MADHURAM BHURAJI PUROHIT,AHMEDABAD vs. THE ITO, WARD-5(3)(4) PRESENT WARD-5(3)(1), AHMEDABAD

ITA 2580/AHD/2025Status: DisposedITAT Ahmedabad01 April 2026AY 2017-183 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found the addition made by the AO to be based on assumption, as the cash sales ratio was lower than the previous year and purchases were not doubted. Therefore, the addition was deleted.

What were the facts?

The assessee deposited Rs. 25,07,480/- in their bank account prior to demonetization. The assessee claimed this amount was from cash sales, supported by an increase in total and cash sales compared to the previous year.

What were the issues?

Whether cash deposits in a bank account, claimed to be from cash sales, can be treated as unexplained income without proper verification, especially when sales figures show a consistent pattern.

Which sections of the Income-tax Act were involved?

Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: Shri Sanjay Garg & Annapurna Gupta

For Appellant: Ms. Astha Maniar, AR

Hearing: 23/02/2026Pronounced: 01/04/2026

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 06/11/2025 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017-18. 2. The assessee, in this appeal, is aggrieved by the action of the Ld. CIT(A) in confirming the addition of Rs.25,07,480/- on account of unexplained cash Asst. Year : 2017-18

deposits in the bank account of the assessee prior to start of demonetization period. The case of the assessee is that the aforesaid cash was deposited out of the cash sales made by the assessee. The Ld. Counsel for the assessee has demonstrated from the record that the total sales of the assessee in the immediately preceding AY 2016-17 were Rs.2.02 crores, whereas, during the assessment year under consideration, i.e. AY 2017-18 the sales of the assessee have almost doubled to Rs.4.77crores. She has further demonstrated that the cash sales of the assessee during the immediately preceding AY 2016-17 were Rs.84.62 lakhs, whereas, the cash sales during the assessment year under consideration were Rs.1.41 crores. She has submitted that the assessee had cash available in his books of accounts on account of the aforesaid cash sales, which the assessee was required to deposit in the bank account on the announcement of demonetization scheme. Though the Assessing Officer (AO) has admitted the sales done through banking channel, however, has disallowed the sales made in cash.

We note that in the immediately preceding assessment year, the assessee had made cash sales of Rs.84.62 lakhs as against the total sale of 2.02 cores, which approximately comes to 40% of the total sales. During the year under consideration, the assessee had made total sales at Rs.4.77 cores and total cash sales made by the assessee during the year comes to 30% of the total sales, which ratio is quite lower than the earlier cash sales. The purchases have not been doubted by the AO. Under the circumstances, the impugned addition made by the AO merely on the basis of assumption and presumption by treating the cash sales as undisclosed income of the assessee is not tenable and the same is, accordingly, ordered to be deleted. Asst. Year : 2017-18

In the result, the appeal of the assessee stands allowed.

Order pronounced in the Open Court on 01/04/2026. (Annapurna Gupta ) Judicial Member

अहमदाबाद/Ahmedabad, िदनांक/Dated 01/04/2026 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की "ितिलिप अ#ेिषत/Copy of the Order forwarded to : अपीलाथ$ / The Appellant

"%थ$ / The Respondent. 2. 3. संबंिधत आयकर आयु& / Concerned CIT आयकर आयु& अपील

( ) / The CIT(A)- 5. िवभागीय "ितिनिध आयकर अपीलीय अिधकरण अहमदाबाद/DR,ITAT, Ahmedabad. , , 6. गाड" फाईल / Guard file.

आदेशानुसार/ BY ORDER, स%ािपत "ित //// सहायक पंजीकार (Asstt.

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