ZAHIR IQBAL LALIWALA,AHMEDABAD V. THE ACIT, CIRCLE-4(1)(1), AHMEDABAD

ITA 394/AHD/2025

AI Insights

The case involves an appeal by Zahir Iqbal Laliwala against the order of the Commissioner of Income Tax (Appeals), which confirmed and enhanced the addition of unexplained cash credits under section 68 of the Income-tax Act, 1961. Initially, the Assessing Officer added \\u20b91,26,89,915 as unexplained cash credits, which was later enhanced to \\u20b92,60,80,590 by the CIT(A) based on discrepancies noted in Form No. 26AS. The assessee contested that the enhancement was made without proper notice or opportunity to explain, particularly noting the death of their CA and the lack of updated contact information in the tax records. The Tribunal found that the enhancement was made in violation of the principles of natural justice due to the absence of a proper hearing or notice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712944 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARGOVIND SINGH
• Assessee Lawyers: HARDIK VORA
• Keywords: Unexplained cash credit; Principle of natural justice; TDS; FORM 26AS
• Section: 147; 144; 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI T.R SENTHIL KUMAR, JUDICIAL MEMBER ITA No.394/Ahd/2025 (Assessment Year: 2011-12) Zahir Iqbal Laliwala, Aman, Opp. Paras Baug Soc. B/h. Tagore Hall, Paldi, Ahmedabad-380007. [PAN :AAFPL5516 R] Vs. The Assistant Commissioner of Income Tax, Circle-4(1)(1), Ahmedabad. (Appellant) .. (Respondent) Appellant by : Shri Hardik Vora, AR Respondent by: Shri Hargovind Singh, Sr. DR Date of Hearing 30.07.2025 Date of Pronouncement 31.07.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned This appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals) [CIT(A)], passed under section 250 of the Income-tax Act, 1961 (“the Act” for short), dated 26.07.2023, for the assessment year 2011–12, whereby the ld. CIT(A) not only confirmed the addition of ₹1,26,89,915/- made by the Assessing Officer (AO) under section 68 of the Act, but also enhanced the same to ₹2,60,80,590/- based on the income reflected in Form No. 26AS. 2. The assessee has raised the following grounds of appeals: Printed from counselvise.com ITA No. 394/Ahd/2025 Zahir Iqbal Laliwala Vs. ACIT Asst. Year : 2011-12 - 2– 1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in passing order without providing enough opportunities to represent the case of the assessee. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in passing order without considering that CA Nazim Rajaiwala, who was handling the appeal had expired and email id on portal belonged to him, as a result, the assessee was unaware of the notices. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the addition of Rs. 1,26,89,915/- as unexplained cash credits u/s.68 based on credit entries in the bank account. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) erred in enhancing assesee’s income by Rs.1,33,90,675/- u/s.68 based on entries reflected in 26AS, without issuing any prior notice. 5. It is therefore prayed that the above addition/disallowance made by the assessing officer may please be deleted. 3. The assessment in this case was completed under section 144 read with section 147 of the Act. In the said assessment, the AO made an addition of ₹1,26,89,915/- under section 68, on the ground that the assessee had failed to furnish any explanation with respect to certain receipts shown as contract payments. 4. The assessee preferred an appeal before the ld. CIT(A). During the appellate proceedings, the CIT(A) observed that as per Form No. 26AS, the gross contract receipts of the assessee amounted to ₹2,60,80,590/-, whereas the AO had considered only ₹1,26,89,915/-. Accordingly, the CIT(A) held that there was an understatement of ₹1,33,90,675/- and enhanced the assessed income to ₹2,60,80,590/-, Printed from counselvise.com ITA No. 394/Ahd/2025 Zahir Iqbal Laliwala Vs. ACIT Asst. Year : 2011-12 - 3– directing the AO to give due credit of TDS amounting to ₹41,80,405/- while giving effect to the appellate order. 5. Aggrieved by the enhancement of income, the assessee has come in appeal before us. The principal grievance of the assessee is that the ld. CIT(A) enhanced the assessed income from ₹1,26,89,915/- to ₹2,60,80,590/- without issuing any specific notice to the assessee or granting an opportunity to explain the discrepancy. 6. The ld. counsel for the assessee submitted that the enhancement made by the ld. CIT(A) is bad in law as no opportunity was provided before enhancing the income. The ld. Departmental Representative, on the other hand, relied upon the order of the ld. CIT(A). 7. We have heard both parties and perused the orders of the Revenue authorities. It is evident that the order of the ld. CIT(A) was passed ex parte despite issuance of multiple notices. The enhancement of income was solely based on the difference between the amount considered by the AO and the gross receipts as per Form No. 26AS. However, such enhancement was made without giving notices or opportunity of hearing to the assessee, which is in violation of the principles of natural justice. 8. Given that the enhancement involves a substantial amount, and in view of the fact that no opportunity was given to the assessee to explain the same, we deem it appropriate to remand the matter back to the file of the Assessing Officer. The AO shall verify the receipts Printed from counselvise.com ITA No. 394/Ahd/2025 Zahir Iqbal Laliwala Vs. ACIT Asst. Year : 2011-12 - 4– reflected in Form 26AS vis-à-vis the actual income of the assessee, and adjudicate the matter afresh, after affording due opportunity of hearing to the assessee. 9. In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open Court on 31.07.2025 Sd/- Sd/- (T.R SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 31.07.2025 MV आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "