MR. MANISH BHAVANJI BHEDA ,MUMBAI vs. DCIT, CIRCLE 20(1), MUMBAI

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. 1295/MUM/2026 Assessment Year: 2017-18

Mr. Manish Bhavanji Bheda, Deputy Commissioner of Income 25, Vishwas Niwas No.9, Tax, 20(1), Assessment Unit of Vs. Acharya Donde Marg, Opp Income Tax, National Faceless Wadia Children Hospital, Assessment Centre, Delhi, Parel- 400012, Maharashtra. Kautilya Bhavan, BKC, Bandra East, Delhi. PAN NO. AEPKB 1041 E Appellant Respondent

: Shri Ravi Dasija, CA. Assessee by : Shri Mukesh Thakwani (SR DR) Revenue by

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

This appeal is directed against the order dated 15.01.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], for Assessment Year 2017–18, whereby the addition of ₹27,25,408/- made under Section 68 of the Income-tax Act, 1961 (“the Act”) and the validity of reassessment proceedings under Sections 147/148 of

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 2 ITA No. 1295/MUM/2026

the Act were upheld. the Act were upheld. The grounds raised by the assessee are raised by the assessee are reproduced as under: :

“1. In the facts and circumstances of the case and in law In the facts and circumstances of the case and in law, RS. the learned CIT (A) , RS. the learned CIT (A) erred in confirming an addition of Rs. 27,25,408 made u/s 68 in respect of erred in confirming an addition of Rs. 27,25,408 made u/s 68 in respect of erred in confirming an addition of Rs. 27,25,408 made u/s 68 in respect of alleged loans from Sanjay Shah/Jignesh Shah related parties. alleged loans from Sanjay Shah/Jignesh Shah related parties alleged loans from Sanjay Shah/Jignesh Shah related parties In the facts and circumstances of the case and in law it is submitted that the In the facts and circumstances of the case and in law it is submitted that the In the facts and circumstances of the case and in law it is submitted that the learned CIT (A) erred in confirming the impugned addition of Rs. 27,25,408/ erred in confirming the impugned addition of Rs. 27,25,408/- erred in confirming the impugned addition of Rs. 27,25,408/ made u/s 68 without appreciating that: made u/s 68 without appreciating that: a The said addition is based on only surmises and suspicions The said addition is based on only surmises and suspicions The said addition is based on only surmises and suspicions b There was no link at all between the Appellant and Mr. Sanjay b There was no link at all between the Appellant and Mr. Sanjay b There was no link at all between the Appellant and Mr. Sanjay Shah/Jignesh Shah Shah/Jignesh Shah c. The learned AO has not even given the names and amounts of enders c. The learned AO has not even given the names and amounts of enders c. The learned AO has not even given the names and amounts of enders which in his view were related to parties of Jignesh Shah Sanjay Shah which in his view were related to parties of Jignesh Shah Sanjay Shah which in his view were related to parties of Jignesh Shah Sanjay Shah c. The Sources of loa c. The Sources of loan were proved. d. The genuineness of transactions in the said loans was proved. d. The genuineness of transactions in the said loans was proved. d. The genuineness of transactions in the said loans was proved. e. No opportunit e. No opportunity to cross Mr Jignesh Shah or to rebut the adverse y to cross Mr Jignesh Shah or to rebut the adverse statements relied on by the learned AO was given. statements relied on by the learned AO was given. f Provisions of section 68 had no application f Provisions of section 68 had no application. g Provisions of section 115BBE had no application g Provisions of section 115BBE had no application. The learned CIT (A) erred in not holding that the impugn The learned CIT (A) erred in not holding that the impugned assessment made u/s ed assessment made u/s 147 was bad in law 147 was bad in law and time barred and was passed without giving a fair and time barred and was passed without giving a fair opportunity of hearing opportunity of hearing.” 2. The assessee, an individual, filed his return of income on The assessee, an individual, filed his return of income on The assessee, an individual, filed his return of income on 21.10.2017 declaring total income of ₹88,660/-. Subsequently, 21.10.2017 declaring total income of . Subsequently, based on information available on the departmental Insight Portal ormation available on the departmental Insight Portal ormation available on the departmental Insight Portal and investigation carried out by the Investigation Wing and I&CI, and investigation carried out by the Investigation Wing and I&CI, and investigation carried out by the Investigation Wing and I&CI, the Assessing Officer (“AO”) received information that the assessee the Assessing Officer (“AO”) received information that the assessee the Assessing Officer (“AO”) received information that the assessee had allegedly entered into high had allegedly entered into high-value suspicious transactions value suspicious transactions

