DASHRATH SINGH RAO ,MUMBAI vs. ITO WARD 19(1)(1), MUMBAI

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ITA 8660/MUM/2025Status: DisposedITAT Mumbai12 May 2026AY 2019-208 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional evidence submitted by the assessee, citing a GST survey that led to the seizure of books and documents. Consequently, the matter was set aside to the Assessing Officer for a fresh assessment.

What were the facts?

The assessee's case was reopened based on information about fake invoices. During the assessment, additions were made for unexplained purchases, cessation of liabilities, and cash deposits. The CIT(A) partly allowed the assessee's appeal, deleting some additions.

What were the issues?

Whether additional evidence should be admitted and whether the assessment should be set aside to the AO for fresh consideration based on new evidence.

Which sections of the Income-tax Act were involved?

Section 69C,Section 41(1),Section 68,Section 147,Section 143(3),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI

Before: Shri Sandeep Gosain (JM) & Shri Biyayananda Pruseth (AM)

For Appellant: Shri Rajesh Shah
For Respondent: Shri Annavaram Kosuri
Hearing: 12.05.2026Pronounced: 29.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “D”, MUMBAI

Before Shri Sandeep Gosain (JM) & Shri Biyayananda Pruseth (AM)

ITA No. 8660/Mum/2025 (A.Y. 2019-20)

Dashrath Singh Rao Vs. ITO Ward 19(1)(1) 476, Pushpa Sadan Piramal Chamber P.B. Marg, Girgaon Mumbai-400012. Mumbai-400 004. PAN : AJXPR6358J (Appellant) (Respondent)

ITA No. 8126/Mum/2025 (A.Y. 2019-20)

ITO Ward 19(1)(1) Vs. Dashrath Singh Rao Piramal Chamber 476, Pushpa Sadan Mumbai-400012. P.B. Marg, Girgaon Mumbai-400 004. PAN : AJXPR6358J (Appellant) (Respondent)

Assessee by Shri Rajesh Shah Respondent by Shri Annavaram Kosuri Date of Hearing 12.05.2026 Date of Pronouncement 29.05.2026

ORDER Per Bijayananda Pruseth (AM) :

These cross appeals filed by the assessee and Department emanate from

the order passed under section 250 of the Income-tax Act, 1961 (in short, 'Act')

by the Commissioner of Income-Tax (Appeals)/ National Faceless Appeal Centre

[in short, 'CIT(A)'] dated 24.09.2025 for the assessment years (AY) 2019-20.

With consent of both parties, the appeals were clubbed and heard together and

a common order is passed for the sake of convenience and brevity. ITA No.

8660/Mum/2025 is taken as a “lead case.”

2 ITA No. 8126, 8660/Mum/2025 Dashrath Singh

2.

There is delay of 16 days in filing the appeal. The assessee has filed an

application for condonation of delay and submitted that the erstwhile tax

consultant was not conversant with filing of appeal before the ITAT. Hence, the

assessee consulted 2/3 consultants to get proper advice on the matter. The

assessee was also out of station due to festive season. Therefore, there was

small delay of 16 days, which was neither intentional nor deliberate. Therefore,

he requested to condone the delay. The Ld. DR of the Revenue has not opposed

the prayer. After considering the request of the assessee, the delay is condoned

in the interest of justice.

ITA No. 8660/Mum/2025

3.

Grounds of appeal raised by the assessee read as under : “On the facts and circumstances of the case and in law, the learned AO erred in re-opening of the assessment though the JAO had no jurisdiction to issue notice after 29/03/2022 as per Circular No.: S.O. 1466(E), i.e. Notification No. 18/2022/F. No. 370142/16/2022-TPL w.e.f. 29/03/2022. The re-opening of the assessment itself is bad in law. 2. a) On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the addition of Rs. 1,11,37,891 under Section 69C expenditure. as unexplained b) The appellant submits that Section 69C is not applicable to the facts of the case, c) The learned CIT(A) has wrongly held that the provision of S.115BBE is applicable to the facts of the case. The AO erred in applying the said provision for working out tax and surcharge on tax. 3. a) On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming addition of Rs.70,76,020 on account of liability under Section 41(1) of the Act though the liability is in existence. b) The learned CIT(A) erred in treating the said amount as ceased to be payable though the said creditors are payable at the end of the year.

3 ITA No. 8126, 8660/Mum/2025 Dashrath Singh

4.

The appellant craves leave to add, amend, modify, cancel and or substitute any of the grounds of the appeal.” ITA No. 8126/Mum/2025 4. Grounds of appeal raised by the Revenue read as under : “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,24,49,600/- made by the AO u/s 68 of the Income Tax Act, 1961, without appreciating that the assessee failed to discharge the onus of proving the nature and source of substantial cash deposits made in his Yes Bank account during the year, and did not furnish corroborative evidence linking such deposits to disclosed business turnover. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting relief of Rs. 95,01,942/- out of the total addition of Rs. 1,65,77,962/-made by the AO u/s 41(1) of the Act, without verifying the cessation of liability or obtaining confirmations from creditors, despite the assessee's failure to produce evidence of subsequent payments or current status of outstanding balances. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in accepting post-facto explanations and unsupported claims of cash-based retail trade without verifying the audit trail, books of accounts, or matching cash deposits with actual sales invoices, and failed to appreciate that the assessee did not maintain proper records of cash transactions. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in disregarding the findings of the Investigation Wing and DG GST Intelligence, Pune, which clearly established that the assessee had availed accommodation entries from shell entities operated by entry providers, and failed to appreciate that the AO's additions were based on third-party statements, GST data, and non-response to statutory notices. 5. "The appellant craves, leave to amend or alter any grounds or add a new ground which may be necessary." Further the tax effect involved in this case is Rs. 72,44,009/, which is above the escribed limit as per CBDT's Circular No. 09/2024 Dated. 17.09.2024 and also this case under one of the exceptions specified in paragraph 3.1(h) of the of CBDT's Circular No. 2024 Dated. 15.03.2024, wherein it is stated that in cases involving "Organised Tax evasion", including cases of accommodation entry of bogus purchases". Hence, the appeal u/s 253 of the Act, is being filed before Hon'ble ITAT. A copy of the CIT(A)'s order was received on 24.09.2025 in this office of PCIT- 19, Mumbai. The last date of filling an appeal is 30.11.2025. The appeal should be filed immediately.”

4 ITA No. 8126, 8660/Mum/2025 Dashrath Singh 5. Facts of the case, in brief, are that the assessee filed his return of income

for AY 2019-20 on 24.09.2019 declaring total of income of Rs. 6,27,770/-.

Based on the information received from the DDIT(Inv), Unit-4(1), Mumbai that

entities, namely, Rajput Trading Company (Prop. Rishi Singh) and Octagen

Trading Co. were indulging in generating and issuing fake invoices leading to

wrongful availment of Input Tax Credit (ITC) and assessee was one of the

beneficiaries, the case was reopened by issuing notice u/s. 148 of the Act on

30.03.2023. In response, the assessee filed return declaring the same total

income of Rs. 6,27,770/-. The assessee was engaged in retail trading of mobile

and mobile accessories along with wholesale trade of fabrics and yarn during

the year. The AO has issued various notices as per the table in para 2 of the

assessment order. It is seen that the assessee partly complied with the notices

issued and mostly did not file any response. The AO, thereafter, added Rs.

1,11,37,891/- u/s. 69C of the Act in respect of purchases from Rajput Trading

Company, Octogen Trading Company and K.N.S. Industries Pvt. Ltd. Since, the

assessee failed to adduce any documentary evidence regarding the current

liabilities and sundry creditors of Rs. 1,65,77,962/-, the same was added u/s.

41(1) of the Act as cessation of liability. He also added Rs. 1,24,49,600/- u/s. 68

of the Act towards the cash deposits made during the year. Therefore, the total

was determined at Rs. 4,07,93,223/- as against returned income of Rs.

6,27,770/-.

5 ITA No. 8126, 8660/Mum/2025 Dashrath Singh 6. Aggrieved by the order of the AO, the assessee filed the appeal before

the CIT(A). The assessee challenged the validity of the reopening as well merits

of addition. The CIT(A) dismissed the ground of validity of reopening by relying

upon various decisions of the Hon’ble Gujarat, Delhi and Punjab and Haryana

High Courts, as per para 4.2 of the appellate order. The CIT(A) confirmed the

addition made u/s. 69C of the Act amounting to Rs. 1,11,37,891/-. Regarding

the addition u/s. 41(1) of the Act, he deleted Rs. 95,01,942/- and sustained

addition of Rs. 70,76,015/- by giving various reasons such as, the additions in

some cases would amount to double addition because the impugned amount

has already been added u/s. 69C of the Act. Such discussion is at para 7.2 of

the appellate order. The CIT(A) deleted the entire cash deposit of Rs.

1,24,49,600/- made u/s. 68 of the Act by observing that the cash deposit was

out of the regular trading receipts of the assessee. In the result, the appeal was

partly allowed.

7.

Aggrieved by the above order of CIT(A), both assessee and Revenue have

filed the appeals before the Tribunal. The Ld. AR of the assessee has filed a

paper book containing 154 pages and submitted that the details at serial

numbers 6 to 13 were not available before the AO or the CIT(A). He requested

to admit the additional evidences. He submitted that the issues pertain to

bogus purchases, cessation of liabilities and cash deposit. He submitted that

though the AO passed u/s. 147 r.w.s. 143(3) of the Act, it was in reality an order

u/s. 144 of the Act. The assessee could not fully comply with the requirements

6 ITA No. 8126, 8660/Mum/2025 Dashrath Singh of the AO during the assessment proceedings because the books of account,

bills etc. were seized by the GST Department, which prevented the assessee

from filing all the details. Hence, ex-parte order was passed by the AO, which

was partly upheld by the CIT(A). He requested that the additional evidence filed

by the assessee may be admitted and the matter may be set aside to the AO

for fresh assessment.

7.1 The Ld. DR of the Department opposed the admission of the additional

evidence in absence of sufficient cause.

7.2 We have heard both the parties and perused the materials on record.

There is no dispute that there was a survey by the GST Department at the

premises of the assessee wherein the books of account, bills etc. have been

seized. The assessee was unable to provide the details in absence of books of

account and primary details. The assessee has enclosed the statements of Shri

Mukesh Nainmal Joshi and Shri Rishi Singh by the Senior Intelligence Officer,

DGGI, Pune Zonal Unit, which corroborates that there was survey action by the

GST Department in case of various persons. Therefore, the claim of the

assessee that he was prevented by sufficient cause to file complete details to

the AO is supported by credible evidence. Rule 29 permits ITAT to admit

additional evidence for any substantial cause. The intention behind the Rule is

that substantial justice should be done and the interest of justice should be the

overriding consideration. In view of the above facts and the statutory provision,

the additional evidence filed by the assessee are admitted. However, we find

7 ITA No. 8126, 8660/Mum/2025 Dashrath Singh that such documents and evidences were never examined by the AO to come

to a fair and reasonable conclusion on the impugned issues, on which the

additions were made him. Therefore, without discussing further on the merits

of the addition and the grounds raised in the appeal, in the interest of justice,

we deem it proper to set aside the order of CIT(A) and restore the matter to

the file of AO for fresh assessment after considering the additional evidences

filed by the assessee. The AO may call for further details and evidences, if he is

not satisfied with the additional evidence filed by the assessee. The assessee

is directed to furnish all the details as may be required by the AO. Accordingly,

the grounds are allowed for statistical purposes.

8.

We make it clear that we have not expressed any opinion on the merits

of the additions or the jurisdictional ground raised by the assessee. The AO shall

independently decide the issues in accordance with law.

9.

In the result, appeal is allowed for statistical purposes.

ITA No. 8126/Mum/2025

10.

We have already set aside the order of CIT(A) and restored the matter to

the file of AO for fresh assessment in accordance with law. Hence, there is no

need for separate adjudication on the grounds raised by the Revenue. The AO

shall consider all these issues while passing the fresh assessment order.

11.

In combined result, both the appeals are allowed for statistical purposes.

Order pronounced in the open court on 29.05.2026.

8 ITA No. 8126, 8660/Mum/2025 Dashrath Singh Sd/- Sd/- (SANDEEP GOSAIN) (BIJAYANANDA PRUSETH) Judicial Member Accountant Member

Mumbai : Dated: 29.05.2026

Copy of the order forwarded to : 1. The appellant 2. The respondent 3. CIT-concerned 4. DR, ITAT, Mumbai 5. Guard file By order (Dy/Asstt. Registrar) ITAT, Mumbai.

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