FAHAD WAGHOO,MAHARASHTRA vs. INCOME TAX OFFICER, WARD 28(1)(1), MUMBAI, MUMBAI

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ITA 530/MUM/2026Status: DisposedITAT Mumbai17 September 2026AY 2021-202213 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the addition of Rs. 80,43,000/- as unexplained money due to lack of substantiation for the cash deposits. It also confirmed the assessment of Rs. 7,20,41,250/- as business income and the addition of Rs. 12,00,000/- as undisclosed business receipts, citing insufficient evidence to the contrary.

What were the facts?

The assessee, engaged in real estate facilitation, had cash deposits aggregating to Rs. 80,43,000/- in bank accounts. The Assessing Officer treated these as unexplained money. The assessee also received Rs. 7,74,56,250/- from a land transaction, which the AO assessed as business income, and added Rs. 12,00,000/- based on GST returns.

What were the issues?

Whether cash deposits in bank accounts are unexplained money and whether receipts from land facilitation activities constitute business income or capital gains.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH MUMBAI

For Respondent: Shri Ravi Teja, Sr. DR
Hearing: 15.09.2026Pronounced: 17.09.2026

आदेश / ORDER PER: MAKARAND VASANT MAHADEOKAR, AM This appeal by the assessee is directed against the order dated 26.11.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as

2 ITA No. 530/Mum/2026 FAHAD WAGHOO “CIT(A)”] under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] for the assessment year 2021- 22. The impugned appellate order arises from the assessment order dated 19.12.2022 passed under section 143(3) read with section 144B of the Act. 2. The assessee has raised following grounds of appeal: 1. The order of the assessing officer is contrary to law, facts, weight of evidence and probability of surrounding circumstances of the case and at any rate is opposed to the principle of equity, natural justice and fair play. 2. That the assessing officer has erred in law and on the facts by adding a sum of Rs.80,43,000/- being cash deposits without considering the fact that the sum of Rs.53,93,000/- was deposited out of the land advance amount repaid by the farmers and balance was by way of re-deposit of the money already withdrawn from banks. 3. That the assessing officer erred in not appreciating the facts that the appellant had received an advance amount of Rs.7,74,56,250/- during the year 2020-21 for purchase of agriculture land from various parties and treating the said advance amount as appellant's gross income. 4. That the assessing officer erred in law and on the facts by adding the sum of Rs.12,00,000/- as income based on the GST return figures in-spite of the appellant submission that the difference of Rs.12,00,000/- was due to revised contract bill and they could not file a revised GST return as there was no provision to file revised return in the GST portal. 5. The Appellant reserves its rights to add, alter, delete, substitute or otherwise the above grounds of appeal before or during the hearing of appeal.

3 ITA No. 530/Mum/2026 FAHAD WAGHOO 3. The appeal was first fixed for hearing on 02.04.2026. None appeared for the assessee and the hearing was adjourned to 13.05.2026 with a direction to issue notice by RPAD. On 13.05.2026, there was again no appearance and the appeal was adjourned to 20.05.2026. On 20.05.2026, in the continued absence of the assessee, the matter was adjourned to 01.07.2026 with a direction to issue notice by Speed Post and e-mail. On 01.07.2026, none appeared and the appeal was adjourned to 04.08.2026, again with a direction to issue notice by Speed Post and e-mail. On 04.08.2026, there was no appearance for the assessee and the appeal was adjourned to 15.09.2026, granting a last opportunity and directing notice by Speed Post AD.

4.

When the appeal was called on 15.09.2026, none appeared on behalf of the assessee and no application seeking adjournment was filed. The learned Departmental Representative (DR), did not object to the disposal of the appeal on merits and relied upon the orders of the lower authorities. Having regard to the repeated opportunities reflected in the order sheet, we proceeded under Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 and heard the respondent. 5. The assessee is an individual engaged in activities relating to real estate facilitation, including aggregation and conversion of agricultural land. He filed the original return of income on 17.12.2021 declaring total income of Rs.49,86,720/- under the heads profits and gains of business or profession and capital gains. A revised return was filed on 31.03.2022 declaring total income of

4 ITA No. 530/Mum/2026 FAHAD WAGHOO Rs.55,90,300/- under the heads long-term capital gains and income from other sources. The case was selected for scrutiny on account of large cash deposits in bank accounts and purchase or sale of property during the year. 6. During the assessment proceedings, notices under sections 143(2) and 142(1), reminder communications and two show-cause notices were issued. The assessee furnished replies and documents in stages. The Assessing Officer thereafter completed the assessment determining total income at Rs.8,13,99,550/-. The three variations which survive in the present appeal are set out below. 7. The Assessing Officer found cash deposits aggregating to Rs.53,93,000/- in two Axis Bank accounts, comprising Rs.12,00,000/- in the current account of Waghoo Realty and Rs.41,93,000/- in the assessee's savings account. A further amount of Rs.26,50,000/- was deposited in the Axis Bank account of Fahad Car Fantasy. The aggregate cash deposits were thus Rs.80,43,000/-. 8. The assessee explained that Rs.42,06,500/- represented recovery of an advance from Shri Ramesh Haridas Katkari, a farmer who had withdrawn from a proposed land transaction. In relation to the remaining deposits in the first two accounts, the assessee stated that ordinary business cash withdrawn earlier had been redeposited as and when funds were required in the bank. An affidavit dated 15.12.2022 of Shri Katkari was filed. The affidavit, however, referred to a refund of Rs.42,06,000/- and did not state

5 ITA No. 530/Mum/2026 FAHAD WAGHOO the date or mode of the original advance or the dates and particulars of the alleged cash refunds. Shri Katkari also did not respond to the notice issued under section 133(6). The assessee did not produce proof of the original payments, a cash book, or a deposit-wise cash trail. No income from the car-sales concern in whose account Rs.26,50,000/- had been deposited was disclosed for the year.

9.

The Assessing Officer held that the explanation did not establish the nature and source of the deposits and treated Rs.80,43,000/- as unexplained money under section 69A, with the consequential application of section 115BBE. 10. In the revised return, the assessee had shown consideration of Rs.7,75,00,000/- in respect of the land transaction with M/s Sunny Housing (India) Pvt. Ltd., indexed cost of acquisition of Rs.7,20,25,000/-, and long-term capital gain of Rs.54,75,000/-. On examination of the memoranda of understanding and the assessee's replies, the Assessing Officer found that the land belonged to Smt. Ashabai Baburao Katkari and other landowners. The assessee had entered into an unregistered memorandum of understanding with the previous developer and thereafter another unregistered memorandum of understanding with M/s National Builders or M/s Sunny Housing (India) Pvt. Ltd. The assessee's role was found to comprise facilitation, coordination, land conversion and related legal work. The land had never become the assessee's capital asset.

6 ITA No. 530/Mum/2026 FAHAD WAGHOO 11. The Assessing Officer further noticed that the assessee had been receiving consideration from the arrangement from financial year 2018-19 onwards and had offered capital gains for the same land in successive years by adopting different amounts as cost of acquisition. During the relevant previous year, the assessee received Rs.7,74,56,250/- from M/s Sunny Housing (India) Pvt. Ltd. The Assessing Officer treated the receipts as arising from the assessee's business activity. Payments of Rs.54,15,000/- made to farmers and others during the year were allowed as business expenditure. After allowing that expenditure, the balance of Rs.7,20,41,250/- was assessed as business income. In the computation of assessed income, the long-term capital gain of Rs.54,75,000/- already included in the revised return was excluded before adding the business income, thereby avoiding duplication of that returned amount. 12. The revised return did not disclose income under the head profits and gains of business or profession. The GST records, however, reflected sales of Rs.12,00,000/- in GSTR-1 or GSTR-3B for the relevant year. In response to the show-cause notice, the assessee stated that a bill had been raised under a contract, but the customer did not accept the work; that the bill was subsequently revised; and that the GST portal did not permit revision of the return. The Assessing Officer found that the assessee had not furnished the identity of the customer, the contract, invoices, ledger accounts, correspondence showing rejection of the work or invoice, or any GST reconciliation or

7 ITA No. 530/Mum/2026 FAHAD WAGHOO correction. The amount of Rs.12,00,000/- was consequently added as undisclosed sales. 13. The appeal was preferred before learned CIT(A). No additional evidence was furnished. The appeal was decided on the basis of the written submissions and the material available on the assessment and appellate portals. 14. The challenge based on natural justice was rejected because the assessment order dealt with the assessee's business model and the material furnished, several statutory notices and show-cause notices had been issued, replies had been considered, and a final opportunity had also been granted. The Commissioner of Income Tax (Appeals) held that mere non-acceptance of the explanation did not make the assessment order non-speaking. 15. The addition of Rs.80,43,000/- was confirmed since the affidavit did not contain material particulars capable of connecting the alleged refund with the cash deposits, the person said to have made the refund did not respond to the notice under section 133(6), and no cash book, bank-withdrawal trail or other corroborative evidence was produced. The addition of Rs.7,20,41,250/- was confirmed on the finding that the assessee never owned the land, acted as an intermediary in a continuing commercial arrangement, and had failed to establish that the receipts constituted a refundable liability. The deduction of Rs.54,15,000/- allowed by the Assessing Officer for payments to farmers was also noticed. The addition of Rs.12,00,000/- was confirmed because the statutory GST disclosure remained

8 ITA No. 530/Mum/2026 FAHAD WAGHOO unreconciled and the explanation of rejected work or revised billing was unsupported by primary evidence. The appeal was accordingly dismissed. 16. We have heard the learned DR and carefully perused the assessment order, the impugned appellate order, the explanations reproduced therein and the material referred to by the lower authorities. Since the assessee has not appeared, no fresh material or argument has been placed before us. Nevertheless, each substantive issue has been independently examined on the basis of the available record. 17. The assessment record shows that the assessee was given repeated opportunities and, in fact, filed replies on several dates. The proposed variations were specifically confronted through show-cause notices. When further time was requested on 12.12.2022 to obtain confirmation from Shri Katkari, a final opportunity up to 15.12.2022 was granted and the affidavit filed on that date was considered in the assessment order. The Assessing Officer dealt separately with the cash deposits, the land transaction and the GST discrepancy and recorded reasons for not accepting the explanations. The first appellate authority also afforded opportunities and considered the written submissions filed on 19.11.2025. No particular notice, response or piece of evidence has been identified before us as having been denied consideration. On these facts, we find no breach of natural justice or want of application of mind. The general challenge to the validity of the assessment is therefore dismissed.

9 ITA No. 530/Mum/2026 FAHAD WAGHOO 18. Section 69A applies where the assessee is found to be the owner of money not recorded in the books of account, if any, maintained for a source of income and either no explanation regarding its nature and source is offered or the explanation is not satisfactory. The assessee admittedly maintained the three bank accounts into which cash aggregating to Rs.80,43,000/- was deposited. He also stated before the Assessing Officer that no separate cash book was maintained. The decisive question is therefore whether the explanation offered is supported by material establishing the source and the link between that source and the deposits. 19. As regards the alleged refund from Shri Katkari, the explanation was of Rs.42,06,500/-, whereas the affidavit spoke of Rs.42,06,000/-. More importantly, the affidavit did not disclose when and by what mode the original advance was paid, when the amounts were refunded in cash, or how those refunds corresponded to the dates and amounts of the deposits in the bank account. The explanation also does not arithmetically reconcile with the deposits: Rs.42,06,500/- stated to be the refund and Rs.12,00,000/- stated to be business cash aggregate to Rs.54,06,500/-, whereas the deposits in the first two accounts aggregate to Rs.53,93,000/-. The assessee did not produce the banking evidence of the alleged original payments or a contemporaneous account showing the receivable and its recovery. The non-response to the notice under section 133(6), though not by itself conclusive against the assessee, left the affidavit wholly uncorroborated. The explanation for Rs.12,00,000/- as redeposit

10 ITA No. 530/Mum/2026 FAHAD WAGHOO of business cash was equally unsupported because no cash book, withdrawal details or deposit-wise correlation was furnished. For the separate cash deposits of Rs.26,50,000/- in the account of Fahad Car Fantasy, neither a source was substantiated nor was any income from that concern disclosed for the year.

20.

Thus, the material does not establish either the stated source or the cash trail for any identifiable component of the aggregate deposits. The explanation is not rejected merely because the deposits were made in cash; it fails because the essential transactional particulars and corroborative evidence are absent. We therefore find no error in the concurrent conclusion that Rs.80,43,000/- represented unexplained money within section 69A. The consequential tax treatment under section 115BBE follows in accordance with law. The corresponding ground is dismissed. 21. The assessee's own explanation before the Assessing Officer described his activity as conversion, development and plotting of land, which required identification of landowners, coordination with developers, payment of governmental and professional charges and completion of legal formalities. The land stood in the names of Smt. Ashabai Baburao Katkari and other landowners. No registered instrument or other material showed that the land had become a capital asset of the assessee. The unregistered memoranda of understanding and the role actually performed by the assessee support the finding that his rights and receipts arose

11 ITA No. 530/Mum/2026 FAHAD WAGHOO from a commercial facilitation arrangement and not from transfer of a capital asset owned by him.

22.

The alternative contention before the CIT(A) was that the sum received from M/s Sunny Housing (India) Pvt. Ltd. was a mere advance and remained a liability. That contention required primary material showing the terms on which the money was refundable, the event upon which income would accrue, the corresponding ledger or balance-sheet treatment and the continued obligation as at the end of the year. No such evidence was furnished in the first appeal or before us. On the other hand, the record shows receipts under the arrangement over successive years and expenditure incurred by the assessee during the relevant year towards farmers and others. The payer's description of the payment as an advance, or the section under which tax may have been deducted, cannot by itself determine the character of the receipt in the assessee's hands when the surrounding commercial facts point to the assessee's continuing business activity.

23.

The Assessing Officer did not tax the receipt without recognising the related expenditure. Out of the receipt of Rs.7,74,56,250/-, expenditure of Rs.54,15,000/- supported by the bank statements and attributable to payments to farmers and others was allowed, and only the balance of Rs.7,20,41,250/- was brought to tax as business income. The capital gain of Rs.54,75,000/- included in the revised return was separately reduced in arriving at the assessed income. In the absence of

12 ITA No. 530/Mum/2026 FAHAD WAGHOO evidence establishing a capital asset in the assessee's hands or a subsisting refundable liability, and having regard to the nature and continuity of the commercial arrangement, we find no basis to disturb the treatment of Rs.7,20,41,250/- as profits and gains of business or profession. The corresponding ground is dismissed.

24.

The sales figure of Rs.12,00,000/- was disclosed by the assessee in statutory GST returns but was absent from the revised income-tax return. Such a disclosure is relevant contemporaneous material, though it is open to the assessee to establish by cogent evidence that the figure did not represent accrued or received income. Here, the assessee did not furnish the contract, invoice, revised bill, customer's rejection, ledger account, correspondence, credit note, GST reconciliation or any other document capable of verifying the explanation. Even the identity of the customer and particulars of the work were not supplied to the Assessing Officer. The bald assertion that the bill was not accepted and that the GST return could not be revised does not rebut the statutory disclosure. As no contrary evidence was placed before the first appellate authority or before us, the addition of Rs.12,00,000/- as undisclosed business receipts is upheld. The corresponding ground is dismissed.

13 ITA No. 530/Mum/2026 FAHAD WAGHOO 25. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on 17.09.2026.

Sd/- Sd/- (AMIT SHUKLA) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 17/09/2026 SAUMYA SRIVASTAVA, Sr. PS

आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / The CIT(A) 3. 4. आयकर आयु�(अपील) / Concerned CIT िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण,       / DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6.

आदेशानुसार/BY ORDER, स�ािपत �ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण,             / ITAT, Mumbai

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