ANEESH TRADERS,JVPD SCHEME,MUMBAI V. INCOME TAX OFFICER CIRCLE 17(1)(1), MUMBAI, KAUTILYA BHAVAN ,MUMBAI

ITA 1298/MUM/2025

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The case involves Aneesh Traders appealing against the order of the Ld. Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, which confirmed the addition of Rs. 72,40,000 as unexplained money under section 69A of the Income Tax Act, 1961. The addition was based on substantial cash deposits in the assessee's bank account during the demonetisation period, which were not satisfactorily explained. The tribunal noted the assessee's failure to provide evidence in earlier proceedings due to the serious illness of a partner and decided to restore the matter for a fresh examination, allowing the assessee another opportunity to substantiate their claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773205 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 25-02-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: PRATEEK JAIN
• Keywords: Opportunity of being heard; Reasonable cause; Corroborative evidences
• Section: 142(1); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 1298/MUM/2025 Assessment Year: 2017-18 Aneesh Traders, 502/504 Dilrag, Presidency Society, JVPD Scheme, Mumbai-400049. Vs. ITO Circle 17(1)(1), Kautilya Bhavan, Mumbai-400051. PAN NO. AAAFA 1935 G Appellant Respondent Assessee by : Mr. Prateek Jain Revenue by : Mr. Surendra Mohan, Sr. DR Date of Hearing : 05/08/2025 Date of pronouncement : 23/09/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 26.12.2024 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 following grounds: 1. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in passing an ex-parte order without giving reasonable opportunity of being heard, for the reasons mentioned in the impugned order or otherwise. Printed from counselvise.com 2. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in invoking the provisions of section 69A of the Income Tax Act, 1961 in the Appellant's case, for reasons stated in t 3. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of Ld. A.O. in making an addition of Rs. 72,40,000/ Bank Account, by treating the sa 69A of the Income Tax Act, 1961, as per the reasons stated in the impugned order 2. Briefly stated, the facts of the case are that the assessee filed its return of income on 29.03.2018 declaring total income of ₹7,45,010/-. The return of income filed by the assessee was selected for scrutiny and notice u/s 143(2) of the Income 1961 (in short ‘the Act’) was issued and served upon the assessee Thereafter, the Assessing Officer issued multiple notices under section 142(1) of the Act on 20.07.2019, 05.10.2019, 15.11.2019, 29.11.2019, and 19.12.2019. However, the assessee failed to comply with the same. 2.1 During the course of assessment proceedings, it was noticed that the assessee had deposited a sum of Bank account during the demonetisation period between 09.11.2016 to 31.12.2016. In an online response during cash transaction enquiries, the assessee claimed that the deposits were sourced out of withdrawals made during the period 0 07.11.2016. However, no cogent documentary evidence was placed on record to substantiate such claim. analysing the details, recorded findings that: (i) cash deposits ITA No. 1298/MUM/2025 2. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in invoking the provisions of section 69A of the Income Tax Act, 1961 in the Appellant's case, for reasons stated in the impugned order or otherwise. 3. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of Ld. A.O. in making an addition of Rs. 72,40,000/- being cash deposited in Bank Account, by treating the same as unexplained money u/s 69A of the Income Tax Act, 1961, as per the reasons stated in the impugned order or otherwise. Briefly stated, the facts of the case are that the assessee filed its return of income on 29.03.2018 declaring total income of The return of income filed by the assessee was selected for scrutiny and notice u/s 143(2) of the Income 1961 (in short ‘the Act’) was issued and served upon the assessee Thereafter, the Assessing Officer issued multiple notices under ection 142(1) of the Act on 20.07.2019, 05.10.2019, 15.11.2019, 29.11.2019, and 19.12.2019. However, the assessee failed to comply with the same. During the course of assessment proceedings, it was noticed that the assessee had deposited a sum of ₹72,00,000/ Bank account during the demonetisation period between 09.11.2016 to 31.12.2016. In an online response during cash transaction enquiries, the assessee claimed that the deposits were sourced out of withdrawals made during the period 0 07.11.2016. However, no cogent documentary evidence was placed on record to substantiate such claim. The Assessing Officer, after analysing the details, recorded findings that: (i) cash deposits Aneesh Traders 2 ITA No. 1298/MUM/2025 2. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in invoking the provisions of section 69A of the Income Tax Act, 1961 in the Appellant's case, for 3. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of Ld. A.O. in being cash deposited in me as unexplained money u/s 69A of the Income Tax Act, 1961, as per the reasons stated in Briefly stated, the facts of the case are that the assessee filed its return of income on 29.03.2018 declaring total income of The return of income filed by the assessee was selected for scrutiny and notice u/s 143(2) of the Income-tax Act, 1961 (in short ‘the Act’) was issued and served upon the assessee. Thereafter, the Assessing Officer issued multiple notices under ection 142(1) of the Act on 20.07.2019, 05.10.2019, 15.11.2019, 29.11.2019, and 19.12.2019. However, the assessee failed to During the course of assessment proceedings, it was noticed 72,00,000/- in his HDFC Bank account during the demonetisation period between 09.11.2016 to 31.12.2016. In an online response during cash transaction enquiries, the assessee claimed that the deposits were sourced out of withdrawals made during the period 01.04.2016 to 07.11.2016. However, no cogent documentary evidence was placed The Assessing Officer, after analysing the details, recorded findings that: (i) cash deposits Printed from counselvise.com during demonetisation far exceeded earlier periods without proper explanation; (ii) no contemporaneous books of account or cash book were produced; (iii) no evidence of utilisation or purpose of earlier withdrawals was furnished; and (iv) a substantial inc balance between 01.04.2015 and 01.04.2016 remained unexplained. In absence of corroborative material, the Assessing Officer invoked section 69A of the Act, treating the sum of ₹72,40,000/- as unexplained money, and applied tax under section 115BBE at the prescribed rate. 3. On appeal, the Ld. CIT(A) issued multiple notices granting opportunities on several dates, details of which stand recorded in para 5.1 of the impugned order. reproduced as under: 5.1 Background facts, AO’s order and grounds of appeal are perused. The appellant was asked to submit documentary evidences in support of the grounds of appeal. The case was posted on the following dates Date of hearing notice Time limit for furnishing written s 06.03.2020 23.03.2020 15.02.2021 02.03.2021 18.08.2021 02.09.2021 14.05.2024 24.05.2024 04.06.2024 20.06.2024 ITA No. 1298/MUM/2025 during demonetisation far exceeded earlier periods without proper explanation; (ii) no contemporaneous books of account or cash book were produced; (iii) no evidence of utilisation or purpose of earlier withdrawals was furnished; and (iv) a substantial inc balance between 01.04.2015 and 01.04.2016 remained unexplained. In absence of corroborative material, the Assessing Officer invoked section 69A of the Act, treating the sum of as unexplained money, and applied tax under section 15BBE at the prescribed rate. On appeal, the Ld. CIT(A) issued multiple notices granting opportunities on several dates, details of which stand recorded in para 5.1 of the impugned order. For ready reference, said para is reproduced as under: round facts, AO’s order and grounds of appeal are perused. The appellant was asked to submit documentary evidences in support of the grounds of appeal. The case was posted on the following dates Time limit for furnishing written submission Remarks 23.03.2020 Adjournment - Government restrictions for travel due to Covid 19 02.03.2021 No reply 02.09.2021 No reply 24.05.2024 Adjournment- Partner of the assessee’s firm is bedridden. 20.06.2024 Adjournment- Partner of the assessee’s firm is bedridden. Aneesh Traders 3 ITA No. 1298/MUM/2025 during demonetisation far exceeded earlier periods without proper explanation; (ii) no contemporaneous books of account or cash book were produced; (iii) no evidence of utilisation or purpose of earlier withdrawals was furnished; and (iv) a substantial increase in cash balance between 01.04.2015 and 01.04.2016 remained unexplained. In absence of corroborative material, the Assessing Officer invoked section 69A of the Act, treating the sum of as unexplained money, and applied tax under section On appeal, the Ld. CIT(A) issued multiple notices granting opportunities on several dates, details of which stand recorded in For ready reference, said para is round facts, AO’s order and grounds of appeal are perused. The appellant was asked to submit documentary evidences in support of the grounds of appeal. The case was posted on the following dates-: Government restrictions for travel due to Covid- Partner of the assessee’s firm is bedridden. Partner of the assessee’s firm is bedridden. Printed from counselvise.com 03.07.2024 19.07.2024 01.08.2024 14.08.2024 12.11.2024 18.11.2024 02.12.2024 09.12.2024 03.12.2024 11.12.2024 3.1 Despite such repeated opportunities, the assessee neither filed written submissions nor adduced any supporting evidence. Consequently, the Ld. CIT(A) upheld the unexplained cash deposits, duly confirmed by the bank under section 133(6) of the Act, fell within the ambit of section 69A, and thus, the action of the Assessing Officer was legally and factually justified. The relevant finding “6.1.6 Support of the above decision is taken only to emphasise the fact that in absence of any explanation, bank deposits can be taken as unexplained money under section 69A of the Income tax Act. Therefore, the Assessing Officer has not committed any error in treating the cash deposit as unexplained money under section 69A of the Act. It is also important to recall that the trigger for initiation of action in this case was the information about cash deposit of Rs.72,00 Officer also got confirmation from the HDFC Bank about cash deposit of the same figure of money, after calling for information under section 133(6) of the Act. The assessee, in the online cash response, has attributed the source of cash the period 1.4.2016 to 7.11.2046. However, as mentioned in the assessment order; despite being specifically asked for, it has not given any documentary evidence regarding the same. Further, it has stated that the total cash deposited during the demonetisation period is Rs.72,40,000 (para 23 of the assessment order). Based on such a statement by the assessee, the Assessing Officer had to consider the higher figure of Rs.72,40,000 as unexplained money while completing the assessment. In absence of any explanation from the assessee, the action of the Assessing Officer in taking the admitted deposit figure has a strong legal and logical backing. Therefore, Ground No 1 of the appeal is being dismissed.” ITA No. 1298/MUM/2025 19.07.2024 Adjournment- Partner of the assessee’s firm is bedridden. 14.08.2024 No reply 18.11.2024 No reply 09.12.2024 No reply 11.12.2024 Adjournment- Partner of the assessee’s firm is bedridden. Despite such repeated opportunities, the assessee neither filed written submissions nor adduced any supporting evidence. Consequently, the Ld. CIT(A) upheld the assessment, observing that unexplained cash deposits, duly confirmed by the bank under section 133(6) of the Act, fell within the ambit of section 69A, and thus, the action of the Assessing Officer was legally and factually The relevant finding of ld CIT(A) is reproduced 6.1.6 Support of the above decision is taken only to emphasise the fact that in absence of any explanation, bank deposits can be taken as unexplained money under section 69A of the Income tax Act. Therefore, ing Officer has not committed any error in treating the cash deposit as unexplained money under section 69A of the Act. It is also important to recall that the trigger for initiation of action in this case was the information about cash deposit of Rs.72,00,000. The Assessing Officer also got confirmation from the HDFC Bank about cash deposit of the same figure of money, after calling for information under section 133(6) of the Act. The assessee, in the online cash response, has attributed the source of cash deposits to be cash withdrawals during the period 1.4.2016 to 7.11.2046. However, as mentioned in the assessment order; despite being specifically asked for, it has not given any documentary evidence regarding the same. Further, it has stated al cash deposited during the demonetisation period is Rs.72,40,000 (para 23 of the assessment order). Based on such a statement by the assessee, the Assessing Officer had to consider the higher figure of Rs.72,40,000 as unexplained money while completing he assessment. In absence of any explanation from the assessee, the action of the Assessing Officer in taking the admitted deposit figure has a strong legal and logical backing. Therefore, Ground No 1 of the appeal ” Aneesh Traders 4 ITA No. 1298/MUM/2025 Partner of the assessee’s firm is bedridden. Partner of the assessee’s firm is bedridden. Despite such repeated opportunities, the assessee neither filed written submissions nor adduced any supporting evidence. assessment, observing that unexplained cash deposits, duly confirmed by the bank under section 133(6) of the Act, fell within the ambit of section 69A, and thus, the action of the Assessing Officer was legally and factually of ld CIT(A) is reproduced as under: 6.1.6 Support of the above decision is taken only to emphasise the fact that in absence of any explanation, bank deposits can be taken as unexplained money under section 69A of the Income tax Act. Therefore, ing Officer has not committed any error in treating the cash deposit as unexplained money under section 69A of the Act. It is also important to recall that the trigger for initiation of action in this case was ,000. The Assessing Officer also got confirmation from the HDFC Bank about cash deposit of the same figure of money, after calling for information under section 133(6) of the Act. The assessee, in the online cash response, has deposits to be cash withdrawals during the period 1.4.2016 to 7.11.2046. However, as mentioned in the assessment order; despite being specifically asked for, it has not given any documentary evidence regarding the same. Further, it has stated al cash deposited during the demonetisation period is Rs.72,40,000 (para 23 of the assessment order). Based on such a statement by the assessee, the Assessing Officer had to consider the higher figure of Rs.72,40,000 as unexplained money while completing he assessment. In absence of any explanation from the assessee, the action of the Assessing Officer in taking the admitted deposit figure has a strong legal and logical backing. Therefore, Ground No 1 of the appeal Printed from counselvise.com 4. Before us, the Ld to serious illness of the partner of the firm, who has been bedridden, the assessee could not effectively pursue the proceedings before the Ld. CIT(A). It was pleaded that the assessee now seeks to place releva cash deposits and prayed for one more opportunity in the interest of justice. 4.1 We have heard the rival submissions and carefully perused the record. It is not in dispute that the assessee failed to avail repeate opportunities before the lower authorities. However, it is equally a settled proposition that technicalities should not come in the way of substantial justice. Where the assessee demonstrates a reasonable cause for non-compliance, and expresses readiness material evidence, one further opportunity ought to be afforded, particularly when the addition made is of a substantial amount. this backdrop, and guided by the overarching principle that the rules of procedure are intended to advance the ca not to thwart it, we deem it appropriate to restore the matter to the file of the Ld. CIT(A) for fresh adjudication. The assessee shall be under an obligation to furnish all documentary evidence in support of its claim that cash deposits were sourced out of earlier withdrawals. The Ld. CIT(A) shall grant due opportunity to both parties and decide the matter in ITA No. 1298/MUM/2025 Before us, the Ld. counsel for the assessee submitted that due to serious illness of the partner of the firm, who has been bedridden, the assessee could not effectively pursue the proceedings before the Ld. CIT(A). It was pleaded that the assessee now seeks to place relevant material to substantiate the source of cash deposits and prayed for one more opportunity in the interest of We have heard the rival submissions and carefully perused the record. It is not in dispute that the assessee failed to avail repeate opportunities before the lower authorities. However, it is equally a settled proposition that technicalities should not come in the way of substantial justice. Where the assessee demonstrates a reasonable compliance, and expresses readiness material evidence, one further opportunity ought to be afforded, particularly when the addition made is of a substantial amount. this backdrop, and guided by the overarching principle that the rules of procedure are intended to advance the cause of justice and not to thwart it, we deem it appropriate to restore the matter to the file of the Ld. CIT(A) for fresh adjudication. The assessee shall be under an obligation to furnish all documentary evidence in support of its claim that cash deposits during the demonetisation period were sourced out of earlier withdrawals. The Ld. CIT(A) shall grant due opportunity to both parties and decide the matter in Aneesh Traders 5 ITA No. 1298/MUM/2025 . counsel for the assessee submitted that due to serious illness of the partner of the firm, who has been bedridden, the assessee could not effectively pursue the proceedings before the Ld. CIT(A). It was pleaded that the assessee nt material to substantiate the source of cash deposits and prayed for one more opportunity in the interest of We have heard the rival submissions and carefully perused the record. It is not in dispute that the assessee failed to avail repeated opportunities before the lower authorities. However, it is equally a settled proposition that technicalities should not come in the way of substantial justice. Where the assessee demonstrates a reasonable compliance, and expresses readiness to adduce material evidence, one further opportunity ought to be afforded, particularly when the addition made is of a substantial amount. In this backdrop, and guided by the overarching principle that the use of justice and not to thwart it, we deem it appropriate to restore the matter to the file of the Ld. CIT(A) for fresh adjudication. The assessee shall be under an obligation to furnish all documentary evidence in support during the demonetisation period were sourced out of earlier withdrawals. The Ld. CIT(A) shall grant due opportunity to both parties and decide the matter in Printed from counselvise.com accordance with law. is accordingly allowed. 5. Since we have already restored the appeal to the file of the Ld. CIT(A) for deciding afresh, the other grounds on merit are not required to be adjudicated upon at this stage and accordingly same are dismissed as infructuous. 6. 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// ITA No. 1298/MUM/2025 accordance with law. The ground No. 1 of the appeal of the assessee is accordingly allowed. nce we have already restored the appeal to the file of the Ld. CIT(A) for deciding afresh, the other grounds on merit are not required to be adjudicated upon at this stage and accordingly same are dismissed as infructuous. In the result, the appeal of the assessee is allowed for 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 Aneesh Traders 6 ITA No. 1298/MUM/2025 The ground No. 1 of the appeal of the assessee nce we have already restored the appeal to the file of the Ld. CIT(A) for deciding afresh, the other grounds on merit are not required to be adjudicated upon at this stage and accordingly same 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 "