AAKASH RAMESH KOTHARI,MUMBAI V. ITO WARD 20(1)(1), MUMBAI

ITA 4057/MUM/2025

AI Insights

The case involves Aakash Ramesh Kothari, the appellant, contesting an order from the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, which confirmed an addition of Rs 40,41,500 under section 69A of the Income Tax Act, 1961. This addition was based on alleged unexplained cash deposits during the demonetization period. The appellant argued that the CIT(A) dismissed the appeal without proper hearing, relying on assumptions and estimations rather than concrete evidence. The Tribunal found that the CIT(A) had not provided adequate opportunity for the appellant to present his case, leading to the decision to remit the case back for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793195 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2017-2018
• Appeal Filed On: 07-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADITYA RAI
• Assessee Lawyers: AMIT JHAVERI
• Keywords: Set aside; Income from undisclosed sources; Principle of natural justice

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J(SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 4057/MUM/2025 Assessment Year: 2017-18 Aakash Ramesh Kothari, 258, Bapty Road, 3rd floor, Room No. 7, Deval Bhuvan, Mumbai-400008. Vs. ITO Ward 20(1)(1), Room No. 303, Piramal Chambers, Lalbaug, Mumbai-400012. PAN NO. AWVPK 0519 P Appellant Respondent Assessee by : Mr. Amit Jhaveri, CA Revenue by : Mr. Aditya Rai, Sr. DR Date of Hearing : 05/08/2025 Date of pronouncement : 23/09/2025 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against order dated 11.04.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising grounds as reproduced as under: Ground No 1: Opportunity of Hearing :  The Ld. CIT(A) not given proper opportunity of hearing before dismissing the said appeal. Only 1 notice given by the LD. Printed from counselvise.com CIT(A) that after 5 years and 2 months on the IT portal in the busy month of March. No Physical notice given by the Ld. CIT(A), NFAC.  No second opportunity given by the Ld. CIT(A) and simply dismissed the appeal which is unjustified and unwarranted. Ground No 2: Addition u/s 69A for cash deposit during demonetization worth Rs 40,41,500/  The CIT(A), NFAC not justified in confirming the ad account of cash deposits out of cash withdraw from the bank account.  The CIT(A), NFAC confirmed the addition only on the basis of assumption presumption, estimation and own imagination of the Ld. ITO Wd 20(1)(1) and without any base or specific reasons. The Ld. ITO Wd 20(1)(1) made own imaginary story that withdrawn money has been utilised for investment purpose & unexplained income deposited in bank account is total unjustified and unwarranted  The CIT(A), NFAC not considered the fact that there that cash deposited is not withdrawn from the bank.  The CIT(A), NFAC not considered the facts that government has allowed to deposit the old currencies upto 31.12.2016 & assessee has deposit the cash before due date.  The CIT(A), NFAC not justif cash withdrawn by the assessee has been utilized for expenses or investment. Only on the basis of own theories without any concrete evidence simply dismissing the appeal is not justified.  The Ld. ITO WD 20(1)(4) had taken disallowance of deposits and the same is confirmed by CIT(A), NFAC as a date of deposits. If a deposit was made on 09.11.2016 then he intend to allow but assessee has deposited on Dec 2016 so disallow. So, a reason for disallowance itself 2. At the threshold, the learned counsel for the assessee assailed the impugned order on the ground that the learned CIT(A) failed to afford proper and adequate opportunity of hearing before dismissing the appeal. It was submitted that only a solitary notice was issued after an inordinate lapse of nearly five years and two months, on 17.03.2025, and thereafter the appeal was disposed of Aakash Ramesh Kothari ITA No. 4057/MUM/2025 CIT(A) that after 5 years and 2 months on the IT portal in the busy month of March. No Physical notice given by the Ld. CIT(A), NFAC. o second opportunity given by the Ld. CIT(A) and simply dismissed the appeal which is unjustified and unwarranted. Ground No 2: Addition u/s 69A for cash deposit during demonetization worth Rs 40,41,500/- The CIT(A), NFAC not justified in confirming the ad account of cash deposits out of cash withdraw from the bank account. The CIT(A), NFAC confirmed the addition only on the basis of assumption presumption, estimation and own imagination of the Ld. ITO Wd 20(1)(1) and without any base or specific easons. The Ld. ITO Wd 20(1)(1) made own imaginary story that withdrawn money has been utilised for investment purpose & unexplained income deposited in bank account is total unjustified and unwarranted The CIT(A), NFAC not considered the fact that there that cash deposited is not withdrawn from the bank. The CIT(A), NFAC not considered the facts that government has allowed to deposit the old currencies upto 31.12.2016 & assessee has deposit the cash before due date. The CIT(A), NFAC not justified in making assumptions that the cash withdrawn by the assessee has been utilized for expenses or investment. Only on the basis of own theories without any concrete evidence simply dismissing the appeal is not justified. The Ld. ITO WD 20(1)(4) had taken the criteria for disallowance of deposits and the same is confirmed by CIT(A), NFAC as a date of deposits. If a deposit was made on 09.11.2016 then he intend to allow but assessee has deposited on Dec 2016 so disallow. So, a reason for disallowance itself is debatable. At the threshold, the learned counsel for the assessee assailed the impugned order on the ground that the learned CIT(A) failed to afford proper and adequate opportunity of hearing before dismissing the appeal. It was submitted that only a solitary notice was issued after an inordinate lapse of nearly five years and two months, on 17.03.2025, and thereafter the appeal was disposed of Aakash Ramesh Kothari 2 ITA No. 4057/MUM/2025 CIT(A) that after 5 years and 2 months on the IT portal in the busy month of March. No Physical notice given by the Ld. o second opportunity given by the Ld. CIT(A) and simply dismissed the appeal which is unjustified and unwarranted. Ground No 2: Addition u/s 69A for cash deposit during The CIT(A), NFAC not justified in confirming the addition on account of cash deposits out of cash withdraw from the bank The CIT(A), NFAC confirmed the addition only on the basis of assumption presumption, estimation and own imagination of the Ld. ITO Wd 20(1)(1) and without any base or specific easons. The Ld. ITO Wd 20(1)(1) made own imaginary story that withdrawn money has been utilised for investment purpose & unexplained income deposited in bank account is The CIT(A), NFAC not considered the fact that there is no proof that cash deposited is not withdrawn from the bank. The CIT(A), NFAC not considered the facts that government has allowed to deposit the old currencies upto 31.12.2016 & ied in making assumptions that the cash withdrawn by the assessee has been utilized for expenses or investment. Only on the basis of own theories without any concrete evidence simply dismissing the appeal is the criteria for disallowance of deposits and the same is confirmed by CIT(A), NFAC as a date of deposits. If a deposit was made on 09.11.2016 then he intend to allow but assessee has deposited on Dec 2016 so disallow. So, a reason for At the threshold, the learned counsel for the assessee assailed the impugned order on the ground that the learned CIT(A) failed to afford proper and adequate opportunity of hearing before dismissing the appeal. It was submitted that only a solitary notice was issued after an inordinate lapse of nearly five years and two months, on 17.03.2025, and thereafter the appeal was disposed of Printed from counselvise.com by order dated 11.04.2025 without granting any further opportunity. It was contended that such a course of action was violative of the principles of natural justice and, therefore, the appeal deserves to be restored to the file of the learned CIT(A) for fresh adjudication. 3. We have heard rival submissions and perused the material placed on record. The findings of the learned C culminated in the confirmation of the addition of under section 69A of the Act, are reproduced “1. This appeal is filed against the order of the ITO, Ward20(1)(1), Mumbai passed u/s143(3) of the I T Act, 1961 dated.21.12 2. The grounds of appeal object u/s.69A of the IT Act. 1961. The assessee had withdrawn large amounts of cash on various dates in the month of August 2016. Further, as mentioned in the showcause noticeissued by the AO, cash was deposited on 05/12/16 (7,30,000), (7,20,000), 07/12/16 (Rs.4,90,000), 06/12/2016 (Rs.8,90,000), 13/12/2016 (4,50,000), 19/12/16 14/12/2016 (6,81,500) and 30/12/16 (80,000). A perusal of the bank statement reveals that there is no consistency in the demonetisation and post have been received on various dates from Auric Bullion and Jewellers followed by large cash withdrawals in the month of August 2016. No cogent reason has be person would not keep on withdrawing cash in spite of having large amount of cash in hand without