PRAKASH BHIMANDASH SINDHANI,JAMNAGAR vs. INCOME TAX OFFICER ,WARD 2(10), JAMNAGAR

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ITA 289/RJT/2026Status: DisposedITAT Rajkot27 July 2026AY 2020-215 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that while the assessee's explanation lacked full documentary support, cash transactions are customary in this business. Both parties agreed to an ad-hoc estimated addition.

What were the facts?

The assessee, engaged in seasonal trading, made cash purchases of Rs. 3,75,000/- from a wholesaler. The Assessing Officer added this amount as unexplained money, which was confirmed by the CIT(A).

What were the issues?

Whether the addition of Rs. 3,75,000/- as unexplained cash purchase was justified, and if not, what would be a reasonable estimated addition.

Which sections of the Income-tax Act were involved?

Section 132,Section 147,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Suresh Tejwani, Ld. AR
For Respondent: Shri Anandi Dixit, Ld. Sr. DR
Hearing: 16/06/2026Pronounced: 27/07/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, “SMC” Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member आयकर अपील सं. /ITA No. 289/Rjt/2026 [ िनधा�रण वष�/Assessment Year : 2020-21 ] Prakash Bhimandash Sindhani Income Tax Officer, Ward 2(10), बनाम/ 0 Nanakpuri, Ranjit Sagar Road, Ayakar Bhavan, Near Income Jamnagar, Gujarat-361001. Tax Office, Jamnagar, Gujarat, Vs. 361001 �ायीलेखासं./जीआइआरसं./PAN/GIR No.: BPRPS6422R (अपीलाथ�/Assessee) (��थ�/Respondent)

िनधा�रती की ओर से/Assessee by : Shri Suresh Tejwani, Ld. AR राज�की ओर से / Revenue by : Shri Anandi Dixit, Ld. Sr. DR सुनवाई की तारीख/Date of Hearing : 16/06/2026 घोषणा की तारीख/Date of Pronouncement : 27/07/2026

:: आदेश/ORDER ::

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year 2020-21, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals) [‘Ld. CIT(A)’], dated 11.11.2025, which in turn arises out of an assessment order passed by the Assessing Officer (hereinafter referred to as “AO”) u/s. 147 of the Act, on 25.03.2025.

2.

The solitary grievance of the assessee in this appeal is that Ld. CIT(A) erred in confirming the addition made of Rs. 3,75,000/-, as unexplained money u/s 69A of the Act, without considering the justification & explanation of the assessee.

3.

Succinctly, the factual panorama of the case is that assessee before me is an Individual.The assessee has filed return of income for assessment year (A.Y.) 2020-21, on 10/01/2021, declaring total income at Rs.3,63,690/-. A search action, u/s 132 of the Income-tax Act, 1961 was carried on at office premise of M/s Ambica Ashish Tradelink LLP situated at Ground Floor and Basement, Rudrapath Complex, Near Rajpath Club, S G Highway, Ahmedabad. During the course of search proceedings, it has been noticed that M/s Ambica Ashish Tradelink LLP is engaged in unaccounted sales in cash whereby cash is received in lieu of discount offered in invoice or in lieu of bills that are completely unaccounted. Further, analysis of ledger account of the assessee revealed that assessee is one of such persons who has entered into following cash transaction during the assessment year (AY) under consideration with Ambica Fireworks Group. The assessee has entered into unaccounted cash transactions aggregating to Rs.3,75,000/- during the year under consideration, and as such, the transaction mentioned above has not been subjected to taxation and has been found escaped assessment for A.Y. 2020-21 within the meaning of section 147 of the Income Tax Act, 1961.

4.

In response to the notice dated 08/10/2024, the assessee submitted before assessing officer that he is engaged in business of trading of various seasonal items such as fireworks, rakhi, gulal/pichkari etc and accepted that purchase of Rs.3,75,000/- have been made with Ambica Fireworks Group during the year under consideration and paid fully amount in cash. On perusal of the same it is noticed that no supporting documentary evidences submitted by the assessee in support of his claim therefore, the submission of the assessee was not found tenable, and hence assessing officer made addition of Rs.3,75,000/-.

5.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld.CIT(A), who has confirmed the action of the assessing officer, therefore, the assessee is in appeal before this Tribunal.

6.

I have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. At the outset, the Ld. Counsel for the assessee submitted that total addition made by the assessing officer in the hands of the assessee is only Rs. 3,75,000/- and a search under Section 132 of the Act was conducted in the case of M/s Ambica Ashish Tradelink LLP, who is the wholesaler. The case was selected on the allegation that the firm was making unaccounted cash sales and issuing invoices after receiving cash amounts shown as cash discount. The order of ld. CIT(A), in so far as, confirming the addition made of Rs. 3,75,000/-, as unexplained money u/s 69A is without considering the justification and explanation, and hence is not tenable when the same is allowable under the provision of the Act. Without prejudice to the above, ld. Counsel for the assessee also argued that considering the smallness of the amount, an adhoc estimated addition may be made in the hands of the assessee. On the other hand, the Ld. DR for the revenue did not raise objection, if ad hoc estimated addition may be made in the hands of the assessee.

7.

I have considered the submissions of both the parties. The original return of income of assessee for A.Y. 2020-21, was filed declaring total income of Rs.

3,63,690/-. The return of income filed with balance sheet and Profit and Loss Account. The assessee had also filed return of income under section 148 of the Act. A cash payment by Prakash Sindhani of Rs.3,75,000/- was made towards purchase of goods from M/s Ambica Ashish Tradelink LLP. The said amount was paid in cash at the time of purchase in parts not exceeding Rs.2,00,000/-.The assessee is engaged in the business of a seasonal store under the name New Deepak Seasonal Store. The store deals in seasonal items such as Firecrackers, Rakhi, Gulal, and Pichkari during respective festival periods. The nature of business is purely seasonal and sales vary according to festival demand and such a small purchases and Sales are done in cash. That is, assessee’s business is cash oriented business wherein purchases and sales are made in cash.The assessee is an individual small trader engaged in the business of seasonal items. The goods are purchased from wholesalers and sold to retail customers, in cash, after retaining a reasonable profit margin. In this line of business, cash transactions are ordinary and customary due to the nature of retail seasonal trade. I note that both the parties, that is, the Ld. Counsel for the assessee and the Ld. DR for the revenue have agreed that considering the smallness of the amount, the adhoc estimated addition may be made in the hands of the assessee. I note that during the assessment proceedings, the assessee submitted various documents and evidences to prove his claim, however, the assessing officer had not considered these documents and evidences in right perspective. At the same time, I also note that some of the documents and evidences submitted by the assessee before the lower authorities are self -servicing documents, therefore should not be relied on fully. Therefore, to meet the end of justice, I am of the view that an ad hoc estimated addition may be made in the hands of the assessee @ 8% on Rs.3,75,000/-, which comes to Rs. 30,000/- (8% of Rs.3,75,000). Therefore, I direct the assessing officer to make an addition in the hands of the assessee to tune of Rs. 30,000/-, by following normal rate of income tax (not u/s 115BBE of the Act), as the income pertains to business of the assessee.

8.

In the result, the appeal filed by the assessee is partly allowed, in above terms.

Order was pronounced in the open Court on 27/07/2026.

Sd/- [ Dr. Arjun Lal Saini ] लेखा सद�/Accountant Member //True Copy// राजकोट /Rajkot िदनांक/ Date: 27/07/2026 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot By Order 6. Guard File Sr. Private Secretary ITAT, Rajkot

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