MILAN BIPIN MEHTA,MUMBAI vs. ITO WARD 35(2)(3), MUMBAI

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ITA 6530/MUM/2025Status: DisposedITAT Mumbai29 July 2026AY 2014-156 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue of unexplained cash deposits to the AO for fresh examination, allowing the assessee an opportunity to furnish corroborative evidence for the opening cash balance. The addition related to Section 54 was deleted by the CIT(A) and not challenged further.

What were the facts?

The assessee claimed a deduction under Section 54 for the purchase of a new flat, but the AO disallowed a portion of the capital gain for non-compliance with deposit rules. The AO also made an addition of Rs. 10,22,000/- under Section 69A for unexplained cash deposits.

What were the issues?

Whether the addition of Rs. 10,22,000/- under Section 69A for unexplained money was justified, and if the assessee could substantiate its opening cash balance.

Which sections of the Income-tax Act were involved?

Section 69A,Section 54,Section 143(3),Section 139

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI CHALLA NAGENDRA PRASAD, JM & SHRI ARUN KHODPIA, AM

For Appellant: Shri Dhaval Shah
For Respondent: Shri Amit Kumar Singh, Sr. DR
Hearing: 29.07.2026

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JM & SHRI ARUN KHODPIA, AM I.T.A. No.6530/Mum/2025 (Assessment Year: 2014-15) Milan Bipin Mehta ITO 35(2)(3), Mumbai 1801 Vista 2 Wadhwa the Kautilya Bhavan, Bandra Kurla Vs. address, L.B.S Marg, Ghatkopar Complex, Mumbai-400051 West, Mumbai-400086 PAN: ASMPM5069R Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Dhaval Shah Revenue by : Shri Amit Kumar Singh, Sr. DR : 23.07.2026 Date of Hearing : 29.07.2026 Date of Pronouncement O R D E R Per Arun Khodpia, AM: This appeal is preferred by the assessee, directed against the order of the Commissioner of Income Tax Appeals –ADDL/JCIT (A) – 2, Bengaluru [in short, “the Ld. CIT(A)”], dated 29.09.2025 for the Assessment Year (AY) 2014- 15,arises from the assessment order under section 143(3) of the Income Tax Act, 1961 [in short, “the Act”] dated 27.12.2016, passed by Income Tax Officer, Ward – 35(2)(3), Mumbai [in short, “the Ld.AO”].The grounds of appeal raised by the assessee are as under: “1. The Ld. CIT(A) has erred in law and in fact in confirming the addition of Rs. 10,22,000/- made by the Ld. A.O. u/s. 69A of the Act.

ITA No. 6530/Mum/2025 Milan Bipin Mehta 2. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” 2. As per facts on record, the assessee has income from salary, house property (rent) and other sources during the year under consideration. The case of assessee was picked up for scrutiny assessment u/s 143(3). Accordingly, statutory notices u/s 143(2) and 142(1) were issued. During the assessment proceedings, the Ld. AO raised an issue regarding quantum of Long-Term Capital Gains. It is found that the assessee during the year had sold an immovable property that is Flat No.194, 19th Floor, Building No.1, Wing-B, Kalpataru Aura, L.B.S Marg, Ghatkopar (West), Mumbai-400086 for sale consideration of Rs.1,92,50,000/-. The assessee has reduced indexed purchase price of the said flat at Rs.1,34,38,020/-from the consideration and accordingly, the Long-Term Capital Gain was arrived at Rs.58,11,980/-.

3.

It is further submitted by the assessee before the Ld. AO that the assessee purchased a flat for consideration of Rs.1,02,68,924/- on 21.06.2014 and therefore, the assessee is eligible for deduction u/s 54 of the Act. While examining the aforesaid claim, the Ld. AO observed that an amount of Rs.27,36,400/- was not paid by the assessee in accordance with the conditions mentioned u/s 54(2) of the Act that the amount of Capital Gain which is not appropriated by the assessee towards the purchase of new asset within one year before the date on which the transfer of original asset took place or which is not utilized by him for purchase or construction of the new asset before the date of

ITA No. 6530/Mum/2025 Milan Bipin Mehta furnishing the return of income u/s 139, shall be deposited by him before furnishing such return in Capital Gains account not later than the due date applicable in the case of assessee for furnishing the return u/s 139(1). Since the assessee had utilized only a sum of Rs.44,54,000/- towards purchase of new asset, the remaining balance of Rs.27,36,400/- has been disallowed and taken to be taxable as Long-Term Capital Gain.

4.

One more issue has been raised by the Ld. AO regarding unexplained money u/s 69 of the Act, as the assessee deposited cashon various occasions in his bank account, which the assessee has tried to substantiate that he was having an opening balance of Rs.9,30,658/- and remaining was out of cash withdrawals during the year. The Ld. AO was not convinced with the submissions of the assessee, therefore, had made an addition u/s 69A of the Act to the extent of 10,22,000/- as unexplained money within the meaning of section 69A of the Act.

5.

Being aggrieved with the aforesaid addition, assessee preferred an appeal before the Ld. CIT(A), who had deleted the first disallowance u/s 54. However, the addition of Rs.10,22,000/- made u/s 69A was found to be correctly made by the Ld. AO and therefore, the Ld. CIT(A) has upheld the said addition. The assessee, against the aforesaid decision of Ld. CIT(A) in confirming the addition u/s 69A is before us.

6.

At the outset, Ld. AR of the assessee submitted that the assessee was having an opening cash balance of Rs.9,30,658/-, which is duly recorded in 3

ITA No. 6530/Mum/2025 Milan Bipin Mehta assessee’s balance sheet as on 31st March, 2013. However, since the assessee had filed its return in ITR-2 form, wherein the assessee was not under obligation to file the details of balance sheet, therefore such details were furnished by the assessee in ITR. On being directed to clarify the opening cash balance with the supporting evidence, the Ld. AR requested to restore this matter to the file of Ld. AO, wherein the assessee would be under obligation and undertakes to furnish all the corroborative evidence so as to prove that the assessee has a legitimate cash opening balance which is deposited by him in his bank account.

7.

Per contra, Ld. DR vehemently supported the order of Ld. AO and Ld. CIT(A) and requested not to accept the request of assessee for setting aside of the issue back to the file of Ld. AO, as in the first round of proceedings, the assessee was unable to substantiate such opening balance by way of any substantial evidence before the Revenue Authorities.

8.

On a thoughtful consideration of the aforesaid facts, circumstances and on perusal of the material available on record, we find that the assessee has furnished an unaudited balance sheet having opening balance of Rs.9,30,658/-. The assessee’s balance sheet also carries the information relating to his assets and liabilities and now since the assessee is undertaking to furnish necessary information to the satisfaction of the Ld. AO to prove that the opening cash balance, as shown by the assessee as opening balance shall be substantiated with the corroborative evidence, we observe as under:

ITA No. 6530/Mum/2025 Milan Bipin Mehta 9. Under the request by the assessee, in the interest of justice, we deem it appropriate to restore this matter back to the file of Ld. AO for fresh examination, verification of the facts with an opportunity to assessee to furnish all the necessary evidence, information which the assessee was unable to furnish in the first round of proceedings to substantiate its claim having an opening cash balance, which is utilized in cash deposits in bank.We,thus, restore this matter back to the file of Ld. AO for fresh adjudication in above terms.

10.

Needless to say, the assessee shall be provided with reasonable opportunities of being heard in the setaside proceedings. The assessee is also directed to co-operate and pro-actively assist in the set aside proceedings, failing which the authority would be at liberty to decide the matter in accordance with the mandate of law.

11.

In result, the appeal of assessee is allowed for statistical purposes, in above terms.

Order pronounced in the open court on 29-07-2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 29-07-2026. Ankit K., Sr. PS

ITA No. 6530/Mum/2025 Milan Bipin Mehta 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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