NIKHIL RASHIKLAL VORA ,MUMBAI V. INCOME TAX OFFICER WARD 34(2)(2), MUMBAI

ITA 3628/MUM/2025

AI Insights

The case involves Nikhil Rashiklal Vora, who did not file a return of income for the assessment year 2012-13. Upon discovering substantial transactions in the Multi Commodity Exchange (MCX), the Assessing Officer believed income had escaped assessment and reopened the case under Section 148 of the Income-tax Act, 1961. The CIT(A) upheld the addition of Rs. 8,00,187 as unexplained cash credits, which the assessee claimed were professional fees. The Tribunal noted that while the addition was related to the transactions that led to the reopening of the assessment, it required further examination to substantiate the connection and the legitimacy of the claimed professional fees.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713289 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2012-2013
• Other Referred Cases: CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom)(HC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAGIRATH RAMAWAT
• Assessee Lawyers: DEVENDRA JAIN
• Keywords: Opportunity of being heard; Reassessment proceedings; Corroborative evidences; Unexplained cash credit; Unexplained investment; Onus to prove; Transactions in derivatives; Reason to believe
• Section: 148; 143(3); 271(1)(c); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “K (SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 3628/MUM/2025 Assessment Year: 2012-13 Nikhil Rashiklal Vora, Flat No. 6, Amit Parnar IST Floor, 205-A, Dixit Road, Vile Parle (E), Mumbai-400057. Vs. ITO Ward 34(2)(2), Kautilya Bhavan, Bandra Kurla Complex, Bandra (E), Mumbai-400051. PAN NO. AAOPV 0747 R Appellant Respondent Assessee by : Mr. Devendra Jain Revenue by : Mr. Bhagirath Ramawat, Sr. DR Date of Hearing : 29/07/2025 Date of pronouncement : 31/07/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is preferred against order dated 30.03.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 2, Chennai [hereinafter shall be referred as ‘Ld. CIT(A)’] for assessment year 2012-13, raising following grounds: 1. In the facts and circumstances of the case and in law, the Ld. Addl JCIT (Appeals)-2, Chennai has erred in upholding the addition of Rs. 8,00,187/- without making any addition in respect of reasons recorded for reopening and therefore the Printed from counselvise.com addition is bad in law as held in the case of CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom)(HC). 2. In the facts and circumstances of the case and in law, the Ld. Addl.JCIT (Appeals) addition of Rs.8,00,187/ credits, though they were the \"Professional Fees\" received during the Year. 2. Before us, the Ld. Counsel for the assessee submitted that the ground No. 1 raised in the present appeal was not adjudicated by the Ld. CIT(A) and therefore, same might be treated as additional ground. The Ld. DR did not object for treating the said ground additional ground. The said ground being purely of the legal in nature and not requiring admitted for adjudication 3. Briefly stated, the facts not filed a return of income for the relevant assessment year. Upon analysis of information available in the Income Tax Department’s database, it was noticed that the assessee had engaged in transactions aggregating to Commodity Exchange (MCX) during the relevant financial year. In view of the same, and observing the failure of the assessee to file a return, the Assessing Officer recorded reasons to believe that income had escaped assessment and, accord under Section 148 of the on 22.03.2019. ITA No. 3628/MUM/2025 is bad in law as held in the case of CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom)(HC). 2. In the facts and circumstances of the case and in law, the Ld. Addl.JCIT (Appeals)-2, Chennai has erred in confirming the addition of Rs.8,00,187/- in respect of unexplained cash credits, though they were the \"Professional Fees\" received Year. Before us, the Ld. Counsel for the assessee submitted that the ground No. 1 raised in the present appeal was not adjudicated by the Ld. CIT(A) and therefore, same might be treated as additional ground. The Ld. DR did not object for treating the said ground additional ground. The said ground being purely of the legal in nature and not requiring investigation of fresh facts admitted for adjudication. Briefly stated, the facts of the case are that the assessee had not filed a return of income for the relevant assessment year. Upon analysis of information available in the Income Tax Department’s database, it was noticed that the assessee had engaged in transactions aggregating to ₹51,53,51,129/- Commodity Exchange (MCX) during the relevant financial year. In view of the same, and observing the failure of the assessee to file a return, the Assessing Officer recorded reasons to believe that income had escaped assessment and, accordingly, issued a notice under Section 148 of the the Income-tax Act,1961( in short the Act) Nikhil RAshiklal Vora 2 ITA No. 3628/MUM/2025 is bad in law as held in the case of CIT v. Jet Airways 2. In the facts and circumstances of the case and in law, the 2, Chennai has erred in confirming the of unexplained cash credits, though they were the \"Professional Fees\" received Before us, the Ld. Counsel for the assessee submitted that the ground No. 1 raised in the present appeal was not adjudicated by the Ld. CIT(A) and therefore, same might be treated as additional ground. The Ld. DR did not object for treating the said ground as additional ground. The said ground being purely of the legal in fresh facts, same was are that the assessee had not filed a return of income for the relevant assessment year. Upon analysis of information available in the Income Tax Department’s database, it was noticed that the assessee had engaged in on the Multi Commodity Exchange (MCX) during the relevant financial year. In view of the same, and observing the failure of the assessee to file a return, the Assessing Officer recorded reasons to believe that ingly, issued a notice tax Act,1961( in short the Act) Printed from counselvise.com 3.1 In response, the assessee filed a return of income on 03.04.2019 declaring a total income of statutory notices, the reas In the course of proceedings, the Assessing Officer observed credit entries in the assessee’s bank account which were claimed to represent professional fees received during the year. However, in the absence of supporting documentary evidence agreements, or invoices said amount was treated as unexplained under Section 68 of the Act. 4. On appeal, the Ld. CIT(A) affirmed the addition, holding that the assessee failed to discharge the onus of proving the nature and source of the credits. While the assessee asserted that the credits represented professional fees received from a U.S. (Moran and Knobel Inc.), no corroborative evidence was submitted. The CIT(A) also noted that even if such receipts were accepted as professional fees, the deduction of expenses claimed against the same remained unsubstantiated and, therefore, not allowable. relevant finding of the Ld. CIT(A) is reproduced as under: “5. Decision: 5.1 From the Assessment Order u/s 143(3) r.w.s. 147 dated 20.12.2019, it is ascertained that during the course of Assessment proceedings, the Assessing Officer has required the Appellant to furnish the particulars of credit entries in the Appellant's Bank Account. The appellant explained the same to be \"Professional Fees\" received during the Year. However, it stated in the Assessment Order that the Appellant has failed ITA No. 3628/MUM/2025 In response, the assessee filed a return of income on 03.04.2019 declaring a total income of ₹2,23,330/ statutory notices, the reassessment was completed on 20.12.2019. In the course of proceedings, the Assessing Officer observed credit entries in the assessee’s bank account which were claimed to represent professional fees received during the year. However, in the ng documentary evidence—such as contracts, agreements, or invoices—the explanation was not accepted, and the said amount was treated as unexplained under Section 68 of the On appeal, the Ld. CIT(A) affirmed the addition, holding that ailed to discharge the onus of proving the nature and source of the credits. While the assessee asserted that the credits represented professional fees received from a U.S. (Moran and Knobel Inc.), no corroborative evidence was submitted. CIT(A) also noted that even if such receipts were accepted as professional fees, the deduction of expenses claimed against the same remained unsubstantiated and, therefore, not allowable. relevant finding of the Ld. CIT(A) is reproduced as under: ecision: 5.1 From the Assessment Order u/s 143(3) r.w.s. 147 dated 20.12.2019, it is ascertained that during the course of Assessment proceedings, the Assessing Officer has required the Appellant to furnish the particulars of credit entries in the t's Bank Account. The appellant explained the same to be \"Professional Fees\" received during the Year. However, it stated in the Assessment Order that the Appellant has failed Nikhil RAshiklal Vora 3 ITA No. 3628/MUM/2025 In response, the assessee filed a return of income on 2,23,330/-. Pursuant to sessment was completed on 20.12.2019. In the course of proceedings, the Assessing Officer observed credit entries in the assessee’s bank account which were claimed to represent professional fees received during the year. However, in the such as contracts, the explanation was not accepted, and the said amount was treated as unexplained under Section 68 of the On appeal, the Ld. CIT(A) affirmed the addition, holding that ailed to discharge the onus of proving the nature and source of the credits. While the assessee asserted that the credits represented professional fees received from a U.S.-based entity (Moran and Knobel Inc.), no corroborative evidence was submitted. CIT(A) also noted that even if such receipts were accepted as professional fees, the deduction of expenses claimed against the same remained unsubstantiated and, therefore, not allowable. The relevant finding of the Ld. CIT(A) is reproduced as under: 5.1 From the Assessment Order u/s 143(3) r.w.s. 147 dated 20.12.2019, it is ascertained that during the course of Assessment proceedings, the Assessing Officer has required the Appellant to furnish the particulars of credit entries in the t's Bank Account. The appellant explained the same to be \"Professional Fees\" received during the Year. However, it stated in the Assessment Order that the Appellant has failed Printed from counselvise.com to substantiate the above claim with supporting documents/ evidences and hence t 5.2 On the other hand, the Appellant in his Grounds of Appeal has stated that the receipts were deposited in ICICI Bank of the Appellant's NRE A/c. by Moran and Knobel Inc. a US based company. And that the Net Income of Rs. has been declared in the Return of Income. The Appellant has remained non the course of Appeal proceedings. The Appellant's Grounds have been considered carefully. Even if one were to accept the Appellant's explanation, there needs to be supporting details, documents and Bank Statements, Copy of Agreement/ Contract, etc to the explanation, as rightly mentioned by the Assessing Officer in para 5.1 of the Order. Thus, the Appellant has only repeated a Assessment proceedings in the Grounds of Appeal also without furnishing the supporting details. The Assessing Officer has mentioned the same as Bank Statements only. Therefore, in the circumstance, it is concluded Appellant has failed to discharge his onus by substantiating the source of the credits, the Assessing Officer has rightly assessed the same as unexplained cash credits. Accordingly the relevant Grounds are dismissed. 5.3 The Appellant has al calculating deduction under chapter VI by not allowing deduction u/s. 80D of Mediclaim amount of Rs. 17,482/ whose maximum allowable deduction is Rs.15,000 / found that the Appellant has claimed it in the Ret Income. In the absence of specific observation on such disallowance by the Assessing Officer, the Jurisdictional Assessing Officer is directed to verify the claim and allow if the same is allowable as per the conditions prescribed in this regard. The Ground is allowed for statistical 5. Before us, the learned counsel for the assessee has raised an additional ground contending that the addition made by the Assessing Officer is unsustainable in law as it does not pertain to the issue for which the case was originally reopened. It is submitted that where reassessment proceedings are initiated for a specific reason, no addition can be made on a different issue unless the ITA No. 3628/MUM/2025 to substantiate the above claim with supporting documents/ evidences and hence treated the same as unexplained. 5.2 On the other hand, the Appellant in his Grounds of Appeal has stated that the receipts were deposited in ICICI Bank of the Appellant's NRE A/c. by Moran and Knobel Inc. a US based company. And that the Net Income of Rs. 1,79,238/ has been declared in the Return of Income. The Appellant has remained non-responsive to the opportunities afforded during the course of Appeal proceedings. The Appellant's Grounds have been considered carefully. Even if one were to accept the pellant's explanation, there needs to be supporting details, documents and Bank Statements, Copy of Agreement/ Contract, etc to the explanation, as rightly mentioned by the Assessing Officer in para 5.1 of the Order. Thus, the Appellant has only repeated and reiterated what he had said during the Assessment proceedings in the Grounds of Appeal also without furnishing the supporting details. The Assessing Officer has mentioned the same as Bank Statements only. Therefore, in the circumstance, it is concluded that since the Appellant has failed to discharge his onus by substantiating the source of the credits, the Assessing Officer has rightly assessed the same as unexplained cash credits. Accordingly the relevant Grounds are dismissed. 5.3 The Appellant has also filed a Ground that the AO erred in calculating deduction under chapter VI by not allowing deduction u/s. 80D of Mediclaim amount of Rs. 17,482/ whose maximum allowable deduction is Rs.15,000 / found that the Appellant has claimed it in the Ret Income. In the absence of specific observation on such disallowance by the Assessing Officer, the Jurisdictional Assessing Officer is directed to verify the claim and allow if the same is allowable as per the conditions prescribed in this e Ground is allowed for statistical purposes. Before us, the learned counsel for the assessee has raised an additional ground contending that the addition made by the Assessing Officer is unsustainable in law as it does not pertain to ch the case was originally reopened. It is submitted that where reassessment proceedings are initiated for a specific reason, no addition can be made on a different issue unless the Nikhil RAshiklal Vora 4 ITA No. 3628/MUM/2025 to substantiate the above claim with supporting documents/ reated the same as unexplained. 5.2 On the other hand, the Appellant in his Grounds of Appeal has stated that the receipts were deposited in ICICI Bank of the Appellant's NRE A/c. by Moran and Knobel Inc. a US 1,79,238/- has been declared in the Return of Income. The Appellant has responsive to the opportunities afforded during the course of Appeal proceedings. The Appellant's Grounds have been considered carefully. Even if one were to accept the pellant's explanation, there needs to be supporting details, documents and Bank Statements, Copy of Agreement/ Contract, etc to the explanation, as rightly mentioned by the Assessing Officer in para 5.1 of the Order. Thus, the Appellant nd reiterated what he had said during the Assessment proceedings in the Grounds of Appeal also without furnishing the supporting details. The Assessing Officer has mentioned the same as Bank Statements only. that since the Appellant has failed to discharge his onus by substantiating the source of the credits, the Assessing Officer has rightly assessed the same as unexplained cash credits. Accordingly so filed a Ground that the AO erred in calculating deduction under chapter VI by not allowing deduction u/s. 80D of Mediclaim amount of Rs. 17,482/- whose maximum allowable deduction is Rs.15,000 /-. It is found that the Appellant has claimed it in the Return of Income. In the absence of specific observation on such disallowance by the Assessing Officer, the Jurisdictional Assessing Officer is directed to verify the claim and allow if the same is allowable as per the conditions prescribed in this purposes.” Before us, the learned counsel for the assessee has raised an additional ground contending that the addition made by the Assessing Officer is unsustainable in law as it does not pertain to ch the case was originally reopened. It is submitted that where reassessment proceedings are initiated for a specific reason, no addition can be made on a different issue unless the Printed from counselvise.com addition is also made on the issue for which reasons were recorded. In support, reliance is placed on the judgment of the Bombay High Court in Taxman 117 (Bom)]. 5. Per contra, the learned Departmental Representative has submitted that in the instant case, no return was filed by th assessee in the regular course, and therefore, any addition made in the reassessment proceedings would be deemed to relate to income that had escaped assessment. It is thus contended that the ratio in Jet Airways (I) Ltd.(supra) present case. 6. We have heard rival submissions of the parties and perused the relevant materials on record provides that if the Assessing Officer has reason to believe that any income chargeable to tax assessment, he may subject to the assess or re-assess such income chargeable to tax which has escaped assessment and which comes to his notice subsequently, in the co section”. Further, Explanation 3 to section 147 of the Act was inserted by the Finance (No. 2) which provides as follows: \"Explanation 3. under this section, the Assessing Officer may assess or reassess ITA No. 3628/MUM/2025 addition is also made on the issue for which reasons were recorded. port, reliance is placed on the judgment of the Bombay High Court in CIT v. Jet Airways (I) Ltd. Taxman 117 (Bom)]. Per contra, the learned Departmental Representative has submitted that in the instant case, no return was filed by th assessee in the regular course, and therefore, any addition made in the reassessment proceedings would be deemed to relate to income that had escaped assessment. It is thus contended that the ratio in (supra) is not applicable to the We have heard rival submissions of the parties and perused the relevant materials on record. We find that section 147 of the Act provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any may subject to the provisos of section 148 to 153, assess such income “and also any chargeable to tax which has escaped assessment and which comes to his notice subsequently, in the course of proceedings under this . Further, Explanation 3 to section 147 of the Act was inserted by the Finance (No. 2) Act of 2009, w.e.f. 01.04.1989 provides as follows: \"Explanation 3.—For the purpose of assessment or reassessment is section, the Assessing Officer may assess or reassess Nikhil RAshiklal Vora 5 ITA No. 3628/MUM/2025 addition is also made on the issue for which reasons were recorded. port, reliance is placed on the judgment of the Hon’ble CIT v. Jet Airways (I) Ltd. [(2010) 195 Per contra, the learned Departmental Representative has submitted that in the instant case, no return was filed by the assessee in the regular course, and therefore, any addition made in the reassessment proceedings would be deemed to relate to income that had escaped assessment. It is thus contended that the ratio in is not applicable to the facts of the We have heard rival submissions of the parties and perused . We find that section 147 of the Act provides that if the Assessing Officer has reason to believe that any d assessment for any provisos of section 148 to 153, and also any other income chargeable to tax which has escaped assessment and which comes urse of proceedings under this . Further, Explanation 3 to section 147 of the Act was Act of 2009, w.e.f. 01.04.1989 , For the purpose of assessment or reassessment is section, the Assessing Officer may assess or reassess Printed from counselvise.com the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons such issue have not been included in the reasons recorded under sub-section (2) of section 148.\" 6.1 The issue came up before the Hon’ble Bombay High court in the case of Jet Airways (I) Ltd. (supra) as to whether Assessing Officer can make addition o any addition on the issue for which case was reopened. High Court held in Explanation 3 does not override the principal condition under Section 147, namely, that respect of other issues only if the Assessing Officer makes an addition on the issue which formed the basis of the belief that income had escaped assessment. The Hon’ble High Court held that the expression \"and also\" in cumulatively, and unless reassessment is made on the original issue, no addition on other issues is permissible. finding of the Hon’ble High Court in reproduced as under: “16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belie had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessme on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessit fulfilling the conditions set out in the substantive part of section ITA No. 3628/MUM/2025 the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons such issue have not been included in the reasons recorded under section (2) of section 148.\" The issue came up before the Hon’ble Bombay High court in the case of Jet Airways (I) Ltd. (supra) as to whether Assessing Officer can make addition on any other ground if he did not make any addition on the issue for which case was reopened. in Jet Airways (I) Ltd. (supra) lays down that Explanation 3 does not override the principal condition under Section 147, namely, that reassessment can validly proceed in respect of other issues only if the Assessing Officer makes an addition on the issue which formed the basis of the belief that income had escaped assessment. The Hon’ble High Court held that the expression \"and also\" in Section 147(1) is to be read cumulatively, and unless reassessment is made on the original issue, no addition on other issues is permissible. finding of the Hon’ble High Court in reproduced as under: 16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belie had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessme on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessit fulfilling the conditions set out in the substantive part of section Nikhil RAshiklal Vora 6 ITA No. 3628/MUM/2025 the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under The issue came up before the Hon’ble Bombay High court in the case of Jet Airways (I) Ltd. (supra) as to whether Assessing n any other ground if he did not make any addition on the issue for which case was reopened. The Hon’ble (supra) lays down that Explanation 3 does not override the principal condition under reassessment can validly proceed in respect of other issues only if the Assessing Officer makes an addition on the issue which formed the basis of the belief that income had escaped assessment. The Hon’ble High Court held that Section 147(1) is to be read cumulatively, and unless reassessment is made on the original issue, no addition on other issues is permissible. The relevant finding of the Hon’ble High Court in reproduced as under: 16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section Printed from counselvise.com 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has thi Assessing Officer has to assess or reassess the income (\"such income\") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assess which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escap has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event assessee. 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a.matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the sub has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the A such income \"and also\" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words \"and also\" are used in a cumulative and conjunctive sens the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the words \"and also\" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legisla 147(1) as they stood after the amendment of 1 hold the field. 6.2 In the instant case, reasons recorded, has been reproduced by the Assessing Officer. For ready reference same is extracted under: ITA No. 3628/MUM/2025 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income (\"such income\") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assess which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a.matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income \"and also\" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words \"and also\" are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words \"and also\" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147(1) as they stood after the amendment of 1-4-1989 continue to hold the field.” In the instant case, reasons recorded, has been reproduced by the Assessing Officer. For ready reference same is extracted Nikhil RAshiklal Vora 7 ITA No. 3628/MUM/2025 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the s effect that the Assessing Officer has to assess or reassess the income (\"such income\") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he ed assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the of a challenge by the 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a.matter of first principle, based on the language used in section 147(1) and on the basis of ject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any ssessing Officer may assess or reassess such income \"and also\" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words \"and also\" are used in a e. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must the interpretation that was placed on the words \"and also\" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the tive powers to do so, the provisions of section 1989 continue to In the instant case, reasons recorded, has been reproduced by the Assessing Officer. For ready reference same is extracted as Printed from counselvise.com “It is seen from Non Income for Α.Υ. 2012 available on I relevant to the A.Y.2012 following transactions: Sr. No. Nature of the Transaction 1. The assessee has made National/Multl Commodity Exchangve Contract of Rs. 10 Lakhs and above for Sale or Purchase in the Exchange 3. As per CIB Information, during the year under consideration the assessee was engaged in the transaction of National/Multi Commodity Exchange Contract of Rs. 51,53,51,129/ Exchange Ltd. 4. A letter vide no. NMS2/AA0PV0747R/3006131 dated, 17 2014 was generated available on NMS Cycle has not complied with the sald letter till date. As such Information has duly been verified on the ITBA Portal on 360 degree pr 5. On perusal and verification of the Information available on system and after considering the same prima facle it is observed that, the assessee has the Income chargeable to tax. it can be seen from the above that despite of having such a huge tra Commodity Market but falled to disclose Capital gain thereon. Further, despite of having known sources the assessee has transacted in Commodity Market therefore, it is room to believe that the assessee has some undisclosed sources which is char tax 6. Besides, giving an opportunity to comply with the above fact the assessee did not consider the matter seriously and failed to comply with the matter till date. Considering the above fact and abstaining from filing the return of Income It i assessee has concealed his Income earned during the financial year 2011-12 corresponding to the A.Y. 2012 Rupees Fifty One Crore Fifty Three Lakhs Fifty OneThousand OneHundred TwentyNine] which is charge be an escaped assessment and therefore the provisions of section 147 of the I.T. Act, 1961are applicable 6.3 In the instant case, the Assessing Officer had recorded reasons to believe that income had escaped assessm ITA No. 3628/MUM/2025 It is seen from Non-filer data, the assessee has not filed return of Income for Α.Υ. 2012-13. However it is observed from the details available on I-taxnet, It Is found that during the F.Y.2011 relevant to the A.Y.2012-13, the assessee has entered into the following transactions: Nature of the Transaction Summary reference The assessee has made National/Multl Commodity Exchangve Contract of Rs. 10 Lakhs and above for Sale or Purchase in the Exchange- CIB Transaction As per CIB Information, during the year under consideration the assessee was engaged in the transaction of National/Multi Commodity Exchange Contract of Rs. 51,53,51,129/- Exchange Ltd. 4. A letter vide no. NMS2/AA0PV0747R/3006131 dated, 17 2014 was generated-&-Issued from system against the Information available on NMS Cycle-2, I-Tax Net Portal however; the assessee has not complied with the sald letter till date. As such Information has duly been verified on the ITBA Portal on 360 degree pr 5. On perusal and verification of the Information available on system and after considering the same prima facle it is observed that, the assessee has the Income chargeable to tax. it can be seen from the above that despite of having such a huge tra Commodity Market but falled to disclose Capital gain thereon. Further, despite of having known sources the assessee has transacted in Commodity Market therefore, it is room to believe that the assessee has some undisclosed sources which is char 6. Besides, giving an opportunity to comply with the above fact the assessee did not consider the matter seriously and failed to comply with the matter till date. Considering the above fact and abstaining from filing the return of Income It is reason to belleve that the assessee has concealed his Income earned during the financial year 12 corresponding to the A.Y. 2012-13 of Rs. 51,53,51,129/ Rupees Fifty One Crore Fifty Three Lakhs Fifty OneThousand OneHundred TwentyNine] which is chargeable to tax has deemed to be an escaped assessment and therefore the provisions of section 147 of the I.T. Act, 1961are applicable to this case.\" In the instant case, the Assessing Officer had recorded reasons to believe that income had escaped assessment in respect of Nikhil RAshiklal Vora 8 ITA No. 3628/MUM/2025 filer data, the assessee has not filed return of 13. However it is observed from the details taxnet, It Is found that during the F.Y.2011-12 ntered into the Summary reference ransaction code:502 As per CIB Information, during the year under consideration the assessee was engaged in the transaction of National/Multi -In MCX Stock 4. A letter vide no. NMS2/AA0PV0747R/3006131 dated, 17-02- Issued from system against the Information Tax Net Portal however; the assessee has not complied with the sald letter till date. As such Information has duly been verified on the ITBA Portal on 360 degree profile. 5. On perusal and verification of the Information available on system and after considering the same prima facle it is observed that, the assessee has the Income chargeable to tax. it can be seen from the above that despite of having such a huge transaction in Commodity Market but falled to disclose Capital gain thereon. Further, despite of having known sources the assessee has transacted in Commodity Market therefore, it is room to believe that the assessee has some undisclosed sources which is chargeable to 6. Besides, giving an opportunity to comply with the above fact the assessee did not consider the matter seriously and failed to comply with the matter till date. Considering the above fact and abstaining s reason to belleve that the assessee has concealed his Income earned during the financial year 13 of Rs. 51,53,51,129/- Rupees Fifty One Crore Fifty Three Lakhs Fifty OneThousand able to tax has deemed to be an escaped assessment and therefore the provisions of section In the instant case, the Assessing Officer had recorded reasons ent in respect of Printed from counselvise.com substantial transactions (to the tune of firstly, no capital gain disclosed and investment from undisclosed sources. reassessment order, it is evident that the Assessing Officer examined the bank credits that were claimed to be the source of such transactions and found the same to be unsubstantiated. It was in that context that the addition of unexplained cash credit. Officer is reproduced as under: “5.1 Unexplained Cash Credit On perusal of the bank statements has credit entries on various dates which are the sou Trading in the Commodity transactions, the same credits were explained as Professional Fees received during the year As per assessee's work profile assessee was engaged in preparing Legal Documents, amendments and other admistrative works for the client's retirement plan as per the advice from Mr Balakodingudi. During the course of the assessment proceedings assessee was asked to submit the documentary evidence regarding the receipt of Professional fees alongwith the copy of Agreement/Contract and o However till date assessee has not submitted any kind of supporting documentary evidence to justify the credit entries as Professional Fees. The asseessee failed to substantiate his arguments by documentary evidences. assessee to explain the source of Credit entries in the banks from documentary evidences which assessee failed. On verification of details submitted by the assessee it is found that the assessee has debited expenses of Rs 6,52,187/ 831425/- (Rs 800187/ as Profit on sale of Share) during the year. However no details in these expenses were furnished by the assessee till the date of passing this order. The onus lies on t the expenses claimed with documentary evidences which the assessee failed. Since the income is treated as Unexplained so expenses claimed against such income, suo moto does not exist. ITA No. 3628/MUM/2025 substantial transactions (to the tune of ₹51.53 crores) on the MCX, , no capital gain disclosed and secondly investment from undisclosed sources. On perusal of the reassessment order, it is evident that the Assessing Officer examined the bank credits that were claimed to be the source of such transactions and found the same to be unsubstantiated. It was in that context that the addition of ₹8,00,187/ unexplained cash credit. The relevant finding of the Assessing Officer is reproduced as under: “5.1 Unexplained Cash Credit On perusal of the bank statements It is seen that the assessee has credit entries on various dates which are the sou Trading in the Commodity transactions, the same credits were explained as Professional Fees received during the year As per assessee's work profile assessee was engaged in preparing Legal Documents, amendments and other admistrative works for lient's retirement plan as per the advice from Mr Balakodingudi. During the course of the assessment proceedings assessee was asked to submit the documentary evidence regarding the receipt of Professional fees alongwith the copy of Agreement/Contract and other supporting documentary evidence. However till date assessee has not submitted any kind of supporting documentary evidence to justify the credit entries as Professional Fees. The asseessee failed to substantiate his arguments by documentary evidences. The onus lies on the assessee to explain the source of Credit entries in the banks from documentary evidences which assessee failed. On verification of details submitted by the assessee it is found that the assessee has debited expenses of Rs 6,52,187/- against the receipt of Rs (Rs 800187/- claimed as professional fees + Rs 31238/ as Profit on sale of Share) during the year. However no details in these expenses were furnished by the assessee till the date of passing this order. The onus lies on the assessee to substantiate the expenses claimed with documentary evidences which the assessee failed. Since the income is treated as Unexplained so expenses claimed against such income, suo moto does not exist. Nikhil RAshiklal Vora 9 ITA No. 3628/MUM/2025 51.53 crores) on the MCX, secondly, source of On perusal of the reassessment order, it is evident that the Assessing Officer examined the bank credits that were claimed to be the source of such transactions and found the same to be unsubstantiated. It 7/- was made as The relevant finding of the Assessing It is seen that the assessee has credit entries on various dates which are the source of Trading in the Commodity transactions, the same credits were explained as Professional Fees received during the year. As per assessee's work profile assessee was engaged in preparing Legal Documents, amendments and other admistrative works for lient's retirement plan as per the advice from Mr Balakodingudi. During the course of the assessment proceedings assessee was asked to submit the documentary evidence regarding the receipt of Professional fees alongwith the copy of ther supporting documentary evidence. However till date assessee has not submitted any kind of supporting documentary evidence to justify the credit entries as Professional Fees. The asseessee failed to substantiate his The onus lies on the assessee to explain the source of Credit entries in the banks from documentary evidences which assessee failed. On verification of details submitted by the assessee it is found that the assessee has ainst the receipt of Rs claimed as professional fees + Rs 31238/- as Profit on sale of Share) during the year. However no details in these expenses were furnished by the assessee till the date of he assessee to substantiate the expenses claimed with documentary evidences which the assessee failed. Since the income is treated as Unexplained so expenses claimed against such income, suo moto does not exist. Printed from counselvise.com Penalty proceedings u/s 271(1)(c) is initiat furnishing inaccurate particulars of income. 