MR. BHAUSAHEB B PANSARE,KALYAN vs. ITO WARD-3(1), KALYAN

2.1 During the assessment proceedings, the assessee submitted During the assessment proceedings, the assessee submitted During the assessment proceedings, the assessee submitted that that that he he he was was was employed employed employed as as as a a a Headmaster Headmaster Headmaster with with with MadhyamikVidhyalaya, Sapad, Kalyan, District Thane, and MadhyamikVidhyalaya, Sapad , Kalyan, District Thane, and derived income from salary, commission from LIC, and other derived income from salary, commission from LIC, and other derived income from salary, commission from LIC, and other sources such as bank interest. Upon examination of sources such as bank interest. Upon examination of sources such as bank interest. Upon examination of information available on the Insight Portal, the Assessing information available on the Insight Portal, the Assessing information available on the Insight Portal, the Assessing Officer noted significant payments—both in cash and through Officer noted significant payments both in cash and through other modes—towards three credit cards held in the name of towards three credit cards held in the name of towards three credit cards held in the name of the assessee. The details of such payments, as recorded by the assessee. The details o f such payments, as recorded by the Assessing Officer, were as under: the Assessing Officer, were as under:

Sr. No. Name of the Bank Amount Amount 1. ICICI BANK LTD. Rs. 18,88,000/ Rs. 18,88,000/- 2. INDUSIND BANK LTD. INDUSIND BANK LTD. Rs. 19,23,100/ Rs. 19,23,100/- 3. SBI CARD AND PAYMENT SBI CARD AND PAYMENT Rs. 14,76,140/ Rs. 14,76,140/- SERVICES LTD. Total Rs. 52, 87, 240/- Rs. 52, 87, 2.2 In response, the assessee categorically asserted that the In response, the assessee categorically asserted that the In response, the assessee categorically asserted that the impugned credit-card transactions were not undertaken by impugned credit card transactions were not undertaken by him. He explained that he had handed over the said credit him. He explained that he had handed over the said credit him. He explained that he had handed over the said credit cards to one Shri Yogesh Abhimanyu Karbhari Shri Yogesh Abhimanyu Karbhari Shri Yogesh Abhimanyu Karbhari, a close friend and associate, who was carrying on fabrication business as a and associate, who was carrying on fabrication business as a and associate, who was carrying on fabrication business as a sole proprietor under the name M/s Harsh Fabrication and sole proprietor under the name M/s Harsh Fabrication and Engineering Works. It was submitted that the credit cards Engineering Works . It was submitted that the credit cards were utilised exclusively for the business expenses and were utilised exclusively for the business expenses and were utilised exclusively for the business expenses and purchases of Shri Karbhari, and that the corresponding es of Shri Karbhari, and that the corresponding es of Shri Karbhari, and that the corresponding payments towards the credit-card accounts were also made payments towards the credit card accounts were also made by him. The assessee emphasised that, having regard to his by him. The assessee emphasised that, having regard to his by him. The assessee emphasised that, having regard to his financial capacity, it was wholly improbable for him to incur financial capacity, it was wholly improbable for him to incur financial capacity, it was wholly improbable for him to incur expenditure of such magnitude. expenditure of such magnitude.

2.3 The assessee stated that the credit cards had been handed The assessee stated that the credit cards had been handed The assessee stated that the credit cards had been handed over in good faith to assist his friend in running his business. over in good faith to assist his friend in running his business. over in good faith to assist his friend in running his business. In support of his explanation, he furnished the credit-card In support of his explanation, he furnished the credit In support of his explanation, he furnished the credit payment payment statements, statements, bank bank pay pay-in in slips, slips, a a written written undertaking/confirmation from Shri Karbhari, as well as his undertaking/confirmati on from Shri Karbhari, as well as his own bank statements. He further submitted a detailed own bank statements. He further submitted a detailed own bank statements. He further submitted a detailed explanation regarding the manner and quantum of deposits explanation regarding the manner and quantum of deposits explanation regarding the manner and quantum of deposits made into each of the three credit-card accounts, which was made into each of the three credit card accounts, which was tabulated by the Assessing Officer as under: tabulated by the Assessing Officer

Sr. No. Name of Name Cash Amounts Business the credit the credit deposit (Rs.) credited expenses incurred expenses incurred card card through by the third party online mode (Rs.) 1 IndusInd IndusInd 19,93,600 NIL 19,93,600 Bank Ltd. Bank Ltd. 2 ICICI Bank ICICI Bank 18,84,300 NIL 18,84,300 18,84,300 Ltd. 3 SBI Card SBI Card NIL 13,77,140 13,77,140 2.4 During the course of the assessment proceedings, in order to During the course of the assessment proceedings, in order to During the course of the assessment proceedings, in order to verify the explanation furnished by the assessee, the verify the explanation furnished by the assessee, the verify the explanation furnished by the assessee, the Assessing Officer issued a notice under section 133(6) of the Assessing Officer issued a notice under section 133(6) of the Assessing Officer issued a notice under section 133(6) of the Act to Shri Yogesh Abhimanyu Karbhari at the e Act to Shri Yogesh Abhimanyu Karbhari at the e-mail address available in his PAN database, i.e., gprasad1970@yahoo.co.in available in his PAN database, i.e., gprasad1970@yahoo.co.in. However, no response was received to the said statutory However, no response was received to the said statutory However, no response was received to the said statutory requisition. The Assessing Officer also observed that the requisition. The Assessing Officer also observed that the requisition. The Assessing Officer also observed that the assessee’s salary account had been utilised for transactions assessee’s salary account had been utilised for transacti assessee’s salary account had been utilised for transacti relating to the business concerns of M/s Harsh Fabrication relating to the business concerns of M/s Harsh Fabrication and Engineering Works. and Engineering Works 2.5 In the absence of any confirmation or supporting material In the absence of any confirmation or supporting material In the absence of any confirmation or supporting material from Shri Karbhari, the Assessing Officer held that the from Shri Karbhari, the Assessing Officer held that the from Shri Karbhari, the Assessing Officer held that the assessee had failed to substantiate the genuineness of the assessee had failed to substantiate the genuineness of assessee had failed to substantiate the genuineness of credit-card card card transactions transactions transactions in in in question. question. question. Accordingly, Accordingly, Accordingly, the the the deposits aggregating to ₹52,87,240/- made towards the three deposits aggregating to made towards the three credit cards were treated as unexplained, and the same were credit cards were treated as unexplained, and the same were credit cards were treated as unexplained, and the same were brought to tax as unexplained money under the provisions of brought to tax as unexplained money under the provisions of brought to tax as unexplained money under the provisions of the Act. The assessment was thereafter completed under the Act. The asse ssment was thereafter completed under section 143(3) of the Act vide order dated 19 March 2025. section 143(3) of the Act vide order dated 19 March 2025. section 143(3) of the Act vide order dated 19 March 2025.

the Faceless Assessment Unit to the e-mail address reflected the Faceless Assessment Unit to the e mail address reflected in his PAN database, which, according to the assessee, was in his PAN database, which, according to the assessee, was in his PAN database, which, according to the assessee, was obsolete and no longer in use. It was urged that the notice obsolete and no longer in use. It was urged that the notice obsolete and no longer in use. It was urged that the notice ought to have been sent to the e-mail address furnished in ought to have been sent to the e mail address furnished in Shri Karbhari’s most recent return of income. It was further Karbhari’s most recent return of income. It was further Karbhari’s most recent return of income. It was further submitted that, assuming there was no response to the notice submitted that, assuming there was no response to the notice submitted that, assuming there was no response to the notice under section 133(6), the Faceless Assessing Officer was under section 133(6), the Faceless Assessing Officer was under section 133(6), the Faceless Assessing Officer was empowered to ensure verification by invoking section 131 of empowered to ensure verification by invoking section 131 of empowered to ensure verification by invoking section 131 of the Act and issuing summons. the Act and issuing su 3.1 In support of the explanation regarding the utilisation of the In support of the explanation regarding the utilisation of the In support of the explanation regarding the utilisation of the credit cards, the assessee furnished before the learned CIT(A) credit cards, the assessee furnished before the learned CIT(A) credit cards, the assessee furnished before the learned CIT(A) a copy of the income-tax return of Shri YogeshKarbhari for a copy of the income tax return of Shri YogeshKarbhari for A.Y. 2023-24, a copy of the Udyam Registration Certificate of 24, a copy of the Udyam Registration Certificate of 24, a copy of the Udyam Registration Certificate of Harsh Fabrication & Engineering Works arsh Fabrication & Engineering Works, as well as a , as well as a certificate issued by the educational institution of the certificate issued by the educational institution of the certificate issued by the educational institution of the assessee stating that, in his capacity as a Headmaster, he assessee stating that, in his capacity as a Headmaster, he assessee stating that, in his capacity as a Headmaster, he was not permitted to engage in business activities. It was was not permitted to engage in business activities. It was was not permitted to engage in business activities. It was asserted that the cash deposits represented funds belonging asserted that the cash deposit s represented funds belonging to Shri Karbhari and were duly reflected in his books of to Shri Karbhari and were duly reflected in his books of to Shri Karbhari and were duly reflected in his books of account, and that the assessee had merely facilitated the use account, and that the assessee had merely facilitated the use account, and that the assessee had merely facilitated the use of his credit cards out of goodwill.The learned CIT(A), of his credit cards out of goodwill.The learned CIT(A), of his credit cards out of goodwill.The learned CIT(A), however, rejected the explanation furnished by the assessee, however, rejected the explanation furnished by the however, rejected the explanation furnished by the observing as under: observing as under:

“5.2.3 The submission of the appellant is not acceptable on merit. It is The submission of the appellant is not acceptable on merit. It is The submission of the appellant is not acceptable on merit. It is pertinent to mention here that the confirmation cum undertaking was pertinent to mention here that the confirmation cum undertaking was pertinent to mention here that the confirmation cum undertaking was also submitted to the AO. To verify the same, the AO issued notice also submitted to the AO. To verify the same, the AO issued notice also submitted to the AO. To verify the same, the AO issued notice u/s 133(6) to Shri u/s 133(6) to Shri Yogesh Abhimanyu Karbhari. However, no Yogesh Abhimanyu Karbhari. However, no response was received. Further, it was noted by the AO that the response was received. Further, it was noted by the AO that the response was received. Further, it was noted by the AO that the salary account of the appellant was also being used for transactions salary account of the appellant was also being used for transactions salary account of the appellant was also being used for transactions done by M/s Harsh fabrication and engineering works which did not done by M/s Harsh fabrication and engineering works which did not done by M/s Harsh fabrication and engineering works which did not commensurate as t commensurate as to how a proprietorship business undertaking o how a proprietorship business undertaking using a salaried employee's bank account as well as credit card using a salaried employee's bank account as well as credit card using a salaried employee's bank account as well as credit card payment and not its own bank account for its business activities. payment and not its own bank account for its business activities. payment and not its own bank account for its business activities. The contention of appellant does not pass the test of human The contention of appellant does not pass the test of human The contention of appellant does not pass the test of human probability as cited by Hon'ble Apex Court in case of SumatiDayal Vs probability as cited by Hon'ble Apex Court in case of SumatiDayal Vs probability as cited by Hon'ble Apex Court in case of SumatiDayal Vs CIT [1995] 80 Taxmann 89 (SC) as no prudent person would give CIT [1995] 80 Taxmann 89 (SC) as no prudent person would give CIT [1995] 80 Taxmann 89 (SC) as no prudent person would give credit card or bank accounts to a third party for his business credit card or bank accounts to a third party for his business credit card or bank accounts to a third party for his business activities. Even if the appellant's contention is to be taken correct then Even if the appellant's contention is to be taken correct then Even if the appellant's contention is to be taken correct then also the submission of the appellant is not acceptable. The also the submission of the appellant is not acceptable. The also the submission of the appellant is not acceptable. The payments towards credit card transactions have been made in cash. payments towards credit card transactions have been made in cash. payments towards credit card transactions have been made in cash. The appellant has been unable to explain the source of pa The appellant has been unable to explain the source of pa The appellant has been unable to explain the source of payments made in cash. Merely submitting undertaking and copy of ITR does made in cash. Merely submitting undertaking and copy of ITR does made in cash. Merely submitting undertaking and copy of ITR does not prove the source of payments made towards credit card in not prove the source of payments made towards credit card in not prove the source of payments made towards credit card in cash.”

at pages 34 to 74 of the Paper Book. He further invited our at pages 34 to 74 of the Paper Book. He further invited our at pages 34 to 74 of the Paper Book. He further invited our attention to the cash deposit pay-in slips pertaining to attention to the cash deposit pay in slips pertaining to deposits made into the ICICI Bank credit deposits made into the ICICI Bank credit-card account, available at pages 24 to 33. The learned counsel also relied available at pages 24 to 33. The learned counsel also relied available at pages 24 to 33. The learned counsel also relied upon the undertaking/confirmation furnished by Shri Yogesh upon the undertaking/confirmation furnished by Shri Yogesh upon the undertaking/confirmation furnished by Shri Yogesh Abhimanyu Karbhari acknowledging that the impugned Abhimanyu Karbhari acknowledging that the impugned Abhimanyu Karbhari acknowledging that the impugned credit-card transactions were carried out by card transactions were carried out by card transactions were carried out by him for the purposes of his fabrication business. purposes of his fabrication business.

4.1 It was submitted that the source of the cash deposits stood It was submitted that the source of the cash deposits stood It was submitted that the source of the cash deposits stood duly explained through the said confirmation and supporting duly explained through the said confirmation and supporting duly explained through the said confirmation and supporting documents, and that the non-response to the notice issued documents, and that the non response to the notice issued under under section section 133(6) 133(6) occur occurred red only only because because the the communication was sent to an e-mail address that was no communication was sent to an e mail address that was no longer operative. In these circumstances, the learned counsel longer operative. In these circumstances, the learned counsel longer operative. In these circumstances, the learned counsel urged that, in the interest of justice, the matter may be urged that, in the interest of justice, the matter may be urged that, in the interest of justice, the matter may be restored to the file of the Assessing Officer for a proper restored to the file of the Assessing Officer for a proper restored to the file of the Assessing Officer for a proper verification of the source of the cash deposits appearing in verification of the source of the cash deposits appearing in verification of the source of the cash deposits appearing in the assessee’s credit-card accounts. the assessee’s credit

4.2 The The The learned learned learned Departmental Departmental Departmental Representative, Representative, Representative, however, however, however, submitted that the conduct asserted by the assessee submitted that the conduct asserted by the assessee submitted that the conduct asserted by the assessee—of extending his credit cards and bank account for the extending his credit cards and bank account for the extending his credit cards and bank account for the business transactions of a third party without consideration transactions of a third party without consideration transactions of a third party without consideration—was highly improbable. He suggested that it was plausible that highly improbable. He suggested that it was plausible that highly improbable. He suggested that it was plausible that the assessee might have received some form of consideration the assessee might have received some form of consideration the assessee might have received some form of consideration or benefit for allowing his credit or benefit for allowing his credit-card limits to be utilised for card limits to be utilised for meeting business expenditure over a period of two to three g business expenditure over a period of two to three g business expenditure over a period of two to three months. The learned DR further contended that, even if the months. The learned DR further contended that, even if the months. The learned DR further contended that, even if the assessee’s explanation were to be accepted, the implications assessee’s explanation were to be accepted, the implications assessee’s explanation were to be accepted, the implications of the cash transactions in the hands of Shri YogeshKarbhari, of the cash transactions in the hands of Shri YogeshKarbhari, of the cash transactions in the hands of Shri YogeshKarbhari, including compliance including compliance with statutory provisions pertaining to with statutory provisions pertaining to loan loan loan transactions transactions transactions not not not routed routed routed through through through account-payee account account instruments, would require examination. instruments, would require examination.

4.3 Notwithstanding these observations, the learned DR agreed Notwithstanding these observations, the learned DR agreed Notwithstanding these observations, the learned DR agreed that the matter may be remanded to the Assessing Officer for that the matter may be remanded to the Assessing Officer for that the matter may be remanded to the Assessing Officer for the limited purpose of carrying out necessary verification as the limited purpose of carrying out necessary verification as the limited purpose of carrying out necessary verification as requested by the assessee. requested by the assessee.

5.1 The learned counsel for the assessee drew our attention to The learned couns el for the assessee drew our attention to various entries in the credit-card statements various entries in the credit card statements—such as payments of ₹ ₹20,000/- and ₹25,000/- to Vighnharta Steel Vighnharta Steel Corporation, Thane (Paper Book p. 34) and expenditure of Corporation, Thane (Paper Book p. 34) and expenditure of ₹99,500/- incurred towards incurred towards Harsh Fabrication & Harsh Fabrication & Engineering, Bhiwandi (Paper Book p. 36). When queried, the learned (Paper Book p. 36). When queried, the learned (Paper Book p. 36). When queried, the learned counsel was unable to immediately produce corresponding counsel was unable to immediately produce corresponding counsel was unable to immediately produce corresponding invoices, and was therefore directed to clarify whether such invoices, and was therefore directed to clarify whether such invoices, and was therefore directed to clarify whether such invoices were raised in the name of the assessee or in the invoices were raised in the name of the assessee or in the invoices were raised in the name of the assessee or in the name of Shri Yogesh Abhimanyu Karbhari, to whom the Yogesh Abhimanyu Karbhari, to whom the assessee attributes the entire set of transactions. assessee attributes the entire set of transactions. assessee attributes the entire set of transactions.

5.2 The assessee’s case rests on the assertion that Shri The assessee’s case rests on the assertion that Shri The assessee’s case rests on the assertion that Shri YogeshKarbhari, proprietor of M/s Harsh Fabrication & YogeshKarbhari, proprietor of M/s Harsh Fabrication & Engineering Works, had utilised the assessee’s credit cards for Engineering Works the assessee’s credit cards for business purposes and had deposited the cash required for business purposes and had deposited the cash required for business purposes and had deposited the cash required for meeting the resultant dues out of his own books of account. meeting the resultant dues out of his own books of account. meeting the resultant dues out of his own books of account. It is an admitted position that the notice issued under section It is an admitted position that the notice issued under section It is an admitted position that the notice issued under section 133(6) of the Act by the Assessing Officer to Shri Karbhari 133(6) of the Act by the Assessing Office r to Shri Karbhari remained unresponded. However, before us, the assessee has remained unresponded. However, before us, the assessee has remained unresponded. However, before us, the assessee has expressed readiness to produce Shri Karbhari for personal expressed readiness to produce Shri Karbhari for personal expressed readiness to produce Shri Karbhari for personal verification, as well as to furnish all supporting primary verification, as well as to furnish all supporting primary verification, as well as to furnish all supporting primary evidence establishing the nexus between the deposits in evidence establishing the nexus between the deposits in evidence establishing the nexus between the deposits in question and the latter’s business activities. ion and the latter’s business activities.

5.3 At the same time, we cannot ignore the factual observations At the same time, we cannot ignore the factual observations At the same time, we cannot ignore the factual observations of the lower authorities. The Assessing Officer had noted that of the lower authorities. The Assessing Officer had noted that of the lower authorities. The Assessing Officer had noted that not only were sizeable cash deposits made towards the credit- not only were sizeable cash deposits made towards the credit not only were sizeable cash deposits made towards the credit card accounts, but even the assessee’s salary account was card accounts, but even the a ssessee’s salary account was used for business-related transactions of used for business related transactions of M/s Harsh Fabrication & Engineering Works. The learned CIT(A), relying Fabrication & Engineering Works . The learned CIT(A), relying upon the principle of human probabilities as enunciated by upon the principle of human probabilities as enunciated by upon the principle of human probabilities as enunciated by the Hon’ble Supreme Court in SumatiDayal v. CIT the Hon’ble Supreme Court in SumatiDayal v. CIT (1995) 80 Taxmann 89 (SC), held that it was inherently improbable for Taxmann 89 (SC), held that it was inherently improbable for Taxmann 89 (SC), held that it was inherently improbable for a salaried individual to permit unfettered use of his credit a salaried individual to permit unfettered use of his credit a salaried individual to permit unfettered use of his credit cards and bank accounts for a third party’s business without cards and bank accounts for a third party’s business without cards and bank accounts for a third party’s business without cogent commercial justification. cogent commercial justification.

5.4 Nonetheless, the Tribunal is equally conscious of the cardinal Nonetheless, the Tribunal is equally conscious of the cardinal principle that no person should be prejudiced for want of principle that no person should be prejudiced for want of principle that no person should be prejudiced for want of proper verification when relevant material is available and the proper verification when relevant material is available and the proper verification when relevant material is available and the assessee expresses willingness to produce the concerned assessee expresses willingness to produce the concerned assessee expresses willingness to produce the concerned party. party. party. The The The explanation explanation explanation tendered, tendered, tendered, though though though presently presently presently uncorroborated, cannot be rejected corroborated, cannot be rejected in limine without affording without affording a final opportunity for proper examination. The evidentiary a final opportunity for proper examination. The evidentiary a final opportunity for proper examination. The evidentiary gaps pointed out by the revenue authorities are capable of gaps pointed out by the revenue authorities are capable of gaps pointed out by the revenue authorities are capable of being addressed through direct verification of the alleged being addressed through direct verification of the alleged being addressed through direct verification of the alleged source—namely, th namely, the books and financial statements of Shri e books and financial statements of Shri YogeshKarbhari. YogeshKarbhari.

5.5 In these circumstances, and in the interest of substantial In these circumstances, and in the interest of substantial In these circumstances, and in the interest of substantial justice, we deem it appropriate to set aside the orders of the justice, we deem it appropriate to set aside the orders of the justice, we deem it appropriate to set aside the orders of the authorities below and restore the matter to the file of the authorities below and restore the matter to the file of the authorities below and restore the matter to the file of the Assessing Officer for the limited purpose of carrying out a Assessing Office for the limited purpose of carrying out a comprehensive verification of the source of the cash and comprehensive verification of the source of the cash and comprehensive verification of the source of the cash and online online online deposits deposits deposits made made made into into into the the the assessee’s assessee’s assessee’s credit-card credit credit accounts. The Assessing Officer shall be at liberty to conduct accounts. The Assessing Officer shall be at liberty to conduct accounts. The Assessing Officer shall be at liberty to conduct such enquiry, including summoning parties, examining books such enquiry, including summoning parti es, examining books of account, and calling for additional evidence, as may be of account, and calling for additional evidence, as may be of account, and calling for additional evidence, as may be warranted in the facts of the case. warranted in the facts of the case.

5.6 It is clarified that the assessee shall produce Shri Yogesh It is clarified that the assessee shall produce Shri Yogesh It is clarified that the assessee shall produce Shri Yogesh Abhimanyu Karbhari and all relevant documentary evidence Abhimanyu Karbhari and all relevant documentary evidence Abhimanyu Karbhari and all relevant documentary evidence in support of his claim, and shall be afforded adequate in support of his claim and shall be afforded adequate opportunity of being heard. The Assessing Officer shall opportunity of being heard. The Assessing Officer shall opportunity of being heard. The Assessing Officer shall thereafter pass a speaking order in accordance with law. thereafter pass a speaking order in accordance with law. thereafter pass a speaking order in accordance with law.

5.7 The ground of the appeal of the Assessee is accordingly The ground of the appeal of the Assessee is accordingly The ground of the appeal of the Assessee is accordingly allowed for statistical purpose. allowed for statistical purpose.

6 In the result, appeal of the Assessee is allowed for statistical In the result, appeal of the Assessee is allowed for statistical purposes.

Order pronounced in the open Court on ounced in the open Court on 26/11/2025. /11/2025.