Income Tax Appellate Tribunal - Mumbai
Mathew Julius Menezes,Vasai Thane vs Income Tax Officer Ward 17 2 1 Mumbai, ... on 2 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" BENCH MUMBAI
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER &
SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER
ITA No. 7135/Mum/2025
(Assessment Year: 2018-19)
Mathew Julius ITO Ward - 17(2)(1),
Menezes, Mumbai
House No. 62, Opp Vs. Room No. 104, 1st
Gujrati School Behind Floor, Kautilya
Sanghavi Timber, Vasai Bhavan, C-41 to C-
(West), Thane, 43, G Block, Bandra
Maharashtra-401202. Kurla Complex,
Bandra East,
Mumbai - 400 051.
PAN/GIR No. AJZPM4296N
(Applicant) (Respondent)
Assessee by Shri Jitendra Singh, Ld. AR
Revenue by Smt. Usha Gaikwad, Ld. DR
Date of Hearing 18.03.2026
Date of Pronouncement 02.04.2026
आदे श / ORDER
PER MAKARAND VASANT MAHADEOKAR, AM:
This appeal is filed by the assessee against the order dated 29.09.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi[hereinafter referred to as "CIT(A)"], under section 250 of the Income Tax Act, 1961[hereinafter referred to as "the 2 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es Act"], arising out of the assessment order dated 26.03.2024 passed by the Assessing Officer under section 147 r.w.s. 144B of the Act for the Assessment Year 2018-19.
Facts of the Case
2. The assessee is an individual engaged in the business of trading in cashew, spices and pulses under the name and style of M/s Global Impex. No return of income for the year under consideration was filed by the assessee.
3. The reassessment proceedings were initiated on the basis of information flagged in the Insight system indicating that search and survey action conducted on a syndicate led by Shri Naresh Jain by the Investigation Wing, Mumbai, had revealed that the said group was engaged in providing accommodation entries in the form of long-term capital gains and losses through manipulation of scrips. It was alleged that cash was deposited in dummy bank accounts, layered through multiple accounts and routed through dummy trading accounts to provide accommodation entries to various beneficiaries.
4. Based on such information, notice under section 148A(b) dated 24.03.2022 was issued to the assessee alleging that he was a beneficiary of such accommodation entries to the extent of Rs. 12,83,070/-. The assessee filed response contending that he had not undertaken any such transactions and furnished demat account statements and bank statements to demonstrate that all transactions were genuine and routed through his own accounts.
3 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es However, the Assessing Officer was not satisfied with the explanation of the assessee and proceeded to pass an order under section 148A(d), thereafter issuing notice under section 148 and completing the reassessment under section 147 r.w.s. 144B.
5. During the course of assessment proceedings, the Assessing Officer issued notices under section 142(1) calling for details. The assessee furnished details of his business, bank statements, demat statements and working of short-term and long-term capital gains. It was the claim of the assessee that all gains were duly disclosed in the return of income. The Assessing Officer, however, relied upon the investigation findings relating to Shri Naresh Jain and held that the assessee was a beneficiary of accommodation entries. The Assessing Officer referred to alleged information received from the Investigation Wing and notices issued under section 133(6), and concluded that the assessee had received accommodation entries. Finally, the Assessing Officer treated a sum of Rs. 12,83,070/- as unexplained cash credit under section 68 of the Act and added the same to the total income of the assessee. The total income was thus assessed at Rs. 18,65,870/-.
6. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The assessee reiterated that there was no direct evidence linking the assessee with Shri Naresh Jain and that the addition had been made solely on the basis of general statements and investigation reports without any independent corroboration. It was further submitted that no 4 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es opportunity of cross-examination of the said person was provided to the assessee, and that the transactions in question were duly supported by documentary evidences placed on record. The Ld. CIT(A), however, upheld the action of the Assessing Officer by observing that the information received from the Investigation Wing indicated involvement of the assessee as a beneficiary in accommodation entry transactions and that the Assessing Officer was justified in making the addition.
7. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us and has raised the following grounds:
1. The National Faceless Appeal Centre (NFAC), Delhi ["Ld. CIT(A)" for short] erred in passing the order dated 29.09.2025 under section 250 of the Income Tax Act, 1961 ["of the Act" for short] upholding the assessment order dated 26.03.2024 passed under section 147 r.w.s 144B of the Act determining total income of the Appellant at Rs.
18,65,870/- without appreciating the facts and circumstances of the case. The Appellant strongly objects to the impugned order passed by Ld. CIT(A) as the same is illegal, arbitrary and perverse on the following amongst other grounds which are urged without prejudice to one another; -
2. Notice issued under section 148 of the Act to reopen the assessment is bad in law.
The Ld. CIT(A) erred in upholding the action of the Ld. A.O. in issuing the notice dated 20.04.2022 under section 148 of the Act to reopen the assessment without having any information which suggests that income chargeable to tax has escaped assessment for the assessment year under consideration 2018-19. The Appellant, therefore, humbly prays that the impugned notice issued under section 148 as well as the reassessment order passed in pursuance to the said notice is bad in law and the same may be quashed.
3. Adhoc addition under section 68 of the Act is unjustified - Rs. 12,83,070/-
The Ld. CIT(A) fell in error of law in upholding the action of the Ld. A.O. in treating the making adhoc addition of Rs. 12,83,070/- under 5 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es section 68 of the Act merely on conjecture and surmise. Thus, the addition of Rs. 12,83,070/- under section 68 of the Act is without any basis and the same may be deleted.
The Ld. CIT(A) failed to appreciate that the Appellant has not done any transactions with Shri Naresh Jain and therefore, the allegation that the Appellant is one of the beneficiaries is without verifying the records of the Appellant. Thus, the impugned addition of Rs. 12,83,070/- under section 68 of the Act is unjustified and the same may be deleted.
The Ld. CIT(A) further erred in upholding the action of the Ld. A.O. in making adhoc addition in the hands of the Appellant merely on the basis of general statement of Shri Naresh Jain without appreciating that Shri Naresh Jain had not specifically mentioned the name of Appellant in his statement. Thus, the impugned addition of Rs. 12,83,070/- under section 68 of the Act is against the provisions of law and the same may be deleted.
The Ld. CIT(A) further erred in upholding the action of the Ld. A.O. in making the addition in the hands of the Appellant without providing any opportunity to cross examine Shri Naresh Jain on whose statement he is relying upon to draw an adverse inference against the Appellant. The Appellant, therefore, humbly prays that the addition of Rs. 12,83,070/- is without any basis and the same may be deleted.
4. The Appellant denies any liability to pay interest under section 234B and 234C of the Act. Hence, the same are not leviable.
5. The Appellant craves leave to add, alter, amend, delete, rescind, or withdraw any of the grounds of appeal mentioned hereinabove.
8. The Ld. Authorised Representative (AR), assailed the very assumption of jurisdiction under section 147 of the Act and submitted that the notice issued under section 148 dated 20.04.2022 is ex facie bad in law and liable to be quashed. It was submitted that the jurisdiction to reopen an assessment under section 147 is conditioned upon the existence of "information 6 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es which suggests that income chargeable to tax has escaped assessment" as contemplated under section 148 and section 148A of the Act.
9. The Ld. AR submitted that the reasons recorded in the notice issued under section 148 of the Act are vague and non- specific, inasmuch as they do not disclose the precise nature of the alleged transactions or the manner in which the assessee is stated to be a beneficiary. It was contended that the reopening has been initiated merely on the basis of information flagged in the Insight system without any independent application of mind by the Assessing Officer or any tangible material establishing a live nexus between the assessee and the alleged accommodation entries.
10. The Ld. AR further submitted that the assessee has not entered into any transaction aggregating to Rs. 12,83,070/- as alleged by the Assessing Officer. Inviting attention to the detailed statement of transactions placed on record, it was pointed out that the share transactions undertaken by the assessee, including those in the alleged scrips, are duly reflected in the demat account and are supported by corresponding entries in the bank account. It was thus contended that the allegation of receipt of accommodation entries to the extent of Rs. 12,83,070/- is factually incorrect and not borne out from the transaction details furnished before the lower authorities.
7 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es
11. The Ld. AR further submitted that even in the order passed under section 148A(d) of the Act, the Assessing Officer has failed to provide any specific details or material establishing the alleged escapement of income and has merely reiterated the information flagged in the Insight system. It was contended that the Assessing Officer has not brought on record any independent enquiry, tangible evidence, or cogent material to substantiate the allegation that the assessee is a beneficiary of accommodation entries, and the entire proceedings have been carried forward solely on the basis of generalized information without demonstrating any direct nexus with the assessee.
12. The Ld. AR further placed reliance on the decision of the co- ordinate bench in the case of ACIT Vs. Mangalam Financial Services (ITA No. 3727/MUM/2025) and specifically invited our attention to paragraph 7 thereof. It was submitted that in the said decision, Co-ordinate Bench, after considering similar facts, had held that where the Assessing Officer has merely relied upon information available on the Insight portal and investigation reports without bringing any independent material on record or establishing a direct nexus between the assessee and the alleged accommodation entry providers, the addition cannot be sustained.
13. The Ld. AR further submitted that the notice issued under section 148 of the Act dated 20.04.2022 has been issued after obtaining approval from the PCIT, Mumbai-17. It was contended that since the impugned notice has been issued beyond a period 8 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es of three years from the end of the relevant assessment year, the approval ought to have been obtained from the specified authority being the Principal Chief Commissioner of Income Tax (PCCIT) in terms of section 151 of the Act, and not from the PCIT. It was thus submitted that the sanction accorded by the PCIT is without jurisdiction and consequently the notice issued under section 148 as well as the reassessment proceedings are liable to be held as invalid in law. The Ld. AR, in support of the above contention, placed reliance on the judgment of the Hon'ble jurisdictional High Court in the case of Vodafone Idea Limited vs. DCIT (Writ Petition No. 2766 of 2022, dated 06.02.2024), and specifically drew our attention to para 3 of the said decision. For ready reference, the relevant extract of para 3 of the judgment is reproduced herein below:
3. In the impugned order dated 5th April 2022 and the impugned notice dated 6th April 2022, both state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 5th April 2022 and 6th April 2022, respectively, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand.
14. Relying on the aforesaid binding precedent, the Ld. AR submitted that where the notice under section 148 is issued beyond a period of three years from the end of the relevant assessment year, the approval mandatorily has to be obtained from the PCCIT in terms of section 151(ii) of the Act as it stood 9 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es applicable for the relevant period. It was thus contended that approval obtained from the PCIT is not in accordance with law and renders the assumption of jurisdiction under section 147 invalid.
15. Per contra, the Ld. DR strongly relied upon the orders of the Assessing Officer and the Ld. CIT(A). It was submitted that the Assessing Officer has duly followed the procedure prescribed under the Act while issuing the notice under section 148, and the approval obtained from the PCIT constitutes a valid sanction in the facts and circumstances of the case.
16. We have carefully considered the rival submissions, perused the material available on record, including the reasons recorded, order passed under section 148A(d) of the Act, and the judicial precedents relied upon by the parties. The issue arising for our consideration is whether the assumption of jurisdiction under section 147 of the Act, culminating in issuance of notice under section 148 dated 20.04.2022, is valid in law.
17. The scheme of reassessment mandates that the Assessing Officer must possess "information which suggests that income chargeable to tax has escaped assessment" and must independently apply his mind before initiating proceedings. In the present case, on perusal of the reasons recorded and the order passed under section 148A(d), we find that the Assessing Officer has merely relied upon information flagged in the Insight portal alleging that the assessee is a beneficiary of accommodation 10 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es entries aggregating to Rs. 12,83,070/-. However, no specific details of the alleged transactions, parties involved, or the manner in which such transactions are linked to the assessee have been brought on record. It is further observed that even in the order passed under section 148A(d), the Assessing Officer has not conducted any independent enquiry nor has he brought any tangible material to establish a live nexus between the assessee and the alleged escapement of income. The proceedings appear to have been initiated in a mechanical manner based solely on generalised information.
18. The co-ordinate bench in the case of ACIT vs. Mangalam Financial Services (supra), as relied upon by the Ld. AR, has dealt with an identical situation. The relevant findings of the Tribunal are reproduced herein below:
7. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that assessing officer while passing the assessment order solely relied upon the information available in insight portal. Such information was based on the investigation carried out by Investigation Wing. The assessee in response to show cause notice of assessing officer with regard to sale of shares of Stampede Capital Limited submitted that they have no relationship with SMC Global Securities Ltd. and is not involved in manipulation of price or beneficiary of bogus entry. The assessee carried out transaction of trade through Marwani Shares and Finance Ltd. The scrips were publicly traded in recognised stock exchange. The assessee has shown taxable income of more than Rs. 4.30 crores and has paid tax of Rs. 1.47 crores. The reply of assessee was disregarded. The assessing officer solely relied on the report of Investigation Wing. We find that during First Appellate Stage, the assessee also took similar stand as of before assessing officer. Before ld. CIT(A), the assessee 11 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es stated that 4,500 shares of Stampede Capital Limited were in opening stock and they purchased 46,55,133 shares and sold 44,62,137 shares, leaving closing balance of 1,97,696 shares as on 31.03.2018. The assessee explained that they have no connection with Narendra Balasia or SMC Global Securities Ltd. and that their trading in shares was through Marwani Shares and Finance Ltd.
8. We find that ld. CIT(A) in his finding held that there is no evidence against the assessee nor the assessing officer proved any connection of assessee with SMC Global Securities who were found involved in manipulation of scrip of Stampede Capital Limited. The assessee traded on the platform of BSE or NSE. No comments were made in respect of transaction of assessee, which were carried through de-
mat account and banking channel. There is no allegation against the broker of assessee by SEBI or stock exchange. The broker of assessee is registered with Stock Exchange. On such categorical finding, the ld. CIT(A) deleted the addition.
19. From the aforesaid decision, the settled principle which emerges is that mere reliance on Insight portal information or investigation reports, without any independent verification or nexus with the assessee, is insufficient to sustain proceedings.
20. Applying the above ratio to the present case, we find that the Assessing Officer has not carried out any independent enquiry nor has he demonstrated any linkage between the assessee and the alleged accommodation entries. The reopening has thus been initiated on borrowed satisfaction, which is impermissible in law.
21. The Ld. AR has demonstrated, by placing reliance on demat statements and bank records, that the alleged transaction of Rs. 12,83,070/- is not borne out from the actual records and that the transactions undertaken by the assessee are duly recorded and verifiable. We find that the Assessing Officer has neither 12 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es controverted these factual submissions nor conducted any verification to establish the correctness of the allegation. This further reinforces the conclusion that the reopening has been initiated on incorrect and unverified facts.
22. The next and more fundamental issue relates to the validity of sanction obtained under section 151 of the Act. Admittedly, the impugned notice under section 148 has been issued on 20.04.2022 for Assessment Year 2018-19, which is beyond a period of three years from the end of the relevant assessment year. As per section 151(ii) of the Act, as applicable for the relevant period, the specified authority for granting approval in such cases is the Principal Chief Commissioner of Income Tax (PCCIT).In the present case, the sanction has been accorded by the PCIT, Mumbai-17, which is not the competent authority under the statute.
23. The Hon'ble jurisdictional High Court in the case of Vodafone Idea Limited vs. DCIT (Writ Petition No. 2766 of 2022 dated 06.02.2024) has categorically held as under:
"...since the impugned order as well as the notice are issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand."
24. Further, the Hon'ble High Court, following its earlier decision in Siemens Financial Services Pvt. Ltd., has held that sanction granted by an authority not prescribed under section 13 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es 151 vitiates the entire reassessment proceedings and renders the notice under section 148 invalid.
25. Respectfully following the binding precedent of the Hon'ble jurisdictional High Court, we hold that the approval obtained from the PCIT instead of PCCIT is not in accordance with law and strikes at the very root of jurisdiction. We also note that the proviso to section 151, which provides otherwise, has been inserted only with effect from 01.04.2023 and is not applicable to the year under consideration.
26. In view of the foregoing discussion, it is evident that the reopening has been initiated without any credible and specific information and there is complete absence of independent application of mind by the Assessing Officer. Also the alleged transactions themselves are not substantiated and most importantly, the mandatory sanction under section 151 has not been obtained from the competent authority.
27. Each of the above defects independently goes to the root of the matter and renders the assumption of jurisdiction invalid.
28. In our considered view, the notice issued under section 148 dated 20.04.2022 is bad in law and liable to be quashed. Consequently, the reassessment order passed in pursuance thereof cannot be sustained.
29. Since we have held that the notice issued under section 148 dated 20.04.2022 and the consequent reassessment proceedings 14 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es are invalid in law, the reassessment order passed under section 147 r.w.s. 144B of the Act stands quashed.
30. In view of the above, the other grounds raised by the assessee challenging the addition of Rs. 12,83,070/- under section 68 of the Act, denial of cross-examination, and levy of interest under sections 234B and 234C, being consequential to the validity of reassessment proceedings, do not survive for adjudication.
31. However, for the sake of completeness, we may observe that the addition made by the Assessing Officer is based primarily on generalised information received from the Investigation Wing without bringing any direct evidence on record to establish the assessee's involvement in the alleged accommodation entries. The assessee has placed on record demat statements and bank statements to substantiate the genuineness of the transactions. The Assessing Officer has not carried out any independent verification nor rebutted the documentary evidences furnished by the assessee. Further, no opportunity of cross-examination of the alleged entry operators was provided to the assessee.
32. Thus, even on merits, the addition would not be sustainable in view of settled judicial principles that additions cannot be made merely on the basis of third-party statements or investigation reports without corroborative material and without affording opportunity of cross-examination.
15 IT A No . 7 1 3 5 / M u m / 2 0 2 5 M at h e w J ul i u s M e n e z es
33. Be that as it may, since we have already quashed the reassessment proceedings on jurisdictional grounds, the adjudication on merits is rendered academic.
34. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 02.04.2026.
Sd/- Sd/-
(PAWAN SINGH) (MAKARAND VASANT MAHADEOKAR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated 02/04/2026
Dhananjay, Sr.PS
आदे श की प्रतितिति अग्रेतिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. सं बंधधत आयकर आयु क्त / The CIT(A)
4. आयकर आयु क्त(अपील) / Concerned CIT
5. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy//
1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai