RAGHAV KUMAR DHOOT,JAIPUR vs. DCIT CENTRAL CIRCLE 1, JAIPUR

ITA 491/JPR/2025Status: DisposedITAT Jaipur06 August 2025AY 2018-1968 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order was not illegal. However, it found that the addition of Rs. 7,45,60,400/- made under Section 68 read with Section 115BBE was not sustainable. The Tribunal relied on the Apex Court's decision in Common Cause (A Registered Society) Vs. Union of India, which held that loose sheets of papers are irrelevant as evidence and not admissible under Section 34 of the Indian Evidence Act. The Tribunal noted that the impounded papers were not maintained in the regular course of business and thus lacked evidentiary value. The AO's action of taxing jotting of advance taken/given based on a loose sheet, which was not considered a regular book of account, and taxing the peak of loan transactions without proving the assessee's involvement in business or acting on behalf of a company, was deemed unsustainable. Therefore, the addition was directed to be deleted. The Tribunal did not specifically address the validity of the assessment order's selection for compulsory scrutiny or the charging of interest/penalty, focusing solely on the merits of the addition. The appeal filed by the assessee is allowed.

What were the facts?

The assessee, Sh. Raghav Kumar Dhoot, is challenging an order dated 25.03.2025 passed by the CIT(A)-4, Jaipur. This order upheld the assessment order dated 18.04.2021 passed by the DCIT, Central Circle-1, Jaipur, under Section 143(3) of the Income Tax Act, 1961. The assessment year in dispute is 2018-19. The assessee's case was initially selected for scrutiny under CASS as a survey case. Subsequently, the case was centralized with the DCIT. During a survey conducted on 05/06/2018 at the premises of M/s Dhoot Sangmermer Pvt. Ltd., where the assessee is a director, certain papers (Annexure A-Exhibit No.02) were found. The assessee explained these papers related to cash loans taken and repaid, with amounts written in a coded form. Some of these transactions pertained to the assessment year 2018-19. The assessee clarified that these details pertained to him personally and not to the company.

What were the issues?

1. Whether the assessment order dated 18.04.2021 passed by the DCIT under Section 143(3) is valid, and whether the addition of Rs. 7,45,60,400/- made under Section 68 read with Section 115BBE is legal? - Assessee's contention: The assessment order is illegal and void ab initio because the case was taken up for compulsory scrutiny in violation of CBDT Instructions, as no survey was conducted in the assessee's case. The CIT(A) erred in devising a hypothetical analogy between survey cases and Sections 153A/153C. Compulsory scrutiny guidelines do not cover cases where material is found during a third-party survey. The assessment also lacked prior approval from the Pr. CIT, and judicial precedents state that assessments in contravention of CBDT instructions are nullities. Section 292BB is inapplicable as the reason for compulsory scrutiny was revealed only in the assessment order. - Revenue's contention: Not recorded in the judgment. 2. Whether the addition of Rs. 7,45,60,400/- under Section 68 read with Section 115BBE is sustainable when no books of accounts were maintained or the amounts were recorded therein? - Assessee's contention: The addition is erroneous as neither books of accounts were maintained nor were the amounts recorded. The AO himself recorded that the entries related to cash loans taken and repaid. Deeming provisions of Sections 68, 69, 69A, 69B, or 69C cannot apply to cash loans not reflected in books or linked to unaccounted expenditure/investment. Section 69A was not invoked, and the assessee was not found in possession of unexplained monies. - Revenue's contention: Not recorded in the judgment. 3. Whether the charging of interest under Section 234B and initiation of penalty under Section 271AAC are justified?

Which sections of the Income-tax Act were involved?

Section 143(3),Section 68,Section 115BBE,Section 153A,Section 153C,Section 292BB,Section 143(2),Section 142(1),Section 127,Section 133A,Section 69,Section 69A,Section 69B,Section 69C,Section 234B,Section 271AAC

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

For Appellant: Shri C.M. Agarwal, C.A
For Respondent: Shri Rajesh Ojha, CIT- DR
Hearing: 10/07/2025Pronounced: 06/08/2025

PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee challenges the order of the Commissioner of Income Tax, Appeals-4, Jaipur [ for short CIT(A) ] dated 25.03.2025. The dispute relates to the assessment year 2018-19. Ld. CIT(A) passed that the order because the assessee challenged the order of assessment of income upon him passed u/s 143(3) of the Income Tax Act, 1961 (for short "Act") dated

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