ABUZAR BAIG MIRZA,THANE V. ASSESSING OFFICER, MUMBAI

ITA 5849/MUM/2025

AI Insights

The case involves Abuzar Baig Mirza, who appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, which confirmed an addition of 15,70,80,110 as unexplained income under Section 69A of the Income-tax Act, 1961. The addition was based on a perceived discrepancy between the credit entries in the assessee's bank statement and the turnover reported in his profit and loss account for the assessment year 2017-18. The Tribunal found that the assessee had provided a detailed reconciliation of bank credits versus turnover, which was not adequately considered by the lower authorities. Consequently, the Tribunal remitted the matter back to the Jurisdictional Assessing Officer for a thorough verification of the provided data.

• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2017-2018
• Appeal Filed On: 23-09-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: VIMAL PUNMIYA
• Keywords: Business income; Opportunity of being heard; Additional evidence; Unexplained cash credit; Principle of natural justice
• Section: 147; 148; 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 5849/MUM/2025 Assessment Year: 2017-18 Abuzar Baig Mirza 901, The Corporate Park, Bhairav Lakhani Building, Sector-18, Navi Mumbai, Thane-400705 PAN: ABZPB2426P vs Assessing Officer Circle 17(1), Mumbai-400051 Appellant Respondent Present for: Appellant by : Shri Vimal Punmiya, CA Respondent by : Shri Rajesh Kumar Yadav, CIT DR Date of Hearing : 23.03.2026 Date of Pronouncement : 24.03.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER This appeal filed by the assessee is arising out of the order of CIT(A), National Faceless Appeal Centre, Delhi vide order nos. ITBA/ NFAC/ S/ 250/ 2025-26/ 1079827876(1) dated 21.08.2025 against the assessment order passed u/s 147 r.w.s 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.05.2023 for A.Y. 2017-2018. 2. Grounds taken by the assessee are as under: Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 2 SR No Relevant section Issue Grounds of Appeal 1. Sec 69A Unjustified Addition under Section 69A That on facts and in law, the Ld. AO erred in confirming the addition of ₹15,70,80,110/- as unexplained income u/s 69A, ignoring that the entire difference represented duly explained trade transactions, being opening balances of sundry debtors and fixed deposits, which are duly reflected in books of accounts. 2. Sec 271AAC Penalty On the facts and circumstances of case and in law, Ld Assessing officer erred in initiating penalty u/s 271AAC. 3. Sec 234A, 234B, 234C and 234D Interest On the facts and circumstances of case and in law, Ld. Assessing officer erred in levying interest u/s 234A, 234B, 234C and 234D of the Income Tax Act, 1961 4. Sec 4 Violation of principle of natural justice The Ld. AO erred in passing assessment order without providing sufficient opportunity of being heard. 5. Sec 4 General The appellant may Add Modify Delete any grounds of appeal before the completion of hearing before the ITAT Appeals. 2.1. The sole issue involved in the present appeal is in respect of addition of Rs.15,70,80,110/- as unexplained income u/s 69A on account of difference between the credit entries appearing in the bank statement and the turnover reported by the assessee in its profit and loss account. 3. Brief facts of the case are that assessee is engaged in the business of processing and export of buffalo meat in the proprietor concern in the name and style of M/s. Mirza Agro Foods. Return of income was filed Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 3 on 30.11.2017, reporting total income at Rs.69,33,680/-. Ld. AO received information from the Office of ADIT(Inv.), Kalaburgai, Gulbarga, Karnataka, wherefrom it was observed that total credits in the bank account no. 69005500093 with ICICI bank is Rs.41.41 crores out of which Rs.6.26 crores are remittance from UAE for the goods. Assessee had shown turnover of Rs.29.22 crores whereas the total credits in the bank account amounts to Rs.41.41 crores. Hence, there exists unexplained cash credits in the bank account of the assessee of Rs.12.19 crores. This information led to invocation of proceedings u/s 148 r.w.s 147 of the Act for which notice u/s 148 was issued on 04.07.2022. Assessee filed his return in response to the said notice with the same total income as originally reported by him. 3.1. For the difference pointed by the ld. AO, assessee furnished a reconciliation statement which is produced in the impugned assessment order itself in para 7. The same is extracted below for ready reference: Particulars Amount (Rs.) Opening Balance of Debtors 7,85,96,930.00 ADD Sales During the Year 29,22,53,405.69 ADD Commission Income 1,86,250.00 Total 37,10,36,585.69 LESS Amount Received During the Year 33,09,15,550.00 Amount Outstanding as on 31.3.2017 4,01,21,035.69 3.2. Assessee explained each of the entries in the reconciliation statement, part of which is reproduced in the assessment order. Ld. AO Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 4 made a reference to the balance-sheet for the immediately preceding previous year as on 31.03.2016 to point out that there is no opening balance of debtors and what is reflected in the said balance-sheet is the amount of Rs.61,10,058.84 under the head with “Sundry Creditors for Goods” and amount of Rs.23,66,648/- under the head “Sundry Creditors for Expenses”. Reporting of these figures was explained by the assessee corroborating with certain documents whereby it was contended that assessee had reported the net figure of sundry debtors and creditors both, for goods and expenses and, therefore, this led to an anomaly in the understanding of the reporting so made by him. For this, reference was made by the ld. Counsel to the list of sundry creditors and debtors as on 31.03.2016 to demonstrate how the net figure of Rs.61,10,058.84/- was ultimately reported in the balance- sheet. The said details are extracted below for ready reference: Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 5 3.3. In order to show the sundry debtors and creditors separately in the balance-sheet, assessee re-casted his balance-sheet and furnished the same duly signed by the Chartered Accountant (Auditor). The same is placed in the paper book at page 97 and is also extracted below for ready reference: Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 6 4. Ld. AO after considering the submissions made by the assessee took the view that reporting the net balance of sundry debtors and creditors by the assessee is only an afterthought. He thus, rejected the same and completed the assessment by making an addition of the difference amount of Rs.15,70,80,110/- u/s 69A of the Act. The addition made by Ld. AO is summarized as under: Particulars Amount (₹) Authority Total Bank Credits 41,28,01,055 AO Turnover as per Books 29,22,53,406 (approx) Assessee Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 7 Particulars Amount (₹) Authority Difference considered ~12.19 Crore AO Addition u/s 69A 15,70,80,110 AO 5. Assessee went in appeal before the ld. CIT(A) and reiterated the submissions so made. Ld. CIT(A) observed that Assessing Officer had confronted to the assessee about the fact from the balance-sheet as on 31.03.2016 that the amount reflected as sundry creditors was Rs.61,10,058/- and not Rs.84,76,706/-. Keeping this anomaly in perspective, ld. AO proceeded to make the addition as observed by ld. CIT(A). He further noted that assessee had furnished a certificate from the Chartered Accountant recasting with sundry creditors and sundry debtors closing balances as on 31.03.2016. According to him, on this submission, since assessee did not make an application for admission of additional evidence in terms of Rule 46A of the Income-tax Rules, 1962 (the Rules). He treated the same as inadmissible. He thus, concurred with the findings of the ld. AO and sustained the addition so made, dismissing the appeal of the assessee. Aggrieved, assessee is in appeal before the Tribunal. 6. Before us, ld. Counsel for the assessee reiterated the factual position. A paper book containing 153 pages along with a written submission is placed on record to justify the claim made by the assessee. Ld. Counsel emphasized on the fact that ld. AO has misunderstood the financial data placed on record and proceeded to make the addition for all the credit entries appearing in the bank statement which at the threshold is untenable. According to him, ld. AO Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 8 has presumed that the difference between bank credits and turnover represents undisclosed income without appreciating that turnover represents only sales made during the year, whereas bank credits include gross inflows. Assessee had furnished reconciliation statements to bridge the gap between the accounting figures and bank transactions so as to eliminate the presumption and assumption made by the ld. Assessing Officer, treating the difference as undisclosed income. 6.1. According to the ld. Counsel, difference has arisen on account of following five different nature of transactions (i) opening debtors, (ii) fixed deposit transfers, (iii) interest income, (iv) reversal entries, (v) miscellaneous receipts. 