KANWALJIT SINGH TOOR & ANR vs. PUNJAB STATE CONSUMER DISPUTES REDRESSAL COMMISSION & ORS

[2026:RJ-JP:26518-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 9482/2019 URN: CW / 16712U / 2019 Deen Dayal Gupta S/o Shri Ram Kanwar, Aged About 86 Years, R/o 215, Lajpat Nagar, Alwar. ----Petitioner Versus Assistant Commissioner Of Income Tax, Circle-1, Alwar, Office Of The Assistant Commissioner Of Income Tax, Circle, Bharatpur. ----Respondent For Petitioner(s) : Mr. Gunjan Pathak, Mr. Kanishk Singhal, Ms. Priyanka For Respondent(s) : Mr. Nitin Jain, Mr. Ravindra Pal Singh, Ms. Kriti Kalawatia HON'BLE MR. JUSTICE ARUN MONGA HON'BLE MR. JUSTICE MANEESH SHARMA Order (Oral) Reportable 14/07/2026 Per: Arun Monga, J. 1. The petitioner is before this Court seeking quashing and setting aside of the notice dated 29.03.2019 issued under Section 148 of the Income Tax Act, 1961 as well as the order dated 15.05.2019, whereby the objections filed by the petitioner in response to the said notice were rejected. 2. The petitioner filed his return of income for Assessment Year 2014–15 on 30.08.2014, declaring total income of ₹31,63,270/-, comprising income from house property, business or profession, and long-term capital gains. The return was processed under Section 143(1) of the Income Tax Act, 1961, and later selected for limited scrutiny. Notice under Section 143(2) followed, and the

[2026:RJ-JP:26518-DB] (2 of 7) [CW-9482/2019] petitioner furnished all documents and details called for by the Assessing Officer. 2.1 On completion of scrutiny, the Assessing Officer passed an order under Section 143(3) accepting the returned income after examining the material on record. No adverse finding was recorded, no proceedings under Section 263 were initiated, and no further tax liability arose from that assessment. 2.2 The petitioner was thereafter served notice dated 29.03.2019 under Section 148, on the ground that income chargeable to tax for AY 2014–15 had, in the Assessing Officer's belief, escaped assessment. On seeking reasons for reopening, the petitioner was informed, by communication dated 24.04.2019, that he was engaged in money-lending, had claimed interest expenditure of ₹35,86,892/-, and did not hold a licence under the Rajasthan Money Lending Act, 1963 and that income to that extent had accordingly escaped assessment. 2.3 The petitioner objected to the reopening by submission dated 07.05.2019, contending that all material facts and documents had already been fully and truly disclosed in the original scrutiny, that no fresh tangible material justified reopening, and that the proceedings under Section 147 amounted to nothing more than a change of opinion on material already on record. 2.4 The Assessing Officer rejected these objections by order dated 15.05.2019, and directed the petitioner to furnish documents, explanations, and books of account for completion of the reassessment. 2.5 Hence this petition.

[2026:RJ-JP:26518-DB] (3 of 7) [CW-9482/2019] 3. We have heard the rival contentions of learned counsel for the parties. 4. The petitioner's principal challenge to the notice dated 29.03.2019 and the rejection order dated 15.05.2019 is that the proceedings under Section 148 are non-est, being founded on a mere change of opinion, impermissible in law as a ground to reopen an assessment already concluded under Section 143. 5. Learned counsel for the respondent submits that this argument misreads the notice and the rejection order, both of which show that the reopening rests not on a change of opinion but on the licensing issue under the Rajasthan Money Lending Act, 1963, which was never examined in the original assessment and is borne out by the record relied upon in those proceedings. 6. At the outset, it may be useful, first, to set out the notice dated 24.04.2019 issued under Section 148, reproduced hereinbelow: "Assessment u/s 143(3), in the instant case, was completed on 26.05.2016 at total income of 31,63,270/- by accepting the returned income. The as- sessee has been engaged in Money Lending business. The assessee had shown total interest receipts at 51,28,444/- & interest payment at 35,86,892/-. Thus, net interest receipts are 15,46,552/-. Later on, it was noticed that the assessee was not having any license under Rajasthan Money Lending Act 1963. In this respect, section 5 of the Rajasthan Money Lending Act 1961 reds as under:- "5. Money-lenders not to carry on business of money-lending except for area under license and except in accordance with term of license." Save is provided in section 49, no money-lender shall after the expiration of six months from the date on which this Act is brought into forces carry on, or continue to carry on the business of money-lending except in accordance with the terms & condi- tions of such license. Thus, the assessee is money lending business is not having any legality & in this situation the expenses claimed by the as- sessee on account of interest paid, amounting to 35,86,892/-. In guise of business activity is not allowable in view of explanation-1 of the section 37(1) of the Income Tax Act 1961 which is reproduced hereunder:- "Ex- planation 1. For the removal of doubts, it is hereby declared that any ex- penditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure." In the light of above nar- rated facts, I have reason to believe that the income to the extent of 35,86,892/- has escaped assessment within the meaning of Section 147 of

