ASHESH MAHESHBHAI KOTHARI,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD 5(3)(1), AHMEDABAD, AHMEDABAD

PDF · subscribers
ITA 2695/AHD/2025Status: DisposedITAT Ahmedabad15 October 2026AY 2019-20208 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the dismissal of an appeal for non-prosecution does not absolve the appellate authority of its duty to adjudicate grounds on merits, especially when the CIT(A) had considered the issues. Regarding the addition of Rs. 5,19,500/- under Section 69A, the Tribunal found that the AO had aggregated different types of bank credits and cash deposits without conducting independent inquiries into the nature of individual entries or establishing that the entire amount represented unexplained money. Specifically, three non-cash credits from identified persons were not examined individually. The Tribunal noted that the addition was made primarily due to the assessee's failure to provide a satisfactory explanation, without sufficient independent material to prove the assessee was the owner of unexplained money. Therefore, the addition of Rs. 5,19,500/- under Section 69A was deleted. The issue of deduction under Section 80GGC was not adjudicated as the assessee had withdrawn the claim and paid consequential taxes. Grounds challenging the reopening validity and approval under Section 151 were not specifically decided due to lack of complete statutory records, but the appeal was allowed on the substantive addition. The AO was directed to grant credit for TDS and self-assessment tax after verification. The Tribunal allowed the appeal on the substantive addition.

What were the facts?

The assessee, Ashesh Maheshbhai Kothari, filed an appeal against the order dated 29.10.2025 passed by the CIT(A)/NFAC, Delhi, for Assessment Year 2019-2020. The appeal stemmed from reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961, following a search operation that revealed alleged bogus political donations. The Assessing Officer (AO) made an addition of Rs. 5,19,500/- under Section 69A of the Act, treating certain bank credits and cash deposits as unexplained money. The assessee had initially claimed a deduction under Section 80GGC, which was later withdrawn. The CIT(A) dismissed the assessee's appeal for non-prosecution. The Tribunal was thus seized of the appeal against the CIT(A)'s order and the underlying assessment.

What were the issues?

1. Whether the learned CIT(A) erred in law by not considering that the assessment proceedings were not completed on or before 31.03.2024, as per the third and fourth provisos to Section 149(1) read with Section 153(2) of the Act? The assessee contended that the assessment was time-barred. The revenue's arguments are not recorded. 2. Whether the learned CIT(A) erred in law by not considering that the prior approval granted by the Principal CIT under Section 151 of the Act is invalid and without jurisdiction? The assessee argued the approval was invalid. The revenue's arguments are not recorded. 3. Whether the learned CIT(A) erred in facts and law by not considering that the credit transactions amounting to Rs. 2,70,000 and cash deposits amounting to Rs. 2,49,500 (totaling Rs. 5,19,500) in the bank accounts are out of explainable sources? The assessee argued the sources were explainable. The revenue's arguments are not recorded. 4. Whether the learned CIT(A) erred in facts and law by not considering that the learned AO erred in making an addition of Rs. 5,19,500 under Section 69A of the Act? The assessee argued the addition was incorrect. The revenue's arguments are not recorded. 5. Whether the learned CIT(A) erred in law by not considering that the learned AO erred in failing to grant credit of TDS amounting to Rs. 1,36,825 and self-assessment tax amounting to Rs. 62,580? The assessee claimed credit for these taxes. The revenue's arguments are not recorded.

Which sections of the Income-tax Act were involved?

Section 148,Section 149,Section 151,Section 153,Section 69A,Section 115BBE,Section 80GGC,Section 234B,Section 234C,Section 270A,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Shri H S Mehta, AR
For Respondent: Ms. Kalpana Singh, Sr. DR
Hearing: 23.09.2026Pronounced: 15.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT And SHRI TAPAS RAM MISRA, JUDICIAL MEMBER ITA No. 2695/AHD/2025 (Assessment Year: 2019-20)

Ashesh Maheshbhai Kothari, Vs. Income Tax Officer, B1 403, Karnavati Apartment Ward 5(3)(1), 03, Bhairavnath Isanpur Road, Ahmedabad. Maninagar, Ahmedabad-380008. [PAN : APIPK9704 L] (Appellant) .. (Respondent) Appellant represented by : Shri H S Mehta, AR Respondent represented by: Ms. Kalpana Singh, Sr. DR Date of Hearing 23.09.2026 Date of Pronouncement 15.10.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the Assessee against the order dated 29.10.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2019- 2020.

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 2– 2. The Assessee has raised the following grounds of Appeal:-

1.

The learned CIT(A) erred in law by not considering the fact that the learned Assessing Officer has erred in law by not completing the assessment proceeding on or before 31.03.2024, by virtue of the third and fourth provisos to section 149(1) r.w.s. 153(2) of the Act. 2. The learned CIT(A) erred in law by not considering the fact that the prior approval given by the Hon'ble PCIT u/s 151 of the Act is invalid and without jurisdiction. 3. The learned CIT(A) erred in both the facts as well as the law by not considering the fact that the learned Assessing Officer failed to appreciate the fact that the credit transactions amounting to Rs. 2,70,000 and the cash deposits amounting to Rs. 2,49,500 (totalling to Rs. 5,19,500) in the bank accounts are out of explainable sources. 4. The learned CIT(A) erred in both the facts as well as the law by not considering the fact that the learned Assessing Officer has erred in law as well as the facts by making addition of Rs. 5,19,500 u/s 69A of the Act. 5. The learned CIT(A) erred in law by not considering the fact that the learned Assessing Officer erred both in law and on facts by failing to grant credit of tax deducted at source (TDS) amounting to Rs. 1,36,825 and self- assessment tax amounting to Rs. 62,580 claimed by the Appellant in the income tax return. 6. Your Appellant, therefore, requests Your Honor to delete the unjustified addition amounting to Rs. 5,19,500, along with the incorrect demand of Rs. 2,49,500 raised along with interest u/s 234B and 234C of the Act. 7. Your Appellant reserves the right to alter, modify, add or delete any ground of appeal. 3. Brief facts of the case are that assessee filed his return of income declaring gross total income of Rs.14.21 lakhs and claimed Chapter VIA deductions of Rs.4.28 lakhs, including deduction of Rs.2 lakhs under section 80GGC towards donation to a political party. A search conducted on 07.09.2022 in the case of RUPPs group of Ahmedabad revealed alleged bogus political donations and return of such donations in cash to the donors through intermediaries. Based on the search findings, the

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 3– Assessing Officer initiated reassessment proceedings under section 148 of the Act. In response, the assessee filed a return withdrawing the claim of Rs.2 lakhs under section 80GGC and declared Chapter VIA deductions of Rs.2.28 lakhs. During the reassessment proceedings, the Assessing Officer also noticed bank credits and cash deposits aggregating to Rs.5.19 lakhs and called upon the assessee to explain the sources thereof. As the assessee did not furnish satisfactory details, the Assessing Officer treated the amount of Rs.5.19 lakhs as unexplained money under section 69A read with section 115BBE of the Act.

4.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who dismissed it for non-prosecution on the ground that the assessee had not effectively pursued the appellate proceedings despite several notices.

5.

We have carefully considered the assessment order, the order of the Ld. CIT(A), the grounds of appeal and the material available on record. The principal grievance of the assessee is against the addition of Rs.5,19,500/- made under section 69A of the Act in respect of certain bank credits and cash deposits. From the assessment order, it is noticed that the Assessing Officer treated the aggregate credits/deposits of Rs.5,19,500/- as unexplained money under section 69A of the Act. The said amount comprises credit entries of Rs.70,000/-, Rs.90,000/- and Rs.1,10,000/- in the ICICI Bank account and cash deposits of Rs.1,50,000/-, Rs.49,500/- and Rs.50,000/- in the ICICI Bank and Union Bank accounts. The Assessing Officer observed that the assessee had not

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 4– satisfactorily explained the sources of these transactions and accordingly made the addition under section 69A of the Act.

5.1 We find that the assessee had raised a specific ground before the Ld. CIT(A) contending that the sources of the bank credits/deposits were explainable and that adequate evidence regarding the source of funds was available. The assessee had also challenged the applicability of section 69A and alternatively pleaded that the addition ought not to have been made where the sources of the funds were supported by evidence.

5.2 The Ld. CIT(A), however, dismissed the appeal for non- prosecution on the ground that the assessee did not effectively pursue the appellate proceedings despite several notices. The Ld. CIT(A) thereafter proceeded to consider the appeal on the basis of the material available on record.

5.3 In this regard, we find that the dismissal of an appeal for non- prosecution does not dispense with the statutory duty of the appellate authority to adjudicate the grounds of appeal on merits. In the present case, the Ld. CIT(A) has, in fact, also considered the issues on merits. Therefore, the correctness of the addition is required to be examined independently on the basis of the material available on record.

5.4 On examination of the assessment order, we find that the Assessing Officer has aggregated different types of bank credits and cash deposits amounting to Rs.5,19,500/- and treated the entire amount as unexplained under section 69A. However, the assessment order does not

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 5– demonstrate any independent enquiry with respect to the nature of the individual credit entries or establish that the entire amount represented unexplained money belonging to the assessee. The assessment records merely state that the sources remained unsubstantiated because the assessee did not furnish the required details.

5.5 It is also relevant that the three non-cash credits of Rs.70,000/-, Rs.90,000/- and Rs.1,10,000/- were received from identified persons, namely Hemal Hardikbhai, Mrs. Arunaben Cheta and Chetankumar Jethal. Thus, the nature of these credits could not have been rejected merely by aggregating them with the cash deposits without examining the identity of the persons, the nature of the transactions and the surrounding circumstances. Further, the assessee is admittedly a salaried individual. The addition under section 69A requires a finding that the assessee was the owner of money, bullion, jewellery or other valuable article and that such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, or the explanation regarding its nature and source was not satisfactory. In the present case, the Assessing Officer has not brought any independent material on record to establish that the entire amount of Rs.5,19,500/- represented unexplained income of the assessee. The addition has essentially been made because the explanation was not furnished to the satisfaction of the Assessing Officer. We also take note of the fact that the assessee had challenged the addition before the Ld. CIT(A) and specifically stated that adequate evidence regarding the sources of the funds was available. In the interest of substantial justice, the material relating to the individual credits ought to have been examined rather

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 6– than sustaining the entire addition merely on the ground of non- compliance/non-prosecution.

5.6 In view of the above discussion, we are of the considered opinion that the addition of Rs.5,19,500/- under section 69A of the Act has been made without bringing sufficient independent material on record to establish that the entire amount represented unexplained money of the assessee. The addition, therefore, cannot be sustained merely on the basis of non-furnishing of satisfactory explanation without examining the nature and source of the individual transactions. Accordingly, the addition of Rs.5,19,500/- made under section 69A of the Act is deleted and the grounds of appeal relating to the said addition are allowed.

5.7 As regards the issue of deduction claimed under section 80GGC, it is noticed that the assessee had himself not claimed the deduction of Rs.2,00,000/- in the return filed in response to notice under section 148 and had paid the consequential tax and interest. The assessment order itself records that no separate addition was made on this account, though penalty proceedings under section 270A were initiated. Therefore, no separate adjudication of the said ground is called for in the present appeal. Insofar as the grounds challenging the validity of reopening under sections 148/149 and the approval under section 151 are concerned, the same involve pure questions of law. However, in the absence of the complete relevant statutory record and approval being demonstrated before us, no specific adverse finding on these grounds is

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 7– considered necessary, particularly when the appeal is being allowed on the substantive addition.

5.8 The ground relating to credit of prepaid taxes/TDS is consequential in nature. The Assessing Officer is directed to grant the assessee due credit of prepaid taxes/TDS as allowable in accordance with law, after verification from the departmental records.

6.

In view of the above discussion, the impugned addition of Rs.5,19,500/- under section 69A of the Act is deleted. The Assessing Officer is also directed to allow the eligible credit of prepaid taxes/TDS in accordance with law.

7.

In the result, the appeal of the assessee is allowed

The order pronounced in the open Court on 15.10.2026. Sd/- Sd/- Sd/- Sd/- (TAPAS RAM MISRA) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) (True Copy) Ahmedabad; Dated 15.10.2026 MV

ITA No.2695/AHD/2025, AY-2019-20 Ashesh Maheshbhai Kothati - 8– आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��थ�/ The Respondent. 3. संबंिधतआयकरआयु�/ Concerned CIT 4. आयकरआयु�(अपील) /The CIT(A)- 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल /Guard file. आदेशानुसार/ BY ORDER,

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →