Vishal Rajnikant Shah Vs ITO (ITAT Nagpur)
Nagpur ITAT: ₹71.76 Lakh Addition u/s 69A Cannot Rest Merely on Departmental Information When Assessee Disputes Ownership of Bank Account – Remanded
The Nagpur ITAT dealt with an addition of ₹71.76 lakh u/s 69A, representing deposits/credits appearing in an account allegedly maintained by the assessee with Shri Renuka Mata Multi State Urban Cooperative Credit Society Ltd. The assessee, whose disclosed income was from salary and interest, consistently denied maintaining or owning the said account. The AO nevertheless treated the entire deposits as unexplained money and the CIT(A) confirmed the addition.
Before the Tribunal, the assessee contended that the AO had not conducted any independent enquiry to establish that the disputed account actually belonged to him. He also offered to produce additional documents and evidence to establish the true facts concerning the deposits.
Significantly, the assessee also raised additional legal grounds challenging the reassessment on two jurisdictional issues: (i) notice u/s 148 having been issued by the jurisdictional AO instead of the Faceless AO, relying upon the Bombay High Court decision in Hexaware Technologies Ltd., and (ii) whether proceedings ought to have been initiated u/s 153C rather than u/s 147 since the information emanated from a search conducted in the case of the cooperative society/bank. The Tribunal admitted these additional grounds as pure questions of law following NTPC Ltd. v. CIT.
The ITAT, however, did not finally adjudicate either the jurisdictional grounds or the merits of the ₹71.76 lakh addition. Considering that ownership of the account itself was disputed and additional evidence remained to be examined, it set aside the orders below and restored the entire matter to the AO for de novo assessment. The AO was directed to examine the documentary evidence, conduct necessary enquiries and pass a speaking order in accordance with law.
Thus, the appeal was allowed for statistical purposes, essentially giving the assessee a fresh opportunity to establish that the impugned account/deposits did not belong to him.
Cases Discussed:
- NTPC Ltd. vs. CIT (Supreme Court), [(1998) 229 ITR 383 (SC)]
- Hexaware Technology Ltd. (Bombay High Court), Writ Petition No. 1778/ of 2023
FULL TEXT OF THE ORDER OF ITAT NAGPUR
This appeal filed by the assessee is directed against the order of National Faceless Appeal Centre, Delhi, (for short, “CIT(A)”), dated 25/03/2025 passed under section 250 of the Income Tax Act, 1961 (for short, “Act”) which is emanating from the assessment order dated 20.02.2024 passed u/s. 147 r.w.s. 144B of the Act, for the Assessment Year (AY) 2016-17.
2. Assessee has raised the following grounds of appeal: –
1. Whether on the fact and circumstances of the case, the Ld. CIT(A) was justified in affirming the addition made by the Assessing Officer on account of total credits received in the bank account held with Shri Renuka Mata Multi State Cooperative Society, to the income of the appellant under section 69A of the Income Tax Act, 1961.
By filing an application dated 24.06.2025, assessee raised additional grounds of appeal, which reads as under:-
2. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred by not quashing the notice u/s. 148 and order u/s. 148(d) dated 31.03.2023 issued by the Jurisdictional Ld. Assessing Officer and not Faceless Assessing Officer being invalid and bad in law specifically in light of CBDT Notification No. 18/2022/F.No.370142/ 16/2022-TPL and recent decision of Jurisdictional Bombay High Court in the case of Hexaware Technology Ltd. (Writ Petition No. 1778/ of 2023)
3. Whether on the facts and circumstances of the case the Assessing Officer was justified in assuming jurisdiction u/s. 147 and not u/s. 153C when the basis on which case was sought to be reopened was the information emanating from the search conducted in the case of Renuka Mata Multi-State Co-operative Bank.
3. We have heard rival submissions and examined the additional grounds raised by the assessee. The additional grounds raise a pure question of law arising from the facts already available on record and do not require any further investigation into fresh facts. Therefore, following the judgment of Hon’ble Supreme Court in the case of NTPC Ltd. vs. CIT [(1998) 229 ITR 383 (SC)], we admit the grounds raised additionally and are taken up for consideration on merits.
4. Facts of the case, in brief, are that assessee is an individual deriving income from salary and interest. He filed his return of income for the A.Y.2016-17 on 03.08.2016 declaring total income of Rs. 6,03,913/-. Based on information available with the Department, Ld.AO noticed that credits/deposits aggregating to Rs. 71,76,029/- had been made during the relevant previous year in an account maintained with M/s. Shri Renuka Mata Multi State Urban Cooperative Credit Society Ltd., allegedly pertaining to the assessee. During the course of assessment proceedings, statutory notices u/s. 143(2) and 142(1) of the Act were issued and duly served upon the assessee. In response, assessee denied having maintained any account with the said Cooperative Credit Society. Subsequently, proceedings for reassessment were initiated by issuance of notice u/s. 148 of the Act. Although notice u/s. 148 was duly served, assessee failed to furnish any return of income in response thereto. Ld. AO observed that assessee had neither substantiated his denial nor furnished any documentary evidence explaining the nature and source of the deposits reflected in the information available with the Department. Accordingly, treating the deposits amounting to Rs. 71,76,029/- as unexplained money u/s. 69A of the Act and completed the assessment by making the said addition and determined the total income of the assessee at Rs. 77,79,942/-.
5. Aggrieved by the order of Ld. AO, assessee preferred appeal before the Ld. CIT(A), who dismissed the appeal of the assessee holding that assessee has failed to explain the nature and source of the credits in the bank account.
6. Being aggrieved with the order of Ld. CIT(A), assessee is in appeal before this Tribunal. Learned counsel for the assessee reiterated the submissions made before the lower authorities and invited our attention to the paper book comprising 181 pages filed before the Tribunal. It was submitted that assessee is an individual deriving income only from salary and interest and has not carried on any business or profession during the year under consideration. Consequently, the assessee has not maintained any regular books of account. Learned counsel further submitted that the addition u/s. 69A of the Act has been made solely on the basis of information received by the Department regarding certain deposits in an account allegedly maintained with M/s. Shri Renuka Mata Multi State Urban Cooperative Credit Society Ltd. The assessee has consistently denied maintaining such account and has disputed the ownership of the alleged deposits. It was contended that Ld.AO has not conducted any independent enquiry to establish about the account is belonged to the assessee, before invoking the provisions of section 69A of the Act.
6.1 Without prejudice to the above submissions, learned counsel fairly submitted that assessee is now in possession of certain additional documents and is willing to furnish all relevant details, documentary evidence and explanations before the Ld. AO to establish the true facts relating to the impugned deposits. It was submitted that such evidence could not be placed before the Ld. AO during the course of assessment proceedings. Learned counsel, therefore, prayed that the impugned orders of the authorities below be set aside and the matter be restored to the file of the Ld. AO for decision afresh.
7. Ld. Departmental Representative (DR) relied on the orders of the authorities below.
8. Considering the facts and circumstances of the case, we are of the considered opinion that the issues raised require fresh examination at the end of the Ld. AO. The addition u/s. 69A has been made with reference to the deposits reflected in the information available with the Department. The assessee has disputed the ownership of the account and has expressed his willingness to furnish further documentary evidence in support of his claim. He also challenged the validity of the notice issued as well as the assumption of jurisdiction u/s. 147 of the Act instead of u/s. 153C of the Act by raising additional grounds, and the documents sought to be relied upon, have not been examined by the Ld. AO, and in order to ensure that the assessment is completed on the basis of all relevant facts and evidence, we deem it appropriate to afford one final opportunity to the assessee. Therefore, in the peculiar facts and circumstances of the case, we consider it just and proper to restore the issues to the file of the Ld. AO for de novo assessment. Accordingly, we set aside the impugned orders and restore the issues to the file of the Ld. AO with a direction to examine all the documentary evidence that may be produced by the assessee, conduct such enquiry as may be considered necessary, and thereafter decide the issue afresh in accordance with law by passing a speaking order. The grounds of appeal raised by the assessee are allowed for statistical purposes.
9. In the result, appeal filed by the assessee stands allowed for statistical purposes only for limited purpose for establishing the ownership of account.
Order pronounced on 10.08.2026 under Rule 34 of Income Tax (Appellate Tribunal) Rules, 1963
