MUKESH GUPTA ,DELHI vs. INCOME TAX OFFICER, WARD - 36(1), DELHI, DELHI

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ITA 1077/DEL/2026Status: DisposedITAT Delhi26 May 2026AY 2018-1912 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal considered the submissions of both parties and the documents on record. It acknowledged the settled accounting principle that in cases of running deposits and withdrawals, a holistic approach considering both is fair and just. The calculation of peak values helps avoid excessive additions by accounting for the possibility that deposits might originate from earlier withdrawals. Therefore, the Tribunal set aside the impugned orders. The matter was remanded back to the Assessing Officer (AO) with a direction to verify the peak balances, as filed by the assessee and extracted in the order, with the bank account entries. Only the verified peak balance was to be added in the hands of the assessee. This decision was to apply mutatis mutandis to AY 2018-19 as well. No issue was expressly left undecided.

What were the facts?

The assessee, Mukesh Gupta, filed two appeals before the Income Tax Appellate Tribunal (ITAT) challenging the orders of the Commissioner of Income Tax (Appeals) - National Faceless Assessment Centre (NFAC) for Assessment Years (AY) 2017-18 and 2018-19. The appeals were filed with a delay of 61 days, which was condoned by the Tribunal due to the severe health issues of the assessee's spouse. The core of the dispute involved additions made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961, amounting to Rs. 78,07,167/- in AY 2017-18, related to alleged bogus entries for purchases and sales in a bank account held with M/s Shri Renuka Mata Multi State Urban Cooperative Credit Society Limited. The assessee claimed to be a commission agent depositing and withdrawing cash on behalf of others. The CIT(A) had upheld the AO's action, noting the absence of representation before them.

What were the issues?

1. Whether the addition made by the Assessing Officer under Section 69A of the Income Tax Act, 1961, on account of total credit in the bank account, is justified, or if the peak balance should be considered for addition? (Mixed question of law and fact) Assessee's Contention: The assessee argued that since the bank account showed continuous deposits and withdrawals, it would be fair and proper to add only the peak balances for the respective assessment years. The assessee provided detailed calculations of peak balances for AY 2017-18 (Rs. 6,43,228/-) and AY 2018-19 (Rs. 13,21,342/-). Revenue's Contention: The Revenue supported the orders of the lower authorities. The learned Departmental Representative (DR) submitted that the assessee should have appeared before the Ld. CIT(A) and proved the deposits and withdrawals to justify the impugned additions.

Which sections of the Income-tax Act were involved?

Section 69A,Section 250,Section 147,Section 148,Section 249(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI

Before: SHRI MAHAVIR SINGH

For Appellant: Shri Ashwini Kumar, CA & Shri Ankur Agarwal, CA
For Respondent: Ms. Monika Singh, CIT-DR
Hearing: 26.05.2026

Heard together (2 matters)

I.T.A No. 1076/Del/2026
I.T.A No. 1077/Del/2026

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A No.1076/Del/2026 Assessment Year: 2017-18 MUKESH GUPTA, Vs. INCOME TAX OFFICER, 130/2, Rameshwar Nagar Ward-36(1), Azad Pur, New Delhi, Delhi 110002. Delhi 110033. PAN No. AFCPG7890R Appellant Respondent & I.T.A No.1077/Del/2026 Assessment Year: 2018-19 MUKESH GUPTA, Vs. INCOME TAX OFFICER, 130/2, Rameshwar Nagar Ward-36(1), Azad Pur, New Delhi, Delhi 110002. Delhi 110033. PAN No. AFCPG7890R Appellant Respondent Assessee by Shri Ashwini Kumar, CA & Shri Ankur Agarwal, CA Revenue by Ms. Monika Singh, CIT-DR Date of hearing: 26.05.2026 Pronouncement on 26.05.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER:

1.

This is a batch of two appeals of the same assessee. Both these appeals are reportedly delayed by 61 days (as per the ITAT Registry). The assessee has filed identically worded condonation petitions in both

the cases. For the sake of convenience, the petition in ITA No.1076 (AY 2017-18) is extracted as under: Date: 22.01.2026 The Registrar Hon'ble Income Tax Appellate Tribunal, New Delhi Sub: APPLICATION FOR CONDONATION OF DELAY IN FILING APPEAL AGAINST ORDER PASSED U/S 250 R.W.S. 147 OF THE INCOME-TAX ACT, 1961 FOR ASSESSMENT YEAR 2017-18 IN THE CASE OF SMT MUKESH GUPTA - AFCPG7890R Sir, In connection with the above, the Appellant, most respectfully, submits as under- 1. That the order dated 24.09.2025 passed u/s 250 r.ws. 147 of the Income-tax Act 1961 by the Ld. Commissioner of Income Tax (Appeals), NFAC was served upon the Appellant on 24.09.2025. 2. That the appeal against the same was due to be filed before Hon'ble Income Tax Appellate Tribunal, New Delhi in accordance with the provisions of the Income-tax Act, 1961 on or before 23.11.2025. 3. That the appeal against the afore said order is being filed late whereas the same was due to be filed on 23.11.2025 resulting in a delay of 60 days. 4. That the reason for not filing the appeal is on account of illness and severe health issues of the Spouse of Appellant. 5. After recovery from illness of her spouse, the Appellant contacted his Counsel, got the appeal prepared, paid filing fees, signed the appeal papers and deposited the appeal immediately thereafter. An affidavit narrating and affirming these facts is enclosed. 6. Consequently, he was prevented by sufficient cause for not filing the appeal within the statutory time and the same occurred only because of the ill health of the Spouse of Appellant. 7. That Your Honour is empowered u/s 249(3) of the Act to condone delay in filing appeal. PRAYER 8. In the circumstances it is respectfully prayed that the delay in filing the appeal may very kindly be condoned and the appeal be kindly admitted for adjudication. Thanking you, Yours faithfully, Sd/- (MUKESH GUPTA)

1.1 Considering the reasons given in the said petition, the delay in both the appeals is hereby condoned and the appeals are admitted for adjudication.

2.

The Appeal for AY 2017-18 arises from order dated 24.09.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A)-NFAC, Delhi. The Appeal for AY 2018-19 arises from order dated 24.09.2025, passed u/s 250 of the Act, by NFAC, Delhi. In both these appeals the issues are similar and hence these matters are being disposed of through a single order.

2.1 For the sake of convenience the appeal for AY 2018-19 is being taken as the lead case. The assessee was found to have entered into a transaction with one M/s Shri Renuka Mata Multi State Urban Cooperative Credit Society Limited. There was an allegation that the assessee was involved in providing bogus entries for purchases and sales. The Ld. AO disbelieved the claim of the assessee that he was a commission agent who was routinely depositing and withdrawing cash from the said bank account on behalf of others. Thereafter, the Ld. AO added the total credit amount in the said bank account totaling to Rs.78,07,167/- u/s 69A of the Act.

2.2 Aggrieved with this action, the assessee approached the Ld. CIT(A) where also he could not succeed mainly on the ground that there was no representation before the first appellate authority.

2.3 Further aggrieved, the assessee has approached the ITAT with grounds which challenge the proceedings initiated through notice u/s 148 of the Act and has also challenged the addition on merit.

3.

Before us the Ld. AR filed a calculation of peak balance for both the years and requested that since the bank accounts showed continuous deposits and withdrawals by the assessee, hence, it would be fair and proper to add the peak balances only. For the sake of capturing the details of deposits and withdrawals the calculation sheets filed by the Ld. AR deserve to be extracted as under: - The Ld. AR explained that for AY 2017-18 the peak balance was on 5.11.2016 at Rs.6,43,228/-. Similarly for AY 2018-19 the peak balance was on 27.06.2017 at Rs.13,21,342/-. It was the submission that if at all any addition has to be made then it is only these amounts which should justifiably be considered for the same.

3.1 The ld. DR supported the orders of authorities below and stated that the assessee should have appeared before the Ld. CIT(A) and proved the deposits and withdrawals so that the impugned additions could have been justifiably addressed.

4. We have carefully considered the submissions of Ld. AR/DR. We have also perused the documents before us. It is a settled position in accounts that in case where there are running deposits and withdrawals, which have not been explained to the satisfaction of the Ld. AO then the most fair and just approach is to not only consider the deposits but to also consider the withdrawals in a holistic manner. The calculation of peak values in such cases rules out the possibility of excessive additions without considering the fact that deposits could also be from earlier withdrawals made. Accordingly, we set aside the impugned order and remand this matter back to the file of Ld. AO with the direction that the peak balance filed before us and extracted in the body of this order, deserves to be cross verified with the entries in the bank account and thereafter only the peak balance needs to be added in the hands of the assessee.

4.1 This decision shall apply mutatis mutandis to AY 2018-19 as well.

5.

In the result, both these appeals are partly allowed.

Order pronounced in the open court on 26.05.2026

Sd/- Sd/- (MAHAVIR SINGH) (SANJAY AWASTHI) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 01.06.2026 *Kavita Arora, Sr. P.S.

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