Prakash Chand Kothari Vs DCIT (ITAT Jaipur)
The Income Tax Appellate Tribunal (ITAT), Jaipur, disposed of cross appeals filed by the assessee and the Revenue relating to Assessment Year 2011-12. The principal issues concerned the validity of reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, and additions made on account of alleged cash loans and interest based on material seized during a search conducted on a third party, the Ramesh Manihar Group.
The assessee’s original return was accepted under Section 143(3). Subsequently, following a search under Section 132 in the case of the Ramesh Manihar Group, the Assessing Officer (AO) received information from the Investigation Wing alleging that the assessee had advanced cash loans of ₹25 crore through the group and earned unaccounted interest. On this basis, reassessment proceedings were initiated under Section 147 by issuing notice under Section 148.
The Tribunal examined the reasons recorded by the AO for reopening the assessment. It observed that the reasons were substantially based on information received from the Investigation Wing and data extracted from pen drives seized during the search. The data consisted of abbreviated entries, including references such as “PCK,” figures under abbreviated headings, and names of alleged borrowers in abbreviated form. The Tribunal found that the reasons did not explain how these abbreviations were linked to the assessee or how the figures represented cash loans of ₹25 crore. It held that the material, by itself, did not constitute tangible material unless it was properly analysed and a clear nexus with the assessee was established.
