ACIT--16(2), MUMBAI vs. AMUL KALYANJI SADIWALA , MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 8555/MUM/2025 Assessment Year: 2012-13

ACIT-16(2), Amul Kalyanji Sadiwala, 481, 4th floor, Aayakar Madhuvan Azad Nagar Co-op. Vs. Bhavan, MK Road, Churchgate society, 1st N.S. Road, Vile Parle Mumbai-400020. (West), Mumbai-400056, Maharashtra. PAN NO. AADPS 3805 J Appellant Respondent

Assessee by : Mr. Snehal Shah Revenue by : Mr. Surendra Mohan, Sr. DR (Virtually appear)

: 09/04/2026 Date of Hearing : 20/04/2026 Date of pronouncement ORDER PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against order dated 28.10.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in holding that the reopening of

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assessment u/s 147 of the Income assessment u/s 147 of the Income-tax Act, 1961 was invalid, tax Act, 1961 was invalid, despite the Assessing Officer having received specific, credible, and despite the Assessing Officer having received specific, credible, and despite the Assessing Officer having received specific, credible, and tangible information from the Investigation Wing supported by tangible information from the Investigation Wing supported by tangible information from the Investigation Wing supported by documentary evidence and duly sanctioned u/s 151, thereby umentary evidence and duly sanctioned u/s 151, thereby umentary evidence and duly sanctioned u/s 151, thereby satisfying the conditions precedent for reopening under sections 147 satisfying the conditions precedent for reopening under sections 147 satisfying the conditions precedent for reopening under sections 147 and 148 of the Act? and 148 of the Act? 2. Whether the Ld. CIT(A) was justified in deleting the addition of 2. Whether the Ld. CIT(A) was justified in deleting the addition of 2. Whether the Ld. CIT(A) was justified in deleting the addition of ₹3,00,00,000/- made u/s 69A of the Act, igno made u/s 69A of the Act, ignoring the corroborative ring the corroborative material seized during search in the case of M/s Evergreen material seized during search in the case of M/s Evergreen material seized during search in the case of M/s Evergreen Enterprises, the statement recorded u/s 132(4) of the principal Enterprises, the statement recorded u/s 132(4) of the principal Enterprises, the statement recorded u/s 132(4) of the principal person involved (Mr. Nilesh Bharani), and the assessee's failure to person involved (Mr. Nilesh Bharani), and the assessee's failure to person involved (Mr. Nilesh Bharani), and the assessee's failure to provide any cogent explanation or document provide any cogent explanation or documentary evidence disproving ary evidence disproving the cash loan transaction? the cash loan transaction? 3. Whether the Ld. CIT(A) was correct in holding that the addition is 3. Whether the Ld. CIT(A) was correct in holding that the addition is 3. Whether the Ld. CIT(A) was correct in holding that the addition is invalid for want of cross invalid for want of cross-examination of Mr. Nilesh Bharani, when examination of Mr. Nilesh Bharani, when the seized documents and the statement recorded u/s 132(4) the seized documents and the statement recorded u/s 132(4) the seized documents and the statement recorded u/s 132(4) constitute independent evidentiary material, and the AO had independent evidentiary material, and the AO had independent evidentiary material, and the AO had provided opportunity to the assessee to rebut the evidence but the provided opportunity to the assessee to rebut the evidence but the provided opportunity to the assessee to rebut the evidence but the assessee failed to do so? assessee failed to do so? 4. Whether the Ld. CIT(A) erred in law in holding that the AO did not 4. Whether the Ld. CIT(A) erred in law in holding that the AO did not 4. Whether the Ld. CIT(A) erred in law in holding that the AO did not dispose of the objections to reopening, whe dispose of the objections to reopening, when the AO had passed a n the AO had passed a speaking order dated 14.10.2019 addressing the assessee's speaking order dated 14.10.2019 addressing the assessee's speaking order dated 14.10.2019 addressing the assessee's objections, thereby fulfilling the procedural requirement laid down in objections, thereby fulfilling the procedural requirement laid down in objections, thereby fulfilling the procedural requirement laid down in GKN Driveshafts (India) Ltd. v. ITO (259 ITR 19 SC)? GKN Driveshafts (India) Ltd. v. ITO (259 ITR 19 SC)? 5. Whether the Ld. CIT(A) erred in treating the 5. Whether the Ld. CIT(A) erred in treating the assessment order as assessment order as bad in law on the ground that the AO issued a show cause notice bad in law on the ground that the AO issued a show cause notice bad in law on the ground that the AO issued a show cause notice without an accompanying notice u/s 142(1), when the AO had without an accompanying notice u/s 142(1), when the AO had without an accompanying notice u/s 142(1), when the AO had already issued multiple statutory notices u/s 143(2) and 142(1) already issued multiple statutory notices u/s 143(2) and 142(1) already issued multiple statutory notices u/s 143(2) and 142(1) during the reassessment proceedings and provided during the reassessment proceedings and provided due opportunity due opportunity to the assessee? 6. Whether the Ld. CIT(A) was correct in deleting the addition merely 6. Whether the Ld. CIT(A) was correct in deleting the addition merely 6. Whether the Ld. CIT(A) was correct in deleting the addition merely on the basis that the name "M/s Dr. Sadiwala Clinic" appeared in on the basis that the name "M/s Dr. Sadiwala Clinic" appeared in on the basis that the name "M/s Dr. Sadiwala Clinic" appeared in the seized documents, ignoring that the clinic is not an independent the seized documents, ignoring that the clinic is not an independent the seized documents, ignoring that the clinic is not an independent juristic entity separate from its partners, and that the evidence arate from its partners, and that the evidence arate from its partners, and that the evidence linked the transaction specifically to the assessee's PAN and contact linked the transaction specifically to the assessee's PAN and contact linked the transaction specifically to the assessee's PAN and contact details, thereby establishing the assessee's individual involvement?” details, thereby establishing the assessee's individual involvement?” details, thereby establishing the assessee's individual involvement?”

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3.1 Subsequently, the Assessing Officer received information from Subsequently, the Assessing Officer received information from Subsequently, the Assessing Officer received information from the Deputy Director of Income the Deputy Director of Income-tax (Investigation), Unit tax (Investigation), Unit-5(4), Mumbai, pursuant to a search action conducted in the case of M/s. Mumbai, pursuant to a search action conducted in the case of M/s. Mumbai, pursuant to a search action conducted in the case of M/s. Evergreen Enterprises. The information indicated that one Mr. Evergreen Enterprises. The information indicated that one Mr. Evergreen Enterprises. The information indicated that one Mr. Nilesh Bharani was engaged in undisclosed money Nilesh Bharani was engaged in undisclosed money-lending activities lending activities involving unaccounted cash transactions. It was further reported involving unaccounted cash transactions. It was further reported involving unaccounted cash transactions. It was further reported that certain coded entries in seized material suggested that “Dr. that certain coded entries in seized material suggested that “Dr. that certain coded entries in seized material suggested that “Dr. Sadiwala Clinic” had allegedly borrowed a sum of Sadiwala Clinic” had allegedly borrowed a sum of ₹3,00,00 3,00,00,000/- in cash during the financial year 2011 cash during the financial year 2011–12 through the said 12 through the said person/entity.

3.2 Proceeding on the assumption that the reference to “Dr. Proceeding on the assumption that the reference to “Dr. Proceeding on the assumption that the reference to “Dr. Sadiwala Clinic” pertained to the assessee, the Assessing Officer Sadiwala Clinic” pertained to the assessee, the Assessing Officer Sadiwala Clinic” pertained to the assessee, the Assessing Officer attributed the alleged transaction to the individ attributed the alleged transaction to the individual assessee. On ual assessee. On this basis, he recorded reasons to believe that income chargeable to this basis, he recorded reasons to believe that income chargeable to this basis, he recorded reasons to believe that income chargeable to tax tax tax had had had escaped escaped escaped assessment assessment assessment and, and, and, accordingly, accordingly, accordingly, initiated initiated initiated

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reassessment proceedings under section 147 of the Act by issuing reassessment proceedings under section 147 of the Act by issuing reassessment proceedings under section 147 of the Act by issuing notice under section 148 on 30.03.2019. In response thereto, the notice under section 148 on 30.03.2019. In respons notice under section 148 on 30.03.2019. In respons assessee filed a return of income on 09.04.2019, reiterating the assessee filed a return of income on 09.04.2019, reiterating the assessee filed a return of income on 09.04.2019, reiterating the income of ₹58,11,220/ 58,11,220/-.

3.3 Statutory notices under the provisions of the Act were duly Statutory notices under the provisions of the Act were duly Statutory notices under the provisions of the Act were duly issued, and the assessment proceedings were carried out issued, and the assessment proceedings were carried out issued, and the assessment proceedings were carried out accordingly. During the course o accordingly. During the course of such proceedings, notices under f such proceedings, notices under sections 143(2) and 142(1) of the Act were issued from time to time, sections 143(2) and 142(1) of the Act were issued from time to time, sections 143(2) and 142(1) of the Act were issued from time to time, in response to which the assessee furnished certain explanations in response to which the assessee furnished certain explanations in response to which the assessee furnished certain explanations and supporting details. However, the Assessing Officer was not and supporting details. However, the Assessing Officer was not and supporting details. However, the Assessing Officer was not satisfied with the same. satisfied with the same. Consequently, the Assessing Officer Consequently, the Assessing Officer proceeded to complete the assessment by making an addition of proceeded to complete the assessment by making an addition of proceeded to complete the assessment by making an addition of ₹3,00,00,000/- under section 69A of the Act, treating the same as under section 69A of the Act, treating the same as under section 69A of the Act, treating the same as unexplained income of the assessee. unexplained income of the assessee. Relevant portion of the Relevant portion of the assessment order is re assessment order is re-produced as under:

"...6. Addition under section 69A of the Income Tax Act 1961. "...6. Addition under section 69A of the Income Tax Act 1961. "...6. Addition under section 69A of the Income Tax Act 1961. Based on the above information and subsequent additional findings, Based on the above information and subsequent additional findings, Based on the above information and subsequent additional findings, show cause notices dated 21/11/2019 was issued to the assessee show cause notices dated 21/11/2019 was issued to the assessee show cause notices dated 21/11/2019 was issued to the assessee requesting the assessee to furnish explanation as to w requesting the assessee to furnish explanation as to why this loan of hy this loan of Rs 3,00,00,000/- will not be treated as his undisclosed income for will not be treated as his undisclosed income for will not be treated as his undisclosed income for the A.Y.2012-13. The copy of the document, seized from the 13. The copy of the document, seized from the 13. The copy of the document, seized from the premises of M/s Evergreen Enterprises showing the assessee's premises of M/s Evergreen Enterprises showing the assessee's premises of M/s Evergreen Enterprises showing the assessee's name and amount of loan, was also furnished to the assessee as name and amount of loan, was also furnished to the as name and amount of loan, was also furnished to the as proof of his cash loan transaction. proof of his cash loan transaction. In response, the assessee upload his submission vide letter dated In response, the assessee upload his submission vide letter dated In response, the assessee upload his submission vide letter dated 26/11/2019 denying the cash loan transaction. 26/11/2019 denying the cash loan transaction. The submission of the assessee is perused but not acceptable. The submission of the assessee is perused but not acceptable. The submission of the assessee is perused but not acceptable.

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Against the backdrop of the informat Against the backdrop of the information received and subsequent ion received and subsequent submissions made by the assessee, the return of income and the submissions made by the assessee, the return of income and the submissions made by the assessee, the return of income and the available documents were perused and examined. It is pertinent to available documents were perused and examined. It is pertinent to available documents were perused and examined. It is pertinent to mention here that the information passed on by the investigation mention here that the information passed on by the investigation mention here that the information passed on by the investigation wing of the Income Tax Department wing of the Income Tax Department to the jurisdictional assessing to the jurisdictional assessing officers are not without substance. The information is gathered after officers are not without substance. The information is gathered after officers are not without substance. The information is gathered after proper investigation of documents, bank accounts, deposition of proper investigation of documents, bank accounts, deposition of proper investigation of documents, bank accounts, deposition of concerned persons and seized documents. In the instant case seized concerned persons and seized documents. In the instant case seized concerned persons and seized documents. In the instant case seized documents reveal that t documents reveal that the assessee had borrowed a cash loan of Rs he assessee had borrowed a cash loan of Rs 3,00,00,000/- during the year under consideration. Further from the during the year under consideration. Further from the during the year under consideration. Further from the statements of Mr Nilesh Bharani it is gathered that Mr Nilesh statements of Mr Nilesh Bharani it is gathered that Mr Nilesh statements of Mr Nilesh Bharani it is gathered that Mr Nilesh Bharani was into the business of cash loan lending and borrowing Bharani was into the business of cash loan lending and borrowing Bharani was into the business of cash loan lending and borrowing in his individual in his individual capacity and for this purpose he used the capacity and for this purpose he used the employees and premises of Evergreen Enterprise. During the course employees and premises of Evergreen Enterprise. During the course employees and premises of Evergreen Enterprise. During the course of search proceedings the statement of Mr. Nilesh Bharani was of search proceedings the statement of Mr. Nilesh Bharani was of search proceedings the statement of Mr. Nilesh Bharani was recorded on oath on 11/10/2017 where he has admitted that he recorded on oath on 11/10/2017 where he has admitted that he recorded on oath on 11/10/2017 where he has admitted that he was conducting cash loan was conducting cash loan lending and borrowing business. The lending and borrowing business. The assessee by denying that no cash loan transaction was done even assessee by denying that no cash loan transaction was done even assessee by denying that no cash loan transaction was done even after being furnished with evidence cannot be acceptable as these after being furnished with evidence cannot be acceptable as these after being furnished with evidence cannot be acceptable as these transactions are recorded and are backed by credible evidences. Mr. transactions are recorded and are backed by credible evidences. Mr. transactions are recorded and are backed by credible evidences. Mr. Nilesh Bharani's state Nilesh Bharani's statement and the conclusive evidence gathered by ment and the conclusive evidence gathered by the Income Tax Department cannot be overlooked. the Income Tax Department cannot be overlooked. As per section 69A of the 1.T.Act, 1961 if the assessee is found to be As per section 69A of the 1.T.Act, 1961 if the assessee is found to be As per section 69A of the 1.T.Act, 1961 if the assessee is found to be the owner of any money and he offers no explanation, then the the owner of any money and he offers no explanation, then the the owner of any money and he offers no explanation, then the money will be deemed to be the money will be deemed to be the income of the assessee for that income of the assessee for that financial year. The onus is on the assessee to offer explanation financial year. The onus is on the assessee to offer explanation financial year. The onus is on the assessee to offer explanation regarding the said undisclosed transaction and if the assessee fails regarding the said undisclosed transaction and if the assessee fails regarding the said undisclosed transaction and if the assessee fails to prove to the satisfaction of the A.O. then A.O. has every right to to prove to the satisfaction of the A.O. then A.O. has every right to to prove to the satisfaction of the A.O. then A.O. has every right to draw an inference t draw an inference that the money represents the undisclosed hat the money represents the undisclosed income of the assessee. The burden to explain the genuineness of income of the assessee. The burden to explain the genuineness of income of the assessee. The burden to explain the genuineness of the transaction lies entirely with the assessee as the relevant facts the transaction lies entirely with the assessee as the relevant facts the transaction lies entirely with the assessee as the relevant facts are exclusively in the knowledge of the assessee. Therefore, the sum are exclusively in the knowledge of the assessee. Therefore, the sum are exclusively in the knowledge of the assessee. Therefore, the sum of Rs.3,00,00,000/ 00,000/- is nothing but undisclosed income of the is nothing but undisclosed income of the assessee itself and hence added to the total income of the assessee assessee itself and hence added to the total income of the assessee assessee itself and hence added to the total income of the assessee for the A.Y 2012-13. Penalty proceedings u/s 271(1)(c) of the Income 13. Penalty proceedings u/s 271(1)(c) of the Income 13. Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 are being initiated separately for concealment of Tax Act, 1961 are being initiated separately for concealment of Tax Act, 1961 are being initiated separately for concealment of income.” 4. On further appeal On further appeal, the Ld. CIT(A) quashed the assessment, Ld. CIT(A) quashed the assessment, holding that the material relied upon by the AO pertained to a holding that the material relied upon by the AO pertained to a holding that the material relied upon by the AO pertained to a distinct partnership firm, "M/s Dr. Sadiwala Clinic" (bearing a distinct partnership firm, "M/s Dr. Sadiwala Clinic" (bearing a distinct partnership firm, "M/s Dr. Sadiwala Clinic" (bearing a

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separate PAN), and not the assessee in his individual capacity. separate PAN), and not the assessee in his individual capacity. separate PAN), and not the assessee in his individual capacity. Relying on the principle that a firm and its partners are distinct Relying on the principle that a firm and its partners are distinct Relying on the principle that a firm and its partners are distinct taxable entities under the Act, the Ld. CIT(A) held that the AO taxable entities under the Act, the Ld. CIT(A) held that the AO taxable entities under the Act, the Ld. CIT(A) held that the AO lacked "reason to believe" that income had escaped assessment in lacked "reason to believe" that income had escaped assessment lacked "reason to believe" that income had escaped assessment the hands of the individual individual assessee.The relevant finding of the Ld. The relevant finding of the Ld. CIT(A) challenging the validity of the reassessment is reproduced as CIT(A) challenging the validity of the reassessment is reproduced as CIT(A) challenging the validity of the reassessment is reproduced as under:

“7.2 As noticed from the appellant's submission and the assessment “7.2 As noticed from the appellant's submission and the assessment “7.2 As noticed from the appellant's submission and the assessment order, addition had been made solely bas order, addition had been made solely based on information received ed on information received from the Investigation Wing stating that during the search in the from the Investigation Wing stating that during the search in the from the Investigation Wing stating that during the search in the case of M/s. Evergreen Enterprises, a coded ledger entry indicated case of M/s. Evergreen Enterprises, a coded ledger entry indicated case of M/s. Evergreen Enterprises, a coded ledger entry indicated that "Dr. Sadiwala Clinic" had borrowed Rs. 3,00,00,000/- in cash. that "Dr. Sadiwala Clinic" had borrowed Rs. 3,00,00,000/ that "Dr. Sadiwala Clinic" had borrowed Rs. 3,00,00,000/ The Assessing Officer has ass The Assessing Officer has assumed that Dr. Sadiwala Clinic refers umed that Dr. Sadiwala Clinic refers to the present appellant, Dr. Amul Kalyanji Sadiwala, and to the present appellant, Dr. Amul Kalyanji Sadiwala, and to the present appellant, Dr. Amul Kalyanji Sadiwala, and accordingly treated the amount as unexplained money in his accordingly treated the amount as unexplained money in his accordingly treated the amount as unexplained money in his personal hands. However, the name appearing in the seized ledger personal hands. However, the name appearing in the seized ledger personal hands. However, the name appearing in the seized ledger is M/s. Dr. Sadiwala Clinic, which is is M/s. Dr. Sadiwala Clinic, which is also evident from the reasons also evident from the reasons recorded for re-opening of the assessment order by the AO in the opening of the assessment order by the AO in the opening of the assessment order by the AO in the assessment order(also re assessment order(also re-produced in the Para 5.1 of this order). produced in the Para 5.1 of this order). M/s. Sadiwala's Clinic is separate entity registered with PAN: M/s. Sadiwala's Clinic is separate entity registered with PAN: M/s. Sadiwala's Clinic is separate entity registered with PAN: AAAFD0246M and the appellant is AAAFD0246M and the appellant is merely one of its partners. The merely one of its partners. The Assessing Officer has not shown any evidence to justify treating a Assessing Officer has not shown any evidence to justify treating a Assessing Officer has not shown any evidence to justify treating a transaction (allegedly recorded in the assessment order) in the firm's transaction (allegedly recorded in the assessment order) in the firm's transaction (allegedly recorded in the assessment order) in the firm's name as that in the hands of an individual partner. In law, a name as that in the hands of an individual partner. In law, a name as that in the hands of an individual partner. In law, a partnership firm and it partnership firm and its partners are distinct taxable entities. The s partners are distinct taxable entities. The Hon'ble Supreme Court in CIT v. R.M. Chidambaram Pillai [1977] Hon'ble Supreme Court in CIT v. R.M. Chidambaram Pillai [1977] Hon'ble Supreme Court in CIT v. R.M. Chidambaram Pillai [1977] 106 ITR 292 (SC) recognized that the firm's income and a partner's 106 ITR 292 (SC) recognized that the firm's income and a partner's 106 ITR 292 (SC) recognized that the firm's income and a partner's individual income cannot be interchanged unless there is conclusive individual income cannot be interchanged unless there is conclusive individual income cannot be interchanged unless there is conclusive proof of diversion o ersion or direct receipt by the partner.” 5. The assessee filed a Paper Book(PB) containing pages 1 to The assessee filed a Paper Book(PB) containing pages 1 to The assessee filed a Paper Book(PB) containing pages 1 to 202. With reference to ground No. 6 of the appeal With reference to ground No. 6 of the appeal challenging With reference to ground No. 6 of the appeal validity of reassessment validity of reassessment, the Ld. counsel submitted that the seized the Ld. counsel submitted that the seized document pertains to M/s Dr. Sadiwala Clinic which is a separate document pertains to M/s Dr. Sadiwala Clinic which is a separate document pertains to M/s Dr. Sadiwala Clinic which is a separate

