J V JEWELLERS,JAMNAGAR vs. ITO WARD 2(6), JAMNAGAR, JAMNAGAR

ITA 760/RJT/2025Status: DisposedITAT Rajkot30 September 2026AY 2023-246 pages
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What did the Tribunal hold?

The Tribunal acknowledged that the addition was made on account of purchases from M/s Tirth Gold, based on data seized during a search. While the assessee claimed the purchases were not bogus and submitted bank statements and books of account, the Tribunal found that the assessee did not satisfactorily explain the transactions or submit all necessary documents to the lower authorities. The Tribunal noted the assessee's alternative plea for an estimated addition. Citing Supreme Court observations in CIT v. Williamson Financial Services and Gujarat High Court's decision in CIT v. President Industries, the Tribunal held that only the profit element embedded in the undisclosed receipts should be taxed, not the entire gross amount. Therefore, the Tribunal directed the Assessing Officer to make an addition of 8% of Rs. 13,07,275/-, amounting to Rs. 1,04,582/-, representing the profit element. This decision was based on the peculiar facts and smallness of the amounts involved and was not to be construed as laying down general propositions of law.

What were the facts?

The assessee, J V Jewellers, is appealing an order from the Commissioner of Income Tax (Appeal) for Assessment Year 2023-24. This order upheld an addition of Rs. 13,07,275 made by the Assessing Officer (AO) under Section 69C of the Income Tax Act, treating it as unexplained expenditure. The AO's assessment order, dated March 14, 2025, was passed under Section 143(3) read with Section 144B. The addition was based on information obtained during a search and seizure operation on M/s Tirth Gold on September 13, 2023. The assessee had declared a total income of Rs. 18,920. The assessee's appeal to the CIT(A) was dismissed, leading to the present appeal before the Tribunal.

What were the issues?

1. Whether the addition of Rs. 13,07,275/- as unexplained expenditure under Section 69C of the Income Tax Act, upheld by the CIT(A), is legally and factually sustainable? 2. Whether the assessee was denied a fair opportunity to be heard and cross-examine the evidence, thereby violating the principles of natural justice, by the AO and CIT(A)? Assessee's Contentions: The assessee argued that the addition was based on ERP data seized from M/s Tirth Gold, which should not be relied upon without corroborative evidence and is a "dump document." The assessee contended that no corroborative material was provided and that the plea of violation of natural justice due to denial of cross-examination should be accepted. Alternatively, the assessee argued that only the profit element, not the entire purchase amount, should be taxed. The assessee also relied on confirmations for a specific transaction of Rs. 1,85,840, which it claimed was already recorded. As an alternative, the assessee suggested an estimated addition considering a Gross Profit (GP) rate of 2.5%. Revenue's Contentions: The Revenue argued that there was no need to provide an opportunity for cross-examination as the addition was based on evidence. The Revenue relied on the findings of the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 69C,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Chetan Agarwal, Ld. AR
For Respondent: Shri Abhimanyu Singh Yadav, Ld. Sr. DR
Hearing: 30/07/2026

Per, Dr. Arjun Lal Saini, AM: The captioned appeal filed by the assessee, pertaining to Assessment year 2023-24, is directed against the order passed by the Commissioner of Income Tax (Appeal) vide order 24.09.2025, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) read with section144B of the Act, dated 14.03.2025. 2. The grounds of appeal raised by the assessee are as follows:

1.

The Ld. CIT(A) has erred in law as well as on fact by upholding an addition made by Ld. AO amounting to Rs. 13,07,275/- being

The order continues below.

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