SAMIT MAHENDRA KUMAR SHAH,MUMBAI vs. INCOME TAX OFFICER WARD 23(3)(6), MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: J (SMC) BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA 2231/MUM/2026 िनधा�रणवष�/AssessmentYear:2016-17) Samit Mahendra Kumar Shah Income Tax Officer Ward 1st Floor, 126/128 Sheikh Memon 23(3)(6) Mumbai Street, Zaveri Bazar, Maharashtra Room no. 616, 6th Floor Vs. 400002 Piramal Chambers, Lalbaug, Mumbai, Maharashtra 400012 अपीलाथ� Appellant ��थ� Respondent Permanent Account Number of Assessee: AOSPS3506B

अपीलाथ��ारा/Appellant represented by: Shri Anish Shah, CA ��थ��ारा/Respondent represented by: Ms. Jayshree Thakur Sr. D.R. सुनवाईकीतारीख/Date of conclusion of hearing: 02-Jul-2026 घोषणाकीतारीख/Date of pronouncement: 08-Jul-2026 आदेश / ORDER Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax (Appeal), ADDL/JCIT (A) – Chennai [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2016-17, date of order 08.07.2025. The impugned order emanated from the order of Ld. Income Tax Officer, Ward- 18(3)(2), Mumbai order passed under section 143(3) of the Act date of order 03.12.2018.

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah 2. Brief facts of the case are that the assessee filed the return of income declaring a total income of Rs. 8,17,310/-. The case was selected for scrutiny under CASS. During the course of the assessment proceedings, the Ld. AO observed that the assessee had sold an immovable property for a total consideration of Rs. 27,50,000/-. After deduction of TDS at the rate of 1%, amounting to Rs. 27,500/-, the assessee received a net consideration of Rs. 27,22,500/-. The assessee computed the long-term capital gain arising from the sale of the immovable property and claimed that the sale proceeds were intended to be invested so as to avail exemption under Section 54EC of the Act. It was further noticed that, during the relevant financial year, a sum of Rs. 17,27,500/-, being part of the sale consideration, was deposited with the partnership firm, M/s R. Sumit Kumar and Company, through two account- payee cheques, namely Rs. 13,55,000/- dated 18.11.2015 and Rs. 3,72,500/- dated 19.11.2015, aggregating to Rs. 17,27,500/-. However, the Ld. AO treated the said amount as unexplained and added the entire sum of Rs. 17,27,500/- to the total income of the assessee under Sections 68 and 69 of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal and upheld the addition made by the Ld. AO. Being further aggrieved, the assessee has filed the present appeal before us.

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah “Facts of the case

(i) Disallowance of interest expenses of Rs. 36,000/-u/s 14A (1)

(ii) Inclusion of Rs. 17,27,500/- in total income by applying the provisions of section (ii) 69.

a. A sum of Rs.9,95,000/- was refunded by cheque to R. Samit Kumar & Co. from whom there was a borrowing of that amount effected in earlier year. This amount was debited to their loan account. The loan borrowing outstanding and payable (Cr.) as at 01.04.2015 amounted to Rs.15,95,821/- which was reduced on payment of

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah Rs.9,95,000/-. The net amount of Rs. 6,00,821/- (Cr.) is shown as outstanding in the Balance Sheet and also reflecting in confirmation in the books of the appellant.

b. In addition thereto the appellant effected two payments as follows:-

i. Rs.13,55,000/-on 18th November, 2015 by cheque no. 68 and

ii. Rs.3,72,500/- effected on 19th November, 2015 by cheque no. 69

These two payments aggregated to Rs.17,27,500/- are duly reflected in the Bank Pass Book (Page 9)

Sr. Name Closing Balance Filed with A.O. No. 1. R. Samit Kumar & Co A/c 1 20,000/- (Dr.) Yes 2. R. Samit Kumar & Co A/c 2 15,59,304/- (Dr.) Yes 3. R. Samit Kumar & Co A/c 6,00,821/- (Cr.) Yes (Property) 4. R. Samit Kumar & Co A/c (RTGS) 15,59,487/- (Cr.) Yes 5. R. Samit Kumar & Co A/c (Surat 17,27,500/- (Dr.) No Flat Sale)

I have filed 4 confirmations during assessment proceedings. However only one confirmation of Rs. 17,27,500/- could not be filed due to oversight of the accountant. I am submitting the same as additional evidence. I request you to kindly accept the same. Details of Additional Evidence: 1. Affidavit in original dated 29th June, 2026 (Page no. 96-98) 2. Original Confirmation of accounts of R. Samit kumar & Co. in the books of Samit Mahendra Kumar Shah for the period 01.04.2015 to 31.03.2016 duly reflecting the balance at Rs. 17,27,500/-. (page no. 99).

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah 3. Copy of bank passbook bearing account no. 6935 with Bank of Baroda for the period 01.04.2015 to 31.03.2016 as I have filed only relevant page earlier. (page no. 110-106) 4. Relevant page of bank passbook showing payment of Rs. 9,10,000/- for National Highway Authority of India Bonds (54EC bonds) as CIT Appeal has stated at para 5.2.6 and 5.2.7 that the claim for exemption u/s 54EC is disallowed. (page no. 107)” 4. The Ld. DR supported the orders of the revenue authorities and contended that the assessee had failed to satisfactorily explain the impugned transaction during the assessment proceedings. It was argued that the assessee had claimed a double benefit by treating the sale proceeds as repayment of an earlier loan while simultaneously reflecting the same amount as an advance to the partnership firm. The Ld. DR submitted that the additional evidence filed before the Tribunal had never been produced before the Ld. AO and, therefore, the addition made under Section 69 of the Act was rightly sustained by the Ld. CIT(A). However, the Ld. DR fairly submitted that, if the additional evidence is admitted, the matter may be restored to the file of the Ld. AO for proper verification. The Ld. DR relied on the order of the Ld. AO. The relevant part of the impugned assessment order is reproduced as below:-

“6.5 In this case, assessee had sold the house property and sale proceeds during the year duly accounted but earlier loan represents the said property were not been re-paid. Due said facts, it has again shown the surplus of sale of flat to his firm i.e. M/s Virchand Punamchand & co, a partner R Samitkumar & Co as loan given amounting to Rs.17,27,500/- wherein the assessee is also one of the partner. The investment done by the assessee as loan and advances to a partner R Samitkumar & Co of firm Virchand Punamchand & Co is not recorded in the books of firm because it is accommodation entry to the loan re-payments duly appearing in the bank statement of assessee i.e. Rs.9,95,000/- and Rs.13,50,000/- for claiming un-secured loan shown outstanding Rs.15,59,487/- and Rs.6,00,821/- appearing in the balance sheet. The explanation offered by the assessee through its representative found to un-satisfactory and hence, the surplus on account of sale proceeds of flats benefits

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah Rs.17,27,500/-claimed twice i.e one time crediting the capital account and second time claiming as loan and advances given claim of the assessee is taxed as un-explained investment under section 69 of the IT Act in the hands of the assessee. Penalty proceeding under section 271(1)(c) is separately initiated for concealment of income thereby furnishing inaccurate particulars of income.” 5. We have heard the rival submissions and perused the material available on record. The principal controversy in the present appeal relates to the addition of Rs.17,27,500/- made under Sections 68 and 69 of the Act. Before us, the assessee has filed an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 seeking admission of additional evidence, comprising an affidavit, confirmation of account from M/s R. Samit Kumar & Co., and the complete bank passbook evidencing the impugned transactions. The assessee has explained that although confirmations in respect of four accounts of the said concern were furnished during the assessment proceedings, the confirmation relating to the account reflecting the balance of Rs.17,27,500/- could not be filed due to an inadvertent oversight on the part of the accountant. Upon consideration of the explanation furnished, we are satisfied that the additional evidence sought to be produced is directly relevant and has a material bearing on the adjudication of the issue in dispute. The confirmation and the supporting banking records go to the root of the matter and are necessary for arriving at a just and proper conclusion. In the interest of substantial justice and to afford the assessee an effective opportunity to substantiate its claim, we admit the additional evidence filed under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah AO. The Ld. AO shall examine the affidavit, confirmation of account, bank statements and all other supporting documents produced by the assessee, verify the accounting entries in the books of the assessee and and thereafter decide the issue afresh in accordance with law by passing a speaking order. Needless to state, the assessee shall extend full cooperation and furnish all requisite details and evidence as may be called for by the Ld. AO, who shall afford the assessee a reasonable opportunity of being heard before passing the fresh assessment order. Accordingly, the impugned order of the Ld. CIT(A) on this issue is set aside, and the matter is restored to the file of the Ld. AO for de novo adjudication in the light of the additional evidence admitted before us. We have not expressed any opinion on the merits of the addition, and all contentions of both parties are kept open for consideration by the Ld. AO. Thus, the grounds raised by the assessee are allowed for statistical purposes.

ITA 2231/MUM/2026 Samit Mahendra Kumar Shah