DINESHBHAI DAHYABHAI PATEL,AHMEDABAD vs. DCIT, CIRLCE -4(1)(1), AHMEDABAD

ITA 2388/AHD/2026Status: DisposedITAT Ahmedabad28 September 2026AY 2015-163 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that the very basis of the impugned assessment proceedings, the order passed by the Ld. Principal Commissioner of Income-tax under Section 263 of the Act dated 30.03.2021, had been challenged by the assessee in ITA No.105/Ahd/2021. This earlier appeal was disposed of by the Tribunal on 09.10.2024. In that order, the Tribunal observed that the proceedings under Section 263 were initiated and completed within a short period of 12 days and that the Ld. PCIT had not adequately demonstrated the alleged lack of enquiry by the Assessing Officer. Consequently, the Tribunal restored the matter to the file of the Ld. PCIT for fresh adjudication after providing due opportunity of hearing. Therefore, the original order passed by the Ld. PCIT under Section 263, which formed the basis for the consequential assessment order, no longer constituted a valid foundation for the present assessment proceedings. The Tribunal concluded that the assessment order passed under Section 144 r.w.s. 263 r.w.s. 144B of the Act and the consequential penalty proceedings arising therefrom could not survive for independent adjudication. Accordingly, the appeals were rendered infructuous, and no adjudication on the grounds raised by the assessee was called for. The operative direction was to dismiss both appeals.

What were the facts?

The assessee, Dineshbhai Dahyabhai Patel, filed two appeals (ITA Nos. 2387 & 2388/Ahd/2026) against the orders of the Commissioner of Income-tax (Appeals), NFAC, Delhi, for Assessment Year 2015-16. ITA No. 2387/Ahd/2026 pertains to an assessment order passed under Section 144 r.w.s. 263 r.w.s. 144B of the Income-tax Act, 1961, challenging an addition of Rs. 40,31,520/- under Section 40A(3). ITA No. 2388/Ahd/2026 concerns a penalty imposed under Section 271(1)(c) of the Act. The appeals were filed by the assessee against the Deputy Commissioner of Income-tax, Circle 4(1)(1), Ahmedabad. The procedural history reveals that the basis of the assessment, an order under Section 263 dated 30.03.2021, was previously challenged by the assessee in ITA No.105/Ahd/2021 before the Tribunal. That appeal was disposed of on 09.10.2024, with the Tribunal restoring the matter to the Principal Commissioner for fresh adjudication.

What were the issues?

1. Whether the addition of Rs. 40,31,520/- made by the Assessing Officer under Section 40A(3) of the Income-tax Act, 1961, and confirmed by the CIT(A), is legally sustainable, considering the assessee's contention that the entries represented consolidated accounting postings and not actual cash payments exceeding the prescribed limit to a single person in a day? (Question of law and fact, turning on Section 40A(3)). 2. Whether the disallowance was made on assumptions, presumptions, and surmises without independent verification of underlying vouchers, bills, payment records, or suppliers, thereby breaching principles of natural justice? (Question of fact and law). 3. Whether the penalty imposed under Section 271(1)(c) of the Act is valid, given the circumstances of the assessment proceedings? (Question of law and fact, turning on Section 271(1)(c)). Assessee's Contentions: The impugned entries were consolidated accounting postings, not actual cash payments exceeding the limit. The disallowance was based on assumptions without independent verification. The orders were passed without appreciating facts and ignoring submissions, breaching natural justice. Revenue's Contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 271(1)(c),Section 144,Section 263,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI RAHUL CHAUDHARY

For Appellant: Shri Tushar Hemani, Sr. Advocate
For Respondent: Shri Amit Pratap Singh, Sr. DR
Hearing: 30.07.2026Pronounced: 28.09.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

-

The present two appeals are directed at the instance of the assessee against the orders of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 27.05.2026 and 29.05.2026 passed for Assessment Year 2015-16. ITA No. 2387/Ahd/2026 emerges out of proceedings under Section 144 r.w.s. 263 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as “the Act”); whereas ITA No.2388/Ahd/2026 arose against penalty imposed under Section 271(1)(c) of the Act.

2.

The assessee has rai

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 40A(3)

All 3,278 judgments and leading authorities on Section 40A(3) →

Recent GST High Court judgments

Search GST case law →