DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(4), MUMBAI, MUMBAI V. MANISHA KAMAL KHETAN, MUMBAI

ITA 7891/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the additions made by the Assessing Officer on account of unexplained cash credits and notional rent. The assessee, Manisha Kamal Khetan, was implicated due to her signing authority in foreign bank accounts and her association with properties in Dubai. The Assessing Officer had treated the peak balances in these accounts and the notional rent from a property as unexplained cash credits and income from house property, respectively. However, the CIT(A) found that the assessee did not have beneficial ownership or control over these assets, leading to the deletion of the additions. The Tribunal affirmed the CIT(A)'s decision after a detailed examination of the documents and arguments presented.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837959 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2023-2024
• Appeal Filed On: 26-11-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAMKOSURI; LD
• Assessee Lawyers: RAKESH JOSHI; LD
• Keywords: Unexplained cash credit; Peak credit; Assessment record
• Section: 143(3); 68; 27

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 7891/Mum/2025 (Assessment Year: 2023-24) DCIT Central Circle- 3(4) Room No. 413, 4th floor, Kautilya Bhavan, Bandra Kurla Complex, Mumbai- 400 051 Vs. Manisha Kamal Khetan, 4th floor, 35 Shantideep Building, Andheri Kurla Road, Andheri East, Mumbai-400 059 PAN/GIR No. ABTPK3232G (Applicant) (Respondent) Revenue by Shri Annavaram Kosuri, Ld. DR Assessee by Shri Rakesh Joshi, Ld. AR Date of Hearing 19.02.2026 Date of Pronouncement 20.02.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal is filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals)-51, Mumbai [hereinafter referred to as “the Ld. CIT(A)”] under section 250 of the Income-tax Act, 1961 dated 17.09.2025, arising out of the assessment order passed by the Deputy Commissioner of Income Printed from counselvise.com 2 ITA No. 7891/Mum/2025 Manisha Kamal Khetan Tax, Central Circle 3(4), Mumbai [hereinafter referred to as “the Assessing Officer” or “the AO”] under section 143(3) of the Act dated 31.12.2024 for the Assessment Year 2023–24. Facts of the Case 2. The assessee is an individual and resident in India. For the Assessment Year 2023–24, she filed her return of income on 29.07.2023 declaring total income of Rs. 1,20,18,620/-. The return was processed under section 143(1) of the Act. The case was selected for scrutiny under CASS for the reason that “New foreign asset in nature of account(s) in which taxpayer is a signing authority (Business ITR)” had been noticed. 3. During the course of assessment proceedings, the AO noticed increase in the peak balance in Bank of Singapore account No. 681966 standing in the name of the assessee. The assessee explained that the increase represented rental receipts and advance rent received in respect of a property situated in Dubai jointly owned with her husband. The AO observed that the assessee had offered rental income of Rs. 11,59,863/- under the head “Income from House Property” and admitted receipt of advance rent of Rs. 22,49,854/-.The advance rent was not offered to tax in the year under consideration. The copy of bank statement was not furnished for verification. Accordingly, the AO held that the increase in peak balance to the extent of Rs. 22,49,854/- remained unexplained and added the same under section 68 read with section 115BBE of the Act treating it as unexplained cash credit. Printed from counselvise.com 3 ITA No. 7891/Mum/2025 Manisha Kamal Khetan 4. The AO further observed that the assessee was a signing authority in foreign bank accounts: i. Bank of Singapore Account No. 681968 in the name of M/s Skyways International Pvt. Ltd. showing increase in peak balance of Rs. 5,24,59,118/-. ii. Bank of Singapore Account No. 1000689110 in the name of M/s Parkland Investments Ltd. showing increase in peak balance of Rs. 2,06,76,845/-. Total increase in peak balances amounted to Rs. 7,31,35,963/-. 5. The assessee submitted that she was not the owner of the said companies and she was only a signing authority. She also submitted that she did not have beneficial interest in the bank accounts and the companies were separate legal entities. The AO, however, did not accept the explanation on the ground that no account opening documents, company resolutions or MOU were furnished and it was not established that the assessee was merely a signatory. The AO concluded that the source of increase in peak balance remained unexplained. Accordingly, the AO added Rs. 7,31,35,963/- under section 68 r.w.s. 115BBE as unexplained cash credits. 6. The AO further noted that Villa No. K-25, Palm Jumeirah, Dubai was held in the name of M/s Parkland Investments Ltd., and the assessee claimed to have beneficiary interest therein. The assessee contended that the property belonged to M/s Parkland Printed from counselvise.com 4 ITA No. 7891/Mum/2025 Manisha Kamal Khetan Investments Ltd., a UAE incorporated company and rental income was offered by the company in UAE. 7. The AO rejected the explanation holding that the assessee had not furnished documentary evidence to establish absence of ownership and in absence of satisfactory evidence, provisions of section 23(1) were applicable. The AO gathered rental data from public sources and estimated the annual value at Rs. 2,16,10,450/- and after allowing deduction under section 24(a) computed income from house property at Rs. 1,51,27,315/-. The same was added to total income. 8. Accordingly, the AO completed the assessment under section 143(3) making above mentioned additions to determine total income at Rs. 10,25,31,752/-. 9. Aggrieved, the assessee preferred appeal before the Ld. CIT(A). On the issue of advance rent of Rs. 22,49,854/-, before the Ld. CIT(A), the assessee submitted that the immovable property situated in Dubai was jointly owned by her and her husband and that the same had been let out under valid tenancy agreements. It was explained that two tenancy agreements were executed during the relevant period. Under the second tenancy agreement, a sum of Rs. 22,49,854/- was received in advance towards rent. The assessee contended that such advance rent pertained partly to Assessment Year 2023–24 and partly to Assessment Year 2024–25. It was further submitted that rental income had been offered proportionately in the respective years in accordance with the period to which it related. In support of this Printed from counselvise.com 5 ITA No. 7891/Mum/2025 Manisha Kamal Khetan contention, the assessee placed on record the return of income for A.Y. 2024–25 evidencing inclusion of the balance portion of rental income relatable to that year. The Ld. CIT(A), after considering the material on record, held that the source of receipt of Rs. 22,49,854/- was clearly identifiable as advance rent received under a valid tenancy agreement and, therefore, the same could not be treated as unexplained cash credit under section 68 of the Act. However, since the rent was admittedly received during the year under consideration, the Ld. CIT(A) held that the same was liable to be taxed on receipt basis as income from house property in A.Y. 2023–24. Accordingly, the addition was sustained as regular house property income and not as unexplained cash credit. At the same time, the Ld. CIT(A) directed that appropriate adjustment be made in A.Y. 2024–25 so as to avoid double taxation of the same income. Thus, this ground was partly allowed. 10. With regard to the addition of Rs. 7,31,35,963/- under section 68 r.w.s. 115BBE on account of increase in peak balances of foreign bank accounts, the assessee submitted before the Ld. CIT(A) that she was merely a beneficiary of the Khetan Family Trust and not the owner of the entities in whose names the bank accounts were maintained. It was explained that the Trust owned M/s Skyways International Pte. Ltd., and the said company in turn owned M/s Parkland Investments Ltd. The assessee contended that she was only an authorized signatory for operational purposes and had no ownership or beneficial interest Printed from counselvise.com 6 ITA No. 7891/Mum/2025 Manisha Kamal Khetan in the bank accounts. It was further submitted that in her return of income she had duly disclosed her status in Schedule FA as a beneficiary and not as a beneficial owner. The bank accounts in question did not belong to her and the amounts therein did not represent her income. The Ld. CIT(A), upon appreciation of the factual matrix, recorded that both M/s Skyways International Pte. Ltd. and M/s Parkland Investments Ltd. were separate legal entities in the eyes of law. It was observed that mere signatory authority to a bank account or beneficial interest through a trust would not, by itself, justify lifting the corporate veil. The Ld. CIT(A) further held that no material had been brought on record by the Assessing Officer to demonstrate that the companies were sham, alter ego of the assessee, or created for tax evasion purposes. It was also observed that section 68 contemplates addition in respect of unexplained credits appearing in the books of the assessee, whereas the bank accounts in question did not pertain to the assessee. In view of these findings, the Ld. CIT(A) deleted the addition of Rs. 7,31,35,963/-. 11. In respect of addition of Rs. 1,51,27,315/- towards notional rent on Villa No. K-25, Palm Jumeirah, the Ld. CIT(A) recorded that the property stood in the name of M/s Parkland Investments Ltd., a separate corporate entity. It was held that the assessee was neither the legal owner nor a deemed owner of the said property within the meaning of section 22 read with section 27 of the Act. The Ld. CIT(A) further observed that no circumstances existed to warrant piercing of the corporate veil and attributing Printed from counselvise.com 7 ITA No. 7891/Mum/2025 Manisha Kamal Khetan ownership of the company’s asset to the assessee. Since notional rent under the head “Income from House Property” can be assessed only in the hands of the owner or deemed owner, the Ld. CIT(A) held that such addition could not be sustained in the hands of the assessee. Accordingly, the addition of Rs. 1,51,27,315/- was deleted. 12. Aggrieved by the order of CIT(A), the revenue is in appeal before us raising following grounds of appeal: 1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition Rs.22,49,854 made under section 68 r.w.115BBE of the Income Tax Act without appreciation of facts and law. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition Rs.7,31,35,963 made under section 68 r.w.115BBE of the Income Tax Act without appreciation of facts and law. 3. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.1,51,27,315/- under the head Income from House Property by ignoring beneficial ownership of the assessee. 4. The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal, if need be. 13. The learned Departmental Representative (DR), strongly relying upon the assessment order submitted that the Assessing Officer had afforded sufficient opportunity to the assessee to substantiate her claims with documentary evidence. It was contended that the additions were made only after the assessee failed to discharge the onus cast upon her under section 68 of the Act. With respect to the addition of Rs. 22,49,854/- on account of advance rent, the learned DR submitted that the assessee had Printed from counselvise.com 8 ITA No. 7891/Mum/2025 Manisha Kamal Khetan not furnished complete bank statements and supporting documents before the Assessing Officer and had not offered the said amount to tax in the return of income for the year under consideration. In respect of the addition of Rs. 7,31,35,963/- relating to the foreign bank accounts of M/s Skyways International Pte. Ltd. and M/s Parkland Investments Ltd., the learned DR submitted that the assessee was admittedly a signatory to the said accounts and had failed to produce account opening forms, corporate resolutions or any documentary evidence to demonstrate that she had no beneficial interest in the funds. It was argued that the Ld. CIT(A) deleted the addition without there being sufficient documentary evidence on record to establish that the assessee was merely a signatory and not the real owner or beneficiary of the funds. Similarly, with regard to the deletion of addition of Rs. 1,51,27,315/- towards notional rent, the learned DR submitted that the Assessing Officer had invoked the provisions of section 23 after the assessee failed to produce documentary evidence establishing that she had no ownership or deemed ownership in the Dubai property. It was contended that the Ld. CIT(A) accepted the assessee’s explanation without adequate evidentiary support and without rebutting the factual findings recorded by the Assessing Officer. 14. The learned Authorised Representative (AR), at the outset, supported the impugned order of the learned CIT(A). The learned AR drew our attention to the relevant portions of the order of the learned CIT(A) wherein it has been recorded that complete details Printed from counselvise.com 9 ITA No. 7891/Mum/2025 Manisha Kamal Khetan in respect of tenancy agreements, trust structure and ownership of overseas properties were furnished before the Assessing Officer. It was submitted that the learned CIT(A) has specifically noted that the Assessing Officer has not brought any adverse material on record to rebut the documentary evidences filed by the assessee. The learned AR submitted that the tenancy contract dated 13.02.2023 entered into with Phoenix Universal General Trading L.L.C. is placed at page 16 of the paper book. The said contract clearly records the names of the lessors as Shri Kamal Shrigopal Khetan and Smt. Manisha Kamal Khetan and specifies the contract period from 15.02.2023 to 14.02.2024 with annual rent of AED 230,000/- payable in one instalment. He further submitted that the computation of income and working of rental income for the year under consideration are placed at pages 5 to 8 of the paper book, evidencing that the rental income pertaining to the relevant period was duly offered to tax. The return of income for the subsequent assessment year, wherein the balance rent was offered, is placed at pages 9 to 12 of the paper book. The learned AR pointed out that the bank book of Bank of Singapore Account No. 681966 reflecting the receipt of rent are placed at pages 6 of the paper book and the summary of peak balance is also placed therein. It was submitted that all these documents were filed before the Assessing Officer during assessment proceedings and the learned CIT(A) has recorded a categorical finding to that effect. Printed from counselvise.com 10 ITA No. 7891/Mum/2025 Manisha Kamal Khetan 15. With regard to the addition relating