KISHORKUMAR LAKHAJI PRAJAPATI ,MUMBAI V. INCOME TAX OFFICER 32(2)(2), MUMBAI

ITA 3688/MUM/2025

AI Insights

The case involves Kishorkumar Lakhaji Prajapati, the appellant, who appealed against the order of the Additional/Joint Commissioner of Income Tax (Appeals) - Faridabad, which confirmed the assessment made under section 144 of the Income-tax Act, 1961. The assessment included additions of Rs. 11,50,000 as unexplained money under section 69A and Rs. 5,30,315 as business income. The AO had made these additions based on cash deposits in the appellant's bank account during the demonetization period and presumed business receipts. The CIT(A) upheld these additions, leading to the appeal before the ITAT. The ITAT found that the assessment order was passed ex-parte and restored the matter to the AO for a fresh decision, emphasizing the need for the appellant to provide necessary details.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716470 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2017-2018
• Appeal Filed On: 26-05-2025
• Other Referred Cases: Kehav Mills Co Ltd v. CIT (1965) 56 ITR 365 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Assessee Lawyers: K. SHIVARAM
• Keywords: Business income; Additional evidence; Corroborative evidences
• Section: 144; 142(1)

Judgement Text

"|आयकर अपीलीय न्यायाधिकरण न्यायपीठ, म ुंबई| IN THE INCOME-TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सुं./ITA No. 3688/MUM/2025 (नििाारण वर्ा / Assessment Year: 2017-18) Kishorkumar Lakhaji Prajapati A/101, Krishna Avenue, Shree Krishna Nagar, Mumbai 400006 v/s. बिाम Income Tax Officer- 32(2)(2) Room No. 716, 7th Floor, Kautilya Bhavan, C-41 to C043, G Block, BKC, Bandra East, Mumbai 400051 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAIPP5132E Appellant/अपीलार्थी .. Respondent/प्रनिवादी निर्ााररती की ओर से /Assessee by: Shri K. Shivaram Sr. Adv & Ms. Neelam Jadhav राजस्व की ओर से /Revenue by: Shri Asif Karmali Sr. DR स िवाई की िारीख / Date of Hearing 17.07.2025 घोर्णा की िारीख/Date of Pronouncement 22.08.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the ADDL/JCIT (A)-Faridabad [CIT(A)], dated 27.03.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year: 2017-18. 2. The assessee has raised the following grounds of appeal: “1. The Learned National Faceless Appeal Centre (NFAC) erred in confirming the assessment passed under section 144 by the Assessing Officer at Rs. 16,80,320/- against the returned income of Rs.5,13,949/- on 17/08/2019. Printed from counselvise.com P a g e | 2 ITA No 3688/Mum/2025 AY 2017-18 Kirshorkumar Lakhaji Prajapati II Addition of Rs.11.50,000/- u/s.69A as Unexplained Money 2. The Learned National Faceless Appeal Centre (NFAC) has erred in confirming the addition of Rs.11,50,000/- u/s. 69A of the Income tax Act, 1961, as unexplained money without appreciating that amount deposited in the bank account was on account sale transactions, which are properly recorded in the books of account and shown as cash in hand in the books of account wherein the appellant has maintained day to day stock transaction register, hence addition on presumption confirmed by the CIT(A) may be directed to be deleted. 3. The Learned National Faceless Appeal Centre (NFAC) failed to appreciate that the cash sales deposited in the bank account cannot be assessed under section 69A and the provisions of section 115BBE cannot be applicable. III. Addition of Rs.5,30,315/- as Business Income 4. The Learned National Faceless Appeal Centre (NFAC) has erred in upholding the addition of Rs.5,30,315/- as business income, computed at 8% of the total credits of Rs.66,28,940/- reflected in the appellant's bank account, without appreciating that the appellant had already filed a return of income wherein all debit and credit entries, including cash sales, were duly therefore applying the presumptive rate of 8% on the total bank credits is not in accordance with law hence, the addition confirmed by the National Faceless Appeal Centre (NFAC) may be directed to be deleted. 5. Without prejudice to the above, when the income is estimated under section 144 of the Act, the specific addition under section 69A, read with section 115BBE of the Act, cannot be possible; hence same may be directed to be deleted. IV. Ex parte Order passed by the Assessing Officer 6. Without prejudice to the above, the Learned National Faceless Appeal Centre (NFAC) erred in confirming the ex parte order passed by the Assessing Officer treating the assessee as a non-filer, without appreciating that the delay in filing the Return of Income was due to technical issues arising from the non-linking of PAN with Aadhaar. The appellant filed the return of income online on 17/08/2019, immediately after the successful linking of PAN with Aadhaar. and the same was brought to the notice of the Assessing Officer during the assessment proceedings. Therefore, the order passed by the Assessing Officer, and subsequently confirmed by the NFAC, treating the appellant as a non-filer and confirming the addition may be directed to be deleted. V. No Additional Evidence filed, hence there is no violation of Rule 46A 7. Without prejudice to above, the Learned National Faceless Appeal Centre NFAC erred in presuming that there was a violation of Rule 46A of the Income Tax Rules, 1962, without appreciating that, the appellant during the appellate proceedings has submitted the documents which were submitted during the assessment e-proceeding in the form of Audited Books of Accounts for 3 years, Cash Book, Bank Book, and Stock register. As there is no violation of Rule 46A, the Learned National Faceless Appeal Centre (NFAC) ought to have decided the Issue on merit, considering the documents which were filed before the AO and before the Learned National Faceless Appeal Centre NFAC. Printed from counselvise.com P a g e | 3 ITA No 3688/Mum/2025 AY 2017-18 Kirshorkumar Lakhaji Prajapati 8. Without prejudice to above the Judgement of Supreme Court in Kehav Mills Co Ltd v. CIT (1965) 56 ITR 365 (SC) is dealing with entirely different issue on the Issue of additional evidence which was not part of the record when the question was formed hence cannot be applied to the facts of the appellant hence the addition confirmed by the Learned National Faceless Appeal Centre (NFAC) may be directed to be deleted. 9. The appellant craves leave to add, amend, alter, or delete any of the above grounds of appeal.” 3. Brief facts of the case are that the assessee did not file its return for AY 2017-18. On the basis of information available with the IT department regarding cash deposit of Rs. 11,50,000/- in the bank account during the demonetization period, a notice u/s. 142(1) was issued on 12.03.2018, requiring the assessee to file its return of income. However, neither any return was filed nor any compliance was made to the statutory notices issued by the Ld. AO. On 24.05.2019, the assessee submitted before the Ld. AO that he was not able to file his return due to non-linking of PAN with his Aadhar. However, assessee gave no explanation regarding nature and source of the said cash deposit. Hence Ld. AO added the entire cash deposit of Rs. 11,50,000/- as unexplained money u/s. 69A of the Act. Further Ld. AO noted that the assessee had been filing his IT returns for other assessment years declaring business income from proprietary business of jewellery. Accordingly, he applied a rate of 8% on the total credits in the account of the assessee amounting to Rs. 66,28,940/- treating the same on business receipts. Accordingly, addition of Rs. 5,30,315/- computed @ 8% of gross receipts was also made under the head “Income from business and profession”. The assessment was completed at an income of Rs. 16,80,315/- vide order dated 07.12.2019 u/s. 144 of the Act. Printed from counselvise.com P a g e | 4 ITA No 3688/Mum/2025 AY 2017-18 Kirshorkumar Lakhaji Prajapati 3.1. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). However, Ld. CIT(A) noted that the assessee had not furnished any cogent reasons backed by supporting evidence with regard to the source of deposits in his bank account and has also not filed the ITR for the year under consideration. He, accordingly, dismissed the assessee’s appeal vide order dated 27.03.2025. Aggrieved with the order of Ld. CIT(A), the assessee has now filed an appeal before Tribunal. 4. We have heard the rival submissions and perused the material available before us. It is clear that the assessment order was passed ex-parte and therefore, in the interest of justice we deem it appropriate to restore the same to Ld. AO for fresh adjudication on merits. The assessee is also directed to furnish requisite details before Ld. AO. 5. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 22.08.2025. Sd/- Sd/- AMIT SHUKLA RENU JAUHRI (न्यानयक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 22.08.2025 दिव्य रमेश न ुंिग वकर/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT Printed from counselvise.com P a g e | 5 ITA No 3688/Mum/2025 AY 2017-18 Kirshorkumar Lakhaji Prajapati 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. Printed from counselvise.com "