Kushal Jain Vs DCIT (ITAT Jodhpur)
Summary: The Income Tax Appellate Tribunal, Jodhpur, allowed the appeal of Kushal Jain for Assessment Year 2018-19 and deleted an addition of Rs. 25,000/- made under Section 68 of the Income-tax Act, 1961. The dispute arose from a search and seizure operation conducted under Section 132 on 19 February 2019 in the Rajlakshmi Group, which also covered the assessee. During the search, a diary was seized from the assessee’s residence. The Assessing Officer found an entry showing receipt of Rs. 25,000/- from M/s Rajlakshmi Industries. Although the assessee explained that the amount had been received from the employer for meeting business expenses, the Assessing Officer treated it as an unexplained cash credit because no corresponding entry was found in the employer’s books. The CIT(A), Jaipur-5, confirmed the addition.
Before the Tribunal, the assessee submitted that Rajlakshmi Industries had offered additional income in an application for settlement before the Income Tax Settlement Commission/Interim Board and that the disputed amount of Rs. 25,000/- formed part of the income so offered. The Departmental Representative supported the findings of the lower authorities. The Tribunal examined the seized diary entries, the assessee’s explanation and the materials relating to the employer’s settlement proceedings.
The Tribunal observed that the assessee had consistently explained the receipt as money provided by Rajlakshmi Industries for incurring petty expenses on its behalf. It further found that the employer had filed a settlement application offering additional income, including the disputed amount, and that an order had been passed by the Settlement Commission/Interim Board. Consequently, the issue relating to Rs. 25,000/- stood settled through the employer’s proceedings. The Tribunal held that the same amount could not again be added in the assessee’s hands and deleted the addition. The appeal was accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This is an appeal by the assessee against order dated 30.07.2025 of learned Commissioner of Income Tax (Appeals) [in short `CIT(A)], Jaipur-5 for the Assessment Year 2018-19.
2. The solitary issue arising for consideration relates to addition of an amount of Rs. 25,000/- made by the Assessing Officer and confirmed by learned First Appellate Authority.
3. Briefly stated, the assessee is a resident individual. A search and seizure operation under section 132 of the Income Tax Act, 1961 (in short ‘the Act’) was carried out in case of Rajlakshmi Group on 19-2-2019 and the assessee was also covered under the said search operation. Based on such search operation, proceedings under section 153A of the Act was initiated in case of the assessee. As observed by the Assessing Officer, in course of search operation, one diary was seized from the residence of the assessee which, as per the statement of the assessee, contained unaccounted expenses. On further analysis of the diary, the Assessing Officer noted that on the credit side of the account, there is receipt entry of Rajlakshmi Industries. When this was confronted to the assessee, he stated that the amounts were taken from M/s Rajlakshmi Industries towards expenses. Whereas, no contra entry was found in the books of M/s Rajlakshmi Industries. Thus, based on the aforesaid facts, the Assessing Officer treated the amount of Rs. 25,000/- as unexplained cash credit under section 68 of the Act and added back at the hands of the assessee. Though, the assessee contested the aforesaid addition before learned First Appellate Authority, however, the addition was confirmed.
4. We have considered rival submissions and perused the materials on record. It is the say of the assessee before us that in an application filed for settlement before the Interim Board, the employer firm, M/s Rajlakshmi Industries, has offered additional income and the amount of Rs.25,000/- stated to be received by the assessee forms part of the same. Thus, she submitted. it cannot be added again at the hands of the assessee.
5. Learned Departmental Representative (DR) relied upon the observations of the Departmental Authorities.
6. Having considered rival submissions and perused the materials on record, we find that based on the entries made in a diary seized from the assessee, the Assessing Officer has made addition of Rs. 25,000/-. However, in the said statement, the assessee had categorically stated that the amount was received from the employer, Rajlakshmi Industries, for incurring petty expenses on behalf of the employer. It is further revealed from the materials on record that the employer, M/s Rajlakshmi Industries, had made an application before Income Tax Settlement Commission, Principal Bench, New Delhi, offering certain additional income. The amount of Rs. 25,000/- forms part of that. The Settlement Commission/ Interim Board has passed an order on the application filed by the employer. Thus, the issue relating to addition of Rs.25,000/- stands settled by the virtue of decision of the Interim Board on the application for settlement made by M/s Rajlakshmi Industries. That being the case, the addition made at the hands of the assessee cannot survive. Accordingly, the same is deleted. The appeal is allowed.
7. In the result, appeal is allowed.
Order Pronounced in the open court on 07/08/2026.
