SANJAY VRAJLAL KOTHARI V ITO 25(2)(3), MUMBAI

Case snapshot

Sections / provisions: 68; 250; Bank deposits

Questions before the Court / Tribunal

• Section 68 bank deposits: addition cannot mechanically include deposits outside the relevant assessment year and explained items require verification.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

Sanjay Vrajlal Kothari Vs. ITO Ward 25(2)(3) B-603, Shroff Apts, Mumbai Sodawala Lane, Borivali (West), Mumbai – 400092 स्थायी ले खा सं ./जीआइआर सं ./ PAN/GIR No: AGPPK5426K Appellant .. Respondent [

Appellant by : Anil Thakrar Respondent by : Suresh D. Gaikwad

The appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC, dated 15.03.2023 for A.Y. 2006-07. The assessee has raised the following grounds before us:

4. The appellant request to delete the addition confirmed by the CIT (A).

5. The appellant craves to add, alter or omit any or all of the above grounds of appeal before or at the time of hearing of the appeal.”

Appellant / assessee submissions

4. During the course of appellate proceedings before us the ld. Counsel submitted that in the aforesaid bank account the total deposit made was mostly by cheques and same were pertained to assessment

year 2004-05 to 2007-08. However, the assessing officer has incorrectly added the whole amount pertaining to all these assessment year in the assessment year 2006-07. As per the working given by the ld. Counsel only the amount of Rs.49,56,976/- was pertained to the period 01.04.2005 to 31.03.2006 relevant to assessment year 2006-07 and the remaining deposits was pertained to other assessment year i.e. 2004- 05, 2005-06 and 2007-08 which was included in the total income of the assessee pertaining to assessment year 2006-07. The ld. Counsel further submitted that out of the amount of cash and cheque deposit pertained to this year the ld. CIT(A) has already deleted the amount of Rs.15,93,895/- and out of the remaining amount of Rs.33,63,081/- some of the amount pertained to the friendly loan obtained and repaid to the parties as per the copies of loan confirmation letters and copies of bank statements placed in the paper book. The ld. Counsel further submitted that some deposit in the bank account are pertained to miscellaneous items i.e. bank charges, dividend etc. The Counsel submitted that aforesaid explainable items of deposits were incorrectly added to the total income of the…

of the mother of the assessee from 10.08.2008 to 26.12.2008. Therefore, ld. CIT(A) has accepted the additional evidences filed by the assessee and called remand report from the assessing officer. However, we find that the assessing officer has incorrectly added the whole amount of deposit found in the impugned bank account which was not pertained to the assessment year under consideration. Further as per the submission of the assesse there are some amount deposited in the bank account on account of dividend, bank interest and friendly loan taken by the assessee in respect of which the assesse has referred various document placed in the paper book. During the course of appellate proceedings before us the ld. Counsel submitted that there is no supporting evidences of loan on credit card of Rs.20,000/- and amount of deposit claimed on account of market Creation Limited to the amount of Rs.2.90 lac. All these issues were not considered at the time of remand proceedings, therefore, in the interest of justice we restore all the aforesaid issues except the amount of Rs.15,93,895/- for deciding a fresh to the file of the AO after affording adequate opportunity to the assessee.…

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

of the mother of the assessee from 10.08.2008 to 26.12.2008. Therefore, ld. CIT(A) has accepted the additional evidences filed by the assessee and called remand report from the assessing officer. However, we find that the assessing officer has incorrectly added the whole amount of deposit found in the impugned bank account which was not pertained to the assessment year under consideration. Further as per the submission of the assesse there are some amount deposited in the bank account on account of dividend, bank interest and friendly loan taken by the assessee in respect of which the assesse has referred various document placed in the paper book. During the course of appellate proceedings before us the ld. Counsel submitted that there is no supporting evidences of loan on credit card of Rs.20,000/- and amount of deposit claimed on account of market Creation Limited to the amount of Rs.2.90 lac. All these issues were not considered at the time of remand proceedings, therefore, in the interest of justice we restore all the aforesaid issues except the amount of Rs.15,93,895/- for deciding a fresh to the file of the AO after affording adequate opportunity to the assessee.…

Operative decision and relief

3. The Ld CIT (A) is also erred in confirming the said amount without considering the additional evidence filed at the time of remand report proceedings

3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) after considering the submission of the assessee called remand report from the assessing officer. The ld. CIT(A) has deleted the addition to the extent of Rs.15,93,895/- on the basis of confirmation of the various parties from whom the balance was recoverable on purchase of shares which were settled at later years.

of the mother of the assessee from 10.08.2008 to 26.12.2008. Therefore, ld. CIT(A) has accepted the additional evidences filed by the assessee and called remand report from the assessing officer. However, we find that the assessing officer has incorrectly added the whole amount of deposit found in the impugned bank account which was not pertained to the assessment year under consideration. Further as per the submission of the assesse there are some amount deposited in the bank account on account of dividend, bank interest and friendly loan taken by the assessee in respect of which the assesse has referred various document placed in the paper book. During the course of appellate proceedings before us the ld. Counsel submitted that there is no supporting evidences of loan on credit card of Rs.20,000/- and amount of deposit claimed on account of market Creation Limited to the amount of Rs.2.90 lac. All these issues were not considered at the time of remand proceedings, therefore, in the interest of justice we restore all the aforesaid issues except the amount of Rs.15,93,895/- for deciding a fresh to the file of the AO after affording adequate opportunity to the assessee.…

6. In the result, the appeal of the assesse is partly allowed for statistical purposes.

Ratio and legal principle

• A bank-credit addition for a particular assessment year must first be confined to credits legally attributable to that year; deposits from other years cannot be swept into the addition.
• Where multiple credits have distinct explanations and the evidence has not been properly examined, a credit-by-credit verification may be required instead of sustaining a blanket addition.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with section 68 bank deposits: addition cannot mechanically include deposits outside the relevant assessment year and explained items require verification. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

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Section / provision impact

• 68 - apply the exact version considered in the judgment.
• 250 - apply the exact version considered in the judgment.
• Bank deposits - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• Ramachandra Kanu Mendadkar v. CIT(A) - ITAT Mumbai - D Bench
• ACIT v Ramlal Jewellers Pvt. Ltd. - ITAT Mumbai - D Bench
• Krishna D. Pawar v. ITO - ITAT Mumbai

Different outcome / possible distinction

• ACIT, Circle-9(2), New Delhi Vs. Four Star Constructions Pvt. Ltd. - Operative order controls

Full judgment and source control

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