INCOME TAX OFFICER, WARD-3(1)(2), AHMEDABAD, AHMEDABAD vs. KIRANSINH ABESINH VAGHELA, AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 2675/Ahd/2025 (िनधा�रण वष� / Assessment Year : 2017-18) Income Tax Officer बनाम/ Kiransinh Abesinh Ward-3(1)(2), Ahmedabad Vaghela Vs. 2485, Gohel Sheri, Sanand, Ahmedabad, Gujarat - 382210 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AEPPV2469D (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Alpesh Parmar, CIT.DR ��यथ� क� ओर से/Respondent by : Shri Prashant Srivastav, AR Date of Hearing 16/03/2026 Date of Pronouncement 21/05/2026

(आदेश)/ORDER PER ANNAPURNA GUPTA, AM:

The present appeal has been filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 24.10.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18.

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 2 – 2. The grounds of appeal raised by the Revenue are as under:

“(a) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in admitting the additional evidences in contravention with provisions of Rule 46A without allowing the AO to examine the same by calling of remand report and thereby deleting the addition of Rs. 7,68,55,833/-, made by the AO u/s 69A of the Act. (b) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in not setting aside the assessment by exercising powers u/s 251(1)(a) to the file of AO to decide the issue afresh as the original assessment order was passed u/s 144 of the Act.” 3. Brief facts relating to the case are that during the year under consideration it was observed that the assessee had total credits of Rs.7,68,55,833/- in his bank account which was mainly through cash deposits and cheque deposits, RTGS/NEFT and debits were mainly through transfers to different entities. The total credit was found to be not commensurate with the income offered in return of income filed by the assessee. Notices were issued to assessee to furnish the details and documents regarding the source of cash deposits and other credits in the bank accounts along with supporting documents. However, the assessee did not respond to the same. Therefore, the AO added the entire credits of Rs. 7,68,55,833/- as unexplained money u/s.69A of the Act to the total income of the assessee in the assessment framed u/s.147 r.w.s. 144 of the Act.

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 3 – Mills and, accordingly, all payments of purchases were made through banks. All the purchasers of the said commodity, he contended were Farmers and Shepherds who were inhabitants of small villages and since the commodity was sensitive to season effect and could be spoiled if stored for long period, the assessee, it was explained, sold his goods in cash and deposited the said amount of the sales received in cash in bank accounts. The assessee stated that he had maintained regular books of accounts for the impugned assessment year, which were audited u/s. 44AB of the Act by a certified Chartered Accountant and the said Audit Report was uploaded by the Assessee well within the time prescribed under the provisions of the Act. The assessee stated, therefore, that the entire credit entries of Rs.7,68,55,833/- reflected in the bank account of the assessee pertained to the sales made by the assessee during the course of the business activity carried out by it. The asessee furnished documentary evidences, like; bank statement of the Prime Co-operative Bank Limited (Current Account) and another in HDFC bank CC account. Ld. CIT(A) on verification of the HDFC bank account found that the assessee had taken loan from the said bank for its business purpose and the interest charged by bank has been debited in the profit and loss account. The assessee also furnished details like; trade name, name of proprietor, nature of business activity, address of place of business, copy of market fees paid ledger for the period under consideration. The assessee also submitted that he was not registered under VAT as he was in the business of

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 4 – trading of cattle feed and anaj, which was exempted under VAT. Details regarding Turnover, Gross Profit, Net profit of the preceding two years and the current year were also filed, which revealed that the gross profit ratio and the net profit ratio was in increasing trend. The assessee also submitted that in audit report and the income tax return, the nature of business of the assessee was specifically mentioned as trading cattle feed. Copy of the audit report and income tax return of the last three years was also furnished. The Ld. CIT(A) perused all the evidences filed by the assessee and noted that total sales of the assessee in its business of cattle feed and anaj amounted to Rs.8.74 Crores and the same was duly reported in the income tax return in the audit report for the impugned year. He noted the amount to tally with the cash deposited in the bank account of the assessee and further found the purchases to have been done through banking channels only, which were also noted to be duly reflected in the income tax return of the assessee. He, therefore, held that the cash deposited in the bank account of the assessee/credits in the bank account all pertained to the business receipts of the assessee and he held that the assessee had sufficiently established the fact of carrying on his business of cattle feed and anaj trading through various documentary evidences submitted as above. Noting above facts, he, accordingly, deleted the addition made by the AO of Rs.7.68 Crores on account of cash / credits in the bank account of the assessee during the impugned year. The detailed findings of the Ld. CIT(A) in this regard are contained at para 7 as under:

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 5 – “7. During the appeal proceedings, Assessment order, the grounds of appeal, submissions of the appellant have been carefully considered and adjudicated as under: 7.1 During the year under consideration, it was observed that the appellant had total credit of Rs.7,68,55,833/- during the F.Y. 2016 17 in bank account No. 25010282001000434 which were mainly through cash deposits & Cheque deposit RTGS/NEFT, and debits are mainly through transfers to different entities. The total credit in the bank account does not commensurate with the income offered in return of income by the appellant. Notices u/s. 142(1) of the Income-Tax Act were issued to assessee on 12/1/2023 and 25/1/2023 requesting assessee to furnish the details and documents as per the annexure to the said notices and requested to furnish the sources of cash deposits and other credits in his bank accounts along with credible supporting documents in the notices issued u/s. 142(1) of the Act. However, the appellant had not responded to the same. The appellant failed to furnish the sources of the cash and other credits in his bank account amounting to Rs. 7,68,55,833/- . Hence, the AO added the credits of Rs.7,68,55,833/- as unexplained money u/s. 69A of the Income-Tax Act, 1961 to the total income of the appellant. 7.2 During the appellate proceedings, the appellant stated that his main business is trading of Cattle Feed such as De Oil Cake, which is mainly available from Oil Mills and accordingly all payments of purchases are made through banks. All the purchasers of the said commodity De Oil Cake are Farmers and Shepherds inhabitants of the small villages and since the commodity is sensitive to season effect and can be spoiled if the same is stored for long period, the appellant sold his goods by cash and deposited the said amount of the sales received in cash are deposited in bank accounts. Further, the appellant had maintained regular books of accounts for the period 01-04-2016 to 31-03-2017 i.e. Assessment Year 2017-18 which are closed, adjusted and audited u/s 44AB of the Act by certified Chartered Accountant, the said Audit Report is uploaded by the Assessee well within the time prescribed under the provisions of the Act. In accordance with the same the Assessee has filed Return of Income for A.Y. 2017-18 well within the time prescribed under the provisions of the Act. 7.3 The appellant objected the addition made by the AO of Rs.7,68,55,833/- unexplained money u/s 69A of Income Tax Act, 1961. The appellant stated that the addition amount of Rs.7,68,55,833/- which was nothing but sum of all credit entries reflected in the Prime Co Operative Bank ,however, the AO made the addition U/s 69A of the income tax act 1961 even though the appellant was engaged in the business activity and the nature of activity has been shown in his income tax return and audit report. Major portion of credit entries were the payment received from the customers in cash and in cheque mode only and debit entries are nothing but the payment made to the suppliers against the purchase of the material only. Even in debit side of the bank statement, reflects name of different suppliers to whom the appellant made the payment for purchase of the material from them . Hence, it is clear that the appellant purchased the material from different vendors during the year for business activity only. 7.4 The appellant has furnished documentary evidences like bank statements of The Prime Co-operative Bank Limited (Current Account) and another is HDFC bank CC account. On verification it is seen that the appellant has taken loan from HDFC bank for the Business purpose. The interest charged by bank also has been debited in the profit and loss account during the period under consideration. The appellant was in the business of trading of cattle food and anaj and received major component of sale in cash and the same has been

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 6 – deposited by him in the bank account. The appellant has furnished details like the Trade Name, Name of proprietor, Nature of Business Activity, Address of place of business. Copy of market fees paid ledger for the period under consideration. The appellant submitted that he was not registered under VAT as your appellant was in the business of trading of cattle feed and anaj which was exempted under VAT. Therefore, he has not get himself registered under VAT. Details regarding Turnover, Gross Profit, Net profit of the last two previous years and the current previous year are as under:

On perusal of the above details it is seen that the Gross profit ratio and Net Profit ratio was in increasing trend. 7.5 Further, the appellant submitted that in the audit report and income tax return it was specifically mentioned the nature of the business of your appellant. Nature of the business was mention in the income tax return and the audit report was Trading-Cattle food. Copy of audit report and income tax return of last three years i.e. FY 2015-16, 2016-17, 2017-18 has been furnished during the appellate proceedings. The appellant received payment from customers in the mode of cash for selling Anaj and Cattle feed as he did the business in village area and majority of the customers are farmers not having bank account. Even they are not use to the banking system. Total sales of the appellant by trading of Anaj and Cattle feed of amount Rs. 8,74,09,427/-(Cattle feed-6,95,82,093/- and Anaj-1,78,27,334/ ) and the same receipts has been reported in the income tax return and in the audit report for the assessment year 2017-18. Receipts from the sale of cattle fees and anaj was deposited in the bank account and same has been reflected in the credit side of the bank account and the same has been added as income of the appellant income. The appellant had deposited the same amount in the bank account because of payment for purchase of material to supplier from bank account. Majority of the purchase has been done by him from the banking channel only. He purchased the cattle food and Anaj amount of Rs.6,62,71,886/- and purchase of Anaj of Rs.1,80,24,376/-shown in his income tax return. 7.6 Further, the appellant earned the agriculture income amount of 2,45,000/- and which was declared in the income tax return. The appellant submitted the audited books of accounts from Chartered accountant under section 44AB under Income tax Act, 1961 and there is no qualified opinion passed by chartered accountant. Therefore, genuineness of business is proven.

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 7 – 7.7 On perusal of the cash book, Bank Book and Bank statement submitted by the appellant, it is clearly established that Income received from sales by your appellant was only receipts of sale of cattle food and Anaj which was received in cash and bank and the same cash has been deposited in the bank account of your appellant at regular intervals. On perusal of the sale register, it is also established that appellant achieved the turnover of Rs. 8,74,09,427/- in A.Y. 2017-18 and received sales consideration of the same in cash and bank from the customers. appellant has submitted the sales register, purchase registers, cash book, bank book, few copies of contra confirmation of the supplier of cattle food and anaj, transport ledger , Shop rent exp ledger, Godown ledger and Market fees ledger which was proves that your appellant was engaged in the business activity and the amount has been deposited in the bank accounts was nothing but amount has been received from the customer against the sales proceeds only and the same has been accounted and recorded in the books of accounts of your appellant. 7.8 Considering the above facts and the submission made by the appellant, the undersigned is of the opinion that the addition done by the AO u/s 69A amounting to Rs.7,68,55,833/- was not sustainable. All three limbs of Section 69A of the Act stands qualified in the case of the appellant, i.e. • The appellant was found to be owner of the Money; • Such Money was not recorded in the books of accounts; and • Its nature and source not identifiable. Hence, the addition made by the AO is hereby deleted and the grounds raised by the appellant is allowed. 5. The only grievance of the Revenue was that the assessee had furnished no evidences explaining the source of cash/credits in bank account of Rs.7.68 Crores to the AO and all evidences were furnished to the Ld. CIT(A) alone who had entertained the same in violation of Rule 46A of the Income Tax Rules, 1962, which permitted the Ld.CIT(A) to entertain these evidences only when the assessee demonstrated circumstances which prevented him from furnishing the same during assessment proceedings.

ITA No.2675/Ahd/2025 [ITO vs. Kiransinh Abesinh Vaghela] A.Y. 2017-18 - 8 – account as pertaining to his receipts from the business activity of cattle feed and Anaj trading. In the light of the same, when no infirmity has been pointed out in the factual finding of the Ld. CIT(A), the mere technical ground of the assessee’s evidences not having been entertained by the Ld.CIT(A) in accordance with Rule 46A of the Income Tax Rules, we find do not carrying much weight. The Revenue has not challenged the Ld.CIT(A)’s finding on merits to the effect of the assessee’s cash deposits in the bank account being duly explained. We therefore do not find any merit in the technical ground raised by the Revenue and, accordingly, dismiss the same.

This Order pronounced on 21/05/2026

Sd/- Sd/- (SUCHITRA KAMBLE) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/05/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad