section 148 on several grounds - Whether since impugned reopening notice issued under section 148 was issued without a DIN, same was invalid and bad in law - Held, yes [Para 31] [In favour of assessee] Order passed u/s 147 isntead of 153C of the Act Further, assessee has challenged the action of ld.AO in reopening the assessment u/s 147 on the basis of documents found during the course of third party search, which was conducted prior to 01.04.2021 and for which a specific mechanism was provided u/s 153C of the Income tax Act. In this regard, at the outset kind attention of your goodself is invited to the reasons recorded in notice issued u/s 148A(b) of the Act (APB 34-38) Relevant extract of which are reproduced for the sake of convenience: “1. In this connection, it is stated that information regarding transaction related to Future & Option (F&O) carried out by you is available with the department for FY 2016- 17 relevant to AY 2017-18. The information has been received from the ACIT, Central Circle-2, Jaipur that a Search & Seizure operation was carried out in the case of Shri Ajay Gangwal on 02.08.2017. During the course of search proceedings, ledger account of Shri Kapil Taneja was found and seized wherein transaction of Future & Option (F&O) was mentioned. As per ledger account (snapshot of ledger account is enclosed), there are transactions of Rs. 94,06,544/- in F&O which are not reflected in the return of income for the considered year as these transaction were made out of the books of accounts. During the course of investigation proceedings, the assessee could not establish source of such alleged transactions in F&O. In view of the above discussed facts, the amount of Rs. 94,06,544/- is required to be added back to the total in the return of income for the considered year.” From perusal of above, it is evident that the case of the assessee was reopened solely on the basis of alleged information received by the ld. Assessing officer Printed from counselvise.com 17 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT from the ACIT, Central Circle – 2, Jaipur, which was collected during the course of search and seizure action carried out in case of Shri Ajay Gangwal. On the basis of such information ld.AO formed belief that during the course of search and seizure action in case of Shri Ajay Gangwal, an ledger in the name of assessee was found and seized, wherein transaction of Future & Options was mentioned. Further on the perusal of return of income it was observed by ld. AO that F&O transactions are not mentioned in the return of income of the assessee, thus source of same remain unexplained. and accordingly reached to the satisfaction that income to the extent of Rs. 94,06,544/- has escaped assessment. From perusal of above, it is crystal clear that information, based on which notice u/s 148 is issued in the case of assessee, was found during the course of search in case of a third person. Thus in such scenario, the proper course of action is that instead of invoking the provisions of section 148 of the Act, ld.AO should have invoked the provisions of u/s 153C of the Act. At this juncture, kind attention of your goodself is invited to section 153C, which reads as under: 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] From perusal of above, it is evident that legislation has clearly provided that if any documents found during search, pertain to a person other than the person Printed from counselvise.com 18 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT searched, such documents shall be handed over to the Assessing officer having jurisdiction over such third person, who shall complete assessment in accordance with section 153C of the Act. In support of submission made above, reliance is placed on decision of The Jurisdictional High Court, in the case of Sh. Shyam Sunder Khandelwal Vs. ACIT, Jaipur (D.B.Civil Writ Petition No. 18363/2019) vs ACIT & others dated 19.03.2024 has decided the issue as under: Section 153C, read with sections 148 and 153C, of the Income-tax Act, 1961 - Search and seizure - Assessment of any other person (Section 153C vis-a-vis section 148) - Assessment year 2014-15 - Whether on satisfaction of twin condition for proceedings under section 153C, Assessing Officer has to proceed in accordance with section 153A, however, it is not obligatory on Assessing Officer to make assessment for all years - Held, yes - Whether provisions of sections 153A to 153D have prevalence over the regular provisions for assessment or reassessment under sections 143 & 147/148 - Held, yes - Whether once there is incriminating material seized or requisitioned belonging or relatable to person other than on whom search was conducted, section 153C is to be resorted to - Held, yes - Whether provisions of sections 153A to 153D have prevalence over regular provisions for assessment or reassessment under sections 148 & 147/148 - Held, yes - Whether therefore, where basis for initiation of section 148 proceedings in case of assessee was material seized relating to or belonging to assessee during search conducted on ‘M’ Group, notices issued under section 148 and impugned orders rejecting objections filed to issuance of notice were to be quashed and set aside - Held, yes [Paras 30, 32 and 40] [In favour of assessee] Further The Hon’ble Jurisdictional High Court, very recently in the case of Tirupati Construction Company Vs. ITO (D.B. Civil Writ Petition No. 17651 & 17523/2022) dated 21.03.2024 has decided the issue as under: Section 148A, read with sections 147, 148, 153A and 153C, of the Income-tax Act, 1961 - Income escaping assessment - Conducting inquiry, providing opportunity before issue of notice under section 148 (Scope of provision) - Assessment years 2016-17 and 2017- 18 - Assessing Officer issued on assessee a notice under section 148A(b) seeking to reopen assessment for assessment year 2016-17 - Assessee in response filed a reply raising serious objection to maintainability of proceedings on ground that entire basis for reassessment was incriminating material and information collected during search carried out in year 2016 and prior to 31-3-2021 in premises of another assessee and nothing more and, therefore, no proceedings for reassessment could be drawn under section Printed from counselvise.com 19 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT 148A - Assessing Officer did not find merit in reply of assessee and passed an order under section 148A(d) - Whether since entire basis for reopening assessment was nothing but material and information collected during search conducted in year 2016 in premises of another assessee, only legally permissible course of action was one provided under section 153C and not under section 148 - Held, yes - Whether impugned order passed under section 148A(d) deserved to be set aside - Held, yes [Paras 14, 16 and 17] [In favour of assessee] The Hon’ble ITAT Jaipur bench in the identical case in ITA No. 425/JP/2017 in the case of Sh. Navrattan Kothari Vs. ACIT, Jaipur vide order dt. 13.12.2017 has held as under: “….Therefore, in conjoint reading of provisions of section 153A, 153C and 147/148 of the Act as well as a consistent view taken by this Tribunal in a series of decision cited (supra) we hold that the assessment or reassessment of income of the person other than search persons based on seized material can be only be made u/s 153C r.w.s. 153A and the provisions of section 147/148 of the Act are not applicable in such cases. No contrary decision has been brought to our notice. Accordingly, we hold that initiation of proceedings u/s 147/148 by the AO to reassess the income is illegal being without jurisdiction and consequently the reassessment order passed u/s 147 r.w.s. 143(3) is also illegal and void ab initio and is liable to be quashed.” Further reliance is placed on the following case laws: - Ashok Kumar Batwani Talwandi ITA No. 204/2004 dated 10.01.2017(Raj.) - 140 TTJ 249 ITO vs. Arum Kumar Kapoor (ITAT, Amritsar Bench) - 64 taxmann.com 159 G. Koteswara Rao v/s DCIT (ITAT, Visakhapatnam) - Rajat Shubra Chatterji vs. ACIT in ITA no. 2403/Del/2015 (ITAT, Delhi) - Prakash Chand Kothari in ITA No. 1190/JP/2019 (ITAT, Jaipur) It is thus submitted that the consequent re-assessment order passed u/s 147 is without jurisdiction and deserves to be quashed. Reopening solely on the basis of information received from some other officials without recording his own subjective satisfaction and thus same is based on borrowed satisfaction. In this regard, at the outset, information as shared by ld.AO vide notice u/s 148A(b) of the Act (APB 34-38) is again reproduced for the sake of convenience: “1. In this connection, it is stated that information regarding transaction related to Future & Option (F&O) carried out by you is available with the department for FY 2016- 17 relevant to AY 2017-18. The information has been received from the ACIT, Central Circle-2, Jaipur that a Search & Seizure operation was carried out in the case of Shri Printed from counselvise.com 20 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Ajay Gangwal on 02.08.2017. During the course of search proceedings, ledger account of Shri Kapil Taneja was found and seized wherein transaction of Future & Option (F&O) was mentioned. As per ledger account (snapshot of ledger account is enclosed), there are transactions of Rs. 94,06,544/- in F&O which are not reflected in the return of income for the considered year as these transaction were made out of the books of accounts. During the course of investigation proceedings, the assessee could not establish source of such alleged transactions in F&O. In view of the above discussed facts, the amount of Rs. 94,06,544/- is required to be added back to the total in the return of income for the considered year.” From perusal of above, it is evident that ld.AO has reopened the assessment, solely on the basis of information found and seized during the course of search & seizure carried on Shri Ajay Gangwal. It is further submitted that the validity of initiation of reassessment proceedings has to be judged with regard to the material available with the assessing officer and that too by framing the opinion strictly based on the documents and information in possession, that certain income has escaped assessment and not in a mechanical manner, which has been done in the case in hand. Thus, re-opening of the case based on the borrowed satisfaction on the information provided by some other official without carrying out independent verification of the information with reference to return of income and financial affairs of the assessee and without recording his own independent satisfaction on the basis of such independent verification deserves to be held illegal. In this regard further reliance is placed on judgement of Hon'ble High Court in the case of CIT Vs. Atul Jain (Delhi) reported in 299 ITR 383 where in Hon'ble High Court has dismissed the appeal of Revenue by stating below reasons:- Looked at in the light of the decisions placed before us and the law laid down therein, it is necessary to appreciate the information available with the Assessing Officer in the present case. The only information is that the assessed had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque of that amount. The information does not indicate the source of the capital gains (which in this case are shares). We do not know which shares have been transacted and with whom has the transaction taken place. There are absolutely no details available and the information supplied is extremely scanty and vague. In so far as the basis for the reasons is concerned, even this is absent. The Assessing Officer did not verify the correctness of the information received by him but merely accepted the truth of the vague information in a mechanical manner. The Assessing Officer has not even recorded his satisfaction about the correctness or otherwise of the information or his satisfaction that a case has been made out for issuing a notice under Section 148 of the Act. Read in this light, what has been Printed from counselvise.com 21 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT recorded by the Assessing Officer as his \"reasons