ITAT Mumbai remands unexplained loan addition in case of Sonali Sonu Sood to Assessing Officer

The Income Tax Appellate Tribunal, Mumbai Bench, in the case of Sonali Sonu Sood Vs ACIT (ITAT Mumbai), has remitted to the Assessing Officer the issue of an addition of Rs.76,00,000/- alleged as unexplained cash credits. The matter has been restored for a fresh decision with specific directions, and the appeal has been treated as allowed for statistical purposes.

The disputed addition consists of:

  • Rs.45,00,000/- shown as received from Krishnaraj Diamonds, and
  • Rs.31,00,000/- shown as received from **Renuka Exim`.

The foundation of the addition was the statement of Shri Udayanlal Kishanlal Jain, proprietor of M/s. Om Shilpi Jewellers, recorded under section 131 of the Income Tax Act 1961. The Tribunal noted that a coordinate bench had already examined an identical controversy arising from the same search in the connected case of Sonu Pankaj Shakti Sagar Sood vs. ACIT, Central, [2026] 186 taxmann.com 322 (Mum-Trib.), and had remanded the issue to the Assessing Officer with detailed directions. Respecting judicial consistency, the same course has been followed here.

Background of reassessment proceedings

  • The assessee had filed a return of income for Assessment Year 2013-14 on 31/03/2015, reporting a total income of Rs.4,13,090/-.
  • A search and seizure operation under section 132 was conducted on 15/09/2021 in the case of Shri Sonu Sood (husband of the assessee) and associated entities.
  • During this operation, proceedings under section 132 also covered the assessee.

Reopening under section 147/148

Following the search:

  • A notice under section 148 dated 30/03/2023 was issued to the assessee under the reassessment framework introduced by the Finance Act, 2021.
  • The reassessment was completed under section 147 by order dated 27/06/2023.
  • In this order, the Assessing Officer treated Rs.76,00,000/- credited as loans from Krishnaraj Diamonds and Renuka Exim as unexplained loans/cash credits and brought the same to tax.

The key basis for this conclusion was the statement of Shri Udayanlal Kishanlal Jain under section 131, which allegedly indicated the routing of accommodation entries through concerns controlled by him.

The assessee challenged the reassessment order before the CIT(A)-53, but the first appellate authority, by order dated 24/01/2025, confirmed the addition.

The assessee then approached the ITAT Mumbai.

Delay in filing appeal and condonation

Length of delay and explanation

There was an admitted delay of 245 days in filing the appeal before the Tribunal. To regularize the appeal, the assessee filed:

  • An application seeking condonation of delay, and
  • An affidavit outlining the circumstances that led to the late filing.

The Tribunal examined the explanation and supporting materials and heard both sides solely on this preliminary objection before moving to the merits.

The Tribunal relied upon the decision of the Hon’ble Supreme Court in:

**Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors.