SEEMA SATISH MEHTA,MUMBAI vs. INCOME TAX OFFICER, WARD-26(3)(1), MUMBAI, MUMBAI

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ITA 2903/MUM/2026Status: DisposedITAT Mumbai18 September 2026AY 2017-20187 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal directed the Assessing Officer to delete the protective additions. This was because substantive additions for the same items had already been made in the hands of Nitin B. Jain, making the protective additions unsustainable.

What were the facts?

The assessee challenged additions made by the Assessing Officer and confirmed by the CIT(A) regarding unexplained cash and gold. The additions were made on a protective basis, with substantive additions already made in the hands of another individual, Nitin B. Jain.

What were the issues?

Whether protective additions can be sustained when substantive additions for the same items have been made in the hands of another person. Whether the CIT(A) passed a speaking order and afforded a proper opportunity of being heard.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

Pronounced: 18.09.2026

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NATIONAL FACELESS APPEAL CENTRE, DELHI, dated 25-Feb-2026 for the Assessment Year 2017-2018. The Assessee has raised the following grounds of appeal:

1) The appellant objects to the order dated 31/12/2018 passed u/s. 143(3) of the I.T. Act, 1961 by the Ld. Income Tax Officer, Ward-26(3)(1), Mumbai (hereinafter referred to as the Assessing Officer for the Assessment Year 2017-2018. and as confirmed by learned NATIONAL FACELESS APPEAL CENTRE (NFAC) commissioner vide order dated 25/02/2026 vide Din ITBA/NFAC/S/250/2025-26/1086499768(1), on the following among other grounds: 1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the addition made in order passed u/s. 143(3) of the Income Tax Act 1961. 2) 2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the additions of Rs. 33,50,028/- comprising of the following amount, without affording proper opportunity of being heard to the assessee. a. Unexplained Cash u/s 69A Rs. 2,00,000/-. b. Unexplained Gold u/s 69A Rs. 31,50,028/-. 3) 3. On the facts and in the circumstances of the case and in law, the Order passed by the learned CIT (A) is illegal, bad in law, ultra vires and contrary to the provisions of the law and facts, and the same is passed without application of mind and in violation of the principles of natural justice on various issues as stated hereinabove. The order so confirmed by the learned CIT (A) is without any basis and based on assumption, surmises, whims and suspicion. The learned CIT(A) passed the order in mechanical manner without considering the submissions made by assesse. In doing so the the learned CIT(A) has erred in confirming the order passed by the Assessing Officer without properly appreciating, considering and adjudicating the detailed written submissions, documentary evidences and judicial precedents placed on record by the Appellant. 4) 4. That the impugned appellate order is bad in law and void ab initio, being in violation of the mandate of Section 250(6) of the Income-tax Act, 1961, as the learned CIT(A) has failed to pass a speaking order dealing with each ground of appeal and submissions made by the Appellant. 5) 5. That the learned CIT(A) has grossly erred in summarily upholding the assessment order without recording independent findings of fact OR law and without assigning cogent reasons for rejecting the submissions of the Appellant, thereby rendering the appellate order non-reasoned and unsustainable in law. 6) 6. That the order passed by the learned CIT(A) is in breach of principles of natural justice inasmuch as the contentions raised by the Appellant have neither been discussed nor adjudicated upon, and the confirmation of addition/disallowance is mechanical and arbitrary. 7) 7. That the learned CIT(A) has failed to exercise the quasi-judicial powers vested under the Act and has merely reproduced OR relied upon the findings of the Assessing Officer without independent application of mind. 8) 8. On facts and in circumstances of case, the learned the CIT(A) grossly erred in levying interest under Section 234 of the Act. The appellant further submits that once the addition made is deleted, the afore mentioned interest shall stand vacated in full. In that view of the matter, the CIT(A) grossly erred in levying interest of and the same deserves to be deleted in full. 9) 9. The Appellant craves leave to add, to alter OR to amend any of the ground of appeal mentioned hereinabove. 10) 10. Each one of the above grounds of appeal is independent and without prejudice to each other.

2.

All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in confirming the addition made by the Assessing Officer while passing the assessment order under section 143(3) of the Income Tax Act. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

3.

We have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we notice that the assessee has contended that the Ld. CIT(A) failed to pass a speaking order dealing with each ground of appeal and the submissions made by the assessee. It was further submitted that the Ld. CIT(A) erred in confirming the additions made by the AO without affording proper opportunity of being heard to the assessee.

4.

From the records, we notice that the learned CIT(A) specifically mentioned that, in the second round of litigation, the ITAT had set aside the order passed by the CIT(A) under section 250 of the Act and restored the issue to the file of the CIT(A) with a direction to decide the appeal afresh after affording reasonable opportunity of being heard to the assessee.

5.

Thus, on the said issue, after having gone through the Panchnama drawn by the DRI, the statements of Nitin B. Jain, Prakash Choksi, Satish Mehta and the assessee recorded by the DRI as well as the Income Tax Department during the course of inquiry and assessment proceedings, and the confirmation received from M/s. Prakash Gold Palace Private Limited in response to notice under section 133(6) issued by the ACIT, Mumbai, it was found that the statements of the persons were contradictory to each other and they could not explain and justify the source of the cash with documentary evidence before the DRI and the Income Tax Department during the course of interception and search and seizure under section 132A of the Act.

6.

The learned CIT(A) specifically mentioned that during the course of assessment proceedings, the assessee failed to produce any documentary evidence to explain the source of the cash and gold bars. However, the said additions were made on a protective basis, as the entire cash of Rs. 15 lakh and gold bar valued at Rs. 31,50,028/- were found in the possession of Nitin Jain and others and were added back to the total income of Nitin Jain on substantive basis under section 69A of the Act.

7.

We have considered the written submissions filed before us and found that, as per the assessee, the AO has failed to establish:

(i) that the assessee purchased the impugned gold;

(ii) that the assessee financed the acquisition thereof;

(iii) that the assessee was engaged in any undisclosed activity;

(iv) that the assessee had any unexplained source of income;

(v) that the assessee made any unexplained investment; or

(vi) that the impugned assets represented undisclosed income of the assessee.

7.1. It was further submitted that no inquiry was conducted with respect to:

(a) M/s. Prakash Gold Palace Pvt. Ltd.;

(b) the concerned directors or authorised representatives;

(c) books of account of the concerned entities;

(d) stock registers;

(e) banking records;

(f) import documents;

(g) accounting records; or

(h) any independent source to verify the ownership of the gold.

8.

We also find that the order-in-original dated 09.03.2018 passed by the Commissioner of Customs records detailed statements, evidences and business records pertaining to the seized gold. Thus, the ownership and source of the impugned gold ought to be determined in the proceedings before the Customs authorities and the Hon'ble Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

9.

Even otherwise, it has also been specifically mentioned by the Ld. CIT(A) that substantive addition had already been made in respect of the same items in the hands of Nitin B. Jain under section 69A of the Act.

10.

Thus, considering the totality of the facts and circumstances, we direct the AO to delete the addition made in the case of the assessee on a protective basis, as the same cannot survive, more particularly when substantive addition in respect of the same items has already been made in the hands of Nitin B. Jain.

11.

In the result, appeal filed by the Assessee stands allowed.

Order pronounced in the open court on 18.09.2026.

Sd/- Sd/- JAGADISH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 18.09.2026 RY-SrPS Copy to: SEEMA SATISH MEHTA, KUNDAN JEWELLERS, 28/4 SHIVNARAYAN BHAWAN, A. H. WADIA 1 MARG KURLA (W) MUMBAI 400070, MAHARASHTRA, MUMBAI-400070, MAHARASHTRA INCOME TAX OFFICER, WARD-26(3)(1), MUMBAI, INCOME TAX OFFICER, WARD-26(3)(1), 2 MUMBAI, PRATYAKSHAKAR BHAVAN, C- 11, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI, MAHARASHTRA, 400051, MUMBAI-400051, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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