DCIT, CENTRAL CIRCLE-4(3), KOLKATA, KOLKATA vs. SURESH KUMAR BANTHIA, KOLKATA
Facts
A search operation on finance brokers Kasera and Sanwaria in 2018 led to the impounding of documents and statements, although the assessee was not named. A subsequent survey on the assessee in 2020 yielded documents and a statement admitting cash loans, which was later retracted. The Assessing Officer reopened the assessment under Section 147, making additions of ₹36.65 crores for unexplained cash loans and ₹1,64,92,500/- for interest, based on the seized material and the retracted statement.
Held
The Tribunal upheld the CIT(A)'s annulment of the assessment, ruling that the reassessment proceedings under Section 147 were invalid. It found that the incriminating material originated from a third-party search, which should have triggered proceedings under Section 153C. The Tribunal also observed that the assessee's retracted statement lacked corroborating evidence, and the seized documents did not specifically name the assessee as a loan provider or taker, rendering the additions unsustainable on merit as well.
Key Issues
1. Whether reassessment proceedings initiated under Section 147 are valid when the incriminating material pertains to a third-party search, requiring initiation under Section 153C. 2. Whether additions based on a retracted statement without corroborating evidence can be sustained.
Sections Cited
Section 147, Section 148, Section 153C, Section 153A, Section 133A, Section 132, Section 143(3), Section 153, Section 151, Section 139, Section 149, Section 69A, Section 68, Section 254
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
Per Rajesh Kumar, AM:
This is an appeal preferred by the Revenue and Cross Objection filed by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] dated 31.03.2025 for the AY 2016-17.
The issue raised by the Revenue in ground no.1 is against the order of ld. CIT (A) annulling the assessment framed u/s 147 of the Income-tax Act, 1961 (the Act) by the ld. AO on the ground of being invalid and void ab initio without considering the facts on record.
3.1. The facts in brief are that the assessment in this case was originally completed on 31.12.2018 u/s 143(3)/153A. There was search in the case of some finance brokers Kasera and Sanwaria on 30.11.2018. During the course of said search, some documents/papers were found and seized. Their statements were also recorded with regard to their modus operandi of arranging cash loans. However, none of the brokers in their statement named the assessee as loan provider or loan taker nor in any of the seized papers the name of the assessee .i.e. Suresh Kumar Banthia was found/appeared. Thereafter there was a survey conducted u/s 133A on 19.2.2020 on the assessee and his group concern namely Citizen Umbrella Mfg Co Ltd. In the course of survey, some papers with identification mark SKB/1 and 2 were found from the assessee and CUML/1 and 2 from Citizen Umbrella were impounded. Statement of the assessee was recorded u/s 133A on 20.2.2020 wherein the
3.2. The assessment was reopened u/s 148 on 26.3.2021 for which reasons were recorded available from page 201-204 of the paper book. The reasons stated that there was search operation on finance brokers Sanwaria and Kasera group on 30.11.208 and that incriminating documents pertaining to Citizen group were seized and further that Suresh Kumar Bathia alias Jain was the main person of Citizen group abbreviated as SK Jan/Citizen. Further that there was survey in the hands of the assessee. The AO further also noted that the assessee declared low profit against turnover and there were high cash loan transactions. The AO observed that assessee Suresh Kumar Banthia was involved in unaccounted cash loan transactions. The AO further bifurcated year wise cash loan transactions and for the assessment year in question calculated such eash loan transactions at Rs. 36.65 crores. The AO relied on the statement of one Praveen Kumar Kasea and further observed that Suresh Kumar Banthia accepted in his statement dated 20.2.2020 that he used to lend cash through Praveen Kasera. The Ld AO therefore recorded that assessee generated unaccounted income of Rs.36.65 crores
3.3. The ld. CIT (A) in the appellate proceedings, allowed the appeal of the assessee by quashing the assessment framed u/s 147 of the Act on the ground of being invalid and void ab initio for the reason that the proceedings u/s 147 read with section 148 of the Act was invalidly initiated whereas the correct proceedings would have been u/s 153C of the Act because the source of information on the basis of which the reassessment proceedings were initiated emanated during the course of search on the third party M/s Uma Shankar Kasera, Anil Kumar Kasera and Jai Bhagwan Sanweria on 30.11.2018. While allowing the appeal of the assessee on legal issue the learned CIT(A) has taken into account the reply / submissions of the assessee and remand report called for during the appellate proceedings including the reply filed by the assessee. The relevant finding of the ld. CIT (A), are as under:-
“5.2. Discussion and decision: 5.2.1. I have gone through the assessment order as well as the submission of the assesses On perusal of the same, it is observed that a search operation u/s 132 of the Act was conducted in the case of three brokers namely Shri. Uma Shankar Kasera, Anil Kumar Kasera, Jai Bhagwan Sanweria on 30.11.2018. Subsequently, a survey operation u/s 133A was carried out on 19.02.2020 by Directorate of Income Tax, Investigation, Kolkata at various premises of M/s Citizen Umbrella Manufacturers Ltd. in which the assessee was a key person. Thereafter, the Investigation Directorate communicated the papers seized at the time of search in the case of Sanwaria and Kasera and statement of Shri Praveen Kumar Kasera recorded U/s 132(4) on 02/12/2018 along with the survey materials to the AO. It is observed that, on the basis of statement of the aforesaid brokers and the document seized in the said search operation and also relying upon the statement of the assessee and the documents Impounded during the course of survey on the assessee, the AO reopened the assessment u/s 147 after recording the reasons. In the said reasons, the AO had illustrated the fact that during the year under consideration, the assessee had given
3.5. We have perused the rival contention material before us as well as the appellate order and find that the source of incriminating material/ documents on the basis of which the assessment was reopened was the documents seized during the course of search and the finance brokers Kasera and Sanwaria on 30.11.2018. Therefore, the proceedings u/s 153C of the Act should have been initiated as there exists separate code for assessing such incomes which starts with non-abstante clause overriding the other provisions of the Act. Therefore, the ld. CIT (A) has correctly passed the order that the proceedings u/s 147 of the Act as well as the consequent assessment proceedings were invalid and void ab initio. The same have been initiated under the wrong provisions of the Act. We note that the ld. CIT (A) while passing the order relied on several decisions as extracted above. Therefore, we do not find any occasion to interfere with the said appellate order which is very reasoned and speaking order. Consequently, we uphold the order of ld. CIT (A) on this issue by dismissing the ground no.1 of Revenue’s appeal.
