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Facts
The assessee, an individual employed as a salary professional, also undertook a one-time liasioning and coordination assignment for an SRA Redevelopment Project, earning Rs. 1,03,90,000/-. The case was reopened under section 148 of the Act. The assessee declared a net profit of Rs. 58,69,500/- and claimed expenses of Rs. 45,20,500/-.
Held
The Tribunal held that while the existence of the activity and receipt of income was credible, the assessee failed to substantiate the claimed expenses with cogent evidence before the Assessing Officer. The rejection of additional evidence at the appellate stage was upheld.
Key Issues
Whether the expenses claimed by the assessee against consultancy receipts were substantiated with cogent evidence, and if newly produced evidence at the appellate stage can be admitted.
Sections Cited
250, 1961, 148, 143(3), 147, 57, 69, 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Suraj Vijay Kulkarni vs ITO Ward 8(1)(3), Mumbai Flat-876 Building -8 Kohinoor City Phase-1 Kirol Marg, Off L.B.S. Road Kurla-West Maharashtra-400070 PAN:AEBPK5973P APPELLANT RESPONDENT Assessee by :Shri Vimal Punmiya & Mr. Dhaval Salot, Respondent by : Shri S. Anbuselvan (SR AR) Date of hearing : 12/03/2026 Date of pronouncement : 18/03/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2010-11, date of order 10.10.2025. The impugned order emanated from the order of the Ld. Income Tax Officer Ward-8(1)(3), Mumbai (for brevity the ‘’Ld. AO”), order passed under section 143(3) r.w.s. 147 of the Act date of order 21.12.2017.
Suraj Vijay Kulkarni 2. The brief facts of the case are that the assessee is an individual and was employed as a salary professional during the impugned assessment year. In addition to his employment the assessee undertook a one time liasioning and coordination assignment relating to Slum Rehabilitation Authority (SRA) Redevelopment Project in Mumbai. The assessee filed the return on 30.11.2017 declaring total income Rs.86,33,920/-. The assessee’s case was reopened u/sec. 148 of the Act by a notice dated 20.03.2017. Out of salary income the assessee declared the net profit from business and profession amount to Rs.58,69,500/- related to his liasoning and coordination business’. The assessee earned total consultancy fee Rs.1,03,90,000/- from four redevelopment Project. The said details are as follows: Project Project Coordinator Slum Dwellers Balaji Project Balaji Project Management 602 Consultancy SS Consultants Project SS Consultants 634 Latika Consulatancy Project Latika Consultancy 167 Yashwant Poojari Project Yashwant Poojari 230 The consultancy receipts totaling Rs.10390000/- were received as below: Source Amount Balaji Project Management Consultancy 40,00,000/- S.S. Consultants 41,00,000/- Latika Consultancy 11,49,000/- YashwantPoojari 11,41,000/- Total 1,03,90,000/- Suraj Vijay Kulkarni The assessee claimed the income from his new adventure in the Return of Income (ROI) under head of “Income from Other Sources” and claimed deduction u/sec 57 of the Act related to payment of expenses amount to Rs. 45,20,500/-. During the reassessment the Ld. AO treated the entire receipt Rs.1,03,90,000/- as unexplained investment u/sec. 69 of the Act. The assessee claimed that that he already declared the profit amount to Rs.58,69,500/- in the ROI filed by pursuing notice u/sec. 148 of the Act. Only the assessee claimed expenses related to the alleged transaction amount to Rs.45,20,500/-. So the entire expenses was disallowed by the Ld. AO. Being aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) had adjudicated the issue and rejected the appeal of the assessee. The relevant observations of the CIT(A) in para no.6 and 6.2 is reproduced as below: “6. Appellant's submissions were carefully considered. Appellant received an amount of Rs.1,03,90,000/- from various concems as mentioned above. However. the true nature of the receipts was not clearly proved by the appellant. During the course of assessment proceedings, AO analyzed the balance sheet and P &L account of Shri. YashwantShekharPoojari, from whom appellant received the amount of Rs.1,03,90,000/-. AO observed that Shri. Poojari had not reported any investment in proprietary concerns, namely M/s Balaji Project Management Consultancy, SS Consultancy and Latika Consultancy. Further, the only income reported in the P & L account was from cable connection. Shri. Poojari had not mentioned in the P & L account about the receipts or payments made to the appellant, inspite of specific questions asked by the AO. Thus, AO concluded that the nature and source of receipts of Rs. 1,03,90,000/- was not proved by the appellant.During the course of appeal proceedings, appellant produced copies of MoU entered into between the above-mentioned concerns and Mis APT Financial services (proprietarily concern of appellant). During the course of assessment proceedings. such details were not produced. Thus, this is clearly an afterthought. Appellant did not furnish any cogent reason as to why these were not produced before AO. Hence, the fresh evidences are rejected U/R 46A of IT Rules.
Suraj Vijay Kulkarni 6.2 During the course of assessment proceedings, appellant did not furnish any details for the expenses of Rs.45,20,500/-, In para 6.3 of the assessment order. AO clearly brought out the fact that the appellant's representative stated that no bills/invoices were available to be produced in support of appellant's claim. However, during the course of appeal proceedings, appellant produced copy of ledger extracts, copy of payments made to the occupants of the property and the vouchers for the payments. Thus, it is clearly an afterthought. After admitting before the AO no such bills/invoices were available, producing copies of self-made vouchers during the course of appeal proceedings, cannot be admitted under rule 46A of IT Rules. Appellant did not prove that he was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO. Hence, the self-made vouchers with respect to the expenses towards shifting charges, allegedly paid to various persons, claimed to be occupants of a property is not admitted as evidence under rule 46A of the IT Rules.” Being aggrieved assessee filed an appeal before us.
The Learned Authorised Representative (Ld. AR) submitted that a paper book comprising pages 1 to 499 has been filed and placed on record. The Ld. AR contended that the assessee had undertaken a one-time venture and earned gross receipts amounting to Rs.1,03,90,000/-. A copy of the Memorandum of Understanding entered into between the assessee and the project coordinator in relation to the said transaction is placed at APB pages 8 to 43. The assessee further furnished supporting evidences, including bank statements (APB pages 44 to 46) and vouchers and ledger accounts substantiating the claim of expenses (APB pages 44 to 210).
The Learned Departmental Representative (Ld. DR), on the other hand, submitted that the alleged business activity carried out by the assessee did not have any formal legal existence. It was further contended that the evidences relied upon by the assessee are supported merely by self-made vouchers.
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee, though initially a non-filer, filed the return of income in response to notice issued under section 148 of the Act and declared income from the impugned activity amounting to Rs.58,69,500/-. The balance amount of Rs.45,20,500/- was claimed as expenditure against the consultancy receipts. On perusal of the record, we find that the assessee had entered into transactions with various parties in connection with the SRA redevelopment projects, and copies of the Memoranda of Understanding were duly placed in the paper book. Further, a part of the receipts has been routed through banking channels, thereby lending prima facie credibility to the transactions. Thus, the existence of the activity and receipt of income there from cannot be entirely disregarded. However, with regard to the claim of expenditure, we find that the assessee failed to substantiate the same with cogent and verifiable evidence before the Assessing Officer. The Ld. CIT(A) has rightly observed that the supporting evidences, such as self-made vouchers relating to shifting charges allegedly paid to occupants, were not produced at the assessment stage and were sought to be introduced at the appellate stage without satisfying the conditions prescribed under Rule 46A of the Income Tax Rules, 1962. Therefore, the rejection of such additional evidence by the Ld. CIT(A) cannot be faulted. At the same time, it is noted that the Ld. AR fairly conceded before us that a lump-sum disallowance to the extent of Rs.10,00,000/- (Rupees Ten lakh only) may be sustained towards unverifiable expenses.
Suraj Vijay Kulkarni Considering the totality of facts and circumstances of the case, and in the interest of justice, we deem it appropriate to accept such concession. Accordingly, the disallowance of expenditure is restricted to Rs.10,00,000/- and the balance addition of Rs.35,20,500/- is directed to be deleted. Since the assessee has already offered the net income of Rs.58,69,500/- in the return of income, the action of the Ld. Assessing Officer in treating the entire receipts of Rs.1,03,90,000/- as unexplained under section 69 of the Act is not sustainable. In the result, the addition is restricted to Rs.10,00,000/- related to expenses claimed amount to Rs.45,20,500/- and addition of the rest of the expenses is deleted. The grounds raised by the assessee are partly allowed.