ASHOKKUMAR DHIRAJLAL UNDAVIYA,BHAVNAGAR vs. INCOME TAX OFFICER WARD 1(2), BHAVNAGAR

ITA 1007/AHD/2026Status: DisposedITAT Ahmedabad29 September 2026AY 2023-245 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition made by the AO and confirmed by the Ld. CIT(A) was not sustainable and ordered its deletion. The Tribunal noted that the facts and issues in the present appeal were identical to those in the case of Gordhanbhai Modi vs. ITO (ITA No.1065/Ahd/2026), decided by a Co-ordinate Bench. In that case, the addition was deleted because the AO failed to prove unaccounted purchases based on software data found during a search. The Co-ordinate Bench had observed that the partner of M/s Tirth Gold admitted to unaccounted transactions but did not specifically admit to transactions with the assessee. The Tribunal in Gordhanbhai Modi also noted the lack of cash trail or excess stock, the denial by the assessee, and the subsequent statement from M/s Tirth Gold indicating only Rs. 20,038/- in purchases. Crucially, the assessee was not given an opportunity to cross-examine the third party. The Tribunal in the present case agreed that expecting the assessee to prove a negative (i.e., not having made unaccounted transactions) is difficult, and such transactions require positive evidence, which was lacking. Therefore, the impugned addition was ordered to be deleted.

What were the facts?

The assessee, Ashokkumar Dhirajlal Undaviya, proprietor of Hans Jewellers, has appealed against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi, dated January 27, 2026, for Assessment Year 2023-24. The appeal challenges the confirmation of an addition of Rs. 28,72,918/- made by the Assessing Officer (AO) on account of alleged unexplained purchases from M/s Tirth Gold. The AO's action was based on digital data found during a search and seizure operation under Section 132 of the Income Tax Act, 1961, conducted on M/s Tirth Gold on September 13, 2023. This data, recovered from accounting software, indicated unaccounted transactions to the extent of Rs. 28,72,918/- in the name of the assessee for gold purchases. The assessee denied these purchases, but the AO proceeded with the addition, a decision upheld by the Ld. CIT(A).

What were the issues?

1. Whether the learned CIT(A) erred in confirming the addition of Rs. 28,72,918/- on account of alleged unexplained purchases, based on unverified and uncorroborated digital data found from a third party's premises, contrary to principles of natural justice and weight of evidence (Section 250 of the Income Tax Act, 1961)? 2. Whether the learned CIT(A) erred in holding that digital data (Excel sheet) from AUG-ERP software constituted valid and admissible evidence, despite it being a 'dumb document' without independent corroborative material? 3. Whether the learned CIT(A) erred in relying on third-party statements recorded under Section 132(4) without providing the assessee an opportunity for cross-examination, violating principles of natural justice? 4. Whether the learned CIT(A) erred in holding that the onus was on the assessee to disprove the third-party digital data, failing to appreciate that the initial onus lies on the Department to prove allegations with cogent evidence? 5. Whether the learned CIT(A) erred in confirming the addition based on suspicion, surmises, and conjectures, as held by the Hon'ble Supreme Court in Dhakeshwari Cotton Mills Ltd. vs. CIT? Assessee's Contentions: The assessee argued that the addition was based on unverified and uncorroborated digital data from a third party, which is a 'dumb document' without evidentiary value. Reliance on third-party statements under Section 132(4) without cross-examination violates natural justice. The onus to prove the allegation lies with the Department. The AO accepted the assessee's books of accounts, which did not contain these purchases, and therefore, no addition could be made without rejecting the books. The addition was based on suspicion, contrary to Supreme Court rulings. The assessee relied on CIT vs. Abhisar Buildwell (P) Ltd. and CIT vs. Maulikkumar K. Shah. Revenue's Contentions: The judgment does not record specific contentions from the Revenue.

Which sections of the Income-tax Act were involved?

Section 250,Section 132,Section 132(4),Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: Shri Sanjay Garg & Shri Gangadhar Panda

For Appellant: Shri Biren Shah, AR
Hearing: 22/09/2026Pronounced: 29/09/2026

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), [hereinafter referred to as ‘Ld. CIT(A)’], National Faceless Appeal Centre (in short “NFAC”), Delhi dated 27/01/2026 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2023-24. 2. The assessee has raised the following grounds of appeal:

“1. This appeal is filed without prejudice to each other.

The order continues below.

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