KALPANA PIYUSH SANGHVI ,MUMBAI vs. ITO WARD 2(5), THANE

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J(SMC)” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 8337/MUM/2025 Assessment Year: 2017-18

Kalpana Piyush Sanghvi, 309, Income Tax Officer, Ward 2(5), Ostwal Shopping Center, Thane, Ashar IT Park, 6th Floor, Vs. Bhayander, East, Thane, Road No.16Z, Wagle Industrial Maharashtra – 401105. Estate, Thane (West), Thane – 400604, Maharashtra. PAN NO.AAPPS 8284 D Appellant Respondent

Assessee by : Shri. Mahadji Phalke, CA. Revenue by : Shri Mukesh Thakwani (SR DR)

Date of Hearing : 17/06/2026 : 22/06/2026 Date of pronouncement ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against the order dated 24.09.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], for Assessment Year 2017–18. The solitary grievance raised in the present appeal relates to the sustenance of addition of ₹16,50,000/-

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treated as unexplained money under Section 69A of the Income-tax treated as unexplained money under Section 69A of the Income treated as unexplained money under Section 69A of the Income Act, 1961 (“the Act”).

2.1 During the course of assessment proceedings, the Assessing During the course of assessment proceedings, the Assessing During the course of assessment proceedings, the Assessing Officer (“AO”) noticed cash deposits aggregating to iced cash deposits aggregating to iced cash deposits aggregating to ₹16,50,000/- made during the demonetisation period from 09.11.2016 to made during the demonetisation period from 09.11.2016 to made during the demonetisation period from 09.11.2016 to 30.12.2016. The assessee was called upon to explain the source of 30.12.2016. The assessee was called upon to explain the source of 30.12.2016. The assessee was called upon to explain the source of such deposits and to furnish supporting evidence, including details such deposits and to furnish supporting evidence, including details such deposits and to furnish supporting evidence, including details of sales, cash sales and business transactions for the relevant year es and business transactions for the relevant year es and business transactions for the relevant year as well as preceding years. Since no satisfactory explanation or as well as preceding years. Since no satisfactory explanation or as well as preceding years. Since no satisfactory explanation or supporting evidence was furnished before the AO, the amount of supporting evidence was furnished before the AO, the amount of supporting evidence was furnished before the AO, the amount of ₹16,50,000/- was treated as unexplained money and added under was treated as unexplained money and added under was treated as unexplained money and added under Section 69A of the Act while framing the assessment under Section the Act while framing the assessment under Section the Act while framing the assessment under Section 144 of the Act.

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2.2 In appeal, the assessee sought to explain that the impugned In appeal, the assessee sought to explain that the impugned In appeal, the assessee sought to explain that the impugned cash deposits had not emanated from her own sources. It was cash deposits had not emanated from her own sources. It was cash deposits had not emanated from her own sources. It was contended that the cash had been deposited by her husband, who contended that the cash had been deposited by her husband, who contended that the cash had been deposited by her husband, who had allegedly received cash from certain entities and thereafter ad allegedly received cash from certain entities and thereafter ad allegedly received cash from certain entities and thereafter deposited the same into various bank accounts, including that of deposited the same into various bank accounts, including that of deposited the same into various bank accounts, including that of the assessee. According to the assessee, the amounts so deposited the assessee. According to the assessee, the amounts so deposited the assessee. According to the assessee, the amounts so deposited were subsequently transferred to the bank accounts of the were subsequently transferred to the bank accounts of the were subsequently transferred to the bank accounts of the respective entities and commission income was earned by her pective entities and commission income was earned by her pective entities and commission income was earned by her husband for facilitating such transactions. In support of this husband for facilitating such transactions. In support of this husband for facilitating such transactions. In support of this explanation, an affidavit purportedly executed by the husband of explanation, an affidavit purportedly executed by the husband of explanation, an affidavit purportedly executed by the husband of the assessee was produced before the Ld. CIT(A). the assessee was produced before the Ld. CIT(A).

2.3 The Ld. CIT(A), h The Ld. CIT(A), however, declined to admit the affidavit on the owever, declined to admit the affidavit on the ground that it constituted additional evidence within the meaning of ground that it constituted additional evidence within the meaning of ground that it constituted additional evidence within the meaning of Rule 46A of the Income Rule 46A of the Income-tax Rules, 1962. Since no application tax Rules, 1962. Since no application invoking Rule 46A had been filed and no case was made out under invoking Rule 46A had been filed and no case was made out under invoking Rule 46A had been filed and no case was made out under any of the conditions stipulated therein, the additional evidence was itions stipulated therein, the additional evidence was itions stipulated therein, the additional evidence was rejected. The Ld. CIT(A) further observed that even otherwise the rejected. The Ld. CIT(A) further observed that even otherwise the rejected. The Ld. CIT(A) further observed that even otherwise the affidavit was unsupported by corroborative evidence such as bank affidavit was unsupported by corroborative evidence such as bank affidavit was unsupported by corroborative evidence such as bank statements or documentary material demonstrating movement of statements or documentary material demonstrating movement of statements or documentary material demonstrating movement of funds to the alleged beneficiary entities. Consequently, the addition the alleged beneficiary entities. Consequently, the addition the alleged beneficiary entities. Consequently, the addition under Section 69A was confirmed. under Section 69A was confirmed. The relevant findings of the relevant findings of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:- “5.2. Ground 2

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Vide this ground, the Appellant has objected to the addition of Rs. Vide this ground, the Appellant has objected to the addition of Rs. Vide this ground, the Appellant has objected to the addition of Rs. 16,50,000/-u/s 69A of the Act. In this regard, the Appellant has submitted that u/s 69A of the Act. In this regard, the Appellant has submitted that u/s 69A of the Act. In this regard, the Appellant has submitted that this cash was deposited by her husband and she was not aware of this. The this cash was deposited by her husband and she was not aware of this. The this cash was deposited by her husband and she was not aware of this. The Appellant has submitted copy of affidavit from her husband wherein it has been Appellant has submitted copy of affidavit from her husband wherein it has been Appellant has submitted copy of affidavit from her husband wherein it has been stated that her husband has rece stated that her husband has received cash from some entities and has deposited ived cash from some entities and has deposited in various bank accounts including the bank account of Appellant. The cash so in various bank accounts including the bank account of Appellant. The cash so in various bank accounts including the bank account of Appellant. The cash so deposited were subsequently transferred to the respective bank accounts of the deposited were subsequently transferred to the respective bank accounts of the deposited were subsequently transferred to the respective bank accounts of the entities from whom cash was received. The Appellant entities from whom cash was received. The Appellant has submitted that her has submitted that her husband received certain commission for providing this facility. The Appellant has husband received certain commission for providing this facility. The Appellant has husband received certain commission for providing this facility. The Appellant has submitted a copy of affidavit submitted a copy of affidavit signed by her husband Shri Plyush Singh signed by her husband Shri Plyush Singh 5.2.1. I have considered the submissions made by the Appellant I have considered the submissions made by the Appellant. At the outset it I have considered the submissions made by the Appellant is stated the affidavit from her husband was not submitted before the AO inspite is stated the affidavit from her husband was not submitted before the AO inspite is stated the affidavit from her husband was not submitted before the AO inspite of issue of notice u/s 142(1) and the SCN. So, the affidavit is in the nature of of issue of notice u/s 142(1) and the SCN. So, the affidavit is in the nature of of issue of notice u/s 142(1) and the SCN. So, the affidavit is in the nature of additional evidence additional evidence and can be admitted provided conditions and can be admitted provided conditions as mentioned in Rule 46A are satisfied sfied. In this regard, it would be imperative to . In this regard, it would be imperative to refer to the provisions contained in rule 46A of the Income Tax Rules, 1962 which is being provisions contained in rule 46A of the Income Tax Rules, 1962 which is being provisions contained in rule 46A of the Income Tax Rules, 1962 which is being reproduced as under: reproduced as under: "Rule 46A. (1) The Appellant shall not be entitled to produce before "Rule 46A. (1) The Appellant shall not be entitled to produce before "Rule 46A. (1) The Appellant shall not be entitled to produce before the [Deputy [Deputy Commissioner (Appeals)), [or, as the case may be, the [or, as the case may be, the Commissioner Commissioner (Appeals)], (Appeals)], any any evidence, evidence, whether whether oral oral or or documentary, documentary, other than the evidence produced by him during the other than the evidence produced by him during the course of proceedings before the [Assissing Officer], except in the course of proceedings before the [Assissing Officer], except in the course of proceedings before the [Assissing Officer], except in the following circumstances, name following circumstances, namely:- (a) where the [Assessing Officer] has refused to admit evidence (a) where the [Assessing Officer] has refused to admit evidence (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted: or which ought to have been admitted: or (b) where the Appellant was prevented by sufficient cause from (b) where the Appellant was prevented by sufficient cause from (b) where the Appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the producing the evidence which he was called upon to produce by the producing the evidence which he was called upon to produce by the [Assessing Officer]; [Assessing Officer];or (c) where the Appellant was prevented by sufficient cause from (c) where the Appellant was prevented by sufficient cause from (c) where the Appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is producing before the [Assessing Officer] any evidence which is producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal or relevant to any ground of appeal or (d) where the [Assessing Officer) has made the order appealed (d) where the [Assessing Officer) has made the order appealed (d) where the [Assessing Officer) has made the order appealed against without giving suffic against without giving sufficient opportunity to the Appellant to ient opportunity to the Appellant to adduce evidence relevant to any ground of appeal. adduce evidence relevant to any ground of appeal. adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the (2) No evidence shall be admitted under sub (2) No evidence shall be admitted under sub [Deputy Commissioner (Appeals)] [or, as the case may be, the [Deputy Commissioner (Appeals)] [or, as the case may be, the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)) records in writing the reasons for its Commissioner (Appeals)) records in writing t Commissioner (Appeals)) records in writing t admission. admission.

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(3) The [Deputy Commissioner (Appeals)] [or, as the case may be, (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any the Commissioner (Appeals)] shall not take into account any the Commissioner (Appeals)] shall not take into account any evidence produced under sub evidence produced under sub-rule (1) unless the [Assessing Officer) rule (1) unless the [Assessing Officer) has been allowed a reasonable opp has been allowed a reasonable opportunity-- (a) to examine the evidence or document or to cross (a) to examine the evidence or document or to cross (a) to examine the evidence or document or to cross-examine the witness produced by the Appellant, or witness produced by the Appellant, or (b) to produce any evidence or document or any witness in rebuttal (b) to produce any evidence or document or any witness in rebuttal (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the Appellant. of the additional evidence produced by the Appellant. of the additional evidence produced by the Appellant. (4) Nothing contained (4) Nothing contained in this rule shall affect the power of the in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the [Deputy Commissioner (Appeals)] [or, as the case may be, the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, Commissioner (Appeals)] to direct the production of any document, Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the or the examination of any witness, to enable him to dispose of the or the examination of any witness, to enable him to dispose of the appeal, or for any appeal, or for any other substantial cause including the other substantial cause including the enhancement of the assessment or penalty (whether on his own enhancement of the assessment or penalty (whether on his own enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer]) under clause (a) motion or on the request of the [Assessing Officer]) under clause (a) motion or on the request of the [Assessing Officer]) under clause (a) of sub- -section (1) of section 251 or the imposition of penalty under section (1) of section 251 or the imposition of penalty under section 271." section 271." A perusal of the above provisions of Rule 46A would reveal that Rule 46A(1) is rusal of the above provisions of Rule 46A would reveal that Rule 46A(1) is rusal of the above provisions of Rule 46A would reveal that Rule 46A(1) is negatively worded and precludes an appellant from filing any evidence in the negatively worded and precludes an appellant from filing any evidence in the negatively worded and precludes an appellant from filing any evidence in the nature of an additional evidence, other than those which have been filed before nature of an additional evidence, other than those which have been filed before nature of an additional evidence, other than those which have been filed before an AO, except in the cir an AO, except in the circumstances laid out in Rule 46A(1). Thus, it is clear that cumstances laid out in Rule 46A(1). Thus, it is clear that before the first Appellate Authority an Appellant can rely on the evidence filed before the first Appellate Authority an Appellant can rely on the evidence filed before the first Appellate Authority an Appellant can rely on the evidence filed before the AO and incase an Appellant so chooses to furnish any evidence other before the AO and incase an Appellant so chooses to furnish any evidence other before the AO and incase an Appellant so chooses to furnish any evidence other than the ones filed by him before the than the ones filed by him before the AO, then in that situation the Appellant AO, then in that situation the Appellant must make out a case as falling under any of the four limbs of rule 46A(1). It must make out a case as falling under any of the four limbs of rule 46A(1). It must make out a case as falling under any of the four limbs of rule 46A(1). It therefore emerges that without stating a case under Rule 46A(1), an appellant therefore emerges that without stating a case under Rule 46A(1), an appellant therefore emerges that without stating a case under Rule 46A(1), an appellant cannot file additional evidence. A natural corollary of t cannot file additional evidence. A natural corollary of the same is that in the he same is that in the absence of any case made out by an Appellant under Rule 46A(1), the first absence of any case made out by an Appellant under Rule 46A(1), the first absence of any case made out by an Appellant under Rule 46A(1), the first Appellate Authority cannot consider the additional evidence filed before him. In Appellate Authority cannot consider the additional evidence filed before him. In Appellate Authority cannot consider the additional evidence filed before him. In this regard, it would be pertinent to refer to the ratio of the following judgments: this regard, it would be pertinent to refer to the ratio of the following judg this regard, it would be pertinent to refer to the ratio of the following judg In the case of CIT vs. Manish Build Well Pvt. Ltd. [ITA no.928/2011 dated In the case of CIT vs. Manish Build Well Pvt. Ltd. [ITA no.928/2011 dated In the case of CIT vs. Manish Build Well Pvt. Ltd. [ITA no.928/2011 dated 15/11/2011], it was held/averred, as follows, by the Hon'ble Delhi High Court: 15/11/2011], it was held/averred, as follows, by the Hon'ble Delhi High Court: 15/11/2011], it was held/averred, as follows, by the Hon'ble Delhi High Court: "23. It is for the aforesaid reason that Rule 46A starts in a "23. It is for the aforesaid reason that Rule 46A starts in a "23. It is for the aforesaid reason that Rule 46A starts in a negative manner by saying that an negative manner by saying that an appellant before the CIT (A) appellant before the CIT (A) shall not be entitled to produce before him any evidence, whether shall not be entitled to produce before him any evidence, whether shall not be entitled to produce before him any evidence, whether oral or documentary, other than the evidence adduced by him oral or documentary, other than the evidence adduced by him oral or documentary, other than the evidence adduced by him before the assessing officer. After making such a general before the assessing officer. After making such a general before the assessing officer. After making such a general statement, which is in consonance with the statement, which is in consonance with the principle stated in the principle stated in the above judgment, exceptions have been carved out that in certain above judgment, exceptions have been carved out that in certain above judgment, exceptions have been carved out that in certain circumstances it would be open to the CIT (A) to admit additional circumstances it would be open to the CIT (A) to admit additional circumstances it would be open to the CIT (A) to admit additional evidence. Therefore, additional evidence can be produced at the evidence. Therefore, additional evidence can be produced at the evidence. Therefore, additional evidence can be produced at the

