INCOME TAX OFFICER, AURANGABAD vs. SUMIT PRAVIN KHANDELWAL, AURANGABAD

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2281/PUN/2025 िनधा�रण वष� / Assessment Year : 2019-20 ITO, Ward-1(1), Aurangabad. Vs. Sumit Pravin Khandelwal, Lasur Station, Gangapur Aurangabad- 431133. PAN : AXAPK5238M Appellant Respondent Revenue by : Shri Manish Mehta Assessee by : CA Hema M. Jadhav Date of hearing : 16.03.2026 Date of pronouncement 18.05.2026 : आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the Revenue is directed against the order dated 08.08.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2019-20. 2. The Revenue has raised the following grounds of appeal :- “1. Erroneous Deletion of Addition Made u/s 69 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹1,88,00,000/- made by the Assessing Officer u/s 69 of the Income Tax Act, 1961, without appreciating that the assessee failed to satisfactorily explain the source and nature of the time deposits reflected in Form 26AS.

2 ITA No.2281/PUN/2025 2. Failure to Appreciate Material Evidence The Ld. CIT(A) has erred in law and on facts by relying solely on the assessee's submissions and documents without independently verifying the authenticity and source of foreign remittances or reconciling the bank statements with the reported SFT transactions and Form 26AS entries. 3. Ignoring the Validity of SFT Reporting The Ld. CIT(A) erred in accepting the assessee's explanation regarding double reporting in Form 26AS without calling for a report from the reporting financial institution (i.e., SBI) or making any reference to the AO for factual verification, thereby violating principles of natural justice. 4. Treating NRE Deposits as Automatically Explained The Ld. CIT(A) has erred in treating the mere deposit into a Non-Resident External (NRE) account as sufficient explanation of the nature and source of funds under Section 69, disregarding the settled principle that the burden of proof lies on the assessee to substantiate source of each credit entry with documentary evidence and proper nexus. 5. Violation of Rule 46A-Admission of Additional Evidence The Ld. CIT(A) has erred in law by admitting fresh evidence (including US tax returns, employment documents, and bank statements) without giving the Assessing Officer an opportunity to examine and rebut the same, thereby violating the provisions of Rule 46A of the Income Tax Rules, 1962. 6. The appellant crave to leave add or alter any ground of appeal.” 3. Facts of the case, in brief, are that the assessee is an individual and has not furnished his return of income for the year under consideration. On the basis of information received through Insight portal under RMS that the assessee has done large transaction i.e. time deposits of Rs.1,88,00,000/- with State Bank of India, the case of the assessee was reopened and after

3 ITA No.2281/PUN/2025 completing the procedure as per section 148A(d) of the IT Act notice u/s 148 was issued to the assessee on 16.03.2023. The assessee did not file return in response to above notice. Subsequently, notice u/s section 142(1) of the IT Act and show cause notice respectively were issued to the assessee. The assessee in response submitted that he is residing in USA as a salaried employee since 2013 and is a non-resident Indian and do not have any taxable income for the year under consideration hence no return was filed by him. Not being satisfied with the reply filed by the assessee, the Assessing Officer vide order dated 08.03.2024 completed the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act by determining the income of Rs.1,88,00,000 as against no return filed by the assessee. The above assessed income includes addition of Rs.1,88,00,000/- on account of unexplained investment u/s 69 of the IT Act being time deposits appearing in form 26AS of the relevant period on assessee’s PAN. 4. Being aggrieved with the above action of the Assessing Officer, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld.

4 ITA No.2281/PUN/2025 CIT(A)/NFAC deleted the addition made by the Assessing Officer and allowed the appeal filed by the assessee. 5. It is the above order against which the Revenue is in appeal before this Tribunal. 6. We have heard Ld. counsels from both the side and perused the material available on record. In this regard, we find that the assessee is an individual and claimed to be a non-resident Indian for the year under consideration. The assessee as claimed is residing in USA since 2013 as a salaried employee and do not have any income in India. On the basis of time deposits of Rs.1,88,00,000/- reported in Form 26AS and in the absence of proper evidence in the shape of documents supporting the contention of the assessee the Assessing Officer made the additions of Rs.1,88,00,000/- and passed the assessment order u/s 144 of the IT Act. In first appellate proceedings, Ld. CIT(A)/NFAC admitted additional evidences i.e. passport copy, Income Tax Returns filed in USA, NRE bank account statement & copy of latest VISA filed by the assessee and on the basis of above additional evidences allowed the appeal filed by the assessee. Now it is the primary ground of the Revenue that Ld. CIT(A)/NFAC

5 ITA No.2281/PUN/2025 ought to have forwarded those additional evidences to the Assessing Officer for verification and his comments, however Ld. CIT(A)/NFAC failed to call remand report from the Assessing Officer with regard to the additional evidences which is in contravention of Rule 46A of the IT Rules. 7. On the other hand, Ld. AR appearing from the side of the assessee supported the order passed by Ld. CIT(A)/NFAC and relied on various case laws which also suggests that the Assessing Officer can be granted an opportunity to examine such evidence. We further find that Ld. AR appearing from the side of the assessee filed a written submission before the bench wherein it was accepted that the assessee could not furnish the relevant documentary evidences before the Assessing Officer. The relevant para 3 is reproduced as under :- “3. Reasons for Non-submission before the Assessing Officer The assessee respectfully submits that during the course of the assessment proceedings, the assessee was residing outside India and is a Non-Resident Indian (NRI). Due to the assessee's absence from India and practical constraints in communication and document availability, the assessee could not effectively participate in the assessment proceedings nor furnish the relevant documentary evidences before the Assessing Officer. The notice under section 142(1) issued by department and the response was submitted by the assessee on 20-10-2023 but due to lack of understanding of law and legal language mentioned in the notice

6 ITA No.2281/PUN/2025 assessee was not able to understand that he has to submit supporting documents as well. Secondly assesse also replied to the SCN issued on 07-02-2024, the reply submitted on 11-02-2024 explaining all the situations through submissions letter but assessee again has not submitted the evidences but mentioned that I am willing to provide whatever documents department requires for completing assessment. Accordingly, the assessment order came to be passed without giving sufficient opportunity to produce relevant documents which were essential for determining the correct taxable income.” 8. From a perusal of above submission there remains no doubt that the relevant evidences were not available before the Assessing Officer on the basis of which Ld. CIT(A)/NFAC has deleted the additions. However, we find that Ld. CIT(A)/NFAC has not forwarded these additional evidences to the Assessing Officer for his remarks/comments. This is a clear cut violation of Rule 46A of the IT Rules, 1962 which make it mandatory for Ld. CIT(A)/NFAC to call for remand report from the Assessing Officer prior to accepting any additional evidence which was not produced before the Assessing Officer during the course of original assessment proceedings. Accordingly, we are of the considered opinion that Rule 46A of the IT Rules have been violated. We also find support from a judgement passed by Hon’ble Kerala High Court in the case of CIT vs. E.D. Benny

7 ITA No.2281/PUN/2025 [2015] 62 taxmann.com 302 (Kerala) wherein Court observed as under :- “Reading of the finding of the Tribunal would suggest that according to it, if additional documents are summoned by the Commissioner (Appeals) and produced or if the additional evidence produced by the assessee are in the nature of clinching evidence leaving no further room for any doubt or controversy, it is not necessary to give an opportunity to the Assessing Officer to contradict the same. In other words, the finding of the Tribunal would suggest that in cases where documents are summoned by the Commissioner (Appeals) and in cases where the documents produced are conclusive, the principles of natural justice are excluded. These findings of the Tribunal could not be enclosed. As held by Delhi High Court in CIT v. United Towers (I.) (P.) Ltd. [2008] 296 ITR 106/172 Taxman 267, rule 46A(4) of the Rules does not specifically exclude the principles of natural justice and, therefore, these principles are to be read into the Rules. Therefore, the finding of the Tribunal set aside. [Para 23]” 9. Respectfully following the above judgement passed in the case of CIT vs. E.D. Benny (supra), we find force in the above arguments of Ld. DR that Rule 46A has to be followed. Accordingly, Without going into merits of the case, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and restore the matter back to the file of Ld. CIT(A)/NFAC with a direction to decide the appeal afresh and as per fact & law after calling remand report /comments of the Assessing Officer with regard to the additional evidences filed by the assessee. Needless to say that Ld. CIT(A)/NFAC shall decide the appeal after

8 ITA No.2281/PUN/2025 providing reasonable opportunity of hearing to the assessee. Thus, the grounds of appeal raised by the Revenue are allowed for statistical purposes. 10. In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced on this 18th day of May, 2026. Sd/- Sd/- (R. K. PANDA) (VINAY BHAMORE) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 18th May, 2026. Sujeet/DOC Digitally signed by Sujeet Kumar Sujeet Kumar Sharma Sharma Date: 2026.05.19 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 12:14:28 +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 4. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.