CHETAN TULSIDAS KANAKIA,MUMBAI vs. ITO 42(1)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “C”, MUMBAI Before Shri Narender Kumar Choudhry (JM) & Shri Arun Khodpia (AM) ITA No. 3032/Mum/2026 (A.Y. 2016-17) Chetan Tulsidas Kanakia Vs. ITO-42(1)(1) A-4, Bhavana Building Bandra Kurla Complex S.V. Road, Kandivili West Bandra East Mumbai-400 067. Mumbai-400 051. PAN : AGLPK8778L (Appellant) (Respondent) Assessee by Shri Mandar Vaidya Respondent by Shri Ajay Soneji Date of Hearing 25.06.2026 Date of Pronouncement 13.07.2026 ORDER Per Arun Khodpia (AM): - The present appeal is preferred by the assessee against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘Ld. CIT(A)’], dated 27.02.2026, for the assessment year 2016-17, arises out of the assessment order under section 147 read with section 144B of the Income Tax Act, 1961 [in short ‘Act’] dated 10.12.2024 passed by the assessment unit of Income-tax Department.

2 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . 2. Brief facts of the case are, that the assessee has filed return of income for A.Y. 2016-17 on 5.8.2016 declaring total income of Rs. 3,39,340/-. On the basis of information received as per Risk Management Strategy (RMS) formulated by the CBDT through ITBA software under the head ‘Non-PAN data’. The AO noted that the search and seizure under section 132 of the Act was carried out in the case of M/s Shri Renuka Mata Multi State Urban Cooperative Credit Society Ltd. (in short ‘Renuka Mata Society’). It is found that huge money was deposited in the bank account of the society. During the course of assessment proceedings, the society cannot explain source of same. As per specific information, the assessee has made huge deposit of Rs. 1,00,67,890/- in Renuka Mata Society. The AO noted about the opportunities granted to the assessee, wherein the assessee has sought adjournments or did not appear for VC. Accordingly, the AO proposed variation to the total income of the assessee to the extent of unexplained deposits made in assessee’s account maintained with Renuka Mata society. While concluding the assessment, the AO has made addition of Rs. 1,00,67,890/- as unexplained cash credit under section 68 of the Act in the total income of the assessee.

3 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . 3. Aggrieved with the aforesaid addition, the assessee preferred an appeal before CIT(A), who had dismissed the appeal of the assessee with following observations: - “6.0 I have carefully considered the assessment order, the grounds of appeal and the appellant's statement of facts along with the written submission filed. The appellant's case has been reopened after duly following the procedure prescribed under the provisions of the Act, including recording of reasons, obtaining the requisite approval under section 151, and issuance of notice under section 148 in accordance with law. 6.1 Addition of Rs. 1,00,67,890/- u/s 68 The principal grievance relates to addition of Rs.1,00,67,890/- treated as unexplained cash credit u/s 68. The appellant has contended that he does not have any account with Shri Renuka Mata Multi State Urban Co-operative Credit Society and has not made any deposits therein. However: The reopening was based on search findings in the case of the said society. The Designated Verification Unit obtained bank statements in the name of the appellant directly from the society.

4 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . The statements clearly reflected deposits aggregating to Rs.1,00,67,890/-during the relevant financial year. Despite being provided opportunities, including notices u/s 142(1) and video conferencing hearings on two occasions, the appellant failed to furnish any documentary evidence disproving existence of the account or establishing that the transactions did not pertain to him. 6.1.1 A mere denial without supporting evidence is not sufficient to rebut documentary material obtained from the bank itself. If the appellant genuinely did not maintain such account, he was expected to furnish cogent evidence such as complaint to the bank, affidavit supported by corroborative material, KYC mismatch proof, or any evidence of identity misuse. No such evidence has been placed on record. 6.1.2 The burden under section 68 lies upon the assessee to satisfactorily explain the nature and source of credits appearing in his account. the present case, the appellant has neither explained the source of deposits or disproved the ownership of the account. Therefore, the Assessing Officer as justified in treating the deposits of Rs.1,00,67,890/- as unexplained cash edits u/s 68.

5 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . Accordingly, the addition of Rs. 1,00,67,890/- is confirmed.” 4. Assessee felt that the order of CIT(A) is not in accordance with the mandate of law. The assessee preferred an appeal before us. 5. At the outset, Ld. AR of assessee referred to assessee’s reply before the AO, that the assessee has requested for cross examination of the alleged party. However, the same was not permitted stating that the right of cross examination is not an absolute right. The question whether the assessee is entitled for cross examination must depend upon the circumstances of each case and also on the statue concerned. As per AO, in present case no such circumstances are warranted as in the list of beneficiaries to whom accommodation entries were provided by the said group categorically contains the name and address of the assessee. The AO has also made reference to the Designated Verification Unit (DVU) and a report for the same has been received from the DVU with the remark “the said bank has submitted the bank statements in the name of assessee through email which is enclosed with this report”. The assessee was also provided with opportunity of being heard through video conference twice, which the assessee has chosen not to appear. The Ld. AR reiterated the facts as submitted before the authorities below as referred to page 59 of the assessee’s paper book submitting therein an application dated 29.10.2024

6 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . furnished before the AO seeking opportunity to cross examining the person who has made allegation. The Ld. AR further referred to the submission before the AO dated 28.08.2024 wherein Ld. Counsel of the assessee has submitted nature of business of the assessee, who is engaged in the manufacturing and trading of basic dyes under the trade name “Mysore Dyes Industries”. It is also submitted that the assessee earned income from ‘house property’ and ‘other sources’ for which computation of total income, copy of balance sheet and profit and loss account of the relevant years were furnished. The assessee also furnished copy of ITR, Form 26AS and copy of bank statements before the AO stating that during the year under consideration the assessee has held bank accounts with Union Bank of India in the name of Mysore Dyes Industries and Chetan Kanakia and have not deposited any cash in bank accounts. Ld. AR further raised the issue regarding validity of notice u/s. 148 raising contention that the present case reopening was initiated on account of search and seizure action in the case of Renuka Mata Society. Therefore, action of the assessment against the assessee should have invoked provisions of section 153C of the Act and not under section 147 of the Act. The Ld. AR also raised the issue that the reasons recorded in the present case insufficient and does not suggest that income chargeable to tax has escaped assessment and hence the consequent

7 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . assessment order needs to be quashed. It is also contended that approval under section 151 of the Act was granted by the approving authority in mechanical manner without application of mind therefore consequent notice under section 148 of the Act and assessment made under section 147 of the Act are liable to be quashed. Based on the aforesaid submission, it was prayer that the addition under section 68 of the Act made to the total income of the assessee on account of alleged cash deposits made in the account of the assessee in the account maintained with Renuka Mata Society was bad in law and liable to be deleted. In support of the aforesaid contentions as directed by the Bench to the assessee, Ld. AR has furnished an Affidavit duly sworn by the dated 01.07.2026 stating that the assessee has no account or dealings with the said Society, information furnished by Renuka Mata Society cannot be said to be the bank statement these are just book entries in the books of the society. Such unconfirmed book entries without any statement of any key person of the society cannot be implicated upon the assessee to make such addition. It is further submitted that negative burden placed on the assessee to prove the impossible is not justified and permissible in the law. The contents of the affidavit so furnished by the assessee before us are extracted as under: -

8 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . “1, CHETAN TULSIDAS KANAKIA, residing at A-4, Bhavna Building, S.V. Road, Kandivli (West), Mumbai 400067, Maharashtra, India(PAN: AGLPK8778L), solemnly affirm and state as under: 1) I say that for the AY 2016-17, my assessment was reopened u/s. 147 r/ws. 148 and consequent assessment was completed on 10th December 2024. 1 say that from a perusal of the assessment order, it is learnt that some time in May 2017, there was a search action on one Renukamata Urban Cooperative Credit Society (hereafter referred to as the "said society") and it appears that some book entries were found during the said search. 2) No account/dealings with the said society- I say that it is alleged by the Ld. AO that the book entries found during the search action, reveal that I had deposited cash with the said society. I say that I have not deposited any cash with the said society. I further say that I do NOT have any account with the said society and hence I do not know how and why my name has cropped in the book entries of the said society. 3) Unconfirmed book entries found with another person- I say that in my assessment order, the Ld. AO states that the said society has

9 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . NOT confirmed the alleged book entries found during the search (para 4.2.3 of the Assessment Order). I, therefore, say that these are unconfirmed book entries which have no evidentiary value. I further say that it is NOT the case of the Ld. AO that the said society is 'bank' and hence these book entries CANNOT be said to be 'bank statements'. I say that addition cannot be sustained by way of unconfirmed book entries found at third party premises. I further say that the Ld. AO himself states that no person has given any statement implicating me in whatsoever manner (para 4.5 of the assessment order). I say that the said book entries are thoroughly unconfirmed and unverified. 4) Negative Burden- I had preferred an appeal before the Ld. Commissioner (Appeals) against the said order and the Ld. CIT (at para 6.1 of his order) states that the Designated Verification Unit (DVU) has obtained bank statements directly from the society and the said society. I say & reiterate that said book entries are NOT bank statements. I further say & submit that it is impossible to discharge a negative burden viz. it is not possible to prove a negative fact and hence I am unable to prove by documentary evidence that I do not have any account with the said society.

10 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . 5) Absence of credibility/authenticity to the book entries I say that the Ld. AO himself observes (at para 4.2.4 of the Assessment Order) that the books of the said society were rigged and many dubious entries have been made. I say that in such a scenario, no credibility and/or authenticity can be attached to the book entries of the said society and it would be dangerous and unjust to blindly rely upon the book entries of the said society. I say that my appeal was dismissed by the Ld. CIT(A), since I was unable to dislodge a negative burden. Against the said order, I am in appeal before the Hon'ble Income Tax Tribunal (ITA/3032/2026). 6) I further say that I filed with the lower authorities all my relevant documents which I have annexed at pages 31 to 59 of the paper book that I filed with the Hon'ble Tribunal. I say that beyond this, I am unable to lead any evidence to disprove the allegations of the Ld. AO.

Solemnly affirmed at Mumbai this day of June, 2026.” 6. Per contra, Ld. DR strongly supported the orders of the revenue authorities. He referred to paragraph 6.1 of the order of the CIT(A). According to which, the assessee was provided with sufficient opportunities

11 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . by way of notice under section 142(1) of the Act and video conferencing hearing on two occasions, however the assessee failed to furnish any documentary evidence disproving existence of the account or establishing that the transactions did not pertain to him. Mere denial without supporting evidence is not sufficient to rebut documentary material obtained from the bank itself. If the assessee genuinely did not maintain such account, he was expected to furnish cogent evidence such as complaint to the bank, affidavit supported by corroborative material, KYC mismatch proof, or any evidence of identity misuse. It is submitted that CIT(A) has rightly adjudicated the issue and therefore addition made by the AO deserves to be sustained. 7. We have considered the rival submissions and perused the material available on record and case laws relied upon by the assessee. Adverting to the merits of the present case, we find that certain information was received by the AO against the assessee to have maintained account with Renuka Mata Society, wherein huge transaction has taken place. Such transactions shall be considered unaccounted transaction of the assessee and therefore the case of the assessee was reopened under section 147 of the Act. The assessee denied of such transaction or account since beginning in the assessment order as well as before CIT(A). The authorities have noted that the burden to prove, that this account does not pertain to assessee, is on the

12 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . assessee even the assessee has not taken any disciplinary action against the aforesaid Society for the allegation made regarding account maintained with the Society. The assessee before us has submitted that the assessee cannot be compelled to prove the negative once the assessee is saying on oath that account is not maintained by him and transactions in the said account were not carried out by him, for which a sworn affidavit is also furnished. The assessee is not supposed to prove such negative by way of bringing any evidence on record. On the contrary, Revenue ought to bring on record such evidence to establish that account pertains to the assessee and the transactions are carried out by the assessee. On this aspect, we find substance in the submissions of the assessee, which are also solemnly affirmed by way of affidavit dated 01.07.2026 that the alleged accounts or dealings with the said society are not undertaken by the assessee. The account so furnished was just bank book and does not constitute bank statement. There were no statements of any key person against the assessee. The assessee cannot be compelled to prove negative entries in such information, which are considered to be dubious entries by the Revenue itself. Therefore, in the absence of any credible information/evidence/statement or incriminating material against the assessee, addition under section 68 of the Act of Rs. 1,00,67,890/- does not have the substance to survive. We under aforesaid

13 ITA No. 3032/Mum/2026 Chetan Tulsidas Kanakia . deliberation are of the considered opinion that in the present case, addition made by the AO and sustained by CIT(A), only on the basis of third-party statements, under presumption, de hors any substantive corroborative evidence against the assessee, is liable to be deleted and we direct so.

Sd/- Sd/- (NARENDER KUMAR CHOUDRY) (ARUN KHODPIA) Judicial Member Accountant Member Mumbai : Dated 13.07.2026 Copy of the order forwarded to : 1. The appellant 2. The respondent 3. CIT-concerned 4. DR, ITAT, Mumbai 5. Guard file By order (Dy/Asstt. Registrar) ITAT, Mumbai.