BOMBAY TYRES,MUMBAI V. INCOME TAX OFFICER -15(1)(1), MUMBAI

ITA 2393/MUM/2025

AI Insights

The case revolves around the assessment made by the Income Tax Officer (ITO) under section 144 of the Income-tax Act, 1961, against Bombay Tyres, a proprietary concern owned by Rohit Rajgopal Soman. The ITO had added a substantial amount as unexplained cash deposit in a bank account linked to a PAN that was erroneously registered under a non-existent entity. The CIT(A) upheld the ITO's decision, leading to the appeal before the Tribunal. The Tribunal found that the cash deposits were actually related to the proprietor's individual PAN, which had been regularly assessed and taxed, and not under the PAN of a non-existent company. Consequently, the Tribunal deleted the additions made by the ITO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785507 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 04-04-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Business income; Opportunity of being heard; Unexplained cash credit; Principle of natural justice
• Section: 147; 144; 142(1); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 2393/MUM/2025 Assessment Year: 2017-18 Bombay Tyres 23, Arenja Corner, Sector-17, Vashi, Navi Mumbai – 400703 [PAN: AAGCB1604E] vs Income-tax Officer, -15(1)(1), Mumbai Appellant Respondent Present for: Assessee : Shri Tanzil Padvekar and Shri Gopal Sharma, Advocates Revenue : Shri Leyaqat Ali Aafaqui, Sr. DR Date of Hearing : 06.08.2025 Date of Pronouncement : 29.10.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide order no. ITBA/NFAC/S/250/2023-24/1057354062(1), dated 26.10.2023 passed against the assessment order by National Faceless Assessment Centre, Delhi u/s.144 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 28.06.2019 for AY 2017-18. 2. Grounds taken by the assessee are reproduced as under: 1. Considering the facts and circumstances of the case and in Law, the National Faceless Appeal Centre (NFAC) has erred in confirming the Order u/s. 144 r.w.s. 144A dated 28th June, 2019 passed by the Assessing Officer without appreciating the merits of the case. Printed from counselvise.com 2 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 2. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming the additions in respect of PAN AAGCB1604E which pertains to a non-existent entity. Therefore, any proceedings on Non-Existent PAN are void ab initio and therefore bad in law. 3. Considering the facts and circumstances of the case and in Law, the NFAC has erred in passing an order without considering the facts available on record and without providing adequate opportunity of being heard. 4. Considering the facts and circumstances of the case and in Law, the NFAC has passed impugned Order u/s. 250 of the Act on 26th October, 2023 in gross violation of principles of natural justice. Hence, the impugned Order is bad in law. 5. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming addition towards cash deposit in bank account of Rs.3,18,43,590/- as unexplained credit u/s.69A of the Act. 6. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming the addition u/s.69A of the Act when the conditions prescribed u/s. 69A have not been fulfilled. 7. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming the addition of Rs.31,64,997/- being estimated income of 8% against total credits in bank account of Rs.3,95,62,466/-. 8. Considering the facts and circumstances of the case and in Law, the NFAC has erred in making additions without considering the fact that the transaction in the Federal Bank Vashi Branch bearing Account No. 13690200027434 are in fact account of Mr. Rohit Rajgopal Soman (Proprietor of M/s. Bombay Tyres) having PAN AYSPS1288G and the said transactions have been duly recorded in his books of account, subject to audit u/s.44AB of the Act as well as offered for tax in his return of income file for the AY 2017-18. 9. Considering the facts and circumstances of the case and in Law, the NFAC erred in confirming the additions in respect of transactions in Federal Bank Vashi Branch bearing Account No. 13690200027434 when the transactions in the said bank account have already been assessed to tax in the hands of Mr.Rohit Rajgopal Soman (PAN - AYSPS1288G). 10. Considering the facts and circumstances of the case and in Law, the order u/s.250 r.w.s 147 dated 30th January, 2025 (Served on 4th March, 2025) has been passed by the Assessing Officer beyond the time limit prescribed to pass the said Order and therefore the aforesaid order is time barred and invalid. 2.1. The sole issue involved in the present appeal through ten grounds of appeal raised by the assessee is in respect of addition made on account of deposit of cash in the bank account of the assessee, whereby Printed from counselvise.com 3 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 it is alleged that one of the permanent account number (PAN) i.e., AAGCB1604E does not pertains to the assessee but to a non-existent entity. 3. There is a delay of 460 days noted by the registry in filing the present appeal before the Tribunal for which an affidavit and petition for condonation of delay is placed on record. In the petition for condonation of delay, the explanation given by the assessee is that ld. CIT(A) had directed the ld. AO to look into the facts and pass the necessary order in respect of ground numbers 2, 3, 4 and 6, raised by the assessee in the first appeal. According to the assessee, since the matter was remanded back to the ld. AO, he, based on professional advice from a Chartered Accountant proceeded to attend the proceedings before the ld. AO to give effect to the order of the ld. CIT(A) instead of going ahead with filing the appeal before the Tribunal, against the direction of the ld. CIT(A). The order giving effect was passed by ld. AO on 30.01.2025, wherein ld. AO did not accept the submissions of the assessee and continued with the addition made in respect of deposit of cash in the bank account of the assessee. With the said order giving effect passed by ld. AO, assessee did not receive the notice of demand u/s. 156 as well as the computation sheet forming part of the said order because of which appeal could not be filed though assessee had paid the appeal filing fees on 23.03.2025 itself. Assessee pursued the matter with the ld. AO for obtaining the copy of notice of demand and computation sheet by writing email. Assessee submits that the jurisdictional assessing officer was approached by the Chartered Accountant for the issuance of notice of demand as well as computation sheet in respect of the order giving effect passed on 30.01.2025 for Printed from counselvise.com 4 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 which it was stated that the correct course of action is to file an appeal before the Tribunal against the first appellate order dated 26.10.2023. 3.1. Assessee based on conflicting advices of the professionals could not file the appeal before the Tribunal against the first appellate order and waited for the order giving effect passed by ld. AO on the direction given by ld. CIT(A) in the remand to the ld. AO. All this resulted in lapse of time within which the appeal could have been filed before the Tribunal. Assessee contends that it is on account of conflicting advices of the professionals which resulted into the present delay though assessee has acted in good faith and has taken necessary actions as early as possible when the correct position was brought before him. According to him, the delay is neither intentional nor due to negligence. It is, thus prayed by the assessee to condone the delay and take up the matter for adjudication on merits. We have considered the submissions made by the assessee and have corroborated the same with the factual position. Considering the same, we find it appropriate to condone the delay in the interest of justice and fair play and take up the matter for adjudication on the merits of the case. 4. Brief facts of the case are that ld. AO received information in AIMS module that assessee having PAN AAGCB1604E has deposited cash amounting to Rs. 3,18,43,590/- in the bank with Federal Bank, Vashi Branch, bearing account no. 13690200027434. Notice u/s. 142(1) dated 30.01.2018 was issued to file the return of income as there was no return filed against the stated PAN for the year under consideration. In the course of assessment proceedings, assessee vide letter dated 26.02.2018 explained the ld. AO that M/s. Bombay Tyres is a proprietary concern of Rohit Rajgopal Soman whose PAN is Printed from counselvise.com 5 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 AYSPS1288G and he has filed the return for the year under consideration against the said PAN which is on record. The return filed by him was for Rs.13,20,100/- on 02.11.2017. Copy of the said letter dated 26.02.2018 is placed in the paper book at page 2, scanned copy of which is reproduced below for ready reference: Printed from counselvise.com 6 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 4.1. Through this letter, it is noted that assessee furnished correct factual position about the PAN, i.e., AAGCB1604E which does not belong to him since he is running a sole proprietorship business in the name of M/s. Bombay Tyres. Assessee is an individual and has his PAN with the number AYSPS1288G against which he has been filing the returns regularly. Assessee, further contended that there is no company called Bombay Tyres and PAN AAGCB1604E is a “Company PAN” which does not belong to him, as the fourth alphabet ‘C’ in the PAN represents the status of the person as a “Company” holding this PAN. 4.2. Negating the submissions made by the assessee, ld. AO called for bank statement from the branch manager of Federal bank, Vashi branch by issuing notice u/s. 133(6) from whereby he noted that there are total credits of Rs.7,14,06,056/- in the said bank statement which included cash deposit of Rs. 3,18,43,590/-. He concluded that the said deposit of cash in the bank account is unexplained money u/s. 69A which was added to the income. He also computed notional profit at the rate of 8% of the total credits of Rs. 3,95,62,466/- appearing in the bank statement and thus, made an addition of Rs. 31,64,997/- as business income. Accordingly, assessment was completed at total assessed income of Rs. 3,50,08,587/- u/s. 144 r.w.s.144A. 4.3. In the first appeal, assessee again brought out the fact about correct PAN belonging to the assessee and M/s. Bombay Tyres being a proprietary concern of the assessee and the PAN used by the ld. AO while passing the ex parte assessment order does not belong to the assessee but is a “Company PAN” for which no such company in the name of Bombay Tyres exists on the MCA website. Taking note of this submission, ld. CIT(A) observed that the Assessing Officer ought to have Printed from counselvise.com 7 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 ascertained the facts mentioned in the letter dated 26.02.2018 which has been overlooked. Accordingly, he directed the Assessing Officer to ascertain the facts mentioned by the assessee in the said letter. He thus, gave his finding that in case the facts stated by the assessee are found to be true, the Assessing Officer is directed to find the taxpayer having PAN AAGC B1604E and initiate action as per law. Thus, the first appeal was allowed for statistical purposes. Aggrieved, assessee is an appeal before the Tribunal. 5. Before us, ld. Counsel asserted that the PAN against which the impugned assessment has been completed u/s. 144 is for a non- existing entity since Bombay Tyres is a sole proprietary concern of the assessee and no such company exists on the MCA portal nor any Corporate Identification Number (CIN) is allotted to any such company. He submitted that the proprietary business in the name of M/s. Bombay Tyres deals in retailing of auto accessories like tyres and tubes of reputed companies and substantial part of its sales are affected at the counter in cash. The turnover of proprietary concern M/s. Bombay Tyres having PAN AYSPS1288G was Rs. 6,33,12,040/- in the year under consideration. Books of accounts of this proprietary concern were subjected to tax audit under the provisions of section 44AB. Proceeds of cash sales were deposited in the bank account with Federal Bank and the same were accounted as sales in the profit and loss account for the year under consideration on which the net profit has been duly reported in the return filed by the assessee in his individual capacity. 5.1. It was further explained that transactions in the Federal Bank, Vashi Branch, bearing account number 13690200027434 are in fact account of Shri Rohit Rajagopal Soman that is, the proprietor of M/s. Printed from counselvise.com 8 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 Bombay Tyres having PAN AYSPS1288G. According to him, the transactions in the said bank account have already been assessed to tax in the hands of the assessee in his individual capacity for which the assessment order was passed u/s. 147 r.w.s.143(3) dated 19.04.2023. In the said reassessment order, there are no additions in respect of the deposit of cash in the bank account of the assessee with Federal Bank though there are additions and disallowances on other aspects for which the assessee is in appeal before the ld. CIT(A). Ld. Counsel further contended that, inadvertently Bombay Tyres has been allotted a PAN AAGCB1604E with the address being 23 Arera Corner, Sector 17, Vashi, Navi Mumbai and the status indicates “Company”. According to him assessee has never applied for such a PAN in the name of Bombay Tyres as a company and in fact, it was not necessary for him to have another PAN as he has been filing his return of income regularly which has also been assessed by the PAN AYSPS1288G. The issue of a duplicate PAN allotment has been brought to the knowledge of ld. AO which has not been taken into account even though all the transactions mentioned against the PAN have been subjected to tax and leads to duplication of the transactions already reported in the return of income filed in the individual capacity. 5.2. It was also pointed out from the return of income filed by the assessee in his individual capacity that the details about his bank account with Federal Bank were duly disclosed and reported in the return. Since, assessee proceeded with order giving effect proceedings before the ld. AO based on the remand made by ld. CIT(A), he has referred to the submissions made before the ld. AO in the remand proceedings to explain the factual position and demonstrate that the transactions in the Federal Bank account have been duly reported and Printed from counselvise.com 9 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 accounted for, which has been subjected to income tax in the hands of the individual assessee with the proprietary concern M/s. Bombay Tyres. Summary of Federal Bank account transactions with its reconciliation is extracted below: Printed from counselvise.com 10 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 5.3. From the above, it is noted that total deposit of cash in the said bank account is of Rs.3,26,48,850/- part of which is against cash sales and the balance against receipt from debtors. Also, there are credit sales which totals up to Rs. 6,33,12,040/- along with cash sales. The same has been disclosed and reported in the audited profit and loss account for which the net profit has been reported in the return. The opening and closing balances of the said bank account are reconciled and thus, it is evidently demonstrated that the total credits in the said bank account have been accounted and reported for income tax purposes in the return filed by the assessee in his individual capacity. 5.4. Further, reference was made to a letter issued by the Federal Bank dated 26.11.2024, whereby the bank certified that total amount of Rs. 3,26,61,240/- was credited in the account number 1369020027434 as cash deposit in the year under consideration. The said letter is placed at page 14 of the paper book. Ld. Counsel also referred to another letter issued by the Federal Bank dated 01.01.2025 which certifies that assessee having PAN AYSPS1288G with the proprietary concern of M/s. Bombay Tyres is maintaining a current account with the bank with the above stated account number which was opened on 14.03.2014 and closed on 13.04.2017. The said letter is placed at page 13 of the paper book. 5.5. Thus, what emerges from all of the above corroborative documentary evidences placed by the assessee before the ld. AO in the remand proceedings that though reference to two different PAN, one Printed from counselvise.com 11 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 with the status of company in the name of Bombay Tyres which in fact is a proprietary concern of the assessee i.e., Shri Rohit Rajgopal Soman and the other which is the PAN of the individual that is the proprietor of Bombay Tyres, yet the reference is made to one single bank account maintained with Federal Bank, Vashi branch with account number 13690200027434. Accordingly, what needs to be looked into is whether the transactions entered into the said bank account have been correctly and actually been accounted for and reported for the purpose of income tax in the return filed by the assessee either in individual capacity or with the company status. 5.6. From the above, it is evidently established that the entire credit transactions in the said bank account have been adequately and duly accounted for and reported by the assessee in his individual capacity under the name and style of his proprietary concern M/s. Bombay Tyres which has been assessed by the department u/s. 147 r.w.s.143(3) vide order dated 19.04.2023 wherein no addition has been made on this account. Having established the factual position in respect of the bank account for which the entire issue has been raised by the Revenue in respect of deposit of cash, the assessment made by the ld. AO by referring to a PAN with company status in the name of Bombay Tyres which according to the assessee does not exist in the form of a company on the MCA portal as well as no CIN has been allotted in the name of Bombay Tyres, the addition so made ex parte by passing an order u/s. 144 alleging the deposit of cash in the said bank account as unexplained money is uncalled for. Accordingly, the addition made by the ld. AO u/s. 69A in respect of deposit of cash in the Federal Bank Printed from counselvise.com 12 ITA No. 2393/Mum/2025 Bombay Tyres AY 2017-18 account which belongs to proprietary concern of Shri Rohit Rajagopal is deleted. Grounds raised by the assessee in this respect are allowed. 6. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 29.10.2025. Sd/- Sd/- Sd/- [Amit Shukla] [Girish Agrawal] Judicial Member Accountant Member Dated: 29 October, 2025 MP, Sr.P.S. Copy to: 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "