BAIJNATH RAM KHILAWAN YADAV ,MUMBAI vs. DCIT, 27(1), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.1584/MUM/2026 (A.Y. 2023-24) Baijinath Ram Khilawan v/s. Deputy Commissioner of Yadav बनाम Income Tax – 27(1), 13, Bldg. 5, Jasmine CHS, Vijay Mumbai – 400 703, Garden, Ghodbunder Road, Maharashtra Kasaravadavali S.O., Thane – 400 615, Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: AANPY6081E Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : None Revenueby : Shri Swapnil Choudhary, (Sr. DR)

Date of Hearing 28.04.2026 Date of Pronouncement 04.06.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 08.01.2026 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 05.03.2025 for the Assessment Year [A.Y.] 2023-24.

P a g e | 2 ITA No. 1584/Mum/2026 A.Y. 2023-24 Baijinath Ram Khilawan Yadav 2. The grounds of appeal are as under: Ground No. 1: Order passed by the learned CIT(A) in violation to the principle of natural justice is invalid and bad in law. 1.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in passing the impugned order without grant of sufficient opportunity of hearing thereby causing the impugned order passed in violation to principle of natural justice bad in law; 1.2 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in neither rejecting the adjournment applications filed by the appellant nor issued any notice to grant final opportunity of hearing before passing the impugned order thereby causing the impugned order passed arbitrarily to be set aside. WITHOUT PREJUDICE TO ABOVE Ground No. 2: Addition of alleged unexplained unsecured loans u/s. 68 of the Act 2.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in affirming action of the learned AO in treating certain unsecured loans outstanding as at year end as unexplained cash credit u/s. 68 of the Act inasmuch as all the supporting documents were duly submitted during the course of assessment proceedings thereby making the entire addition devoid of any merits liable to be deleted; 2.2 The learned CIT(A) failed to appreciate and ought to have held that balance outstanding as at year end on account of bill discounting services does not postulate "income in the hands of appellant. Ground No. 3: Addition of gifts received from relatives during the year u/s. 68 of the Act 3.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in affirming the action of the learned AO in treating gifts received during the year from relatives as unexplained cash credit u/s. 68 of the Act which is devoid of any merits and liable to be deleted; 3.2 The learned CIT(A) failed to appreciate and ought to have held that gifts received from relatives is not chargeable to tax.

P a g e | 3 ITA No. 1584/Mum/2026 A.Y. 2023-24 Baijinath Ram Khilawan Yadav Ground No. 4: Addition of alleged unexplained sundry creditors u/s. 68 of the Act 4.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in affirming action of the learned AO in treating alleged difference in sundry creditors balances as unexplained inasmuch as the same being genuine in nature ought to be deleted; 4.2 On the facts and in circumstances of the case and in law, the learned CIT(A) failed to appreciate that the sundry creditors balance are duly verified and audited and a mere inadvertent error in the submission filed during the course of assessment proceedings does not make it unexplained. Ground No. 5: Addition of immovable property value introduced in capital account u/s. 68 of the Act 5.1 On the facts and in circumstances of the case and in law, the learned CIT(A) erred in affirming action of the learned AO in treating the value of immovable property introduced in business as unexplained inasmuch as all the supporting details were duly filed during the course of assessment proceedings thereby making the entire addition devoid of any merits and liable to be deleted; 5.2. The learned CIT(A) failed to appreciate and ought to have held that introduction of immovable property from personal to business purpose does not postulate 'income' in the hands of appellant. Ground No. 6- Disallowance of interest expenditure u/s. 37(1) of the Act 6.1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in affirming action of the learned AO in disallowing interest expenditure u/s. 37(1) of the Act inasmuch as the same being incurred wholly and exclusively for the purpose of business ought to be allowed u/s. 37(1) of the Act. Ground No. 7-Disallowance of bill discounting charges u/s. 40(a)(ia) of the Act 7.1On the facts and circumstances of the case and in law, the learned CIT(A) erred in affirming action of the learned AO in disallowing interest expenditure in the nature of bill discounting charges u/s. 40(a)(ia) of the

P a g e | 4 ITA No. 1584/Mum/2026 A.Y. 2023-24 Baijinath Ram Khilawan Yadav Act inasmuch as the said expenditure being outside the scope of provisions u/s. 194A of the Act is liable to be deleted. Ground No. 8 - Disallowance of various business expenditure on adhoc basis u/s. 37(1) of the Act 8.1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in affirming action of the learned AO in disallowing adhoc 25% of various indirect business expenditure incurred during the year inasmuch as the same being incurred wholly and exclusively for the purpose of business ought to be allowed u/s. 37(1) of the Act; 8.2 The learned CIT(A) failed to appreciate that any expenditure cannot be disallowed on adhoc basis purely on the basis of surmises and conjectures. Ground No. 9-Incorrect levy of Interest u/s. 234B of the Act 9.1 The learned CIT(A) erred in affirming action of the learned AO in levy of interest u/s. 234B of the Act which is consequential in nature. Ground No. 10-Incorrect levy of Interest u/s. 234C of the Act 10.1 The learned CIT(A) erred in affirming action of the learned AO in levy of interest u/s. 234C of the Act which is consequential in nature. 3. Briefly stated facts of the case are that the assessee filed return of income of Rs 23,50,130/-which was selected for scrutiny. It was noticed that he had taken unsecured loan aggregating to Rs 6,48,17,433/- during the year from various concerns. In response to the query in this regard by the AO, it was claimed that such amounts represented short term liability only in the nature of „Current Liability‟ and not unsecured loans. The AO however, noted that the assessee failed to submit respective confirmations, bank statements ,copies of account etc. He found that a part of the amount of Rs 5,70,77,026/-was Unsecured loans, Rs. 10,000/- as Gift and Rs 13,91,250/- being Sundry Creditors. In absence

P a g e | 5 ITA No. 1584/Mum/2026 A.Y. 2023-24 Baijinath Ram Khilawan Yadav of proper reply, he added the entire sum of Rs 5,94,68,276/- cr. as Unexplained credit u/s 68 of the Act.

P a g e | 6 ITA No. 1584/Mum/2026 A.Y. 2023-24 Baijinath Ram Khilawan Yadav 6.1 Considering the entirety of the facts and the circumstances of the case, we are of the view that the assessee should be a given one more opportunity of hearing following the principles of natural justice and the matter should be verified and revisited at the level of ld.CIT(A). Accordingly, the entire matter is remanded back to the file of the appellate authority for de novo adjudication by him after affording sufficient opportunity of being heard to the assessee. In case of further non compliance by the assessee, he would be at liberty to decide the appeal based on materials on record and in accordance with law.

Order pronounced in the open court on 04/06/2026.

Sd/- Sd/- SAKTIJIT DEY PRABHASH SHANKAR (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 04.06.2026 Lubhna Shaikh / Steno

P a g e | 7 ITA No. 1584/Mum/2026 A.Y. 2023-24 Baijinath Ram Khilawan Yadav आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.