to foreign bank accounts of Skyways International Pte. Ltd. and Parkland Investments Ltd. The learned AR submitted that the learned CIT(A), after examining the trust deed and corporate documents (as submitted before the Assessing Officer – paper book page No.5), has held that the assessee was neither the owner nor beneficial owner of the funds appearing in the accounts of the said companies. Further, the learned AR referred to Schedule FA of the return of income placed at page 13 of the paper book, wherein the assessee has disclosed her status as beneficiary/signatory. It was contended that there was complete disclosure and no suppression of facts. It was submitted that the learned CIT(A) has appreciated these documents and rightly concluded that the provisions of section 68 cannot be invoked in absence of any credit in the books of the assessee. 16. With regard to the addition on account of alleged notional rent in respect of Villa No. K-25, Palm Jumeirah, the learned AR submitted that the learned CIT(A) has examined the tenancy contract dated 15.10.2021 placed at page 18-19 of the paper book. The said contract clearly records Parkland Investments Limited as the owner/lessor of the property and the tenants. The annual rent of AED 400,000/- is specifically mentioned therein. It was submitted that the said document conclusively establishes that the property is owned by the company and not by the assessee. The learned CIT(A) has recorded a finding that the Printed from counselvise.com 11 ITA No. 7891/Mum/2025 Manisha Kamal Khetan Assessing Officer has not brought any evidence to demonstrate that the assessee was the legal or deemed owner of the property. 17. In response to the request of the learned DR for remand, the learned AR submitted that all the above documents, including tenancy contracts were filed before the Assessing Officer during assessment proceedings. It was submitted that the Ld. CIT(A) has passed a reasoned order after appreciating the documentary evidence and no fresh material is being produced before the Tribunal. Accordingly, it was prayed that the order of the Ld. CIT(A) be upheld and the grounds raised by the Revenue be dismissed. 18. We have carefully considered the rival submissions, perused the assessment order, the impugned order of the learned CIT(A), and the material placed before us in the paper book to which specific reference was made during the course of hearing. 19. At the outset, it is necessary to deal with the preliminary objection of the learned DR that the documents relied upon by the assessee require verification by the Assessing Officer and that the matter ought to be restored to his file. On a perusal of the reply of the assessee placed on record as well as the impugned order, we find that the assessee had, in response to the show cause notice dated 28.11.2024, furnished detailed written submissions along with documentary evidences including tenancy contracts, bank statements, trust documents and explanatory notes on peak balances. The learned CIT(A) has recorded a categorical finding that the evidences were available Printed from counselvise.com 12 ITA No. 7891/Mum/2025 Manisha Kamal Khetan on record and were considered while adjudicating the appeal. The learned DR has not been able to point out any specific document which is being relied upon for the first time before the Tribunal. In these circumstances, we do not find merit in the prayer for remand merely for the purpose of re-appreciation of the same material. A remand cannot be granted to enable the Revenue to conduct a fresh enquiry when the matter has already been examined on the basis of documents forming part of the assessment record. 20. We now proceed to examine the issues on merits. Issue relating to advance rent of Rs. 22,49,854/- 21. The undisputed factual position is that the assessee along with her husband was co-owner of an office premises situated at Lake Tower, Business Bay, Dubai. The tenancy contract dated 13.02.2023 evidencing lease of the premises for the period 15.02.2023 to 14.02.2024 at an annual rent of AED 230,000/- is placed in the paper book. The bank statements reflecting receipt of rent are also on record. 22. The assessee’s consistent explanation before the Assessing Officer and the learned CIT(A) was that part of the rent received during the year represented advance pertaining to the subsequent assessment year and that the income had been offered proportionately in the respective years. The learned CIT(A), after examining the material, held that the receipt was identifiable as rent and not an unexplained credit and therefore could not be assessed under section 68. Printed from counselvise.com 13 ITA No. 7891/Mum/2025 Manisha Kamal Khetan 23. We find that the Assessing Officer had not disputed the existence of tenancy agreements or the nature of receipt as rent. The addition was essentially made on the premise that the entire receipt was liable to be taxed in the year under consideration. The learned CIT(A) has correctly appreciated that the source of receipt stood explained and that the character of income was house property income. The direction to avoid double taxation is also in consonance with settled principles. We do not find any infirmity in this finding. The contention of the learned DR that the learned CIT(A) has deleted the addition without evidence is not borne out from the record. The tenancy contracts and bank statements were part of the assessment proceedings and the same were duly considered. Accordingly, the order of the learned CIT(A) on this issue is affirmed. Issue relating to addition of Rs. 7,31,35,963/- in respect of foreign bank accounts 24. The Assessing Officer treated the peak balances in certain foreign bank accounts as unexplained credits in the hands of the assessee. The primary basis for such addition was that the assessee was an authorised signatory and beneficiary in relation to certain foreign entities. The learned CIT(A), after examining the trust deed, corporate documents and bank statements, has recorded a finding that the accounts in question were in the name of separate legal entities namely Skyways International Pte. Ltd. and Parkland Investments Ltd., and that the assessee was neither the legal owner nor beneficial owner of the funds therein. Printed from counselvise.com 14 ITA No. 7891/Mum/2025 Manisha Kamal Khetan It has further been held that mere signatory authority does not ipso facto establish ownership and that section 68 can be invoked only in respect of credits appearing in the books of the assessee. 25. We have perused the relevant documents placed in the paper book. The bank accounts in question are admittedly not in the personal name of the assessee. No material has been brought on record by the Assessing Officer to demonstrate that the corporate entities were sham or mere conduits of the assessee. The addition is premised solely on the fact of signatory authority and alleged beneficiary status. Such a presumption, in absence of evidence establishing ownership or control of funds as alter ego, cannot sustain an addition under section 68.The learned DR has not pointed out any specific material to contradict the factual findings recorded by the learned CIT(A). In absence of evidence to lift the corporate veil or to establish that the monies represented undisclosed income of the assessee, the deletion of addition by the learned CIT(A) is legally sustainable. Accordingly, we uphold the order of the learned CIT(A) deleting the addition of Rs. 7,31,35,963/-. Issue relating to addition of Rs. 1,51,27,315/- towards notional rent 26. The Assessing Officer assessed notional rent in respect of Villa No. K-25, Palm Jumeirah on the premise that the assessee had beneficial interest in the property. The tenancy contract dated 15.10.2021, placed on record, clearly records Parkland Investments Limited as the owner/lessor of the property. The Printed from counselvise.com 15 ITA No. 7891/Mum/2025 Manisha Kamal Khetan assessee is not shown as owner in the said document. The learned CIT(A) has recorded a clear finding that the property stood in the name of a corporate entity and that the assessee was neither the legal owner nor deemed owner within the meaning of section 22 read with section 27 of the Act. In absence of ownership, income from house property cannot be assessed in the hands of the assessee. The Assessing Officer has not brought any material to demonstrate that the corporate entity was a mere façade or that the property was held benami for the assessee. The learned DR has reiterated that the learned CIT(A) erred in deleting the addition without adequate evidence. However, we find that the tenancy contract and related documents were part of the assessment record and were examined by the learned CIT(A). No contrary evidence has been placed before us to dislodge the finding that the property is owned by Parkland Investments Limited. In these circumstances, we concur with the learned CIT(A) that notional rent cannot be assessed in the hands of a person who is neither the legal nor deemed owner. 27. Upon consideration of the entire material, we find that the learned CIT(A) has passed a reasoned and speaking order dealing with each addition separately and on the basis of documentary evidences already forming part of the assessment record. The learned DR has not been able to demonstrate any perversity in the findings or any fresh material warranting interference or remand. Printed from counselvise.com 16 ITA No. 7891/Mum/2025 Manisha Kamal Khetan 28. Accordingly, the grounds raised by the Revenue are dismissed and the order of the learned CIT(A) is upheld in entirety. Order pronounced in the open court on 20.02.2026. Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 20/02/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT 5. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai Printed from counselvise.com "