Praveen Kumar Saini Vs ITO (ITAT Jaipur)
Cash Trail Missing, Loose-Paper Maths Duplicated: ITAT Gives Mixed Verdict
Cash and Jewellery Additions Upheld; Loose Papers Remanded
The Jaipur ITAT upheld additions of ₹45,76,698 for unexplained cash and ₹97,500 for an unexplained gold necklace, while restoring a ₹4,26,48,355 loose-paper addition to the Assessing Officer for reconsideration.
The Tribunal found that the loose-paper computation taxed interconnected transactions more than once. However, it declined to dismiss the papers as wholly irrelevant and directed further examination.
The assessee’s challenge to the assessment procedure was also rejected. The appeal was partly allowed for statistical purposes, with relief confined to fresh examination of the loose-paper issue.
Election Surveillance Interception Triggered Requisition
On 15 November 2013, a Static Surveillance Team intercepted a Scorpio vehicle at Nawalgarh, Jhunjhunu, in which the assessee was travelling.
The team found ₹45.77 lakh in cash, a gold necklace, foreign currency and loose papers. A warrant under Section 132A was issued on 25 November 2013, and the Department requisitioned the cash, necklace and papers.
The assessee, stated to be engaged in civil construction, subsequently filed a return declaring total income of ₹31,20,000.
The assessment was completed on 9 March 2016 under Section 143(3) read with Section 153B(1)(b), determining income at approximately ₹4.81 crore. The CIT(A) dismissed the appeal against the assessment.
The Tribunal condoned a 17-day delay in the further appeal, accepting the explanation concerning delayed awareness of the appellate order uploaded on the portal.
Requisition-Year Assessment Under Section 143(3) Was Valid
The assessee argued that, following requisition under Section 132A, the assessment should have been completed under Section 153A, making the order under Section 143(3) invalid.
The Tribunal distinguished the requisition year itself from the six preceding assessment years covered by Section 153A under the applicable framework.
AY 2014-15 corresponded to the previous year in which the requisition occurred. It therefore fell outside those six preceding years and was assessable under the normal provisions of Section 143(3), with Section 153B(1)(b) prescribing the completion time limit.
The Tribunal also distinguished authorities concerning Section 153C because the requisition here related to the assessee himself. The jurisdictional ground was dismissed.
Loose-Paper Addition Contained Apparent Duplication
The Assessing Officer calculated income from the loose papers by aggregating ₹41,30,340 of profit, ₹3,47,25,561 of gold purchases, and a ₹62,92,454 debit balance.
After reducing ₹25 lakh already declared under income from other sources, the officer added ₹4,26,48,355.
The Tribunal noted that the officer himself had described pages 3 to 5 as interconnected: one recorded purchases, another sales and profit, and the third a closing balance derived from those figures.
Adding the purchase cost, profit and closing balance together therefore had the effect of taxing the same transactions more than once.
Nevertheless, the papers had been found alongside cash and jewellery admitted to belong to the assessee, and one page bore his name. Their relevance could not be rejected outright.
The Tribunal directed the officer to eliminate duplication, examine the Section 132(4A) presumption, allow rebuttal, conduct necessary enquiries—including from the vehicle owner—and pass a speaking order. All merits remained open.
Disclosed Income Did Not Establish Physical Cash Availability
Initially, the assessee stated that the cash represented borrowings from his sister and other persons for a proposed land transaction. Subsequently, he claimed it came from disclosed income, business working capital and past savings.
The Tribunal found both explanations unsupported. No lender confirmed an advance, and no evidence of the proposed land transaction was produced. The later explanation was also a departure from the earlier statement without adequate supporting material.
The Tribunal emphasised that declaring income under Section 44AD does not, by itself, establish the availability of physical cash.
No trail connected the cash found with the ₹8 lakh business income or ₹25 lakh declared under other sources. Earlier-year returns and reliable evidence of accumulated savings were also absent.
The ₹45,76,698 addition under Section 69A was upheld.
Jewellery Instruction Did Not Protect a Fresh Purchase
The necklace weighed 50.450 grams. Although the registered valuer valued it at ₹79,439, the assessee admitted purchasing it on the interception date for ₹97,500.
The Tribunal rejected reliance on CBDT Instruction No. 1916 dated 11 May 1994. It distinguished customary household jewellery from a freshly purchased necklace whose payment source remained unexplained.
The ₹97,500 addition under Section 69 was therefore sustained.
Author’s Comments
The decision draws a useful distinction between defective computation and unexplained ownership. The loose-paper addition required reconsideration because its arithmetic duplicated interconnected amounts; that finding did not establish that the underlying transactions were fictitious.
For cash, the critical deficiency was the absence of a reliable availability trail. Presumptive taxation may simplify income computation, but a substantial cash holding still requires a coherent explanation supported by facts.
The jewellery finding is similarly specific: it concerns an admitted fresh purchase with an unexplained payment source, rather than ordinary possession of customary household ornaments.
The outcome should therefore be reported precisely: cash and jewellery additions upheld, loose-paper addition remanded, and the requisition-year assessment procedure sustained.
Cases Discussed
- Shyam Sunder Khandelwal v. ACIT [2024] 161 taxmann.com 255 (Rajasthan High Court) — discussed regarding the special procedure under Sections 153A to 153D; distinguished because the requisition in the present case concerned the assessee himself.
- PCIT v. VSL Mining Co. (P.) Ltd. [2025] 479 ITR 433 (Karnataka High Court) — distinguished because it concerned Section 153C material used against another person.
- Harigovind v. ACIT [2026] 485 ITR 509 (Madras High Court) — distinguished because the present case was not a Section 153C proceeding against an “other person”.
- CIT v. Bahubali NeminathMuttin [2016] 388 ITR 608 (Karnataka High Court) — held not to bear upon the provision under which the requisition-year assessment was required to be framed.
- Pr. CIT v. Roshan Lal Sancheti [2023] 150 taxmann.com 227 (Rajasthan High Court) — relied upon for the proposition that a statement under Section 131 cannot be discarded merely through a belated, unsupported retraction or improved explanation.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
1. This appeal by the Assessee is directed against the order of the learned Commissioner of Income Tax (Appeals) [hereinafter referred to as “the learned CIT(A)”] dated 18.11.2025 arising out of the assessment order dated 09.03.2016 passed by the Assessing Officer (hereinafter referred to as “the AO”) under section 143(3) read with section 153B(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2014-15.
2. There is a delay of 17 days in filing this appeal before us. The assessee has filed a condonation application supported by an affidavit explaining the reasons for the delay, stating that the impugned order was served on the portal and that the assessee came to know of its passing only when he visited the office of his counsel in February 2026. Having considered the same, we are satisfied that there was sufficient cause for the delay. Accordingly, the delay is condoned and the appeal is admitted for hearing.
3. The grounds of appeal raised by the Assessee before us read as under:
1. In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in passing the order u/s 143(3) r.w.s. 153B(1)(b) of the Income Tax Act, 1961 which is void ab-initio and deserves to be quashed.
2. In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the making addition of Rs. 4,26,48,355/- on account of loose papers.
3. In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the addition of Rs. 45,76,698/- on account of cash treated as unexplained.
4. In the facts and circumstances of the case the Learned CIT(A) has erred in confirming the addition of Rs. 97,500/- on account of gold jewellery.
5. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.
4. Briefly stated, the facts of the case are that the assessee is an individual stated to be engaged in the business of civil construction. On 15.11.2013, a Static Surveillance Team intercepted a Scorpio vehicle bearing registration No. RJ-18-TA-1938 at Nawalgarh, District Jhunjhunu, in which the assessee was travelling, and cash of Rs 45,76,698, a gold necklace and foreign currency, along with certain loose papers, were found. A warrant of authorisation under section 132A of the Act was issued on 25.11.2013 and the said cash, the gold necklace valued at Rs 79,439 and the loose papers (Annexure-AS) were requisitioned by the Department. The assessee filed his return of income on 28.10.2015 declaring total income of Rs 31,20,000.
The AO completed the assessment on 09.03.2016 under section 143(3) read with section 153B(1)(b) of the Act determining the total income at Rs 4,81,22,550, inter alia making the following additions:
(i) Rs 80,000 by estimating the business income;
(ii) Rs 4,26,48,355 as income from other sources on account of the loose papers;
(iii) Rs 45,76,698 under section 69A of the Act on account of the seized cash treated as unexplained money; and
(iv) Rs 97,500 under section 69 of the Act on account of the gold necklace treated as unexplained investment.
The deduction of Rs 1,00,000 claimed under section 80C of the Act was also disallowed. On appeal, the learned CIT(A), by the impugned order dismissed the appeal on all grounds. Aggrieved, the assessee is in appeal before us.
5. The learned Authorised Representative (hereinafter referred to as “the learned AR”) submitted that the assessment framed under section 143(3) read with section 153B(1)(b) of the Act is void ab initio inasmuch as, a requisition under section 132A of the Act having been made, the assessment ought to have been completed under section 153A of the Act. On the merits, it was submitted that the loose papers are undated, unsigned and stand crossed out, are not in the handwriting of the assessee, and were found not in the possession of the assessee but in a vehicle belonging to his uncle; that the accepted business of the assessee is civil construction and not gold trading; that the papers are dumb documents which cannot form the basis of any addition; and that, in any event, the addition suffers from duplication. As regards the cash, it was submitted that the same stands explained out of the income disclosed in the return and the past savings of the assessee. As regards the gold necklace, it was submitted that the same is covered by CBDT Instruction No. 1916 dated 11.05.1994 and is well within the limit prescribed for a male member of the family.
6. The learned Departmental Representative (hereinafter referred to as “the learned DR”) supported the orders of the authorities below. It was submitted that the assessee had, in his statement recorded under section 131 of the Act, admitted the ownership of the seized cash and the gold necklace; that he gave shifting and unsubstantiated explanations as to the source of the cash; that the presumption under section 132(4A) of the Act was rightly invoked in respect of the loose papers; and that the additions have rightly been sustained by the learned CIT(A).
7. We have heard the rival contentions and perused the material available on record. We first take up ground No. 1, by which the assessee challenges the validity of the assessment on the ground that, a requisition under section 132A of the Act having been made, the assessment ought to have been framed under section 153A of the Act and that the assessment framed under section 143(3) read with section 153B(1)(b) of the Act is void ab initio.
8. The scheme of assessment in cases of search or requisition is well settled. Where a search is initiated under section 132 of the Act or a requisition is made under section 132A of the Act, the case of the person searched or requisitioned is governed by section 153A of the Act, under which the AO assesses or reassesses the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or the requisition is made. Where the seized or requisitioned material belongs to or relates to a person other than the person searched, the case of such other person is governed by section 153C of the Act. The Hon’ble jurisdictional High Court in Shyam Sunder Khandelwal v. ACIT [2024] 161 taxmann.com 255 (Raj.) has held that the special procedure prescribed under sections 153A to 153D of the Act, which begins with a non obstante clause, has an overriding effect over the regular provisions for assessment or reassessment, and that where the material seized or requisitioned belongs or relates to a person other than the person searched, recourse must be had to section 153C of the Act. The Special Leave Petition preferred against this judgement stands dismissed by the Hon’ble Supreme Court.
9. The assessment year under consideration, namely the assessment year 2014-15, is the assessment year relevant to the previous year in which the requisition under section 132A of the Act was made on 25.11.2013, that is, the requisition year itself. It does not fall within the six assessment years immediately preceding the requisition year and is, therefore, not an assessment year required to be assessed under section 153A of the Act. The assessment for the requisition year is to be completed under the normal provisions of the Act, namely section 143(3) of the Act, the time limit for its completion being separately prescribed by section 153B(1)(b) of the Act. The very fact that section 153B(1)(b) of the Act separately prescribes the time limit for completing the assessment for the requisition year is itself a clear indication that the said assessment is a regular assessment made under the normal provisions of the Act, and that provision is not rendered redundant thereby. The framing of the assessment as one under section 143(3) read with section 153B(1)(b) of the Act is, therefore, in accordance with law, the reference to section 153B(1)(b) of the Act being only to the provision prescribing the time limit for its completion.
10. The line of authority represented by PCIT v. VSL Mining Co. (P.) Ltd. [2025] 479 ITR 433 (Kar.) and Harigovind v. ACIT [2026] 485 ITR 509 (Mad.), which requires the AO to follow the procedure under section 153C of the Act where material seized in the course of the search of one person is used against another person, is misplaced, as the present case is not a case under section 153C of the Act: the requisition under section 132A of the Act was of the assessee himself. The decision in CIT v. Bahubali NeminathMuttin [2016] 388 ITR 608 (Kar.), relied upon by the assessee before the learned CIT(A), is on the effect of the rejection of books of account under section 145 of the Act and additions under section 69B of the Act, and does not bear upon the question of the provision under which the assessment for the requisition year is to be framed.
In any event, the assessee participated in the assessment proceedings, complied with the notices and furnished the details called for, and raised no objection to the manner in which the assessment was framed, and no prejudice has been shown to have been caused to him; any defect in the mention of the section would, in such circumstances, be a curable defect within the meaning of section 292B of the Act. Ground No. 1 is accordingly dismissed.
11. By ground No. 2, the assessee challenges the addition of Rs 4,26,48,355 made on account of the loose papers and sustained by the learned CIT(A). From the assessment order it is seen that this addition has been arrived at by determining the income from other sources on account of the loose papers at Rs 4,51,48,355, being the aggregate of
i) profit of Rs 41,30,340 worked out from the sales and purchases recorded on page 4 of the seized papers;
ii) the cost of the gold purchases of Rs 3,47,25,561 recorded on page 3, added under section 69C of the Act; and
iii) the debit balance of Rs 62,92,454 recorded on page 5, added under section 69C of the Act; and by reducing therefrom the income from other sources of Rs 25,00,000 already declared by the assessee.
12. On a perusal of the assessment order, we find that the AO himself has recorded that pages 3 to 5 of the seized papers are interrelated, page 3 recording the cost of the gold purchases, page 4 the sales and the resultant profit, and page 5 the closing debit balance drawn from the same figures. When the three amounts emanate from one and the same set of interconnected transactions, the addition of the gross purchase cost, the profit and the closing balance, one over the other, has the effect of bringing the same transactions to tax more than once. To this extent, the addition, as presently framed, suffers from an apparent duplication and cannot be sustained in the quantum determined. At the same time, we are unable to hold that the seized papers are wholly irrelevant, the papers having been found along with cash and jewellery admitted by the assessee to be his, and page 5 bearing the name of the assessee. The questions as to the extent to which the presumption under section 132(4A) of the Act operates against the assessee, whether that presumption stands rebutted, and the correct quantum of income, if any, that can be brought to tax from these papers after eliminating duplication, are matters which require a proper examination, for which purpose the owner of the vehicle and the writer of the papers may also need to be examined. In these circumstances, we consider it fair and proper to set aside the finding of the learned CIT(A) on this ground and to restore the issue to the file of the AO with the direction that he shall –
i) recompute the addition, if any, so as to avoid bringing the same transactions to tax more than once;
ii) examine the applicability of the presumption under section 132(4A) of the Act and afford the assessee an opportunity to rebut the same;
iii) make such further enquiry as may be necessary, including from the owner of the vehicle; and
iv) pass a speaking order in accordance with law after affording the assessee a reasonable opportunity of being heard.
We express no opinion on the merits, and all contentions of both the parties are left open. Ground No. 2 is accordingly allowed for statistical purposes.
13. By ground No. 3, the assessee challenges the addition of Rs 45,76,698 made under section 69A of the Act on account of the cash found and requisitioned. In his statement recorded under section 131 of the Act on 15.11.2013, the assessee admitted that the cash belonged to him and explained its source as amounts stated to have been borrowed in cash from his sister and from several other named persons, the cash being carried, according to him, for a proposed land transaction.
During the assessment and the first appeal proceedings, the assessee resiled from this explanation and set up a different case, namely that the cash represented his own income, being the income of Rs 33,00,000 disclosed in the return (Rs 8,00,000 as business income under section 44AD of the Act and Rs 25,00,000 under the head income from other sources), the working capital of his contract business and the savings of the earlier years, the availability being worked out by him at about Rs 58,00,000 (as reproduced in paragraph no. 7.1 of the impugned order).
We have considered each of these explanations and are unable to accept any of them. The initial explanation of borrowings for a land transaction was wholly unsubstantiated, no lender having confirmed any advance and no agreement or evidence of the land transaction having been produced, and it was abandoned by the assessee himself. The explanation subsequently set up, that the cash came out of the assessee’s own disclosed income and past savings, is not only unsubstantiated but is also a belated departure from his sworn statement.
A statement recorded under section 131 of the Act cannot be discarded merely because the assessee chooses to retract or improve upon it later, particularly where the retraction is neither prompt nor supported by any cogent material, as held by the Hon’ble jurisdictional High Court in Pr. CIT v. Roshan Lal Sancheti [2023] 150 taxmann.com 227 (Raj.). The Special Leave Petition against it stands dismissed by the Hon’ble Supreme Court.
In any event, the declaration of income under section 44AD of the Act relieves the assessee of the obligation to maintain books of account but does not, by itself, establish the availability of physical cash of the magnitude found, and no nexus or trail was shown between the business income of Rs 8,00,000, or the Rs 25,00,000 shown under the head income from other sources (the source of which was itself not explained), and the cash of Rs 45,76,698 found on 15.11.2013.
As regards the claimed savings of the earlier years, no return of income or assessment record of any earlier year was produced, nor was it explained how such income remained unspent, in what form it was retained, or how it was carried forward to the date of the requisition; and the capital accounts and the balance sheet said to have been drawn up during the assessment proceedings, in the admitted absence of any books of account, cannot be accepted as a reliable record of the availability of cash.
Section 69A of the Act is attracted where the assessee is found to be the owner of money which is not recorded in any books of account and the explanation offered as to the nature and source of its acquisition is, in the opinion of the AO, not satisfactory. Here the assessee is the admitted owner of the cash, no books of account were maintained, and the explanation offered has been vague, shifting and unsupported; the magnitude of the cash and the circumstances in which it was found, while being carried in a vehicle during the election surveillance period, further belie the claim that it represented ordinary business savings. The conditions of section 69A of the Act are, therefore, satisfied, and the addition has rightly been sustained by the learned CIT(A). Ground No. 3 is accordingly dismissed.
14. By ground No. 4, the assessee challenges the addition of Rs 97,500 made under section 69 of the Act on account of the gold necklace. The gold necklace weighing 50.450 grams was found and seized, and was valued by the registered valuer at Rs 79,439. In his statement, the assessee admitted that he had purchased the said necklace on the very day of the interception for a sum of Rs 97,500. As the valuation did not include the making charges, the AO adopted the purchase consideration of Rs 97,500 as the value of the necklace and, in the absence of any evidence of the source of the investment, added the said amount under section 69 of the Act. The reliance placed by the assessee on CBDT Instruction No. 1916 dated 11.05.1994 is misplaced. The said Instruction affords an administrative benefit in respect of gold jewellery customarily held by a household, having regard to family custom and status, and operates to prevent the seizure of such customary jewellery. It has no application to jewellery which, on the assessee’s own admission, was freshly purchased on the very day of seizure and in respect of which no bill or evidence of the source of payment was furnished. The addition in question is not on account of the possession of customary household jewellery but on account of an unexplained investment made on the date of seizure, which falls squarely within section 69 of the Act. The source of the investment of Rs 97,500 having remained unexplained, we find no reason to interfere with the finding of the learned CIT(A). Ground No. 4 is accordingly dismissed.
15. Ground No. 5 is general in nature and does not require any separate adjudication.
16. In the result, the appeal filed by the Assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 28.09.2026
