MAHESH VISHINDAS CHANDWANI,MUMBAI vs. DY CIT, CIRCLE 29(2), MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI GIRISH AGRAWALMahesh Vishindas Chandwani A-19, Indraprasth Sarvodaya, Jain Mandir Road, Mulund(West), Mumbai- 400080 PAN:AAAPC4003B vs DCIT Circle 29(2), Mumbai Room No.202, C-10, 2nd floor, Pratayaksha Kar Bhavan, Bandra Kurla Complex, Bandra (E) Mumbai-400051 APPELLANT RESPONDENT
Per: Anikesh Banerjee (JM):
The instant appeal of the assessee filed against the order of the Ld.
Commissioner of Income Tax-Appeal ADDL/JCIT (A)-4, Chennai [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity the ‘Act’) for assessment year 2013-14, date of order 29.08.2025. The impugned order emanated from the order of the Ld. Deputy Commissioner of 2
Mahesh Vishindas Chandwani
Income Tax Circle 29(2), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) of the Act date of order 14.03.2016. 2. The assessee has taken the following grounds:
“1. The NFAC erred in passing the order dated 29.08.2025 without considering the submissions and documents placed on record by the Appellant. Thus, the order passed by the NFAC is in breach of the principles of natural justice and the same may be set aside.
The Addition of Rs.41,00,000/- made by doubting the genuineness of unsecured loans is unjustified
2. The NFAC erred in confirming the action of the Ld.A.O. in making the addition of Rs.41,00,000/- being loan received from Shri DipakBhatija by doubting his creditworthiness without appreciating the facts and circumstances of the case. The addition of Rs.41,00,000/- made is not justified and the same may be deleted.
3. The NFAC failed to appreciate that the loan received from shriDipakBhatija amounting to Rs.41,00,000/- is duly recorded in the books of accounts of the Appellant and out of which a sum of Rs.50,000/- was repaid back during the year under consideration. Thus, the addition ofRs.41,00,000/-made by the AO and confirmed by the NFAC is not justified and the same may be deleted
4. The NFAC failed to appreciate that the addition of Rs.41,00,000/-has been made merely relying on the statement of Shri DipakBhatija recorded in the back of the Appellant. The Appellant has never been provided the complete copy of the statement and cross examination of Shri Bhatija. Thus, the addition made by the AO and confirmed by the NFAC is in breach of the principles of natural justice. The same may be deleted.
The Addition of Rs.100,000/- on account of advance made to SudhakarJagtap is not justified.
5. The NFAC is not justified to confirm the addition of Rs. 100,000/- being advance given to SudhakarJagtap without appreciating the facts and circumstances of the case. The said addition made by the Ld.A.O. and confirmed by the NFAC is not justified and the same may be deleted.
6. The NFAC is not justified to confirm the addition of Rs.70,366/- being interest received on advance without appreciating the facts and circumstances of the case.
3
Mahesh Vishindas Chandwani
7. The Appellant seeks leave to add, alter and amend the above grounds whenever required.”
The brief facts the case is that the assessee filed the return by declaring total income Rs.5,89,04,970/-. Subsequently the assessee filed revised return and declared the total income Rs.5,88,92,030/-. The assessee’s case was selected for scrutiny under CASS and notice u/sec. 143(2) was issued on 10.09.2014. During the assessment the Ld. AO made the number of additions related to the unsecured loan received by the assessee from Shri Dipak Bhatija amount to Rs.41,00,000/-, the addition of Rs.1,00,000/- on account of advance made to Shri Sudhakar Jagtap and the addition amount to Rs.70,366/- related to interest received at advance which was not offered in return of income. Being aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) uphold the impugned assessment order and confirmed the additions. Being aggrieved assessee filed an appeal before us. 4. The Ld. AR argued and filed a paperbook which is containing page 1 to 116 which has been placed on record. The Ld. AR has advanced her ground-wise argument which is as follows: Ground Nos.2 to 4. 5. Ground Nos. 2 to 4 pertain to the addition of an unsecured loan amounting to Rs. 41,00,000/- received from Mr. Dipak Bhatija. The Ld. AR invited our attention to the loan confirmation received from Mr. Dipak Bhatija for the relevant financial year, which is placed on record at APB page 8. The Ld. AR further submitted that the assessee had earlier received a loan of Rs. 19,00,000/- from the same creditor, Mr. Dipak Bhatija, in A.Y. 2009–10. The said loan amount
4
Mahesh Vishindas Chandwani was added back during the assessment proceedings for A.Y. 2009–10. Aggrieved by the addition, the matter was carried in appeal before the ITAT, Mumbai Bench, which passed an order in the assessee’s case for A.Y. 2009–10 in ITA No.
3707/Mum/2013 dated 07.04.2017. In the said order, the Coordinate Bench of the Tribunal set aside the matter to the file of the AO for the purpose of verification of the loan creditors, including examination of their PAN, Income Tax
Returns, and other relevant details. Pursuant to the directions of the Tribunal, the Ld. AO passed a set-aside assessment order under section 143(3) read with section 254 of the Act dated 31.10.2018, which is placed at APB pages 109 to 116. In the said set-aside assessment proceedings, the Ld. AO examined the loan creditors, and one of the creditors, Mr. Dipak Bhatija, was accepted as genuine.
Consequently, no addition was made in respect of the loan received from him.
The relevant portion of the assessment order reflecting the acceptance of the creditor is placed at APB page 111. The Ld. AR contended that the impugned loan of Rs.41,00,000/- also pertains to the same creditor, Mr. Dipak Bhatija. Therefore, in view of the findings recorded in the set-aside assessment order for A.Y. 2009–
10, the identity and genuineness of the said creditor already stand accepted by the Department. The Ld. AR further submitted that the transaction in question was carried out through proper banking channels, and once the creditor has been accepted as genuine in earlier proceedings, the same cannot be rejected again with respect to the identity and genuineness of the transaction. Accordingly, the Ld. AR prayed that the addition be deleted.
5
Mahesh Vishindas Chandwani
6. On the other hand, the Ld. DR argued that the Ld. AO had categorically examined the transaction with the loan creditor and rejected the genuineness of the loan transaction in the present assessment proceedings. The Ld. DR invited our attention to paragraph 5.9 of the impugned assessment order, wherein the Ld. AO has discussed the transaction relating to Mr. Dipak Bhatija. The relevant extract of the said paragraph from the impugned assessment order is reproduced as under:
“5.9 It is not out of context here to mention that the amount of unsecured loans of Rs.19,00,000/- from Deepak Bhajita for A.Y. 2009-10 has been added by the then Assessing
Officer treating the same as unexplained. The then Assessing Officer fhad issued letter u/s 133(6) to Shri Deepak Bhatija to which there was no response. The then Assessing Officer recorded statements of the loanees and while passing order for A.Y. 2009-10 has also recorded vide Para no.22 as under "He did not have any knowledge obout the credit/deposit and his CA knows about the same. Similar answers were given by AnithaAmarnani, Deepak Bhaatija and Shankar
Amarnani. All these persons stated that their cheque books/pass book/pay-in-slips etc were with their CA and not with them. Further, it was also seen that all these loan creditors had got amount credited/ deposited in their bank account prior to giving loan to the assessee and nobody was in a position to furnish the details of these credits/deposits..."
The then assessing offices concluded that the tourd on finance capacity to advance any loan to the assessee the loan creditor that the cheques books/pass book/ pay-in-slips etc were with their CAs and these loan creditors had credits/deposits in their bank account prior to giving loan to the assessee.
The Ld.CIT(A) has confirmed the addition made regarding unexplained cash credit of Shri
Deepak Bhatija vide order no CIT(A)-33/IT/592/11-12 dated 08/03/2013 stating that Shri
Deepak Bhatija is unaware of the transaction done in his name. The Ld CIT (A) in his order Para no.6 pg no.26 has mentioned as under "... Coming to addition made of Rs.19,00,000/- in the hands of appellant for the unsecured loan amount shown in the name of Shri Deepak Bhatija, besides the fact found that he is practically unaware of transaction in his name as some is done by only and exclusively by 6
Mahesh Vishindas Chandwani his CA. He has not negated his earlier statement that he was paid money for signing blank cheques by him and which along with bank pass book is kept In custody of the same, who only is in knowledge of the transaction. I am in agreement with the A.O. that amount shown as unsecured loan on his name of Rs.19,00,000/-remains unexplained cash credit u/s.68 and hence addition made is upheld....."
We have heard the rival submissions and perused the documents available on record. The assessee has furnished the loan confirmation, bank statements evidencing the transactions through banking channels, copies of the income tax return of the creditor, and other supporting documents, which are placed at APB pages 6 to 18. It is observed that in AY 2009–10, the loan received from the same creditor, Mr. Dipak Bhatija, was initially treated as unexplained and an addition of Rs. 19,00,000/- was made. However, pursuant to the directions of the Coordinate Bench of the Tribunal in ITA No. 3707/Mum/2013 dated 07.04.2017, the matter was set aside for fresh verification. In the set-aside assessment order passed under section 143(3) r.w.s. 254 dated 31.10.2018. The Ld. AO, after examining the relevant material and details of the creditor, accepted the genuineness of the loan transaction with Mr. Dipak Bhatija and no addition was made in respect thereof. Thus, the identity and genuineness of the said creditor stand accepted by the Department in the subsequent assessment proceedings carried out in pursuance of the Tribunal’s directions. The impugned loan of Rs. 41,00,000/- in the present year pertains to the same creditor, and the transactions have also been carried out through proper banking channels, supported by documentary evidence placed on record. In view of these facts and considering that the Department itself has accepted the genuineness of the creditor in the set-aside assessment proceedings for A.Y.
7
Mahesh Vishindas Chandwani
2009–10, we find no justification to sustain the addition in the present assessment year on identical facts. Accordingly, we set aside the impugned appellate order on this issue and direct the deletion of the addition of Rs.
41,00,000/-.
Ground No. 2 to 4 of the assessee’s appeal is therefore allowed.
Ground No.5
8. The Ground No.5 related to addition amount of Rs.1,00,000/- related to advance given to Mr. Sudhakar Jagtap, the Ld. AR stated that the revenue has not able to find the identity of this person though the assessee submitted the confirmation before the Ld. AO. The observations of the Ld. AO in assessment order paragraph no.3.4 is reproduced as below:
“3.4 The contention of the assessee has been perused. The assessee is not able to submit even the address, PAN or any confirmation for the same. The assessee himself agrees that the he is not able to give any whereabouts of Shri SudhakarJagtap The assessee vide order sheet entry dated 23/11/2015 has submitted that no evidences can be furnished. As such an amount of Rs.1,00,000/-is added to the total income of the assessee treating it as unexplained advances.
Penalty proceedings u/s 271(1)(c) of the I.T. Act is initiated for concealment of income”.
The Ld. DR argued and stands in favor of the order of revenue authorities.
In our considered view, the assessee has not been able to satisfactorily establish the identity of the party to whom the advance was given. Although the assessee has contended that the transaction was carried out through banking channels and has submitted the confirmation, PAN, and address of the concerned party before the Revenue authorities, the same requires proper verification. In the interest of justice, we are of the opinion that one more opportunity should be 8 Mahesh Vishindas Chandwani granted to the assessee to substantiate the genuineness of the transaction. Accordingly, we restore the matter to the file of the Ld. AO for the limited purpose of verifying the transaction with the party, Shri Sudhakar Jagtap, amounting to Rs. 1,00,000/-. Needless to state, the assessee shall be afforded a reasonable opportunity of being heard during the set-aside proceedings.
In the result the Ground No.5 of the assessee’s appeal is allowed for statistical purpose.
Ground No.6
12. During the impugned assessment year, the assessee received interest income amounting to Rs. 70,366/- in respect of advances given to a party. The Ld.
AO observed in the assessment order that the said interest income had not been declared in the return of income filed by the assessee. Accordingly, the Ld. CIT(A) upheld the view taken by the Ld. AO. During the course of hearing before us, the Ld. AR submitted a confirmation evidencing receipt of interest amounting to Rs.
70,356/-, from which TDS of Rs. 7,036/- had been deducted, and the assessee received a net amount of Rs. 63,320/-. The confirmation along with the relevant details is placed at APB page 22. Upon perusal of the material on record, we find that this aspect was not duly examined by the Ld. AO during the assessment proceedings, and the addition was made without proper verification.
The Ld. DR relied upon the orders of the revenue authorities.
In our considered view, the assessee has placed on record documents indicating that the interest income was declared in A.Y. 2016–17. The assessee
9
Mahesh Vishindas Chandwani has claimed that the said interest was duly received and offered to tax in the relevant year. In the interest of justice, we deem it appropriate to restore the matter to the file of the Ld. AO for the limited purpose of verifying whether the interest income has been duly declared in the assessee’s return of income.
Needless to state, the same income cannot be subjected to tax twice. The Ld. AO shall afford a reasonable opportunity of being heard to the assessee during the set-aside proceedings.
In the result the Ground No.6 of the assessee’s appeal is allowed for statistical purpose.
Ground No.1 & 7 are general in nature and do not require separate adjudication.
In the result, the appeal of the assessee bearing ITA No.6777/Mum/2025 is allowed for statistical purpose. Order pronounced in the open court on 18th day of March 2026. (GIRISH AGRAWAL) JUDICIAL MEMBER Mumbai,िदनांक/Dated: 18/03/2026 SAUMYASr.PS
Copy of the Order forwarded to:
अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकरआयुƅ CIT 4. िवभागीयŮितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT,
10
Mahesh Vishindas Chandwani
Mumbai
5. गाडŊफाइल/Guard file.
BY ORDER,
////
(Asstt.