KISHOR NANJI DUBRIYA,MUMBAI vs. INCOME TAX OFFICER, WD-17(2)(2), MUMBAI

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ITA 1991/MUM/2026Status: DisposedITAT Mumbai13 August 2026AY 2011-126 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO had not considered withdrawals made by the assessee and that the entire credit entries could not be treated as taxable. The Tribunal directed the AO to recompute the income by taxing 8% of the alleged bogus transactions, following the 'Real Income Theory'.

What were the facts?

The assessee's assessment was re-opened, and the AO made an addition of Rs. 21,46,975/- for cash and cheque deposits in the bank account, as the assessee failed to furnish necessary details. The CIT(A) upheld this addition, finding the assessee's explanations unconvincing.

What were the issues?

Whether the entire cash and cheque deposits in the bank account are taxable when the assessee provided some documentation and made withdrawals. Whether the 'Real Income Theory' and telescoping method should be applied to estimate the profit on such transactions.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 68,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI ANIKESH BANERJEE, JM & SHRI ARUN KHODPIA, AM

Pronounced: 13.08.2026

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JM & SHRI ARUN KHODPIA, AM I.T.A. No.1991/Mum/2026 (Assessment Year: 2011-12) Kishor Nanji Dubriya Income Tax Officer, Wd-17(2)(2) Flat No.302, 3rd Floor, Simran Kautilya Bhavan, Bandra Kurla Vs. Apartment, Vile Parle (East), Complex, Mumbai-400051 Mumbai-400057 PAN: AECPD0325B Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assesseeby : Shri Prakash Jhunjhunwala, CA : Shri Pasale Naganath Bhimrao, Sr Revenueby DR. : 19.05.2026 Date of Hearing Date of Pronouncement : 13.08.2026

O R D E R Per Arun Khodpia, AM: The captioned appeal is preferred by the assessee, directed against the order of Commissioner of Income Tax Appeals Additional/JCIT (A)-3 Bengaluru [in short, “the Ld. CIT(A)] dated 02.12.2025 for the assessment year 2011-12, which in turn arises from assessment order u/s 144 r.w.s 147 of the Income Tax Act, 1961 (in short, “the Act”) dated 27.03.2015 passed by The Income Tax Officer

ITA No. 1991/Mum/2026 Kishor Nanji Dubriya Ward 17(2)(2), Mumbai (in short, “the Ld. AO”).The grounds of appeal raised by the assessee are as under:

“1.0 On facts and circumstances of the case and in law, Ld. AddI/JCIT(A) erred in upholding the validity of notice u/s.148 issued in absence of fresh tangible material, on the basis of borrowed satisfaction and without having reason to believe that income chargeable to tax has escaped assessment; 2.0 On facts and circumstances of the case and in law, Ld.AddI/JCIT(A) erred in confirming the addition u/s.68 of entire cash and cheque deposits made in the bank accounts of Rs.21,46,975/-, though relevant details/documents to establish the nature and source of deposits and corresponding payments are filed during course of assessment, remand and appeal proceedings; 3.0 The Ld. Addl/JCIT(A) ought to have adopted the concept of real income and estimated the reasonable profit on disputed cash and cheque deposits made in bank accounts; 4.0 Without prejudice, Ld. AddI/JCIT(A) erred in sustaining the addition of entire cash and cheque deposits made in bank account, on ignoring the corresponding debit/payments and ought to have adopted the telescoping method and sustained the addition to the extent of peak of credits.”

2.

At the outset, the Ld. AR of the assessee submitted that Ground No. 1 of the present appeal challenging the validity of notice u/s. 148 on legal aspect is not pressed under instruction. Considering the request of assessee’s ground of appeal no. 1 is dismissed as not pressed.

3.

On merits the issue is regarding addition u/s. 68 wherein the AO had treated the entire amount for cash deposits made by the assessee in his bank account amount to Rs. 21,46,975/-. It was the contention of assessee that the assessee has shared the information and source of deposits by submitting relevant details and documents during the course of assessment as well as remand

ITA No. 1991/Mum/2026 Kishor Nanji Dubriya proceedings. Therefore, no addition u/s. 68 was called for. It was also the alternate prayer that the concept of real income and estimated reasonable profit on deposited cash ought to have been made instead of making the entire additions. It is also submitted that the Ld. CIT(A) had ignored the corresponding debits/payments which ought to have been considered for the purpose of telescoping of the figures and sustaining the peak credit was bad in law.

4.

In present case, the assessment of assessee was re-opened u/s. 148 by issuance of notice dated 06.02.2014. The assessment thereafter was completed on 27.03.2015 u/s 144 r.w.s 147 by making an addition of Rs. 21,46,975/-, asduring the assessment proceedings, the assessee was unable to furnish necessary details regarding the cash credits of Rs.18,71,975 + other credits amounting to Rs.2,75,000/- appearing in the bank account of the assessee.

5.

Being aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who had decided the issue against the assessee with the observation that the evidence regarding transactions in the assessee’s bank account stating that the same pertains to assessee’s business does not inspire any confidence and it is held that the onus of proving the source of sum of money which was on the assessee could not be substantiated by the assessee. Ld. CIT(A) thereafter has affirmed the addition of Rs.21,46,975/- made by the Ld. AO u/s 68 of the Act.

ITA No. 1991/Mum/2026 Kishor Nanji Dubriya 6. Before us, Ld. Counsel of the assessee submitted that the assessee has furnished various documents before the Ld. CIT(A) and Ld. AO, however they have not appreciated the facts from such records furnished before them such as analysis, summary of bank account, bank book, cash book, bank statement, IT acknowledgement receipt and computation, P & L Account of Xerox business, P & L Account of fabric trading business, sample sales bills of fabric, sample purchase bill of fabric etc. It is submitted that on furnishing of such details by the assessee, a remand report was also called for from the Ld. AO, wherein the Ld. Assessing Officer has disbelieved the submission of assessee and stated that there were discrepancies in the invoices submitted by the assessee as additional evidence which establishes that the assessee had concocted a story of carrying out the business of sales of garments, the regular business of xerox and the resulting amounts were used to make deposit in cash in said bank account held by assessee in ICICI bank account. To rebut the aforesaid contentions of Ld. Assessing Officer, the assessee submitted that the invoices submitted are genuine and therefore at the most, the transactions of assessee’s bank account can be charged for tax on ‘Real Income Theory’ by applying the provisions of section 44AD, so that the income on such transaction can be estimated at 8%.

7.

Per contra, the Ld. DR vehemently supported the orders of Revenue Authorities.

ITA No. 1991/Mum/2026 Kishor Nanji Dubriya 8. We have considered the rival submissions, perused the material available on record. On a perusal of the order of Ld. CIT(A), we find that the assessee has submitted various additional evidences in the form of books of accounts, ITR as well as certain transactions of sales and purchase. Ld. AO has added the entire credit entries in the bank account of the assessee and had not even considered the withdrawals made by the assessee during the year. On this aspect, even if the assessee was unable to explain the transactions of cash deposits during the year under consideration, the cash withdrawals by the assessee should have been considered, which as per assessee are deposited back.

9.

From the set of facts furnished before us, it appears that the assessee is a small vendor, who is dealing in the business of xerox as well as in the business of fabric trading. Since, the bills furnished by the assessee before the Ld. CIT(A) were handmade bills having various deformities etc., thus the documentation furnished by the assessee was not considered to be genuine, the total transactions of credit in his bank account cannot be treated as taxable, while the assessee has submitted that he is in the business of fabric, furnishing the details of transactions including opening and closing stock. Therefore, to settle the issue legitimately we deem it appropriate to bring to tax the actual income of the assessee, which in the present case can be estimated at 8% following the provisions of presumptive taxation u/s 44AD applicable on the small traders.

ITA No. 1991/Mum/2026 Kishor Nanji Dubriya 10. In terms of aforesaid facts and circumstances, we set aside the orders of Ld. AO and Ld. CIT(A) and direct the Ld. AO to recompute the income of assessee by taking 8% as profit/income embedded in the alleged bogus transactions of cash receipts by the assessee in his bank account.

11.

In result, the appeal of assessee is partly allowed,in above terms.

Order pronounced in the open court on 13-08-2026.

Sd/- Sd/- (ARUN KHODPIA) (ANIKESH BANERJEE) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 13-08-2026. Ankit K., Sr. PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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