PRAHLAD ROY GOENKA,KOLKATA vs. D.C.I.T., CIRCLE - 43, KOLKATA

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ITA 2222/KOL/2026Status: DisposedITAT Kolkata26 October 2026AY 2018-20194 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under Section 147 read with Section 148 of the Income-tax Act, 1961, were null and void. The reasoning was that the proceedings were initiated based on documents seized during a search operation on third parties (Sanwaria and Kasera Group) conducted prior to 01.04.2021. In such circumstances, the assessment proceedings should have been initiated under Section 153C of the Act, which is an exclusive code for such situations and overrides other sections. The Tribunal relied on several judicial precedents, including DCIT vs. Nawal Kumar Kanodia, Sri Dinakara Suvarna vs. DCIT, Shyam Sunder Khandelwal vs. ACIT, Sejal Jewellary vs. Union of India, ACIT vs. Pramod Jain, and its own decision in Maan Steel & Power Limited vs. DCIT. Consequently, the Tribunal quashed the proceedings initiated under Section 148 and the assessment framed as a nullity and invalid. The appeal of the assessee was allowed.

What were the facts?

The assessee, Prahlad Roy Goenka, is in appeal against the order of the CIT(A), NFAC, Delhi, dated 08.06.2026, for Assessment Year 2018-19. The case was reopened based on information from the insight portal, indicating the assessee was a beneficiary of cash loans arranged by finance brokers Sanwaria and Kasera. Documents seized during a search on these brokers allegedly showed the assessee's group name and indicated potential cash borrowings aggregating to Rs. 2,00,00,000/-. A notice under Section 148 was issued on 29.03.2022, to which the assessee filed a return. The Assessing Officer treated the Rs. 2,00,00,000/- as unexplained money and added it to the assessee's income. Maintenance and electricity expenses of Rs. 6,84,224/- claimed under Section 57 were also disallowed.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 read with Section 148 of the Income-tax Act, 1961, are valid when the information leading to the reopening was based on documents seized during a search on a third party (finance brokers Sanwaria and Kasera) conducted prior to 01.04.2021, and whether such proceedings should have been initiated under Section 153C of the Act. Assessee's Contention: The assessee argued that the reassessment proceedings under Section 147 r.w.s. 144 are bad in law and should have been framed under Section 153C of the Act. Revenue's Contention: The judgment does not record specific arguments from the revenue regarding this issue.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 153C,Section 57,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA

Before: SHRI RAJESH KUMARAND SHRI PRADIP KUMAR CHOUBEY

For Appellant: Shri Siddharth Agarwal, Advocate
For Respondent: Shri Dipu Koley, Sr. DR
Hearing: 27.08.2026Pronounced: 26.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBERAND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. No.2222/KOL/2026 Assessment Year: (2018-19) Prahlad Roy Goenka, DCIT, C/o Subhash Agarwal & Associates, Vs. Circle – 43, Advocates, Kolkata Siddha Gibson, 1, Gibson Lane, Suite – 213, 2nd Floor, Kolkata – 700069, West Bengal [PAN: ADXPG9161A] (Appellant) .. (Respondent) Appellant by : Shri Siddharth Agarwal, Advocate Respondent by: Shri Dipu Koley, Sr. DR Date of Hearing 27.08.2026 Date of Pronouncement 26.10.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This appeal preferred by the assessee is against the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as the “ld.CIT(A)”], dated 08.06.2026 for the same Assessment Years (AY) 2018-19.

2.

The only issue pressed at the time of hearing is against the order of ld. CIT(A) upholding the order passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 (In short, ‘the Act’), which is bad in law and should have been framed u/s 153C of the Act.

ITA No.2222/Kol/2026/A.Y.2018-19 Prahlad Roy Goenka vs. DCIT 3. The facts of the case in brief are that case of the assessee was re- opened after AO received credible information from insight portal uploaded by DDIT (Inv.) – 2(4), Kolkata as dissemination of information in the case of beneficiaries of cash loans received through finance brokers Sanwaria and Kasera which was found during search on finance brokers Sanwaria and Kasera. The Assessing Officer (In short, ‘the AO’) has provided some documents allegedly found from the premises of the finance brokers who have been arranging cash loans by executing Rukkas. According to AO, assessee’s group name was found in the materials found and seized from the brokers. Several incriminating documents were recovered which showed that said finance brokers were engaged in unaccounted cash transactions on a large scale and assessee was also found to be beneficiary of the same. Accordingly, the assessee has been identified as borrower of cash loans and the documents decoded from hard copies obtained from DDIT showed that the assessee was potential cash borrower from various lenders for amounts aggregating to Rs.2,00,00,000/-. Accordingly, a notice u/s 148 of the Act was issued on 29.03.2022, which was complied with by the assessee by filing a return of income. Notices u/s 143(2) and 142(1) of the Act were issued and there was part compliance on the part of the assessee. The assessee totally denied the said cash transactions outrightly through the above finance brokers. The AO after considering the reply of the assessee and the documents found during the search from Sanwaria and Kasera, treated the said money of ₹ 2,00,00,000/- as unexplained money which was not recorded in the books of accounts by the assessee and added to the income of the assessee. The AO also disallowed and added the maintenance and electricity expenses of ₹ 6,84,224/- claimed u/s 57 of the Act.

ITA No.2222/Kol/2026/A.Y.2018-19 Prahlad Roy Goenka vs. DCIT 4. In the appellate proceedings, the ld. CIT(A) has confirmed the order of AO.

5.

We have heard rival submissions and perused the materials available on record. We find that undisputedly the proceedings u/s 147 read with section 148 were initiated on the basis of documents seized during the search operation on third party i.e. Sanwaria and Kasera Group, which was conducted on 30.11.2018. The AO issued notice u/s 148 of the Act on 29.03.2022 which was complied with by the filing the return of income. The assessee filed original return of income, declaring income of Rs.7,30,250/-. We observe from the facts before us that the search has been conducted prior to 01.04.2021 on the third party, the assessment proceedings should have been initiated u/s 153C of the Act, which is an exclusive code in the /act to deal with such type of assessment and also overrides the other sections provided in the Act assessment of income. However, the AO initiated the proceedings u/s 147 of the Act by issuing notice u/s 148 of the Act. In our opinion the same is nullity and bad in law and cannot be sustained. The case is squarely covered by the decisions namely i) in DCIT vs. Nawal Kumar Kanodia (ITA No. 1952/Kol/2025, A.Y. 2019-20) ii) Sri Dinakara Suvarna vs. DCIT, [2022] 143 taxmann.com 362 (Karnataka) (special leave petition dismissed, [2023] 151 taxmann.com 489) iii) Shyam Sunder Khandelwal vs. ACIT, [2024] 161 taxmann.com 255 (Rajasthan) iv) Sejal Jewellary vs. Union of India, [2025] 171 taxmann.com 846 (Bombay) and ACIT vs. Pramod Jain, [2025] 163 taxmann.com 762 (SC). The same view has since been taken by this Hon'ble Tribunal in Maan Steel & Power Limited vs. DCIT, Central Circle-1(2), Kolkata, ITA Nos. 1167, 2354, 1096 & 2609/Kol/2025, order dated 26.06.2026.

ITA No.2222/Kol/2026/A.Y.2018-19 Prahlad Roy Goenka vs. DCIT 6. Therefore, considering the facts of the case in the light of the above decisions, we are inclined to quash the proceedings initiated under section 148 of the Act as well as the assessment framed as nullity and invalid in the eyes of law. The appeal of the assessee is allowed.

7.

In the result, the appeal of the assessee is allowed.

The order is pronounced on 26/10/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 26/10/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: 1. \ �Ȣ�ȡ�ȸ/ The Appellant Ĥ×��ȸ/ The Respondent. 2. 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT 4. आयकर] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[ फाईल/ Guard file.

BY ORDER, // TRUE COPY //

Deputy Registrar, ITAT, Kolkata

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