Case Law Details
Abdul Gafar Abdul Karim Nadiadwala Vs ACIT (ITAT Mumbai)
Mumbai ITAT admitted additional evidence under Rule 29 and restored the matter to the AO where substantial additions were made due to lack of earlier explanation, caused by the death of the assessee.
The Tribunal noted:
- Additions of ₹7.79 crore u/s 69A (bank credits) and ₹57.90 lakh (capital gains) were made for want of evidence
- The legal heir explained inability to produce records earlier due to lack of knowledge and late discovery of transactions
- Fresh documentary evidence (loan confirmations, PAN, bank statements, ITRs, etc.) was now produced
The ITAT held:
- The case involved genuine hardship and sufficient cause
- Tribunal has wide powers to admit additional evidence in the interest of justice
Accordingly, the Tribunal:
- Admitted additional evidence
- Set aside the additions for fresh verification
- Restored the matter to AO for de novo examination with proper opportunity
The appeal was allowed for statistical purposes, emphasizing that substantial justice prevails over procedural lapses, especially in exceptional circumstances like death of assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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 2016-17, date of order 19.08.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity the ‘Ld. AO’) order passed under section 147 r.w.s. 144B of the Act date of order 29.05.2023.
2. The brief facts of the case is that the assessee had filed the return, the assessee’s case was reopened u/sec. 148 of the Act. During the reassessment proceeding the additions were confirmed amount to Rs.7,79,01,141/- alleged unexplained money u/sec. 69(1) of the Act and amount to Rs.57,90,582/- towards capital gain on sale of assessee’s property. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) had rejected the assessee’s appeal. Being aggrieved assessee filed an appeal before us.
3. The Ld. AR argued and filed a paper book comprising pages 1 to 201 which has been placed on record. The assessee has filed the application for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 which is reproduced as below:
“Your Honours,
1. The above appeal concerns my late father, Abdul Gafar Abdul Karim Nadiadwala, who died on 22-08-2022. In his case, the following additions have been made in assessment order, which has been sustained by learned Commissioner (Appeals)
(a) Additions towards unexplained credit entries in his bank accounts totaling Rs. 7,79,01,141/- u/s 69A and
(b) Disallowance of cost of acquisition of Rs. 57,90,582/- in computation of capital gains on sale of his residential assessment.
2. My father maintained accounts of his investments under his own control and on his death, I did not have full knowledge of his private dealings and financial dealings. His assessment was mistakenly re-opened on the primary ground that he had not declared investments of mutual funds to the tune of Rs. 12,78,69,225. My tax representatives could show to the tax authority that his investments were fully disclosed in his income tax return In fact, my income tax return for prior year i.e. Assessment Year 2015-16 showed investments more than this figure I say all these to show the Hon’ble Tribunal had honestly filed his tax returns.
My father was 90 years at the time of his death in August 2022 and had age related limitations. Thereafter, as his legal heir, I did not have adequate knowledge of my father’s transactions and took time to understand whatever came my way. It so thus happened that my tax team could not co-relate some entries in his bank accounts with proper evidences to the satisfaction of the tax authorities with strict proof and additions resulted in his assessment order.
3. After filing appeal to the Hon’ble Tribunal, I engaged the services of an Independent chartered accounted, who conducted a deep scrutiny of all my father transactions and could arrive at the evidences required to prove the dispute entries of Rs. 7.79.01.141/-in his bank accounts
I am therefore filing herewith the same as additional evidences by way of a paper book now m appeal before the Hon’ble Bench. The paper book contains a chart of the disputed entries in my bank accounts, treated as his undisclosed income, the explanations about the true nature of the entries and the detailed evidences to prove their nature as not my undisclosed income.
4. I understand that under Rule 29 of the Appellate Tribunal Rules, 1963, the Hon’ble Tribunal has plenary powers to admit additional evidence to enable it to pass orders or for any substantial cause. I sincerely, submit that my case is eligible for exercise of these powers by the Hon’ble Tribunal as the substantial cause involved is the “Justice which was denied to my late father, because I could not explain entries in his bank accounts in the first instance, of which I had no knowledge at that time.
I would therefore, urge the Hon’ble Tribunal to please reach out to exercise its powers to admit my additional evidence and allow me to rely on the same in appeal.”
4. The Ld. AR contended that the documents related to the addition u/sec. 69, the assessee has submitted the evidence related to the loan repayment and the confirmation and PAN of the loan creditors including the bank statement, ledger account. The assessee has submitted the said evidence before the bench which is annexed in APB page 87 to 201. The Ld. AR invited our attention in impugned appellate order para 5 related to the observations contended by the Ld. CIT(A) in the relevant para which is reproduced as below:
“I have carefully considered the grounds of appeal, the assessment order and the written submissions filed. The Assessing Officer has recorded detailed findings that substantial sums aggregating to 7,79,01,141/- were credited in the assessee’s bank accounts during the year and utilised for investment in mutual funds, for which no satisfactory evidence of nature, identity, or source was produced despite repeated opportunities. Even at the appellate stage, apart from reiteration of earlier claims, no fresh explanation or additional evidence has been filed as is evident from Form 35. Bank statements per se cannot establish genuineness of such large cash/cheque credits without corroborative material. The onus lies on the assessee under law, which has not been discharged. Accordingly, the addition of 7,79.01.141/- as unexplained credits is upheld.
Similarly, with respect to sale of flat for 90,00,000/-, the Assessing Officer has computed long-term capital gains at 89,99,110/- after rejecting the claim of cost of acquisition for want of supporting evidence. The assessee has not produced any credible documentary evidence before the AO or in the appellate proceedings to substantiate the claimed indexed cost. In absence of any admissible additional evidence under Rule 46A, there is no basis to interfere with the AO’s working. The differential addition of 57,90,582/- is therefore confirmed.
In conclusion, the additions made by the Assessing Officer are sustained in full, as the assessee has failed to establish the source of impugned credits or the correctness of the claimed cost of acquisition.”
5. The Ld. DR relied upon the orders of the revenue authorities; however, no specific or strong objection was raised against the admission of the additional ground taken by the assessee.
6. We have heard the rival submissions and perused the material available on record. It is observed that an amount of Rs.7,79,01,141/- was credited to the assessee’s bank account during the year, which was stated to have been utilised for investment in mutual funds. The Ld. AR submitted that the relevant evidences had already been furnished before the Ld. AO as well as the Ld. CIT(A). It was further contended that the loans obtained from various creditors had been duly repaid, and in support thereof, confirmations, bank statements, PAN details, and copies of the ITRs of the loan creditors have been furnished as additional evidence. With regard to the addition relating to capital gains, the assessee has also submitted supporting details, which are placed in the APB. The Legal Heir of the assessee accepted that due to the death of the assessee the evidence was not properly arranged in proceeding before the revenue authority. Even the Legal Heir of assessee was unable to apply under Rule 46A of the Income Tax Rule, 1962 to substantiate the index cost of acquisition before the Ld. CIT(A) aginst addition of capital gain. Accordingly, we accept the additional evidence filed by the assessee before the Tribunal. Considering the entirety of facts and circumstances, we are of the considered view that one more opportunity ought to be granted to the assessee to substantiate its claim by placing the additional evidences before the Ld. AO. Accordingly, the matter is restored to the file of the Ld. AO for the limited purpose of verification of the aforesaid additions. We make it clear that we have not expressed any opinion on the merits of the case, which shall be adjudicated independently by the Ld. AO in the set-aside proceedings.
Needless to say, the assessee shall be afforded a reasonable opportunity of being heard, and all evidences and documents filed shall be duly considered in accordance with law. The assessee is also directed to extend full cooperation and act diligently for expeditious disposal of the assessment proceedings.
7. In the result, the appeal of the assessee bearing ITA No.6954/Mum/2025 is allowed for statistical purpose.
Order pronounced in the open court on 21st day of April 2026.
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