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first appellate stage when conditions first appellate stage when conditions stipulate in the Rule 46A are stipulate in the Rule 46A are satisfied and a finding is recorded. satisfied and a finding is recorded. We are highlighting these aspects only to press home the point We are highlighting these aspects only to press home the point We are highlighting these aspects only to press home the point that the conditions prescribed in Rule 46A must be shown to exist that the conditions prescribed in Rule 46A must be shown to exist that the conditions prescribed in Rule 46A must be shown to exist before additional evidence is admitted and every procedural before additional evidence is admitted and every procedural before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with requirement mentioned in the Rule has to be strictly complied with requirement mentioned in the Rule has to be strictly complied with so that the Rule is meaningfully exercised and not exercised in a so that the Rule is meaningfully exercised and not exercised in a so that the Rule is meaningfully exercised and not exercised in a routine or cursory manner. A distinction should be recognized and routine or cursory manner. A distinction should be recognized and routine or cursory manner. A distinction should be recognized and maintained between a case where the assessee invokes Rule 46A to maintained between a case where the assessee invokes Rule 46A to maintained between a case where the assessee invokes Rule 46A to adduce additional evidence before the CIT (A) and a case wh adduce additional evidence before the CIT (A) and a case wh adduce additional evidence before the CIT (A) and a case where the CIT (A), without being prompted by the assessee, while dealing with CIT (A), without being prompted by the assessee, while dealing with CIT (A), without being prompted by the assessee, while dealing with the appeal, considers it fit to cause or make a further enquiry by the appeal, considers it fit to cause or make a further enquiry by the appeal, considers it fit to cause or make a further enquiry by virtue of the powers vested in him under sub virtue of the powers vested in him under sub-Section (4) of Section Section (4) of Section 250. It is only when he exercises his statuto 250. It is only when he exercises his statutory suo moto power ry suo moto power under the above sub under the above sub-section that the requirements of Rule 46A need section that the requirements of Rule 46A need not be followed. On the other hand, whenever the assessee who is not be followed. On the other hand, whenever the assessee who is not be followed. On the other hand, whenever the assessee who is in appeal before him invokes Rule 46A, it is incumbent upon the in appeal before him invokes Rule 46A, it is incumbent upon the in appeal before him invokes Rule 46A, it is incumbent upon the CIT (A) to comply with the requirements of CIT (A) to comply with the requirements of the Rule strictly." the Rule strictly." In the case of ITO vs. Bajoria Foundation [254 ITR 065 (Cal); Para 6], it In the case of ITO vs. Bajoria Foundation [254 ITR 065 (Cal); Para 6], it In the case of ITO vs. Bajoria Foundation [254 ITR 065 (Cal); Para 6], it was held/averred, as follows, by the Hon'ble Calcutta High Court: was held/averred, as follows, by the Hon'ble Calcutta High Court: was held/averred, as follows, by the Hon'ble Calcutta High Court:

"It is trite that rules have to be framed within the scope of "It is trite that rules have to be framed within the scope of "It is trite that rules have to be framed within the scope of main, provision and that a rule, main, provision and that a rule, which travels beyond or is which travels beyond or is inconsistent with or is repugnant to the provisions in the inconsistent with or is repugnant to the provisions in the inconsistent with or is repugnant to the provisions in the statute will be ultra vires and void. Rule 46A was introduced statute will be ultra vires and void. Rule 46A was introduced statute will be ultra vires and void. Rule 46A was introduced with effect from 1 with effect from 1-4-1973 and as a result of insertion of 1973 and as a result of insertion of Section 295(2)(mm) in the income tax act which empowered Section 295(2)(mm) in the income tax act which em Section 295(2)(mm) in the income tax act which em Board to provide for the circumstances in which, the Board to provide for the circumstances in which, the Board to provide for the circumstances in which, the condition subject to which and the manner in which condition subject to which and the manner in which condition subject to which and the manner in which Commissioner (Appeals) may permit an Appellant to produce Commissioner (Appeals) may permit an Appellant to produce Commissioner (Appeals) may permit an Appellant to produce an evidence which the Appellant did not produce or was not an evidence which the Appellant did not produce or was not an evidence which the Appellant did not produce or was not allowed to produce before t allowed to produce before the assessing officer. However, he assessing officer. However, these powers of the Board, which have been vested in them these powers of the Board, which have been vested in them these powers of the Board, which have been vested in them for carrying out for the purposes of the Act, have to be for carrying out for the purposes of the Act, have to be for carrying out for the purposes of the Act, have to be exercised in such a judicious manner so as not to make any exercised in such a judicious manner so as not to make any exercised in such a judicious manner so as not to make any statutory provision redundant and nugatory. statutory provision redundant and nugatory. statutory provision redundant and nugatory. Respectfully following the ratio of the above judgments and in view of the fully following the ratio of the above judgments and in view of the fully following the ratio of the above judgments and in view of the fact that the Appellant has furnished the additional evidence without any fact that the Appellant has furnished the additional evidence without any fact that the Appellant has furnished the additional evidence without any accompanying petition making out a case under any of the four limbs of the Rule accompanying petition making out a case under any of the four limbs of the Rule accompanying petition making out a case under any of the four limbs of the Rule 46A(1) of the Income Tax Rules, 19 46A(1) of the Income Tax Rules, 1962, 1, being constrained by the procedural 62, 1, being constrained by the procedural rules and law laid out, cannot consider the additional evidence. Thus, in the rules and law laid out, cannot consider the additional evidence. Thus, in the rules and law laid out, cannot consider the additional evidence. Thus, in the absence of the requisite documentary evidences, the contention of the Appellant absence of the requisite documentary evidences, the contention of the Appellant absence of the requisite documentary evidences, the contention of the Appellant

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remained unverified and unproved solely due to the cond remained unverified and unproved solely due to the conduct and latches on the uct and latches on the part of the Appellant and these cannot be accepted. part of the Appellant and these cannot be accepted. Without prejudice, apart from the affidavit of Appellant's husband (which Without prejudice, apart from the affidavit of Appellant's husband (which Without prejudice, apart from the affidavit of Appellant's husband (which is not on any stamp paper and is also not notarised), there are no other is not on any stamp paper and is also not notarised), there are no other is not on any stamp paper and is also not notarised), there are no other supporting evidences submitted by supporting evidences submitted by the Appellant. The Appellant has not the Appellant. The Appellant has not submitted copy of bank statement to demonstrate that the cash deposit was submitted copy of bank statement to demonstrate that the cash deposit was submitted copy of bank statement to demonstrate that the cash deposit was subsequently transferred to the beneficiary party/entity. subsequently transferred to the beneficiary party/entity. Thus, in view of these facts, I find the explanation of the Appellant not Thus, in view of these facts, I find the explanation of the Appellant not Thus, in view of these facts, I find the explanation of the Appellant not satisfactory. Accordingly, I uphold the addition of Rs. 16,50,000/ Accordingly, I uphold the addition of Rs. 16,50,000/ Accordingly, I uphold the addition of Rs. 16,50,000/- made by the AO u/s 69A of the Act. Ground is, thus, dismissed. AO u/s 69A of the Act. Ground is, thus, dismissed.”

3.1 The learned Departm The learned Departmental Representative did not seriously ental Representative did not seriously oppose the request for restoration of the matter, subject to the oppose the request for restoration of the matter, subject to the oppose the request for restoration of the matter, subject to the assessee complying with the statutory requirements governing assessee complying with the statutory requirements governing assessee complying with the statutory requirements governing admission of additional evidence. admission of additional evidence.

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4.1 There is no dispute regarding the legal proposition that an There is no dispute regarding the legal proposition that an There is no dispute regarding the legal proposition that an appellant seeking to adduce evidence before the first appellate appellant seeking to adduce evidence before the first appellate appellant seeking to adduce evidence before the first appellate authority, which was not produced before the Assessing Officer, authority, which was not produced before the Assessing Officer, authority, which was not produced before the Assessing Officer, must satisfy the cond must satisfy the conditions prescribed under Rule 46A of the itions prescribed under Rule 46A of the Income-tax Rules, 1962. The rule is not an empty formality but tax Rules, 1962. The rule is not an empty formality but tax Rules, 1962. The rule is not an empty formality but embodies an important procedural safeguard intended to balance embodies an important procedural safeguard intended to balance embodies an important procedural safeguard intended to balance the rights of the assessee and the Revenue. Admission of additional the rights of the assessee and the Revenue. Admission of additional the rights of the assessee and the Revenue. Admission of additional evidence cannot be cla evidence cannot be claimed as a matter of right and must be imed as a matter of right and must be preceded by a demonstration of circumstances falling within the preceded by a demonstration of circumstances falling within the preceded by a demonstration of circumstances falling within the ambit of Rule 46A. The Ld. CIT(A), therefore, cannot be faulted for ambit of Rule 46A. The Ld. CIT(A), therefore, cannot be faulted for ambit of Rule 46A. The Ld. CIT(A), therefore, cannot be faulted for observing that, in the absence of a formal application and observing that, in the absence of a formal application and observing that, in the absence of a formal application and satisfaction of the statuto satisfaction of the statutory conditions, the affidavit filed by the ry conditions, the affidavit filed by the assessee could not be entertained as additional evidence. assessee could not be entertained as additional evidence. assessee could not be entertained as additional evidence.

4.2 At the same time, it is equally well settled that procedural At the same time, it is equally well settled that procedural At the same time, it is equally well settled that procedural prescriptions are intended to advance the cause of justice and not prescriptions are intended to advance the cause of justice and not prescriptions are intended to advance the cause of justice and not to defeat substantive r to defeat substantive rights. The appellate process under the Act is ights. The appellate process under the Act is designed not merely to test procedural compliance but also to designed not merely to test procedural compliance but also to designed not merely to test procedural compliance but also to ascertain the correct tax liability on the basis of relevant facts and ascertain the correct tax liability on the basis of relevant facts and ascertain the correct tax liability on the basis of relevant facts and evidence. Where an assessee seeks to place material evidence on evidence. Where an assessee seeks to place material evidence on evidence. Where an assessee seeks to place material evidence on record and the omission to do so at an earlier stage appears to have e omission to do so at an earlier stage appears to have e omission to do so at an earlier stage appears to have occurred on account of ignorance, inadvertence or other bona fide occurred on account of ignorance, inadvertence or other bona fide occurred on account of ignorance, inadvertence or other bona fide reasons, the matter deserves to be examined from the standpoint of reasons, the matter deserves to be examined from the standpoint of reasons, the matter deserves to be examined from the standpoint of substantial justice rather than technical rigidity. substantial justice rather than technical rigidity.

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4.3 In the present case, the explanation sought to be advanced by ent case, the explanation sought to be advanced by ent case, the explanation sought to be advanced by the assessee has not been examined on merits either by the the assessee has not been examined on merits either by the the assessee has not been examined on merits either by the Assessing Officer or by the Ld. CIT(A). The appellate authority Assessing Officer or by the Ld. CIT(A). The appellate authority Assessing Officer or by the Ld. CIT(A). The appellate authority declined to entertain the affidavit solely on procedural grounds declined to entertain the affidavit solely on procedural grounds declined to entertain the affidavit solely on procedural grounds under Rule 46A and consequently the veracity of the explanation d consequently the veracity of the explanation d consequently the veracity of the explanation remained untested. We also note that the Revenue has not remained untested. We also note that the Revenue has not remained untested. We also note that the Revenue has not demonstrated any prejudice that would be caused if the assessee is demonstrated any prejudice that would be caused if the assessee is demonstrated any prejudice that would be caused if the assessee is afforded one final opportunity to seek admission of the evidence in afforded one final opportunity to seek admission of the evidence in afforded one final opportunity to seek admission of the evidence in accordance with law. aw.

4.4 In our considered view, the ends of justice would be best In our considered view, the ends of justice would be best In our considered view, the ends of justice would be best served if the assessee is granted an opportunity to comply with the served if the assessee is granted an opportunity to comply with the served if the assessee is granted an opportunity to comply with the procedural requirements of Rule 46A and the claim is thereafter procedural requirements of Rule 46A and the claim is thereafter procedural requirements of Rule 46A and the claim is thereafter examined on its merits. Such a course would preserve the statutory examined on its merits. Such a course would preserve the s examined on its merits. Such a course would preserve the s safeguards available to the Revenue while simultaneously ensuring safeguards available to the Revenue while simultaneously ensuring safeguards available to the Revenue while simultaneously ensuring that a potentially relevant explanation is not shut out merely on that a potentially relevant explanation is not shut out merely on that a potentially relevant explanation is not shut out merely on account of a procedural lapse. account of a procedural lapse.

4.5 Accordingly, in the peculiar facts and circumstances of the Accordingly, in the peculiar facts and circumstances of the Accordingly, in the peculiar facts and circumstances of the case, and in further case, and in furtherance of the principles of natural justice, we ance of the principles of natural justice, we deem it appropriate to set aside the impugned order of the Ld. deem it appropriate to set aside the impugned order of the Ld. deem it appropriate to set aside the impugned order of the Ld. CIT(A) on the issue under consideration and restore the matter to CIT(A) on the issue under consideration and restore the matter to CIT(A) on the issue under consideration and restore the matter to his file.The assessee shall be at liberty to file an appropriate his file.The assessee shall be at liberty to file an appropriate his file.The assessee shall be at liberty to file an appropriate application under Rule 46A of the Income r Rule 46A of the Income-tax Rules, 1962, seeking tax Rules, 1962, seeking admission of the additional evidence along with all supporting admission of the additional evidence along with all supporting admission of the additional evidence along with all supporting documents relied upon. The Ld. CIT(A) shall examine the documents relied upon. The Ld. CIT(A) shall examine the documents relied upon. The Ld. CIT(A) shall examine the

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application in accordance with law and determine whether the application in accordance with law and determine whether the application in accordance with law and determine whether the conditions prescribed unde conditions prescribed under Rule 46A stand satisfied. In the event r Rule 46A stand satisfied. In the event the additional evidence is admitted, the Ld. CIT(A) shall afford due the additional evidence is admitted, the Ld. CIT(A) shall afford due the additional evidence is admitted, the Ld. CIT(A) shall afford due opportunity to the Assessing Officer by calling for a remand report opportunity to the Assessing Officer by calling for a remand report opportunity to the Assessing Officer by calling for a remand report and permitting such verification as may be considered necessary. and permitting such verification as may be considered necessary. and permitting such verification as may be considered necessary. Thereafter, the issue shall be adjudicated afresh by a reasoned and he issue shall be adjudicated afresh by a reasoned and he issue shall be adjudicated afresh by a reasoned and speaking order in accordance with law after granting adequate speaking order in accordance with law after granting adequate speaking order in accordance with law after granting adequate opportunity of hearing to both parties. opportunity of hearing to both parties.

4.6 We clarify that we have not expressed any opinion on the We clarify that we have not expressed any opinion on the We clarify that we have not expressed any opinion on the merits of the explanation offered by the assessee and all issues are merits of the explanation offered by the assessee and all issues are merits of the explanation offered by the assessee and all issues are left open for adjudication by the Ld. CIT(A). left open for adjudication by the Ld. CIT(A). The sole ground of the The sole ground of the assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes.

Order pronounced in the open Court on ounced in the open Court on 22/06 06/2026.

Sd/ Sd/- Sd/ Sd/- (ANIKESH BANERJEE ANIKESH BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 22/06/2026 M. Ranganath Vittal , Sr. P.S. M. Ranganath Vittal , Sr. P.S.

Kalpana Piyush Sanghvi 11 ITA No. 8337/MUM/2025

Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai