DY. COMMISSIONER OF INCOME TAX, MUMBAI vs. RAMESH PANNALAL RANAWAT, MUMBAI

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ITA 5782/MUM/2024Status: DisposedITAT Mumbai08 December 2025AY 2015-16Bench: Shri Pawan Singh (Judicial Member), Shri Omkareshwar Chidara ( (Accountant Member)6 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the addition made by the AO for unaccounted sales was devoid of merits and evidence. The extrapolation of sales based on limited CCTV footage without corroborative evidence was considered invalid. The Tribunal also noted that the AO rejected the books of account without proper justification.

What were the facts?

During a survey, the AO found discrepancies between actual sales and reported sales, estimating unaccounted sales of Rs. 149.52 crore. The appellant argued that the AO's estimation based on CCTV footage was unscientific and lacked corroborative evidence. The AO rejected the books of account without proper reasons.

What were the issues?

Whether the addition made by the AO on account of alleged unaccounted sales based on limited CCTV footage and without corroborative evidence is sustainable? Whether the rejection of books of account by the AO was justified?

Which sections of the Income-tax Act were involved?

Section 133A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Mumbai “D” Bench, Mumbai.

Before: Shri Pawan Singh (JM) & Shri Omkareshwar Chidara (AM)

For Appellant: Shri Vipul Zaveri, Shri Annavaran Kosuri
Pronounced: 08/12/2025

The Revenue filed an appeal in the above cited case stating that Ld. CIT(A) has erred in deleting the addition made by Ld. AO on account of undisclosed sales of Rs. 11.78 crore. For the same assessment year, the appellant has filed a cross objection stating that the assessment order passed under section 143(3) of the I.T. Act by Ld. AO is bad-in-law and the assessment order should be quashed.

2 Ramesh Pannalal Ranawat Rahul Ramesh Ranawat (legal heir of late Ramesh Pannalal Ranawat)

2.

Since the assessment year involved is the same and issues involved are same, the Income Tax Appeal of Revenue and cross objection filed by appellant are clubbed and a single order is passed.

3.

In this case, the appellant is a manufacturer and dealer in gold ornaments and they also undertake job work. A survey under section 133A of the Income Tax Act was conducted by Income Tax Department at Cuttack Branch of appellant on 10.4.2014. The Ld. AO in assessment order states that during the course of survey, huge discrepancies were found between actual sales and sales reported for tax purposes. The Ld. AO is of the view that the total sales of Cuttack Branch is Rs. 149.52 crore as against Rs. 13.82 crore admitted by appellant and accordingly, a show-cause notice was issued to appellant accordingly to explain the discrepancy. The Ld. AR of the appellant has filed detailed explanation with respect to the estimated sales computed by Ld. AO and argued that the CCTV footage of period from 31.3.20214 to 10.4.2014 at Cuttack Branch could not be extrapolated for the entire year. The estimated of unaccounted sales made by the Ld. AO does not have any scientific basis nor there is any corroborative evidence. The Ld. AR says that he has asked the Department to give a copy of CCTV footage on the basis of which extrapolation of unaccounted sales was made, but the same was not given. The Ld. AR argues that if 103 persons came on a particular days, it cannot be presumed that 103 sale transactions took place because many people come to see the designs, to find out rates and many people does not buy the gold jewellery who enter the shop. Many times, 4 to 5 people come to buy a single piece of jewellery also. If there are unaccounted cash sales, as presumed by Ld. AO, there should be corroborative evidence with respect to cash bills/slips/estimate etc. and nothing of such documentary evidence was found by Department during survey action at Cuttack. The amount received by cash sales was deposited in the Bank account only and the same may be verified. The Ld. AR has 3 Ramesh Pannalal Ranawat Rahul Ramesh Ranawat (legal heir of late Ramesh Pannalal Ranawat)

flawed the method of computing of the unaccounted cash sales by saying that average sales per invoice is 38.498, there is an average number of sales of 50 per day and the average rate was taken at 2476 with 310 working days per annum and then arrived at the unaccounted cash sales of Rs. 149.52 crore which was not backed by any evidences. The Ld. AR also relied on the order of ITAT in his own case in earlier year vide where it was held that such extrapolation is invalid in the absence of any corroborative evidences. The Ld. AR of appellant at the time of hearing before ITAT had strongly relied on the order of ITAT in appellant’s own case in earlier year where extrapolation was neither scientific nor has any documentary evidence was found to come to the conclusion of such huge unaccounted cash sales. It was argued by Ld. AR that the matter stands covered in their favour by earlier year ITAT order as the facts and circumstances are similar. The Ld. AR of appellant has filed summary of ITAT order in his own case for this A.Y. 2014-15 in the written submissions.

4.

The Ld. DR relied on the assessment order where it was mentioned that CCTV footage shows that many persons are coming and going from shop whereas corresponding sales were not admitted. Hence, the estimate made by Ld. AO should be upheld.

5.

Heard both sides. There is considerable force in the arguments of Ld. AR of the appellant. The Bench is of the view that the addition made with respect to unaccounted sales is devoid of merits and evidence and should be deleted for the following reasons :-

a) The Bench has specifically asked for a copy of CCTV footage of 10 days on the basis of which unaccounted sales were extrapolated. The Ld. AR of the appellant has also asked for a copy of the same earlier and the same was not given to anyone including to ITAT.

4 Ramesh Pannalal Ranawat Rahul Ramesh Ranawat (legal heir of late Ramesh Pannalal Ranawat) b) Where a huge addition of Rs. 130 crore plus is made by Revenue, there should be some pieces of evidence for accounted cash sales. Absolutely, there is no documentary evidence to show that even 1/10th of such unaccounted sales. c) No unaccounted cash was found in the business premises nor the Ld. AO could show which cash deposit in bank corresponds to unaccounted sales. d) The books of account were rejected by Ld. AO and estimate was done. No reasons were recorded/mentioned by Ld. AO for rejecting the books of account which were duly audited. e) The important aspect which should be taken into account is that a remand report was called for from Ld. AO where it was stated that there is no change in facts of case as compared to A.Y. 2014-15 and the remand report sent for A.Y. 2014-15 has to be considered for this year also. The Revenue has admitted that the facts and circumstances in A.Y. 2014-15 and 2015-16 are similar. In such circumstances, the order of ITAT in appellant’s own case for A.Y. 2015-16 should be pari materia with A.Y. 2014-15. For A.Y. 2014-15, the Coordinate Bench has passed a detailed order as to why the extrapolation of 10 days cannot be made applicable to entire year especially when no corroborative evidence was found with respect to corresponding unaccounted stock or cash.

6.

In view of the above, the appeal of Revenue is dismissed.

5 Ramesh Pannalal Ranawat Rahul Ramesh Ranawat (legal heir of late Ramesh Pannalal Ranawat)

7.

The Cross Objection does not survive as there is no material to corroborate the grounds mentioned by appellant. Hence, the cross objection is also dismissed.

Order pronounced in the open Court on 08/12/2025.

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