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involving accommodation entries in the form of unsecured loans. ing accommodation entries in the form of unsecured loans. ing accommodation entries in the form of unsecured loans. The information indicated that certain entities controlled by Shri The information indicated that certain entities controlled by Shri The information indicated that certain entities controlled by Shri Jignesh Shah and Shri Sanjay Shah were engaged in providing Jignesh Shah and Shri Sanjay Shah were engaged in providing Jignesh Shah and Shri Sanjay Shah were engaged in providing accommodation entries such as unsecured loans, bogus capital accommodation entries such as unsecured loans, bogus capital accommodation entries such as unsecured loans, bogus capital gains, share premium entries and contrived losses through re premium entries and contrived losses through re premium entries and contrived losses through concerns having no genuine business activity. The assessee was concerns having no genuine business activity. The assessee was concerns having no genuine business activity. The assessee was identified as one of the beneficiaries who had allegedly received identified as one of the beneficiaries who had allegedly received identified as one of the beneficiaries who had allegedly received fictitious loans aggregating to ₹27,25,408/-. fictitious loans aggregating to

2.1 On the basis of the aforesaid On the basis of the aforesaid information, the AO formed a information, the AO formed a belief that income chargeable to tax had escaped assessment and belief that income chargeable to tax had escaped assessment and belief that income chargeable to tax had escaped assessment and accordingly initiated reassessment proceedings by issuing notice accordingly initiated reassessment proceedings by issuing notice accordingly initiated reassessment proceedings by issuing notice under Section 148 of the Act on 31.03.2021 after obtaining under Section 148 of the Act on 31.03.2021 after obtaining under Section 148 of the Act on 31.03.2021 after obtaining requisite sanction under Section 151 o requisite sanction under Section 151 of the Act. The assessee filed a f the Act. The assessee filed a return in response thereto declaring the same income as originally return in response thereto declaring the same income as originally return in response thereto declaring the same income as originally returned.

2.2 During the reassessment proceedings, During the reassessment proceedings, the ld AO brought the ld AO brought attention of the assessee to the list of loans appearing in tax audit attention of the assessee to the list of loans appearing in tax audit attention of the assessee to the list of loans appearing in tax audit report of assessee as under: e as under:

“

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 4 ITA No. 1295/MUM/2026

S/n Name of the Address of the Address of the PAN (if Amount of Whether the Maximum Whether the In case the lender or lender or available with loan or loan/deposit amount loan or loan or depositor depositor the assessee) deposit was squared up outstanding outstanding deposit was deposit was of the lender or taken or during the in the taken or taken or depositor accepted Previous Year account at accepted by accepted by any time cheque or cheque or during the bank draft or bank draft, Previous use of whether the Year electronic same was clearing taken or system accepted by through a an account bank payee account cheque or an account payee bank draft 1 SWAPNANJA MUMBAI - 500,000 No 1,000,000 Yes-Cheque Account LI SATAM payee cheque 2 CHETAN MUMBAI - 2,500,000 No 2,500,000 Yes-Cheque Account SHAH payee cheque 3 GAURAV MUMBAI - 200,000 Yes 200,000 Yes-Cheque Account VISARIA payee cheque 4 MUMBAI - 500,000 Yes 1,000,000 Yes-Cheque JITENDRA Account MOTANI payee cheque 5 MUMBAI - 500,000 No 500,000 Yes-Cheque PRANAV Account KAPADIA payee cheque 6 MUMBAI - 2,200,000 No 4,200,000 Yes-Cheque RAHUL Account VISARIA payee cheque 7 MUMBAI - 500,000 No 500,000 Yes-Cheque SUNIL Account JATHAR payee cheque

2.3 The assessee was called upon he assessee was called upon by the ld AO to establish the to establish the identity, creditworthiness and genuineness of the loan transactions. identity, creditworthiness and genuineness of the loan transactions. identity, creditworthiness and genuineness of the loan transactions. The assessee however sought copy of the documents supporting The assessee however sought copy of the documents supporting The assessee however sought copy of the documents supporting reasons recorded which was duly provided to the assessee on reasons recorded which was duly provided to the assessee on reasons recorded which was duly provided to the assessee on 26.02.2022 along with copy of approval u/s 151 of 26.02.2022 along with copy of approval u/s 151 of the Act. Though the Act. Though certain confirmations were furnished, the AO found the evidence certain confirmations were furnished, the AO found the evidence certain confirmations were furnished, the AO found the evidence

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 5 ITA No. 1295/MUM/2026

insufficient and ultimately treated the entire sum of ₹27,25,408/- insufficient and ultimately treated the entire sum of insufficient and ultimately treated the entire sum of as unexplained cash credit under Section 68 of the Act. as unexplained cash credit under Section 68 of the Act. as unexplained cash credit under Section 68 of the Act.

