KANAYO HUNDRAJMAL PATHAI ,MUMBAI vs. INCOME TAX OFFICER WARD2(2), MUMBAI

This appeal by the assessee is directed against the order dated 03.12.2025 passed by the learned Additional/Joint Commissioner of Income-tax (Appeals)-4, Bengaluru [hereinafter referred to as ‘the learned CIT(A)’], under section 250 of the Income-tax Act, 1961 (‘the Act’), arising from the assessment order dated 05.12.2019 passed by the Income Tax Officer, Ward 2(2), Kalyan, under section 143(3) read with section 147 of the Act for the assessment year 2013-14.

The assessee has raised grounds challenging, inter alia, the validity of the reassessment proceedings for want of notice under section 143(2) of the Act, non-supply of the reasons recorded for reopening, the validity of the assessment framed under section 143(3) read with section 147 of the Act, the treatment of deposits of Rs.36,77,567 in the bank account of the partnership firm, M/s Siddhivinayak Agency, as the turnover of the assessee, and the consequential estimation of profit at 10 per cent. The assessee has also raised a general ground seeking liberty to add, alter or amend the grounds of appeal.

Brief facts of the case are that information was received by the Assessing Officer that cash deposits/credits aggregating to Rs.36,77,567 were made in an account maintained with HDFC Bank during the relevant previous year. The assessment was reopened under section 147 of the Act. During the assessment proceedings, the Assessing Officer also noticed credits of Rs.30,92,343 in another HDFC Bank account. The aggregate credits of Rs.67,69,910 were treated as the turnover of the assessee and profit thereon was estimated at 10 per cent at Rs.6,76,991. After reducing the income of Rs.1,93,000 offered by the assessee, an addition of Rs.4,83,991 was made and the total income was assessed at Rs.6,86,990.

Before the learned CIT(A), the assessee contended that the bank account in which deposits/credits of Rs.36,77,567 appeared belonged to a separate partnership firm, namely, M/s Siddhivinayak Agency, and could not be treated as his personal bank account or turnover. The assessee also questioned the jurisdiction assumed under section 147 and raised legal grounds concerning the non-issuance of notice under section 143(2), the nature of the assessment framed and the opportunity afforded in the assessment proceedings.

The learned CIT(A) observed that the assessee had not furnished documentary evidence such as the partnership deed, KYC details of the firm, PAN linked to the bank account, return of income and tax audit report of the firm to establish that the credits of Rs.36,77,567 belonged to the partnership firm. The learned CIT(A), therefore, rejected the factual claim. The legal grounds were also rejected and the addition of Rs.4,83,991 was sustained.

Before us, the learned Authorised Representative submitted that the relevant documentary evidence could not be placed before the authorities below and that the assessee is now in a position to place the complete evidence establishing the ownership and nature of the bank account and the transactions recorded therein.

The learned Departmental Representative relied upon the orders of the authorities below. He submitted that adequate opportunities had been granted to the assessee and that the claim regarding the partnership firm was not supported by the requisite documentary evidence before the learned CIT(A).

We have heard the rival submissions and perused the material available on record. The substantive addition rests upon the treatment of the credits in the HDFC Bank account stated by the assessee to belong to M/s Siddhivinayak Agency as the turnover of the assessee. The learned CIT(A) rejected this claim principally for want of the partnership deed, the KYC particulars, PAN linkage of the bank account, the return of income, the tax audit report and other supporting material of the firm. It is now submitted that the assessee is in a position to produce the relevant evidence. In our considered view, the ownership of the bank account and the character of the transactions recorded therein go to the

In the interest of justice, we set aside the impugned order and restore the appeal to the file of the learned CIT(A) for fresh adjudication in accordance with law. The learned CIT(A) shall admit and examine the evidence produced by the assessee, make or cause to be made such enquiry as may be considered necessary, afford a reasonable opportunity of hearing to the assessee as well as to the Assessing Officer, and thereafter pass a speaking order on all the grounds. The assessee shall be at liberty to urge all the legal grounds which were raised and argued before the learned CIT(A), including the grounds relating to the validity of the reassessment and the alleged non-issuance of notice under section 143(2) of the Act. The learned CIT(A) shall adjudicate those grounds independently on their own merits. The assessee is directed to place all supporting evidence before the learned CIT(A) and to cooperate in the appellate proceedings without seeking unnecessary adjournment. We make it clear that we have expressed no opinion on the merits of either the legal grounds or the addition.

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