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Sh. Mahendra Kumar Goyal, Sikar vs ACIT | s.153A, 143(3) | ITAT Jaipur 2025 | BharatTax

SH. MAHENDRA KUMAR GOYAL,SIKAR vs. ACIT, CENTRAL CIRCLE-3, JAIPUR, JAIPUR

ITA 495/JPR/2025Status: DisposedITAT Jaipur15 September 2025AY 2016-17113 pages

AI SummaryN/A

Facts

During a search operation on the "Goyal Group" in which the assessee was a party, various documents, including data from laptops and diaries, were seized. The Assessing Officer (AO) made additions to the assessee's income under sections 69, 69A, and 69C of the Income Tax Act, 1961, for unexplained investments, cash advances, and notional interest based on these seized materials. The Commissioner of Income Tax (Appeals) (CIT(A)) partly upheld some additions but also issued directions for re-assessment in certain cases.

Held

The Income Tax Appellate Tribunal held that additions based on documents from a third party's laptop could not be made in the assessee's hands. It further ruled that the CIT(A) exceeded its powers by directing the AO to initiate reassessment proceedings under sections 147/148. For other additions, the Tribunal accepted the assessee's explanations regarding the source of funds, deemed certain additions as double taxation, or found procedural flaws in the lower authorities' decisions, ultimately allowing the appeals for all assessment years.

Key Issues

Whether additions based on third-party seized documents were legally sustainable in the assessee's hands; whether the CIT(A) had the power to direct reassessment proceedings; and the justification for additions related to unexplained investments, cash advances, and notional interest based on the evidence provided.

Sections Cited

153A, 143(3), 127, 69, 69A, 69C, 292C, 147, 148, 149, 150, 251, 269SS, 269T, 271D, 271E, 142(1), 143(2), 144, 245HA, 270A(1)

AI-generated summary — verify with the full judgment below

fu/kZkfjrh dh vksj ls@ Assessee by : Shri P. C. Parwal, CA jktLo dh vksj ls@ Revenue by : Mrs. Anita Rinesh, JCIT, Sr. DR lquokbZ dh rkjh[k@ Date of Hearing : 09/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 15/09/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

Feeling dissatisfied with the order of the learned Commissioner of Income Tax, Appeals-4, Jaipur-04 [ for short ‘CIT(A)’ ] as detailed herein below the assessee preferred the present appeal ITA Number Assessment Date of Section under Date of Details of Year order of which AO order the AO who CIT(A) passed the made the order* assessment* 493/JP/2025 2014-15 08.01.2025 153A 29.09.2021 ACIT, CC-3, JPR 495/JP/2025 2016-17 27.01.2025 153A 29.09.2021 ACIT, CC-3, JPR 496/JP/2025 2018-19 12.03.2025 153A 30.09.2021 ACIT, CC-3, . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal JPR 497/JP/2025 2019-20 27.01.2025 153A 29.09.2021 ACIT, CC-3, JPR 498/JP/2025 2020-21 28.01.2025 143(3)r.w.s.153B 30.09.2021 ACIT, CC-3, JPR 500/JP/2025 2015-16 08.01.2025 153A 29.09.2021 ACIT, CC-3, JPR *The section reference made in this order is referred to the Income Tax Act, 1961 [for short Act]. The reference of the ACIT, CC-3,JPR means the Assistant Commissioner of Income Tax, Central Circle-3, Jaipur [ for short AO].

Since the issue raised in all the six appeals were identical were heard together and are disposed of by a common order.

2. First we take up the appeal of the assessee in for assessment year 2014-15 thereby he raised the following grounds ;

1. The Ld. CIT(A) has erred on facts and in law in holding that though addition for the amount noted on the paper extracted from laptop of Sh. Narayan Goyal, s/o Sh. Daulat Ram Goyal cannot be added in the hands of assessee but at the same time observing that impugned paper is found to be taxable in the hands of Sh. Daulat Ram Goyal whose appeal is pending with him even when it was not an issue in appeal before him.

2. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 1 lacs u/s 69 of the Act on account of alleged unexplained investment in advances on the basis of Pg 57 of Exhibit 4 of AS-1 by not accepting the explanation that it is a memorandum noting without name, the source of giving such advance is out of the cash available as per the cash book and the amount is received back by holding that the explanation of assessee is not reliable and there is no evidence of receipt back of the amount few days after.

The brief facts related to the dispute are that a search u/s 132 was carried out on Goyal Group, Neem Ka Thana, Sikar on 13.06.2019 of which assessee is one of the party. We note that ld. AO at para 5 of the assessment order observed that while search a laptop was found from the residence of Shri Daulat Ram Goyal at Galaxy Bhawan, Shahpura Road, Neem ka Thana, Sikar. During post search enquiry data was extracted from this laptop and it was found that assessee has given cash loan to various persons and earned interest on such loan. The name of person to whom loan was advanced was not given on this page but date of advancing loan and the date on which interest received was mentioned. As per that paper, the assessee has given cash loan at an interest rate of 10.80% / 12% p.a. during financial year 2013-2014 to 2016-2017. In the year under consideration cash loan of Rs.15,00,000/- was given on which interest for the period 02.08.2013 to 31.03.2014 works out at Rs.1,08,000/-. In the assessment proceeding the assessee vide letter dt.19.09.2021 (PB 16, point no. ix) submitted that from his residential premises no laptop was found. Neither in search nor in post search proceedings copy of the He has not given any such loan or received any interest thereon. Request was made to provide the source of such extracted data. The AO however held that paper (Paper book page 6) was extracted from the laptop of Shri Narayan Goyal, who is the son of assessee. The paper contains complete details of loan transactions along with periodical working of interest amount though the name is not mentioned on the paper. Accordingly, it was presumed that assessee advanced Rs.15,00,000/- which is unexplained investment u/s 69 of the Act & assessee earned interest of Rs.1,08,000/- on such advances for which addition is made. When the addition challenged before the ld. CIT(A) he has vide para 4.2 held that from the PAN and aadhar card of Shri Narayan Goyal it is found that he is son of Daulat Ram Goyal and not the assessee. Statement of the assessee on this paper was not recorded and therefore addition based on that paper cannot be made in the hands of the assessee. However, while holding so ld. CIT(A) directed that since the appeal of Shri Daulat Ram Goyal was pending before him, he presumed that the same is taxable in the hands of father of Shri Narayan Goyal i.e., Shri Daulat Ram Goyal and thus a finding is given that the addition of the impugned amount is required to be taxed in the hands of the assessee was made by mistake and the addition is to be made in the hands deleted because the laptop of Narayan Goyal at the residence of Shri Daulat Ram Goyal cannot be made in the hands of the assessee but his further direction that addition is to be made in the hands of Shri Daulat Ram Goyal is only on presumption and surmises. As is evident from the said paper [ paper book page 6 ] the name of Daulat Ram Goyal is not appearing. Ld. CIT(A) has otherwise not brought on record any evidence to presume that the paper / record the advance given by Daulat Ram Goyal.

. 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal As is evident from the order of the ld. CIT(A) that after granting relief on technical ground ld. CIT(A) further directed the ld. AO to initiate appropriate proceedings under Section 147/148 of the Act, relying on the same judgment of Abhisar Buildwell (supra), CBDT Instruction No. 1/2023 (CLC 35-40), and the provisions of Section 150 of the Act. The assessee, while supporting the ultimate relief granted, is aggrieved by the directions given by the ld. CIT(A) in his order suggesting the AO initiate proceedings under Section 147/148 of the Act. The assessee therefore before us by preferring the present Cross-Objection to challenge the directions and to raise other legal and factual grounds in support of the deletion of the addition. Record reveals that ld. CIT(A) vide page 36 while dealing with the appeal of the assessee has issued direction to the ld. AO which reads as under : “Accordingly, the judgement of Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) and U. K. Paints (supra) are squarely applicable to the facts of the case. Accordingly, following the judgment of honorable Supreme Court it is held that the ld. AO rightly issued notices u/s 153A of the Act and at the same time the impugned addition made in assessment order u/s 153A cannot be sustained and is hereby deleted as the same is without basis of incriminating material unearthed during the search action on the appellant and impugned addition could have been done by the learned assessing officer in re-assessment proceedings by issuance of notice under section 147/148. The ld. AO is directed to take necessary action in this regard. Further, the CBDT (ITJ Section) has issued Instruction No. 1 of 2023 dated 23-08- 2023 vide F.No. 279/Misc./M- 54/2023-ITJ on the subject “Implementation of the judgment of the Hon’ble Supreme Court in the case of Pr.CIT (Central-3) v/s AbhisarBuildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding”. The learned assessing officer is directed to implement the law and ratio of the judgement of AbhisarBuildwell (supra) and the said Instruction No. 1 of 2023 dated 23-08-2023 and section 150 of the Act, in the case of the appellant appropriately as per the facts of the case and as per above findings.

2. Miscellaneous Application filed by Revenue before the apex court 3. CBDT’s Instruction No. 1 of 2023 dated 23-08-2023 . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal As is evident the cross objection of the assessee hinges on the provision of section 150, 251, Miscellaneous application filed by the revenue before the apex court and CBDT’s instructions. The provision of section 150 deals as under : Provision for cases where assessment is in pursuance of an order on appeal, etc. 150. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. Section 251 reads as follows : Powers of the70[Joint Commissioner (Appeals) or the] Commissioner (Appeals). 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment: 71[Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment;] (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. 70[(1A) In disposing of an appeal, the Joint Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit.] (2) The 72[Joint Commissioner (Appeals) or the] Commissioner (Appeals) 72[, as the case may be,] shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.—In disposing of an appeal, the 72[Joint Commissioner (Appeals) or the] Commissioner (Appeals), may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the 72[Joint Commissioner (Appeals) or the] Commissioner (Appeals) 72[, as the case may be,] by the appellant. The law is settled by the decision of the apex court in the case of Abhishar Buildwell and U. K. Paints and the revenue’s Miscellaneous application was disposed off by observing as under 1.1.i. Against the judgment dated 24.04.2023 passed by the Hon’ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (supra) the revenue filed Misc. Application before the Hon’ble Supreme Court on 26.04.2023 seeking following reliefs: “(a) This Hon’ble Court may clarify that the waiver of limitation as stipulated in section 150(2) is to be read in respect of the date of issue of notice for reassessment under section 148 (i.e.) if as on the date the assessment under section 153A or section 153C was passed, a notice under section 148 could have been issued as per the law then in force, then fresh proceedings for . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal reassessment of such income not arising from the incriminating material found in searchcan now be initiated pursuant to the findings of this Hon’ble Court in the present appeals/application and may further clarify as follows: (i) That the findings in para 11 and 14 would apply to all the proceedings pending in all the forums including before this Hon’ble Court. (ii) That even though the appeals of the Revenue are dismissed in respect of assessments passed under 153A and 153C, in the absence of incriminating material found during the search, in respect of such income which was found to have escaped assessment other than through incriminating material, the assessing officers would be entitled to reassess such income in terms of Section 147/148 read with section 150. (iii) That the Assessing Officer, may if found necessary initiate fresh proceedings within 60 days from date of disposal of this application following the procedure stipulated in section 147-151 of the Act as is in force now.” 1.1.ii. The Hon’ble Supreme Court vide its order dated 12.05.2023 titled as PCIT v. Abhisar Buildwell Pvt. Ltd. [2023] 294 Taxman 70 (SC) (CLC 32-34) dismissed the Revenue’s Misc. Application by observing as under: “2. Having gone through the averments made in the application and the prayers, we are of the opinion that the prayers sought can be said to be in the form of review which requires detail consideration at length looking into the importance of the matter. Therefore, the present application in the form of clarification is not entertained and we relegate the Revenue to file an appropriate review application for the relief sought in the present application and as and when such review application is filed the same can be heard in the open court.

We also take note of the facts that CBDT’s instructions is an internal administrative directive intended solely for operational guidance of Assessing Officers. It attempts to clarify the post-Abhisar Buildwell (supra) reassessment landscape, specifically in situations where additions under Section 153A/153C were struck down due to absence of incriminating material. This administrative instructions are not binding on quasi-judicial authorities like the CIT(A). It is a settled principle of law, as held by the Hon’ble Supreme Court in UCO Bank v. CIT [(1999) 237 ITR 889 (SC)] (CLC 41-49), that CBDT circulars or instructions cannot override, supplement, or expand the scope of statutory provisions. Thus, taking shelter of Instruction No. 1/2023 as enabling or empowering appellate authorities to direct initiation of reassessment proceedings is a fundamental misapplication of the Instruction, which neither authorizes appellate intervention in reassessment matters nor vests any such power in the ld. CIT(A). Even other wise the Instruction cannot substitute the independent statutory preconditions under Sections 147/148 read with Section 149, which provides the timelines for issuance of notice of reopening. Provision of such section must be satisfied by the ld. AO at any given point of time, when the jurisdiction is assumed for reopening a particular assessment year. Even the power vested with ld. CIT(A) are limited wherein he may i.) confirm, or ii.) reduce, or iii.) enhance, or iv.) annul the assessment; Thus, he has no power to give any direction that what is prescribed in law. The issue related to the power of the commissioner of income has already been dealt with in a decision in the case of ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) (CLC 111-128) wherein Hon’ble Supreme Court underscored that the appellate provisions (Section 33(4) of the 1922 Act, analogous to Section 250/254 of the 1961 Act) do not confer on the appellate authority a power to make any direction on matters not arising in the appeal, especially as the Act provides separate mechanisms (like Section 34 of 1922 Act, now Section 147) to deal with escaped income. Accordingly, the Apex Court held that; “It was not contended, nor was it possible to contend, that by reason of the reference to the said provisions the powers and jurisdiction conferred on the respective authorities, tribunals or courts referred to therein were enlarged or . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal modified by a reference in the proviso or that the proviso could be read or construed as amending those sections conferring on those bodies wider or different powers or jurisdiction. Learned counsel for the department expressly disclaimed any such submission. Therefore, the scope of the proviso cannot ordinarily exceed the scope of the jurisdiction conferred on an authority under the said provisions.” We also take note that the apex court has dealt with the provision of section 150 i.e. Provision for cases where assessment is in pursuance of an order on appeal and section 149 i.e. Time limit for notices undersection 148 of the Act. While dealing with that provision the apex court in the case of K. M. Sharma Vs. Income Tax Officer [122 Taxmann 426 (SC) ] while dealing with the judgment of the land revenue case and thereby the reopening of the case has in detailed analysis the provision for cases where assessment is in pursuance of an order of an appeal and time limit. The relevant finding is reproduced in full because this will clarify the issue on hand with that of the case decided by apex court; In this appeal, which is filed after obtaining special leave, the order dated 24-5- 1996 of the Delhi High Court has been assailed. The main question involved is on the application and interpretation of the provisions of section 150 of the Income-tax Act, 1961 ('the Act'). The relevant facts necessary for deciding the legal question raised are as under :

The above view is also get support by a decision of Nagpur Bench of this ITAT in the case of M B Traders Vs. ACIT [ 132 TTJ 490 ] wherein the co-ordinate bench held that ; 9. After an in-depth study of the entire case record, on a patient hearing of both the sides and after reading the case law cited at length, our observations and findings on the matter are as follows. Before giving our observation and finding, it has been deemed proper to quote ss. 150 and 151 as it is, as under : "150. (1) Notwithstanding anything contained in s. 149 the notice under s. 148 may be issued at any time of the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. (2) The provisions of sub-s. (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the lime the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. 151. (1) In a case where an assessment under sub-s. (3) of s. 143 or s. 147 has been made for relevant assessment year, no notice shall be issued under s. 148 by an AO, who is below the rank of Asstt. CIT or Dy. CIT unless the Jt. CIT is satisfied on the reasons recorded by such AO that it is a fit case for the issue of such notice. Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief CIT or CIT is satisfied, on the reasons recorded by the AO aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-s. (1), no notice shall be issued under s. 148 by an AO, who is below the rank of Jt. CIT, after the expiry of four years from the end of the relevant assessment year, unless the Jt. CIT is satisfied, on the reasons recorded by such AO, that it is a fit case for the issue of such notice. Explanation : For the removal of doubts, it is hereby declared that the Jt. CIT, the CIT or the Chief CIT, as the case may be, being satisfied on the reasons recorded by the AO about fitness of a case for the issue of notice under s. 148, need not issue such notice himself." Sec. 149 deals as quoted above with regard to time-limit for notice. Sec. 150 deals with regard to provision for cases where assessment is in pursuance of an order on appeal. In our considered view there is no bar for issuing notice under s. 148 by the AO on the direction of the first appellate authority. At the same time, reassessment proceeding must be based on the belief of the AO and not of the CIT or appellate authority or that of the Tribunal as had been meant and interpreted from a perusal of s. 147 of the IT Act. The direction of higher authority should not be interpreted as a blanket direction by the AO. But that should be accompanied by the direct satisfaction of the AO with regard to the escapement of income. The appellate authorities or higher authorities cannot interfere on this power of the AO. It means the direction of the higher authorities and that of the appellate authorities must be acted upon by the AO with utter satisfaction. Taking initiation of reassessment proceeding without satisfaction of the AO, simply on the basis of the blanket direction, will not justify the action of initiation of 50 ITA Nos. 493. 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal reopening proceeding. In this particular case as has been rightly pointed out by the learned Authorised Representative from p. 13 of the paper book filed, the AO has simply acted upon, i.e., initiated reopening proceeding on the basis of the direction of the CIT(A) and has totally ignored his part of the job i.e., his satisfaction, as is evident from p. 13 of the paper book filed by the learned counsel which is quoted below for better appraisal of facts : "Assessee filed the return of income of Rs. 39,720 on 25th Jan., 1993. Assessment under s. 143(3) was completed on a total income of Rs. 15,55,579 on 29th March, 1996 making addition of Rs. 15,15,859. The order under s. 143(3) was contested before CIT(A) who cancelled the order of the AO and directed as under : 'It is held that assessment proceedings are bad in law and hence cancelled. The AO should take remedial action under s. 147 or any other provisions of the Act to tax the income escaping assessment.' Accordingly notice under s. 148 of the IT Act, 1961 was issued and sent by RPAD on 27th March, 1998, but assessee denied about the receipt of notice vide his letter dt. 12th Jan., 1999. Considering the legal aspect at the initial stage and considering the large amount of income to be taxed, an approval under s. 147 may kindly be granted. Sd/- Asstt. CIT, Circle-1(3), Nagpur."

11. In the result, the assessee's appeal is allowed. Even the co-ordinate bench of Kolkata vide dealing with the appeal of the revenue in the case of ITO Vs. Sri Biswajit Chatterjee has also held that “ CIT(A) has not power under the provision of law for giving any direction to AO for re-opening of assessment”. Respectfully following the finding as discussed herein above we are of the considered view that ld. CIT(A) will not confer power to assume jurisdiction to the AO to initiate reassessment . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal proceeding. Even otherwise the apex court has also while dealing with the provision of section 147/148 of the Act in the case of Parashuram Pottery Works Co. Ltd Vs ITO [ 1977] 106 ITR 1 held that; “According to section 148 of the Act of 1961, before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. The Income-tax Officer has also, before issuing such notice, to record his reasons for doing so. Section 149 prescribes the time limit for the notice. The time limit in a case not falling under clause (ii) of sub-section (1) of section 149, with which we are not concerned, shall be eight years from the end of the relevant assessment year. Incases falling under clause (b) of section 147, however, the time limit for the notice is four years from the end of the relevant assessment year. Clause (a) of section 147 of the Act of 1961 corresponds to clause (a) of sub-section (1) of section 34 of the Act of 1922. The language of clause (a) of section 147 read with sections 148 and 149 of the Act of 1961 as also the corresponding provisions of the Act of 1922 makes it plain that two conditions have to be satisfied before the Income- tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (i) the Income-tax Officer must have reason to believe that income chargeable to tax has escaped assessment, and (ii) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee (a) to make a return under section 139 for the assessment year to the Income-tax Officer, or (b) to disclose fully and truly material facts necessary for his assessment for that year. Both these conditions must co-exist to confer jurisdiction on the Income-tax Officer. It is also imperative for the Income-tax Officer to record his reasons before initiating proceedings as required by section 148(2). Another requirement is that before notice is issued after the expiry of four years from the end of the relevant assessment years, the Commissioner should be satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. The duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the Income-tax Officer of the account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw from the primary facts. If an Income-tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal reopening assessments: See Income-tax Officer v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). The words "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year" postulate a duty on the assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inference as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable: See Calcutta Discount Co. v. Income-tax Officer [1961] 41 ITR 191 , 201 (SC). As further observed in that case: "Does the duty, however, extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative, Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else—far less the assessee—to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences—whether of facts or law—he would draw from the primary facts." Keeping in view the principles enunciated above, we may deal with the contention advanced on behalf of the appellant that the present is not a case in which action could be taken under section 147(a) of the Act of 1961. This contention has been controverted by the learned counsel for the respondent who has canvassed for the correctness of the view taken by the High Court in the judgment under appeal. It would appear from what has been discussed above that one of the essential requisites for proceeding under clause (a) of section 147 of the Act of 1961 is that the income chargeable to tax should escape assessment because of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The present is not a case where the assessee had omitted or failed to file the return. Question then arises as to what has been omission or failure on the part of the assessee to make a full and true disclosure. There is nothing before us to show that in the return filed by the assessee-appellant the particulars given were not correct. Form C under rule 19 of the Indian Income-tax Rules, 1922, at the relevant time gives the form of return . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal which had to be filed by the companies. Part V of that form deals with depreciation. The said part requires a number of columns to be filled in by the assessee. It has not been suggested that any of the information furnished or any of the particulars given in those columns by the appellant-company were factually incorrect. Nor is it the case of the revenue that the appellant failed to furnish the particulars required to be inserted in those columns. Indeed, the copy of the return has not been filed and consequently no argument on that score could be or has been addressed before us. Part V of the form no doubt requires the assessee to state the written down value in column No. (2). Such written down value had to be specified without taking into account the initial depreciation because such depreciation in terms of clause (vi) of section 10(2) of the Act of 1922 could not be deducted in determining the written down value for the purpose of that clause. The case of the appellant is that in determining the amount of depreciation at the time of the original assessment for the two assessment years in question, the Income-tax Officer relied upon the written down value of the various capital assets as obtaining in the records of the department. This stand has not been controverted. When an Income-tax Officer relies upon his own records for determining the amount of depreciation and makes a mistake in doing so, we fail to understand as to how responsibility for that mistake can be ascribed to an omission or failure on the part of the assessee. It also cannot be disputed that initial depreciation in respect of items of capital assets in the shape of new machinery, plant and building installed or erected after the 31st day of March, 1945, and before the 1st day of April, 1956, is normally claimed and allowed. It seems that the Income-tax Officer in working the figures of depreciation for certain items of capital assets lost sight of the fact that the aggregate of the depreciation, including the initial depreciation, allowed under different heads could not exceed the original cost to the assessee of those items of capital assets. The appellant cannot be held liable because of this remissness on the part of the Income-tax Officer in not applying the law contained in clause (c) of the proviso to section 10(2)(vi) of the Act of 1922. As observed by Shah J. in Commissioner of Income-tax v. Bhanji Lavji [1971] 79 ITR 582 (SC), section 34(1)(a) of the Act of 1922 (corresponding to section 147(a) of the Act of 1961) does not cast a duty upon the assessee to instruct the Income- tax Officer on questions of law. It may also be mentioned that so far as the assessment for the assessment year 1957-58 is concerned, the assessment order was once rectified and at another time revised. Despite such rectification and revision, the above mistake in the calculation of the depreciation remained undetected. It was only in October, 1965, that the Income-tax Officer realised that higher amount of depreciation had been allowed to the appellant than was actually due. A letter to that effect was consequently sent to the assessee on October 5, 1965. It was, however, nowhere mentioned in that letter that the higher amount of depreciation had been allowed and the income as such had escaped assessment because of the omission or failure on the part of the assessee to disclose truly and fully all material facts. Reference to such omission or failure came only in a subsequent . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal communication. The submission made on behalf of the appellant is not without force that reference was made to the assessee's omission or failure to disclose truly and fully all material facts because it was realised that after the expiry of four years from the end of the relevant assessment year, no action for reopening of assessment could be taken on the basis of detection of mistake alone unless there was also an allegation that the income had escaped assessment because of the omission or failure of the appellant to disclose fully and truly material facts. Looking to all the facts, we are of the opinion that it cannot be said that the excess depreciation was allowed to the appellant-company and its income as such escaped assessment because of its omission or failure to disclose fully and truly all material facts. It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. So far as the income- tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, this cannot be said in the present case. The appeal is consequently allowed, the judgment of the High Court is set aside and the impugned notices are quashed.”

1. Page 57 of this Exhibit (page 10 of the paper book ) shows noting of some amount given and received back without any name. The assessee vide letter dt.19.09.2021 (paper book page 2 point no. 7) explained that from the paper it appears that on 21.02.2016 amount given for a temporary period is received back on 02.03.2016. Thereafter Rs.45,000/- taken on 17.11.2016 was paid back on 24.11.2016. However, against amount of Rs.1,00,000/- dated 18.03.2014, there is no corresponding amount noted but from the paper it is evident that amount given/taken is for a temporary be drawn. In the assessment proceeding ld. AO held that the amount of Rs.1,00,000/- advanced on 18.03.2014 has not been received back and assessee has failed to prove the source of the aforesaid investment in advances. Accordingly, addition of Rs.1,00,000/- was made u/s 69 of the Act. When the matter was challenged before the ld. CIT(A) the assessee alternatively contended that as per the cash book (page 11-13 of the paper book), assessee has available cash of Rs.4,55,275/- on 18.03.2014 but since the amount is given for a temporary period, neither the entry for amount given was made nor the entry of amount received back was also not made. The Ld. CIT(A) however at page 8 para 2.5 of the order held that assessee has accepted that advance is given by him but in the absence of receipt back of the amount the same cannot be presumed. Further balance in cash book has no relevance as no entry of advance given is recorded in the cash book. Accordingly, addition made by the AO was confirmed by him. Before us it was argued that the noting on this paper founds without any name and it is only a memorandum noting. Against the amount of Rs.1,00,000/- having date 18.03.2014 there was no noting of the amount received back. As is evident that against the noting of Rs.2,00,000/- date mentioned is of 12.02.2016 against that the date of amount received back 17.11.2016 is the date of amount paid back on 24.11.2016. The subsequent noting indicates that the amount given on 18.03.2014 is also received back within few days but the date on which the amount is received back was not noted. Therefore, it was presumed that this amount was not received back when the subsequent advance given/taken has been received back/paid back. Otherwise also, as per the cash book of the assessee page 11, he has cash balance of Rs. 4,55,275/- on 18.03.2014 which is the source of advance of Rs.1,00,000/-. Merely the said entry was not reflected in the cashbook neither the advance given nor the advance received back was recorded as it was for a temporary period. Ld. CIT(A) has incorrectly held that assessee has accepted that advance is given by him but in fact the assessee in order to explain the paper has stated as alternative argument stating that he has the source for such advance. The record reveals that the assessee has recorded the money given and received back. The availability of cash in the cash book was also not denied by the lower authority and thereby merely the date is not mentioned the said amount cannot be added in the hands of the assessee and thereby we consider the explanation of the assessee that it was for a temporary period and the since the cash book thereby ground no 2 raised by the assessee is allowed.

