HARESH M. BARIYA,JAMJODHPUR vs. DCIT CIR 2 (2) JAMNAGAR, JAMNAGAR

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ITA 541/RJT/2025Status: HeardITAT Rajkot18 August 2026AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted the assessee's failure to provide documentary evidence for HUF ownership of agricultural land. However, to settle the dispute, the addition was restricted to 20% of the estimated expenditure.

What were the facts?

The assessee deposited Rs. 9,25,000 during demonetization, claiming it was from the sale of agricultural produce belonging to his HUF. The Assessing Officer accepted the source but estimated expenditure at 40% and added the balance as unexplained expenditure.

What were the issues?

Whether the estimated expenditure on agricultural receipts, when the source of receipts was accepted but not the expenditure details, can be added as unexplained expenditure. Whether the addition can be made in the individual's hands when claimed to be HUF income.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri N. J. Tilara, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 13/08/2026Pronounced: 18/08/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 541/RJT/2025 [ �नधा�रण वष�/Assessment Year: 2017-18 ] Haresh M. Bariya Income Tax Office, Proprietor Kishan Petroleum, Bal Jamnagar CIT (A) Vs. Mandir, Road, Jamjodhpur-360530, Gujarat Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ARCPB8682J (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri N. J. Tilara, Ld. AR Respondent by : Shri Ganesh Iyer, Ld. Sr. DR Date of Hearing : 13/08/2026 Date of Pronouncement : 18/08/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as ‘Ld.CIT(A)’], dated 07.01.2025, which in turn arises out of an order passed by assessing officer u/s. 143(3) of the Act, dated 17.12.2019.

2.

The assessee filed his return of income on 04.11.2017 declaring total income of Rs.3,12,230/- under the provisions of section 44AD of the Income-tax Act, 1961.

ITA No. 541/RJT/2025 Harsh Masaribhai Bariya The case was selected for complete scrutiny under CASS on the issue of “Abnormal increase in cash deposits during the demonetization period as compared to the pre- demonetization period.” During the course of assessment proceedings, the Assessing Officer noticed that the assessee had deposited cash of Rs.9,25,000/- during the demonetization period from 09.11.2016 to 31.12.2016. On being called upon to explain the source of such cash deposits, the assessee submitted that the cash represented proceeds from the sale of agricultural produce amounting to Rs.10,15,000/- belonging to his Hindu Undivided Family (HUF). In support of his explanation, the assessee furnished various details and documents as called for by the Assessing Officer. The Assessing Officer accepted the explanation furnished by the assessee regarding the source of the cash deposits and did not dispute that the deposits were sourced from the sale of agricultural produce. However, the Assessing Officer proceeded to estimate agricultural expenditure at 40% of the agricultural receipts of Rs.10,15,000/-, amounting to Rs.4,06,000/-, and treated the same as unexplained expenditure under section 69C of the Act. The said amount was added in the hands of the assessee in his individual capacity, although the assessee had specifically claimed that the agricultural income and the corresponding agricultural activity belonged to his HUF. The Assessing Officer’s reasoning was that, although the assessee had satisfactorily explained the source of the cash deposits, he had not furnished sufficient details or documentary evidence regarding the expenditure allegedly incurred for earning the agricultural income. Accordingly, the Assessing Officer estimated such expenditure at 40% of the agricultural receipts and made an addition of Rs.4,06,000/- under section 69C of the Act as unexplained expenditure.

3.

Aggrieved by the above order, the assessee preferred an appeal before the CIT(A), who dismissed the appeal of the assessee and sustained the addition made by the Assessing Officer.

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ITA No. 541/RJT/2025 Harsh Masaribhai Bariya 04. Still, aggrieved by the order of the Ld. CIT(A) assessee in appeal before this Tribunal.

5.

At the time of hearing, the Ld. AR submitted that there was a delay of 150 days in filing the present appeal. In this regard, the assessee had filed an application seeking condonation of delay. Considering the reasons stated therein, we find that the assessee had shown reasonable cause for the delay in filing the appeal. Accordingly, the delay of 150 days is hereby condoned, and the appeal is admitted for adjudication on merits.

6.

Before us, the Ld. AR submitted that the agricultural income in question actually belonged to the HUF and, therefore, the same could not be assessed in the hands of the assessee in his individual capacity. However, when the Ld. DR objected to the said contention, it was submitted that the assessee had not furnished any documentary evidence to establish that the agricultural income was derived from agricultural land belonging to the HUF. No land records or other cogent evidence were produced to demonstrate that the agricultural produce was generated from HUF property. Therefore, the Ld. DR submitted that the authorities below were justified in sustaining the addition.

7.

We have heard the rival submissions and perused the material available on record. In the present case, the assessee has contended that the cash deposits were sourced from the sale of agricultural produce. However, the assessee has failed to furnish requisite documentary evidence, including land records, to establish that the agricultural activity was carried out on HUF property or that the agricultural income belonged to the HUF. Further, no satisfactory evidence has been furnished to establish that the relevant bank account was maintained in the name of the HUF. At the same time, it is not in dispute that the assessee had disclosed the agricultural

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ITA No. 541/RJT/2025 Harsh Masaribhai Bariya receipts of Rs.10,15,040/- and the Assessing Officer himself accepted the explanation regarding the source of the cash deposits. The dispute is essentially with regard to the expenditure estimated by the Assessing Officer in relation to the agricultural receipts. The Assessing Officer estimated such expenditure at 40% of the agricultural receipts and made an addition of Rs.4,06,500/- under section 69C of the Act. During the course of hearing before us, the Ld. AR, without prejudice to the primary contention, submitted that, in order to buy peace and to put an end to the litigation, the assessee was willing to offer 20% of the addition of Rs.4,06,500/- to tax. Considering the totality of the facts and circumstances of the case, and in the interest of justice, we deem it appropriate to restrict the addition to 20% of Rs.4,06,500/-, which works out to Rs.81,300/-. Accordingly, the remaining addition of Rs.3,25,200/- is directed to be deleted.

8.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on this 18th day of August, 2026.

Sd/- Sd/- [ Dr. Arjun Lal Saini ] [ Shri Sonjoy Sarma ] लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member //True Copy// राजकोट/Rajkot िदनांक/ Date: 18/08/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order //True Copy// Sr. Private Secretary ITAT, Rajkot

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