Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ITAT) 5144

INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Sanjay Garg, Judicial Member, Annapurna Gupta, Accountant Member
Income Tax Officer, Ward-5(3)(1), Ahmedabad – Appellant
Versus
Rajeshkumar Mohanlal Shah – Respondent
I.T.A. No. 575/Ahd/2020 (Assessment Year: 2007-08) | I.T.A. No. 10/Ahd/2021 (Assessment Year: 2007-08)

Advocates:
For the Appellants/Petitioners: Suresh Gandhi
For the Respondents: Ketaki Desai

Unexplained money withdrawn from fake accounts introduced/operated by assessee, without satisfactory source explanation, deemed income u/s 69A.

Headnote:Under Section 69A of the Income Tax Act, 1961, where an assessee is found to be the owner of money not recorded in books and fails to explain its nature and source satisfactorily, such money is deemed income. The Assessing Officer received information from RBI inspection revealing 9165 fake accounts opened in a cooperative bank with introduction by assessees (father and son), without KYC norms, crediting Rs. 161.16 crores siphoned off. Enquiries confirmed assessees withdrew funds via self-cheques, account holders denied knowledge, and bank manager admitted facilitation. AO added withdrawn amounts as unexplained income; CIT(A) deleted, holding assessees only earned commission offered to tax. Tribunal found assessees beneficiaries, confirming additions. Issues framed: Whether assessees proved non-ownership of withdrawn funds from fake accounts they introduced and operated, explaining nature/source per S.69A. Ratio: CIT(A) erred ignoring AO's enquiries disproving genuine workers/accounts; assessees bore onus, failed to substantiate cheque discounting claim or disprove via cross-examination; fake accounts and withdrawals established ownership, invoking S.69A deeming income. Revenue's appeals allowed; CIT(A) order set aside, AO's additions of Rs.5,49,98,884/- and Rs.2,58,55,572/- confirmed as deemed income u/s 69A.

Table of Content
1. identical appeals by revenue challenging cit(a) deletion of s.69a additions. (Para 2 , 3 , 4)
2. ao's enquiries establish fake accounts, withdrawals by assessees, invoking s.69a. (Para 5 , 6 , 7)
3. cit(a) erred accepting cheque discounting; fake accounts disproved genuine workers. (Para 8 , 9 , 10 , 11 , 12 , 13)
4. confirm ao additions; revenue appeals allowed. (Para 14 , 15 , 16)

ORDER

PER: ANNAPURNA GUPTA - AM:

Both appeals have been filed by the Revenue against the orders of the Ld. Commissioner of Income Tax (Appeals)-5, (hereinafter referred to as “CIT(A)”) Ahmedabad dated 02.09.2020 passed under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2007-08.

2. It was common ground that the issue involved in both the appeals were identical arising in the backdrop of identical set of facts,both the assessees , father and son,being alleged by the AO to have indulged in a fraud pertaining to siphoning off of funds from a cooperative bank. That the Ld. CIT(A), however, had granted relief to both of them holding that they were not conclusively proved to be the beneficiary of the funds siphoned off/withdrawn from the bank, but at the same time holding that since they had facilitated withdrawal of funds from the bank,commission income was earned on the same ,which he noted both the assessees to have offered to tax in the return of income filed. The Ld. CIT(A) accordingly deleted the addition made in the hands of both the assessees. The Revenue is aggrieved by this order of the Ld. CIT(A) and has accordingly raised identical grounds in both the appeals before us.

3. Both the appeals were accordingly taken up for hearing together and are being disposed of by a common consolidated order for the sake of convenience.

We shall be dealing with the facts in the case of the assessee Shri Rajeshkumar Mohanlal Shah(the son) in the Department’s appeal in ITA No. 575/Ahd/2020 and our decision rendered therein will apply paripassu the other appeal also.

4. Grounds raised by the Revenue in ITA No. 575/Ahd/2020 reads as under:

“(1) The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 5,49,98,8847- u/s. 69A of the I.T. Act on account of alleged withdrawal by the assessee from certain bank accounts being introduced by the assessee on the ground that the same are operated by the assessee.

(2) The Ld. CIT (A) has erred on the facts in not upholding the order of the AO in making addition of Rs. 5,49,98,884/- u/s. 69A of the I.T. Act, 1961 as the information was received from RBI that number of accounts were opened in Bapunagar Mahila Co-op. Bank wherein introducer is Shri Rajesh Mohanlal Shah, assessee and his father Shri Mohanlal Bhupatlal Shah without following KYCs norms credited Rs. 161,16,75,000/-in these accounts.

(3) It is therefore prayed that the order of the Ld. CIT(A) may be set aside and that of the order of the Assessing Officer be restored to the above extent.”

4.1 We have heard both the sides.

5. The brief facts relating to the case are that the Assessing Officer had received information that the assessees were involved in a fraud committed by Bapunagar Mahila Co-op. Bank. The AO had received information that during inspection by the Reserve Bank of India on 31.03.2011 of the Bapunagar Mahila Co-op. Bank, various financial irregularities and frauds were found to have been committed by the Bank. It was noticed that fake accounts totalling 9165 were opened by the introduction given by Late Shri Mohanlal Bhubhatmal Shah and his son Shri Rajen Mohanlal Shah, the assessees before us, without following KYC norms and total amount of 161,16,75,000/- was credited in these accounts. The amounts credited in the 9165 accounts had been noted to be siphoned off by both assessees, therefore, their cases were reopened by issuing notices under Section 148 of the Act. Detailed enquiries were conducted during assessment proceedings by the AO both

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