REKHABEN BHARATBHAI BAGADIA,AHMEDABAD vs. THE ITO, WARD-1(3)(1), AHMEDABAD

आदेश/ORDER Per Suchitra Kamble, Judicial Member:

This is an appeal filed against the order dated 31-10-2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2014-15.

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant with regard to the impugned addition.

2.1 The Ld. CIT(A) has grievously erred in law and or on facts in not adjudicating specifically the validity of initiating the proceedings u/s 147 of the Act. Since the condition precedent for valid reopening u/s.147 are not satisfied, the impugned notice u/s 148 was wholly illegal and unlawful. The appellant has raised detailed objection in reply given 03/02/2022.

3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the credit in bank account amounting to R.19,32,00,000/- as unexplained and thereby making addition of Rs. 19,32,00,000/- u/s. 69A. The appellant had fully discharged the burden cast upon her to prove the impugned credits by producing the required evidence and even confirmation by the creditors in response to the inquiry u/s.133(6) made by AO.

3.2 That in the facts and circumstances of the case as well as in law, the ld. vhas grievously erred in confirming addition of Rs 19,32,00,000/- u/s 69A of Act though all relevant document, evidence, ITR, Bank statement etc.. were submitted to prove source and genuineness. The observations made and conclusion drawn on basis of income declared in ITR are denied.

4.1 Without prejudice, the Ld. CIT(A) has grievously erred in law and or on facts in directing the FAO to assess peak credit in respect of the credit in bank account.

It is therefore prayed that the addition of Rs. 19,32,00,000/- u/s 69A of Act made by the FAO and confirmed by CIT(A) should be deleted.”

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 The assessee was furnished reasons on 19/01/2022 (after 9 months of request) recorded for reopening in response to which the assessee filed objections vide reply on 03/02/2022. The AO passed order disposing said objection on 18/02/2022. During the course of re-assessment proceedings notice u/s. 142(1) was issued on 02/02/2022 and 22/02/2022 with annexure which was responded by the assessee vide reply on 02/02/2022 and 26/02/2022 along with details of credits in bank account, confirmation of the parties, their bank statement, Income Tax Return, Audited Financial Statements, personal accounts, source of their funds explained and other documentary evidences giving the details of immediate source, source of immediate source and ultimate source upto 4th level of source was explained. The AO for cross verification of four sundry creditors, issued notice u/s. 133(6) to some of the parties on 04/03/2022 allowing reply to be given by 11/03/2022. All of them responded to the said inquiry. Thereafter, the AO issued a show cause notice on 16/03/2022 proposing to make addition of Rs. 19,32,00,000/- as unexplained credit u/s. 69A as alleged that the appellant and creditors have not maintained any books of accounts though the Balance Sheet, bank book and other books of accounts are on record with Ld. AO, and called upon the assessee to furnish explanation by 21/03/2022. The assessee furnished a detailed reply with evidence on 21/03/2022 and 22/03/2022. However, the AO has rejected the same mainly on the ground that neither the assessee nor the creditors provided documentary evidence regarding source of credit entries in their bank accounts, and the assessee has failed to prove genuineness of the transactions, proof of identity of the creditors and their credit worthiness, though the source were explained upto 4th level and confirmations, Income Tax Return,

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 details of source of respective creditors, etc. was provided. The Assessing Officer made addition of Rs. 19,32,00,000/- as unexplained credit u/s. 69A of the Act.

• The reasons for reopening was merely high value transactions as per the bank statement but the AO has failed to point out how the same were escaped assessment. The belief formed by AO about escapement of income of the said transaction is baseless and there is no material to form such belief. (See ITO vs Lakhmani Mevaldas (1976) (3 SCC 757), Ganga Saran & Sons Pvt Ltd v ITO (130 ITR 1) (SC).

• The AO has not even point out the details/particulars of the said high value transactions i.e. whether sales or purchases or expenses or credits in the bank accounts. The AO has not

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 indicated any material as to the source of information or the reasons for transaction being escaped income.

• It appears that there was borrowed satisfaction and no independent belief on part of AO which is not a ground for valid reassessment. (Refer to Varshaben S. Patel v ITO (2015) (64 Taxmann.com 179) (Guj), Gateway Leasing P. Ltd. (2020) (117 Taxmann.com 442) (Bom).

• The relevant discussion and case law is given in the written submissions to AO and CIT(A).

Unexplained Credits u/s 69A - Rs. 19,32,00,000/-

The AO has made impugned addition for the reasons stated in para-7- 8 of his order at page-3 to 7. The AO has observed that though the response to notice u/s 133(6) was given by Rishabh Bagadia, Siddharth Bagadia, Toral Bagadia and Samarath Financial Services, they had not provided source of their income for giving credit entries, their ITR was showing very low income compared to the loan. Therefore, they were not capable to give loan amount. It may be noted that CIT(A) vide his notice u/s 250 dt 20.05.2025 sought various information/details which the appellant uploaded. The assessee submits that the impugned addition/diretions/finding given by CIT(A) is wholly unjustified both facts and in law. 4.2

• The perusal of the response dtd. 21.03.2022 to the show cause notice dtd. 16.03.2022 issued by AO, a detailed submission with documents, chart and case law etc. were furnished (page 39 to 51) wherein it was pointed out that in respect of the earlier notices of hearing, detailed explanation with immediate source and the ultimate source of the impugned loans was given along with copies of bank statement, confirmation, Ack of ITR etc. (See page - 118 to 121). 5

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15

• When the CIT(A) asked, even the purpose of borrowings was duly explained in as much as, the group consisting of family members of three parties who were holding huge land bank had decided to enter into development agreement for the township project. (page 116-117).

• As regards the contention of smallness of income compared to the loan amount it was explained from the record of the said party by a chart and other documents (page 164 and onwards). Refer to Smt.Nidhi Rani v ITO (ITA No.3323/Del/2023 DTD. 19.12.2025). The Hon'ble Delhi High Court in the case of CIT vs Vrindavan Farms Pvt. Ltd. in ITA No.71 of 2015 dated 12.08.2015 has held as under:-

"The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their return of income. It was observed by the ITAT that the Assessing Officer had not undertaken any investigation of the veracity of the documents submitted by the assessee, the departmental appeal was dismissed by the Hon'ble High court."

The assessee had also furnished documentary evidence as per page- 156 to 304 of PB showing the immediate source of funds and their source of funds, though at the relevant time it was not statutorily required to prove the source of the source. Considering the same the issue of smallness of income will not hold good. The CIT(A) has doubted the source of source on the ground that none of the parties to the agreement had received money from Bagadia family but it was from Saavvy Unispace Pvt. Ltd. (see page-14 of the order). This finding itself is the proof that the appellant had explained the immediate source of funds. The CIT(A) has also given a finding at page-14 that the confirmations and details of the banking transactions show the truth in the claim of the appellant that there were to and fro

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 movement of funds within the family members. Yet, he has not accepted the impugned loans as genuine. Thus the appellant had fully discharged the initial burden cast upon to prove the impugned loan as per the settled case law.

Sr. No. Name of case law Citation 1 CIT v Ranchhod J. Nakhava 208 Taxman 035(Guj)

2 Garima Polymers Pvt Ltd 131 Taxman.com 04 (Del) 3 Rohini Builders 256 ITR 560 (Guj) 4 Nemichand Kothari v CIT 264 ITR 254 (Gau) 5 DCIT v. Techno Industries ITA No. 660/AHD/2025 dt 03.02.2026

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 However the confirmations and details of banking transactions uploaded show that there is truth in the claim of the assessee that there was to and fro movement of funds with the family member(s)and the total sum cannot be taken as the amount of remittance. Secondly, it is seen from the bank statement that there are credit entries relating to redemption proceeds of various mutual funds e.g., Morgan Stanley, Raligare Invesco. Pinebridge India Liquidity etc as well as repayment of loans about which the Ld AO has not made any comment regarding any kind of either queries or verification made and the findings with respect to such remittances. The appellant has requested for personal hearing and VC notices were issued several times and accepted by the appellant specifying the time suitable for her. However due to probable improper uploading/execution of such replies, the matter could not be proceeded further for such technical fault in uploading reply in spite of acceptance of such request time and again. As a result decision is taken after considering the voluminous written submission and documents uploaded. As has been stated earlier, the source of funds and creditworthiness of the family members and others could not be established by the submission made by the assessee as the claim made as per written submission could not be established in absence of adequate supporting evidences and there is no reason not to uphold the basis of the addition made by the Ld. AO. However, at the same time the Ld AO is directed to give cognizance to the submission of the assessee regarding peak credit being much less than the total remittance in case of a member(s) of the family as well as the credit in the bank account out of redemption proceeds of various Mutual Funds (the source of which requires further clarification) after due verification of the Bank Accounts and other relevant details. In the result, the Ground nos. 4 & 5 are hereby adjudicated as being partly allowed.” The ld. CIT(A) has rightly held that the source of funds and creditworthiness of the family members was not established by the assessee through the evidences related to the receipt of money from either sale of land or advance received. The submissions made by the ld. A.R. that the assessee has given the details appears to be not justified as the paper book has not given the details of following documents. “1. Development Agreement with Savvy Infrastructure Pvt. Ltd. specifying advance received and distribution of such advance with evidence,

I.T.A No. 2560/Ahd/2025 Rekhaben Bharatbhai Bagadia, A.Y. 2014-15 family members and relevant audit reports and audited accounts.”

Therefore, there is no need to interfere with the findings of the ld. CIT(A).

Order pronounced in the open court on 23-04-2026

Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 23/04/2026 TRUE COPY a.k. आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद