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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI ANIKESH BANERJEE, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 3379 & 4111/Mum/2025, are two separate appeals by the assesse preferred against two separate orders of the ld. CIT(A)-52, Mumbai (hereinafter “the ld. CIT(A)"}, dated 11/04/2025 and 23/05/2025 pertaining to AY 2018-19. 2. Both the appeals were heard together and are disposed off by this common order for the sake of convenience and brevity.
In ITA No. 3379/Mum/2025, the assessee has raised the following grounds of appeal:- “The appellant prefers an appeal against the appeal order dated 11/04/2025 by Ld. Commissioner of Income Tax(Appeals)-52, Mumbai on following amongst other grounds each of which are without prejudice to any other :-
0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in confirming the addition u/s.69A r.w.s.115BBE of alleged unexplained cash deposits made in bank accounts of Rs.70,000/-;
0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in confirming the addition u/s.69 r.w.s.115BBE of alleged unexplained investment in mutual funds of Rs.15,55,000/-;
0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in confirming the addition u/s.69A r.w.s.115BBE of alleged unexplained funds received from M/s. Dyaneshwari Multi State Urban Co-op. Credit Society Ltd of Rs.39;00,000/-;
0 On facts and circumstances of the case and in Law, Ld. CIT(A) in without prejudice manner, erred in confirming the addition u/s.68 of alleged cash deposits made in bank account of Rs.70,000/- and of alleged unexplained investment in mutual funds of Rs.15,55,000/-;
0 The Ld. CIT(A) ought to have adopted the concept of real income and followed the assessment orders of earlier years, wherein the commission income @ 0.05% of accommodation transaction value for providing the accommodation transactions had been estimated. The appellant craves leave to add, amend, alter, and/or withdraw any of the grounds of appeal at the time of hearing.”
The assessee has also raised additional grounds, which read as under:- “The appellant prefers an appeal against the appeal order dated 11/04/2025 by Ld. Commissioner of Income Tax (Appeals)-52, Mumbai on following amongst other grounds each of which are without prejudice to any other :-
0 On facts and circumstances of the case and in law, the assessment order passed u/s.143(3) is bad-in-law, since the statutory notice u/s.143(2) to scrutinize the return filed us 139 had not been issued, thereby the consequential reassessment order passed u/s.147 is bad in law;
0 Without prejudice, the notice u/s.143(2) stated in assessment order as issued on 07/10/2019 is bad in law, since allegedly issued after expiry of limitation period (viz. 30/09/2019) specified under 1% Proviso to Sec. 143(2), thereby consequential reassessment order passed u/s.147 is bad in law. The appellant craves leave to add, amend, alter and/or withdraw any of the grounds of appeal at the time of hearing.”
Heard both the parties. Order of the authorities below carefully perused.
Insofar as the additional grounds are concerned, the assessee has challenged that no notice u/s 143(2) of the Act was issued and served upon the assessee. Therefore, the assessment is bad in law and further reference to the notice mentioned in the assessment order is barred by limitation.
A perusal of the assessment order shows that the AO has referred to a notice u/s 143(2) of the Act dated 07/10/2019. The return was filed on 30/03/2019. Therefore, on the face of it, the notice is barred by limitation. However, at the time of hearing the ld. D/R submitted the documentary evidence in respect of the issue of notice u/s 143(2) of the Act which is dated 22/09/2019 and the same was served on 23/09/2019 which means that due to inadvertent error the dates have been wrongly mentioned in the order. Since the facts have been brought on record in respect of the issue of notice u/s 143(2) of the Act and its service, the additional ground/s raised by the assessee are dismissed.
Coming to the merits of the case, the entire quarrel revolves around the alleged unexplained funds received from Dhyaneshwari Multi State Urban Co-operative Credit Society Ltd.. The past history of the assessee as per AY 2014-15 to AY 2017-18 also has the same quarrel where it was found that the main activity of Dhyaneshwari Multi State Urban Co-operative Credit Society Ltd., was receiving huge amounts of cash from various persons and depositing the same in its bank accounts and transferring these funds through RTGS/other banking modes to various non-genuine entities under instruction of the persons seeking the cash/operators managing them. The final beneficiary is unknown and since the assessee was receiving commission income in the said amount at the rate of 0.05% as accepted in the case of Dhyaneshwari Multi State Urban Co-operative Credit Society Ltd., addition at the rate of 0.05% of the deposits were made in the hands of the assessee and since the assessee did not prefer any appeal the same has attained finality.
Considering the past history of the assessee and his assessments from AY 2014-15 to 2017-18, we are of the considered view that for the same transactions similar view should have been adopted by the AO by making addition at the rate of 0.05% which has been fairly accepted by ld. Counsel. Therefore, considering the past history of the assessee we direct the AO to restrict the addition to 0.05% of the deposit. Accordingly, this ground is partly allowed.
Next Grievance relates to the purchase of mutual funds. The ld. Counsel vehemently stated that there was a switch of mutual funds from one to another and, therefore, the source for the investment in the mutual funds was the money received from the switchover of earlier mutual fund. Since no details were furnished before the lower authorities and the order of the ld. CIT(A) is also ex-parte, therefore, in the interest of justice and fairplay we deem it fit to restore the issue to the file of the AO. The assessee is directed to furnish evidence of switchover of mutual funds and explain the source of investment and the AO is directed to verify the same and decide the issue afresh after affording a reasonable and adequate opportunity of being heard to the assessee. Accordingly, this ground is allowed for statistical purposes.
Coming to the issues raised in ITA No. 4111/Mum/2025, the assessee has challenged the levy of penalty u/s 270A of the Act. The roots of the levy of penalty lie in the assessment order dated 20/03/2023 framed u/s 147 of the Act by which addition of Rs.3,49,000/- was made being the addition in respect of estimated commission at the rate of 0.05% as mentioned by the AO at para 3.5 of the assessment order. Considering the additions have been made on estimate basis on the assumption that the assessee must be seen commissioning 0.02% to 0.05%, we do not find any merit in the levy of penalty as the same has been levied on estimated additions. The AO is directed to delete the impugned penalty. Accordingly, this ground is allowed.
In the result, ITA No. 3379/Mum/2025 is partly allowed for statistical purposes and ITA No. 4111/Mum/2025 is allowed. Order pronounced in the Court on 4th September, 2025 at Mumbai. (ANIKESH BANERJEE) JUDICIAL MEMBER (NARENDRA KUMAR BILLAIYA) ACCOUNTANT MEMBER Mumbai, Dated 04/09/2025 *SC SPS आदेश की प्रतिलिपि अग्रेषित/