Ground nos.2, 3 and 4 of the Revenue’s appeal are against the order of ld. CIT (A) deleting the addition of cash loans amounting to ₹36.65 crores u/s 69A of the Act and interest income of ₹1,64,92,500/- u/s
Besides, the assessee has raised the issue in the cross objection in ground nos.7 to 9 in the cross objection, which is qua the addition of ₹36.65 crores u/s 69A of the Act and ₹1,64,92,500/- towards interest u/s 69A of the Act not in accordance with the law and that to based on the statements relied on by ld. AO which has been retracted and has no legal sanctity.
Since, we have already upheld the order of ld. CIT (A) on the legal issue, therefore there is no need for adjudication of these grounds in Revenue’s appeal as well as in the cross objection. However, we would just like to mention that in this case the assessment has been framed by the ld. AO by making the above addition u/s 69A of the Act in respect of cash loans as well as in respect of estimated interest u/s 69A of the Act. The sole basis for making the said addition is the statement recorded during the course of survey action of the assessee. We note that the assessee has already retracted the statement just three days after recording all the statements in which the admission of disclosure was made. The ld. AO has failed to bring on record of any substantive material corroborating the admission by the assessee in the statement. We also note that the documents seized from the possession of Kasera and Sanwaria during the course of search on 30.11.2018, did not mention the name of the assessee nor did the Sanwaria and Kasera in their statements recorded ever named the assessee. Therefore, even on merit the addition made by the ld. AO u/s 69A of the Act which is based on surmises and presumption and has not followed the basis. It is also settled law that the addition based on the statement alone cannot be made specially
“08. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly there was search on finance broker ‘Kaseras’ and ‘Sanwaria’ during which certain documents were seized which are stated to have contained the details of cash transactions/ loans by the assessee. The said search took place on 30.11.2018. Thereafter, a survey was conducted on the assessee and M/s Citizen Umbrella Mfg. ltd. during which the statement of the assessee was recorded u/s 131 of the Act. Admittedly, the search was conducted on a date which falls prior to the start of the assessment year i.e. A.Y. 2020-21 and even the start of the financial year relevant to A.Y. 2020-21. Therefore, material found during the course of said search on ‘Kaseras’ and ‘Sanwaria’ has nothing to do with the assessment of income in the assessment of the assessee. Therefore, we hold that finding recorded by the ld. AO at pages no. 1 to 4 and 20 to 45 are not relevant for the purpose of assessment of income for the year under consideration. We also note that the assessee retracted his statement given during the course of survey u/s 133A of the Act immediately on 24.2.2020 which was within 5 days of the date of survey by filing affidavit on the ground that the statement was taken under coercion and there was no corroborative material found during the course of survey. In the said retraction, the assessee also stated that entries in the impounded documents CUM1 and SKB were not relevant or they were part of the books of account maintained by the assessee. Therefore, we find merit in the contention of the assessee that the ld. AO could not bring on record any substantive material to corroborate the entries the documents/material seized. We also note that though the name of Gajraj Choraria and others Pawan Mundhhra were taken by the finance brokers as stated above i.e. Pawan Mundhhra and Gajraj Choraria and others, however, their statements were not recorded nor any summons were issued even though their phone numbers as well as addresses were given to the survey party as well as to the ld. AO. We note that apart before the statement and jottings in the impugned papers, no corroborative materials were there to show that the assessee was involved in advancing any cash loans through the said brokers Gajraj Choraria and Pawan Mundhhra. We find that the ld. AO has relied on the pages/documents impounded viz SKB/1, CUML/1, CUML/2 as is apparent from the order. We have examined the said papers/documents and find that nothing comes out of the said documents to show that there was any investments made by the assessee. We note that thus there was no material before the AO which corroborates the conclusion of making huge investments by way of giving loans and earning interest thereon. There is no supporting materials or evidences in corroboration of impounded papers of making investment by the assessee. We further note that no statement of any broker or borrower was brought on record.
Since, we have dismissed the appeal of the Revenue by upholding the order of ld. CIT (A) and also allowed the cross objection filed by the assessee on merit by allowing ground no.7,8 and 9, the other grounds raised by the assessee in ground no.1,2,3,4,5 and 6 are not adjudicated and left open to be decided if the need arises for the same.
In the result, the appeal of the Revenue is dismissed and the Cross Objection of the assessee is partly allowed.
Order pronounced in the open court on 13.01.2026.
Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 13.01.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata
