AI Insights
The case involves three appeals by the Revenue against F A Construction concerning the assessment years 2014-15 to 2016-17. The primary issues revolved around the deletion of additions made under Section 69A of the Income Tax Act, 1961, which pertained to unexplained cash withdrawals, and the deletion of an ad hoc disallowance of 5% on unverifiable expenses. The Assessing Officer had initially treated the cash withdrawals as unexplained and made additions accordingly. However, the CIT(A) deleted these additions, leading to the Revenue's appeal. The Tribunal, after reviewing the extensive documentary evidence provided by the assessee during the remand proceedings, upheld the CIT(A)'s decision, finding no merit in the Revenue's arguments.
Appeal Details
Counselvise Citation
[2026] 140 COUNSELVISE.COM (IT) 830783 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-01-2026
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
F
Assessment Year
misc
Appeal Filed On
30-05-2025
Judgement Text
"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA Nos. 3895 to 3897/MUM/2025 Assessment Year: 2014-15 to 2016-17 Dy. CIT Central Circle-2(3), Room No. 803, Old CGO Annexe Building, Churchgate, Mumbai-400020. Vs. F A Construction, Plot No. 112, 1st floor, S V Road, Mumbai, Khar Delivery S.O. Mumbai-400052. PAN NO. AAAFF 0282 D Appellant Respondent Assessee by : Mr. Vijay Mehta Revenue by : Mr. Vivek A. Perampurna, CIT-DR & Ms. Kavitha Kaushik, Sr. DR Date of Hearing : 20/11/2025 Date of pronouncement : 23/01/2026 ORDER PER OM PRAKASH KANT, AM These three appeals by the Revenue are directed against three separate orders, all dated 31.03.2025, passed by the Ld. Commissioner of Income-tax (Appeals) – 48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment years 2014-15 to 2016-17 respectively. Printed from counselvise.com 2. As common issue in d therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. 2.1 Now, we take up the appeal of the Revenue for assessment year 2014-15. The grounds raised by th as under: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 35,87,16,800/ made under Section 69A of the Income appreciating that the assessee establishing the actual utilization of the cash withdrawals for business purposes during the course of assessment proceedings.\" 2. On the facts and circumstances of the case and in law, The Ld. CIT(A) has erred in deleting withdrawals were from disclosed bank accounts, without independently verifying whether the cash was actually utilized for business expenditure or remained unexplained, which is a prerequisite under Section 69A of t 3. On the facts and circumstances of the case and in law, The Ld. CIT(A) has erred in deleting the disallowance of being 5% of the total expenditure made on account of unverifiable expenses, without appreciating that the assessee f complete, verifiable, and third during the assessment proceedings, to substantiate the genuineness and business purpose of the entire expenditure claimed.\" 4. On the facts and circumstances of the case and in CIT(A) has erred in relying solely on the absence of adverse remarks in the remand report without independently verifying the authenticity, completeness, and verifiability of the documentary evidence produced by the assessee, thereby ignoring of inflation or non 3. Briefly stated, the facts of the case are that the assessee is engaged in the business of building and construction. For the ITA Nos. 3895 to 3897/MUM/2025 As common issue in dispute is involved in these appeals and therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. we take up the appeal of the Revenue for assessment 15. The grounds raised by the Revenue are reproduced 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 35,87,16,800/ made under Section 69A of the Income-tax Act, 1961, without appreciating that the assessee failed to discharge the onus of establishing the actual utilization of the cash withdrawals for business purposes during the course of assessment proceedings.\" 2. On the facts and circumstances of the case and in law, The Ld. CIT(A) has erred in deleting the addition solely on the basis that the withdrawals were from disclosed bank accounts, without independently verifying whether the cash was actually utilized for business expenditure or remained unexplained, which is a prerequisite under Section 69A of the Act.\" 3. On the facts and circumstances of the case and in law, The Ld. CIT(A) has erred in deleting the disallowance of ₹12,09,21,303/ being 5% of the total expenditure made on account of unverifiable expenses, without appreciating that the assessee failed to furnish complete, verifiable, and third-party supported documentation during the assessment proceedings, to substantiate the genuineness and business purpose of the entire expenditure 4. On the facts and circumstances of the case and in CIT(A) has erred in relying solely on the absence of adverse remarks in the remand report without independently verifying the authenticity, completeness, and verifiability of the documentary evidence produced by the assessee, thereby ignoring of inflation or non-business use of part of the claimed expenses Briefly stated, the facts of the case are that the assessee is engaged in the business of building and construction. For the F A Construction 2 ITA Nos. 3895 to 3897/MUM/2025 ispute is involved in these appeals and therefore, same were heard together and disposed off by way of this we take up the appeal of the Revenue for assessment e Revenue are reproduced 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 35,87,16,800/- tax Act, 1961, without failed to discharge the onus of establishing the actual utilization of the cash withdrawals for business purposes during the course of assessment proceedings.\" 2. On the facts and circumstances of the case and in law, The Ld. the addition solely on the basis that the withdrawals were from disclosed bank accounts, without independently verifying whether the cash was actually utilized for business expenditure or remained unexplained, which is a 3. On the facts and circumstances of the case and in law, The Ld. ₹12,09,21,303/- being 5% of the total expenditure made on account of unverifiable ailed to furnish party supported documentation during the assessment proceedings, to substantiate the genuineness and business purpose of the entire expenditure 4. On the facts and circumstances of the case and in law, The Ld. CIT(A) has erred in relying solely on the absence of adverse remarks in the remand report without independently verifying the authenticity, completeness, and verifiability of the documentary evidence produced by the assessee, thereby ignoring the possibility business use of part of the claimed expenses Briefly stated, the facts of the case are that the assessee–firm is engaged in the business of building and construction. For the Printed from counselvise.com assessment year under consideration, the a return of income on 24.11.2014 declaring a total income of ₹12,87,87,830/–. The assessment was completed under section 143(3) of the Income Act”) on 30.01.2018, wherein an addition o made under the head “Income from business or profession”, resulting in the total income being assessed at 3.1 Subsequently, the Assessing Officer received information from the in-site portal, i.e., the internal databa Department, indicating that the assessee had withdrawn substantial cash aggregating to accounts during the relevant previous year. On the basis of such information, the Assessing Officer recorded reasons t income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act. Although the assessee initially failed to comply with the said notice, it thereafter filed a return in response, albeit after some de for reopening were duly furnished to the assessee, who raised objections to the assumption of jurisdiction under section 147 of the Act. 3.2 During the course of reassessment proceedings, the Assessing Officer called for various details, inter alia, party and expenses, details of salary and wages paid to employees, ITA Nos. 3895 to 3897/MUM/2025 assessment year under consideration, the assessee filed its original return of income on 24.11.2014 declaring a total income of . The assessment was completed under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) on 30.01.2018, wherein an addition of ₹15,46,80,865/ made under the head “Income from business or profession”, resulting in the total income being assessed at ₹28,54,68,700/ Subsequently, the Assessing Officer received information from site portal, i.e., the internal database of the Income Department, indicating that the assessee had withdrawn substantial cash aggregating to ₹35,87,16,800/– accounts during the relevant previous year. On the basis of such information, the Assessing Officer recorded reasons t income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act. Although the assessee initially failed to comply with the said notice, it thereafter filed a return in response, albeit after some delay. The reasons recorded for reopening were duly furnished to the assessee, who raised objections to the assumption of jurisdiction under section 147 of During the course of reassessment proceedings, the Assessing Officer called for various details, inter alia, party- and expenses, details of salary and wages paid to employees, F A Construction 3 ITA Nos. 3895 to 3897/MUM/2025 ssessee filed its original return of income on 24.11.2014 declaring a total income of . The assessment was completed under section tax Act, 1961 (hereinafter referred to as “the 15,46,80,865/– was made under the head “Income from business or profession”, 28,54,68,700/–. Subsequently, the Assessing Officer received information from se of the Income-tax Department, indicating that the assessee had withdrawn from its bank accounts during the relevant previous year. On the basis of such information, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act. Although the assessee initially failed to comply with the said notice, it thereafter filed a lay. The reasons recorded for reopening were duly furnished to the assessee, who raised objections to the assumption of jurisdiction under section 147 of During the course of reassessment proceedings, the Assessing -wise purchases and expenses, details of salary and wages paid to employees, Printed from counselvise.com number of employees, labour payments, and particulars relating to Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC). However, despite issuance of statutory notices, the assessee failed to furnish the requisite information. Consequently, the Assessing Officer proceeded to frame the assessment by invok the provisions of section 144 of the Act. Even the show issued under section 144 remained uncomplied with. 3.3 The Assessing Officer observed that the assessee had failed to substantiate the utilisation of the cash withdrawn from the banks either by demonstrating that the same had been expended for business purposes or otherwise. Holding that the source and utilisation of the cash withdrawals remained unexplained, the Assessing Officer treated the sum of unexplained money and brought the same to tax under section 69 of the Act. 3.4 The Assessing Officer further noted that the assessee did not produce any supporting evidence in respect of purchases and other expenditure aggregating to profit and loss account. The details of such expenditure were tabulated by the Assessing Officer as under: Sr. No. 1 Purchases 2 Direct Expenses 3 Indirect Expenses Total ITA Nos. 3895 to 3897/MUM/2025 number of employees, labour payments, and particulars relating to Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC). However, despite issuance of statutory notices, the assessee failed to furnish the requisite information. Consequently, the Assessing Officer proceeded to frame the assessment by invok the provisions of section 144 of the Act. Even the show issued under section 144 remained uncomplied with. The Assessing Officer observed that the assessee had failed to substantiate the utilisation of the cash withdrawn from the banks either by demonstrating that the same had been expended for business purposes or otherwise. Holding that the source and utilisation of the cash withdrawals remained unexplained, the Assessing Officer treated the sum of ₹35,87,16,800/ y and brought the same to tax under section 69 The Assessing Officer further noted that the assessee did not produce any supporting evidence in respect of purchases and other expenditure aggregating to ₹2,41,84,26,074/–, as reflected in the profit and loss account. The details of such expenditure were tabulated by the Assessing Officer as under: Particulars Amount in Rs. 2,67,05,926 Direct Expenses 2,48,40,14,510 Indirect Expenses 26,64,22,438 2,77,71,42,874 F A Construction 4 ITA Nos. 3895 to 3897/MUM/2025 number of employees, labour payments, and particulars relating to Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC). However, despite issuance of statutory notices, the assessee failed to furnish the requisite information. Consequently, the Assessing Officer proceeded to frame the assessment by invoking the provisions of section 144 of the Act. Even the show-cause notice issued under section 144 remained uncomplied with. The Assessing Officer observed that the assessee had failed to substantiate the utilisation of the cash withdrawn from the banks, either by demonstrating that the same had been expended for business purposes or otherwise. Holding that the source and utilisation of the cash withdrawals remained unexplained, the 35,87,16,800/– as y and brought the same to tax under section 69 The Assessing Officer further noted that the assessee did not produce any supporting evidence in respect of purchases and other , as reflected in the profit and loss account. The details of such expenditure were Amount in Rs. 2,67,05,926 2,48,40,14,510 26,64,22,438 2,77,71,42,874 Printed from counselvise.com 4. Less: Expenses Already Discussed as disallowed 5 Balance Expenditure as per P & L Account 3.5 In view of the continued non assessee to furnish supporting details despite adequate opportunities, the Assessing Officer considered it reasonable to disallow 5% of the balance expenditure of claimed in the profit and loss account. Accordingly, a disallowance of ₹12,09,21,303/– was made. 4. On further appeal, the Ld. CIT(A) though upheld the validity of the reassessment but deleted the addition on merit. 5. Aggrieved, the Revenue is in appeal before the Trib raising grounds as reproduced above. 6. Before us, the assessee firm filed a Paper Book containing pages 1 to 55. 7. The ground Nos. 1 and 2 raised by the Revenue are directed against the deletion of the addition of Assessing Officer under section 69A of the Income which came to be deleted by the learned Commissioner of Income tax (Appeals). The Revenue has primarily assailed the impugned relief on the ground that the assessee of establishing the actual utilisation of the cash withdrawn for business purposes during the course of assessment proceedings, ITA Nos. 3895 to 3897/MUM/2025 Less: Expenses Already Discussed as 35,87,16,800 Balance Expenditure as per P & L Account 2,41,84,26,074 In view of the continued non-compliance and failure of the assessee to furnish supporting details despite adequate opportunities, the Assessing Officer considered it reasonable to disallow 5% of the balance expenditure of ₹2,41,84,26,074/ rofit and loss account. Accordingly, a disallowance was made. On further appeal, the Ld. CIT(A) though upheld the validity of the reassessment but deleted the addition on merit. Aggrieved, the Revenue is in appeal before the Trib raising grounds as reproduced above. Before us, the assessee firm filed a Paper Book containing The ground Nos. 1 and 2 raised by the Revenue are directed against the deletion of the addition of ₹35,87,16,800/ Assessing Officer under section 69A of the Income which came to be deleted by the learned Commissioner of Income tax (Appeals). The Revenue has primarily assailed the impugned relief on the ground that the assessee failed to discharge the onus of establishing the actual utilisation of the cash withdrawn for business purposes during the course of assessment proceedings, F A Construction 5 ITA Nos. 3895 to 3897/MUM/2025 35,87,16,800 2,41,84,26,074 compliance and failure of the assessee to furnish supporting details despite adequate opportunities, the Assessing Officer considered it reasonable to 2,41,84,26,074/– rofit and loss account. Accordingly, a disallowance On further appeal, the Ld. CIT(A) though upheld the validity of the reassessment but deleted the addition on merit. Aggrieved, the Revenue is in appeal before the Tribunal by way Before us, the assessee firm filed a Paper Book containing The ground Nos. 1 and 2 raised by the Revenue are directed 35,87,16,800/– made by the Assessing Officer under section 69A of the Income-tax Act, 1961, which came to be deleted by the learned Commissioner of Income- tax (Appeals). The Revenue has primarily assailed the impugned failed to discharge the onus of establishing the actual utilisation of the cash withdrawn for business purposes during the course of assessment proceedings, Printed from counselvise.com notwithstanding the fact that the withdrawals were made from disclosed bank accounts. 7.1 Before us, the learned Departmental Representative relied upon the assessment order and contended that, despite substantial cash withdrawals, the assessee failed to satisfactorily explain the utilisation thereof. It was submitted that in the absence of such explanation, the Assessing Officer was justified in treating the cash withdrawals as unexplained money under section 69A of the Act. 7.2 Per contra, the learned counsel for the assessee submitted that during the appellate proceedings the assessee furnished complete details to explain the utilisation of the cash withdrawn from the bank, including the cash book and sample vouchers. It was pointed out that the matter was remanded to the Assessing Officer, and during the remand proceedings no defect or infirmity was pointed out in the documents produced. After considering the remand report and the rejoinder filed by the assessee, the learned CIT(A) rightly deleted the addition. 7.3 The learned counsel invited our attention to page 39 of the Paper Book, being a letter the remand proceedings, calling upon the assessee to furnish complete details with justification. In response thereto, the assessee explained the cash withdrawals and submitted comprehensive documentation, including b ITA Nos. 3895 to 3897/MUM/2025 notwithstanding the fact that the withdrawals were made from disclosed bank accounts. s, the learned Departmental Representative relied upon the assessment order and contended that, despite substantial cash withdrawals, the assessee failed to satisfactorily explain the utilisation thereof. It was submitted that in the absence of such ation, the Assessing Officer was justified in treating the cash withdrawals as unexplained money under section 69A of the Act. Per contra, the learned counsel for the assessee submitted that during the appellate proceedings the assessee furnished ete details to explain the utilisation of the cash withdrawn from the bank, including the cash book and sample vouchers. It was pointed out that the matter was remanded to the Assessing Officer, and during the remand proceedings no defect or infirmity pointed out in the documents produced. After considering the remand report and the rejoinder filed by the assessee, the learned CIT(A) rightly deleted the addition. The learned counsel invited our attention to page 39 of the Paper Book, being a letter issued by the Assessing Officer during the remand proceedings, calling upon the assessee to furnish complete details with justification. In response thereto, the assessee explained the cash withdrawals and submitted comprehensive documentation, including bank-wise cash withdrawals, main cash F A Construction 6 ITA Nos. 3895 to 3897/MUM/2025 notwithstanding the fact that the withdrawals were made from s, the learned Departmental Representative relied upon the assessment order and contended that, despite substantial cash withdrawals, the assessee failed to satisfactorily explain the utilisation thereof. It was submitted that in the absence of such ation, the Assessing Officer was justified in treating the cash withdrawals as unexplained money under section 69A of the Act. Per contra, the learned counsel for the assessee submitted that during the appellate proceedings the assessee furnished ete details to explain the utilisation of the cash withdrawn from the bank, including the cash book and sample vouchers. It was pointed out that the matter was remanded to the Assessing Officer, and during the remand proceedings no defect or infirmity pointed out in the documents produced. After considering the remand report and the rejoinder filed by the assessee, the learned The learned counsel invited our attention to page 39 of the issued by the Assessing Officer during the remand proceedings, calling upon the assessee to furnish complete details with justification. In response thereto, the assessee explained the cash withdrawals and submitted comprehensive wise cash withdrawals, main cash Printed from counselvise.com book, site-wise petty cash books, and summaries of cash utilisation. The list of documents filed by the assessee, as available at page 41 of the Paper Book, included inter alia: bank withdrawal charts, highlighted cash books of various project sites, site utilisation summaries, sample vouchers and bills, details of creditors, and sample RA bills pertaining to government projects. 7.4 It was further explained th construction activities executed at multiple and often remote locations. The nature of the business necessitates engagement of labour from surrounding areas and distant places, including other States, where labourers fre payments. Construction activity being predominantly labour oriented, payment of wages in cash becomes inevitable. It was also submitted that urgent purchases of material and repairs to machinery and equipment at project cash payments. These business compulsions necessitated regular and substantial cash withdrawals to ensure uninterrupted execution of projects within stipulated timelines, failing which the assessee would face penal consequence Government and semi that all such cash payments were made within the permissible limits prescribed under section 40A(3) of the Act. ITA Nos. 3895 to 3897/MUM/2025 wise petty cash books, and summaries of cash utilisation. The list of documents filed by the assessee, as available at page 41 of the Paper Book, included inter alia: bank withdrawal charts, highlighted bank statements, main and petty cash books of various project sites, site-wise and head utilisation summaries, sample vouchers and bills, details of creditors, and sample RA bills pertaining to government projects. It was further explained that the assessee is engaged in civil construction activities executed at multiple and often remote locations. The nature of the business necessitates engagement of labour from surrounding areas and distant places, including other States, where labourers frequently change and insist upon cash payments. Construction activity being predominantly labour oriented, payment of wages in cash becomes inevitable. It was also submitted that urgent purchases of material and repairs to machinery and equipment at project sites often require immediate cash payments. These business compulsions necessitated regular and substantial cash withdrawals to ensure uninterrupted execution of projects within stipulated timelines, failing which the assessee would face penal consequences and risk blacklisting by Government and semi-Government authorities. It was emphasised that all such cash payments were made within the permissible limits prescribed under section 40A(3) of the Act. In view of above F A Construction 7 ITA Nos. 3895 to 3897/MUM/2025 wise petty cash books, and summaries of cash utilisation. The list of documents filed by the assessee, as available at page 41 of the Paper Book, included inter alia: bank-wise bank statements, main and petty wise and head-wise cash utilisation summaries, sample vouchers and bills, details of creditors, and sample RA bills pertaining to government projects. at the assessee is engaged in civil construction activities executed at multiple and often remote locations. The nature of the business necessitates engagement of labour from surrounding areas and distant places, including other quently change and insist upon cash payments. Construction activity being predominantly labour- oriented, payment of wages in cash becomes inevitable. It was also submitted that urgent purchases of material and repairs to sites often require immediate cash payments. These business compulsions necessitated regular and substantial cash withdrawals to ensure uninterrupted execution of projects within stipulated timelines, failing which the s and risk blacklisting by Government authorities. It was emphasised that all such cash payments were made within the permissible In view of above Printed from counselvise.com submission, the assessee prayed that h genuine utilization of the business purposes. 7.5 It was submitted that during original assessment proceedings also the amount debited under the labour charges was duly verified and only a minor amount was disallowed on ad assessee also submitted that similar cash withdrawals had been examined and accepted in earlier years, including in a reopened assessment for assessment year 2010 addition. Due to voluminous records and technical constra assessee placed physical files containing all supporting documents before the Assessing Officer during remand proceedings. 7.6 After considering the submissions of both sides and the remand report, the learned CIT(A) deleted the addition, recording a detailed and reasoned finding that the cash withdrawals were duly explained, accounted for in the books, and utilised for genuine business purposes. The learned CIT(A) further noted that although the Assessing Officer, in the remand report, acknowledged receipt and examination of extensive documentary evidence, no adverse material or discrepancy was brought on record to discredit the assessee’s explanation. reproduced as under: “7.4 It is found that the appellant has challenged the said addition, contending that the cash withdrawals were made from disclosed bank accounts for business purposes and du accounted for in the books of accounts. It is further observed that ITA Nos. 3895 to 3897/MUM/2025 submission, the assessee prayed that huge withdrawals were for the genuine utilization of the business purposes. It was submitted that during original assessment proceedings also the amount debited under the labour charges was duly verified and only a minor amount was disallowed on ad- assessee also submitted that similar cash withdrawals had been examined and accepted in earlier years, including in a reopened assessment for assessment year 2010–11, without any adverse addition. Due to voluminous records and technical constra assessee placed physical files containing all supporting documents before the Assessing Officer during remand proceedings. After considering the submissions of both sides and the remand report, the learned CIT(A) deleted the addition, recording a detailed and reasoned finding that the cash withdrawals were duly explained, accounted for in the books, and utilised for genuine siness purposes. The learned CIT(A) further noted that although the Assessing Officer, in the remand report, acknowledged receipt and examination of extensive documentary evidence, no adverse material or discrepancy was brought on record to discredit the ssessee’s explanation. The relevant finding of ld CIT(A) is as under: It is found that the appellant has challenged the said addition, contending that the cash withdrawals were made from disclosed bank accounts for business purposes and du accounted for in the books of accounts. It is further observed that F A Construction 8 ITA Nos. 3895 to 3897/MUM/2025 uge withdrawals were for the It was submitted that during original assessment proceedings also the amount debited under the labour charges was duly verified -hoc basis. The assessee also submitted that similar cash withdrawals had been examined and accepted in earlier years, including in a reopened 11, without any adverse addition. Due to voluminous records and technical constraints, the assessee placed physical files containing all supporting documents before the Assessing Officer during remand proceedings. After considering the submissions of both sides and the remand report, the learned CIT(A) deleted the addition, recording a detailed and reasoned finding that the cash withdrawals were duly explained, accounted for in the books, and utilised for genuine siness purposes. The learned CIT(A) further noted that although the Assessing Officer, in the remand report, acknowledged receipt and examination of extensive documentary evidence, no adverse material or discrepancy was brought on record to discredit the The relevant finding of ld CIT(A) is It is found that the appellant has challenged the said addition, contending that the cash withdrawals were made from disclosed bank accounts for business purposes and duly accounted for in the books of accounts. It is further observed that Printed from counselvise.com the appellant is engaged in civil construction contracts, particularly with government and semi involve labour facilities are limited. Consequently, the appellant withdraws cash from bank accounts to pay wages, procure materials and meet other on-site expenses. The AO initiated reassessment proceedings based on information regarding high received via the INSIGHT Portal. The assessment was completed ex-parte under Section 144, treating the cash withdrawals as unexplained money under Section 69A, on the ground that the appellant did not furnish supporting evidence during assessment proceedings. 7.5 It is found that the appellant provided substantial evidence regarding cash utilization and confirmed that significant amounts were paid to creditors, suppliers, and labourers. However, the AO, in the remand report, expressed an inability verification due to constraints but did not bring any adverse material to disprove the appellant's claims. 7.6 The addition under Section 69A of the Act is unjustified as the AO has treated the cash withdrawals from the appellant's disclosed bank accounts as unexplained money. However, the Hon'ble ITAT Raipur vide its order dated 10.01.2025 in the case of Harish Pandey vs. ACIT (ITA No. 503/RPR/2024) has categorically held that, \"Without making necessary inquiries, putting the entire bank deposits under the tax net on the basis of presumption to treat the same as taxable income of the assessee is found to be excessive. Such exercise could have been done either by the Ld. CIT(A), may be by himself or by directing the Ld. AO, h First Appellate Authority, who has the powers coterminous with that of the Ld. AO, had not thought it fit to exercise the same.\" 7.7 In the present case, during the assessment proceedings, the AO was precluded from making a detailed inquiry due appellant's failure to submit the required documents at that stage. The assessment was consequently completed under Section 144, where the AO, in the absence of any supporting evidence from the appellant, made an addition under Section 69A based on value cash withdrawals. However, during the appellate stage, the appellant furnished extensive documentary evidence, prompting me to direct a remand inquiry. The AO, in the remand report, has now had the opportunity to peruse the material submitted b appellant. ITA Nos. 3895 to 3897/MUM/2025 the appellant is engaged in civil construction contracts, particularly with government and semi-government entities. These contracts involve labour-intensive work at remote locations, where banking facilities are limited. Consequently, the appellant withdraws cash from bank accounts to pay wages, procure materials and meet site expenses. The AO initiated reassessment proceedings based on information regarding high-value cash wit received via the INSIGHT Portal. The assessment was completed parte under Section 144, treating the cash withdrawals as unexplained money under Section 69A, on the ground that the appellant did not furnish supporting evidence during assessment 7.5 It is found that the appellant provided substantial evidence regarding cash utilization and confirmed that significant amounts were paid to creditors, suppliers, and labourers. However, the AO, in the remand report, expressed an inability to conduct exhaustive verification due to constraints but did not bring any adverse material to disprove the appellant's claims. 7.6 The addition under Section 69A of the Act is unjustified as the AO has treated the cash withdrawals from the appellant's isclosed bank accounts as unexplained money. However, the Hon'ble ITAT Raipur vide its order dated 10.01.2025 in the case of Harish Pandey vs. ACIT (ITA No. 503/RPR/2024) has categorically \"Without making necessary inquiries, putting the entire bank deposits under the tax net on the basis of presumption to treat the same as taxable income of the assessee is found to be excessive. Such exercise could have been done either by the Ld. CIT(A), may be by himself or by directing the Ld. AO, h First Appellate Authority, who has the powers coterminous with that of the Ld. AO, had not thought it fit to exercise the same.\" 7.7 In the present case, during the assessment proceedings, the AO was precluded from making a detailed inquiry due appellant's failure to submit the required documents at that stage. The assessment was consequently completed under Section 144, where the AO, in the absence of any supporting evidence from the appellant, made an addition under Section 69A based on value cash withdrawals. However, during the appellate stage, the appellant furnished extensive documentary evidence, prompting me to direct a remand inquiry. The AO, in the remand report, has now had the opportunity to peruse the material submitted b F A Construction 9 ITA Nos. 3895 to 3897/MUM/2025 the appellant is engaged in civil construction contracts, particularly government entities. These contracts here banking facilities are limited. Consequently, the appellant withdraws cash from bank accounts to pay wages, procure materials and meet site expenses. The AO initiated reassessment proceedings value cash withdrawals received via the INSIGHT Portal. The assessment was completed parte under Section 144, treating the cash withdrawals as unexplained money under Section 69A, on the ground that the appellant did not furnish supporting evidence during assessment 7.5 It is found that the appellant provided substantial evidence regarding cash utilization and confirmed that significant amounts were paid to creditors, suppliers, and labourers. However, the AO, to conduct exhaustive verification due to constraints but did not bring any adverse 7.6 The addition under Section 69A of the Act is unjustified as the AO has treated the cash withdrawals from the appellant's isclosed bank accounts as unexplained money. However, the Hon'ble ITAT Raipur vide its order dated 10.01.2025 in the case of Harish Pandey vs. ACIT (ITA No. 503/RPR/2024) has categorically \"Without making necessary inquiries, putting the entire amount of bank deposits under the tax net on the basis of presumption to treat the same as taxable income of the assessee is found to be excessive. Such exercise could have been done either by the Ld. CIT(A), may be by himself or by directing the Ld. AO, however, the First Appellate Authority, who has the powers coterminous with that of the Ld. AO, had not thought it fit to exercise the same.\" 7.7 In the present case, during the assessment proceedings, the AO was precluded from making a detailed inquiry due to the appellant's failure to submit the required documents at that stage. The assessment was consequently completed under Section 144, where the AO, in the absence of any supporting evidence from the appellant, made an addition under Section 69A based on high- value cash withdrawals. However, during the appellate stage, the appellant furnished extensive documentary evidence, prompting me to direct a remand inquiry. The AO, in the remand report, has now had the opportunity to peruse the material submitted by the Printed from counselvise.com 7.8 The remand report acknowledges that the appellant has provided substantial evidence to substantiate the utilization of cash withdrawals. The AO notes: \"On perusal of submissions made by the assessee, it has been observed that the asses 36,01,03,995/ consideration. In support of its claim, the assessee has provided the bank statements for the relevant period of the related bank accounts. The assessee petty cash books of various sites. Further, the, assessee provided the site- wise and head same, it has been observed that the assessee made utilization of cash for direct exp creditors totaling to Rs. 35,52,42,438/ consideration. Further, the assessee has also provided the bills and vouchers for work done for various heads related to specific projects on a sample basi accounts of these entities, and it is observed that payments to these vendors were made from the cash available as per the cash book.\" 7.9 Additionally, the AO in the remand report confirms that the appellant has submi including as below: \"Chart of bank statements, main cash book and site wise and head vouchers to explain and their ledgers, and RA bills raised during the year along with sample copies signed by government engineers.\" 7.10 Despite having reviewed these records, the AO in the remand report does not bring any ad claim that the withdrawals were used for business purposes. The Hon'ble ITAT Ahmedabad vide its order dated 10.10.2024 in the case of Rajendra Gadhia vs. ITO (ITA No. 31/Ahd/2024) held that \"cash withdrawal satisfactor cannot be added u/s. 69A of the Act.\" 7.10.1 The Hon'ble ITAT has also ruled that: \"Once cash withdrawals are demonstrated, the burden shifts to the Department to disprove their availability for subsequent deposits. ITA Nos. 3895 to 3897/MUM/2025 7.8 The remand report acknowledges that the appellant has provided substantial evidence to substantiate the utilization of cash withdrawals. The AO notes: \"On perusal of submissions made by the assessee, it has been observed that the assessee has withdrawn cash totalling to Rs. 36,01,03,995/- from various bank accounts during the year under consideration. In support of its claim, the assessee has provided the bank statements for the relevant period of the related bank accounts. The assessee provided the main cash book along with petty cash books of various sites. Further, the, assessee provided wise and head-wise cash utilization. On perusal of the same, it has been observed that the assessee made utilization of cash for direct expenses, indirect expenses, and payment to creditors totaling to Rs. 35,52,42,438/- for the year under consideration. Further, the assessee has also provided the bills and vouchers for work done for various heads related to specific projects on a sample basis. The assessee also provided ledger accounts of these entities, and it is observed that payments to these vendors were made from the cash available as per the cash 7.9 Additionally, the AO in the remand report confirms that the appellant has submitted a range of supporting documents, including as below: \"Chart of bank-wise cash withdrawals along with bank statements, main cash book and site-wise petty cash books, site wise and head-wise cash utilization details, sample bills and vouchers to explain the nature of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with sample copies signed by government engineers.\" 7.10 Despite having reviewed these records, the AO in the remand report does not bring any adverse finding against the appellant's claim that the withdrawals were used for business purposes. The Hon'ble ITAT Ahmedabad vide its order dated 10.10.2024 in the case of Rajendra Gadhia vs. ITO (ITA No. 31/Ahd/2024) held that \"cash withdrawal satisfactorily explained through documents cannot be added u/s. 69A of the Act.\" The Hon'ble ITAT has also ruled that: \"Once cash withdrawals are demonstrated, the burden shifts to the Department to disprove their availability for subsequent F A Construction 10 ITA Nos. 3895 to 3897/MUM/2025 7.8 The remand report acknowledges that the appellant has provided substantial evidence to substantiate the utilization of \"On perusal of submissions made by the assessee, it has been see has withdrawn cash totalling to Rs. from various bank accounts during the year under consideration. In support of its claim, the assessee has provided the bank statements for the relevant period of the related bank provided the main cash book along with petty cash books of various sites. Further, the, assessee provided wise cash utilization. On perusal of the same, it has been observed that the assessee made utilization of enses, indirect expenses, and payment to for the year under consideration. Further, the assessee has also provided the bills and vouchers for work done for various heads related to specific s. The assessee also provided ledger accounts of these entities, and it is observed that payments to these vendors were made from the cash available as per the cash 7.9 Additionally, the AO in the remand report confirms that the tted a range of supporting documents, wise cash withdrawals along with bank wise petty cash books, site- wise cash utilization details, sample bills and the nature of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with 7.10 Despite having reviewed these records, the AO in the remand verse finding against the appellant's claim that the withdrawals were used for business purposes. The Hon'ble ITAT Ahmedabad vide its order dated 10.10.2024 in the case of Rajendra Gadhia vs. ITO (ITA No. 31/Ahd/2024) held that ily explained through documents \"Once cash withdrawals are demonstrated, the burden shifts to the Department to disprove their availability for subsequent Printed from counselvise.com Further, it was held that \"When the assessee has satisfactorily explained cash withdrawals through documented evidence, and the AO has not brought any adverse material on record to disprove their availability, an addition under Section 69A cannot be sustained.\" ٠٨7.11 The Hon'ble ITAT Mumbai vide its order dated 12.05.2023, in the case of Ramchandra Kanu Mendadkar vs. CIT(A) (ITA No. 163/MUM/2023), clarifies that: \"addition under Section 69A of the Income Tax Act can only be made if the assessee is found to be the recorded in the books of account and fails to provide a satisfactory explanation regarding the source of the money.\" It further held that: \"on perusal of record, we noticed that the assessee had provided supporting documents such and ledger copy of professional fees to the lower authorities. Additionally, a detailed breakdown of cash fees received from Mr. Sagun Naik and the receipt of professional fees via cheque from Mr. Biren Limbachiya was als From the plain reading of above provisions, it is clear that the addition under section 69A of the Income Tax Act could only be made if the assessee is found to be the owner of money that is not recorded in the books of account and the assesse explanation about the source of the money.\" 7.12 The Hon'ble ITAT Surat vide its order dated 13.11.2023, in the case of Harishbhai G. Chovatiya vs. ITO (ITA No. 486/SRT/2023), further emphasized that: \"Once the assessee has explained the assessing officer was not justified in doubting the availability of such cash in hand for the sole ground of long period of holding, without bringing rebutting such contention.\" The Tribunal also noted: \"The assessing officer ha evidence on record that the cash in hand was beyond the withdrawal from bank.\" ITA Nos. 3895 to 3897/MUM/2025 it was held that \"When the assessee has satisfactorily explained cash withdrawals through documented evidence, and the AO has not brought any adverse material on record to disprove their availability, an addition under Section 69A cannot be sustained.\" 7.11 The Hon'ble ITAT Mumbai vide its order dated 12.05.2023, in the case of Ramchandra Kanu Mendadkar vs. CIT(A) (ITA No. 163/MUM/2023), clarifies that: \"addition under Section 69A of the Income Tax Act can only be made if the assessee is found to be the owner of money that is not recorded in the books of account and fails to provide a satisfactory explanation regarding the source of the money.\" It further held that: \"on perusal of record, we noticed that the assessee had provided supporting documents such as the cash book, bank statement, and ledger copy of professional fees to the lower authorities. Additionally, a detailed breakdown of cash fees received from Mr. Sagun Naik and the receipt of professional fees via cheque from Mr. Biren Limbachiya was also submitted. From the plain reading of above provisions, it is clear that the addition under section 69A of the Income Tax Act could only be made if the assessee is found to be the owner of money that is not recorded in the books of account and the assessee is not offering explanation about the source of the money.\" 7.12 The Hon'ble ITAT Surat vide its order dated 13.11.2023, in the case of Harishbhai G. Chovatiya vs. ITO (ITA No. 486/SRT/2023), further emphasized that: \"Once the assessee has explained the source of cash in hand, the assessing officer was not justified in doubting the availability of such cash in hand for the sole ground of long period of holding, without bringing rebutting such contention.\" The Tribunal also noted: \"The assessing officer has not brought any adverse material or evidence on record that the cash in hand was beyond the withdrawal from bank.\" F A Construction 11 ITA Nos. 3895 to 3897/MUM/2025 \"When the assessee has satisfactorily explained cash withdrawals through documented evidence, and the AO has not brought any adverse material on record to disprove their availability, an 7.11 The Hon'ble ITAT Mumbai vide its order dated 12.05.2023, in the case of Ramchandra Kanu Mendadkar vs. CIT(A) (ITA No. \"addition under Section 69A of the Income Tax Act can only be owner of money that is not recorded in the books of account and fails to provide a satisfactory \"on perusal of record, we noticed that the assessee had provided as the cash book, bank statement, and ledger copy of professional fees to the lower authorities. Additionally, a detailed breakdown of cash fees received from Mr. Sagun Naik and the receipt of professional fees via cheque from From the plain reading of above provisions, it is clear that the addition under section 69A of the Income Tax Act could only be made if the assessee is found to be the owner of money that is not e is not offering 7.12 The Hon'ble ITAT Surat vide its order dated 13.11.2023, in the case of Harishbhai G. Chovatiya vs. ITO (ITA No. source of cash in hand, the assessing officer was not justified in doubting the availability of such cash in hand for the sole ground of long period of holding, s not brought any adverse material or evidence on record that the cash in hand was beyond the Printed from counselvise.com 7.13 In light of these findings, it is evident that the appellant has fully explained the source and utilization of cash withdrawals. The AO, having reviewed these documents, has not raised any specific discrepancies or contrary evidence to support the original addition under Section 69A. The appellant operates in the civil construction sector, undertaking government projects at remote locati banking facilities are limited. It was submitted that labourers are paid in cash and materials are procured from suppliers who insist on cash payments. This business necessity justifies cash withdrawals. The Hon'ble ITAT Surat, in the case of Harishbhai G. Chovatiya (supra), observed that: \"There is no restriction or limit for keeping cash at home (hand). The Assessing Officer has not brought any adverse material or evidence that such cash was invested anywhere else. The Ld.AR of the assessee sub Rs.6,77,106/ withdrawal from his bank account, then the lower authorities were not justified in treating the cash available with the assessee as unexplained.\" Similarly, in the case of Rajendra Gadhia vs. ITO (supra), the ITAT noted that: \"the Department has not provided contrary evidence. Therefore, the Tribunal concludes that the withdrawals from these accounts should be treated as the source for Rs.8,30,000/ during demonetization. Judicial precedents, such as, judgement of Jurisdictional High Court in the case of Shailesh Rasiklal Mehta reported at (2009) 176 taxmann.com 270 (Gujarat), support this conclusion by establishing that once cash withdra demonstrated, the burden shifts to the Department to disprove their availability for subsequent deposits.\" 7.14 In view of above, I am the opinion that the cash withdrawals were made due to genuine business requirements, the AOs action in treating them as unexplained cannot be sustained. The documents submitted include a chart of bank withdrawals along with bank statements, main cash book and site-wise petty cash books, site utilization details, sample bills and vo of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with sample copies signed by government engineers. ITA Nos. 3895 to 3897/MUM/2025 7.13 In light of these findings, it is evident that the appellant has fully explained the source and utilization of cash withdrawals. The O, having reviewed these documents, has not raised any specific discrepancies or contrary evidence to support the original addition under Section 69A. The appellant operates in the civil construction sector, undertaking government projects at remote locati banking facilities are limited. It was submitted that labourers are paid in cash and materials are procured from suppliers who insist on cash payments. This business necessity justifies cash withdrawals. The Hon'ble ITAT Surat, in the case of ishbhai G. Chovatiya (supra), observed that: \"There is no restriction or limit for keeping cash at home (hand). The Assessing Officer has not brought any adverse material or evidence that such cash was invested anywhere else. The Ld.AR of the assessee submits that once the closing balance cash of Rs.6,77,106/- was accepted and the assessee has clearly proved withdrawal from his bank account, then the lower authorities were not justified in treating the cash available with the assessee as unexplained.\" larly, in the case of Rajendra Gadhia vs. ITO (supra), the ITAT \"the Department has not provided contrary evidence. Therefore, the Tribunal concludes that the withdrawals from these accounts should be treated as the source for Rs.8,30,000/- of during demonetization. Judicial precedents, such as, judgement of Jurisdictional High Court in the case of Shailesh Rasiklal Mehta reported at (2009) 176 taxmann.com 270 (Gujarat), support this conclusion by establishing that once cash withdra demonstrated, the burden shifts to the Department to disprove their availability for subsequent deposits.\" 7.14 In view of above, I am the opinion that the cash withdrawals were made due to genuine business requirements, the AOs action them as unexplained cannot be sustained. The documents submitted include a chart of bank withdrawals along with bank statements, main cash book and wise petty cash books, site-wise and head utilization details, sample bills and vouchers to explain the nature of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with sample copies signed by government engineers. F A Construction 12 ITA Nos. 3895 to 3897/MUM/2025 7.13 In light of these findings, it is evident that the appellant has fully explained the source and utilization of cash withdrawals. The O, having reviewed these documents, has not raised any specific discrepancies or contrary evidence to support the original addition under Section 69A. The appellant operates in the civil construction sector, undertaking government projects at remote locations where banking facilities are limited. It was submitted that labourers are paid in cash and materials are procured from suppliers who insist on cash payments. This business necessity justifies cash \"There is no restriction or limit for keeping cash at home (hand). The Assessing Officer has not brought any adverse material or evidence that such cash was invested anywhere else. The Ld.AR mits that once the closing balance cash of was accepted and the assessee has clearly proved withdrawal from his bank account, then the lower authorities were not justified in treating the cash available with the assessee as larly, in the case of Rajendra Gadhia vs. ITO (supra), the ITAT \"the Department has not provided contrary evidence. Therefore, the Tribunal concludes that the withdrawals from these accounts of the deposits during demonetization. Judicial precedents, such as, judgement of Jurisdictional High Court in the case of Shailesh Rasiklal Mehta reported at (2009) 176 taxmann.com 270 (Gujarat), support this conclusion by establishing that once cash withdrawals are demonstrated, the burden shifts to the Department to disprove 7.14 In view of above, I am the opinion that the cash withdrawals were made due to genuine business requirements, the AOs action them as unexplained cannot be sustained. The documents submitted include a chart of bank-wise cash withdrawals along with bank statements, main cash book and wise and head-wise cash uchers to explain the nature of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with sample copies signed by Printed from counselvise.com 7.15 For the reasons discussed above, the cash withdrawals were made from dis books of accounts. The assessee has furnished substantial documentary evidence to demonstrate the utilization of the withdrawn cash towards business expenses, including payments to labourers, creditors, an are integral to the appellant's civil construction business. The AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material evidence to contra any contrary evidence and the settled legal position that satisfactorily explained withdrawals cannot be treated as unexplained money under Section 69A, the addition of Rs. 35,87,16,800/ ground no. 9 of appeal is allowed. 8. We have heard the rival submissions and carefully perused the material available on record. The Assessing Officer treated the cash withdrawals from the assessee’s disclosed bank accounts as unexplained money under section 69A of the Act. reference section 69A of the Act is reproduced as under: “[Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, main any source of income, and the assessee offers no explanation about the nature and source of acquisition of the jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.] 8.1 The section 69A provides that an addition can be made only where the assessee is found to be the owner of money not recorded in the books of account and fails to offer a regarding the nature and source thereof. On a plain reading of the ITA Nos. 3895 to 3897/MUM/2025 7.15 For the reasons discussed above, the cash withdrawals were made from disclosed bank accounts and were duly recorded in the books of accounts. The assessee has furnished substantial documentary evidence to demonstrate the utilization of the withdrawn cash towards business expenses, including payments to labourers, creditors, and for material procurement, all of which are integral to the appellant's civil construction business. The AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material evidence to contradict the appellant's claims. Given the absence of any contrary evidence and the settled legal position that satisfactorily explained withdrawals cannot be treated as unexplained money under Section 69A, the addition of Rs. 35,87,16,800/- made by the AO is deleted. Accordingly, the ground no. 9 of appeal is allowed.” We have heard the rival submissions and carefully perused the material available on record. The Assessing Officer treated the cash withdrawals from the assessee’s disclosed bank accounts as nexplained money under section 69A of the Act. reference section 69A of the Act is reproduced as under: [Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valu and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the 52[Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.]” The section 69A provides that an addition can be made only where the assessee is found to be the owner of money not recorded in the books of account and fails to offer a satisfactory explanation regarding the nature and source thereof. On a plain reading of the F A Construction 13 ITA Nos. 3895 to 3897/MUM/2025 7.15 For the reasons discussed above, the cash withdrawals were closed bank accounts and were duly recorded in the books of accounts. The assessee has furnished substantial documentary evidence to demonstrate the utilization of the withdrawn cash towards business expenses, including payments d for material procurement, all of which are integral to the appellant's civil construction business. The AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material dict the appellant's claims. Given the absence of any contrary evidence and the settled legal position that satisfactorily explained withdrawals cannot be treated as unexplained money under Section 69A, the addition of Rs. deleted. Accordingly, the We have heard the rival submissions and carefully perused the material available on record. The Assessing Officer treated the cash withdrawals from the assessee’s disclosed bank accounts as nexplained money under section 69A of the Act. For ready reference section 69A of the Act is reproduced as under: 69A. Where in any financial year the assessee is found to be the valuable article and such money, bullion, jewellery or valuable article is not tained by him for any source of income, and the assessee offers no explanation money, bullion, jewellery or other valuable article, or the explanation offered by [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such The section 69A provides that an addition can be made only where the assessee is found to be the owner of money not recorded satisfactory explanation regarding the nature and source thereof. On a plain reading of the Printed from counselvise.com statutory provision, it is evident that the primary requirement for invoking section 69A is that the source of the money should be unexplained or not recorded in th case, the Assessing Officer himself has acknowledged that the amounts in question were withdrawn from the assessee’s disclosed bank accounts. Thus, the source of the cash stands duly explained and is not in dispute. 8.2 Once the source of cash is established, no addition under section 69A can be sustained merely on the basis of doubt regarding its utilisation. If the Assessing Officer was of the view that any expenditure was not incurred wholly and exclusively for the purposes of business, or that vouchers were defective or unverifiable, the appropriate course would have been to examine such expenditure under the relevant provisions of the Act. However, the deeming provisions of section 69A cannot be invoked solely on the ground that the Assessing Officer was not satisfied about the utilisation of the cash, despite the source being clearly established. 8.3 In the present case, the assessee has produced voluminous documentary evidence, including books of account, cash books, vouchers, and site- examined during the remand proceedings. The Assessing Officer, despite such examination, has not pointed out any specific discrepancy or brought any adverse material on record to rebut the assessee’s explanation. ITA Nos. 3895 to 3897/MUM/2025 statutory provision, it is evident that the primary requirement for invoking section 69A is that the source of the money should be unexplained or not recorded in the books of account. In the present case, the Assessing Officer himself has acknowledged that the amounts in question were withdrawn from the assessee’s disclosed bank accounts. Thus, the source of the cash stands duly explained and is not in dispute. Once the source of cash is established, no addition under section 69A can be sustained merely on the basis of doubt regarding its utilisation. If the Assessing Officer was of the view that any expenditure was not incurred wholly and exclusively for the poses of business, or that vouchers were defective or unverifiable, the appropriate course would have been to examine such expenditure under the relevant provisions of the Act. However, the deeming provisions of section 69A cannot be invoked solely on ground that the Assessing Officer was not satisfied about the utilisation of the cash, despite the source being clearly established. In the present case, the assessee has produced voluminous documentary evidence, including books of account, cash books, -wise utilisation details, all of which were examined during the remand proceedings. The Assessing Officer, despite such examination, has not pointed out any specific discrepancy or brought any adverse material on record to rebut the essee’s explanation. F A Construction 14 ITA Nos. 3895 to 3897/MUM/2025 statutory provision, it is evident that the primary requirement for invoking section 69A is that the source of the money should be e books of account. In the present case, the Assessing Officer himself has acknowledged that the amounts in question were withdrawn from the assessee’s disclosed bank accounts. Thus, the source of the cash stands duly explained Once the source of cash is established, no addition under section 69A can be sustained merely on the basis of doubt regarding its utilisation. If the Assessing Officer was of the view that any expenditure was not incurred wholly and exclusively for the poses of business, or that vouchers were defective or unverifiable, the appropriate course would have been to examine such expenditure under the relevant provisions of the Act. However, the deeming provisions of section 69A cannot be invoked solely on ground that the Assessing Officer was not satisfied about the utilisation of the cash, despite the source being clearly established. In the present case, the assessee has produced voluminous documentary evidence, including books of account, cash books, wise utilisation details, all of which were examined during the remand proceedings. The Assessing Officer, despite such examination, has not pointed out any specific discrepancy or brought any adverse material on record to rebut the Printed from counselvise.com 8.4 In view of the above facts and the settled legal position, we find no infirmity in the order of the learned CIT(A) deleting the addition of ₹35,87,16,800/– made under section 69A of the Act. The grounds raised by the Revenue are 9. Ground Nos. 3 and 4 raised by the Revenue pertain to the deletion of an ad hoc disallowance of the total expenditure of in its profit and loss account. 10. We have heard the rival submissions and carefully perused the material available on record. We find that, after considering the submissions made during the remand proceedings, the learned Commissioner of Income recording detailed findings, which read as under: “8.1 I have carefully considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. It is found that mentioned that during assessment proceedings, the appellant was asked to provide the details of the expenditure and substantiate to the claims of expenditure with necessary supporting documents. However, the a incurred before the AO. As appellant failed to comply with the notices issued by the AO and not provided any related documents, the AO disallowed Rs. 12,09,21,303/ incurred of Rs. 241,84,26,074/ A/c. and added in the total income of the appellant. 8.2 During appellate proceedings, the appellant submitted all the supporting documents related to cash withdrawals from its bank accounts, Main cash boo sample bills, vouchers to explain the nature of expenditure incurred, purchase bills, ledgers of debtors and creditors. The said ITA Nos. 3895 to 3897/MUM/2025 In view of the above facts and the settled legal position, we find no infirmity in the order of the learned CIT(A) deleting the addition made under section 69A of the Act. The grounds raised by the Revenue are accordingly dismissed. Ground Nos. 3 and 4 raised by the Revenue pertain to the deletion of an ad hoc disallowance of ₹12,09,21,303/ the total expenditure of ₹2,41,84,26,074/– claimed by the assessee in its profit and loss account. have heard the rival submissions and carefully perused the material available on record. We find that, after considering the submissions made during the remand proceedings, the learned Commissioner of Income-tax (Appeals) deleted the disallowance, g detailed findings, which read as under: 8.1 I have carefully considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. It is found that vide para 23 and 24 of assessment order the AO mentioned that during assessment proceedings, the appellant was asked to provide the details of the expenditure and substantiate to the claims of expenditure with necessary supporting documents. However, the appellant did not provide any details of expenditure incurred before the AO. As appellant failed to comply with the notices issued by the AO and not provided any related documents, the AO disallowed Rs. 12,09,21,303/- being 5% of the expenditure Rs. 241,84,26,074/- claimed under Profit and Loss A/c. and added in the total income of the appellant. 8.2 During appellate proceedings, the appellant submitted all the supporting documents related to cash withdrawals from its bank accounts, Main cash book alongwith site wise petty cash book, sample bills, vouchers to explain the nature of expenditure incurred, purchase bills, ledgers of debtors and creditors. The said F A Construction 15 ITA Nos. 3895 to 3897/MUM/2025 In view of the above facts and the settled legal position, we find no infirmity in the order of the learned CIT(A) deleting the addition made under section 69A of the Act. The grounds Ground Nos. 3 and 4 raised by the Revenue pertain to the 12,09,21,303/–, being 5% of claimed by the assessee have heard the rival submissions and carefully perused the material available on record. We find that, after considering the submissions made during the remand proceedings, the learned tax (Appeals) deleted the disallowance, 8.1 I have carefully considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. vide para 23 and 24 of assessment order the AO mentioned that during assessment proceedings, the appellant was asked to provide the details of the expenditure and substantiate to the claims of expenditure with necessary supporting documents. ppellant did not provide any details of expenditure incurred before the AO. As appellant failed to comply with the notices issued by the AO and not provided any related documents, being 5% of the expenditure claimed under Profit and Loss 8.2 During appellate proceedings, the appellant submitted all the supporting documents related to cash withdrawals from its bank k alongwith site wise petty cash book, sample bills, vouchers to explain the nature of expenditure incurred, purchase bills, ledgers of debtors and creditors. The said Printed from counselvise.com details are forwarded to the AO and a remand report was called from him. The rejoinder f the remand report. 8.3 The AO in his remand report submitted his comments wherein he stated that on perusal of audited books of accounts submitted by the appellant, it has been observed that total direct expenses are of Rs. 190,08,93,929/ 25,67,69,541/ under consideration. Out of these total expenses, payments made in cash is Rs. 11,89,77,013/ 87,38,742/- fo 8.4 The AO further mentioned that the appellant is engaged in the business of civil construction work undertaken for Government, Semi-Government, and private contracts. These construction projects are spread across multiple locations and typically extend beyond a year for completion. Given the diverse and numerous project sites, labourers are assembled from nearby areas as well as from distant states. These labourers, primarily unskilled, need to be retained for extended periods, necessitating the provision of on-site accommodation and essential amenities. Wage payments to these labourers, along with related expenses, often require cash transactions, making cash withdrawals vals unavoidable. Additionally, material procurement, transportation charges, and other essential expenses, particularly for remote project sites, also necessitate cash payments. The AO observed that the appellant had incurred all cash payments within the prescribed limits under Section 40A(3) of the Income Tax Act, which he has verified from the cash books provided by 8.5 As per remand report the AO mentioned that the appellant has furnished substantial documentary evidence in connection ion to to business b expenses, includ and for material procurement, all of which are integral to the appellant's civil construction business. The AO, perused these documents during the remand proceedings, has neither raised any adverse finding nor presented the appellant's claims. 8.6 In view of above facts, the appellant has furnished substantial documentary evidence in connection to business expenses, including payments to labourers, creditors and purchase of material. The AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material evidence to contradict the appellant's claims. Hence, the AO is directed to delete the disallowances made ITA Nos. 3895 to 3897/MUM/2025 details are forwarded to the AO and a remand report was called from him. The rejoinder from appellant was also called for against the remand report. 8.3 The AO in his remand report submitted his comments wherein he stated that on perusal of audited books of accounts submitted by the appellant, it has been observed that total direct expenses re of Rs. 190,08,93,929/- and indirect expenses of Rs 25,67,69,541/- (totalling to Rs. 215,76,63,470/-) during the year under consideration. Out of these total expenses, payments made in cash is Rs. 11,89,77,013/- for direct expenses and Rs. for indirect expenses (totalling to Rs. 12,77,15,755/ 8.4 The AO further mentioned that the appellant is engaged in the business of civil construction work undertaken for Government, Government, and private contracts. These construction spread across multiple locations and typically extend beyond a year for completion. Given the diverse and numerous project sites, labourers are assembled from nearby areas as well as from distant states. These labourers, primarily unskilled, need ained for extended periods, necessitating the provision of site accommodation and essential amenities. Wage payments to these labourers, along with related expenses, often require cash transactions, making cash withdrawals vals unavoidable. , material procurement, transportation charges, and other essential expenses, particularly for remote project sites, also necessitate cash payments. The AO observed that the appellant had incurred all cash payments within the prescribed limits under n 40A(3) of the Income Tax Act, which he has verified from the cash books provided by appellant. 8.5 As per remand report the AO mentioned that the appellant has furnished substantial documentary evidence in connection ion to to business b expenses, including payments to labourers, creditors and for material procurement, all of which are integral to the appellant's civil construction business. The AO, perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material evidence to contradict the appellant's claims. 8.6 In view of above facts, the appellant has furnished substantial documentary evidence in connection to business expenses, including payments to labourers, creditors and purchase of he AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material evidence to contradict the appellant's claims. Hence, the AO is directed to delete the disallowances made F A Construction 16 ITA Nos. 3895 to 3897/MUM/2025 details are forwarded to the AO and a remand report was called rom appellant was also called for against 8.3 The AO in his remand report submitted his comments wherein he stated that on perusal of audited books of accounts submitted by the appellant, it has been observed that total direct expenses and indirect expenses of Rs ) during the year under consideration. Out of these total expenses, payments made for direct expenses and Rs. r indirect expenses (totalling to Rs. 12,77,15,755/-). 8.4 The AO further mentioned that the appellant is engaged in the business of civil construction work undertaken for Government, Government, and private contracts. These construction spread across multiple locations and typically extend beyond a year for completion. Given the diverse and numerous project sites, labourers are assembled from nearby areas as well as from distant states. These labourers, primarily unskilled, need ained for extended periods, necessitating the provision of site accommodation and essential amenities. Wage payments to these labourers, along with related expenses, often require cash transactions, making cash withdrawals vals unavoidable. , material procurement, transportation charges, and other essential expenses, particularly for remote project sites, also necessitate cash payments. The AO observed that the appellant had incurred all cash payments within the prescribed limits under n 40A(3) of the Income Tax Act, which he has verified from 8.5 As per remand report the AO mentioned that the appellant has furnished substantial documentary evidence in connection ion to to ing payments to labourers, creditors and for material procurement, all of which are integral to the appellant's civil construction business. The AO, perused these documents during the remand proceedings, has neither raised any any material evidence to contradict 8.6 In view of above facts, the appellant has furnished substantial documentary evidence in connection to business expenses, including payments to labourers, creditors and purchase of he AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material evidence to contradict the appellant's claims. Hence, the AO is directed to delete the disallowances made Printed from counselvise.com of Rs. 12,09,21 Accordingly, the ground no. 10 of appeal is also allowed. 11. We find merit in the reasoning adopted by the learned CIT(A). The Assessing Officer has not pointed out any specific defect in the books of account, no as non-genuine, excessive, or unsupported by vouchers. The disallowance has been made purely on an ad hoc basis, without rejecting the books of account or bringing any cogent material on record. It is well settled that ad hoc disallowances, in the absence of specific defects or findings, are impermissible in law unless conceded by the assessee. 11.1 In the present case, the assessee has produced complete books of account and supporting evidence during appellate proceedings, all of which were examined by the Assessing Officer in remand proceedings, without any adverse comment. In such circumstances, the deletion of the ad hoc disallowance by the learned CIT(A) calls for no interference. 11.2 Accordingly, we find CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed. 12. In the appeal for the other years also identical grounds except change of the amount have been raised by the Revenue and therefore, following our grounds of other appeals ITA Nos. 3895 to 3897/MUM/2025 of Rs. 12,09,21,303/- being 5% of the total expenditure. Accordingly, the ground no. 10 of appeal is also allowed. We find merit in the reasoning adopted by the learned CIT(A). The Assessing Officer has not pointed out any specific defect in the books of account, nor has he identified any particular expenditure genuine, excessive, or unsupported by vouchers. The disallowance has been made purely on an ad hoc basis, without rejecting the books of account or bringing any cogent material on tled that ad hoc disallowances, in the absence of specific defects or findings, are impermissible in law unless conceded by the assessee. In the present case, the assessee has produced complete books of account and supporting evidence during appellate proceedings, all of which were examined by the Assessing Officer in remand proceedings, without any adverse comment. In such circumstances, the deletion of the ad hoc disallowance by the learned CIT(A) calls for no interference. Accordingly, we find no infirmity in the order of the learned CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed. In the appeal for the other years also identical grounds except change of the amount have been raised by the Revenue and therefore, following our finding in assessment year 2014 of other appeals are decided mutatis mutandis F A Construction 17 ITA Nos. 3895 to 3897/MUM/2025 being 5% of the total expenditure. Accordingly, the ground no. 10 of appeal is also allowed.” We find merit in the reasoning adopted by the learned CIT(A). The Assessing Officer has not pointed out any specific defect in the r has he identified any particular expenditure genuine, excessive, or unsupported by vouchers. The disallowance has been made purely on an ad hoc basis, without rejecting the books of account or bringing any cogent material on tled that ad hoc disallowances, in the absence of specific defects or findings, are impermissible in law unless In the present case, the assessee has produced complete books of account and supporting evidence during appellate proceedings, all of which were examined by the Assessing Officer in remand proceedings, without any adverse comment. In such circumstances, the deletion of the ad hoc disallowance by the no infirmity in the order of the learned CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed. In the appeal for the other years also identical grounds except change of the amount have been raised by the Revenue and finding in assessment year 2014-15, mutatis mutandis. Printed from counselvise.com 13. In the result, all the three appeals of the Revenue are dismissed. Order pronounced in the open Court Sd/- (SANDEEP GOSAIN JUDICIAL MEMBER Mumbai; Dated: 23/01/2026 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 Nos. 3895 to 3897/MUM/2025 In the result, all the three appeals of the Revenue are ounced in the open Court on 23/01/2026. Sd/ (SANDEEP GOSAIN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai F A Construction 18 ITA Nos. 3895 to 3897/MUM/2025 In the result, all the three appeals of the Revenue are /01/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "
Other Referred Cases
Harish Pandey vs. ACIT, Rajendra Gadhia vs. ITO, Ramchandra Kanu Mendadkar vs. CIT(A), Harishbhai G. Chovatiya vs. ITO, Shailesh Rasiklal Mehta vs. CIT
Laws Referred To
Income-tax Act, 1961
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