6.2. According to the ld. Counsel, accounting records and financial statement accurately reflect the business income and turnover of the assessee. These have been prepared in accordance with the standard accounting practice and is subject to audit. Assessee maintains proper books of accounts and the same have not been rejected by the ld. AO. Assessee has furnished reconciliation of bank credits versus turnover forming part of the written submission made before us which is reproduced below: Particulars Amount (₹) Nature Explanation Paper Book Page No. Total ICICI Bank Credits 41,28,01,055 Gross credits As per bank statement 83-94 Less: Opening Debtors (Realisation) 7,86,92,245 Non-income Recovery of past sales 97 Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 9 Particulars Amount (₹) Nature Explanation Paper Book Page No. Less: FD Sweep Transfers 7,72,05,494 Transfer Internal bank movement 100 Less: Interest on FD 75,751 Income separately shown Already taxed 101 Less: RTGS Return Entry 20,00,000 Reversal Not income 102 Less: Excess payment reversal 26,00,000 Adjustment Creditor refund 103-107 Less: Misc receipts 95,190 Commission Not sales, but offered to tax 108 Balance: Trade Receipts 25,21,32,375 Business receipts Current year receipts Balance: Trade Receipts 25,21,32,375 Business receipts in bank Add: Closing Debtors 4,01,21,031 Accrual Not yet received 7 Net Sales (P&L) 29,22,53,406 Turnover Matches audited accounts 109 6.3. Ld. Counsel has also furnished the balance-sheet as on 31.03.2016 which was prepared originally with the reporting of net balance of sundry creditors and debtors. The same is also extracted below for ready reference: Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 10 BALANCE SHEET AS ON 31.03.2016 7. Per contra, ld. CIT DR vehemently argued to support the orders of the authorities below. He referred to para 6 of the order of ld. CIT(A) to point out the observations made by him both, on the netting of the sundry creditors and debtors balances and the submission of additional evidence in the form of certificate from a Chartered Accountant without complying with the provisions of Rule 46A. According to him, the explanations given by the assessee as rightly observed by ld. AO are an afterthought and, therefore, the addition so made ought to be sustained. Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 11 8. We have heard both the parties and perused the material on record. Assessee has explained his case by furnishing the reconciliation statement, though in piecemeal, as noted in the impugned assessment order by the ld. AO. The entire issue has arisen on account of reporting adopted by the assessee in the immediately preceding previous year in his balance-sheet as on 31.03.2016 wherein netting was done for the debit and credit balances of sundry debtors and creditors which is not the generally accepted practice of reporting. In the year under consideration, assessee has reported the sundry creditors and sundry debtors balances separately in terms of standard reporting practices and hence, led to the understanding construed differently by the authorities below, resulting in the addition in the hands of the assessee. 8.1. Assessee has placed on record plethora of documents and details corroborated by the documentary evidences and has summarized the same in the form of reconciliation statement extracted above. We are in agreement with the contention made by the ld. Counsel that reconciliation bridges the gap between the accounting figures and the bank transactions to eliminate any presumption or assumption. The manner in which the assessee has submitted the reconciliation of bank credits versus turnover as extracted above explains the case of the assessee. However, since this form of detailing and data was not available before the authorities below. In the fitness of the case, we find it appropriate to remit the matter back to the file of ld. Jurisdictional Assessing Officer (JAO) with the limited purpose of verification of the data reported in the reconciliation statement with the corroborative documentary evidence and to arrive at the conclusion based on this verification for granting relief to the assessee and keeping the aforesaid observations in perspective. Assessee is directed to be diligent in attending the hearings so fixed and to make all the required Printed from counselvise.com ITA No.5849/Mum/2025 Abuzar Baig Mirza A.Y. 2017-18 12 submissions to explain his case. Accordingly, ground raised by the assessee in this regard is allowed for statistical purposes. 9. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 24 March, 2026. Sd/- Sd/- Sd/- (Anikesh Banerjee) (Girish Agrawal) Judicial Member Accountant Member Dated: 24 March, 2026 Ankit, Sr.P.S Copy to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER, (Dy./Asst.Registrar) ITAT, Mumbai Printed from counselvise.com "