5.2 It is pertinent to note that it is an admitted preposition of law that in respect of a self required to be furnished by an assessee who claims the existence of such fact. Contrary to non existence of self suffici proof is always on the assessee to establish the existence of particular facts. The onus never shifts to the Department. From this it follows that the assessee who wishes to the Revenue to believe the existence of particular facts, onus furnish आयकर अͬध establish the existence of particular facts. From this that the burden of proof does not shift upon the Revenue to disapprove the existence of the person to prove that he is correct. The onus is not upon the Revenue to prove that he is not incorrect. From this it also follows non furnishing of details / evidences in support of existence of a nonself sufficient fact from the assessee would lead the Revenue to take a contrary view to that of the claim made by 6.4 Thus, though the addition made is in respect of unexplained credits, such credits were directly linked to the source of the commodity transactions forming the very basis of the reasons recorded for reopening the assessment. The Assessing Officer had examined whether the investments made in the commodity exchange could be explained by the credits in the assessee’s bank account. Upon the assess the addition was made. Therefore, the addition, though not strictly in the form of unexplained investment in commodity transaction but pertains to the very source of the said transactions and cannot be considered extraneous to the reasons recorded. 6.5 Though, initially during the hearing 17/07/2025, contested that no addition was made in respect of item for which ITA No. 3628/MUM/2025 Penalty proceedings u/s 271(1)(c) is initiated separately for furnishing inaccurate particulars of income. 5.2 It is pertinent to note that it is an admitted preposition of law that in respect of a self- sufficient fact no further evidence is required to be furnished by an assessee who claims the existence of such fact. Contrary to non existence of self sufficient fact burden of proof is always on the assessee to establish the existence of particular facts. The onus never shifts to the Department. From this it follows that the assessee who wishes to the Revenue to believe the existence of particular facts, onus heavily lies upon him to आयकर अͬध Seal of the necessary detail(s) / evidence(s) to establish the existence of particular facts. From this it also follows that the burden of proof does not shift upon the Revenue to disapprove the existence of the fact and accordingly it is duty of the person to prove that he is correct. The onus is not upon the Revenue to prove that he is not incorrect. From this it also follows non furnishing of details / evidences in support of existence of a nonself act from the assessee would lead the Revenue to take a contrary view to that of the claim made by the assessee. Thus, though the addition made is in respect of unexplained credits, such credits were directly linked to the source of the actions forming the very basis of the reasons recorded for reopening the assessment. The Assessing Officer had examined whether the investments made in the commodity exchange could be explained by the credits in the assessee’s bank account. Upon the assessee’s failure to substantiate those credits, the addition was made. Therefore, the addition, though not strictly unexplained investment in commodity transaction pertains to the very source of the said transactions and cannot d extraneous to the reasons recorded. initially during the hearing 17/07/2025, contested that no addition was made in respect of item for which Nikhil RAshiklal Vora 10 ITA No. 3628/MUM/2025 ed separately for 5.2 It is pertinent to note that it is an admitted preposition of law sufficient fact no further evidence is required to be furnished by an assessee who claims the existence of ent fact burden of proof is always on the assessee to establish the existence of particular facts. The onus never shifts to the Department. From this it follows that the assessee who wishes to the Revenue to believe heavily lies upon him to Seal of the necessary detail(s) / evidence(s) to it also follows that the burden of proof does not shift upon the Revenue to fact and accordingly it is duty of the person to prove that he is correct. The onus is not upon the Revenue to prove that he is not incorrect. From this it also follows non furnishing of details / evidences in support of existence of a nonself act from the assessee would lead the Revenue to take a assessee.” Thus, though the addition made is in respect of unexplained credits, such credits were directly linked to the source of the actions forming the very basis of the reasons recorded for reopening the assessment. The Assessing Officer had examined whether the investments made in the commodity exchange could be explained by the credits in the assessee’s bank ee’s failure to substantiate those credits, the addition was made. Therefore, the addition, though not strictly unexplained investment in commodity transaction, pertains to the very source of the said transactions and cannot initially during the hearing 17/07/2025, the assessee contested that no addition was made in respect of item for which Printed from counselvise.com reasons was recorded, h Assessing Officer in para 5 the effect that investment in commodity market transaction was linked to the credit appear in the books of accounts and source of which the assessee failed to explain, came to our notice, t was fixed for clarification and the parties were asked to explain how the ratio in the case of Jet Airways (I) Ltd. (supra) apply in the case of the assessee. The Ld. counsel for the assessee however submitted that finding of the Ld. Assessing Officer in para 5.1 of connect between the investment in commodity transaction and the credit from professional receipt appearing in the books of accounts was not correct finding of fact assessment order, the Assessing Officer has nowhere elabo how the stated transaction of the meager amount of Rs.8,00,187/ 7. We have heard rival submissions of the parties and perused the relevant materials on record Assessing Officer has way of professional fee amounting to Rs.8,00,187/ the investment in commodity transactions has been made on the basis of reasons recorded ratio of the Jet Airways (I) Pvt. Ltd. (supra) does not apply in the instant case, but the Ld. counsel for the assessee has disputed this factual finding of the Ld. Assessing Officer ITA No. 3628/MUM/2025 reasons was recorded, however, when the finding of the Ld. Assessing Officer in para 5.7 of the impugned assessment order to the effect that investment in commodity market transaction was linked to the credit appear in the books of accounts and source of the assessee failed to explain, came to our notice, t ification and the parties were asked to explain how the ratio in the case of Jet Airways (I) Ltd. (supra) apply in the case of the assessee. The Ld. counsel for the assessee however submitted that finding of the Ld. Assessing Officer in para 5.1 of connect between the investment in commodity transaction and the credit from professional receipt appearing in the books of accounts was finding of fact. The Ld. counsel submitted that in the assessment order, the Assessing Officer has nowhere elabo transaction of Rs.51,53,51,529/- were amount of Rs.8,00,187/- of the professional receipt. We have heard rival submissions of the parties and perused the relevant materials on record. We are of the opin Assessing Officer has made the addition of unexplained credit by way of professional fee amounting to Rs.8,00,187/ the investment in commodity transactions, thus, addition in fact has been made on the basis of reasons recorded and therefore, the ratio of the Jet Airways (I) Pvt. Ltd. (supra) does not apply in the but the Ld. counsel for the assessee has disputed this finding of the Ld. Assessing Officer having connection Nikhil RAshiklal Vora 11 ITA No. 3628/MUM/2025 owever, when the finding of the Ld. .7 of the impugned assessment order to the effect that investment in commodity market transaction was linked to the credit appear in the books of accounts and source of the assessee failed to explain, came to our notice, the matter ification and the parties were asked to explain how the ratio in the case of Jet Airways (I) Ltd. (supra) apply in the case of the assessee. The Ld. counsel for the assessee however submitted that finding of the Ld. Assessing Officer in para 5.1 of connection between the investment in commodity transaction and the credit from professional receipt appearing in the books of accounts was . The Ld. counsel submitted that in the assessment order, the Assessing Officer has nowhere elaborated as were sourced out of the professional receipt. We have heard rival submissions of the parties and perused . We are of the opinion that the the addition of unexplained credit by way of professional fee amounting to Rs.8,00,187/- in relation to , thus, addition in fact and therefore, the ratio of the Jet Airways (I) Pvt. Ltd. (supra) does not apply in the but the Ld. counsel for the assessee has disputed this having connection Printed from counselvise.com between the investment in commodity transactions and corresponding credit of Rs.8,00,187/ accounts, therefore, in the facts and circumstances of the case, need verification as to Ltd. apply in the case of the assessee or not matter is restored back to the file of the Ld. CIT(A) for deciding afresh after providing opportunity to both the Assessing Officer as well assessee to support their contention. the appeal of the assessee is accordingly allowed for statistical purposes. 7.1 As far as merit of the addition is concerned, the Ld. counsel for the assessee submitted that the Ld. CIT(A) had not provided any opportunity of being heard and the be complied and therefore, one more opportunity might be provided to the assessee to substantiate the source of the professional fee. In view of facts and circumstances of the case and in the prayer of the assessee, we feel it appropriate to restore this issue also to the file of the Ld. CIT(A) for deciding afresh after taking into consideration submission or supporting evidence filed by the assessee if any before him. The grounds on merit raised by the assessee are also allowed for statistical purposes. ITA No. 3628/MUM/2025 between the investment in commodity transactions and corresponding credit of Rs.8,00,187/- appearing in his books of therefore, in the facts and circumstances of the case, need verification as to whether the ratio of the Jet Airways (I) Pvt. td. apply in the case of the assessee or not. Accordingly, the restored back to the file of the Ld. CIT(A) for deciding afresh after providing opportunity to both the Assessing Officer as well assessee to support their contention. The additional the appeal of the assessee is accordingly allowed for statistical As far as merit of the addition is concerned, the Ld. counsel for the assessee submitted that the Ld. CIT(A) had not provided any opportunity of being heard and the notices issued by him could not be complied and therefore, one more opportunity might be provided to the assessee to substantiate the source of the professional fee. In view of facts and circumstances of the case and in the prayer of the it appropriate to restore this issue also to the file of the Ld. CIT(A) for deciding afresh after taking into consideration submission or supporting evidence filed by the assessee if any before him. The grounds on merit raised by the assessee are also wed for statistical purposes. Nikhil RAshiklal Vora 12 ITA No. 3628/MUM/2025 between the investment in commodity transactions and appearing in his books of therefore, in the facts and circumstances of the case, it whether the ratio of the Jet Airways (I) Pvt. . Accordingly, the restored back to the file of the Ld. CIT(A) for deciding afresh after providing opportunity to both the Assessing Officer as The additional ground of the appeal of the assessee is accordingly allowed for statistical As far as merit of the addition is concerned, the Ld. counsel for the assessee submitted that the Ld. CIT(A) had not provided any notices issued by him could not be complied and therefore, one more opportunity might be provided to the assessee to substantiate the source of the professional fee. In view of facts and circumstances of the case and in the prayer of the it appropriate to restore this issue also to the file of the Ld. CIT(A) for deciding afresh after taking into consideration submission or supporting evidence filed by the assessee if any before him. The grounds on merit raised by the assessee are also Printed from counselvise.com 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 31/07/2025 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 No. 3628/MUM/2025 In the result, the appeal of the assessee is allowed for nounced in the open Court on 31 Sd/- Sd/ (RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Nikhil RAshiklal Vora 13 ITA No. 3628/MUM/2025 In the result, the appeal of the assessee is allowed for 31/07/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "