VILAS HARISHCHANDRA PAWAR,KALYAN vs. INCOME TAX OFFICER WARD 2(2) KALYAN, KALYAN

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 3902/Mum/2026 (Assessment Year: 2019-20) Vilas Harischandra ITO Ward 2(2) Kalyan Pawar Wayle Nagar, Gandhi Vs. Khutal Bangla Nagar, Kahadakpada, Sarlagaon, Murbad, Kalyan, Dombivali, Kalyan-Domviali, Maharashtra-421 301 Maharashtra-421 401 PAN/GIR No. ATLPP4878R (Applicant) (Respondent) Assessee by Shri Om Kandalkar & Shri Akhilesh Deshmukh, Ld. ARs Revenue by Shree Kumar C., Ld. DR Date of Hearing 30.06.2026 Date of Pronouncement 24.07.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 10.03.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [hereinafter referred to as "the CIT(A)"], under section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"], for

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A.Y. 2019-20, arising out of the assessment order dated 14.12.2023 passed by the Income Tax Officer, Ward 2(2), Kalyan [hereinafter referred to as "Assessing Officer"], under section 147 read with section 144 of the Act.

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made the addition under Section 69 of the Act, without assigning any reasons thereof. 7. The Ld. CIT (A) has failed to appreciate that the deposits represented business receipts, agricultural income and circulation of funds, and that the appellant’s business was eligible for presumptive taxation under Section 44AD. Even otherwise, the entire deposits could not be treated as income. 8. The Ld. CIT (A) has erred in not adjudicating the ground relating to levy of tax u/s. 115BBE which was applied in the computation sheet without any discussion or finding in the assessment order. 9. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing. 3. Brief facts of the case are such that the assessee is an individual. The Assessing Officer received information through the Insight Portal, flagged under the Risk Management Strategy formulated by the CBDT, that during F.Y. 2018-19 relevant to A.Y. 2019-20, deposits aggregating to Rs. 3,48,000/- were made in the assessee's savings bank account maintained with Bank of Baroda. The assessee had not filed his return of income for the year under consideration. Proceedings under section 148A were accordingly initiated and an order under section 148A(d) was passed on 28.03.2023 after obtaining the necessary approval from the specified authority. Notice under section 148 was also issued on 28.03.2023.

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response was received, the Assessing Officer proceeded to frame the assessment ex parte to the best of his judgment under section 144 of the Act. The Assessing Officer held that since the assessee was a non-filer and had not furnished any explanation with supporting evidence regarding the nature and source of the deposits, the sum of Rs. 3,48,000/- was liable to be treated as income of the assessee under section 69 of the Act. The addition was accordingly made. Penalty proceedings were also separately initiated. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). There was a delay of 227 days in filing the appeal before the CIT(A). The assessee sought condonation of the said delay. However, the CIT(A) rejected the request for condonation of delay merely observing that the reasons stated for condonation were not satisfactory.On the merits also, the CIT(A) referred to the addition in respect of unexplained cash deposits of Rs. 3,48,000/- and observed that no explanation regarding their nature and source had been furnished with evidence. The CIT(A) thereafter confirmed the addition of Rs. 3,48,000/-, though while doing so the impugned order referred to section 69A of the Act, whereas the Assessing Officer had made the addition under section 69 of the Act. The appeal of the assessee was accordingly rejected. 6. Before us, the learned AR submitted that the CIT(A) was not justified in refusing to condone the delay of 227 days in filing the

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first appeal. It was submitted that the assessment order was passed ex parte. The delay occurred because the assessee was suffering from severe back pain and cervical spondylosis and had been advised strict bed rest by his doctor. Owing to the said medical condition, the assessee could neither effectively participate in the reassessment proceedings nor file the appeal within the prescribed period. The learned AR submitted that the assessee had placed before the CIT(A) an application for condonation of delay, supported by an affidavit and a medical certificate. Reference was made to pages 37 to 40 of the paper book containing the condonation application, pages 41 to 45 containing the affidavit and page 36 containing the medical certificate. It was contended that despite the said material, the CIT(A) rejected the condonation request by a cryptic observation that the reasons were not satisfactory, without dealing with the explanation or the supporting evidence. 7. On the merits, the learned AR submitted that during F.Y. 2018-19, cash deposits of Rs. 1,000/-, Rs. 3,48,000/- and Rs. 4,01,000/- were made in the assessee's bank accounts maintained with ICICI Bank, Bank of Baroda and Thane Zilla Sahakari Bank, respectively. The Assessing Officer, however, made the addition only in respect of Rs. 3,48,000/- deposited in the Bank of Baroda account, treating the same as unexplained investment under section 69 of the Act. The learned AR submitted that the assessee, being unable to participate in the reassessment proceedings on account of his medical condition,

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had furnished additional evidence before the CIT(A), including the computation of income, capital account and balance sheet for A.Y. 2019-20 and the bank statements of ICICI Bank, Bank of Baroda and Thane Zilla Sahakari Bank. 8. It was further submitted that the cash deposits were explained by the assessee as being out of past cash withdrawals from his bank accounts, which had their source in regular business sale proceeds arising from the sale of building materials and agricultural receipts. In support of the explanation, the learned AR referred to the cash flow statement for F.Y. 2018-19 placed at page 8 of the paper book, the computation of income and capital account placed at pages 14 and 15, the Bank of Baroda statement placed at pages 16 to 27 and a chart correlating the cash withdrawals and subsequent cash deposits. The learned AR contended that neither the Assessing Officer nor the CIT(A) had pointed out any defect in the cash flow statement or disproved the explanation regarding the availability of cash from earlier withdrawals. It was, therefore, submitted that the addition of the entire cash deposit of Rs. 3,48,000/- under section 69 could not be sustained. 9. The learned DR, on the other hand, relied upon the orders of the lower authorities. He further pointed out that the assessment order was passed ex parte and, therefore, the explanation regarding the source of the deposits and the documents

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subsequently relied upon by the assessee had not been examined by the Assessing Officer. 10. We have considered the rival submissions and perused the material placed on record. The first issue which arises for consideration is the delay of 227 days in filing the appeal before the CIT(A). The assessee had explained that he was suffering from severe back pain and cervical spondylosis and had been advised strict bed rest. The explanation was supported by an affidavit and a medical certificate. The same medical condition was also stated to be the reason for the assessee's non-participation in the reassessment proceedings, which culminated in an ex parte assessment under section 144 of the Act. 11. The CIT(A), while declining to condone the delay, merely observed that the reasons stated were not satisfactory. The impugned order does not deal with the medical explanation, affidavit or medical certificate filed by the assessee, nor does it record any finding that the delay was deliberate or that the explanation was not bona fide. In these circumstances, we are of the considered view that the assessee had shown sufficient cause for the delay. We accordingly condone the delay of 227 days in filing the appeal before the CIT(A). 12. Coming to the merits, the assessment order shows that the addition of Rs. 3,48,000/- was made in ex parte proceedings principally for want of any explanation regarding the nature and source of the cash deposit in the Bank of Baroda account. Before

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the CIT(A), however, the assessee furnished the cash flow statement, computation of income, capital account and relevant bank statements in support of the explanation regarding availability and circulation of cash. The cash flow statement for the period 01.04.2018 to 31.03.2019, as placed before us, is reproduced below:

Particulars Amount Opening cash balance as on 01.04.2018 Rs. 2,64,334/- Add: Cash inflows Agricultural income Rs. 31,000/- Cash withdrawn from ICICI Bank Rs. 9,94,471/- Cash withdrawn from Bank of Baroda Rs. 17,02,100/- Cash withdrawn from Thane Zilla Sahakari Bank Rs. 2,19,000/- Total cash inflows Rs. 29,46,571/- Total cash available Rs. 32,10,905/- Less: Cash outflows Drawings Rs. 1,26,961/- Cash deposited in ICICI Bank Rs. 1,000/- Cash deposited in Bank of Baroda Rs. 3,48,000/- Cash deposited in Thane Zilla Sahakari Bank Rs. 4,01,000/- Business-related expenses, etc. Rs. 22,90,848/- Total cash outflows Rs. 31,67,809/- Closing cash balance as on 31.03.2019 Rs. 43,096/-

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arising from the opening cash balance, agricultural income and cash withdrawals aggregating to Rs. 29,15,571/- from three bank accounts. The CIT(A) has neither examined this cash flow statement nor pointed out any discrepancy therein. There is also no finding that the cash withdrawals reflected in the statement were factually incorrect or had been utilised elsewhere so as to render the cash unavailable for redeposit. 14. In our considered view, once the assessee had furnished a specific and supported explanation regarding the source of the cash deposit, the same could not have been rejected merely by reiterating the observations made in the ex parte assessment order. The material placed on record demonstrates availability of cash sufficient to explain the deposit of Rs. 3,48,000/-, and the explanation remains unrebutted. 15. We also note that while the Assessing Officer made the addition under section 69 of the Act, the CIT(A), while confirming the same, referred to section 69A. Be that as it may, in the absence of any adverse finding on the cash flow statement or the supporting bank statements, the impugned addition cannot be sustained. We accordingly set aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the addition of Rs. 3,48,000/-. 16. In view of our decision on merits, the other grounds relating to the validity of reopening and consequential application of

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section 115BBE do not require separate adjudication and are rendered academic.

Order pronounced in the open court on 24.07.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 24/07/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. संबंधधत आयकर आयुक्त / The CIT(A) 3. आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai