HIRALAL TEJSHI LALAN ,MUMBAI vs. ACIT, CIRCLE 41(1)(1), MUMBAI

Validity of Reassessment Proceedings:

At the outset, the Ld. AR requested that Ground Nos. 3 and 4 be taken up first, as these grounds challenge the order of the Ld. CIT(A) in confirming the addition of alleged cash loans amounting to Rs.45,00,000/-. Considering the request of the Ld. AR, we proceed to adjudicate Ground Nos. 3 and 4 in the first instance.

Ground Nos. 3 and 4 are interrelated and interconnected, and relates to challenging the order of Ld. CIT(A) in upholding the addition made by the AO under Section 68 of the Act. Accordingly, these grounds are being disposed of by this consolidated order.

From the record, we find that the addition under Section 68 of the Act was made by the AO on the basis of information emanating from a search and seizure action conducted under Section 132 of the Act in the case of M/s Evergreen Enterprises. According to the AO, during the course of the search, statements were recorded and certain documents, including lenders' ledgers, were seized, which allegedly indicated that the assessee had advanced cash loans to, or through, M/s Evergreen Enterprises. Based on the said material, the AO treated the amount of Rs.45,00,000/- as unexplained cash credit under Section 68 of the Act and made the impugned addition.

On the other hand, the Ld. AR submitted that the issue involved in the present appeal is squarely covered in favour of the assessee by the decisions of the Coordinate Benches of the Tribunal in the following cases:

ITA No. 3243/Mum/2023 – Mayur Kanjibhai Shah; 2. ITA No. 4905/Mum/2025 – Shah Petroleum Products; and 3. ITA No. 4289/Mum/2024 – Abbas Ismail Contractor.

After considering the rival submissions and perusing the material available on record, we find that the search conducted under Section 132 of the Act in the case of M/s Evergreen Enterprises has been examined by various Coordinate Benches of the Tribunal. The very same seized material and documentary evidence relied upon by the AO in the present case were also scrutinized in those cases. The Coordinate Benches, after detailed consideration of the facts and evidence, deleted similar additions made under Section 68 of the Act, particularly in the case of Mayur Kanjibhai Shah (ITA No. 3243/Mum/2023), operative portion of the same is reproduced herein below:

It is an admitted fact that the Assessing Officer has not entertained the Assessee's request for cross examination of Shri Nilesh Bharani / M/s Evergreen Enterprises and also it is a fact that Shri Nilesh Bharani subsequently retracted his statement. Therefore, his statement made earlier become doubtful as claimed by the Assessee and cannot be relied as substantive evidence. Even otherwise, we have failed to understand that how the name as mentioned in the said diary, as 'NENSIBHI ELLA' can be attributed to the Assessee's name. Further, how the coded amount of Rs.32,500 can be construed as Rs.3,25,000,00/-. Further, how the Assessee is connected with the said narration of entries written in diary. Further, as per Assessee's claim, the mobile number noted in said diary is even otherwise do not belong to the Assessee and the Assessing Officer also failed to verify the owner of the said number to connect with the Assessee.

Considering the totality of the facts and circumstances of the case, we find that the issue involved in the present appeal is squarely covered by the aforesaid decisions of the Coordinate Benches of the Tribunal in Mayur Kanjibhai Shah (ITA No. 3243/Mum/2023), Shah Petroleum Products (ITA No. 4905/Mum/2025), and Abbas Ismail Contractor (ITA No. 4289/Mum/2024).

Thus, respectfully following the doctrine of binding precedents and maintaining judicial consistency, we direct the AO to delete the impugned addition of Rs.45,00,000/- made under Section 68 of the Act. Accordingly, Ground Nos. 3 and 4 raised by the assessee are allowed.

In view of our detailed findings while adjudicating Ground Nos. 3 and 4, Ground Nos. 1 and 2 have become infructuous and, therefore, do not require any separate adjudication.

In the result, the appeal filed by the assessee is partly allowed.