[2026:RJ-JP:26518-DB] (4 of 7) [CW-9482/2019] the Income Tax Act, 1961. Therefore, it is a fit case of issue of notice u/s 148 of the Income Tax Act, 1961, for the AY 2014-15" 7. In substance, the petitioner's objections to above notice were, inter alia, twofold, as stated here in after. 7.1. First, the original assessment under Section 143(3) had been completed only after due consideration of all details and documents submitted, and no aspect of the money-lending activity had escaped scrutiny at that stage; the reopening was therefore founded on a mere change of opinion on facts already before the Assessing Officer, not on any fresh material, and Section 147 permits reassessment only where escapement of income comes to light through fresh information subsequently discovered, not otherwise. 7.2. Second, and without prejudice to the above, the petitioner asserted that the licensing requirement under the Rajasthan Money Lending Act, 1963 did not apply to him at all, since Section 2(9)(i) of that Act excludes from the definition of "loan" any advance made on the basis of a negotiable instrument for commercial purposes; as the amounts in question were advanced through negotiable instruments, the business fell outside the Act's licensing regime altogether, and the premise of the reopening notice was accordingly incorrect. On this basis, the petitioner sought that the notice be dropped in its entirety. 8. The Assessing Officer rejected these objections by order dated 15.05.2019, holding that the reopening was not a case of change of opinion but one based on facts that had never been examined earlier, the question of the petitioner holding a licence

[2026:RJ-JP:26518-DB] (5 of 7) [CW-9482/2019] under the Rajasthan Money Lending Act had simply not arisen or been considered during the original assessment. 8.1. On the petitioner's alternative contention regarding negotiable instruments, the Assessing Officer held that a licence is mandatorily required of every person carrying on money-lending business, regardless of the mode of advancing money, and that since the petitioner was found to be engaged in such business, the licensing requirement applied to him. 8.2. The objections were accordingly rejected, and the petitioner was directed to cooperate in completing the reassessment. 9. We agree with the reasoning of the Assessing Officer. While it is trite law that an Assessing Officer cannot invoke Section 148 merely because, on a fresh look at the same material, the earlier assessment appears erroneous, that principle protects against reassessment founded on a genuine change of opinion, it does not shield an assessee where the ground for reopening was never considered or examined in the original assessment at all. 10. On a plain reading of the show-cause notice, it is apparent that the reopening arose from an aspect that had genuinely escaped the Assessing Officer's attention during the original assessment, namely, that an amount allowed as expenditure may not have qualified for that treatment. It is not disputed that, under the statutory protection in Section 2(9) of the Rajasthan Money Lending Act, 1963, money advanced through negotiable instruments, whether by cheque or otherwise through a negotiable instrument, falls outside the licensing requirement of Section 5 of that Act.

[2026:RJ-JP:26518-DB] (6 of 7) [CW-9482/2019] 11. Learned counsel for the petitioner argues that the entire record concerning money lent by cheque or other negotiable instruments was before the Assessing Officer in the original Section 143 proceedings, and that the ₹35,86,892/- was allowed as expenditure only after that record was examined. 12. We are, however, unable to accept this submission in the absence of any specific averment to that effect before the Assessing Officer. 13. The objections raised by the petitioner were only a general assertion that money was advanced through negotiable instruments, without specific particulars i.e. no cheque numbers or other identifying details of the instruments said to have been placed before the Assessing Officer. 14. During arguments before us, counsel attributed this omission to oversight rather than any intentional default on the petitioner's part. 15. Be that as it may, we are not inclined to speculate on this question or record findings based on submissions unsupported by the record. That determination is best left to the Assessing Officer. As regards the rejection of the objections, we affirm the same. 16. Accordingly, the writ petition is disposed of, with liberty to the petitioner to place on record the particulars of the negotiable instruments relied upon. The Assessing Officer shall examine the same, and if the transactions are found to qualify for exemption under Section 29 of the Rajasthan Money Lending Act, 1963, shall proceed accordingly. 17. The present writ petition stands disposed of with the aforesaid observations.

[2026:RJ-JP:26518-DB] (7 of 7) [CW-9482/2019] 18. All pending applications stand disposed of. (MANEESH SHARMA),J (ARUN MONGA),J 41/Aman/Seema