LIFE TELECOM PRIVATE LIMITED ,MUMBAI vs. ITO WARD 12(3)(1), MUMBAI

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ITA 1926/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2012-138 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A). Regarding the validity of reopening, the Tribunal found that the CIT(A) had correctly noted that the AO received specific information from the Investigation Wing regarding large cash deposits, which constituted tangible material for forming a belief that income had escaped assessment. The Tribunal found no material to controvert these findings. On the issue of the addition under Section 68, the Tribunal agreed with the CIT(A) that the assessee failed to establish the genuineness of the cash sales with supporting material, specifically the link between alleged cash sales, stock movement, and bank deposits. The documents produced were deemed insufficient. The Tribunal noted that the assessee did not appear to present arguments or evidence to challenge the CIT(A)'s factual findings. The Tribunal also agreed with the CIT(A) that the challenge to penalty proceedings under Section 271(1)(c) was premature and that interest under Sections 234B and 234C was consequential. Consequently, all grounds raised by the assessee were dismissed.

What were the facts?

The assessee, Life Telecom Private Limited, filed an appeal against the order of the NFAC/CIT(A) for Assessment Year 2012-13. The original assessment under Section 143(3) accepted the assessee's return declaring Nil income. Subsequently, the Assessing Officer (AO) reopened the assessment under Section 148 based on information from the Investigation Wing regarding large cash deposits in the assessee's bank accounts. During reassessment, the AO noted the absence of an original cash book and proper stock register, and a failure to correlate cash sales with bank deposits. The AO treated ₹11,50,24,260/- as unexplained cash credit under Section 68, leading to an addition to total income. The CIT(A) upheld the reopening and the addition.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 read with Section 148 of the Income Tax Act, 1961, are valid, considering the assessee's contention that there was no independent, reliable material to initiate reopening and that all material facts were fully disclosed in the original return. 2. Whether the addition of ₹11,50,24,260/- as unexplained cash credit under Section 68 of the Act is justified, given the assessee's claim that these were genuine cash sales duly accounted for, supported by a cash sales register, cash book, and stock register, and that taxing them again would lead to double taxation. 3. Whether the penalty proceedings under Section 271(1)(c) were wrongly initiated. 4. Whether the levy of interest under Sections 234B and 234C is sustainable. Assessee's Contentions: - Reopening was invalid due to lack of tangible material and full disclosure in the original return. - Addition under Section 68 is erroneous as cash deposits represent genuine cash sales, already offered to tax, and supported by books of account and stock registers. The AO cannot substitute his judgment for that of a businessman. - Penalty proceedings were wrongly initiated despite full disclosure. Revenue's Contentions: - The CIT(A) upheld the reopening based on specific information from the Investigation Wing, which constituted tangible material. - The CIT(A) found that the assessee failed to establish the genuineness of cash sales with supporting evidence, noting issues with the cash book, invoices lacking customer details, and no reconciliation between cash receipts and stock movement.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 68,Section 271(1)(c),Section 234B,Section 234C,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI SIDDHARTHA NAUTIYAL

For Respondent: Shri Manoj Kumar (CIT-DR)

आदेश / ORDER

PER SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NFAC / Ld. CIT(A) vide order dated 22-Dec-2025 for the Assessment Year 2012-13. The Assessee has raised the following grounds of appeal:

1.

Validity of Reassessment Proceedings: On the facts and in the circumstances of the case, and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in upholding the reassessment proceedings initiated under section 147 read with section 148 of the Income Tax Act, 1961, without appreciating the following facts: a) There were no independent, reliable, and tangible material facts or information on record to initiate the reassessment proceedings.

b) All material facts necessary for the assessment were fully and truly disclosed by the Appellant in the Return of Income filed. c) Mere possession of information that was already available from the Return of Income cannot constitute a valid reason to form a belief for reopening the assessment. d) The mandatory jurisdictional requirements under section 147 were not fulfilled, rendering the reassessment proceedings invalid in law and liable to be quashed. Without prejudice to Ground 1 above: 2. Addition of Unexplained Cash Credit of ₹11,50,24,260/- under Section 68 of the Act: The learned CIT(A) erred in upholding the addition of 11,50,24,260/- by invoking section 68 of the Income Tax Act, 1961, treating the same as unexplained cash credit, while ignoring the following: a) All purchases and sales made during the year under consideration were duly accounted for in the books of account, which were verified and audited by statutory auditor and all the figures in Audited Financial Statements are in agreement of books of accounts maintained and also in agreement with all other relevant evidences as obtained during conducting of audit. b) The Cash Sales Register, reflecting cash sales date-wise/bill- wise basis and supported by sample cash sales bills, was furnished during the assessment proceedings as well as before the honourable CIT(A). The Cash Book also reflects these cash sales on the debit side, and the cash generated from such sales was deposited into the bank accounts, constituting the source of the cash deposits during the year under consideration. c) The cash sales have already been offered to tax under the head "Sales" in the Return of Income, and taxing the same again under section 68 would result in double taxation. d) The copy of the summary of the Stock Register provided during assessment proceedings clearly reflects all inward purchases of goods and corresponding outward sales of goods, including all cash sales, which are duly accounted for on the outward side of the stock summary. e) Neither the Assessing Officer (AO) nor the CIT(A) raised any doubts regarding the genuineness of the purchases made during the year under consideration. f) The CIT(A) ignored settled judicial precedents and decided cases on cash counter sales, which hold that the assessee is not required to establish the identity or creditworthiness of customers, provided there are genuine and corresponding purchases and stock available against such cash sales. g) The learned AO cannot substitute or force his judgment for that of the businessman in deciding when cash should be deposited into the bank.

h) The Appellant prays that the addition made by the learned AO, by rejecting the cash received from cash sales, established the source of cash deposited in the bank amounting to the tune of 11,50,24,260/- and treating it as unexplained cash credit under section 68 of the Act-despite having such sales being recognized as income in the Profit and Loss Account is invalid in law and liable to be deleted. 3. Penalty Proceedings under Section 271(1)(c): The learned CIT(A) erred in holding that the ground against the initiation of penalty under section 271(1)(c) was pointless, whereas the AO had wrongly initiated such penalty despite full and true disclosure of all facts in respect of the share premium. 4. Levy of Interest under Sections 234B and 234C: The learned CIT(A) erred in confirming the levy of interest under sections 234B and 234C, without appreciating that the same is consequential and without prejudice to the deletion of the addition made. 5. General Ground: The Appellant craves leave to add, amend, alter, or withdraw any of the above grounds of appeal at or before the time of hearing.

2.

The brief facts of the case are that the assessee company is engaged in the business of trading in mobile phones and accessories. The assessee filed its return of income for A.Y. 2012-13 declaring Nil income. The assessment under section 143(3) of the Income-tax Act, 1961 ("the Act") was completed on accepting the return of income. Subsequently, the Assessing Officer received information from the Investigation Wing regarding large cash deposits in different bank accounts of the assessee which was followed by transfer of the said amounts through banking channels. On the basis of this information, the Assessing Officer reopened the assessment under section 148 of the Act. In response, the assessee filed its return declaring Nil income.

3.

During the reassessment proceedings, the assessee furnished details of its bank accounts and certain purchase and sale details along with sample invoices. The Assessing Officer, however, observed that the assessee had not produced the original cash book and proper stock register to be able for him to carry out verification. According to the Assessing Officer, the assessee had also failed to correlate the cash sales with the cash deposits in the bank accounts. The Assessing Officer further noticed that large amounts of cash were deposited in bulk and were thereafter transferred to other entities.

4.

The assessee submitted that the cash deposits were genuine cash sales which were already recorded in the books of account. The Assessing Officer did not accept the explanation. The Assessing Officer held that the assessee had failed to establish the genuineness of the cash sales and held that the amount of ₹11,50,24,260/-were unexplained cash credit under section 68 of the Act. The total income was accordingly computed at ₹11,50,24,260/-.

5.

The assessee carried the matter in appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the validity of reopening as well as the addition of ₹11,50,24,260/- made under section 68 of the Act. The assessee also challenged initiation of penalty proceedings under section 271(1)(c) and levy of interest under section 234B of the Act.

6.

The learned CIT(A) upheld the reopening of the assessment. The CIT(Appeals) observed that the Assessing Officer had received specific information from the Investigation Wing regarding large cash deposits in the bank accounts of the assessee and this information established tangible material for forming a prima facie belief that income chargeable to tax had escaped assessment. The learned CIT(A) further held that the Assessing Officer had applied his mind to the information received and the reassessment was not based merely on suspicion or change of opinion. Accordingly, Ld. CIT(A) dismissed the ground challenging the reopening of assessment.

7.

On merits, the learned CIT(A) noted that the assessee submitted that the cash deposits of ₹11,50,24,260/- were the assessee’s genuine cash sales.

However, the CIT(Appeals) observed that the assessee had not produced supporting evidence to establish the genuineness of such sales. The learned CIT(A) noted that the cash book contained self-generated entries, the cash sale invoices did not contain customer details and there was no reconciliation between the cash receipts and the movement of stock. The learned CIT(A) therefore held that the assessee had failed to establish that the large cash deposits were genuine business receipts and sustained the addition of ₹11,50,24,260/- under section 68 of the Act.

8.

The learned CIT(A) further held that the ground challenging initiation of penalty proceedings under section 271(1)(c) was premature. The levy of interest under section 234B was also upheld as mandatory in nature. The appeal of the assessee was accordingly dismissed.

9.

The assessee is in appeal before us against the order passed by the learned CIT(A) dismissing the appeal of the assessee.

10.

We have perused the material available on record. At the time of hearing, none appeared on behalf of the assessee. No application seeking adjournment was filed and no letter of authority in favour of any authorised representative was placed on record. Thus, despite having filed the present appeal, the assessee has not appeared to explain the grounds raised before us or to point out any error in the findings recorded by the lower authorities. We therefore proceed to decide the appeal on the basis of the material available on record.

11.

The first issue raised by the assessee relates to the validity of reopening. We find that the learned CIT(A) has examined this issue and held that the Assessing Officer had specific information from the Investigation Wing regarding large cash deposits in the bank accounts of the assessee. The Assessing Officer thereafter examined the information and formed a belief that income had escaped assessment. Nothing has been brought before us to controvert these findings. We therefore find no reason to interfere with the order of the learned CIT(A) upholding the reopening of the assessment.

Coming to the addition of ₹11,50,24,260/- under section 68 of the Act, 12. the case of the assessee is that the cash deposited in the bank accounts was towards cash sales already recorded in its books and, therefore, addition of the same amount again would result in double taxation. However, the issue is not merely whether the amounts have been recorded in the books under the head "sales". The assessee was required to establish, with supporting material, that the large cash receipts had actual come from business transactions/ sales.The learned CIT(A) has observed that the assessee did not establish the link between the alleged cash sales, movement of stock and the deposits in the bank accounts. The documents produced were also not sufficient to establish the genuineness of the large cash receipts. Before us, the assessee has not produced any material to controvert these findings.

13.

Though several grounds have been raised in the memorandum of appeal, none appeared on behalf of the assessee at the time of hearing, no adjournment was sought and no authority letter was filed. Therefore, there is nothing before us to show as to how the factual findings recorded by the learned CIT(A) are incorrect. Merely raising grounds in the memorandum of appeal, without supporting the same at the time of hearing or pointing out any error in the impugned order, does not provide any basis for interference. The conduct of the assessee in not appearing or prosecuting the appeal also supports the dismissal of the appeal. Nevertheless, we have independently examined the issues on the basis of the material available on record and find no merit in the grounds raised by the assessee.

14.

As regards initiation of penalty proceedings under section 271(1)(c), we agree with the learned CIT(A) that the challenge at the stage of mere initiation of penalty proceedings is premature. The ground relating to levy of interest under sections 234B and 234C is consequential in nature.

15.

Considering the facts of the case and the material available on record, we find that the learned CIT(A) has considered the issues raised by the assessee and has given reasons for sustaining the action of the Assessing Officer.

We therefore find no infirmity in the order of the learned CIT(A) so as 16. to call for our interference. The order of the learned CIT(A) is accordingly upheld and all the grounds raised by the assessee are dismissed.

17.

In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on 23.09.2026.

Sd/- Sd/- OM PRAKASH KANT SIDDHARTHA NAUTIYAL ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 23.09.2026. KRK, Sr. PS Copy to: LIFE TELECOM PRIVATE LIMITED , FLAT NO. 1, FIRST FLOOR, NIVETIA BUNGLOW NIVETIA RANI SATI MARG 1 MALAD EAST, MUMBAI-400097, MAHARASHTRA

ITO WARD 12(3)(1), 2 AAYAKAR BHAVAN, M.K ROAD,, MUMBAI-400020, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE

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