SHAUKATALI IBRAHIM,MUMBAI vs. WARD 26(2)(1), MUMBAI, MUMBAI

The assessee has taken the following grounds: 1) The Ld. AO erred in making an addition of credit card payment to the tune of Rs 10,65,000/- as unexplained expenditure under section 69C of the Income Tax Act without considering the facts & circumstances of the case. 2) The Ld. AO erred in making an addition of Municipal Taxes to the tune of Rs 57,792/- without considering the facts & circumstances of the case. 3) The Ld. AO erred in invoking Section 115 BBE and levying tax at the maximum marginal rate even though the assessee clearly established credit card payment is from genuine sources. 4) On the facts and circumstances of case and in law, Ld Assessing officer erred in initiating penalty u/s 271AAC(1). 5) On the facts and circumstances of case and in law, Ld Assessing officer erred in initiating penalty u/s 270A 6) On the facts and circumstances of case and in law, Ld. Assessing officer erred in levying interest u/s 234A and 234B of the Income Tax Act,1961 7) The Ld. AO erred in passing assessment order without providing sufficient opportunity of being heard. 8) The appellant may Add Modify delete any grounds of appeal before the completion of hearing before the ITAT Appeals. 3. The brief facts of the case are that the assessee is an individual who filed his return of income for AY 2023-24 on 28.10.2023, declaring total income of Rs.6,21,190/-. The case was selected for scrutiny under CASS for the reason of “large cash payments made for credit card purchases”, and notice under section 143(2) of the Act was issued. During the assessment proceedings, the assessee filed certain details and explanations before the Ld. AO. During the year under consideration, the assessee had made payments through credit cards aggregating to Rs.11,79,000/-. In explaining the source thereof, the assessee claimed an opening cash balance of Rs.4,50,000/- and cash receipts of Rs.6,15,000/- from relatives and friends towards credit-card payments made on their behalf. The Ld. AO was not satisfied with the explanation and supporting evidence and accordingly treated Rs.10,65,000/- as unexplained expenditure under section 69C read with section 115BBE of the Act. The Ld. AO further disallowed municipal taxes of Rs.57,792/- claimed against income from house property for want of documentary evidence. Consequently, the total income was assessed at Rs.17,43,980/- as against the returned income of Rs.6,21,190/-. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A), challenging, inter alia, the addition of Rs.10,65,000/- under section 69C, disallowance of municipal taxes of Rs.57,792/-, consequential application of section 115BBE, levy of interest and initiation of penalty proceedings. The assessee had also raised a ground alleging lack of sufficient opportunity of being heard.

During the appellate proceedings, the Ld. CIT(A) issued four notices fixing the appeal for hearing. The Ld. CIT(A) recorded that the assessee either did not respond or merely resubmitted written submissions without furnishing documentary evidence in support of the grounds raised. The relevant observation of the Ld. CIT(A) contained in paragraph 5.2 at page 10 of the impugned order is reproduced below:—

The Ld. AR submitted that the assessee could not effectively represent his case before the Ld. CIT(A) and, consequently, the relevant documentary evidence in support of the grounds of appeal could not be properly placed and considered in the first appellate proceedings. It was contended that the impugned additions involve factual verification of the sources of the credit-card payments as well as the claim relating to municipal taxes. The Ld. AR, therefore, prayed that one more opportunity may be granted to the assessee and the entire matter may be restored to the file of the Ld. CIT(A) for fresh adjudication after permitting the assessee to place the relevant evidence on record.

Per contra, the Ld. DR relied upon the orders of the revenue authorities and submitted that sufficient opportunities had already been afforded to the assessee during the first appellate proceedings. The Ld. DR drew our attention to paragraph 5.2 of the impugned appellate order, wherein the Ld. CIT(A) specifically recorded that notices were duly sent to the email address furnished by the assessee on the e-filing portal, but the assessee failed to furnish proper responses and documentary evidence. The Ld. DR accordingly submitted that there was no infirmity in the action of the Ld. CIT(A).

We have heard the rival submissions and perused the material available on record. It is evident from the impugned appellate order that the Ld. CIT(A) had provided four opportunities to the assessee. However, the Ld. CIT(A) recorded that the assessee failed to furnish the requisite documentary evidence in support of the grounds raised and, ultimately, the appeal was dismissed. The dispute principally relates to the addition of Rs.10,65,000/- under section 69C of the Act and the disallowance of municipal taxes of Rs.57,792/-, both of which require consideration of the relevant factual material and supporting evidence. Considering the facts and circumstances of the case and in the interest of substantial justice, we deem it appropriate to grant one more opportunity to the assessee to substantiate his claims before the first appellate authority. Accordingly, without expressing any opinion on the merits of the additions/disallowances, we set aside the impugned order and restore the entire matter to the file of the Ld. CIT(A) for fresh adjudication in accordance with law, after considering the submissions and documentary evidence which may be furnished by the assessee. The assessee is directed to be diligent and cooperative in the set-aside proceedings and to furnish all the requisite details and documentary evidence before the Ld. CIT(A) without seeking unnecessary adjournments. The Ld. CIT(A) shall afford reasonable opportunity of being heard to the assessee and thereafter adjudicate the grounds afresh by passing a speaking order in accordance with law. We reiterate that we have not expressed any view on the merits of the issues raised in the appeal.

Accordingly, the grounds raised by the assessee are restored to the file of the Ld. CIT(A) for fresh adjudication and are treated as allowed for statistical purposes.

In the result, the appeal of the assessee bearing ITA No. 3094/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 31st day of August 2026 Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 31/08/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI