METAL TUBE AND ROLLING MILLS,MUMBAI vs. INCOME TAX 24(2)(1), MUMBAI

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ITA 3116/MUM/2024Status: DisposedITAT Mumbai05 May 2026AY 2014-1514 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the issue of cash deposits to the Assessing Officer for fresh examination, considering the assessee's claim and the sister concern's settlement application. The issue of disallowance of professional fees was also restored to the Assessing Officer for verification of TDS compliance and calculation of disallowance.

What were the facts?

The assessee appealed against CIT(A) orders concerning additions for undisclosed cash deposits, disallowance of raw material purchases, and disallowance of professional fees. The primary issue involved cash deposits routed through a third party's bank account, claimed by the assessee to belong to its sister concern.

What were the issues?

Whether cash deposits in a third-party account can be taxed in the assessee's hands when claimed to belong to a sister concern, and whether disallowance for non-deduction/short-deduction of TDS is justified and correctly calculated.

Which sections of the Income-tax Act were involved?

Section 69C,Section 69A,Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH MUMBAI

For Appellant: Mr. Satish Modi, Adv
For Respondent: Shri Annavaram Kosuri Sr. AR
Hearing: 22.04.2026Pronounced: 05.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 3114/Mum/2024 (Assessment Year: 2011-12) & ITA No. 3115/Mum/2024 (Assessment Year: 2010-11) & ITA No. 3116/Mum/2024 (Assessment Year: 2014-15)

M/s. Metal Tube & Income Tax Officer- Rolling Mills 24(2)(1) 1st Floor, Metal Tube, Vs. Room No. 618, Marol Maroshi Road, Piramal Chambers, Andheri (East), Mumbai Lalgaug, Mumbai, Maharashtra – 400059 Maharashtra- 400012 PAN/GIR No. AAEFM9353N (Applicant) (Respondent) Assessee by Mr. Satish Modi, Adv. Revenue by Shri Annavaram Kosuri Sr. AR Date of Hearing 22.04.2026 Date of Pronouncement 05.05.2026

2 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: These are three appeals filed by the assessee against the respective orders passed by the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "CIT(A)"]under section 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"] for Assessment Years 2010–11, 2011–12 and 2014–15. Since common issues are involved, these appeals are being disposed of by way of this consolidated and common order. It is further noted that these matters are recalled appeals pursuant to the order of the Tribunal dated 05.12.2025 passed in M.A. Nos. 60, 61 & 62/Mum/2025, whereby the earlier ex-parte consolidated order dated 29.10.2024 was recalled and the appeals were restored for fresh adjudication.

2.

Respective grounds raised by the assessee are : In ITA No. 3115/Mum/2024 for A.Y. 2010-11 1. Disallowance of Rs. 4,07,597/- u/s 69C pertaining to the purchase of raw materials from four different parties. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition made by Ld. AO of Rs. 4,07,597/- by disallowing the purchase of raw materials from four different parties, without appreciating the facts of the case as submitted in the right perspective. 2. Addition of Rs. 49,69,802/- u/s 69A under the head of ‘Undisclosed Cash Deposits’ on cash deposits to the account of Mahendra Vora. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in partly confirming the addition made by Ld. AO on account of cash deposit of Rs. 49,69,802 out of Rs. 88,79,022/-.

3 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills 3. Addition on account of interest income & unsecured advances amounting to Rs. 14,30,009/-. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition made by Ld. AO on account of interest income & unsecured advance amounting to Rs. 14,30,009/-. In ITA No. 3114/Mum/2024 for A.Y. 2011-12 Addition of Rs. 1,27,20,000/- u/s 69A under the head of Undisclosed Cash Deposits on the account of Mahendra Vora. On the facts and in the circumstances of the case and in the law the Ld. CIT(A) has erred in upholding the addition made by Ld. AO of Rs. 1,26,55,000/- without appreciating the facts of the case. However, Ld. CIT(A) finds during the proceedings, that as per the ledger, the amount of cash paid to Shri Mahendra Vora by the assessee to be Rs. 1,27,20,000/- and therefore, CIT(A) propose to enhance the addition from Rs. 1,26,55,000/- to Rs. 1,27,20,000/- and treat such payment as unaccounted money in the hands of the assessee u/s 69A. In ITA No. 3116/Mum/2024 for A.Y. 2014-15 On the facts and in the circumstances of the case and in the law the Ld. CIT(A) has erred in confirming the disallowance of Rs. 4,22,080/- being professional fees for non-deduction of tax deducted at source & Rs. 3,62,491/- being discount allowed. Addition on account of Cash Deposits in the name of Shri Mahendra Vora 3. We shall first take up the common issue arising in these appeals relating to the addition on account of cash deposits routed through the bank account of Shri Mahendra S. Vora, which is involved in Assessment Years 2010–11 and 2011–12. The facts, as emanating from the assessment orders, are that the Assessing Officer received information from the Investigation Wing that substantial cash deposits were made in the bank account of Shri Mahendra Vora. During the course of enquiry, the statement of Shri Mahendra Vora was recorded, wherein he stated that the deposits in the said bank account pertained to the

4 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills assessee as well as its group concern. Based on such statement and examination of the ledger account in the books of the assessee, the Assessing Officer observed that an amount of Rs. 1,26,55,000/- in A.Y. 2011–12 and Rs. 88,79,022/- in A.Y. 2010– 11 represented transactions routed through the said account.

4.

The Assessing Officer further noted that the deposits comprised both cash and cheque transactions and that the assessee had failed to furnish satisfactory explanation regarding the nature and source thereof. The explanation of the assessee that the deposits belonged to its sister concern, M/s Rasiklal Kantilal & Co., and that the same had been offered to tax before the Settlement Commission, was not accepted on the ground that no conclusive documentary evidence was furnished to establish such claim. The Assessing Officer also observed that the subsequent retraction by Shri Mahendra Vora from his earlier statement was not reliable. Accordingly, the Assessing Officer treated the said deposits as unexplained and made addition under section 68/69A, as the case may be.

5.

Before the Learned CIT(A), the assessee reiterated that the entire amount routed through the account of Shri Mahendra Vora did not belong to the assessee but to the sister concern, which had already disclosed the same before the Settlement Commission. It was contended that taxing the same amount again in the hands of the assessee would amount to double taxation. It was also submitted that the Assessing Officer had

5 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills placed reliance on third-party statement without granting effective opportunity of cross-examination and without bringing any independent corroborative material on record.

6.

The Learned CIT(A), however, did not accept the contentions of the assessee. In Assessment Year 2011–12, the CIT(A) not only upheld the addition made by the Assessing Officer but, on verification of the ledger account, observed that the total amount involved was Rs. 1,27,20,000/- and accordingly proposed enhancement of the addition by invoking the provisions of section 69A. The CIT(A) held that the assessee failed to satisfactorily explain the nature and source of the deposits and that mere reference to Settlement Commission proceedings in the case of another entity was not sufficient to discharge the burden cast upon the assessee.Similarly, for Assessment Year 2010–11, the CIT(A) confirmed the addition made by the Assessing Officer to the extent of Rs. 49,70,000/-on account of cash deposits in the account of Shri Mahendra Vora, holding that the assessee failed to establish that the deposits did not belong to it.

7.

Thus, the core controversy arising for our consideration is whether the deposits appearing in the bank account of Shri Mahendra Vora can be brought to tax in the hands of the assessee in the absence of independent corroborative evidence and in light of the assessee’s claim that the same pertain to its sister concern and have already been subjected to tax.

6 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills 8. During the course of hearing before us the Learned Authorised Representative (AR) reiterated the factual position as borne out from the material placed on record and specifically invited our attention to the application filed before the Hon’ble Settlement Commission by M/s Rasiklal Kantilal & Co., which has been placed in the paper book. Particular emphasis was laid on the contents of the said application, especially the portion appearing at page 57 of the paper book.Drawing reference to the said document, the Learned AR submitted that the very bank account in the name of Shri Mahendra Shantilal Vora, which forms the basis of the addition in the hands of the present assessee, has been categorically acknowledged in the settlement application as an account utilised for the purposes of the applicant firm, namely M/s Rasiklal Kantilal & Co. It was pointed out that the settlement application itself records that the said bank account, though standing in the name of Shri Mahendra Vora, was in fact used for undertaking transactions of the applicant firm and that such transactions were not disclosed in the regular books of account.It was thus submitted that the ownership as well as the beneficial interest in the said bank account and the transactions therein stood admitted by M/s Rasiklal Kantilal & Co. before a statutory forum. It was further submitted that the total undisclosed income offered before the Settlement Commissionwhich included income relatable to Assessment Years 2010–11, 2011–12 and 2012–13, arising from such undisclosed bank transactions.

7 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills 9. The Learned AR then submitted that although the settlement application was subsequently not accepted, the material contained therein, including the categorical admission regarding the ownership and utilisation of the bank account, remains a relevant and crucial piece of evidence. It was further contended that, pursuant to the rejection of the settlement application, the income so disclosed has been brought to tax in the hands of M/s Rasiklal Kantilal & Co. in regular assessment proceedings.The Learned AR further invited our attention to the assessment orders passed in the case of M/s Rasiklal Kantilal & Co., wherein the very same cash deposits in the bank account of Shri Mahendra Shantilal Vora have been examined and brought to tax in the hands of the said concern.Further, it was submitted that the statement of one of the partners of M/s Rasiklal Kantilal & Co., namely Shri Rasiklal M. Morakhia, was also recorded, wherein he admitted that the deposits in the said bank account belonged to the firm and not to Shri Mahendra Vora.

10.

The Learned AR further invited our attention to the ledger account extract placed in the paper book, depicting the transactions in the name of Shri Mahendra S. Vora as recorded in the books of the assessee for the relevant financial years. Referring to the said ledger, it was submitted that all transactions routed through the bank account of Shri Mahendra Vora have been duly recorded in the regular books of account of the assessee. The Learned AR pointed out that the ledger clearly reflects both debit and credit entries corresponding to transfers

8 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills made to and from the said bank account, thereby demonstrating that the transactions are not unaccounted or unexplained but are duly captured in the books.

11.

In light of the above, the Learned AR submitted that once the Department itself has taken a consistent stand in the case of M/s Rasiklal Kantilal & Co. that the deposits in the bank account of Shri Mahendra Vora belong to that concern and has assessed the same to tax in its hands, it is not open to the Department to take a contradictory stand in the case of the present assessee and bring the same amount to tax again.

12.

From the facts placed before us, it emerges that there are multiple facets requiring proper verification. On one hand, the Assessing Officer has proceeded to treat the deposits in the said bank account as belonging to the assessee based primarily on statements recorded during investigation and the alleged failure of the assessee to satisfactorily explain the source. On the other hand, the assessee has placed reliance on (i) the settlement application filed by M/s Rasiklal Kantilal & Co., wherein the said bank account has been admitted to be an undisclosed account of that concern, (ii) the assessment orders passed in the case of M/s Rasiklal Kantilal & Co., wherein the very same deposits have been brought to tax in its hands, and (iii) the ledger account in the books of the assessee reflecting corresponding entries of transfers to and from the said account.

9 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills 13. It is thus evident that the material on record gives rise to a prima facie inconsistency, which requires reconciliation. In particular, the following aspects need verification: i. whether the deposits in the bank account of Shri Mahendra Vora have already been assessed to tax in the hands of M/s Rasiklal Kantilal & Co.; ii. the extent to which the said deposits are reflected in the books of account of the assessee through corresponding ledger entries; iii. whether the entire gross deposits have been brought to tax without considering inter-linked debit and credit entries; and iv. the correct quantification of income, if any, that can be attributed to the assessee in respect of such transactions. 14. During the course of hearing, both the Learned AR as well as the Learned Departmental Representative fairly agreed that the issue requires fresh examination at the level of the Assessing Officer in light of the above factual aspects.

15.

Considering the totality of the facts and in the interest of justice, we deem it appropriate to restore this issue to the file of the Assessing Officer for de novo adjudication. The Assessing Officer is directed to verify and reconcile the information available on record with the actual additions made, and also to examine the bank account in the name of Shri Mahendra Vora in conjunction with the assessment records of M/s Rasiklal Kantilal & Co. The Assessing Officer shall also take into account the ledger account produced by the assessee and determine the correct taxability, if any, in accordance with law.

16.

The assessee shall be afforded reasonable opportunity of being heard and shall be at liberty to furnish all relevant

10 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills evidences in support of its claim. The Assessing Officer shall thereafter decide the issue afresh in accordance with law. Accordingly, therelated grounds of appeal are allowed for statistical purposes. Disallowance on account of Short Deduction of TDS (A.Y. 2014–15)

17.

We shall now take up the issue relating to disallowance of professional fees on account of alleged short deduction/non- deduction of tax at source in Assessment Year 2014–15.

18.

The facts, as emanating from the assessment order, are that during the course of assessment proceedings, the Assessing Officer observed that the assessee had debited professional fees amounting to Rs. 4,22,080/- in the Profit and Loss account. On verification, the Assessing Officer held that the assessee had either not deducted tax at source or had short deducted tax on such payments as required under the provisions of Chapter XVII- B of the Act.n the absence of satisfactory explanation and supporting evidence from the assessee, the Assessing Officer invoked the provisions of section 40(a)(ia) of the Act and disallowed the said expenditure of Rs. 4,22,080/-.

19.

Before the Learned CIT(A), the assessee submitted that the payments were made in the course of business and that tax, wherever applicable, had been duly deducted. It was further contended that there was no complete failure to deduct tax and, at best, the case involved only short deduction, for which

11 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills disallowance under section 40(a)(ia) was not warranted. The assessee also submitted that the recipients had duly offered the income to tax.The Learned CIT(A), however, did not accept the contentions of the assessee and confirmed the disallowance made by the Assessing Officer on the ground that the assessee failed to demonstrate compliance with the TDS provisions and failed to furnish requisite evidences in support of its claim.

20.

The Learned AR, placed on record the detailed statement of payments made during the year along with the working of tax deducted at source. Referring to the said statement, it was submitted that the total professional fees amounted to Rs. 6,17,855/-, against which the TDS liability was computed at Rs. 41,248/-, whereas tax of Rs. 26,854/- was actually deducted, resulting in an alleged short deduction of Rs. 14,394/-.The Learned AR pointed out that, as per the details furnished, the issue of short deduction arises only in respect of two items, while in the remaining cases either tax has been correctly deducted or the payments were not liable for deduction of tax at source. It was further submitted that the lower authorities have not examined these details in proper perspective and have proceeded to make disallowance without appreciating the nature of payments and applicability of TDS provisions.The Learned AR further submitted that even assuming without admitting that there is any default in deduction of tax at source, the disallowance under section 40(a)(ia) cannot extend to the entire amount of expenditure. It was contended that in view of the

12 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills amended provisions of section 40(a)(ia), only 30% of the amount on which tax has not been deducted can be disallowed.It was thus submitted that the disallowance, if at all warranted, should be restricted only to the extent of 30% of the amounts in respect of which there is non-deduction or short deduction of tax, and not the entire professional fees as disallowed by the Assessing Officer and sustained by the Learned CIT(A).

21.

The Learned Departmental Representative, on the other hand, relied upon the orders of the lower authorities.

22.

We have considered the rival submissions and perused the material placed on record. From the details furnished by the assessee, it is observed that the issue of non-compliance with TDS provisions arises only in respect of limited transactions and not the entire expenditure. Further, the contention of the assessee that the disallowance, if any, is to be restricted to 30% of the relevant expenditure requires verification with reference to the nature of payments, applicability of TDS provisions and actual deduction made.

23.

In our considered view, the matter requires fresh examination at the level of the Assessing Officer to verify: i. the exact nature of payments made, ii. applicability of TDS provisions in each case, iii. whether the case involves non-deduction or short deduction, and iv. the correct quantum of disallowance, if any, in accordance with section 40(a)(ia).

13 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills 24. Accordingly, we restore this issue to the file of the Assessing Officer with a direction to verify the details furnished by the assessee and restrict the disallowance, if any, in accordance with law after affording reasonable opportunity of being heard to the assessee. 25. This ground of appeal is accordingly allowed for statistical purposes.

Ground relating to Disallowance under section 69C – A.Y. 2010-11

26.

In so far as the ground raised in ITA No. 3115/Mum/2024 for A.Y. 2010–11 relating to disallowance of Rs. 4,07,597/- under section 69C on account of alleged non-genuine purchases from four parties is concerned, it is observed that the same was not argued by the Learned AR at the time of hearing. Since the said ground was not argued, the same is dismissed as not adjudicated. In the result, the appeals of the assessee are disposed of as under: ITA No. 3114/Mum/2024 for A.Y. 2011–12 is partly allowed for - statistical purposes. - ITA No. 3115/Mum/2024 for A.Y. 2010–11 is partly allowed for statistical purpose. ITA No. 3116/Mum/2024 for A.Y. 2014–15 is partly allowed for - statistical purposes.

14 ITA Nos.3114,3115,3116/Mum/2024 Metal Tube & Rolling Mills Order pronounced in the open court on 05.05.2026.

Sd/- Sd/- (PAWAN SINGH) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 05/05/2026 Z.U., 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. 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai

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