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partnership firm whereas on the basis of the said documents, partnership firm whereas on the basis of the said documents, partnership firm whereas on the basis of the said documents, assessment of the assessee has been reopened which is invalid assessment of the assessee has been reopened which is invalid assessment of the assessee has been reopened which is invalid action on the part of the action on the part of the Assessing Officer.

6.1 It is a well-settled judicial principle, as enunciated by the settled judicial principle, as enunciated by the settled judicial principle, as enunciated by the Hon’ble Supreme Court in Hon’ble Supreme Court in ACIT v. Rajesh Jhaveri Stock Brokers ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500) Pvt. Ltd. (291 ITR 500) that the "existence" of relevant materi that the "existence" of relevant material on the basis of which a reasonable person can make requisite belief , is the basis of which a reasonable person can make requisite belief the basis of which a reasonable person can make requisite belief a jurisdictional prerequisite. The material must point specifically to a jurisdictional prerequisite. The material must point specifically to a jurisdictional prerequisite. The material must point specifically to the escapement of income of the the escapement of income of the concerned assessee. assessee. Thus in the case, the issue is whether the material on th case, the issue is whether the material on the basis of which the e basis of which the Assessing Officer has recorded reasons was relevant to the case of Assessing Officer has recorded reasons was relevant to the case of Assessing Officer has recorded reasons was relevant to the case of the assessee. For ready reference, relevant portion of reason For ready reference, relevant portion of reason For ready reference, relevant portion of reason recorded for re- opening of the assessment (as re opening of the assessment (as re-produced in the produced in the assessment order and also available on and also available on PB 17 to 18 PB 17 to 18) is extracted as under:

"...The assessee is an individual. The assessee had filed its return "...The assessee is an individual. The assessee had filed its return "...The assessee is an individual. The assessee had filed its return for A.Y. 2012-13 on 19.09.2012 declaring income at Rs. 58,11,216/. 13 on 19.09.2012 declaring income at Rs. 58,11,216/. 13 on 19.09.2012 declaring income at Rs. 58,11,216/. The assessee is declaring income as income from business and The assessee is declaring income as income from business and The assessee is declaring income as income from business and profession and income profession and income from other sources.

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Information in this case is received from Dy. Director of Income Information in this case is received from Dy. Director of Income Information in this case is received from Dy. Director of Income Tax(Inv.) Unit 5(4), Mumbai on 25.03.2019 that a search action u/s. Tax(Inv.) Unit 5(4), Mumbai on 25.03.2019 that a search action u/s. Tax(Inv.) Unit 5(4), Mumbai on 25.03.2019 that a search action u/s. 132 was carried out in the case of M/s. Evergreen Enterprises 132 was carried out in the case of M/s. Evergreen Enterprises 132 was carried out in the case of M/s. Evergreen Enterprises (AADFE8617J). Mr. Mr. Nilesh Bharani is o (AADFE8617J). Mr. Mr. Nilesh Bharani is one of the partners in M/s. ne of the partners in M/s. Evergreen Enterprises. The documentary evidence found in the Evergreen Enterprises. The documentary evidence found in the Evergreen Enterprises. The documentary evidence found in the search as well as statement on oath of Mr. Nilesh Bharani recorded search as well as statement on oath of Mr. Nilesh Bharani recorded search as well as statement on oath of Mr. Nilesh Bharani recorded u/s. 132(4) of the Income Tax Act, 1961 unearthed as undisclosed u/s. 132(4) of the Income Tax Act, 1961 unearthed as u/s. 132(4) of the Income Tax Act, 1961 unearthed as activity of money lending and borrow activity of money lending and borrowing in unaccounted cash being ing in unaccounted cash being operated at the premises of M/s. Evergreen Enterprises by Mr. operated at the premises of M/s. Evergreen Enterprises by Mr. operated at the premises of M/s. Evergreen Enterprises by Mr. Nilesh Bharani. Shri Shri Shri Amul Amul Amul Kayanji Kayanji Sadiwala Kayanji Sadiwala Sadiwala has has has borrowed borrowed borrowed cash cash loan cash loan loan of of of Rs.3,00,00,000/- in F.Y. 2011 in F.Y. 2011-12 through Nilesh Bharani/Evergreen 12 through Nilesh Bharani/Evergreen Enterprises. S Code Coded Coded Actual Contact Contact F.Y. No amount as amount as amount Person number per ledger per ledger (in Rs.) (in'000) (in'000) Dr. 1 30000 30000 30000000 Amulbhai 9820069830 9820069830 2011-12 Sadiwala Clinic

Therefore, in view of the above facts, I have reason to believe that Therefore, in view of the above facts, I have reason to believe that Therefore, in view of the above facts, I have reason to believe that income to the extent of income to the extent of Rs.3,00,00,000/- has escaped assessment has escaped assessment for the A.Y.2012-13. 13. It is evident from the above facts that the assessee had not truly and It is evident from the above facts that the assessee had not truly and It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the fully disclosed material facts necessary for his assessment for the fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of year under consideration thereby necessitating reopening year under consideration thereby necessitating reopening the Act. In this case more than four years have lapsed from the end of In this case more than four years have lapsed from the end of In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to assessment year under consideration. Hence necessary sanction to assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Principal issue notice u/s 148 has been obtained separately from Principal issue notice u/s 148 has been obtained separately from Principal Commissioner of income Tax as per the provi Commissioner of income Tax as per the provisions of section 151 of sions of section 151 of the Act. The proceedings of section 147 of the I.T. Act are duly attracted as The proceedings of section 147 of the I.T. Act are duly attracted as The proceedings of section 147 of the I.T. Act are duly attracted as mentioned in explanation to section 148. Hence, it is a fit case for mentioned in explanation to section 148. Hence, it is a fit case for mentioned in explanation to section 148. Hence, it is a fit case for issue of notice under section 148 of the I.T.Act. issue of notice under section 148 of the I.T.Act.

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6.2 It is evident form reasons recorded It is evident form reasons recorded and extracted above and extracted above that information received form investigation wing information received form investigation wing explicitly identifies the explicitly identifies the borrower as "Dr. Sadiwala Clinic." "Dr. Sadiwala Clinic." The Assessee has demonstrated The Assessee has demonstrated that "M/s Dr. Sadiwala Clinic" is a registered partnership firm with that "M/s Dr. Sadiwala Clinic" is a registered partnership firm with that "M/s Dr. Sadiwala Clinic" is a registered partnership firm with its own separate PAN (AAAFD0246M). its own separate PAN (AAAFD0246M). For the purposes of the For the purposes of the Income-tax Act, a partnership firm and its partners are independent tax Act, a partnership firm and its partners are independent tax Act, a partnership firm and its partners are independent taxable units. As held by the taxable units. As held by the Hon'ble Supreme Court in Hon'ble Supreme Court in CIT v. R.M. Chidambaram Pillai (106 ITR 292) Chidambaram Pillai (106 ITR 292), while a firm is not a separate , while a firm is not a separate legal person under general law, it is a distinct "Person" under legal person under general law, it is a distinct "Person" under legal person under general law, it is a distinct "Person" under Section 2(31) of the Act. Section 2(31) of the Act.

6.3 The Revenue argues that the clinic is not an independent The Revenue argues that the clinic is not an independent The Revenue argues that the clinic is not an independent juristic entity separate from its partners. We find this argument ristic entity separate from its partners. We find this argument ristic entity separate from its partners. We find this argument legally untenable in tax jurisprudence. When material is found legally untenable in tax jurisprudence. When material is found legally untenable in tax jurisprudence. When material is found pertaining to a firm, the appropriate jurisdictional action lies pertaining to a firm, the appropriate jurisdictional action lies pertaining to a firm, the appropriate jurisdictional action lies against the firm. Reopening the individual assessment of a partner against the firm. Reopening the individual assessment of a partn against the firm. Reopening the individual assessment of a partn based on a transaction explicitly recorded in the name of the firm— based on a transaction explicitly recorded in the name of the firm based on a transaction explicitly recorded in the name of the firm without establishing a direct diversion of funds to the partner— without establishing a direct diversion of funds to the partner without establishing a direct diversion of funds to the partner constitutes a jurisdictional error. constitutes a jurisdictional error.

6.4 The AO proceeded on a flawed assumption that "Dr. Sadiwala The AO proceeded on a flawed assumption that "Dr. Sadiwala The AO proceeded on a flawed assumption that "Dr. Sadiwala Clinic" and "Dr. Amul Clinic" and "Dr. Amul Kalyanji Sadiwala" are interchangeable for Kalyanji Sadiwala" are interchangeable for the purpose of taxation. In the absence of any material linking the the purpose of taxation. In the absence of any material linking the the purpose of taxation. In the absence of any material linking the individual assessee to the specific receipt of these funds in his individual assessee to the specific receipt of these funds in his individual assessee to the specific receipt of these funds in his personal capacity, the "Reason to Believe" lacks the requisite nexus. personal capacity, the "Reason to Believe" lacks the requisite nexus. personal capacity, the "Reason to Believe" lacks the requisite nexus.

Amul Kalyanji Sadiwala 10 ITA No. 8555/MUM/2025

6.5 Consequently, the reassessment is Consequently, the reassessment is bad in law and void bad in law and void ab- initio. Since the jurisdictional challenge is upheld, we find no Since the jurisdictional challenge is upheld, we find no Since the jurisdictional challenge is upheld, we find no necessity to adjudicate upon the grounds pertaining to the merits of necessity to adjudicate upon the grounds pertaining to the merits of necessity to adjudicate upon the grounds pertaining to the merits of the addition or the lack of cross the addition or the lack of cross-examination. Accordingly, we Accordingly, we uphold the finding of the Ld. CIT(A) allowing the appeal hold the finding of the Ld. CIT(A) allowing the appeal hold the finding of the Ld. CIT(A) allowing the appeal as unsustainable in law unsustainable in law.

6.6 Since, we have already uphe Since, we have already upheld the quashing of the ld the quashing of the reassessment proceedings, the other grounds challenging the reassessment proceedings, the other grounds challenging the reassessment proceedings, the other grounds challenging the validity as well as merit are not required to be adjudicated upon. validity as well as merit are not required to be adjudicated validity as well as merit are not required to be adjudicated The appeal of the Revenue Revenue is accordingly dismissed. .

Order pronounced in the open Court on ounced in the open Court on 20/04/2026. /04/2026. Sd/- Sd/ Sd/- (ANIKESH BANERJEE) (ANIKESH BANERJEE (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 20/04/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai