KAMBAR CONSTRUCTIONS,MUMBAI V. ITO WD-25(2)(5), MUMBAI

ITA 5357/MUM/2025

AI Insights

Kambar Constructions appealed against the order of the Commissioner of Income Tax (Appeals), challenging the additions made under section 68 of the Income Tax Act, 1961, concerning unsecured loans, and an addition for alleged unaccounted cash payment for land purchase. The Tribunal noted that the assessee had previously submitted additional evidence which was not adequately considered by the CIT(A). The Tribunal emphasized the need to adhere to the principles of natural justice and allowed the appeal for statistical purposes, remanding the case back to the CIT(A) for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782667 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: NEELAM JADHAV
• Keywords: Set aside; Additional evidence; Corroborative evidences; Unexplained cash credit; Principle of natural justice; Loose papers
• Section: 143(3); 142(1); 68; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 5357/Mum/2025 (Assessment Year: 2013-14) Kambar Constructions A-52, Dakshina Park, N. S. Road No. 10, Juhu Scheme, Mumbai – 400049. Vs. Income Tax Officer Ward – 25(2)(5), Mumbai. PAN/GIR No. AAKFK6879M (Appellant) : (Respondent) Assessee by : Shri Neelam Jadhav Respondent by : Shri Hemanshu Joshi, SR DR Date of Hearing : 28.10.2025 Date of Pronouncement : 31.10.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2013-14. 2. The assessee has raised the following grounds of appeal: 1. Violation of Principles of Natural Justice: 1. The Learned NFAC (A) has erred in passing an ex parte order without following the mandate prescribed under section 250 of the Income-tax Act 1961, Le, fixing a day and place of hearing, hence, the order of the NFAC (A) may be quashed and set aside. 2. Without prejudice to above, the Learned NFAC (A) has erred in passing an ex- parte order merely relying on the remand report, without considering the various Printed from counselvise.com ITA No. 5357/Mum/2025 (A.Y. 2013-14) Kambar Constructions 2 submissions and documents which were filed in the course of remand proceedings, without independent application of law and facts and without granting a reasonable opportunity to respond to the findings of the Assessing Officer in the remand report hence the order of the NFAC (A) may be quashed and set aside. 3. The Learned NFAC (A) has erred in relying on various case laws in the order without giving an opportunity to explain how the case laws relied on by the Learned NFAC (A) are not applicable, as the principle of natural justice is violated. The order of the Learned NFAC (A) may be quashed and set aside. II. Merits: Addition u/s 68 as Unsecured Loans Rs.1,26,26,848/- 4. The Learned NFAC (A) erred in sustaining the addition of Rs.1,26,26,848/- on account of unsecured loans from sixteen parties as unexplained cash credits under section 68 of the Act, without appreciating that the appellant had furnished the source of investments, bank details etc., during the appellate proceedings vide letter dated 06/02/2019, along with supporting statements and confirmations, and further during the remand proceedings vide letter dated 25/11/2024, the appellant had submitted confirmations, agreements, bank statements, repayment details, and other supporting evidence to substantiate the identity, genuineness, and creditworthiness of the lenders, hence the addition confirmed by the NPAC (A) may be directed to be deleted. 5. The Learned NFAC (A) failed to appreciate that most of the loans had either been repaid through proper banking channels or adjusted against allotment of flats in subsequent years, which itself establishes the genuineness of the transactions. As the appellant has discharged the primary onus by furnishing confirmations, PAN details, bank statements, and agreements relating to the allotment of flats, the burden shifted upon the Department to disprove the same. In the absence of any contrary evidence brought on record by the Department, the addition sustained under section 68 of the Act may be directed to be deleted. 6. Without prejudice to above, the Learned NFAC (A) failed to appreciate that the appellant has furnished various documents in respect of all sixteen lenders, whereas the Learned NFAC (A), affirmed the addition by general observation without analysing the documents submitted by individual lenders, as the order being passed without following the due process of law, and without analysing the creditworthiness of individual lenders, addition confirmed by the NFAC (A) may be directed to be deleted. Learned III. Addition on account of the alleged Unaccounted Cash Payment for the Purchase of Land Printed from counselvise.com ITA No. 5357/Mum/2025 (A.Y. 2013-14) Kambar Constructions 3 7. The Learned NFAC (A) has erred in confirming the addition of Rs.41,46,500/- on account of alleged unaccounted cash payment for purchase of land, relying solely on loose papers/Excel sheets and statements recorded during survey, without appreciating the fact that the appellant had already retracted the said statement during assessment proceedings vide letter dated 28/03/2016. Further, during appellate proceedings, the partner, Shri Rohit Chugani, vide Affidavit-cum- Undertaking dated 20/12/2022, categorically retracted the statement recorded during the course of the survey and clarified that the loose paper (point no. 9), not found in the appellant's premises, was in fact prepared by the survey team on their computer. Hence, the addition sustained by the Learned NFAC (A) may be directed to be deleted. 8. The Learned NFAC (A) failed to appreciate that, merely based on a statement made in the course of a survey without any additional evidence, an addition cannot be made. When the statement was retracted, the addition of RS.41,46,500/- may be directed to be deleted. 9. The Learned NFAC (A) failed to appreciate that when the statement was retracted, the learned Assessing Officer ought to have examined the purchaser of land and ought to have compared it with the stamp valuation, as the value shown in the purchase agreement was more than the stamp valuation addition may be directed to be deleted. 10. The Learned NFAC (A) failed to appreciate that the alleged Excel sheet cannot be relied upon as evidence without following the due process of law for the use of electronic evidence in the assessment proceedings. 11. Without prejudice to the above, the alleged payment was in respect of the purchase of land, which, being stock in trade, the alleged addition may be increased in the valuation of the stock in trade, and no addition can be made for the relevant assessment year. IV. Provisions of section 115BBE 12. The Learned NFAC (A) failed to appreciate that provisions of section 115BBE cannot be applicable to the facts of the appellant, hence assessing the income as per section 115BBE of the Act may be directed to be deleted.” 3. Brief facts of the case are that the assessee is engaged in the business of builders and developers and had filed its return of income dated 29.07.2013, declaring total income at Rs. 16,16,023/- and the same was processed u/s. 143(1) of the Act. The assessee’s Printed from counselvise.com ITA No. 5357/Mum/2025 (A.Y. 2013-14) Kambar Constructions 4 case was selected for scrutiny and notices u/s. 143(2) and 142(1) were issued and served upon the assessee. The learned Assessing Officer ('ld. A.O.' for short) observed that the assessee has taken unsecured loans from 39 parties out of whom only 22 parties complied with the notice u/s. 133(6) issued by the ld. AO and since the other parties remained unverifiable, the ld. AO made an addition aggregating to Rs. 1,26,26,848/- u/s. 68 of the Act and further made an addition of Rs. 41,46,500/- for payment of cash towards purchase of lands admeasuring 23 gunthas and 35 gunthas based on the documents impounded during the survey action conducted on 20.11.2014 from the chambers of Mrs. Rita Patel, partner of the assessee firm which according to the ld. AO was not duly substantiated by the assessee. The ld. AO passed the assessment order dated 31.03.2016, u/s. 143(3) of the Act, determining total income at Rs. 1,67,73,350/- 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 25.06.2025 upheld the addition made by the ld. AO on the ground that the assessee has failed to furnish any documentary evidence to rebut the entries found in the loose sheets and also the statements recorded by the department. 5. The assessee is in appeal before us, challenging the order of the ld. CIT(A). 6. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has filed additional evidences before the first appellate authority for which the ld. CIT(A) has sought for a remand report from the ld. AO, where after duly considering the documentary evidence of the assessee, the ld. AO has stated that the assessee has not established the creditworthiness and genuineness of the transaction and the same is confronted to the assessee during the first appellate Printed from counselvise.com ITA No. 5357/Mum/2025 (A.Y. 2013-14) Kambar Constructions 5 proceeding which was not controverted by the assessee inspite of several opportunities provided by the ld. CIT(A). The ld. CIT(A) upheld the addition made by the ld. AO on this observation. 7. Before us, the learned Authorised Representative ('ld. AR' for short) for the assessee prayed that the assessee be given one more opportunity to present its case before the first appellate authority for rebuttal of the remand report filed by the ld. AO on which basis the ld. CIT(A) has upheld the addition. 8. The learned Departmental Representative ('ld. DR' for short) for the revenue vehemently opposed to the same on the ground that the assessee was given sufficient opportunities to substantiate its claim. 9. On the above observation, we deem it fit to extend the assessee with one more opportunity to present its case before the first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation. The assessee is directed to cooperate with the proceeding before the ld. CIT(A) without any undue delay from its side and the ld. CIT(A) is directed to decide the issue on the merits of the case based on the submission of the assessee after giving sufficient opportunity to both sides. 10. In the result, the appeal filed by the assessee is hereby allowed for statistical purpose. Order pronounced in the open court on 31.10.2025 Sd/- Sd/- Sd/- Sd/- (OM PRAKASH KANT) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Printed from counselvise.com ITA No. 5357/Mum/2025 (A.Y. 2013-14) Kambar Constructions 6 Mumbai; Dated: .10.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "