HITESH SURESH JAIN ,MUMBAI V. ACIT, CIRCLE 27(1), MUMBAI

ITA 8735/MUM/2025

AI Insights

The case involves Hitesh Suresh Jain, the appellant, who contested the reopening of his income tax assessment for the assessment year 2019-20 by the Assistant Commissioner of Income Tax, Circle -27(1), under sections 147/148 of the Income-tax Act, 1961. The reopening was based on information from a search and seizure operation related to ARC Group and Shri Ashwin Kumar Mali, suggesting that Jain had received an unsecured loan of Rs. 20,00,000 from M/s Gulab Gems and Jewellery, an entity allegedly involved in providing accommodation entries. Jain denied these allegations and requested evidence and an opportunity to cross-examine the lender, which was not adequately provided. The CIT(A) upheld the addition made under section 68 of the Act, leading to Jain's appeal to the Tribunal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847056 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2019-2020
• Appeal Filed On: 18-12-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAGIRATH RAMAWAT
• Assessee Lawyers: SNEHA MORE IB RUTUJA N. PAWAR
• Keywords: Set aside; Search and seizure; Accommodation entries; Tangible material
• Section: 147; 148; 68; 2

Judgement Text

"1 IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “K (SMC)” BENCH, MUMBAI BEFORE SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.8735/MUM/2025(AY:2019-20) Hitesh Suresh Jain, Plot No. 27, F Lane, Sector 8, Vashi, Navi Mumbai -400703. vs. Assistant Commissioner of Income tax Circle -27(1), Room No. 415, 4th floor, Tower No. 6, Vashi Railway Station Commercial Complex, Vashi, Navi Mumbai-400703. PAN/GIR No: AJKPJ7659K (Appellant) (Respondent) Appellant by Ms. Sneha More I/b Adv. Rutuja N. Pawar Respondent by Shri Bhagirath Ramawat (SR DR) Date of Hearing 18.02.2026 Date of Pronouncement 27.03.2026 O R D E R PER BIJYANANDA PRUSETH, AM: This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre [in short, ‘CIT(A)’], dated 11.11.2025 for the assessment year (AY) 2019-20. 2. The grounds of appeal raised by the assessee are as under: “1. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in re-opening the case of the appellant u/s. 147/148 of the Act for A.Y. 2019-20 without adhering to the due procedure laid down u/s. 148A of the Act. 2. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has failed in upholding the re-opening u/s. 147 of the Act without there bring any tangible material on record which can be corroborated with evidence. 3. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in upholding the addition made by Assessing Printed from counselvise.com ITA No.8735/MUM/2025/AY 2019-20 Hitesh Suresh Jain 2 Officer u/s. 68 of the Act being alleged loan of Rs. 20,00,000/- taken by the appellant for A.Y. 2019-20. 4. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in ignoring the fact that Section 68 of the Act does not apply to the case of the appellant for A.Y. 2019-20. 5. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in ignoring the fact that Assessing Officer failed to provide the appellant with an opportunity to cross-examine the lender M/s. Gulab Gems and Jewellery. 6. That on the facts and in the circumstances of the case of the appellant and in law Ld. NF AC has failed to consider, that the Assessing Officer provided the copy of the alleged ledger to the appellant only one day prior to passing of assessment order for A.Y. 2019-20. 7. Without prejudice to the ground of appeal no. 1, that on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in neglecting the initiation of issuing a show cause notice u/s. 148A(b) of the Act by Assessing Officer without considering the 1st Proviso clause 'b' to Section 148A of the Act. 8. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC and the Assessing Officer both have failed to consider the objections filed by the appellant against the re-opening u/s. 147 and submissions filed during the proceedings wherein the appellant has categorically denied knowing or even having any transaction with M/s. Gulab Gems and Jewellery. 9. That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has not considered the fact that Notice u/s. 143(2) of the Act is bad-in-law and inconsistent with the CBDT Instruction F. No. 225/157/2017/ITA.II dated 23.06.2017 hence entire proceedings should be quashed. 10. That the impugned order being contrary to law, evidence, and facts of the case may kindly be set aside, amended, and modified in the light of the grounds of appeal enumerated above and the appellant be granted such relief as is called for on the facts and in the circumstances of the case of the appellant and in law. 11. That each of the grounds of appeal enumerated above is without prejudice to and independent of one another. 12. That the appellant craves leave to reserve to himself the right to add, to alter or amend any of the grounds of appeal before or at the end of the hearing and to produce such further evidence, documents, and papers as may be necessary.” Printed from counselvise.com ITA No.8735/MUM/2025/AY 2019-20 Hitesh Suresh Jain 3 3. Facts of the case, in brief, are that the assessee filed his return of income for the AY 2019-20 on 22.10.2019 declaring total income at Rs.19,86,930/-. Based on the information available with the AO due to the search and seizure operation in case of ARC Group and Shri Ashwin Kumar Mali that the assessee had received unsecured loan of Rs.20,00,000/- from an entry provider, the case was reopened and notice u/s 148 was issued on 31.03.2023. The assessee filed return u/s 148 on 29.04.2023 declaring the same income. The AO asked assessee to explain as to why loan of Rs.20,00,000/- received from M/s Gulab Gems and Jewellery (Proprietor: Shri Jitendra Pamecha) should not be added to total income as these are accommodation entries provided by an entity controlled by Shri Ashwin Kumar Mali in lieu of cash given. Since there was a mistake in the show cause notice, a revised show cause notice was issued giving the correct name of the creditor. In reply, the assessee submitted that he had not received any unsecured loan of Rs.20,00,000/- from M/s Gulab Gems and Jewellery or from any of the entities mentioned in the show cause notice. The assessee requested to furnish documentary evidence with bank statement in support of the show cause notice and provide opportunity of cross-examination of such alleged lender. In view of the above reply of assessee, the AO issued another show cause notice on 20.03.2024 but observed that assessee choose not to file any reply. Therefore, the said amount of Rs.20,00,000/- was added u/s 68 of the Act in the order u/s 147 dated 22.03.2024. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) has mentioned the facts of the case and reproduced grounds of appeal Printed from counselvise.com ITA No.8735/MUM/2025/AY 2019-20 Hitesh Suresh Jain 4 and statement of facts. It is seen from the order of CIT(A) that a notice u/s 250 was issued on 07.11.2024 but there is no discussion about the reply of the appellant. The order was finally passed on the basis of the findings of the AO, grounds of appeal and statement of facts. The CIT(A) has observed that merely because the credit entry does not appear in the books of the assessee, the same by itself cannot absolve the assessee when independent material demonstrates receipt of funds linked to him. He also observed that opportunity of cross- examination, though desirable, is not an absolute right where sufficient documentary evidence is found on record. Hence, the CIT(A) upheld the addition made by the AO and dismissed the appeal. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR of the assessee submitted that the AO did not provide adequate opportunity to explain the case before him. He submitted that the assessee has not taken any loan from M/s Gulab Gems and Jewellery. He has also not taken any loan from the entities or persons mentioned in the show cause notice. Further, the assessee was given show cause notice on 20.03.2024 by the AO and he passed the assessment order immediately thereafter on 22.03.2024 without waiting for the reply of the assessee. The CIT(A) has also not given adequate opportunity to the assessee and confirmed the order of the AO. The appellant was also not provided with an opportunity to cross examine the lender. The order was passed without considering the documents available with the appellant and without proper hearing of the appellant. Hence, the Ld. AR requested to set aside the order of CIT(A). Printed from counselvise.com ITA No.8735/MUM/2025/AY 2019-20 Hitesh Suresh Jain 5 6. On the other hand, the Ld. Sr. DR of the revenue supported the order of lower authorities. He submitted that the AO had given adequate opportunity to the assessee to explain its case, which the assessee failed to do. 7. We have heard both parties and perused the materials on record. The addition in the present case was made on the basis of seized material found from the premises of ARC Group and Shri Ashwin Kumar Mali, revealing that the appellant had reportedly received Rs.20,00,000/- from M/s Gulab Gems and Jewellery, an entry provider. The AO confronted the assessee about the impugned issue, in response to which, the assessee filed reply dated 18.03.2024. Subsequently, the AO issued final show cause notice on 20.03.2024. The AO passed the order u/s 147 of the Act immediately thereafter, on 22.03.2024, without waiting for the reply and evidence from the assessee. The assessee had earlier submitted that he had not taken any loan of Rs.20,00,000/- from M/s Gulab Gems and Jewellery or any entity stated in the show cause notice. The assessee had also requested to furnish documentary evidence along with bank statement of the lender and provide opportunity of cross-examination. However, the request of the assessee was not considered and the order was passed without the reply from the assessee. The CIT(A) has also issued only one notice and did not provide adequate and reasonable opportunity of hearing to the assessee. Thus, both lower authorities have passed their respective orders without effectively hearing the assessee. Therefore, in the interest of justice, we deem it proper to set aside the order of CIT(A) and restore the matter back to the file of the AO for fresh assessment after providing adequate and reasonable Printed from counselvise.com ITA No.8735/MUM/2025/AY 2019-20 Hitesh Suresh Jain 6 opportunity of hearing to the assessee. The assessee is also directed to be diligent and file necessary details and evidences by not seek adjournment without valid reason. The ground is allowed for statistical purpose. 8. Since we have set aside the order of CIT(A) and restore the matter to the file of AO for fresh assessment, the other grounds become academic in nature and do not require adjudication. 9. We make it clear that we have not expressed any opinion on the merit of the case. The AO shall independently decide all issues in accordance with law. 10. In the result, the appeal of the assessee is allowed for statistical purpose. Order is pronounced on 27.03.2026. Sd/- Sd/- (RAHUL CHAUDHARY) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 27.03.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order Assistant Registrar ITAT, MUMBAI Printed from counselvise.com ITA No.8735/MUM/2025/AY 2019-20 Hitesh Suresh Jain 7 Printed from counselvise.com "