any plausible reason. The onus is on the assessee to prove the recycling of fund and that the cash withdrawn was not utilised for The assessee failed to discharge this burden. Since the entire cash withdrawn during the early part of the year was not deposited, in all probability the cash withdrawn during the period August 2016 to October 2016 was also utilised It is also seen that the cash of Rs. 40,41,500/ immediately after demonetisation but was deposited very late starting from 05/12/2016 to as late as 30/12/2016, ie. over a Aakash Ramesh Kothari ITA No. 4057/MUM/2025 by order dated 11.04.2025 without granting any further opportunity. It was contended that such a course of action was ve of the principles of natural justice and, therefore, the appeal deserves to be restored to the file of the learned CIT(A) for We have heard rival submissions and perused the material placed on record. The findings of the learned C culminated in the confirmation of the addition of under section 69A of the Act, are reproduced as under: 1. This appeal is filed against the order of the ITO, Ward20(1)(1), Mumbai passed u/s143(3) of the I T Act, 1961 dated.21.12 2. The grounds of appeal object to addition of Rs. 4041500/ u/s.69A of the IT Act. 1961. The assessee had withdrawn large amounts of cash on various dates in the month of August 2016. Further, as mentioned in the showcause noticeissued by the AO, ash was deposited on 05/12/16 (7,30,000), (7,20,000), 07/12/16 (Rs.4,90,000), 06/12/2016 (Rs.8,90,000), 13/12/2016 (4,50,000), 19/12/16 14/12/2016 (6,81,500) and 30/12/16 (80,000). A perusal of the bank statement reveals that there is no consistency in the withdrawal and deposit pattern in pre demonetisation and post-demonetisation period. Large amounts have been received on various dates from Auric Bullion and Jewellers followed by large cash withdrawals in the month of August 2016. No cogent reason has been offered for the same. A person would not keep on withdrawing cash in spite of having large amount of cash in hand without any plausible reason. The onus is on the assessee to prove the recycling of fund and that the cash withdrawn was not utilised for expenses or investment. The assessee failed to discharge this burden. Since the entire cash withdrawn during the early part of the year was not deposited, in all probability the cash withdrawn during the period August 2016 to October 2016 was also utilised for the expenses or investment. It is also seen that the cash of Rs. 40,41,500/- was not immediately after demonetisation but was deposited very late starting from 05/12/2016 to as late as 30/12/2016, ie. over a Aakash Ramesh Kothari 3 ITA No. 4057/MUM/2025 by order dated 11.04.2025 without granting any further opportunity. It was contended that such a course of action was ve of the principles of natural justice and, therefore, the appeal deserves to be restored to the file of the learned CIT(A) for We have heard rival submissions and perused the material placed on record. The findings of the learned CIT(A), which culminated in the confirmation of the addition of ₹40,41,500/- as under: 1. This appeal is filed against the order of the ITO, Ward20(1)(1), Mumbai passed u/s143(3) of the I T Act, 1961 dated.21.12.2019. Rs. 4041500/- u/s.69A of the IT Act. 1961. The assessee had withdrawn large amounts of cash on various dates in the month of August 2016. Further, as mentioned in the showcause noticeissued by the AO, ash was deposited on 05/12/16 (7,30,000), (7,20,000), 07/12/16 (Rs.4,90,000), 06/12/2016 (Rs.8,90,000), 13/12/2016 (4,50,000), 19/12/16 14/12/2016 (6,81,500) and 30/12/16 (80,000). A perusal of the bank statement reveals that there is no withdrawal and deposit pattern in pre- demonetisation period. Large amounts have been received on various dates from Auric Bullion and Jewellers followed by large cash withdrawals in the month of en offered for the same. A person would not keep on withdrawing cash in spite of having large amount of cash in hand without any plausible reason. The onus is on the assessee to prove the recycling of fund and that expenses or investment. The assessee failed to discharge this burden. Since the entire cash withdrawn during the early part of the year was not deposited, in all probability the cash withdrawn during the period August 2016 for the expenses or investment. not deposited immediately after demonetisation but was deposited very late starting from 05/12/2016 to as late as 30/12/2016, ie. over a Printed from counselvise.com span of 26 days. The very act of cash on various dates as mentioned above clearly prove beyond doubt that either the same was his unaccounted income or he had been involved in converting the demonetized currency into legal tender. The addition of Rs.4041500 3.1 On a careful consideration of the matter, we find that the impugned order of the learned CIT(A) does not contain any discussion with regard to the issuance of notices by him or the alleged non-compliance on the part of the assessee. The produced before us demonstrates that the assessee was not afforded adequate opportunity to substantiate its case. The denial of sufficient time and opportunity strikes at the very root of the principles of natural justice. It is trite law that justi be done but must manifestly appear to have been done. The right to be heard before an adverse decision is a basic facet of fair procedure. 3.2 In these circumstances, and in order to advance the cause of substantial justice, we deem it fit of the learned CIT(A) on the issue in dispute and remit the matter back to his file for fresh adjudication. The learned CIT(A) shall grant due opportunity to the assessee to file its submissions and evidences, and thereaf At the same time, the assessee is directed to extend full co operation and ensure due compliance with the notices issued, without seeking unnecessary adjournments. Aakash Ramesh Kothari ITA No. 4057/MUM/2025 span of 26 days. The very act of the assessee in depositing the cash on various dates as mentioned above clearly prove beyond doubt that either the same was his unaccounted income or he had been involved in converting the demonetized currency into legal tender. The addition of Rs.4041500 is confirmed.” On a careful consideration of the matter, we find that the impugned order of the learned CIT(A) does not contain any discussion with regard to the issuance of notices by him or the compliance on the part of the assessee. The produced before us demonstrates that the assessee was not afforded adequate opportunity to substantiate its case. The denial of sufficient time and opportunity strikes at the very root of the principles of natural justice. It is trite law that justice must not only be done but must manifestly appear to have been done. The right to be heard before an adverse decision is a basic facet of fair In these circumstances, and in order to advance the cause of substantial justice, we deem it fit and proper to set aside the order of the learned CIT(A) on the issue in dispute and remit the matter back to his file for fresh adjudication. The learned CIT(A) shall grant due opportunity to the assessee to file its submissions and evidences, and thereafter decide the appeal in accordance with law. At the same time, the assessee is directed to extend full co operation and ensure due compliance with the notices issued, without seeking unnecessary adjournments. Aakash Ramesh Kothari 4 ITA No. 4057/MUM/2025 the assessee in depositing the cash on various dates as mentioned above clearly prove beyond doubt that either the same was his unaccounted income or he had been involved in converting the demonetized currency into legal On a careful consideration of the matter, we find that the impugned order of the learned CIT(A) does not contain any discussion with regard to the issuance of notices by him or the compliance on the part of the assessee. The record produced before us demonstrates that the assessee was not afforded adequate opportunity to substantiate its case. The denial of sufficient time and opportunity strikes at the very root of the ce must not only be done but must manifestly appear to have been done. The right to be heard before an adverse decision is a basic facet of fair In these circumstances, and in order to advance the cause of and proper to set aside the order of the learned CIT(A) on the issue in dispute and remit the matter back to his file for fresh adjudication. The learned CIT(A) shall grant due opportunity to the assessee to file its submissions and ter decide the appeal in accordance with law. At the same time, the assessee is directed to extend full co- operation and ensure due compliance with the notices issued, Printed from counselvise.com 4. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 23/09/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Aakash Ramesh Kothari ITA No. 4057/MUM/2025 In the result, the appeal of the assessee is allowed for statistical purposes. ounced in the open Court on 23/09/2025. Sd/ (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Aakash Ramesh Kothari 5 ITA No. 4057/MUM/2025 In the result, the appeal of the assessee is allowed for /09/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "