THE DY. COMMISSIONER OF INCOME-TAX, JAIPUR vs. LATE SHRI SUNDER GANGARAM PUNJABI THROUGH LEGAL HEIR MS. SUNAYANA MERIA, JAIPUR

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ITA 1952/JPR/2025Status: DisposedITAT Jaipur12 August 2026AY 2012-1310 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that reassessment proceedings initiated under Section 147 based on third-party seized material, without recording independent satisfaction and following the procedure under Section 153C, are void. The Tribunal followed the jurisdictional High Court's decision on this matter.

What were the facts?

The revenue initiated reassessment proceedings under Section 147 based on information seized from a third party during a search. The assessee's legal heir argued that the proceedings should have been initiated under Section 153C, not Section 147, as the AO lacked independent satisfaction.

What were the issues?

Whether reassessment proceedings initiated under Section 147 are valid when the information originates from a search on a third party and Section 153C procedure is not followed.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 153C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHE (B

Before: SMT. ANNAPURNA GUPTA & SH. UDAYAN DAS GUPTA

Hearing: 29.06.2026Pronounced: 12.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE (B),JAIPUR. BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER

I.T.A. No.1951& 1952/JPR/2025 Assessment Year: 2011-12& 2012-13

Vs. Late Shri Sunder Dy. CIT, Circle (International Gangaram Punjabi Taxation), Jodhpur. Through legal heir Ms. Sunayana Maria, Punjabi, 542, Gali No. 6 Raja Park Jaipur, Rajasthan. [PAN:AUNPP8206G] (Respondent) (Appellant)

Appellant by Sh. Shravan Kumar Meena, CIT Respondent by Sh. Surendra Shah, CA Date of Hearing 29.06.2026 Date of Pronouncement 12.08.2026

ORDER Per: Udayan Das Gupta, JM: This appeal is filed by the revenue against the order of ld. CIT (A)-42, Delhi, dated 08.10.2025, passed u/s 250 of the Act, 1961( henceforth the Act ), which has emanated from the order of AO, dated 27/12/2018 passed u/s 147 r.w.s. 144 of the Act.

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2.

Brief facts emerging from records are that, on the basis of information received from the CIT, Central Circle-3, Jaipur, that the assessee has advanced a loan amounting to Rs. 4 crores (Rs. Four crores) to various persons through one “Ramesh Manihar Group”, and in absence of any regular return on record, proceedings were initiated u/s 147, after necessary approval from the PCIT-2, Jaipur,vide notice u/s 148 dated 31.03.2017, in response to which there has not been any compliance by the assessee.

2.1 This specific information was forwarded by the DCIT, Central Circle-3,to the AO ( of the assessee )on the basis of incriminating materials found and seized in course of search conducted u/s 132of the Act, on Ramesh Manihar Groupon 07.01.2016, contained in eighteen ( 18 ) Pen Drives and entries recorded in (Excell Sheets) in the computer system of the said seized person Ramesh Manihar Group, where it was evident that this assessee “Sunder Ganga Ram Punjabi” had advanced a loan amount of Rs. Four crores, in cash, which has remained unrecorded in regular books, and has earned interest @ 9 to 10% per annum from the said loan.

2.2 It was further observed from seized documents and computer records , that the seized person “ Ramesh Chand Manihar ( Maheswari ) and one Sri Manmohan Bagla ”( known as Manihar / Maheswari group ) acted as finance brokers for arranging finance in between various borrowers and lenders in cash (unrecorded in

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regular books ) and the assessee in this case, was one of the loan lenders to the said group, who has advanced the alleged loan amount of Rs.4 crores on 28th September, 2010 ( as per recorded date in seized documents- para – 4 of assessment order ).

2.3 It has been further observed that the seized person has approached the Hon’ble Income Tax Settlement commission, for settlement of pending cases , where they have surrendered the income earned as “commission” on the loan transactions handled by them as finance brokers.

2.4 Meanwhile , in course of reassessment proceedings, even though no return has been submitted , written submission has been filed by the legal heir of the assessee Ms. Sunayana Maria, stating the fact that she is residing abroad ( foreign citizen ) and the assessee has already expired on 5th February 2016 and it was also objected that the notice u/s 148 was issued on 31.03.2018 after the date of death of the assessee, in the name of the deceased“Sunder Ganga Ram Punjabi ”, when the information of death of the assessee was already intimated to the jurisdictional AO on 24th November, 2016 and also in course of proceedings for the Asst year 2009- 10 which itself,raises serious questions regarding the legal validity of the 148 notice itself being issued in the name of a dead person.

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2.5 However, it is observed that the assessment u/s 147/144, has been framed by the AO, bringing the legal heir Ms. Sunayana Maria on record , on the basis of information ( seized materials ) forwarded by the AO Central Circle, Jaipur , emanating out of incriminating materials seized in course of search u/s 132 , and the assessment has been completed on a total income of Rs.4.24 crores(including Rs. four crores being the alleged advance of loan given by the deceased assessee during his life time plus interest calculated on the same being 24 lakhs).

3.

The matter carried in appeal before the ld. first appellate authority has been agitated on the legal issue that when the assessment is sought to be reopened on the basis of incriminating materials ( seized pen drive )gathered during the course of search of a third party( M/s Manish Manihar group ) the AO of the searched person needs to record a satisfaction that the incriminating materials belongs to the other person (the assessee) and the said materials are to be forwarded to the AO of the other person and after recording of satisfaction by the AO of the assessee regarding the incriminating materials belonging to the assessee, proceedings are to be initiated as per procedure vide notice u/s 153C of the Act 61 and in absence of any independent material existing with the AO ( excluding the seized materials) provisions of section 147 is not applicable.

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4.

The ld. CIT(A) vide a very detailed order, relying on the judgment of the Jurisdictional High Court in the case of Shyam Sunder Khandelwal vs. ACIT in Civil Writ Petition dated 19.03.2024 has quashed the reassessment proceedings holding the same to be void and has allowed the appeal of the assessee by observing in para 5.5 of the appellate order as follows:

“5.5 Though, the assessee is not a party to the batch of writ petitions decided in the above order by the Hon'ble High Court, however, the issue involved is identical on the identical facts. In the said writ petitions to proceedings were initiated u/s 148 on the basis of same search and the same incriminating material gathered from the search in Ramesh Manihar group. Thus, the above decision of the Hon'ble jurisdictional Rajasthan High Court is found squarely applicable to the facts of the instant case. In the above order Hon'ble High Court, Rajasthan has quashed the notices issued under Section 148 and the resultant assessment orders. As per the above judgement, in cases of the person other than on whom search was conducted but material belonging or relating to such persons was seized or requisitioned, the AO has to proceed under Section 153C of the Act instead of section 147/148 of the Act., as the proceedings in the relevant cases were initiated based on the incriminating material and documents including Pen Drives seized during the search carried out in the case of Ramesh Manihar Group and the statements recorded during proceedings.

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5.6 It is pertinent to mention here that though certain other High Courts, including the Hon'ble Delhi High Court in the case of PCIT vs. Naveen Kumar Gupta [2024] 168 taxmann.com 574 (Delhi), vide judgment dated 20.11.2024 has not concurred with the above judgment of the Rajasthan High Court and has held to the contrary that where jurisdictional conditions to initiate further steps under section 153C were not satisfied, non obstante clause as used in section 153C could not be read to completely exclude provisions of section 147 and thus, Assessing Officer could initiate reassessment proceedings under section 147 even if proceedings under section 153C could have been initiated, however, as the assessee in the instant case at hand falls within the territorial jurisdiction of the Rajasthan High Court, as per principles of judicial discipline and precedence, the judgment of the Hon'ble Rajasthan High Court has binding effect on the lower authorities in the instant case.

5.7 Therefore, respectfully following the decision of Hon'ble jurisdictional Rajasthan High Court in the above writ petitions, the impugned notice issued u/s 148 of the I.T.Act, 1961 which was issued on the basis of incriminating material seized during the course of search in the case of Ramesh Manihar Group is hereby quashed as void- ab-initio. The resultant impugned assessment order also does not survive as the same is rendered non est. However, the AO shall be at liberty to take appropriate action

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against the assessee u/s 153C in accordance with law. As a result, the ground of appeal no. 11 raised by the appellant is allowed.”

5.

Now, the revenue is before the tribunal on the grounds contained in the memorandum of appeal and in course of hearing before the tribunal, the ld. DR argued on merits of the case that the ld. CIT(A) was not justified in deleting the addition of Rs.4.24 crores without appreciating the finding of the AO that the assessee has failed to prove the source of fundings in the financial transactions. But the Ld DR, has not submitted anything regarding the legal issue raised by the assessee, that when information arising out of incriminating materials are flowing from search documents of third party ( person searched )u/s 132, it is incumbent on the part of the AO of the assessee to record independent satisfaction on the basis of the seized materials received and thereafter to proceed with the same as per procedure laid down under law, vide issue of notice u/s 153C of the Act. The Ld DR has raised a formal objection that since the revenue has filed an SLP before the Hon’ble Apex court against the decision of the Hon’ble jurisdictional High court , the Ld CIT ( A ) was not justified in solely relying on the legal issue , without adjudicating on merits.

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6.

Per contra the Ld AR of the assessee , relied on the order of the Ld CIT ( A ) and further relying on the decision of the Hon’ble jurisdictional High court in the case of Shyam Sunder Khandelwal v ACIT ( supra )he prayed for upholding of the order of the Ld CIT ( A ) and he further clarified that the SLP filed by the revenue before the Hon’ble Apex Court in SLP ( Civil ) Diary No 24444/2025 in the case of ACIT circle 4, Jaipur vs Pramod Jain ( one of the bunch petitioner ) decided by the Hon’ble Rajasthan High Court while delivering the judgment in “ Shyam Sunder Khandelwal “ Case, has been dismissed by the Hon’ble Apex court , observing that there is no good reason to interfere with the common impugned order passed by the High court and the Ld AR prayed for sustaining the appellate order.

7.

We have heard the rival submissions and considered the materials on record. We find that the re assessment proceedings is initiated vide notice u/s 148, based on incriminating materials seized from third party in course of search u/s 132, and the same has been forwarded to the AO of the assessee( other person ) contained in seized pen drives and excel sheets.

7.1 It was incumbent on the part of the AO of the assessee to record his satisfaction after receipt of the seized material and follow the procedure laid down in section 153C, because the same being a special provision, overrides general reassessment rules and in the instant case the AO has chosen to skip the procedure

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laid out in section 153C to issue a standard section 148 notice based on the information flowing from seized material itself and such notice issued is not as per provisions of law. 7.2 As such, respectfully following the law laid down by the Hon’ble Jurisdictional High Court in the case of Shyam Sunder Khandelwal v ACIT ( supra)which is binding on this tribunal, we uphold the order of the ld. CIT(A) and we are fully in agreement with the same and the appeal of the revenue is dismissed being devoid of merits.

8.

Since we have dismissed the appeal of the revenue on the legal issue, the grounds raised on the merits are not adjudicated.

9.

In the result, the appeal of the revenue is dismissed.

ITA –1952 / JPR / 2025 /Asst year: 2012-13

10.

This appeal is also preferred by the revenue against the order of the Ld CIT ( A ) dated 08/10/2025, passed u/s 250 of the Act, and the grounds of appeal raised by the revenue in form 36 and the facts of the case are identical to the immediately earlier year ie Assessment year 2011-12 decided by us in ITA 1951/ JPR/ 2025,and

I.T.A. No.1951& 1952/JPR/2025 Assessment Year: 2011-12& 2012-13 10

our observation and findings in the said appeal, are applicable mutatis mutandis to this appeal also with necessary changes in the quantum figures.

11.

As such, respectfully following the law laid down by the Hon’ble Jurisdictional High Court in the case of Shyam Sunder Khandelwal v ACIT (supra)which is binding on this tribunal, we uphold the order of the ld. CIT(A) and we are fully in agreement with the same and the appeal of the revenue is dismissed.

12.

Since we have dismissed the appeal of the revenue on the legal issue, the grounds raised on the merits are not adjudicated.

13.

In the result both the appeals of the revenue are dismissed.

Order pronounced on 12.08.2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963. Sd/- Sd/- (ANNAPURNA GUPTA) (Udayan Das Gupta) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.

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