2.4 . Aggrieved, the assessee carried the matter in Aggrieved, the assessee carried the matter in appeal before Aggrieved, the assessee carried the matter in the Ld. CIT(A), challenging both the validity of reassessment and the Ld. CIT(A), challenging both the validity of reassessment and the Ld. CIT(A), challenging both the validity of reassessment and the addition on merits. The Ld. CIT(A), however, affirmed the action the addition on merits. The Ld. CIT(A), however, affirmed the action the addition on merits. The Ld. CIT(A), however, affirmed the action of the AO.

ounsel for the assessee filed a paper book 3. Before us the Ld. C Before us the Ld. Counsel for the assessee filed a containing pages 53. .

4.1 We have nevertheless examined the findings recorded by the We have nevertheless examined the findings recorded by the We have nevertheless examined the findings recorded by the Ld. CIT(A). The appellate authority has noted that the reassessment Ld. CIT(A). The appellate authority has noted that the reassessment Ld. CIT(A). The appellate authority has noted that the reassessment proceedings were initiated on the basis of specific and tangible proceedings were initiated on the basis of specific and tangible proceedings were initiated on the basis of specific and tangible information received from departmental sources indicating that the information received from departmental sources indicating information received from departmental sources indicating assessee had received accommodation entries in the form of assessee had received accommodation entries in the form of assessee had received accommodation entries in the form of fictitious loans amounting to ₹27,25,408/- through concerns fictitious loans amounting to through concerns controlled by Shri Jignesh Shah and Shri Sanjay Shah. The reasons controlled by Shri Jignesh Shah and Shri Sanjay Shah. The reasons controlled by Shri Jignesh Shah and Shri Sanjay Shah. The reasons recorded by the AO disclose a live nexus between the information recorded by the AO disclose a live nexus between the informati recorded by the AO disclose a live nexus between the informati received and the formation of belief regarding escapement of received and the formation of belief regarding escapement of received and the formation of belief regarding escapement of income. It has also been recorded that statutory approval under income. It has also been recorded that statutory approval under income. It has also been recorded that statutory approval under Section 151 was obtained from the competent authority and Section 151 was obtained from the competent authority and Section 151 was obtained from the competent authority and

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 6 ITA No. 1295/MUM/2026

adequate opportunity was afforded to the assessee during the adequate opportunity was afforded to the assessee during the adequate opportunity was afforded to the assessee during the proceedings. The relevant finding of the Ld. CIT(A) on the issue in The relevant finding of the Ld. CIT(A) on the issue in The relevant finding of the Ld. CIT(A) on the issue in dispute is reproduced as under: dispute is reproduced as under:-

“Decision: I have carefully considered the submission made by the appellant in I have carefully considered the submission made by the appellant in I have carefully considered the submission made by the appellant in appeal, the grounds including additional ground appeal, the grounds including additional ground and facts of the case as well as and facts of the case as well as gone through the observation and findings of the AO 's order dated 26 through the observation and findings of the AO 's order dated 26 through the observation and findings of the AO 's order dated 26-03-2022 .It is observed from the assessment order that the present case was reopened vide is observed from the assessment order that the present case was reopened vide is observed from the assessment order that the present case was reopened vide issuing notice u/s 148 of the Act vide dated 31 issuing notice u/s 148 of the Act vide dated 31-03-2021 after obtaining prior 2021 after obtaining prior approval of the Compet approval of the Competent Authority of Income Tax, u/s 151 based on the ent Authority of Income Tax, u/s 151 based on the credible information received credible information received from the departmental source source regarding the appellant having entered into the transaction of fic appellant having entered into the transaction of fictitious loan for Rs.27,25,408/ tious loan for Rs.27,25,408/- through the concerns of Jignesh Shah.. It is obser through the concerns of Jignesh Shah.. It is observed from the assessment order ved from the assessment order that an opportunity of being heard being provided to the appellant as per that an opportunity of being heard being provided to the appellant as per that an opportunity of being heard being provided to the appellant as per provision of section148A(b) of the Income Tax Act, 1961 before reopening of the provision of section148A(b) of the Income Tax Act, 1961 before reopening of the provision of section148A(b) of the Income Tax Act, 1961 before reopening of the case and in course of 148A proceeding after providing other details as sought, case and in course of 148A proceeding after providing other details as s case and in course of 148A proceeding after providing other details as s under proceeding u/s148A(d)with Specified Authority". And thereafter reopened under proceeding u/s148A(d)with Specified Authority". And thereafter reopened under proceeding u/s148A(d)with Specified Authority". And thereafter reopened by issuing notice the prior approval of the u/s.148 of the Act on 31-03-2021 for by issuing notice the prior approval of the u/s.148 of the Act on 31 by issuing notice the prior approval of the u/s.148 of the Act on 31 which the respective orders and notice are reproduced as under: which the respective orders and notice are reproduced as under: which the respective orders and notice are reproduced as under: Sir/ Madam/ M/s. Subject: Providing of reasons recorded for re Providing of reasons recorded for re-opening-reg. With regard to the ongoing reopening proceedings, and consequent to your filing With regard to the ongoing reopening proceedings, and consequent to your filing With regard to the ongoing reopening proceedings, and consequent to your filing of Return in response to notice u/s 148 of the IT Act, 1961, the reasons for of Return in response to notice u/s 148 of the IT Act, 1961, the reasons for of Return in response to notice u/s 148 of the IT Act, 1961, the reasons for reopening to your case are provided as under: reopening to your case are provided as under: Reasons for re Reasons for re-opening of assessment in the case of MANISH opening of assessment in the case of MANISH BHAVANJI BHEDA BHAVANJI BHEDA During the year under consideration, it is observed from the ITD, ITBA & Insight During the year under consideration, it is observed from the ITD, ITBA & Insight During the year under consideration, it is observed from the ITD, ITBA & Insight portals that the assessee has entered into high value suspicious transactions. portals that the assessee has entered into high value suspicious transactions. portals that the assessee has entered into high value suspicious transactions. The information in thi The information in this regard has been received on the Insight portal after s regard has been received on the Insight portal after investigation carried out by the office of the Investigation and the I&CI. It is found investigation carried out by the office of the Investigation and the I&CI. It is found investigation carried out by the office of the Investigation and the I&CI. It is found from the Verification module on the insight for F.Y.2016 from the Verification module on the insight for F.Y.2016-17 that the assessee has 17 that the assessee has done the high volume/value trans done the high volume/value transactions i.e. It was found during investigation actions i.e. It was found during investigation that both (Jignesh S Shah and Sanjay Shah) are managing and controlling that both (Jignesh S Shah and Sanjay Shah) are managing and controlling that both (Jignesh S Shah and Sanjay Shah) are managing and controlling multiple companies and concerns, which are not carrying out any genuine companies and concerns, which are not carrying out any genuine companies and concerns, which are not carrying out any genuine business activity. These concerns are involved into activity of providing business activity. These concerns are involved into activity of p business activity. These concerns are involved into activity of p accommodation entries of various kinds such as unsecured loans, share accommodation entries of various kinds such as unsecured loans, share accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, contrived losses etc. Various concerns were found to be premium, bogus gains, contrived losses etc. Various concerns were found to be premium, bogus gains, contrived losses etc. Various concerns were found to be non-existent at their addresses. existent at their addresses.

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The taxpayer is found to have entered into the transaction of fictitious loan for The taxpayer is found to have entered into the transaction of fi The taxpayer is found to have entered into the transaction of fi Rs.2725408/- through the concerns of Jignesh Shah. The taxpayer has filed the through the concerns of Jignesh Shah. The taxpayer has filed the through the concerns of Jignesh Shah. The taxpayer has filed the ITR for A.Y. 2017-18 declaring total income at Rs.88,660/ 18 declaring total income at Rs.88,660/-. It is found from the . It is found from the details provided that the assessee has resorted to suspicious mode of obtaining provided that the assessee has resorted to suspicious mode of obtaining provided that the assessee has resorted to suspicious mode of obtaining the gains and not offering the income to tax by not showing the details of income the gains and not offering the income to tax by not showing the details of income the gains and not offering the income to tax by not showing the details of income or claiming non allowable deduction. or claiming non allowable deduction. Thus, the income related to the above mentioned transactions remains Thus, the income related to the above mentioned transactions remains Thus, the income related to the above mentioned transactions remains undisclosed and the same are required to be considered in computing total undisclosed and the same are required to be considered in computing undisclosed and the same are required to be considered in computing income of the assessee. On the basis of this tangible information available on income of the assessee. On the basis of this tangible information available on income of the assessee. On the basis of this tangible information available on record, it is evidently clear that the income has remained undisclosed and not record, it is evidently clear that the income has remained undisclosed and not record, it is evidently clear that the income has remained undisclosed and not offered for tax. Hence, I have reasons to believe that income chargeable to tax offered for tax. Hence, I have reasons to believe that income chargeable to tax offered for tax. Hence, I have reasons to believe that income chargeable to tax more than Rs.1,000,000/ s.1,000,000/- has escaped assessment by reason of the failure on has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the part of the assessee to disclose fully and truly all material facts necessary for the part of the assessee to disclose fully and truly all material facts necessary for that assessment year i.e. for the subject A.Y. within the meaning of section 147 of assessment year i.e. for the subject A.Y. within the meaning of section 147 of assessment year i.e. for the subject A.Y. within the meaning of section 147 of the Income-tax Act, 1 tax Act, 1961.

Accordingly, proceedings u/s 147 needs to be initiated to assess the true and Accordingly, proceedings u/s 147 needs to be initiated to assess the true and Accordingly, proceedings u/s 147 needs to be initiated to assess the true and correct income of the assessee on the above issue and any other income which correct income of the assessee on the above issue and any other income which correct income of the assessee on the above issue and any other income which will be detected during the course of assessment proceedings. will be detected during the course of assessment proceedings. will be detected during the course of assessment proceedings. The notice u/s. 148 was issued af The notice u/s. 148 was issued after obtaining approval from appropriate ter obtaining approval from appropriate authority. In case of any objection to the reopening proceedings initiated, you are requested In case of any objection to the reopening proceedings initiated, you are requested In case of any objection to the reopening proceedings initiated, you are requested to file response latest by 29.10.2021 by 6:00 pm. In the absence of any response to file response latest by 29.10.2021 by 6:00 pm. In the absence of any response to file response latest by 29.10.2021 by 6:00 pm. In the absence of any response by the said date, it will be considered t by the said date, it will be considered that you have no objection to the hat you have no objection to the proceedings initiated. proceedings initiated.

PREETI HOODA PREETI HOODA CIRCLE 20(1), MUMBAI CIRCLE 20(1), MUMBAI In view of above, it is observed from the case history that the AO has followed the In view of above, it is observed from the case history that the AO has followed the In view of above, it is observed from the case history that the AO has followed the rules and regulation properly including recording of reason before initiation of rules and regulation properly including recording of reason before initiation of rules and regulation properly including recording of reason before initiation of proceeding u/s 147 of the Act, giving opportunity for giving explanation in this proceeding u/s 147 of the Act, giving opportunity for giving explanation in this proceeding u/s 147 of the Act, giving opportunity for giving explanation in this regard to appellant and thereafter obtaining prior approval of the Competent appellant and thereafter obtaining prior approval of the Competent appellant and thereafter obtaining prior approval of the Competent Authority of Income Tax, u/s 151 of the Act issued said notice to the appellant. Authority of Income Tax, u/s 151 of the Act issued said notice to the appellant. Authority of Income Tax, u/s 151 of the Act issued said notice to the appellant. Therefore I find no infirmity in the action of the AO as well as no violation of no infirmity in the action of the AO as well as no violation of no infirmity in the action of the AO as well as no violation of natural justice being done in as much as the initiation of proceeding made u/s natural justice being done in as much as the initiation of proceeding made u/s natural justice being done in as much as the initiation of proceeding made u/s 147 being made in accordance with law. 147 being made in accordance with law. In Ideal Associates v. Assistant Commissioner of Income tax K.R. SHRIRAM AND In Ideal Associates v. Assistant Commissioner of Income tax K.R. SHRIRAM In Ideal Associates v. Assistant Commissioner of Income tax K.R. SHRIRAM N.R. BORKAR, WRIT PETITION NO. 879 OF 2022 APRIL 7. 2022 of HIGH COURT N.R. BORKAR, WRIT PETITION NO. 879 OF 2022 APRIL 7. 2022 of HIGH COURT N.R. BORKAR, WRIT PETITION NO. 879 OF 2022 APRIL 7. 2022 of HIGH COURT OF BOMBAY, [2023] 146 taxmann.com 225 (Bombay) it is observed and decision OF BOMBAY, [2023] 146 taxmann.com 225 (Bombay) it is observed and decision OF BOMBAY, [2023] 146 taxmann.com 225 (Bombay) it is observed and decision

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 8 ITA No. 1295/MUM/2026

delivered by Hon'ble Judges Whether at stage when Assessing Officer reopens delivered by Hon'ble Judges Whether at stage when Assessing Officer reopens delivered by Hon'ble Judges Whether at stage when Assessing Officer reopens assessment, it is not necessa assessment, it is not necessary that material before Court should conclusively ry that material before Court should conclusively prove or establish that income has escaped assessment prove or establish that income has escaped assessment - Held, yes Held, yes Whether at this stage, test to be applied is only whether there was reason to Whether at this stage, test to be applied is only whether there was reason to Whether at this stage, test to be applied is only whether there was reason to believe that income had escaped assessment and whether Assessing Officer had believe that income had escaped assessment and whether Assess believe that income had escaped assessment and whether Assess tangible material before him for formation of that belief tangible material before him for formation of that belief - Held, yes Held, yes - Whether since in instant, case, there had been application of mind while Whether since in instant, case, there had been application of mind while Whether since in instant, case, there had been application of mind while granting approval under section 151, reopening of assessment was justified- granting approval under section 151, reopening of assessment was justified granting approval under section 151, reopening of assessment was justified Held, yes [Paras 2 and 3] and 3] In the case-Export Credit Guarantee Corporation of India Ltd. v Additional Export Credit Guarantee Corporation of India Ltd. v Additional Export Credit Guarantee Corporation of India Ltd. v Additional Commissioner of Income Commissioner of Income-tax* DR. D.Y. CHANDRACHUD AND A.A. SAYED, JJ. tax* DR. D.Y. CHANDRACHUD AND A.A. SAYED, JJ. WRIT PETITION NO. 502 OF 2012 WRIT PETITION NO. 502 OF 2012 JANUARY 10/11, 2013, HIGH COURT OF BOMBAY, [2013] 30 taxmann.com 211 JANUARY 10/11, 2013, HIGH COURT OF BOMBAY, [2013] 30 taxmann.com 211 JANUARY 10/11, 2013, HIGH COURT OF BOMBAY, [2013] 30 taxmann.com 211 (Bombay), it is observed and decision delivered by Hon'ble Judges bay), it is observed and decision delivered by Hon'ble Judges-Section 147 of bay), it is observed and decision delivered by Hon'ble Judges the Income-tax Act, 1961 tax Act, 1961-Income escaping assessment Income escaping assessment - Non-disclosure of primary facts - Change of opinion Change of opinion - Assessment year 2006-07 07 - Whether, even in absence of assessee's, failu absence of assessee's, failure to disclose material facts, where there is complete re to disclose material facts, where there is complete failure on part of Assessing Officer to apply his mind, during original assessment failure on part of Assessing Officer to apply his mind, during original assessment failure on part of Assessing Officer to apply his mind, during original assessment proceedings, to points on which assessment is sought to be reopened, it can be proceedings, to points on which assessment is sought to be proceedings, to points on which assessment is sought to be said that there is tangible material an said that there is tangible material and reason to believe that income has d reason to believe that income has escaped assessment escaped assessment - Held, yes In view of above the grounds relating to violation of natural justice vis-a vis In view of above the grounds relating to violation of natural justice vis In view of above the grounds relating to violation of natural justice vis initiation of proceedings u/s 147 of the Act stand dismissed. initiation of proceedings u/s 147 of the Act stand dismissed.” ” 4.2 The settled legal position is that at the The settled legal position is that at the stage of initiation of stage of initiation of reassessment proceedings, the Court or appellate authority is only reassessment proceedings, the Court or appellate authority is only reassessment proceedings, the Court or appellate authority is only required to examine whether there existed tangible material giving required to examine whether there existed tangible material giving required to examine whether there existed tangible material giving rise to a bona fide “reason to believe” that income chargeable to tax rise to a bona fide “reason to believe” that income chargeable to tax rise to a bona fide “reason to believe” that income chargeable to tax had escaped assessment. Suff had escaped assessment. Sufficiency or adequacy of such material iciency or adequacy of such material is not open to scrutiny at that stage. Once the formation of belief is is not open to scrutiny at that stage. Once the formation of belief is is not open to scrutiny at that stage. Once the formation of belief is founded upon relevant material and is not shown to be arbitrary or founded upon relevant material and is not shown to be arbitrary or founded upon relevant material and is not shown to be arbitrary or based on mere conjecture, the assumption of jurisdiction under based on mere conjecture, the assumption of jurisdiction under based on mere conjecture, the assumption of jurisdiction under Section 147 cannot be faulted. be faulted.

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 9 ITA No. 1295/MUM/2026

4.3 In the present case, no material has been placed before us to In the present case, no material has been placed before us to In the present case, no material has been placed before us to demonstrate that the reasons recorded were non demonstrate that the reasons recorded were non-existent, irrelevant existent, irrelevant or based on borrowed satisfaction. Nor has any argument been or based on borrowed satisfaction. Nor has any argument been or based on borrowed satisfaction. Nor has any argument been advanced to show that the statutory procedure prescribed under advanced to show that the statutory procedure pr advanced to show that the statutory procedure pr the Act was violated. In these circumstances, we find no infirmity in the Act was violated. In these circumstances, we find no infirmity in the Act was violated. In these circumstances, we find no infirmity in the conclusion reached by the Ld. CIT(A) upholding the validity of the conclusion reached by the Ld. CIT(A) upholding the validity of the conclusion reached by the Ld. CIT(A) upholding the validity of reassessment proceedings. reassessment proceedings. Accordingly, Ground No. 4 of the appeal Accordingly, Ground No. 4 of the appeal is dismissed.

challenge the addition of ₹27,25,408/- 5. Ground Nos. 1 and 2 Ground Nos. 1 and 2 challenge the addition of made under Section 68 of the Act in respect of unsecured loans made under Section 68 of the Act in respect of unsecured loans made under Section 68 of the Act in respect of unsecured loans alleged to have been received from entities connected with Shri alleged to have been received from entities connected with Shri alleged to have been received from entities connected with Shri Jignesh Shah and Shri Sanjay Shah. Jignesh Shah and Shri Sanjay Shah. The AO proceeded on the The AO proceeded on the basis that the assessee had fai basis that the assessee had failed to discharge the primary burden led to discharge the primary burden cast upon him under Section 68 of the Act. The Ld. CIT(A), while cast upon him under Section 68 of the Act. The Ld. CIT(A), while cast upon him under Section 68 of the Act. The Ld. CIT(A), while affirming the addition, observed that except for a few confirmations, affirming the addition, observed that except for a few confirmations, affirming the addition, observed that except for a few confirmations, the assessee had failed to produce adequate material establishing the assessee had failed to produce adequate material establishing the assessee had failed to produce adequate material establishing the identity of the the identity of the creditors, their creditworthiness and the creditors, their creditworthiness and the genuineness of the transactions. On that basis, the addition was genuineness of the transactions. On that basis, the addition was genuineness of the transactions. On that basis, the addition was sustained. The relevant finding of the Ld. CIT(A) is reproduced as The relevant finding of the Ld. CIT(A) is reproduced as The relevant finding of the Ld. CIT(A) is reproduced as under:-

“Decision :I have considered the submission of the appellant as above, pe Decision :I have considered the submission of the appellant as above, perused Decision :I have considered the submission of the appellant as above, pe statement of facts and gone through the AO's observation & decision. I find that statement of facts and gone through the AO's observation & decision. I find that statement of facts and gone through the AO's observation & decision. I find that the AO, under verification and observation is of opinion that the appellant being AO, under verification and observation is of opinion that the appellant being AO, under verification and observation is of opinion that the appellant being unable to discharging the primary onus of proving the loan creditors being unable to discharging the primary onus of proving the loan creditors being unable to discharging the primary onus of proving the loan creditors being genuine and the said the said loan creditors having the necessary loan creditors having the necessary identity and creditworthiness for lending the loan. In course of appeal proceeding I find, creditworthiness for lending the loan. In course of appeal proceeding I find, creditworthiness for lending the loan. In course of appeal proceeding I find, despite giving written submission, the appellant is unable to either establish the despite giving written submission, the appellant is unable to either establish the despite giving written submission, the appellant is unable to either establish the

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 10 ITA No. 1295/MUM/2026

genuineness of balance loan creditors genuineness of balance loan creditors apart from 5 creditors, for whom, the apart from 5 creditors, for whom, the appellant, despite availing ample hearing opportunity, being unable to submit the appellant, despite availing ample hearing opportunity, being unable to submit the appellant, despite availing ample hearing opportunity, being unable to submit the respective loan confirmation as well as other relevant details before the AO in respective loan confirmation as well as other relevant details before the AO in respective loan confirmation as well as other relevant details before the AO in course of scrutiny proceeding or justifiably explain wh course of scrutiny proceeding or justifiably explain what prevented the appellant at prevented the appellant filing the relevant documents in support of said loan creditors for proving the filing the relevant documents in support of said loan creditors for proving the filing the relevant documents in support of said loan creditors for proving the genuineness as well as business exigency before the AO in course of scrutiny genuineness as well as business exigency before the AO in course of scrutiny genuineness as well as business exigency before the AO in course of scrutiny proceedings.

In view of that considering the entire conspectus of the case I am of opinion that In view of that considering the entire conspectus of the case I am of opinion that In view of that considering the entire conspectus of the case I am of opinion that the appellant is unable to establish beyond doubt with corroborating evidence the appellant is unable to establish beyond doubt with corroborating evidence the appellant is unable to establish beyond doubt with corroborating evidence that all the loan creditors being genuine and non tainted. Accordingly, I find no that all the loan creditors being genuine and non tainted. Accordingly, I find no that all the loan creditors being genuine and non tainted. Accordingly, I find no infirmity in the order of the AO and find the addition being made of Rs. the order of the AO and find the addition being made of Rs. the order of the AO and find the addition being made of Rs. 27,25,408/-is justified in as much as the additions being made is justified in as much as the additions being made in accordance is justified in as much as the additions being made with law. Accordingly addition of Rs. . Accordingly addition of Rs.27,25,408/-under undisclosed income under undisclosed income stand confirmed. The grounds confirmed. The grounds relating to this issue are dismissed” 5.1 We have carefully considered the rival submissions and perused We have carefully considered the rival submissions and perused We have carefully considered the rival submissions and perused the material available on record. the material available on record. It is trite law that where a sum is It is trite law that where a sum is credited in the books of an assessee, the initial burden lies upon credited in the books of an assessee, the initial burden lies upon credited in the books of an assessee, the initial burden lies upon the assessee to establish three the assessee to establish three essential ingredients, namely: (i) essential ingredients, namely: (i) identity of the creditor; (ii) creditworthiness of the creditor; and (iii) identity of the creditor; (ii) creditworthiness of the creditor; and (iii) identity of the creditor; (ii) creditworthiness of the creditor; and (iii) genuineness of the transaction. Once the assessee produces prima genuineness of the transaction. Once the assessee produces prima genuineness of the transaction. Once the assessee produces prima facie evidence in support of these ingredients, the burden shifts facie evidence in support of these ingredients, the burden shifts facie evidence in support of these ingredients, the burden shifts upon the Revenue to rebut the same through cogent material. ue to rebut the same through cogent material. ue to rebut the same through cogent material.

5.2 In the present case, it is evident from the assessment order In the present case, it is evident from the assessment order In the present case, it is evident from the assessment order that that that before before before the the the AO AO AO the the the assessee assessee assessee furnished furnished furnished only only only limited limited limited confirmations in respect of certain creditors and did not place on confirmations in respect of certain creditors and did not place on confirmations in respect of certain creditors and did not place on record record the the complete complete doc documentary umentary evidence evidence necessary necessary to to substantiate the loan transactions. Consequently, the AO proceeded substantiate the loan transactions. Consequently, the AO proceeded substantiate the loan transactions. Consequently, the AO proceeded

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 11 ITA No. 1295/MUM/2026

to make the impugned addition. The Ld. CIT(A) also noted the to make the impugned addition. The Ld. CIT(A) also noted the to make the impugned addition. The Ld. CIT(A) also noted the inadequacy of supporting evidence and upheld the assessment. inadequacy of supporting evidence and upheld the assessment. inadequacy of supporting evidence and upheld the assessment.

5.3 However, before us, the assesse However, before us, the assessee has placed in the paper book e has placed in the paper book additional documents including confirmations, copies of income-tax additional documents including confirmations, copies of income additional documents including confirmations, copies of income returns, and bank statements of the concerned creditors. These returns, and bank statements of the concerned creditors. These returns, and bank statements of the concerned creditors. These documents, if examined in their proper perspective, may have a documents, if examined in their proper perspective, may have a documents, if examined in their proper perspective, may have a bearing on the determination of bearing on the determination of the issue. Since these evidences the issue. Since these evidences were either not available before the lower authorities or were not were either not available before the lower authorities or were not were either not available before the lower authorities or were not subjected to detailed verification, any adjudication by us on the subjected to detailed verification, any adjudication by us on the subjected to detailed verification, any adjudication by us on the merits of the addition without such verification would be merits of the addition without such verification would be merits of the addition without such verification would be premature.

5.4 The Tribunal, bei The Tribunal, being a final fact-finding authority, is equally finding authority, is equally obliged to ensure that substantial justice is not defeated on account obliged to ensure that substantial justice is not defeated on account obliged to ensure that substantial justice is not defeated on account of technical lapses, particularly when relevant documentary of technical lapses, particularly when relevant documentary of technical lapses, particularly when relevant documentary evidence is stated to be available. At the same time, the Revenue evidence is stated to be available. At the same time, the Revenue evidence is stated to be available. At the same time, the Revenue must be afforded an opportunity to examine the authenticity and ed an opportunity to examine the authenticity and ed an opportunity to examine the authenticity and evidentiary value of such documents. evidentiary value of such documents.

5.5 Having regard to the totality of the facts and circumstances, Having regard to the totality of the facts and circumstances, Having regard to the totality of the facts and circumstances, and in the interest of justice, we are of the considered opinion that and in the interest of justice, we are of the considered opinion that and in the interest of justice, we are of the considered opinion that the issue relating to the additio the issue relating to the addition under Section 68 deserves to be n under Section 68 deserves to be restored to the file of the AO for a fresh examination. The assessee restored to the file of the AO for a fresh examination. The assessee restored to the file of the AO for a fresh examination. The assessee shall place on record all relevant documents in support of the shall place on record all relevant documents in support of the shall place on record all relevant documents in support of the identity, creditworthiness and genuineness of the loan transactions. identity, creditworthiness and genuineness of the loan transactions. identity, creditworthiness and genuineness of the loan transactions.

Mr. Manish Bhavanji Bheda, Mr. Manish Bhavanji Bheda, 12 ITA No. 1295/MUM/2026

The AO shall examine The AO shall examine the evidences so furnished, conduct such the evidences so furnished, conduct such inquiries as may be deemed necessary, and thereafter adjudicate inquiries as may be deemed necessary, and thereafter adjudicate inquiries as may be deemed necessary, and thereafter adjudicate the matter afresh by passing a speaking order in accordance with the matter afresh by passing a speaking order in accordance with the matter afresh by passing a speaking order in accordance with law after affording adequate opportunity of hearing to the assessee. law after affording adequate opportunity of hearing to the assessee. law after affording adequate opportunity of hearing to the assessee. We clarify that all contentions available to both parties on merits ll contentions available to both parties on merits ll contentions available to both parties on merits are left open and no opinion is expressed by us on the ultimate are left open and no opinion is expressed by us on the ultimate are left open and no opinion is expressed by us on the ultimate sustainability of the addition. sustainability of the addition. The ground No.1 and 2 of the appeal The ground No.1 and 2 of the appeal of the assessee are accordingly allowe assessee are accordingly allowed for statistical purposes. d for statistical purposes.

Order pronounced in the open Court on ounced in the open Court on 22/06 06/2026. 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. Vittal , Sr. P.S. 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