ASHOK MEWARA,LAXMI CINEMA ,JODHPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- II UDAIPUR

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ITA 681/JODH/2024Status: DisposedITAT Jodhpur12 June 2026AY 2013-201410 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that income pertaining to earlier years cannot be taxed in the current assessment year simply because its source is not explained for the current year. It also directed that credit for income already offered by the assessee under Section 153A must be allowed.

What were the facts?

During a search, loose papers with financial transactions prior to April 1, 2010, were found. The Assessing Officer (AO) made additions based on these papers, and the CIT(A) confirmed them, disallowing opening balances and income offered under Section 153A.

What were the issues?

Whether additions made based on loose papers without establishing a nexus to undisclosed income are valid, and whether credit for income offered under Section 153A should be allowed.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: DR. MITHA LAL MEENA, HON’BLE & SHRI SUDHIR PAREEK, HON’BLE

For Appellant: Shri P.C. Parwal, CA (Virtual)
For Respondent: Smt. O.P. Meena CIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17)

Ashok Mewara Assistant Commissioner Laxmi Cinema, Near bus Stand, of Income Tax, Central Bilara, Rajasthan-342603 Circle-II, Udaipur. PAN No. AEBPM6843E Assessee by Shri P.C. Parwal, CA (Virtual) Revenue by Smt. O.P. Meena CIT-DR (Virtually) Date of Hearing 02 / 06 / 2026 Date of Pronouncement 12 / 06 / 2026 ORDER PER BENCH: These appeals are filed by assessee against the separate order of Commissioner of Income Tax, Appeal, Udaipur-2 [hereinafter referred to as the CIT(A)] even dated 30.06.2024 with respect to the assessment year 2011-12 to 2013-14 and 2015-16 to 2016-17.

2.

The appellant assessee has raised the following grounds of appeal:- ITA NO. 679/JODH/2024 (A.Y. 2011-12) 1. That on the facts and in law, the assessment framed U/s 153A r.w.s. 143(3) of the Act without reference to incriminating material found in search and without establish the nexus or connect of such seized

2 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) material with unearthing of undisclosed income of the assessee is illegal and bad in law. 2. The Ld. CIT (A), Udaipur-2 has grossly erred on fact and in law in confirming the addition of Rs. 30,68,381/- including the opening balance as on 01-04-2010 amounting to Rs. 27,39,686/- on the basis of the transaction found noted on various papers ignoring that the amount noted on these papers are deaf and dumb. He has further erred in not allowing the credit of opening amount of principal amounting to Rs. 27,39,686/- for mere want of source of such opening balance prior to the block period and treated the same as unexplained in the assessment year under consideration. Thus, the action of the Ld. CIT (A), Udaipur-2 is unjustified & bad in law and the addition so confirmed is liable to be deleted. 3. That the appellant reserves his rights to add, to alter or to modify any grounds of the appeal on or before hearing of the same. ITA NO. 680/JODH/2024 (A.Y. 2012-13) 1. That on the facts and in law, the assessment framed U/s 153A r.w.s. 143(3) of the Act without reference to incriminating material found in search and without establish the nexus or connect of such seized material with unearthing of undisclosed income of the assessee is illegal and bad in law. 2. The Ld. CIT (A), Udaipur-2 has grossly erred on fact and in law in confirming the addition of Rs. 3,11,332/- on the basis of the transaction found noted on various papers ignoring that the amount noted on these papers are deaf & dumb and treated the same as unexplained in the assessment year under consideration. He has further erred in not allowing the credit of amount already offered for taxation in the return filed U/s 153A of the IT Act, 1961. Thus, the action of the Ld. CIT (A), Udaipur-2 is unjustified & bad in law and the addition so confirmed is liable to be deleted. 3. That the appellant reserves his rights to add, to alter or to modify any grounds of the appeal on or before hearing of the same. ITA NO. 681/JODH/2024 (A.Y. 2013-14) 1. That on the facts and in law, the assessment framed U/s 153A r.w.s. 143(3) of the Act without reference to incriminating material found in search and without establish the nexus or connect of such seized material with unearthing of undisclosed income of the assessee is illegal and bad in law. 2. The Ld. CIT (A), Udaipur-2 has grossly erred on fact and in law in confirming the addition of Rs. 2,91,349/- on the basis of the transaction

3 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) found noted on various papers ignoring that the amount noted on these papers are deaf & dumb and treated the same as unexplained in the assessment year under consideration. He has further erred in not allowing the credit of amount already offered for taxation in the return filed U/s 153A of the IT Act, 1961. Thus, the action of the Ld. CIT (A), Udaipur-2 is unjustified & bad in law and the addition so confirmed is liable to be deleted. 3. That the appellant reserves his rights to add, to alter or to modify any grounds of the appeal on or before hearing of the same. ITA NO. 682/JODH/2024 (A.Y. 2015-16) 1. That on the facts and in law, the assessment framed U/s 153A r.w.s. 143(3) of the Act without reference to incriminating material found in search and without establish the nexus or connect of such seized material with unearthing of undisclosed income of the assessee is illegal and bad in law. 2. The Ld. CIT (A), Udaipur-2 has grossly erred on fact and in law in confirming the addition of Rs. 1,69,135/- on the basis of the transaction found noted on various papers ignoring that the amount noted on these papers are deaf & dumb and treated the same as unexplained in the assessment year under consideration. He has further erred in not allowing the credit of amount already offered for taxation in the return filed U/s 153A of the IT Act, 1961. Thus, the action of the Ld. CIT (A), Udaipur-2 is unjustified & bad in law and the addition so confirmed is liable to be deleted. 3. That the appellant reserves his rights to add, to alter or to modify any grounds of the appeal on or before hearing of the same. ITA NO. 685/JODH/2024 (A.Y. 2016-17) 1. That on the facts and in law, the assessment framed U/s 153A r.w.s. 143(3) of the Act without reference to incriminating material found in search and without establish the nexus or connect of such seized material with unearthing of undisclosed income of the assessee is illegal and bad in law. 2. The Ld. CIT (A), Udaipur-2 has grossly erred on fact and in law in confirming the addition of Rs. 11,39,853/- on the basis of the transaction found noted on various papers ignoring that the amount noted on these papers are deaf & dumb and treated the

4 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) same as unexplained in the assessment year under consideration. He has further erred in not allowing the credit of amount already offered for taxation in the return filed U/s 153A of the IT Act, 1961. Thus, the action of the Ld. CIT (A), Udaipur-2 is unjustified & bad in law and the addition so confirmed is liable to be deleted. 3. That the appellant reserves his rights to add, to alter or to modify any grounds of the appeal on or before hearing of the same. 3. The appellant assessee has raised sole and common issue in all these appeals on identical facts related to addition made on the basis of transaction noted on loose papers alleged to be deaf and dumb documents, and therefore, all these appeals were heard together and adjudicated by this consolidated order for sake of brevity.

4.

The ITA No. 679/Jodh/2024 with respect to assessment year 2011- 12 is taken as lead case for discussion of facts. Briefly the facts of the case are that the assessee is an employee of M/s Ridhi Sidhi Infra Projects Pvt. Ltd. and earns income from salary, interest and commission. A search was conducted at the premises of the assessee on 21.03.2017, where certain loose papers were found with the evidence of certain transactions pursuant to various financial years. In response to notices issued under Section 153A, assessee filed the return declaring additional income for the assessment years under consideration as under:-

5 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) Assessment Year Income declared Income declared Additional income in original return in return filed declared under Section 153A 2011-12 Rs. 4,54,360/- Rs. 5,51,090/- Rs. 96,730/- 2012-13 Rs. 5,30,880/- Rs. 6,48,950/- Rs. 1,18,070/- 2013-14 Rs. 5,52,950/- Rs. 5,59,840/- Rs. 6,890/- 2015-16 9,98,620/- Rs. 9,99,820/- Rs. 1,200/- 2016-17 Rs. 12,30,350/- Rs. 25,21,540/- Rs. 13,00,269/- 5. During the course of scrutiny assessment, the AO has made addition based on the notings on the loos papers for the assessment years under consideration which are partially confirmed by the Ld. CIT(A) as detailed in tabular form hereunder:-

A/Y Addition made Addition confirmed Remark by AO by CIT(A) 2011-12 Rs. 30,68,381/- Rs. 30,68,381/- Benefit of opening balance of Rs. 27,39,686/- and income of Rs. 96,730/- offered in 153A return not given. 2012-13 Rs. 3,11,332/- Rs. 3,11,332/- Credit of income of Rs. 1,18,070/- offered in the return filed 153A not given. 2013-14 Rs. 3,96,393/- Rs. 1,05,044/- Credit of income of Rs. 6,890/- offered in the return filed 153A not given. 2015-16 Rs. 31,69,135/- Rs. 1,69,135/- Credit of income of Rs. 1,200/- offered in the return filed 153A not given 2016-17 Rs. 46,63,684/- Rs. 11,39,853/- Credit of income of Rs. 13,00,269/- offered in the return filed 153A not given 6. The Ld. counsel for the assessee has submitted that the AO has made addition of Rs. 30,68,381/- based on a paper found at Exhibit-9 of Annexure-AS which is scanned at page no. 6 of the assessment order for

6 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) the assessment year 2011-12. The appellant submitted that the amount advanced and interest paid thereon to 3 parties are noted for the period prior to 01.04.2010. Based on, this paper the AO has made addition of the amount appearing on 31.03.2010 of Rs. 15,73,519/- + Rs. 6,79,650/- + Rs. 8,15,212/- aggregating to Rs. 30,68,381/-.

7.

The AR contended that on this paper, the amount which was outstanding as on 31.03.2010 are pertaining to earlier years as noted above. The outstanding amount of advances as on 31.03.2009 were Rs. 27,39,626/- (Rs. 14,04,928/- + Rs. 6,06,830/- + Rs. 7,27,868/-). The Ld. CIT(A) has not allowed credit of this amount stating the reason that assessee has not explained the source of opening amount ignoring the fact that the income is to be taxed on assessment year basis . The Ld. AR argued that once a particular income do not fall in the year under consideration, that cannot be taxed in a different year only for the reason that source of that income in that particular year could not be explained. Accordingly, he pleaded that the addition to the extent of Rs. 27,39,626/- which pertain to earlier year be directed to be deleted.

7 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) 8. The Ld. AR further submitted that as on the alleged paper, there are 3 calculations of interest on amount advanced. The second calculation on this sheet is again repeated in the third calculation is as much as the amount of Rs. 2,60,000/-, Rs. 1,00,000/- and Rs. 2,75,600/-, the second figure of calculation is repeated in the third calculation. The third calculation is the correct calculation as there was mistake in the second calculation. Thus, the correct amount of interest as per the sheet for the assessment year 2011-12 would be as under:-

A/Y Interest as per AO Correct Interest 2011-12 Rs. 3,28,755/- Rs. 2,59,935/- (1,68,591+72,820+87,344) (1,68,591/-+87,344/-) 2012-13 Rs. 3,11,332/- Rs. 2,96,354/- (1,88,822+40,780/-32,817/- (1,88,822+48,913+38,565+20,054) +48,913) 2013-14 Rs. 3,96,393/- Rs. 1,05,044/- (reduced by CIT(A) to Rs. 1,05,044/-)

9.

The appellant further submitted that the appellant has himself offered income of Rs. 96,730/- in the return filed under Section 153A. The Ld. CIT(A) has not given credit of this amount for the reason that the basis for calculation of interest offered at Rs. 96,730/- was not explained. The Ld. AR argued that even the assessee has offered the income, the credit of the same be directed to be allowed against the

8 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) addition made by AO and confirmed by the Ld. CIT(A). The Ld. AR has also submitted that similarly for the assessment year 2012-13, 2013-14, 2015-16 and 2016-17, the Ld. CIT(A) has confirmed the addition on account of interest at Rs. 3,11,332/-, Rs. 1,05,044/-, Rs. 1,69,135/- and Rs. 11,39,853/- respectively. Accordingly, the AO may be directed to allow credit of income offered in the return filed under Section 153A of the Act.

10.

On the other hand the Ld. DR relied on the impugned order.

11.

We have heard both the sides, perused the material on record and the impugned order. It is undisputed fact on record that the additions are made by the AO and confirmed by the Ld. CIT(A) based on the notings on a paper found at Exhibit-9 of Annexure-AS, scanned at page no. 6 of the assessment order, wherein, amount advanced and interest paid is noted for the period prior to 01.04.2010. We concur with the submissions of assessee if a particular income do not fall in the assessment year under consideration, that cannot be taxed in a different year for the only reason that source of that income in that particular year could not be explained. Accordingly, the addition made to the extent of

9 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) Rs. 27,39,626/- being pertaining to the earlier year is hereby directed to be deleted.

12.

In the present case, it is noted that assessee has himself offered an income of Rs. 96,730/- in the return of filed under Section 153A and the Ld. CIT(A) has not given credit for this amount. We hold that the CIT(A) has not been justified in not giving credit of this amount stating the reason that basis of the calculation of interest offered at Rs. 96,730/- was not explained. In our view, once the appellant assessee has offered sum income, the credit of the same is directed to be allowed against the addition made by the AO. Accordingly, the AO is directed to allow the credit of Rs. 96,730/-. We further directed the AO to allow the credit of the income filed under Section 153A of the Act to Rs. 1,18,070/-, Rs. 6,890/-, Rs. 1,200/- and Rs. 13,00,269/- with respect to assessment year 2012-13, 2013-14, 2015-16 and 2016-17 respectively.

13.

The issue raised in ITA Nos. 680 to 682/Jodh/2024 for the assessment year 2012-13, 2013-14 and 2015-16 and ITA No. 685/Jodh/2024 for assessment year 2016-17 are similar on identical facts to that discussed in the ITA No. 679/Jodh/2024 Assessment year 2011- 2012 except variation in quantum of disallowing. Therefore, our

10 ITA No. 679 to 682 and 685/Jodh/2024 (Assessment Years 2011-12 to 2013-14 and 2015-16 to 2016-17) observation and finding given in ITA No. 679/Jodh/2024 shall apply to ITA No. 680 to 682/Jodh/2024 and ITA No. 685/Jodh/2024, in mutatis mutandis, ordered accordingly. 14. In the backdrop of the aforesaid discussion all the captioned appeals of the assessee is allowed in the manner discussed as above.

Order pronounced on 12 / 06 / 2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules,1963.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 12 / 06 / 2026. Pritesh Vaishnav PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER,

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