. 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal 4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The brief facts of the case on the issue from the assessment order are that seized document i.e. imaging of "One Plus T-6" mobile phone of the assessee Exhibit-4 of Annexure-AS-1 from the residence of the assessee, out the above data, page no. 62 of the above Exhibit, it is noticed that the assessee has made unaccounted investment and payment amounting to Rs.21,60,000/- during FY 2017-18. The claim of assesee that the amounted noted in this paper is an advances is not found correct as noting made in this paper is a nature of business transactions i.e. "2 GADI RASTA, RAJASTHAN TILES". Ld. AO has further noted that noting of page no. 6 of Annexure-A-1 represent as advances and interest thereon. The assessee has tried to match page No. 62 of Ex-4 connected with page no. 6 of A-1 wherein the amount of Rs. 20,00,000/- and date 20.04.20217 written at bottom of this page and the same has noted in another page of 62 at top. The Id. AO concluded that the nature of noting made on these papers are different each other, therefore, the explanation given by the assessee in respect to the above is not found correct Finally, the addition has been made of Rs. 9,43,285 wirit the amount mentioned in Exhibit-4 of Annexure-AS-1. And also an addition has been made of Rs. 12,16,715 apparently w.r.t. the same page which is apparently total of Rs. 8,40,715 & Rs. 3,76,000 as mentioned on that page. Consequently, it appears, the learned AO has not made any addition in this year with respect to page no. 6 of A-1. The Id. AO in the order for AY 2019-20 has stated that Shri Prabhu Dayal Saini amounting Rs. 25,00,000/-has been offered for tax by the assessee in the return of income filed u/s 153A of the Income tax Act, 1961. Since assessee himself has included investment amount in the income, hence no further addition is required to made.". Further as noted in the order for AY 2019-20, "In his statement recorded on 14.06.2019 Shm Mahendra Kumar Goyal has accepted that he has given this cash loan to Shri Prabhu Dayal Saini The appellant has contended that Sh Prabhu Dayal (name as given by the appellant in his submissions) has purchased tiles for Rs. 8,40,715/- against which Rs. 1,60,000/- was received from Sh Prabhu Dayal and balance Rs.6.81,715/- . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal was due. Further Rs.3,76,000/- was paid for tiles purchased by him from Rajasthan Tiles and thus Rs.10,56,715 was due from him. Assessee appellant further paid Rs.9,43,285/- so that as on 25.04.2017 an amount of Rs. 20,00,000/- is due from him. Firstly the appellant has not been able to show that the two papers are for the same transaction. The nature of the transactions in the nature of entries of the two papers are different and even the handwriting appears to be different, for example on comparison of "5" on both the pages. Hence the conclusion of the learned AO in this regard is hereby upheld. It is undisputed from the side of the appellant that the advance of Rs. 9,43,285 was made by the appellant to Sh Prabhu Dayal (name as given by the appellant in his submissions) and the sources of such cash payment of the unexplained and undisclosed and hence this addition made in the assessment order is hereby upheld. With respect to the addition made of Rs. 12,16,715, the appellant has contended that Sh Prabhu Dayal has purchased tiles for Rs. 8,40,715/- against which Rs. 1,60,000/-was received from Sh Prabhu Dayal and balance Rs.6,81,715/- was due. Further Rs.3,76,000/- was paid for tiles purchased by him from Rajasthan Tiles. The appellant has inter-alia contended that the addition made without giving credit of Rs. 1,60,000 received from him amounts to double addition. The contention of the appellant in this regard is found to be acceptable as, as per the seized paper, Rs 1,60,000 was paid back by Sh. Prabhu Dayal (name as given by the appellant in his submissions) before the payment was made of Rs.3.76.000 by the appellant. At the same time it is undisputed that while the two papers as discussed in this ground of appeal are de-linked, the appellant has not been able to substantiate and explain the sources for such transactions and advances. Thus the addition of Rs. 12,16,715 u/s 69 is hereby reduced by the amount of Rs.1,60,000 and the addition is sustained to the extent of Rs. 10,56,715. Accordingly this ground of appeal is hereby partly allowed. However this is subject to the enhancement of assessment which is discussed here under Enhancement of assessment- A notice of enhancement was issued to the appellant on the date of 11.02.2025 with the remarks that. The Id. Assessing Officer has mistakenly made addition pertaining to assessment year 2018-19 into assessment order of A. Y. 2019-20. As per para 5 of . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal assessment order of A. Y. 2019-20, the Id AO has discussed the addition of Rs 384000/- pertaining to AY 2018-19 and addition of Rs.342000/- pertaining to A.Y 2019-20 in the assessment order passed for A Y. 2019-20. However, Id. AO has made addition of Rs 384000/- in A.Y. 2019-20 whereas no addition as per this discussion made in A Y. 2018-19 You are therefore being provided an opportunity to furnish your explanation in this regard as to why assessment should not be enhanced by an amount of Rs. 3,84,000/- The appellant has replied to the notice as under.- Vide dt 17/02/2025 With reference to hearing notice u/s 250 dt. 1 1.02 2025 wherein your goodself observed as under- "The Ld. AO has mistakenly made addition pertaining to AY 2018-19 into assessment order of AY 2019-20. As per Para 5 of assessment order of AY 2019-20, the Ld. AO has discussed the addition of Rs.3,84,000/- pertaining to AY 2018-19 and addition of Rs. 3,42,000/- pertaining to AY 2019-20 in the assessment order passed for AY 2019-20. However, Ld. AO has made addition of Rs.3,84,000/- in AY 2019-20 whereas no addition as per this discussion made in AY2018-19." On this basis an opportunity is provided to fumish the explanation in this regard as to why the assessment should not be enhanced by an amount of Rs 3.84,000/- In this connection we are to submit as under-

4. Without prejudice to the above, it is to further submit that your goodself had confirmed addition of Rs. 3,84,000/- in AY 2019-20 and therefor the same addition cannot be again made in AY 2018-19. In case, this addition is made in AY 2018-19, the order passed in AY 2019-20 be rectified. The submissions of the appellant have been perused careful. The Id. AO has noted in the assessment order for the AY 2019-20 as under:- On perusal page 6 of exhibit-1 of annexure A seized from the residence of the assessee, it is noticed that the assessee has given cash loan to Shri Prabhu (Dayal) Saini. In his statement recorded on 14.06.2019 Shri Mahendra Kumar Goyal has accepted that he has given this cash loan to Shri Prabhu Dayal Saini as per details given below:- A.Y Principal (Rs.) Interest (Rs.) Total (Rs.) 2018-19 25,00,000 3,84,000 28,84,000 2019-20 3,42,000 3,42,000 . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal Accordingly show cause notice was given why the said investment of Rs. 25,00,000/-along with interest income of Rs. 384,000/- should not be added to income. In response to show cause notice, assessee submitted as under:- ……………… The reply of the assessee has been considered and noticed that investment in advance given to Shri Prabhu Dayal Saini amounting Rs. 25,00,000/-has been offered for tax by the assessee in the return of income filed u/s 153A of the Income tax Act, 1961. Since assessee himself has included investment amount in the income, hence no further addition is required to made. Regarding contention of assessee that no recovery was made from Shri Prabhu Dayal Saini and therefore no interest income was received by assessee is not acceptable for the reason that assessee is following mercantile system of accounting and therefore interest income of Rs. 3,84,000/- is added to income as undisclosed interest income for the year under consideration The penalty proceedings u/s 270A(1) of the Income tax Act, 1961 for under reporting of income are initiated separately for the year under consideration. However no addition of interest was done in the assessment order for the AY 2018-19 and the amount which was to be added in the assessment order of AY 2018-19 of Rs. 3,84,000 was added in the assessment order for the AY 2019-20 and the amount which was pertaining to the AY 2019-20 was noted anywhere. The issue raised by the appellant on the merits in reply to the enhancement notice has been considered and the same is on the similar lines as in the case of submission made in the appeal for the AY 2019-20. The facts of the two years are pari materia. In the appeal for the AY 2019-20, the contention of the appellant have been rejected. Respectfully following the same, the contentions of the appellant on the merit are rejected hereby. Accordingly addition of Rs. 3,84,000 is hereby made to the income of the appellant and the assessment is enhanced.

. 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal Ground No. 3: The Ld. AO has erred on facts and in law in making an addition both for undisclosed income and also for unrecorded investment/ expenditure and also not allowing setoff of income assessed in M/s Galaxy Industries where assessee is a partner resulting into double taxation. 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The brief facts of the issue as per the assessment order are that as per the noting on the backside of page no. 9, the appellant has made payment of Rs. 1,00,000/- to Sh Deewan for getting land conversion, and the appellant did not give an explanation regarding the source of the same, hence, the same was added to the total income on account of unexplained conversion expenses u/s 69C of the IT Act, 1961. The appellant has contended in the appeal that the Id. AO made addition of Rs. 23,726/- on account of unaccounted sales. Further AO has also made an addition of Rs. 23,41,289/- on account of TP Dala income and Rs. 7,06,485/- on account of undisclosed profit on unrecorded sales in case of Galaxy industries in which assessee and his family members are partners (PB 110-133). M/s Galaxy Industries has accepted this addition. Thus these amounts aggregating to Rs. 30,71,500/- was available with the assessee for the investment. Hence set-off of this amount needs to be allowed against the addition of any unexplained investment sustained/ accepted by the assessee to avoid double taxation. The appellant has also placed reliance on number of judgements in this regard. However regarding the claim of the appellant it is seen that the claim of the appellant is limited to Rs. 23,726 with respect to the addition made in his own hands. The credit /set off of this income of the appellant is allowed from the addition made is being adjudicated in this ground of appeal. However with respect to the other claims of the appellant the appellant is claiming the set off of income of a separate legal entity. It does not matter whether the appellant is partner in such firm or not. What happened to such unaccounted money which was earned by the partnership firm is not in the knowledge of the undersigned and the appellant has also not been able to prove that such unaccounted money was actually used by the appellant When the income is unaccounted income earned by the assessee and the set off is claimed against the application, in that case generally the onus is on the . 495 to 498/JP/2025 Sh. Mahendra Kumar Goyal assessing authority to show that such unaccounted money out of unaccounted income was not used anywhere else and if the assessing authority is not contending otherwise in that case the set off is generally allowed to the assessee. However when the unaccounted income is earned by a different entity a separate legal person, in that case the same principles regarding the onus does not apply. In that case the onus shifts to the assessee. The assessee is required to show and prove that the unaccounted income earned by a different entity was actually used by the assessee in the application or expenses. In the present ground of appeal the appellant has not been able to show and prove so. In view of the above discussion the addition made in the assessment order is reduced by the amount of Rs. 23,726 and the appellant gets partial relief in this regard. This ground of appeal is hereby partly allowed.