SACHIN K MEHTA (HUF),ASHOK SHOPPING CENTRE vs. ITO WARD 19(3)(1), PIRAMAL CHAMBERS

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ITA 4729/MUM/2026Status: DisposedITAT Mumbai24 September 2026AY 2019-207 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that an effective opportunity to substantiate a claim is crucial for fair adjudication. The CIT(A) failed to provide this opportunity, thus necessitating a fresh adjudication.

What were the facts?

The assessee's appeal concerns additions made by the Assessing Officer (AO) and confirmed by the CIT(A) regarding unexplained money and expenditure. The assessee argued that the CIT(A) erred by not providing an effective opportunity to present additional documents.

What were the issues?

Whether the CIT(A) erred by confirming additions without providing the assessee an effective opportunity to present evidence and arguments, violating principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 69A,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE

For Appellant: Ms Kanupriya Damor, Sr. DR
For Respondent: Ms Kanupriya Damor, Sr. DR
Pronounced: 24/09/2026

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 24.02.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC)-Delhi [in short ‘the Ld. CIT(A)] for Assessment Year (‘A.Y.’) 2019-20, raising following grounds:

“1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.

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10,14,301/- made by the Assessing Officer under the provisions of Section 69A of made by the Assessing Officer under the provisions of Section 69A of made by the Assessing Officer under the provisions of Section 69A of the Income-tax Act, 1961 read with Section 69C of the Income tax Act, 1961 read with Section 69C of the Income-tax Act, 1961 tax Act, 1961 read with Section 69C of the Income without properly appreciating the facts and evidences placed on record by the without properly appreciating the facts and evidences placed on record by the without properly appreciating the facts and evidences placed on record by the Appellant. 2. On the facts and circumstances of the case and in law, the Learned CIT(A) 2. On the facts and circumstances of the case and in law, the Learned CIT(A) 2. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition of Rs. 10,00,000/ erred in confirming the addition of Rs. 10,00,000/- by treating the unsecured loan by treating the unsecured loan received from M/s Consultshah Financial Services Pvt. Ltd. as unexplained received from M/s Consultshah Financial Services Pvt. Ltd. as unexplained received from M/s Consultshah Financial Services Pvt. Ltd. as unexplained money under Section 69A of the Income money under Section 69A of the Income-tax Act, 1961 despite the Appellant tax Act, 1961 despite the Appellant having having having furnished furnished furnished documentary documentary documentary evidence evidence evidence establishing establishing establishing the the the identity, identity, identity, creditworthiness and genuineness of the tra creditworthiness and genuineness of the transaction. 3. The entire assessment and penalty proceedings are vitiated as the AO failed to 3. The entire assessment and penalty proceedings are vitiated as the AO failed to 3. The entire assessment and penalty proceedings are vitiated as the AO failed to grant cross-examination of untested statement of Shri Sanjay Shah, the only examination of untested statement of Shri Sanjay Shah, the only examination of untested statement of Shri Sanjay Shah, the only person whose alleged statement was used to draw adverse conclusions. person whose alleged statement was used to draw adverse conclusions. person whose alleged statement was used to draw adverse conclusions. This violates principles of natural justice as held in: This violates principles of natural justice as held in: Andaman Timber Industries vs. Commissioner of Central Excise (2015) Andaman Timber Industries vs. Commissioner of Central Excise (2015) Andaman Timber Industries vs. Commissioner of Central Excise (2015) 281 CTR 241 (Supreme Court) 281 CTR 241 (Supreme Court) M. Pirai Choodi vs. Commissioner of Income Tax (2011) 334 ITR 262 M. Pirai Choodi vs. Commissioner of Income Tax (2011) 334 ITR 262 M. Pirai Choodi vs. Commissioner of Income Tax (2011) 334 ITR 262 (Supreme Court) (Supreme Court). 4. On the facts and circumstances of the case and in law, the Learned CIT(A) and circumstances of the case and in law, the Learned CIT(A) and circumstances of the case and in law, the Learned CIT(A) failed to appreciate that the loan was received and repaid through proper failed to appreciate that the loan was received and repaid through proper failed to appreciate that the loan was received and repaid through proper banking channels, duly recorded in the books of accounts of the Appellant and banking channels, duly recorded in the books of accounts of the Appellant and banking channels, duly recorded in the books of accounts of the Appellant and supported by lender confirmation, bank stat supported by lender confirmation, bank statements and copy of income tax return ements and copy of income tax return of the lender. 5. On the facts and circumstances of the case and in law, the Learned CIT(A) On the facts and circumstances of the case and in law, the Learned CIT(A) On the facts and circumstances of the case and in law, the Learned CIT(A) erred in confirming the disallowance of interest payment of Rs. 14,301/- treated erred in confirming the disallowance of interest payment of Rs. 14,301/ erred in confirming the disallowance of interest payment of Rs. 14,301/ as unexplained expenditure under Section 69C o as unexplained expenditure under Section 69C of the Income f the Income-tax Act, 1961 despite the fact that the interest was paid through banking channels and tax was despite the fact that the interest was paid through banking channels and tax was despite the fact that the interest was paid through banking channels and tax was duly deducted at source and deposited with the Government. duly deducted at source and deposited with the Government. duly deducted at source and deposited with the Government. 6. On the facts and circumstances of the case and in law, the Learned CIT(A) 6. On the facts and circumstances of the case and in law, the Learned CIT(A) 6. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition primarily on the basis of third nfirming the addition primarily on the basis of third-party statements nfirming the addition primarily on the basis of third recorded during search proceedings under Section 132(4) of the Income-tax Act, recorded during search proceedings under Section 132(4) of the Income recorded during search proceedings under Section 132(4) of the Income 1961, without providing the Appellant an opportunity to cross-examine such 1961, without providing the Appellant an opportunity to cross 1961, without providing the Appellant an opportunity to cross person and without bringing any person and without bringing any independent evidence on record linking the independent evidence on record linking the Appellant with the alleged accommodation entry transactions. Appellant with the alleged accommodation entry transactions. Appellant with the alleged accommodation entry transactions. 7. On the facts and circumstances of the case and in law, the Learned CIT(A) 7. On the facts and circumstances of the case and in law, the Learned CIT(A) 7. On the facts and circumstances of the case and in law, the Learned CIT(A) failed to appreciate that the addition has been made merely on the basis of failed to appreciate that the addition has been made merely on the basis failed to appreciate that the addition has been made merely on the basis assumptions and general allegations made by the Assessing Officer, without assumptions and general allegations made by the Assessing Officer, without assumptions and general allegations made by the Assessing Officer, without establishing any direct nexus between the Appellant and the alleged cash establishing any direct nexus between the Appellant and the alleged cash establishing any direct nexus between the Appellant and the alleged cash transactions.

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8.

On the facts and circumstances of the case and in law, the Learned CIT(A) 8. On the facts and circumstances of the case and in law, the Learned CIT(A) 8. On the facts and circumstances of the case and in law, the Learned CIT(A) failed to appreciate that the loan transaction and interest payment were duly reciate that the loan transaction and interest payment were duly reciate that the loan transaction and interest payment were duly recorded in the books of accounts of the Appellant, and therefore there was no recorded in the books of accounts of the Appellant, and therefore there was no recorded in the books of accounts of the Appellant, and therefore there was no concealment of income nor furnishing of inaccurate particulars of income. concealment of income nor furnishing of inaccurate particulars of income. concealment of income nor furnishing of inaccurate particulars of income. 9. The CIT(A) erred by holding that c 9. The CIT(A) erred by holding that confirmation of addition automatically implies onfirmation of addition automatically implies concealment, contrary to the law laid down in: concealment, contrary to the law laid down in: Manoj Gunomal Rochlani vs. ACIT (ITA No. 5876/MUM/2024) Manoj Gunomal Rochlani vs. ACIT (ITA No. 5876/MUM/2024) Manoj Gunomal Rochlani vs. ACIT (ITA No. 5876/MUM/2024) Aeon Commercial India v. ACIT (ITA No. 4166/Mum/2025) Aeon Commercial India v. ACIT (ITA No. 4166/Mum/2025) Aeon Commercial India v. ACIT (ITA No. 4166/Mum/2025) Anandmangal Investment & Finance Pvt Ltd vs ITO Anandmangal Investment & Finance Pvt Ltd vs ITO (ITA No. 4166/Mum/2025) 4166/Mum/2025) 10. On the facts and circumstances of the case and in law, the Learned CIT(A) 10. On the facts and circumstances of the case and in law, the Learned CIT(A) 10. On the facts and circumstances of the case and in law, the Learned CIT(A) failed to consider that no cash deposit or cash withdrawal has been found or failed to consider that no cash deposit or cash withdrawal has been found or failed to consider that no cash deposit or cash withdrawal has been found or established in the bank accounts of the Appellant in relation to the alleged established in the bank accounts of the Appellant in relation to the alleged established in the bank accounts of the Appellant in relation to the alleged accommodation entry and therefore the addition made by the Assessing Officer is accommodation entry and therefore the addition made by the Assessing Officer is accommodation entry and therefore the addition made by the Assessing Officer is purely based on presumption. purely based on presumption. 11. On the facts and circumstances of the case and in law, the Learned CIT(A) 11. On the facts and circumstances of the case and in law, the Learned CIT(A) 11. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition under Section 69A of the Income-tax Act, 1961 erred in confirming the addition under Section 69A of the Income erred in confirming the addition under Section 69A of the Income despite the fact that the transaction in question is a recorded loan transaction despite the fact that the transaction in question is a recorded loan transaction despite the fact that the transaction in question is a recorded loan transaction through banking channels and therefore the provisions of the said section are not through banking channels and therefore the provisions of the said section are not through banking channels and therefore the provisions of the said section are not applicable to the facts of the case. applicable to the facts of the case. 12. On the facts and circumstances of the cas 12. On the facts and circumstances of the case and in law, the orders passed by e and in law, the orders passed by the Assessing Officer under Section 147 read with Section 144B of the Income-tax the Assessing Officer under Section 147 read with Section 144B of the Income the Assessing Officer under Section 147 read with Section 144B of the Income Act, 1961 and confirmed by the Learned CIT(A) are arbitrary, contrary to law and Act, 1961 and confirmed by the Learned CIT(A) are arbitrary, contrary to law and Act, 1961 and confirmed by the Learned CIT(A) are arbitrary, contrary to law and liable to be set aside. liable to be set aside. 13. The Appellant craves leave to 13. The Appellant craves leave to add, amend, alter or withdraw any of the above add, amend, alter or withdraw any of the above grounds of appeal at the time of hearing.” grounds of appeal at the time of hearing. 2. Briefly stated, the assessee filed its return of income declaring Briefly stated, the assessee filed its return of income declaring Briefly stated, the assessee filed its return of income declaring a loss of ₹24,17,627/ 24,17,627/-. The assessment was subsequently reopened . The assessment was subsequently reopened pursuant to information received through the Insight Portal pursuant to information received through the Insight Portal pursuant to information received through the Insight Portal concerning alleged accommodation concerning alleged accommodation-entry transactions unearthed entry transactions unearthed during search proceedings conducted in the case of certain persons, during search proceedings conducted in the case of certain persons, during search proceedings conducted in the case of certain persons, including Shri Sanjay Shah. During the search, statements under ri Sanjay Shah. During the search, statements under ri Sanjay Shah. During the search, statements under section 132(4) were recorded and various documents and digital section 132(4) were recorded and various documents and digital section 132(4) were recorded and various documents and digital

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evidence were stated to have been found. On the basis thereof, the evidence were stated to have been found. On the basis thereof, the evidence were stated to have been found. On the basis thereof, the assessee was alleged to have obtained an accommodation entry assessee was alleged to have obtained an accommodation entry assessee was alleged to have obtained an accommodation entry from M/s Consultshah Financial Services Pvt. Ltd. ultshah Financial Services Pvt. Ltd.

3.

During the reassessment proceedings, the assessee explained During the reassessment proceedings, the assessee explained During the reassessment proceedings, the assessee explained that the loan of ₹10,00,000/ 10,00,000/- had been received through banking had been received through banking channels and was subsequently repaid; interest of ₹14,301/- was channels and was subsequently repaid; interest of channels and was subsequently repaid; interest of also paid through banking ch also paid through banking channels after deduction of tax at annels after deduction of tax at source. The assessee furnished, inter alia, the relevant ledger, Form source. The assessee furnished, inter alia, the relevant ledger, Form source. The assessee furnished, inter alia, the relevant ledger, Form 16A and bank statement. The Assessing Officer, however, was not 16A and bank statement. The Assessing Officer, however, was not 16A and bank statement. The Assessing Officer, however, was not satisfied with the explanation and, relying principally upon the satisfied with the explanation and, relying principally upon the satisfied with the explanation and, relying principally upon the statement of Shri Sanjay statement of Shri Sanjay Shah and the material gathered during the Shah and the material gathered during the search, treated the loan of ₹10,00,000/- as unexplained money search, treated the loan of as unexplained money under section 69A and the interest of ₹14,301/- under section 69A and the interest of as unexplained expenditure under section 69C, aggregating to ₹10,14,301/ expenditure under section 69C, aggregating to 10,14,301/-

4.

In appeal, the assessee In appeal, the assessee reiterated that the transaction was reiterated that the transaction was genuine and supported by documentary evidence. The learned genuine and supported by documentary evidence. The learned genuine and supported by documentary evidence. The learned CIT(A), however, confirmed the additions, observing that Shri CIT(A), however, confirmed the additions, observing that Shri CIT(A), however, confirmed the additions, observing that Shri Sanjay Shah had admitted the operation of dummy entities for Sanjay Shah had admitted the operation of dummy entities for Sanjay Shah had admitted the operation of dummy entities for providing accommodation entries and th providing accommodation entries and that the assessee had not at the assessee had not produced sufficient evidence to controvert the findings of the produced sufficient evidence to controvert the findings of the produced sufficient evidence to controvert the findings of the Assessing Officer. The learned CIT(A), accordingly, dismissed the Assessing Officer. The learned CIT(A), accordingly, dismissed the Assessing Officer. The learned CIT(A), accordingly, dismissed the relevant grounds of appeal. relevant grounds of appeal.

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5.

Before us, the learned counsel for the assessee submitted that Before us, the learned counsel for the assessee submitted that Before us, the learned counsel for the assessee submitted that the appeal before the learned CIT(A) was dismissed without l before the learned CIT(A) was dismissed without l before the learned CIT(A) was dismissed without affording adequate opportunity to place the remaining documentary affording adequate opportunity to place the remaining documentary affording adequate opportunity to place the remaining documentary evidence on record. It was submitted that the assessee had evidence on record. It was submitted that the assessee had evidence on record. It was submitted that the assessee had specifically sought time for filing further documents in support of specifically sought time for filing further documents in support of specifically sought time for filing further documents in support of the genuineness of the transaction and that the matter, therefore, ss of the transaction and that the matter, therefore, ss of the transaction and that the matter, therefore, deserved to be restored to the learned CIT(A) for fresh adjudication. deserved to be restored to the learned CIT(A) for fresh adjudication. deserved to be restored to the learned CIT(A) for fresh adjudication.

6.

The learned Departmental Representative relied upon the The learned Departmental Representative relied upon the The learned Departmental Representative relied upon the orders of the authorities below. orders of the authorities below.

7.

We have heard the rival submissions We have heard the rival submissions and perused the material and perused the material available on record. It is not in dispute that, during the appellate available on record. It is not in dispute that, during the appellate available on record. It is not in dispute that, during the appellate proceedings, the assessee sought further time to place additional proceedings, the assessee sought further time to place additional proceedings, the assessee sought further time to place additional documents in support of its case. The impugned order of the documents in support of its case. The impugned order of the documents in support of its case. The impugned order of the learned CIT(A), however, came to be learned CIT(A), however, came to be passed without granting the passed without granting the assessee an effective opportunity to produce such material and assessee an effective opportunity to produce such material and assessee an effective opportunity to produce such material and have the same considered on merits. The learned CIT(A) has have the same considered on merits. The learned CIT(A) has have the same considered on merits. The learned CIT(A) has principally proceeded on the basis of the material already available principally proceeded on the basis of the material already available principally proceeded on the basis of the material already available on record and the findings recorded b on record and the findings recorded by the Assessing Officer. y the Assessing Officer.

8.

In In In our our our considered considered considered view, view, view, an an an effective effective effective opportunity opportunity opportunity to to to substantiate a claim is an integral component of a fair appellate substantiate a claim is an integral component of a fair appellate substantiate a claim is an integral component of a fair appellate adjudication, particularly where the assessee has specifically adjudication, particularly where the assessee has specifically adjudication, particularly where the assessee has specifically sought time to place relevant documentary evide sought time to place relevant documentary evidence on record. The nce on record. The controversy involves the genuineness of the loan transaction, the controversy involves the genuineness of the loan transaction, the controversy involves the genuineness of the loan transaction, the

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identity and financial capacity of the lender, the movement of funds identity and financial capacity of the lender, the movement of funds identity and financial capacity of the lender, the movement of funds through banking channels and the basis on which the transaction through banking channels and the basis on which the transaction through banking channels and the basis on which the transaction has been characterised as an accommoda has been characterised as an accommodation entry. These matters tion entry. These matters ought to be examined after giving the assessee a reasonable ought to be examined after giving the assessee a reasonable ought to be examined after giving the assessee a reasonable opportunity to place its evidence on record and to address the opportunity to place its evidence on record and to address the opportunity to place its evidence on record and to address the material relied upon against it. material relied upon against it.

9.

We, therefore, deem it appropriate, in the interest of We, therefore, deem it appropriate, in the interest of We, therefore, deem it appropriate, in the interest of substantial justice, to set aside the impugned order of the learned substantial justice, to set aside the impugned order of the learned substantial justice, to set aside the impugned order of the learned CIT(A) on the issues under appeal and restore the matter to his file CIT(A) on the issues under appeal and restore the matter to his file CIT(A) on the issues under appeal and restore the matter to his file for fresh adjudication in accordance with law. The learned CIT(A) for fresh adjudication in accordance with law. The learned CIT(A for fresh adjudication in accordance with law. The learned CIT(A shall afford the assessee a reasonable and effective opportunity to shall afford the assessee a reasonable and effective opportunity to shall afford the assessee a reasonable and effective opportunity to furnish the supporting documents and submissions and shall furnish the supporting documents and submissions and shall furnish the supporting documents and submissions and shall thereafter decide the appeal afresh by a speaking order. Needless to thereafter decide the appeal afresh by a speaking order. Needless to thereafter decide the appeal afresh by a speaking order. Needless to say, the assessee shall fully cooperate in the proceedings and shall say, the assessee shall fully cooperate in the proceedings say, the assessee shall fully cooperate in the proceedings not seek any undue adjournment. In view of the above, the grounds not seek any undue adjournment. In view of the above, the grounds not seek any undue adjournment. In view of the above, the grounds raised by the assessee are allowed for statistical purposes. . raised by the assessee are allowed for statistical purposes. raised by the assessee are allowed for statistical purposes.

10.

In the result, appeal of the assessee is allowed for statistical In the result, appeal of the assessee is allowed for statistical In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open Court ounced in the open Court on 24/0 09/2026.

Sd/- Sd/- (ANIKESH BANERJEE ANIKESH BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/09/2026 /2026 Kunal Kr. P.S.

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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

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