ASHOK HEMANDAS ADNANI ,ULHASNAGAR vs. INCOME TAX OFFICER , WARD KALYAN

When the appeal was called for hearing, none appeared on behalf of the assessee. Despite several opportunities having been granted, neither did anyone appear on behalf of the assessee nor was any application seeking adjournment filed. Accordingly, having considered the material available on record, we proceed to dispose of the appeal ex parte qua the assessee, after hearing the submissions of the Ld. DR.

The brief facts of the case are that the assessee filed the return u/sec. 139(4) declaring income amount to Rs.5,13,094/-. The Ld. AO had received the information that the huge amount was credited in bank account namely IDBI Bank and ICICI Bank duly maintained by the assessee in F.Y. 2014-15 relevant to A.Y. 2015-16. The assessee was running a business in the name of “Pankaj Textile” and return was filed by declaring turnover amount to Rs.45,38,950/- and profit was declared at the rate of 11.3% on the turnover which comes to Rs.5,13,000/-. During the assessment the Ld. AO found that the total credit entries found in the bank accounts amount to Rs.1,56,38,184/-. Out of that Rs.1,10,92,830/- is a cash component which was deposited in bank. During the verification of the assessment record the Ld. AO found that the said deposit is never be declared in the turnover during the filing of return. During the assessment the assessee explained that the amount received is cash is related to the other part of business of the assessee in bill discounting and the assessee earned commission at the rate of 1% on this bill discounting amount to Rs.1,10,92,830/- which comes amount to Rs.1,10,992/-. But during the assessment the Ld. AO rejected the assessee’s plea and added back the entire cash deposit due to lack of evidence u/sec. 69C of the Act with the total income of the assessee. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) rejected the appeal of the assessee for non prosecution. The Ld. CIT(A) issued the notice u/sec 250 of the Act on dated 18/11/2025 & asked 2 assessee to submit the documents on or before 25/11/2025. The assessee submitted the evidence on 25/11/2025 before the Ld. CIT(A) through online. But the Ld. CIT(A) had passed the impugned appellate order on dated 24/11/2025 and confirmed the addition. Being aggrieved the assessee filed an appeal before us.

The assessee filed a paper book comprising pages 1 to 115, which has been taken on record. The assessee also filed an application for admission of additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. The additional evidence consists of confirmations from various parties in respect of bill discounting transactions aggregating to Rs.1,10,92,830/-. It was submitted that these confirmations, along with the list of parties from whom the bill discounting commission was received, had not been furnished before either of the revenue authorities. The relevant confirmations and the list of bill discounting transactions are placed at pages 7 to 23 of the APB. The assessee further submitted that, during the appellate proceedings, it had duly complied with the notice issued by the Ld. CIT(A) under Section 250 of the Act dated 18.11.2025. In support thereof, the assessee placed on record the e- Proceedings response acknowledgement dated 25.11.2025, along with the supporting documents, which form part of the additional evidence filed before us. On perusal of the record, we find that the learned CIT(A), vide notice dated 18.11.2025 issued u/sec 250 of the Act, had granted time to the assessee to furnish the requisite details on or before 25.11.2025. However, the impugned appellate order came to be passed on 24.11.2025, i.e., even before the expiry of the time granted for compliance. This factual aspect is borne out from the material placed before us.

The Ld. DR supported the orders of the revenue authorities. The Ld. DR invited our attention to paragraphs 5 to 5.4 of the impugned assessment order which is reproduced below: “5. On the other hand, assessee has come-up with idea of showing the un-reported receipts in the bank account from 'Bill Discounting Business' and divided the income in two parts one is from Textile Business and other is commission received on Bill Discounting Business. Since, nowhere in the details/documents filed before various authorities viz. Income Tax, Sales Tax and Banker, wherein it was reported that it is engaged in Bill discounting business also. Hence, claim of the assessee hasn't hold any ground here. 5.1 Assessee's latest ITRs filed for the year AY 2020-21 & 2021-22 and 2022-23 have been perused and it is seen that in all these ITRs assessee has declared income u/s. 44AD of the Act wherein income was computed @6% or 8% and even more than the prescribed ratio. But nowhere, income from bill discounting business is shown/reported/mentioned. Even in the bank account opening form of the assessee for both the bank IDBI and ICICI bank, there is no mention of 'Bill Discounted business' of the assessee. 5.2 Further, bill discounting business is kind of short term lending business, which need approval from the concerned authorities. Further, while doing the bill discounting business one can't accept cash and lend cash to parties. Both the conditions are not fulfilled by the assessee in the present case. 5.3 Further again it is to reiterate that assessee has declared less business turnover then the credit entries in bank accounts. Hence, all the cash deposited in the bank account is out of the un-disclosed and unaccounted source, which needs to bring to tax. 5.4 Hence, in view of the above, the idea of declaring 'bill discounting business' in respect of cash deposited in the bank account is not sustained at all and same is proposed as unexplained money u/s. 69A of the Act to be taxed u/s. 115BBE of the Act. Hence, entire amount of cash deposited in the bank accounts amounting to Rs.1,10,92,830/- is proposed to consider as unexplained money u/s. 69A of the Act and taxed accordingly.”

We have heard the rival submissions and carefully considered the material available on record. It is an undisputed fact that the assessee has filed an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of additional evidence comprising confirmations from various parties in support of the assessee's claim that the cash deposits aggregating to Rs.1,10,92,830/- pertained to bill discounting transactions on which only commission income was earned. These confirmations and supporting documents were admittedly not available before the Ld. AO during the assessment proceedings. We further find from the record that the Ld. CIT(A), vide notice issued under Section 250 of the Act dated 18.11.2025, had granted time to the assessee up to 25.11.2025 to furnish the requisite documentary evidence. However, the impugned appellate order was passed on 24.11.2025, i.e., before the expiry of the time granted for compliance. The assessee has also placed on record the e-Proceedings acknowledgement dated 25.11.2025 evidencing the filing of the relevant documents before the Ld. CIT(A). Thus, the material placed before us prima facie indicates that the documentary evidence could not be considered by the first appellate authority. Considering the totality of the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to set aside the orders of the revenue authorities on this issue and restore the matter to the file of the Ld. AO for de novo adjudication after taking into consideration the additional evidence filed by the assessee, including the confirmations and other supporting documents. The Ld. AO shall verify the authenticity and evidentiary value of the additional evidence and decide the issue afresh in accordance with law after affording the assessee a reasonable and adequate opportunity of being heard. It is made clear that we have not expressed any opinion on the merits of the controversy, and all the contentions of both the assessee and the revenue are left open to be considered by the Ld. AO during the set-aside proceedings.

In the result, the appeal of the assessee bearing ITA No.2208/Mum/2026 is allowed for statistical purpose Order pronounced in the open court on 24th day of July 2026. Sd/- Sd/- (BIJAYANANDA PRUSETH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 24/07/2026 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