INCOME TAX OFFICER, WARD 3(3)(5), AHMEDABAD, AHMEDABAD vs. SMIT CHOKSHI, AHMEDABAD

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member ITA No. 1864/Ahd/2025 Assessment Year 2017-18

The ITO, Smit Chokshi, Ward-3(3)(5), Room No. 516, Ahmedabad Vs Aayakar Bhavan, (Appellant) Nr. Sachin Tower, Vejalpur, Ahmedabad PAN: BCYPC7453C (Respondent)

C.O. No. 98/Ahd/2025 (in ITA No. 1864/Ahd/2025) Assessment Year 2017-18

Smit Chokshi, Room The ITO, No. 516, Aayakar Ward-3(3)(5), Bhavan, Nr. Sachin Vs Ahmedabad Tower, Vejalpur, (Respondent) Ahmedabad PAN: BCYPC7453C (Appellant)

Assessee by: Shri Anil Kshatriya, A.R. Revenue by: Shri Veerabadram Vishlavath, Sr. D.R.

Date of hearing : 24-03-2026 Date of pronouncement : 29-05-2026 आदेश/ORDER Per Suchitra Kamble, Judicial Member:

I.T.A No. 1864/Ahd/2025 & CO 98/Ahd/2025 Smit Chokshi, A.Y. 2017-18 This is an appeal filed against the order dated 08-07- 2025 passed by National Faceless Appeal Centre, (NFAC), Delhi for assessment year 2017-18.

The grounds of cross objection are as under:- 3. “1. On facts and circumstances of the case and in law, the Ld. ‘CIT(A) has grossly erred in dismissing the appellant's ground no.3 challenging the addition of Rs. 20,34,435/- so made by the A.O. making adhoc addition of 1% in GP disclosed by the appellant in total disregard to the appellant's written submission dated 12.08.2023 and Ld. CIT(A) has further grossly erred in enhancing the addition to the extent of Rs. 25,00,455/- on this score, without issuing a statutory notice u/s. 250 of the Act for enhancement of income and therefore, the appeal decision so passed on this ground is bad in law, illegal, invalid and is perverse on this count alone, as such it is liable to be quashed and set aside.”

I.T.A No. 1864/Ahd/2025 & CO 98/Ahd/2025 Smit Chokshi, A.Y. 2017-18 4. The assessee is an individual deriving income from business of trading in gold. The assessee made cash deposit of Rs.4,66,02,000 during the demonetization period. The assessee explained that this represents cash sales. The Assessing Officer stated that, sale bills furnished by the assessee, does not contain any details of sold, full details of customer, like their full name, contact No., address, gross weight, net weight, details of precious stones embedded on the jewellery, its weight and price is not written separately etc. All the 327 cash sale bills furnished by the assessee are below the amount of Rs.2 Lakhs. Not a single bill is of more than Rs.2 lakh, which is surprising. The assessee has not even furnished the addresses so that no further enquiry can be made by the department with regard to the such sales. Hence, the sale bills clearly indicates that the same are forged and not sold to the persons whose names are mentioned on the bills and also no such person exists. The assessee has made cash sales of only Rs. 74,89,524/- during the entire FY 2015-16 out of which cash sales of only Rs. 8,44,031/- was made during the period 01.04.2015 to 08.11.2015. However, the total cash sales of the assessee during the F.Y. 2016-17 has been miraculously increased to Rs. 5,14,00,010/-. Out of the same, the assessee has shown to made cash sales of Rs.4,77,17,662/- (540% increase that same period of last year) during the period 01.04.2016 to 08.11.2016 only, which is not justified. The assessee has shown to made huge cash sales only in the month of October 2016 and first week of November 2016 only i.e. period just before the start of demonetization, so as to justify the large cash at hand as on 08.11.2016 (midnight) and hence to justify cash deposited during the demonetization period. The assessee has shown NIL cash sale in the month of April, May, June and September, 2016. In the month of July and August, 2016

I.T.A No. 1864/Ahd/2025 & CO 98/Ahd/2025 Smit Chokshi, A.Y. 2017-18 meager cash sale of Rs.1,52,310/- and Rs. 4,28,362/- respectively has been shown by the assessee. Then, suddenly in the very next month of October 2016, cash sales of Rs.2,44,95,247/- has been shown by the assessee. Then, during the period of 01.11.2016 to 07.11.2016 (merely 7 days) cash sales of Rs.2,26,41,743/- has been shown to be made. The sudden increase in the cash sales is not supported by any factor. Even if cash sales made by the assessee during the same period of last year is analyzed, it is seen that the assessee has made total sales of Rs.8,44,031/- during the period 01.04.2015 to 08.11.2015. Therefore, the assessee has made cash sales 56 times higher than the same period of last year. Hence, it can be easily construed that the data shown by the assessee is merely an afterthought to justify the source of the unaccounted cash deposited by the assessee during the demonetization period. It is also pertinent to mention that the after showing such huge cash sales of several crores of rupees in the month of October and November 2016, the assessee has again show NIL sale in the months of December, January and February 2016. How can it be possible that the assessee who has ZERO sale in 07 months and meager sale in other 03 months of the F.Y. 2016-17 has made sale of approximately 4.70 Crores only in October and first 7 days of November 2016 (i.e a total of 38 days). Thereafter, the assessee has shown cash sales only in March, 2017. Further, the assessee does not hold any showroom. He has only an office/shop, which is located at 5th floor of some complex, Balaji Heights. Further, the above complex is not located on the main road of C G Road. It is located off C G Road. Further, it can also be seen from the rent expenses claimed by the assessee for the whole year of Rs.20,000/- only. This also indicates the location of the shop/office of the assessee. Further, even any jewellery

I.T.A No. 1864/Ahd/2025 & CO 98/Ahd/2025 Smit Chokshi, A.Y. 2017-18 show room which is located on the main C G Road or any good location, could not make cash sale of such a huge amount in a single day or in a few days, as shown by the assessee. In view of the elaborate discussion made above, it has become clear that the assessee made cash deposit of Rs.4,66,02,000/- during the demonetization period out of his undisclosed sources. Therefore, the amount of Rs. 4,66,02,000/- was treated as unexplained cash credits of the assessee and is added to the total income of the assessee.

Being aggrieved by the assessment order, the assessee 5. filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

I.T.A No. 1864/Ahd/2025 & CO 98/Ahd/2025 Smit Chokshi, A.Y. 2017-18

We have heard both the parties and perused all the 8. relevant material available on record. From the perusal of records though the Assessing Officer as well as the ld. D.R. doubted those evidences but as per the norm and practice the sales below 2 lacs are permissible for not disclosing the details of PAN of the customer. There was no dispute on the part of the Assessing Officer that there was a sale during the present assessment year prior to demonetization. Thus, the deletion on the part of the CIT(A) was justified and hence the appeal of the Revenue is dismissed.

The ld. D.R. relied upon the order of the CIT(A). 10.

I.T.A No. 1864/Ahd/2025 & CO 98/Ahd/2025 Smit Chokshi, A.Y. 2017-18 11. We have heard both the parties and perused all the relevant material available on record. The addition of Rs. 20,34,435/- was made by the Assessing Officer solely on the basis of adhoc quantum of 1% in GP disclosed by the assessee was not at all confronted to the assessee and beside this there was no other valid reasons for rejection of books of account. The CIT(A) at the first threshold has accepted the say and books thereof related to cash sales therefore this addition related to expenditure was not justified on any of the basis thereby rejected the books. Thus, the cross objection filed by the assessee is allowed.

Order pronounced in the open court on 29-05-2026

Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 29/05/2026 a.k. TRUE COPY आदेश की �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद