VIVEK KAMALKAR KADAM,VIRAR WEST V. INCOME TAX OFFICER, THANE

ITA 6162/MUM/2025

AI Insights

The case revolves around an appeal by Vivek Kamalkar Kadam against the order of the CIT(A), which sustained the addition of Rs 12,50,000 to the assessee's income for the Assessment Year 2016-17 under section 69A of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer (AO) due to unexplained cash deposits in the assessee's bank account, which were claimed to be repayments of a friendly loan to Shri Gulamnabi Gafoor Shaikh. The Tribunal examined the evidence provided, including bank statements, affidavits, and financial documents, and concluded that the assessee had adequately explained the source of the deposits, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790984 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 30-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Additional evidence; Source of fund
• Section: 143(3); 271(1)(c); 133(6); 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “SMC” BENCH: MUMBAI BEFORE HON’BLE JUSTICE (RETD.) C. V. BHADANG, PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 6162/Mum/2025 Assessment Year : 2016-17 Vivek Kamalkar Kadam NamasthetuBunglow No. 2, Padmavati Nagar Phase 4, Near Mamta Super Market, Bolinj, Virar West, Vasai – Virar, Maharashtra – 401305. [PAN: ADQPK2053E] vs. Income Tax Officer, Ashar IT Park, 6th Floor Road, 16Z, Wagale Industrial Road, Thane – 400604, Maharashtra. (Appellant) (Respondent) For Assessee : Shri Jitendra Singh For Revenue : Shri Brajendra Kumar, Sr.DR Date of Hearing : 02-12-2025 Date of Pronouncement : 10-12-2025 ORDER PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the Assessee against the order of the Ld. ADDL/JCIT(A)-6, Delhi, dated 30-07-2025, pertaining to Assessment Year (AY) 2016-17, wherein the Assessee has taken the following grounds of appeal: “1. On facts and circumstances of the case and in law, the learned CIT(A) erred in sustaining addition of 12,50,000/- u/s 69A of the Act, being part of loan repayment, ignoring that the Appellant had discharged the initial burden by providing comprehensive evidence of the source, including affidavit, confirmation, ITR, and audited accounts of Shri Shaikh, which establish identity, genuineness, and creditworthiness of the transaction. Printed from counselvise.com 2 ITA No. 6162/Mum/2025 2. On facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate that once identity of the creditor, genuineness of the transaction, and capacity are demonstrated, no addition can be sustained in the hands of the appellant. 3. On facts and circumstances of the case and in law, the learned CIT(A) erred in placing undue reliance on non-response of third party to notice u/s 133(6), which is beyond the control of the appellant. The appellant cannot be penalized for non-compliance by an independent third party. 4. The learned CIT(A) erred in law and on facts in treating the affidavit and financials of the creditor as insufficient, contrary to judicial precedents holding that documentary evidence corroborates explanation under section 69A. 5. The learned CIT(A) erred in upholding levy of interest u/s 234B and 234D, which being consequential ought to be deleted if the addition is deleted. 6. The appellant craves leave to add, amend, modify or withdraw any ground of appeal at the time of hearing.” 2. The limited issue under consideration relates to source of cash deposit of Rs 12.50 lacs in the bank account maintained by the assessee. 3. The relevant facts and findings of the ld. CIT(A) read as under: “6.1 The appellant filed his return of income for the A.Y.2016-17 on 02.07.2016 declaring a total income of Rs.5,02,690/-. The return was processed under section 143(1) of the Income Tax Act, 1961. Subsequently, the case was selected for scrutiny under the Computer Aided Scrutiny Selection (CASS) system for the purpose of verifying cash deposits in the appellant's bank accounts. During the course of assessment proceedings, the Assessing Officer observed that the appellant had deposited cash amounting to Rs.20,50,000/- in his bank account maintained with Bassein Catholic Co-op Bank Ltd., Virar (East), which, prima facie, appeared to be disproportionate to his known sources of income, considering that he was primarily in receipt of salary from Reliance Infrastructure Ltd. and Printed from counselvise.com 3 ITA No. 6162/Mum/2025 commission income from LIC. When called upon to explain the source of these cash deposits, the appellant stated that the funds were the return of a friendly loan advanced to one Shri Gulamnabi Gafoor Shaikh, a transporter and proprietor of Sahil Transport. The AO after considering the replies, concluded that the explanation was not satisfactorily supported with documentary evidence. Accordingly, he treated the cash deposits to the extent of Rs.20,00,000/- as unexplained money under section 69A of the Act and the total assessed income was determined at Rs.25,02,690/- under section 143(3) of the Act, and penalty proceedings under section 271(1)(c) were also initiated separately. 6.2 Aggrieved by the said assessment order dated 28.12.2018, the appellant. preferred the present appeal before this forum and contended that the Assessing Officer failed to appreciate the confirmations submitted and erred in making the impugned addition. The appellant requested for deletion of the additions and also objected to the charging of interest under sections 234B and 234D. Further, he pleaded for leniency on the ground that he is a salaried person with limited knowledge of the provisions of the Income Tax Act. 6.3 During the appellate proceedings, the appellant submitted a detailed written reply reiterating that the impugned cash deposits were not his income, but merely the repayment of a friendly loan of Rs.25,00,000/- advanced by him to Shri Gulamnabi Gafoor Shaikh. In support of this claim, the appellant submitted copies of his own bank statements, confirmation letters, a notarised affidavit from Shri Shaikh, income tax return, audited balance sheet and profit and loss account of Shri Shaikh, as well as deposit pay-in slips. The appellant explained that the said loan was advanced in July 2015 out of earlier advances received from a third party, Mr. Mahesh Vasant Raut, in connection with a property deal which was later cancelled. According to the appellant, the loan was repaid by Shri Shaikh partly by cheque (Rs.5,00,000/-) and partly in cash (Rs.20,00,000/-) in September 2015 and January 2016. Since the claims involved examination of fresh documents, a remand report was called for from the Assessing Officer. 6.4 In the remand report dated 11.07.2024, the AO acknowledged that a deposit slip for cash amounting to Rs.7,50,000/- bearing the signature of Shri GulamnabiGafoor Shaikh had been furnished by the appellant. However, with regard to the remaining cash deposits of Rs.12,50,000/-, no corresponding deposit slips or verifiable evidence were submitted. The AO had issued a notice under section 133(6) to Shri GulamnabiGafoor Shaikh Printed from counselvise.com 4 ITA No. 6162/Mum/2025 requesting him to furnish bank statements, cash book, and other financial details to demonstrate his capacity to repay Rs.20,00,000/-in cash. However, Shri Shaikh failed to respond to the said notice and did not furnishdocuments to justify the availability of such large cash amounts. As a result, the AO maintained that the appellant had failed to conclusively prove the source of the cash deposits and reiterated that the addition of Rs. 20,00,000/- u/s 69A was justified. 6.5 In response to the remand report, the appellant submitted a rejoinder emphasizing that he had made every effort to obtain the deposit slips and had even requested the Assessing Officer to issue notice directly to the bank for the same. The appellant cited non-cooperation from bank officials and the ill health and old age of Shri Shaikh as reasons for the non- availability of further evidence. He reiterated that the affidavit, confirmation, and financial documents of Shri Shaikh established the identity, creditworthiness, and genuineness of the transaction. He also referred to various judicial precedents in support of his contention. 6.6 Upon detailed consideration of the entire material on record, the remand report, the rejoinder, and the oral arguments made during the hearing, it is noted that the appellant has attempted to establish the genuineness of the cash deposits by submitting documents and explanations. However, in the present case, while the appellant has furnished the deposit slips of Rs.7,50,000/- with the signature of Shri Shaikh, the remaining Rs. 12,50,000/- remains unverified, as noted by AO in remand report. Despite the opportunity given during remand proceeding, neither the appellant nor the lender has furnished cash book, bank statements, or any other concrete evidence to demonstrate the availability of cash in hands of Sh Shaikh at the relevant time. The submission that Shri Shaikh was unwell and could not respond is sympathetic but cannot substitute for hard evidence required under law. The responsibility to prove the source of cash deposits lies squarely on the appellant, and that burden has not been discharged fully. If substantial cash deposits are found in the assessee's bank account and the source is unexplained/ explanation furnished is lacking, the Assessing Officer can treat these deposits as unexplained money and add them to the income under Section 69A. 6.7 An affidavit from ShGulamnabi Shaikh stating that he deposited cash into appellant's bank account is a relevant form of evidence when explaining the source of cash deposits to the tax authorities. However, simply submitting such an affidavit is typically not enough to meet the requirements under Section 69A of the Income Tax Act. Courts and Printed from counselvise.com 5 ITA No. 6162/Mum/2025 tribunals have held that a mere affidavit, unless corroborated by additional evidence, may not be considered a satisfactory explanation. The appellant must furnish supporting documentation such as the third person's bank statementsshow cash withdrawal), PAN details, proof of capacity (creditworthiness), and evidence of the actual transfer of funds. If any piece of corroborative evidence is missing, the affidavit is treated as self-serving and may not be accepted as conclusive proof. The person who claims to have deposited the cash needs to satisfactorily explain the source of those funds in their own hands. The tax department and courts expect the third party to appear for cross-verification if needed and to prove how they acquired the money they deposited. If the chain of evidence is broken at any stage, the explanation can be rejected. The appellant must be able to establish the identity of the depositor, the genuineness of the transaction, and the creditworthiness/capacity of the person making the deposit. If the Assessing Officer finds that any of these elements are inadequately demonstrated, the explanation needs to be disregarded. If there are no supporting documents (like a bank trail from the third person, withdrawal slips, confirmation letters, or appearances before the assessing officer), the explanation cannot be regarded as complete or satisfactory. 6.8 Accordingly, while the deposit of Rs.7,50,000/- is accepted as explained on the strength of documentary evidence, the remaining Rs. 12,50,000/- is held to be unexplained and is accordingly confirmed as income under section 69A of the Act. The grounds relating to interest under sections 2348 and 234D are consequential and need no separate adjudication.” 4. Heard both the parties and purused the material available on record. It is a settled proposition that where certain sum is found credited in the bank account maintained by the assessee, the onus lies with the assessee to explain the source of such deposits and to substantiate the explanation so offered with appropriate documentation. In the instant case, the assessee has explained that the cash so deposited was in respect of repayment of loan of Rs.25,00,000/- initially advanced by him to Shri Gulamnabi Gafoor Shaikh in month of July 2015 and the loan was repaid by Shri Shaikh partly by cheque (Rs.5,00,000/-) and partly in cash (Rs.20,00,000/-) in September 2015 and January 2016 which was Printed from counselvise.com 6 ITA No. 6162/Mum/2025 deposited in the assessee’s bank account. To substantiate the same, the assessee has submitted during the appellate proceedings before the ld CIT(A), copies of his own bank statements, confirmation letter and notarised affidavit from Shri Shaikh, income tax return, audited balance sheet and profit and loss account of Shri Shaikh engaged in transport business as well as deposit pay-in slips used for deposit of cash in the bank which has been verified by the AO during the remand proceedings 5. The factum of assessee having advanced the loan of Rs 25 lacs to Shri Shaikh has not been disputed by either of the authorities. The factum of repayment of loan of Rs 5 lacs through cheque has been accepted by the AO during the assessment proceedings. Further, during the appellate proceedings, the ld CIT(A) has also accepted the repayment of loan by way of cash deposit to the tune of Rs 7.5 lacs, however, has not accepted the repayment of remaining amount of Rs 12.5 lacs by way of cash deposit. The reasoning adopted by the ld CIT(A) is that the assessee has failed to demonstrate the availability of cash in hands of Shri Shaikh at the relevant point in time and secondly, the remaining deposit slips with the signatures of Shri Shaikh which are used for deposit of cash are not available on record. 6. As far as the matter relating to deposit slips is concerned, we find that the assessee has reached out to its bank and has requested for copy of the deposit slips, however, the bank in its wisdom has decided not to share the deposit slips with the assessee and has stated that they can share with the tax department, should there be an official communication issued by them. The assessee has brought the said fact to the notice of the AO and we find that inspite of the same, the AO has not sought any information Printed from counselvise.com 7 ITA No. 6162/Mum/2025 directly from the bank and therefore, no adverse view can be taken basis non-availability of deposit slips. 7. Secondly, as regards availability of cash in hands of Shri Shaikh, we find that it is case where the cash has been found deposited in the bank account of the assessee and therefore, the onus on the assessee is limited to establishing the nature and source of such deposits. Once the assessee discharges his onus, the onus shifts on the Revenue to rebut the same by bringing any adverse material on record. The assessee has explained that cash so deposited is towards the repayment of loan by Shri Shaikh and the latter has confirmed the loan and repayment transaction in his confirmation as well as affidavit placed on record. Further, as per the audited financial statements of Shri Shaikh for the year ended 31/03/2016 and the tax return so filed by the him for assessment year 2016-17, he has reported a turnover of Rs 1,64,99,086/- from his transport business and has a declared net worth of Rs 37,92,665/- thus demonstrating his creditworthiness to repay the loan amount. Apparently, the ld CIT(A) has failed to take cognizance of these documentation which duly establishes his creditworthiness to repay the loan amount and instead of that, emphasis has been laid solely on availability of cash in his hands which the assessee cannot be expected to demonstrate as the onus of the assessee is limited to explaining the source of deposit and not the source of source of such cash deposit. 8. We therefore, find merit in the contention advanced by the ld AR that the assessee had discharged the initial burden by providing appropriate documentation in terms of affidavit, confirmation, ITR, and audited financial statements of Shri Shaikh, which establishes his identity and creditworthiness, and genuineness of the loan transaction and no adverse Printed from counselvise.com 8 ITA No. 6162/Mum/2025 material is available on record to rebut the same. In light of the same, the addition so made and sustained by the ld CIT(A) amounting to Rs 12,50,000/- is hereby directed to be deleted. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 10-12-2025 Sd/- Sd/- [JUSTICE (RETD) C.V. BHADANG] [VIKRAM SINGH YADAV] PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated: 10-12-2025 Biswajit Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai Printed from counselvise.com "