VISHAL BHANDARI,JHABUA vs. ITO, DHAR

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first appeal dated 16.10.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”], which in turn arises out of assessment-order dated 08.03.2025 passed by learned ITO, Dhar [“AO”] u/s 147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2020-21, the assessee has preferred this appeal.

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 (i) The assessee-individual is engaged in a small trading business named

“M/s Swastik Store”. For AY 2020-21, the assessee filed return on

10.01.2021 u/s 139 declaring a total income of Rs. 2,76,580/- which

was assessed u/s 143(1). Subsequently, the AO received information

from DDIT, Unit-2(1), Ahmedabad stating that during the course of

search u/s 132 conducted on one “M/s Ambica Group”, certain

incriminating documents were found and seized. The AO has re-

produced Invoice No. B10935 dated 11.11.2023 issued by M/s

Ambica Ashish Trade Link LLP on Page No. 2 of assessment-order.

This invoice is claimed to have been confronted to Shri Tejas

Vikrambhai Modi, Logistics Manager of the godown, vide Q.No. 16 of

the statements recorded during search, which is re-produced in AO’s

order. The AO considered statement of Shri Tejas and an excel sheet

and came to a conclusion that the assessee made unaccounted cash

transaction of purchase of Rs. 2,40,950/- from M/s Ambica Trading

Co. & M/s Bahucharkrupa Trading Company. Accordingly, the AO

issued notice dated 30.03.2024 to assessee. In response, the assessee

re-filed return on 29.08.2024 repeating the original income of Rs.

2,76,580/-.

(ii) Thereafter, the AO issued notices u/s 143(2)/142(1) which remained

partly complied with by assessee. During proceedings, the assessee

filed copies of Bank Statement, ITR Acknowledgement, Computation of

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 Income, Ledger accounts, Annual Sale Purchase Account, GSTR-4, etc.

which is acknowledged by AO in Para 3 of assessment-order. The Ld.

AO has, however, noted that the assessee “did not comment on the

issue of unaccounted cash transactions”. The AO thereafter treated

the alleged unaccounted cash transactions of Rs. 2,40,950/- as

unexplained money of assessee u/s 69A and closed assessment.

(iii) Aggrieved, the assessee carried matter in first-appeal and raised legal

issues to challenge the proceedings framed by AO as well as the

merits of additions. The Ld. CIT(A) fixed hearings on 25.09.2025,

06.10.2025 and 14.10.2025 but the assessee could not participate.

Ultimately, the Ld. CIT(A) rejected assessee’s grounds and dismissed

appeal.

(iv) Now, the assessee has come before us in present appeal.

“1. That the appeal order u/s 250 has been passed without giving proper and reasonable opportunity of being heard. 2. That the Notice issued u/s 148 of the Act is illegal, wrong and without authority of law and Jurisdiction. 3. That the Assessment Order passed u/s 147 of the Act is illegal, wrong and without authority of law and Jurisdiction. 4. That the additions made of Rs.2,40,950/- u/s 69A is illegal, wrong and unjustified.”

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 4. In Ground No. 1, the assessee is claiming that the Ld. CIT(A) has not

given proper and reasonable opportunities of hearing. Ground No. 2 & 3 are

legal grounds in which the assessee is challenging the legality of proceeding

done by AO. During hearing before us, Ld. AR made a brief submission qua

these grounds but, however, he immediately submitted that these grounds

may be treated as non-pressed if appropriate relief is granted to assessee in

Ground No. 4. The Ld. DR for revenue does not have any objection to this

submission of Ld. AR. Since in the discussions that would follow, we are

giving appropriate relief to assessee, the Ground No. 1 to 3 are dismissed

as non-pressed/non-pleaded.

is that the addition of Rs. 2,40,950/- made by AO u/s 69A on account of

unexplained cash transactions of purchase and upheld by CIT(A), is wrong

and unjustified.

made oral submissions. His submissions are summed up below:

(i) That the assessee is engaged in a very small level retail business of

general store named “M/s Swastik Store” at a smaller place named

Meghnagar.

(ii) That the assessee has no other source of income except the above

business.

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 (iii) That for the year under consideration, the assessee filed return of

income u/s 139 in form “ITR-4-Sugam” which is applicable to an

assessee engaged in the business covered under presumptive

provisions of section 44AD, 44ADA and 44AE. The assessee declared a

business turnover of Rs. 13,82,811/- and net profit of Rs. 2,76,580/-

u/s 44AD. The assessee re-filed very same return of income in

response to notice u/s 148.

(iv) That the assessee was having an absolute exemption from

maintaining books of account and documents since he opted for

presumptive taxation u/s 44AD. Therefore, the assessee has not

maintained any books of account or document.

(v) That, the Invoice No. B10935 dated 11.11.2023 issued by M/s Ambica

Ashish Trade Link LLP re-produced by Ld. AO on Page No. 2 of

assessment-order, which is the basis for alleging unaccounted

purchase by assessee, is in the name of “M/s Jay Ambe Fataka

Bhandar” and it nowhere contains name of assessee. Therefore, the

said invoice is not at all concerning present assessee.

(vi) That the observation given by Ld. AO that no submission was made by

assessee qua the issue of unaccounted purchase, is not correct. In

fact, the assessee filed a reply dated 16.11.2024 to Ld. AO, copy of

same is available at Page No. 1 of Paper-Book and re-produced below.

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 “To, The Assessing Officer, Sub : Show cause Notice as to why the proposed verification should not be made. Ref. : Show cause Notice ITBA/AST/F/147(SCN)/2024-25/1070069650(1) Dated 01/11/2024 माननीयमहोदय, "सरलश�द�म�म�यहकहनाचाहूँगा�कम�एकबहुतछोटा�यापार�हूँऔर आयकरअ�ध�नयमक�धारा44AD के�ावधान�कापालनकरताहूँ, इसकारणमेरे�वारा कोई�हसाब�कताबनह�ंरखाजाताहै, मेरे�वाराआपकोमेर��ब��वखर�द�सेसंबं�धत सार�जानकार�मेरेकेGST �रटन�औरब�क�टेटम�ट, वदोन�डीलस�क�लेजस�उपल�ध करअपनेप�कोरखाहै। म�आपसेपहलेभी�नवेदनकरचुकाहूँ�कM/s अं�बका�े�डंगकंपनीएवं M/s बहुचरकृपाकंपनी�वारामेरानामकहाँसेदज��कया, इसकामेरेपासकोई�माण नह�ंहै, उनदोन�डीलस�सेमेरे�वाराजोमालखर�दागयाहै, वहमेरेGST केपोट�लके फाम�4 म��प�ट�दखाईदेरहाहैऔरइसकेसंबंधम�मेरे�वाराउ�ह�केवलऔरकेवल 54536/- �पयेमेर�खुदरानकद�ब��म�सेआयकरअ�ध�नयमक�धारा40A(3) क� सीमाम�रहतेहुए�दएह�, जो�क�व�धस�मतलेनदेनक����याम�आताहै। आपके�वारामेरे�करणम�धारा69A वधारा115BBE लगायेजानेक�बात रखीगईहै, जो�कमुझछोटेवमझोले�यापार�के�लएठ�क�तीतनह�ंहोतीहै, �यो�क मेरे�वारएकछोटा�यापार�होनेकेबावजूदपूण�तःईमानदार�एवस�य�न�ठासेशासनको करकाभुगतान�कयाजारहाहै, इसकेउपरांतभीअगरआपमेरे�व��धधारा 69A व धारा115BBE का�योगकरतेह�, तोवहमेरे�लएबहुतबड़ादंडहोगा�य��कपूरेवष�क� मेर�आयह�2.5 लाखसे3 लाखहोतीहै, िजसम�क�गुजरबसरकरनाआजक�महंगाई केजमानेबहुतह�क�ठनहोताहै, अतः�ीमानसे�नवेदनहै�कइतनाकठोरदंडमुझेना दै, िजससे�कमुझेवमेरेप�रवारकोपूरेवष�आ�थ�कक�ठनाईकासामनाकरनापड़े। कृपाकरमेरेGST के�रटन�औरब�क�टेटम�ट, वदोन�डीलस�क�लेजस�तो आधारमानतेहुए, मुझेइस�करणम��नरंकआदेशदेनेकाक�टकर�, आपक�बड़ीकृपा होगी।

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 ध�यवाद। �थान: झाबुआ �दनांक: 16/11/2024 करदाता ह�ता/- (�वशालभंडार�)” In above reply, Ld. AR submitted, the assessee made a vehement submission qua the unaccounted purchase alleged by Ld. AO.

(vii) Thus, the assessee did not make any unaccounted purchase of goods as alleged by Ld. AO. Hence, no addition is warranted.

(viii) Lastly, Ld. AR submitted that the assessee has opted for presumptive taxation u/s 44AD. He submitted that in terms of section 44AD, an assessee can be taxed for the element of presumptive income only and the assessee is entitled to exemption from maintenance of books of account, documents and giving explanation of purchase, expenses, etc. Further, the alleged amount of unaccounted purchase is just Rs. 2,40,950/- and the assessee desires to close litigation. Therefore, he would be satisfied if the element of presumptive income u/s 44AD from the alleged purchase of Rs. 2,40,950/- is accepted. In that event, Ld. AR further prayed that a clear direction be issued to the Ld. AO that the provision of section 115BBE shall not apply. Ld. AR relied upon ITAT, Rajkot in Hanif Osman Ravda, ITA No. 447/RJT/2025, order dated 15.10.2025.

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 7. Per contra, Ld. DR supported the order of AO. He submitted that the

AO has acted on the basis of information received from Investigation Wing.

He submitted that the AO has made addition on the basis of cogent

information/evidence. He primarily requested to uphold the AO’s order.

However, he left the alternative prayer of Ld. AR accepting presumptive

taxation u/s 44AD, for the wisdom of bench.

have perused the orders of lower authorities as well as the material placed

on record to which our attention was drawn during the course of hearing.

The core issue arising for adjudication in the present appeal is whether the

AO was justified in making an addition of Rs. 2,40,950/- u/s 69A by

treating the alleged cash purchase transactions as unexplained money in

the hands of assessee.

very foundation of the addition made by Ld. AO appears to be fragile for

these reasons:

(i) The primary piece of evidence relied upon by Ld. AO, namely, the

Invoice No. B10935 dated 11.11.2023 issued by M/s Ambica Ashish

Trade Link LLP, is not in the name of assessee. It is admittedly in the

name of "M/s Jay Ambe Fataka Bhandar" which is an altogether

different entity. The AO has not placed on record any material to

bridge this gap and establish a nexus between the said Invoice and

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 assessee. A document belonging to a third party cannot, without more,

be used to fasten liability upon present assessee.

(ii) The AO's observation that the assessee did not comment on the issue

of unaccounted cash transactions is factually incorrect. The assessee

had filed a reply dated 16.11.2024 squarely addressing this issue, as

is evident from the copy filed in the Paper-Book (re-produced above).

(iii) It is an admitted and undisputed position that the assessee is a small

retail trader running "M/s Swastik Store" at a small place

“Meghnagar” and has no other source of income except the said

business. The assessee has opted for presumptive taxation u/s 44AD

and declared a business turnover of Rs. 13,82,811/- with net profit of

Rs. 2,76,580/- for the year under consideration. An assessee opting

for presumptive taxation u/s 44AD is statutorily not required to

maintain books of account and documents. Consequently, such

assessee cannot be expected to explain each individual purchase

transaction or cash flow in the manner contemplated under regular

provisions. To impose an addition u/s 69A in such circumstances, on

the basis of a document not even bearing the assessee's name, would

be to impose an obligation which the statute itself does not cast upon

the assessee.

(iv) The statement of Shri Tejas Vikrambhai Modi, Logistics Manager of

the godown, was recorded in the course of search operations upon

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 M/s Ambica Group. It is settled law that a statement recorded in the

course of third-party proceedings, without giving assessee an

opportunity to cross-examine the deponent and without any

independent corroborating evidence linking assessee to alleged

transaction, cannot be the sole basis for making an addition in the

hands of assessee.

with a view to bring finality to the litigation between the assessee and the

revenue, we find merit in the alternative and agreeable proposal put forth by

Ld. AR, which has also been fairly left to the wisdom of Bench by Ld. DR.

The assessee is engaged in a small business and has declared his income

under the presumptive scheme u/s 44AD. Taking a pragmatic view of the

matter, we accept the said proposal and direct that the amount of Rs.

2,40,950/- shall be brought to tax only to the extent of presumptive income

@ 20% thereon [since the assessee has himself declared a profit of Rs.

2,76,580/- on business turnover of Rs. 13,82,811/-, accepting net profit

rate of 20%], which works out to Rs. 48,190/- [20% of Rs. 2,40,950/-].

Accordingly, we uphold the addition only to the extent of Rs. 48,190/- and

direct the AO to modify assessment-order so as to sustain the addition to

that limited extent and delete excessive addition. Here, we would also like to

make it clear that since the amount is being assessed as presumptive

income from business u/s 44AD and not as income falling within the ambit

of section 68, 69, 69A, 69B, 69C or 69D of the Act, the provisions of section

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Vishal Bhandari ITA No. 1090/Ind/2025 – AY 2020-21 115BBE shall have no application to the addition sustained by assessee.

Therefore, the AO would charge tax as per slab rates of taxation as

applicable to an individual assessee and not u/s 115BBE. With this, the

Ground No. 4 is partly allowed.

peculiar facts of case and shall not be quoted or treated as a precedent.

Order pronounced in open court on 08/05/2026

Sd/- Sd/-

(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore

िदनांक/Dated : 08/05/2026

Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

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