AMIT PRAKASH KHANGAL,THANE V. INCOME TAX OFFI, THANE

ITA 4180/MUM/2025

AI Insights

The case revolves around an appeal by Amit Prakash Khangal against the orders of the Assessing Officer and the CIT(A), which added a total of INR 19,49,792 to his income as unexplained credit under Section 68 of the Income Tax Act, 1961. The additions were related to the funds used for purchasing a property valued at INR 21,00,000. The Tribunal examined the documents and explanations provided by the assessee, which included a housing loan from his employer, withdrawals from fixed deposits, and cash contributions from his father and brother. The Tribunal found the explanations and documents satisfactory, leading to the allowance of the appeal and deletion of the additions made by the lower authorities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713325 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Unexplained cash credit; Salary income; Source of fund; Assessment record
• Section: 147; 148; 144; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.4180/MUM/2025 (Assessment Year 2016-2017) Amit Prakash Khangal 301, D. Ramchandra Heights, Tisgaon Road, Tisgaon Naka, Ramchandra N., Kalyan (East), Thane - 421306. Maharashtra [PAN:BXHPK0509D] …………. Appellant Income Tax Officer Ward 1(1), Thane Qureshi Mansion, Gokhale Road, Thane – 400602. Maharashtra Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Ms. Aakriti Seth Shri Surendra Mohan Date Conclusion of hearing Pronouncement of order : : 30.07.2025 31.07.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 25/04/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 11/03/2022, passed under Section 147 read with Section 144 read with Section 144B of the Act for the Assessment Year 2016-2017. 2. The Assessee has raised following grounds of appeal : “1. The Learned Assessing Officer has not served the notice under section 148 of the Income Tax Act, 1961 in proper time. The Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 2 assessee has not been in receipt of the notice under section 148 of the Income Tax Act, 1961. Hence the assessment proceedings are bad in law and liable to be quashed since the notice under section 148 of the Income Tax Act, 1961 has not been served in the due course of time. We pray before your honor to give the due directions of the Learned Assessing Officer to quash the said assessment proceedings and delete the impugned demand. 2. The learned Assessing Officer has been unjust in adding to the returned income an amount of INR 800000 under section 68 of the Income Tax Act, 1961 as unexplained credited, which is the housing loan availed by the aggrieved assessee to purchase the house property. We pray before your honor to delete the impugned addition of INR 800000 and provide relief to the assessee 3. The learned Assessing Officer has been unjust in adding to the returned income an amount of INR 503992 under section 68 of the Income Tax Act. 1961 as unexplained credited, which are amounts withdrawn by the assessee from his own account for payments towards purchase of the house property. We pray before your honor to delete the impugned addition of INR503992 and provide relief to the assessee. 4. The learned Assessing Officer has been unjust in adding to the returned income an amount of INR 305600 under section 68 of the Income Tax Act, 1961 as unexplained credited, which are amounts advanced by the brother of the assessee to purchase the house property. We pray before your honor to delete the impugned addition of INR 305600 and provide relief to the assessee. 5. The learned Assessing Officer has been unjust in adding to the returned income an amount of INR 335400 under section 68 of the Income Tax Act, 1961 as unexplained credited, which are amounts advances by the father of the assessee to purchase the house property. We pray before your honor to delete the impugned addition of INR 335400 and provide relief to the assessee 6. The learned assessing officer has been unjust in disallowing a claim of Rs. 4800 under section 10(13) of the Income Tax Act, 1961 which was due to the assessee as per the form 16 issued by the employer. We pray before your honor to allow the said deduction and provide relief to the assessee.” Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 3 3. The relevant facts in brief are that the Assessee is an individual working with the Maharashtra Mantralaya Credit Co-op Society. For the Assessment Year 2016-2017, Assessee filed return of income on 18/04/2017 declaring income of INR,2,43,930/-. Reassessment proceeding were initiated in the case of the Assessee on the basis of information received by the Assessing Officer to the effect that the Assessee has purchased immovable property for a sale consideration of INR.20,93,000/-. During the re-assessment proceedings the Assessee was asked to explain the source of funds used for purchasing the immovable property. In response the Assessee vide reply dated 28/02/2022 made the following submission: “viii. Please note in case of noncompliance the case will be decided on merit as per documents available on record. In compliance of the above notice assessee furnished written reply on 28.02.2022 along with attachments, the contents of reply reproduce as under:- \"With reference to the notice dated 13.01.2022, I have to state to your good self as under: 1. l' am employed with The Maharashtra Mantralaya Cooperative Credit Society Limited. My employer is in the business of running and managing a cooperative credit society in the State Of Maharashtra for the Class 3 and Class 4 employees of State Government of Maharashtra. 2. Re Point No. 2: Please find a copy of my Agreement for purchase of the said residential property. The property was purchased for an amount of Rs. 21,00,000/- The stamp duty and registration charges are duly paid. The said amount was paid by way of loan of Rs. 8,00,000/- from my employer and the balance from my personal savings and by my father Mr. Prakash Khangal and by my brother Mr Ajit Khangal in cash. My father and my brother withdrew amounts from their savings account and handed over the cash to me for the Purchase of the Flat. Detailed list with amounts (proof attached) is given below in point no 6. The builder M/s Atharva Developers had asked me to give cash as a part of my Purchase Agreement of Rs, 21,00,000/ Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 4 The amount of cash paid to the builder is from my known source of income and every amount has been withdrawn from my savings bank account and from my brothers savings bank account and my fathers savings bank account and paid to the developer. 3. Re Point No. 3: An amount of Rs. 8,00,000/- was taken as a loan from The Maharashtra Mantralaya Cooperative Credit Society Limited, my employer. The said amount was directly paid to the seller of the property from whom the property was purchased by me. Please find attached a sanction letter from my employer towards the loan. The cheque was in the name of the sellor of the property as is the practice in the State of Maharashtra. Hence the loan amount of Rs 8,00,000/-is not reflected in my bank statement. 4. Re Point No. 4: As per the cash deposits of Rs. 49,500/- in my Bank of Maharashtra Savings account are from the withdrawals made from my salary account. My salary is deposited in the account with The Maharashtra Mantralaya Cooperative Credit Society Limited and I withdrew from cooperative society account and deposit in my Bank of Maharashtra savings account This clearly evident from the pass book submitted for the FY 2015-16 of my salary account with The Maharashtra Mantralaya Cooperative Credit Society Limited. 5. Re Point No 5: The amount of my monthly remuneration is credited to my savings account with the Maharashtra Mantralaya Cooperative Credit Society Limited, which is my salary account and hence there is no credit of salary in my other bank account. Please find attached a copy of my salary account savings bank account with The Maharashtra Mantralaya Cooperative Credit Society Limited. Please find attached a copy of my Form 16 digitally signed by my employer. There is no physical signature on Form 16 as It is digitally signed by the authorized signatory 6. Re Point No 6: The total purchase consideration of the property was as follows Total Purchase Value 21,00,000 Loan from my employer The Maharashtra Mantralaya Coop Credit Society Ltd 8,00,000 Paid by my Father Mr Prakash Khangal vide chq number 020093 from AXIS Bank dated 30.04.2015 1,50,000 Cash withdrawn from my cooperative credit 5,09,000 Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 5 society salary account and paid to developer in cash (Proof of pass book attached) Withdrawal In cash by my brother Mr Ajit Prakash Khangal from his savings account in cash(Proof of pass book attached) 3,05,600 Friendly Loan taken from father Mr Prakash Khangal cash (Loan agreement attached as proof) 3,35,400 The developer had asked us to pay the amount in cash towards Purchase of Flat I withdrew on various dates from my salary account of cooperative credit society where I am employed out of my past savings and paid the above sum of Rs. 5,09,000/- in cash to the developer Also my brother Mr. Ajit Khangal helped me by withdrawing from his savings account an amount of Rs. 3,05.600/- (proof of his withdrawal from saving account attached) which was given to the developer as a part of the Purchase of flat Also my father Mr. Prakash Khangal helped me by withdrawing from his savings account an amount of Rs. 3,35,400/- (proof of loan agreement attached) which was given to the developer as a part of the Purchase of flat. All the amounts paid in cash are forming part of Rs. 21,00,000/- which is the Purchase Value of the agreement and was out of my own sources and withdrawals from family members bank account to honour the Purchase Value of the flat The developer had asked to pay the amount in cash and we as a lower middle class family paid as for us it is forming part of the Purchase Value and I have withdrawn from my savings bank account for which I have submitted adequate proof of withdrawal 7. I have to humbly submit with folded hands that all the facts stated above by me are true and all the payments towards purchase consideration are from my salary income and from borrowings from my employer, The Maharashtra Mantralaya Cooperative Credit society Limited and from my father and from my brother. The stamp duty is paid and registration of documents is legally done on the agreement value of Rs. 21,00,000/- 8. Please take the above on record and oblige\". 4. The Assessee has also placed on record documents/details in support of the above contention. However, the Assessing Officer was Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 6 not convinced and therefore, proceed to make addition of INR.19,49,792/- [INR.8,00,000/- + INR.5,03,992/- + INR.3,05,600/- + INR.3,35,400/- + INR.4,800/-]. 5. Being aggrieved, the Assessee challenged the above additions of INR.19,49,792/- in appeal before the CIT(A). However the said appeal was dismissed by the Learned CIT(A) vide Order, dated 25/04/2025, since the Assessee had failed to respond to the notice of hearing issued by the CIT(A). 6. Being aggrieved, the Assessee has now preferred the present appeal before the Tribunal challenging the order passed by the CIT(A) on the grounds reproduced at Paragraph 2 above. 7. The Assessee reiterated the stand taken before the Assessing Officer and placed extensive reliance upon the detailed written submissions, dated 30/07/2025, placed at pages 1 to 9 of the paper-book and documents filed in support of the same at pages 1 to 85 of the paper-book. 8. Per contra Learned Departmental Representative relied upon the order passed by the Assessing Officer and submitted that the Assessee had failed to substantiate that the submissions made before the Assessing Officer by placing on record sufficient collaborative evidence. The Learned Departmental Representative, further submitted that the Assessee had failed to take advantage of the opportunities granted by the Learned CIT(A) during the appellate proceeding and therefore, no infirmity could be found with the order passed by the CIT(A) dismissing the appeal preferred by the Assessee. 9. In rejoinder, the Learned Authorized Representative for the Assessee submitted that all the relevant documents/details form part of the Paper Book filed by the Assessee (Page 10 to 85) were filed before Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 7 the Assessing Officer except for the Sanction Letter placed at Page No.59 to 61 of the Paper Book. Therefore, the material now being placed before the Tribunal formed part of the assessment record. 10. We have considered the rival submissions and have perused the material on record including the orders passed by authorities below and the documents placed as part of the Paper Book. On perusal of the same it become clear that Assessee had purchased immovable property for a sale consideration of INR.21,00,000/-. The Assessee had explained the source of the aforesaid purchase consideration was as under: (a) INR.8,00,000/- claimed by the Assessee to be loan taken by the Assessee from employer i.e. The Maharashtra Mantralaya Coop Credit Society Ltd. (b) INR.5,03,992/- being maturity amount in respect of following fixed deposits held by the Assessee Sr. No. FD Receipt No. Date of Maturity/Credit Amount INR 1. 38962 25/08/2015 2,32,492 2. 40884 26/08/2015 1,69,000 3. 40585 27/08/2015 1,02,500 Total 5,03,992 (c) INR.3,05,600/- being loan taken by Assessee from his brother which was in turned sourced by his brother from the maturity amount of the following two fixed deposits held by his brother: Sr. No. FD Receipt No. Date of Maturity/Credit Amount INR 1. 40861/62 03/09/2015 3,05,626 Total 3,05,626 (d) INR.3,35,400/- being loan taken by the Assessee from his father which was in turn sourced by the father from the from the withdrawals made by the father from his bank account between April 2014 to October 2015. Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 8 11. In support the Assessee had placed before the Assessing Officer the following documents forming part of the paper-book filed by the Assessee before the Tribunal: (a) Annexure 1 – Agreement for Sale and Sale Deed [Page No.10-58 of Paper Book] (b) Annexure 2 – Housing Loan confirmation letter, EMI Schedule and Bank Statement [Page No.59-63 of Paper Book] (c) Annexure 3 – Fixed Deposit Receipts of Mr. Amit Khangal [Page No.64-71 of Paper Book] (d) Annexure 4 – Fixed Deposit Receipts of Mr. Ajit Khangal [Page No.72-76 of Paper Book] (d) Annexure 5 – Letter of Arrangement and Bank Statements of Mr.Prakash Khangal [Page No.77-84 of Paper Book] (e) Annexure 6 – Form 16 of Mr. Amit Khangal [Page No.85 of Paper Book] 12. On perusal of the above documents filed by the Assessee we find that the same corroborate the written submissions of the Assessee. On the perusal of documents enclosed as Annexure 2 [page 59 to 63], it becomes clear that the Assessee had obtained a loan of INR.80,00,000/- from its employer. On perusal of documents enclosed as Annexure 3 it can be seen that the Assessee held three fixed deposits having aggregate maturity value of INR.5,03,992/-. The aforesaid fixed deposits matured on 25th, 26th and 27th September, 2015 and the maturity amount was withdrawn by the Assessee. The Assessing Officer failed to appreciate the correct factual position and drew adverse inference against the Assessee observing that the Assessee had made deposits just before withdrawing cash. Similarly, on perusal of documents forming part of Annexure 4 [Page No.72 to 76] it emerges that the brother of the Assessee [i.e. Ajit Prakash Kangal] held two fixed deposit which Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 9 matured on 03/09/2015. The maturity amount of INR.3,05,626/- was given by the Assessee’s brother to the Assessee for making payment towards purchase consideration. Similarly in support of INR.4,85,400/- received by the Assessee from his father [i.e., Sh. Prakash Dagu Khangal], it was explained that an amount of INR.1,50,000/- was given on behalf of the Assessee to the builder through cheque drawn on Axis Bank in the favour of the builder. As regards balance amount of INR.3,35,400/-, it was explained that that the father of the Assessee had made withdrawals over a period of time form his bank account which were aggregated and the same were used by the father to provide fund aggregating to INR.3,35,400/- in cash to the Assessee for assisting the Assessee for purchase of the immovable property. In support, the Assessee had filed bank statements showing withdrawal made by his father and the Letter of Arrangement which form part of Annexure 5 [page 77 to 84]. As regards, the addition of INR.4800/- is concerned we find that Form 16 filed by the Assessee clearly shows that the same has been received as exempt allowance from the employer. Therefore, keeping in view all the documents and details furnished by the Assessee, we find that the additions made by the Assessing Officer cannot be sustained. Accordingly, the order passed by the Assessing Officer and the CIT(A) are overturned and addition of INR.19,49,792/- made by the Assessing Officer is deleted. 13. In result the present appeal preferred by the Assessee is allowed. Order pronounced on 31.07.2025. Sd/- Sd/- (Vikram Singh Yadav) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 31.07.2025 Milan,LDC Printed from counselvise.com ITA No.4180/Mum/2025 Assessment Year 2016-2017 10 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध ,आयकर अपीलीय अदधकरण ,म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai Printed from counselvise.com "