to believe\" is nothing more than a report given by him to the Commissioner of Income Tax. As held by the Supreme Court in Chhugamal Rajpal, the submission of a report is not the same as recording of reasons to believe for issuing a notice. The Assessing Officer has clearly substituted form for substance and, therefore, the action of the Respondent falls foul of the law laid down by the Supreme Court in Chhugamal Rajpal which is clearly applicable to the facts of these appeals. Further Hon'ble Gujarat High Court in the case of Seth Brothers Vs. CIT reported in 169 CTR 519 has laid down following principles for re-opening of the assessment u/s 148 of the Income Tax Act, 1961: (Reproduced in 28 TW 57,79) \"11 (a) There must be material for belief • Circumstances must exist and cannot be deemed to exist for arriving at an opinion. • Reason to believe must be honest and not based on suspicion, gossip, rumour or conjuncture. • Reasons referred must disclose the process of reasoning by which he holds `reasons to believe' and change of opinion does not confer jurisdiction to reassess. • There must be nexus between material and belief. • The reasons referred must show application of mind by the assessing officer.” The Hon’ble ITAT, Delhi in the case of Uma Strips Ltd. vs DCIT in ITA Nos. 3284/Del/2019 vide orders dt. 11.05.2022 held as under: 9. From the above, we find that there is no live link presented by the AO between the material available with him i.e. the report of the investigation and to reason to belief that the assessee has tried to evade the assessment for the particular year in question. Simply stating and doubting that the assessee is involved in obtaining accommodation entries without providing proof, reason, information to back-up the claim cannot be considered as a valid reason to issue notice u/s 148 of the I.T. Act. There is no independent application of mind that could be deciphered from the reasons recorded. There is no reference to examination of the returns filed and whether the entries taken or on account of bogus capital, a balance sheet item or on account of bogus sales or purchases on account of revenue account. As per the record and the reasons recorded, no enquiries have been conducted by the Assessing Officer to come to a conclusion or reasons to belief with regard to evasion of tax which has escaped assessment. 10. Placing reliance on the decisions of Hon’ble jurisdictional Delhi High Court in the case of Pr. CIT Vs. Meenakshi Overseas (P) Ltd. 395 ITR 677, G&G Pharma 384 ITR 147, Subh Infrastructure 398 ITR 198 and Pr. CIT Vs. RMC Polyvinyl (I) Ltd. 396 ITR 5 wherein the Delhi High Court has held that observations of the Investigation Wing should not be treated as conclusions without the AO independently verifying the same , in the Printed from counselvise.com 22 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT absence of which the Hon’ble Court held that the reopening of assessment was bad in law. 11. Hence, we hold that the proceedings u/s 148 of the I.T. Act are void ab initio and are liable to be quashed.” In case of PCIT vs. RMG Polyvinyl (I) Ltd [2017] reported in 83 taxmann.com 348 (Delhi) it is held by Hon’ble Delhi High court that where information was received from investigation wing that assessee was beneficiary of accommodation entries but no further inquiry was undertaken by Assessing Officer, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified. In case of PCIT vs. Meenakshi Overseas (P.) Ltd. [2017] 82 taxmann.com 300 (Delhi) it is held by the Hon‘ble Delhi High court that where reassessment was resorted to on basis of information from DIT(Investigation) that assessee had received accommodation entry and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. In the circumstances it is submitted that in the instant case also, it is evident that the ld.AO has simply proceeded with the information received from the some other officials, gathered by them in the course of search & seizure conducted in the case of some third party and no independent inquiry whatsoever was carried out by ld.AO before reaching to the conclusion that income has escaped assessment in the case of assessee. Hence, in substance it can be observed that there is no income which has escaped assessment and thus, it is submitted that since there was no independent application of mind by ld.AO while recording the satisfaction of escapement of income before issue of notice u/s 148 and he simply proceeded on borrowed satisfaction reached by some other officials without verifying the same, therefore, the entire proceedings initiated u/s 148 deserves to be held bad in law. Ground of Appeal No. 2 to 2.1: In these grounds of appeal, assessee challenged the action of l.d AO in confirming the action of ld. AO in making addition of Rs. 1,52,364/- made u/s 69A of the Act by alleging that assessee has earned alleged Net Profit of Rs. 1,52,364/- in F&O Transactions, arbitrarily. Brief facts pertaining to this ground of appeal is that case was reopened for the sole reason that during the course of search in the case of Shri Ajay Gangwal a Printed from counselvise.com 23 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT ledger pertaining to assessee was found & seized, as per which it is alleged that assessee had undertaken F&O transaction of Rs. 94,06,544/-. Assessee during the course of 148A proceedings as well as reassessment proceedings u/s 147 of the Act has filed a affidavit before the ld. AO stating that he has never undertaken any F&O transaction with Shri Ajay Gangwal and ledger found during the course of search at Shri Ajay Gangwal is not pertaining to him. Further he also challenged the authenticity of Ledger as same was neither clear nor sealed & signed. However, ld.AO brushed aside the submission made by assessee arbitrarily and completed the assessment vide order dated 24.05.2023, by making addition of Rs. 1,52,364/- by alleging the same as unexplained Net profit earned in F&O transaction by assessee (Rs. 47,62,289/- + 17,165/- -46,27,090/- ). In this regard it is reiterated that ld, AO made the addition in the hands of assessee solely on the basis of ledger found & seized during the course of search & seizure carried out at some other party. It is also submitted that assessee during the course of reassessment proceeding repeatedly sought the clear and legitimate copy of the ledger on the basis of which it is alleged that assessee has undertaken alleged F&O Transaction with Shri Ajay Gangwal and same is not yet been provided till date by the ld. AO. It is also submitted that assessee has categorically denied on entering any F&O transaction with Shri Ajay Gangwal and in support of his claim furnished an affidavit (APB 41 – 42) which remain unrefuted. It is further submitted that ld.AO has passed the re-assessment order solely on the basis of information received during the course of search & seizure conducted at some third party by some other officials in some other case, without providing assessee of opportunity of cross examination of the searched party i.e Shri Ajay Gangwal who alleged to undertake F&O transaction jointly with the assessee. Also, ld. AO did not provide complete legible copies of information on which heavy reliance is placed before making such a huge addition in the hands of the assessee. Hon’ble Apex court in the case of CCE Vs. Andaman Timber Industries, (324) ELT 641 has held as under: “6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the Printed from counselvise.com 24 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross- examination and make the remarks as mentioned above.” CIT vs Odeon Builders (P.) Ltd [2019] 110 taxmann.com 64 (SC) Hon’ble Supreme Court held that if the addition was based on third party information gathered by Investigation wing then addition cannot be made unless such information is provided to the assessee and opportunity of cross examination is provided more so when assessee placed on record all the evidences. The relevant findings are as under: Headnote: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Whether no substantial question of law arose from impugned order of Tribunal - Held, yes [Para 4] [In favour of assessee] Printed from counselvise.com 25 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT (403 ITR 183) Sunita Dhadda, order dt 28.03.2018 SLP (SC) The ratio laid down by Hon’ble Rajasthan High Court and also Hon’ble ITAT, Jaipur Bench as below was upheld: “Their Lordships ADARSH KUMAR GOEL and ROHINTON FALL NARIMAN Ji.- dismissed the Department's special leave petition against judgment dated July 31, 2017, of the Jaipur Bench of the Rajasthan High Court in DB ITA No. 197 of 2012 whereby the High Court held that the Tribunal was justified in deleting the addition of Rs. 4,07,00,000 of \"on money\" said to have been received with respect to subject land of the assessee holding that the question what was the price of the land at the relevant time, was a pure question of fact and that unless it was established on record by the Department, that as a matter of fact, the consideration did pass to the seller from the purchaser, the Department had no right to make any additions, especially since none of the witnesses were examined before the Assessing Officer, and the assessee did not have any opportunity to cross-examine them” [Emphasis Supplied] Hon’ble Jaipur Bench of Tribunal in the case of Sh. Pramod Jain vs. DCIT in has relied upon the view taken by Hon’ble Apex Court in Andaman Timbers and held that the statements of witness cannot be made sole basis of making assessment without giving an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. Hon’ble Ahmedabad bench of ITAT also in the case of Smt. Sunita Jain vs ITO quashed the assessment order by placing reliance on Apex Court judgment in the case of Andaman Timber (cited supra) as entire assessment was based upon the statements of Sh. Mukesh Choksi, which were neither supplied to assessee nor was opportunity of cross examination was provided. In view of above, it is submitted that addition made by ld. AO without providing opportunity of cross examination is against the principle of natural justice and order so passed deserves to be quashed and addition so made be deleted.” 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records : S.No PARTICULARS PAGE NO. 1. Copy of Acknowledgement of Income tax return filed u/s 139(4) dated 01.11.2017 1 Printed from counselvise.com 26 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT S.No PARTICULARS PAGE NO. 2. Copy of Acknowledgement of Income tax return filed u/s 148 dated 09.11.2022 2 3. Copy of Audited Financial Statement for the year ending 31st march 2017 along with audit report in form 3CB and 3CD 3-33 4. Copy of Show-Cause Notice issued u/s 148A(b) dated 28.05.2022 34-38 5. Copy of Reply dated 11.06.2022 to Show-Cause Notice issued u/s 148A(b) along with affidavit 39-42 6. Copy of Issue Letter issued u/s 148A(b) dated 27.06.2022 along with Information Passing letter regarding search proceeding in case of Ajay Gangwal and issue wise reply in matter of Ajay Gangwal 43-47 7. Copy of Reply dated 04.07.2022 to issue letter issued u/s 148A(b) 48-49 8. Copy of Order issued U/s 148A(d) dated 26.07.2022 50-53 9. Copy of Notice issued u/s 148 dated 26.07.2022 54-55 10. Copy of Notice issued u/s 142(1) dated 16.01.2023 56-60 11. Copy of Reply dated 30.01.2023 to notice issued u/s 143(2) read with section 147 61-63 12. Copy of draft Assessment order dated 02.05.2023 64-68 13. Copy of Written Submission dated 13.01.2025 in filed before Ld.CIT(A) 69-74 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee has challenged the fact that the notice issued in this case is bad in law based on the apex court decision in the case of Shri Rajeev Bansal and the validity ordered in that order was not followed the 148 notice issued is required to be quashed and on that issue he relied upon the submission filed in his written submission. He also challenged the proceeding stating that considering the Printed from counselvise.com 27 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT seized material the proceeding is required to be conducted in accordance with the provision of section 153C of the Act and not as per provision of section 148 of the Act and to that effect he relied upon the decision of our High Court in the case of Shri Sham Sunder Khandelwal Vs. ACIT (Supra) and Tirupati Construction Company (Supra) and other decision as mentioned in the written submission. 8. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). 9. We have heard the rival contention perused the material placed on record and the orders of the lower authorities disputed before us. The various ground raised by the assessee thereby the assessee challenges the finding of the lower authorities on the technical grounds as well as merits of the disputes. The brief facts of the case are that assessee is an individual, filed his return of Income u/s 139(4) of the Act for the year under consideration on 01.11.2017 declaring total income at Rs. 85,45,820/- (APB 01). Subsequently, case of assessee was reopened vide issuance of notice u/s 148 dated 30.06.2021 (under erstwhile scheme of Reassessment, prevailing prior to the date when Finance Act 2021 came into force), on the basis of some information stated to have been received Printed from counselvise.com 28 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT during the course of search & seizure operation carried out in the case of Shri Ajay Gangwal on 02.08.2017. Thereafter, consequent upon the decision of Hon’ble Supreme Court in the case of UOI vs. Ashish Agarwal dated 04/05/2022, proceedings initiated vide notice dated 30.06.2021 were dropped and fresh notice was issued u/s 148A(b) on 28.05.2022 in accordance with new law on Re-opening as applicable w.e.f. 01.04.2021. As per notice issued u/s 148A(b), case was reopened for the sole reason that during the course of search in the case of Shri Ajay Gangwal a ledger pertaining to assessee was found & seized, as per which it is alleged that assessee had undertaken F&O transaction of Rs. 94,06,544/-. Assessee vide reply dated 11.6.2022 (APB 39 - 42) filed in response to notice u/s 148A (b), wherein he given an affidavit to ld. AO stating that he has never undertaken any F&O transaction and ledger found while search at Shri Ajay Gangwal is not pertaining to him. He also challenged the authenticity of Ledger as same was neither clear nor sealed & signed. However, the same were not appreciated and the order was passed u/s 148A(d) of the Act and accordingly notice u/s 148 was issued. In reassessment proceedings, assessee once again stated that he has never undertaken any F&O transaction with Shri Ajay Gangwal and challenged the authenticity of the ledger. However, ld.AO brushed Printed from counselvise.com 29 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT aside the submission made by assessee arbitrarily and completed the assessment vide order dated 24.05.2023, whereby ld. AO made the addition of Rs. 1,52,364/- by alleging the same as unexplained Net profit earned in F&O transaction by assessee (Rs. 47,62,289/- + 17,165/- - 46,27,090/-). That order of the assessee was challenged before the ld. CIT(A). The assessee contended that ld. CIT(A) has not decided the legal ground raised by the assessee and has simply confirmed the action of the ld. AO by holding as under : “5.2. It is further noted and as detailed in preceding para above that during the appellate proceedings, the appellant has not furnished any substantial evidence in support of its grounds of appeal. The appellant has challenged the addition in the different grounds of appeal. However, the appellant has not furnished any substantial written submission or documentary evidence in support of its grounds of appeal challenging the addition. The appellant has also not submitted any copy of its written submission or documentary evidence filed during the assessment proceedings. The onus lies on the appellant to support any claim by bringing in cogent documentary evidence. In absence of any substantial written submission or documentary evidence in support of its grounds of appeal, I have no basis to take a contrary view in the appellate proceedings as I have no reason to interfere with the assessment order. As such, I do not find any infirmity in the order of Assessing Officer. Therefore, Addition of Rs. 1,52,364/- is hereby sustained on merits.” Aggrieved by that finding the assessee preferred the appeal and the assessee vide grounds of appeal no 1 & 1.2 challenged the validity of the opening of reassessment proceedings u/s 148 of the Act. Record reveals that the case of the assessee was reopened based on information received during the course of search in the case of Shri Ajay Printed from counselvise.com 30 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Gangwal, wherein a ledger pertaining to assessee was found & seized, as per which it is alleged that assessee had undertaken F&O transaction of Rs. 94,06,544/-. Because of such information, it was alleged by ld.AO that the assessee has earned unexplained net profit of Rs. 1,52,364/- from trading in F&O Transaction. As contended by the ld. AR of the assessee considering the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal, notice issued u/s 148 of the Act is barred by limitation and contended that ; (i) Reopening by jurisdictional Assessing officer and by Faceless Assessing Officer, which is contrary to the specific provisions of section 151A (ii) Notice u/s 148 being issued without mentioning DIN. (iii) Since the reopening is done on the basis of information received during the course of search at third party, than it should be done as per the provisions of 153C of the Act. (iv) Reassessment is completed without disposing the objection raised by the assessee. (v) Reassessment is opened solely on the basis of ledger found during search in the case of Shri Ajay Gangwal, without application of independent mind and without providing opportunity to cross examine. Before proceeding to decide the issue of time barring of the proceeding it would be appropriate to read the relevant para of the judgments of Hon’ble Supreme Court in case of Rajeev Bansal reported in 167 taxmann.com 70 wherein the apex court has held that ; b. Interplay of Ashish Agarwal with TOLA Printed from counselvise.com 31 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT 108. The Income-tax Act read with TOLA extended the time limit for issuing reassessment notices under section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109. [Lord Asquith, in his concurring opinion, observed: \"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.\"] Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income-tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021. 109. If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income-tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction. See State of A P v. A P Pensioners Association [2005] 13 SCC 161. [This Court observed that the \"legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom.\"] 110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section 149A(d) Printed from counselvise.com 32 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022. 113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income- tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time-barred. So, as the submission of the assessee upon receipt of the judgement of Hon’ble Supreme Court in the case of Rajeev Bansal, in order to determine the validity of notice issued u/s 148 of the Act he submitted a table so as to determine the surviving period as held by the court and the same reads as under : Printed from counselvise.com 33 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT S. No Details of Notice issued Date of Notice APB Remark 1. Notice issued u/s 148 30.06.2021 WS page no 21 2. Notice u/s 148A(b) along with material relied upon issued on 28.05.2022 & 27.06.2022 34 – 38 & 43 – 47 In compliance of Hon’ble Apex Court judgment in UOI Vs Ashish Agarwal). 3. Reply filed by Assessee 11.06.2022 & 04.07.2022 39 – 42 & 48 – 49 4. Surving period available to Revenue 1 Day Day Includes only 30.06.2021 as per para 108,111 &112 of Judgment of Hon’ble Supreme Court in the case of Rajeev Bansal 6. Date of Issue of notice u/s 148 under new regime 26.07.2022 50 – 55 Beyond the Surving Period * Notice u/s 148 of the Act should have been issued on or before 05.07.2022 in the case of assessee by following the judgement of Hon’ble Supreme Court in the case of Rajeev Bansal. On perusal of aforesaid table, it is evident that order u/s 148A(d) of the Act & Notice u/s 148 of the Act should be passed/issued by 05.07.2022. However in the case of assessee order u/s 148A(d) of the Act & Notice u/s 148 of the Act were passed/issued on 26.07.2022 which is beyond the prescribed limit. Thus, the notice issued u/s 148 of the is barred by the limitation and therefore consequential order passed u/s 147 of the Act is void-ab-initio and addition so made deserves to be deleted outrightly. Now coming to the other issue as raised in the present case is that of the framing the assessment in the present case reopened as well as completed without following provisions of section 151A, which provides procedure for “Faceless assessment of income escaping assessment” Printed from counselvise.com 34 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT while issuing the notice u/s 148 of the Act. This matter has been dealt with by the CBDT notification no.18/2022 dated 29.03.2022 in terms of section 151A, para 3 of which provides that notices for assessment/re assessment/re-computation under Faceless Assessment Scheme shall be issued through “Automated Allocation , in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee.”, i.e. by FAO, whereas, in the case of assessee company notice u/s 148 as well as u/s 148A have been issued by DCIT Circle 1 Jaipur, i.e. Jurisdictional Assessing Officer (JAO). This issued has already been decided by the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. v. ACIT, Circle 15(1)(2), Mumbai and others [2024] 162 taxmann.com 225 (Bombay), has held that there is no question of concurrent jurisdiction of JAO and FAO for issuance of reopening notice under section 148 or even for passing assessment or reassessment order and it is only FAO which could issue notice under section 148 and not JAO. Hon’ble Bombay High Court in the above case has went on to hold that when an authority acts contrary to law, the said act of the Authority is required to be quashed and Printed from counselvise.com 35 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessee are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income-tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice. Based on that decision the present case, notice u/s 148 was issued by JAO, i.e. DCIT Circle 1 Jaipur and not through automated allocation as provided in Notification No. 18/2022, dated 29-3-2022 r.w.s. 151A, which is not in accordance with provisions of section 151A of the Act quashed and set aside. The other legal ground raised by the assessee is that in the present case assessment u/s 147 was re-opened on the basis of documents found during the course of third party search, which was conducted prior to 01.04.2021 and for which a specific mechanism was provided u/s 153C of the Income tax Act and for that he invited our attention to notice issued u/s 148A(b) of the Act (page 34-38). That reasons it self shows that the cae Printed from counselvise.com 36 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT was reopened solely on the basis of alleged information received by the ld. Assessing officer from the ACIT, Central Circle – 2, Jaipur, which was collected during the course of search and seizure action carried out in case of Shri Ajay Gangwal. On the basis of such information ld.AO formed belief that during the course of search and seizure action in case of Shri Ajay Gangwal, an ledger in the name of assessee was found and seized, wherein transaction of Future & Options was mentioned. Further on the perusal of return of income it was observed by ld. AO that F&O transactions are not mentioned in the return of income of the assessee, thus source of same remain unexplained. and accordingly reached to the satisfaction that income to the extent of Rs. 94,06,544/- has escaped assessment. That reasons so recorded are clear that information, based on which notice u/s 148 is issued in the case of assessee, was found during the course of search in case of a third person. Thus in such scenario, the proper course of action is that instead of invoking the provisions of section 148 of the Act, ld.AO should have invoked the provisions of u/s 153C of the Act and thereby the assessment made u/s. 148 is required to be quashed. In support of that contention ld. AR of the assessee relied upon the decision of our High Court in the case of Shri. Shyam Sunder Khandelwal Printed from counselvise.com 37 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Vs. ACIT, Jaipur (D.B.Civil Writ Petition No. 18363/2019) vs ACIT & others dated 19.03.2024 has decided the issue as under: CONCLUSION:- 23. The reasons supplied in case in hand for initiation of proceedings under section 147/148 are based on the incriminating material and documents including Pen Drives seized during the search carried out of the Manihar Group and the statements recorded during proceedings. From the information received the AO noticed that the loan advanced and interest earned thereon were unaccounted. In other words the basis for initiation of section 148 proceedings is the material seized relating to or belonging to the petitioner, during the search conducted of Manihar Group. 24. In the case where search or requisition is made, the AO under section 153A mandatorily is required to issue notices to the assessee for filing of income-tax return for the relevant preceding years. The AO assumes jurisdiction to assess/reassess 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under section 153C. The two pre-requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of section 153A. 26. Special procedure is prescribed under section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under section 143 & 147/148. 27. Section 153A and 153C starts with non-obstante clause. The procedure for assessment/reassessment in section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under sections 139, 147, 148, 149, 151 & 153. 28. The language of explanation 2 to new section 148 is akin to section 153A and section 153C. Corollary being that after seizing of operational period of section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted section 148. 29. The Department has not set up a case that for initiating proceedings under section 148 it had material other than the material seized during the search of Manihar Group. The contention was that though the material with regard to unaccounted loan advanced by the petitioner was received, the earning of interest on unaccounted loan was derivation of the AO from the material received. The Printed from counselvise.com 38 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT submission is that the derived conclusion cannot be acted upon under section 153C. The submission lacks merit and shall defeat the concept of single assessment order for each of relevant preceding years for assessing 'total income' in case of incriminating material found during search or requisition. 30. The argument that by enactment of section 153A to 153D has not eclipsed section 148 does not enhance the case of respondent to initiate the proceedings under section 148. On fulfillment of two conditions for invoking section 153C the proceeding in accordance with section 153A are to be initiated. The operating field of and section 153A to 153D and section 148 are different. Applicability of section 153C in cases where the seized material related to or belonged to person other than on whom search is conducted or requisition made does not render section 148 otiose. Section 148 shall continue to apply to the regular proceedings and also in cases where no incriminating material is seized during the search or requisition. 31. The other aspect of the matter is that under section 153A and 153C, 'the total income' is to be assessed. The total income includes returned income (if any), undisclosed income unearthed during the search or requisitioning and information possessed from the other sources. For Illustration:- An assessee had returned income of Rs.100, undisclosed income of Rs.200 is unearthed during search and there is information from annual information statement of non-disclosure of income of Rs.150/-. The AO under section 153A and 153C shall pass order dealing with income of Rs.100+Rs.200+Rs.150, the total income being Rs.450/-. In cases where there is no unearthing of undisclosed income of Rs.200/-, the department can resort to proceeding under section 147/148. 32. The argument that section 153C can be invoked in case there is incriminating material for all the relevant preceding years and otherwise section 148 is to be resorted to, is misplaced. On satisfaction of the twin condition for proceedings under section 153C, the AO has to proceed in accordance with section 153A. Notice is to be issued for filing of the returns for relevant preceding years and thereupon proceed to assessee or reassessee the 'total income'. It is not obligatory on the AO to make assessment for all the years, the earlier orders passed may be accepted. But once there is incriminating material seized or requisitioned belonging or relatable to the person other than on whom search was conducted, section 153C is to be resorted to. 33. Before concluding, it would be fair to deal with the case law cited by both the parties. 34. Reliance of respondents on decision of M/s. M.R. Shah Logistics Pvt. Limited (supra) is of no avail. The issue of interplay of provisions of section 147/148 vis-a-vis section 153C in the case of seized material relating or belonging to the person other than on whom the search was conducted or requisition made was not the issue before the Supreme Court. 35. The Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) while dealing with the provisions of section 153A held that in case of absence of incriminating material seized during the search, the department is not remediless for reassessing the unabated assessment on the basis of material received from the other sources and can proceed under section 148. The decision does not Printed from counselvise.com 39 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT support the contentions raised that section 148 is rendered redundant if section 153C is to be resorted to in the facts of the present case. 36. The Single Bench of this Court in the case of Vijay Kumar Mehta (supra) held that if the Department has chosen not to proceed under section 153C, no right is created to the petitioner for getting the notice under section 148 quashed. Moreover, learned Single Judge was not having the benefit of the decision of the Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra). The appeal against the order was dismissed having rendered infructuous in view of the subsequent developments that the assessment order was passed. 37. The decision of the Madras High Court in the case of Saloni Prakash Kumar (supra) is of no help to the respondents. The High Court held that section 153C does not preclude issuance of notice under section 148. The field of applicability of two sections was not the issue before the Court. 38. The petitioner relied upon the decision of the Karnataka High Court in the case of Sri Dinakara Suvarna (supra). It would be relevant to quote Para-10: 10. Admittedly no proceedings were initiated under section 153C of the Act. Thus, there is patent non-application of mind. It is relevant to note that the author of the diary Smt. Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-sum income. 39. Further reliance was placed upon the decision of the Bombay High Court in the case of M/s. Aditi Constructions (supra). The para-9 is quoted:- \"9. We find that the jurisdictional conditions for invoking section 147-148 are not satisfied as there is no failure to disclose material facts fully and truly. It is not in dispute that by the letter dated 11th September 2015 (Exhibit H) the Petitioner have submitted all the particulars along with supporting documents to the Respondent No.1. Hence the reasons to believe and a presumption based on the statement of Shri Bhanwarlal Jain (a third party) in the course of a search, that the loans of the entities were bogus or accommodation entries was clearly dispelled. Moreover, the specific provisions of S. 153C would prevail over the general provisions of section 147 in the case of search on 3rd party.\" 40. In view of above discussion the notices issued under section 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed against the petitioners in accordance with law. 41. The first ground of challenge to initiation of proceedings under section 148 is being accepted and there is no need to dilate upon other grounds raised for challenging the notice issued under section 148 of the Act. 42. It would be appropriate to mention that during the pendency of the writ petitions there was interim protection in favour of the petitioners. 43. The writ petitions are allowed accordingly. Based on the above discussion and respectfully following the decision as cited by the assessee we considered that the assessment is required to be Printed from counselvise.com 40 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT framed u/s. 153C of the Act and not u/s. 148 of the Act and thereby the said legal ground raised by the assessee. On the merits of the case the assessee submitted that he has never undertaken any F&O transaction with Shri Ajay Gangwal and ledger found during the course of search at Shri Ajay Gangwal is not pertaining to him. Further he also challenged the authenticity of Ledger as same was neither clear nor sealed & signed. However, ld.AO brushed aside the submission made by assessee arbitrarily and completed the assessment vide order dated 24.05.2023, by making addition of Rs. 1,52,364/- by alleging the same as unexplained Net profit earned in F&O transaction by assessee (Rs. 47,62,289/- + 17,165/- -46,27,090/-). In this regard it is reiterated that ld, AO made the addition in the hands of assessee solely on the basis of ledger found & seized during the course of search & seizure carried out at some other party. It is also submitted that assessee during the course of reassessment proceeding repeatedly sought the clear and legitimate copy of the ledger on the basis of which it is alleged that assessee has undertaken alleged F&O Transaction with Shri Ajay Gangwal and same is not yet been provided till date by the ld. AO. It is also submitted that assessee has categorically denied on entering any F&O transaction with Shri Ajay Gangwal and in support of his claim furnished an affidavit at page Printed from counselvise.com 41 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT 41 – 42 which remain unrefuted. It is further submitted that ld.AO has passed the re-assessment order solely on the basis of information received during the course of search & seizure conducted at some third party by some other officials in some other case, without providing assessee of opportunity of cross examination of the searched party i.e Shri Ajay Gangwal who alleged to undertake F&O transaction jointly with the assessee. Also, ld. AO did not provided completely legible copies of information on which heavy reliance is placed before making such a huge addition in the hands of the assessee. When the assessee on its merits denied and filed affidavit ld. AO did not controvert that fact even before us and therefore, we hold that the facts stated on affidavit cannot be disbelieved considering the decision of apex court in the cae of Mehta Parikh & Co. Vs. CIT [ 30 ITR 181] and thereby we direct to delete the addition. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11/08/2025. 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;@Judicial Member ys[kk lnL;@Accountant Member Printed from counselvise.com 42 ITA No. 578/JP/2025 Sh. Kapil Taneja vs. DCIT Tk;iqj@Jaipur fnukad@Dated:- 11/08/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Kapil Taneja, Jaipur 2. izR;FkhZ@ The Respondent- DCIT, Circle-01, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 578/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "