Aabid Ali Khan vs The Assistant Commissioner Of Income Tax

$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 08.04.2026
+ ITA 262/2026 CM APPL. 19494/2026 CM APPL. 19495/2026
AABID ALI KHAN ....Appellant
Through: Ms. Sonia Mathur, Sr. Adv. With
Mr.Rajendra Sahu, Ms. Shubhi
Bhardwaj, Mr. Sushil Kumar Dubey,
Ms. Sadeena Khan and Ms. Manasi
Sridhar, Advocates
Versus
THE ASSISTANT COMMISSIONER OF INCOME TAX
.....Respondent
Through: Mr. Shlok Chandra, Sr. Standing
Counsel with Ms. Naincy Jain, Ms.
Madhavi Shukla, JSCs and Mr. Udit
Dad, Advocates
CORAM:
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE VINOD KUMAR
VINOD KUMAR, J. (ORAL)
1. The present appeal preferred under Section 260A of the Income Tax
Act, 1961 (in short “the Act”) is directed against an order dated 14.11.2025
passed by the Income Tax Appellate Tribunal, Delhi Bench ‘A’, New Delhi
(in short “ITAT”) in ITA No. 1714/DEL/2024. The present appeal pertains
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Signed By:PRAMOD
KUMAR VATS
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to Assessment Year (AY) 2017-18.
The facts as per the Assessment Order dated 17.05.2021
2. The Appellant-Aabid Ali Khan, resident of 2016, First Floor, Bank
Street, Karol Bagh, New Delhi-110005 is a holder of Permanent Account
Number (PAN) AGQPK0737J. The assessment order dated 17.05.2021 has
been reproduced by the Commissioner of Income Tax (Appeals) [in short
CIT(A)] in his order dated 16.02.2024.
3. Facts as per the Assessment order reveal that on 07.03.2017, the
police authorities at Shahjahanpur, Uttar Pradesh intercepted a bus coming
from Lucknow and bound for Delhi on the basis of secret information and
seized cash amounting to Rs.68,47,000/- along with some contraband
substance described as "brown sugar" from four persons namely Mujahid,
Shadab, Taufeek and Deepu Goswami. During interrogation, the said
persons disclosed that the seized cash belonged to Aabid Ali Khan (i.e. the
Appellant herein). Consequently, the matter was reported to the Income Tax
Department.
4. On receipt of this information, the Investigation Wing authorized
ITO, Shahjahanpur to inquire into the matter and furnish a report. The
enquiries revealed that cash amounting to Rs.68,47,000/- seized by the
police from Muzahid and Sahdab belonged to the appellant.
5. During enquiries, Shahdab and Muzahid made statements to the effect
that on 07.03.2017, they brought an amount of Rs.78,80,000/- from
Lucknow, when they were intercepted by the police. They stated that the
entire amount belonged to the appellant. They disclosed that the appellant
herein had given them an amount of Rs.80,42,100/- which they brought
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KUMAR VATS
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from Delhi to Lucknow on 04.03.2017 for the purchase of a property in
Lucknow. However, as the deal could not be materialised, the appellant
instructed them to bring back the money. They left Rs.1,20,000/- at
Lucknow and brought back the remaining amount of Rs.78,80,000/-.
6. On enquiry, the appellant reiterated the same facts and furnished a list
of seventeen persons (including himself, his wife Anisa Begam, his sons,
and Muthoot Finance Ltd.) from whom he claimed to have collected the sum
of Rs.80,42,100/-, out of which Rs.80,00,000/- were given to Shahdab and
Muzahid. He stated that the sum was collected from these persons to
purchase a property in Lucknow collectively as an investment. However, he
expressed his inability to produce these persons on the plea that it was not
possible to bring so many persons to Bareilly from Delhi.
7. He also furnished the names and addresses of the persons with whom
the deal was being negotiated in Lucknow. Therefore, enquiries were also
conducted with Muzahid Ali resident of Shahjahanpur who stated that he
was a property dealer and not the owner of the property no. 105/5
Hussainganj, Lucknow which was the subject of negotiations with the
appellant. He stated that since the deal did not materialise, no transfer of
property took place.
8. The Assessing Officer took note of the submissions of the appellant
and the evidence produced by him. He also perused the entries in the bank
accounts of these seventeen lenders advancing money, which showed that
the amounts in cash were withdrawn by these persons over a period of long
time stretching to weeks and even months. Therefore, the Assessing Officer
was of the opinion that the contention of the assessee (i.e. Aabid Ali Khan)
was only an attempt to explain unaccounted money seized by the police. He
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KUMAR VATS
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noted that in the affidavits furnished by these persons, no specific details
about the dates of payments/loans etc., were given.
9. It is to be noted that the appellant had also raised a plea that he had
obtained a gold loan amounting to Rs. 10,14,000/- from Muthoot Finance
Ltd., secured against gold ornaments to prove that he had been arranging the
funds for the bona fide purpose of purchasing a property. In support of his
contention, two loan sanction letters both dated 12.01.2017 was also
furnished which reflect that Aabid Ali Khan and his son Sajid Choudhary
had taken loans total amounting to Rs. 10,14,000/-.
10. The Assessing Officer was of the view that the appellant failed to
explain the source of Rs.68,47,000/- seized by the police on 07.03.2017. He
noted that there is no reason as to why so much cash was required to be
brought from Delhi to complete the deal, when the appellant himself had an
office at Hazratganj, Lucknow and could have easily transferred the amount
to his Lucknow office.
11. Further no reason was given by the assessee i.e. Aabid Ali Khan as to
why all the seventeen persons had given him money in cash after making
cash withdrawals from their bank accounts, and not through banking
channels because all of them had their own respective bank accounts.
12. The Assessing Officer was of the view that the money being carried
was not for the purpose of purchasing the property at Lucknow as claimed
by the appellant as he did not even know the exact quantum of the amount.
13. Observing these facts, the Assessing Officer held that a total cash of
Rs.80,42,100/-, which included the seized amount of Rs.68,47,000/-,
represented the assessee’s unaccounted income and was liable to be taxed
during the year under consideration (i.e. AY 2017-18).
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KUMAR VATS
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14. The Assessing Officer proceeded to pass the assessment order dated
17.05.2021 under Sections 144/153A read with Section 142(1) of the Act
making an addition of Rs.80,42,100/- as unexplained cash under Section
69A of the Act and an addition of Rs.4,02,300/- as estimated income
(average declared income for past two Assessments Years i.e. 2015-16 and
2016-17). The total assessed income was determined at Rs. 84,44,400/- and
with penalties, a demand of Rs.97,19,715/- was raised.
Appeal before Commissioner of Income Tax (Appeals) 29, New Delhi
15. Aggrieved by the Assessment Order dated 17.05.2021 passed under
Section 144/153A read with Section 142(1) of the Act, the appellant
preferred an appeal before the CIT(A). After considering the rival
submissions, the CIT(A) vide order dated 16.02.2024 allowed the appeal
partly by deleting the addition of Rs.4,02,300/- but sustained the addition of
Rs.80,42,100/- under Section 69A of the Act.
16. The CIT(A) had considered the facts of the case in detail and
examined the written submissions along with supporting evidence furnished
by the appellant. The grievance of the appellant was that the Assessing
Officer had added a sum of Rs. 80,42,100/- as against Rs.68,47,000/- seized
by the police.
17. The CIT(A) was of the opinion that the addition was made by
Assessing Officer on the basis of statement made by Aabid Ali Khan
himself which was corroborated by the statements of Shadab and Mujahid.
Therefore, the CIT(A) held that this addition has been correctly made by the
Assessing Officer on the basis of evidence recorded after examining various
persons and therefore, he declined to interfere with the order of the
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KUMAR VATS
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Assessing Officer regarding addition of Rs.80,42,100/-. Though he set aside
the addition of Rs.4,02,300/-.
Appeal before Income Tax Appellate Tribunal
18. Aggrieved by the order dated 16.02.2024 passed by the CIT(A), the
appellant filed an appeal before the ITAT, which dismissed the appeal vide
the impugned order dated 14.11.2025 and sustained the addition of
Rs.80,42,100/-.
19. His contentions before the ITAT were as under :
i) When only cash of Rs.68,47,000/- was seized, there was no
justification for an addition of Rs.80,42,100/- and that at the best
Assessing Officer should have made addition of Rs.68,47,000/- only
instead of Rs.80,42,100/-.
ii) The CIT(A) did not consider the loan sanction letter for the gold
loan of Rs.10,14,000/-.
iii) The CIT(A) did not consider the fact that the joint acquisition of
property by pooling resources is a well-accepted practice within the
Muslim community. The Assessing Officer failed to issue notices
under Section 131 of the Act to summon and examine the
contributors, whose names and affidavits along with the bank
accounts had been placed on record.
iv) When the assessee had provided prima facie evidence regarding
the identity of the persons and the sources of the pooled money, the
burden was shifted to the Department to verify the same, which the
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KUMAR VATS
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Assessing Officer could have done by making enquiries from the said
persons. Further, the affidavits of those persons could not have been
brushed aside without cross-examination.
20. The ITAT answered by holding that it is difficult to accept that as
many as seventeen persons helped the assessee in collecting a huge amount
of Rs.80,42,100/- and that believe this version would be extending the rules
of prudence beyond ordinary human conduct. The ITAT further held that the
Assessing Officer was justified in not issuing notices under Section 131 of
the Act to summon and examine the contributors, whose names, details and
affidavits were on record because the assessee had not sufficiently
discharged his initial onus to sufficiently explain the source. Therefore, the
Assessing Officer was not required to conduct further enquiries about the
truthfulness and credibility of the explanation.
21. Accordingly, the appeal was dismissed by ITAT vide the impugned
order dated 14.11.2025.
Submissions of the Parties before this Court and our opinion
22. Aggrieved by the above order of ITAT, the present appeal has been
preferred. Learned counsel for the appellant argues that the ITAT has not
answered any of the pleas raised before it and had passed a perfunctory
order.
23. On the other hand, Mr. Shlok Chandra, Senior Standing Counsel for
the department argues that all these issues are purely factual. He submitted
that the Assessing Officer, CIT(A) as well as the ITAT have reached the
same conclusion that the appellant could not sufficiently explain the source
of the huge cash and therefore, the appeal should be dismissed.
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KUMAR VATS
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24. We have carefully considered the submissions. True it is that this
court can entertain an appeal, only if the case involves a substantial question
of law. But by now it has been well settled that if there is patent illegality on
the face of it, the appellate court can interfere on the factual findings also, in
case the same are perverse. Therefore, while hearing the appeal under
Section 260A of the Act, this court has a limited window to look into the
facts. We may refer to Vijay Kumar Talwar v. Commissioner of Income-
tax, New Delhi (2011) 196 Taxman 136 (SC) in which Supreme Court of
India has held that a finding of fact may give rise to a substantial question of
law in the event of findings are based on no evidence or while arriving at the
said finding, relevant admissible evidence has not been taken into
consideration.
25. Having said so, now we proceed to take up the other issues raised by
learned counsel for the appellant. The first grievance is that when the
affidavits and statement of bank accounts of seventeen persons were
furnished to the Assessing Officer, he was required to issue notices under
Section 131 of the Act to verify the truthfulness of those evidences. It is
argued that by submitting the affidavits and the statement of bank accounts,
the appellant had shown the source of the money.
26. Learned counsel for the appellant argued that the relevant entries have
been highlighted in the statement of bank accounts of those seventeen
persons, which shows how the money was collected in accordance with
prevalent Muslim practices.
27. The appellant has placed on record Annexure P-4, which is a chart
showing the names of lenders who had give the money to the appellant, after
withdrawing the amounts from their bank accounts. A bare look at this chart
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itself shows that the cash withdrawals span a long period from April 2016 to
February 2017. Furthermore, a cursory look at the statements is enough to
hold that the amount of cash withdrawals is actually much less than as
claimed by the appellant and therefore, does not match with the claims made
in the affidavits.
28. This is the reason that Assessing Officer has specifically mentioned
that the appellant did not give details as on which date, the cash withdrawals
were made. Further there is no reason to unsettle the reasoning of the
Assessing Officer and so also of CIT (A) and ITAT that since the appellant
as well as these contributors had their own bank accounts, there was no
reason for them to take out money in cash and then hand over the same to
the appellant. Hence, we agree with the finding of the ITAT that the
appellant was unable to discharge the initial onus sufficiently and therefore,
there was no reason for the Assessing Officer to proceed in the direction of
verification of the claims in the affidavits.
29. Another important aspect of the matter is that allegedly money for the
deal was withdrawn from the banks by said seventeen lenders during the
period from April 2016 till February 2017 from time to time whereas the
cash was seized on 07.03.2017. As per the appellant, those seventeen
persons had given sum of Rs.80,42,100/- to him. One would wonder that
when the deal was not even in the offing, why would those seventeen
persons withdraw such huge amount in piecemeal that too over a period
spread in months. Had the assessee’s stand been true, all those persons
would have withdrawn the amount from their bank accounts immediately.
30. The antecedental facts and circumstances that not only an amount of
Rs.68,47,000/- was recovered from Shadab and Mujahid but also a huge
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KUMAR VATS
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quantity of contraband substance was recovered shows that the appellant-
assessee has cooked up a story and portrayed a picture to explain and justify
an illegal and unexplained income.
31. Now, we take up the issue of the gold loan availed by the appellant
and his son on 12.01.2017 from Muthoot Finance Ltd. Perusal of these two
loan sanction applications shows that the mode of payment was in cash.
These are the documents of the month of January and the seizure of cash
took place in the month of March 2017. The Assessing Officer has observed
that when all the contributors had bank accounts and Aabid Ali Khan
himself had a bank account, why the bank to bank transactions were not
conducted.
32. The grant of substantial money in cash as a loan by a financial
company (Muthoot Finance Ltd.) itself is unacceptable being not amenable
to reason. Further, there is sufficient time gap in the date of the loan and the
date of interception of the cash. In such level of unsatisfactory explanation
of the appellant, the Assessing Officer had no reason for verifying the details
of the said gold loan. Neither the onus shifted to the Department, nor there
was any need for cross examination of these contributors by the Assessing
Officer.
33. So far as the question of joint procuring of money for purchase of
property is concerned, the same could have been considered, had the
Appellant offered a satisfactory explanation. Moreover, the Appellant did
not produce even a single person out of the seventeen persons before the
Assessing Officer. We could have accepted the plea that it was not possible
to bring seventeen persons from Delhi to Bareilly before the Assessing
Officer due to distance but all these seventeen persons (except Muthoot
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Finance Ltd.) were either his family members or his close circle friends. It
does not appeal to reason that the appellant could not even produced some of
them before the Assessing Officer. The Assessing Officer was therefore,
justified in not accepting the explanation of the appellant.
34. Now we come to the issue as to whether the Assessment Officer
should have made addition of Rs. 80,42,100/- or Rs. 68,47,000/- to the
income of the appellant.
35. We have noticed that the Assessing Officer has summarised the
statements of Shadab, Mujahid (from whose possession the cash of
Rs.68,47,000/- was recovered) as well as of Aabid Ali Khan in his order.
Shadab and Mujahid stated that they had in their custody an amount of
Rs.78,80,000/-. However, when counted, the seized amount was found to be
Rs.68,47,000/-. They had also stated that Aabid Ali Khan had given them an
amount of Rs.80,00,000/- which they brought from Delhi to Lucknow for
purchase of a property. Aabid Ali Khan had also stated that out of the
collected amount of Rs.80,42,100/-, he had given Rs.80,00,000/- to Shadab
and Mujahid.
36. As already stated, the Assessing Officer did not accept the assessee’s
plea and rejected his claim of having borrowed or collected Rs.80,42,100/-
from seventeen persons. We fail to understand that when the Assessing
Officer himself had rejected the stand of the appellant about the
borrowing/collection of Rs.80,42,100/-, how he could take this figure of
Rs.80,42,100/- and make addition of this amount to the income of the
appellant. In fact the Assessing Officer has noted that the appellant did not
even know the exact amount. The Assessing Officer has recorded that the
appellant so also Shadab and Mujahid were not aware of the exact amount.
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KUMAR VATS
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37. Thus, we are of the view that the Assessing Officer himself had not
accepted the claim of the appellant having collected Rs.80,42,100/- from
seventeen persons, it was not justified for him to make an addition of
Rs.80,42,100/-. Once the plea or stand of the assessee was rejected, it has to
be rejected whole hog. The Assessing Officer cannot reject one side of the
story and accept the other, when there is no other incriminating material.
The fact that a sum of Rs.68,47,000/- was recovered and not only the
carriers of the said amount but also the appellant had admitted the amount to
be belonging to him, the Assessing Officer should have made an addition of
Rs.68,47,000/- in the hands of the assessee. The addition of Rs.80,42,100/-
to the income of the appellant is in itself contrary to Assessing Officer’s own
rejection of the appellant’s claim. Thus this addition of Rs.80,42,100/-
instead of seized amount of Rs. 68,47,000/- suffers from perversity. We hold
that an addition equal to the seized cash amounting to Rs.68,47,000/- alone
can be added in the hands of the appellant for the Assessment Year 2017-18.
38. Though the issue before us involves pure findings of fact and it is not
within the domain of this court to enter into the details of these facts,
however, in order to confine the addition to the extent plausible and
permissible, we have ventured into the factual analysis.
Conclusion
39. In view of the foregoing discussion, the appeal is partly allowed. The
addition of Rs.80,42,100/- is reduced to Rs.68,47,000/-. We thus, modify the
impugned order dated 14.11.2025 in the manner that there shall be an
addition of Rs.68,47,000/- in the income of the appellant during Assessment
Year 2017-2018. Consequences to follow. The Assessing Officer shall give
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KUMAR VATS
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appeal effect in accordance with law.
40. The pending applications also stand disposed of.
VINOD KUMAR, J
DINESH MEHTA, J
APRIL 08, 2026
VB
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KUMAR VATS
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