CHETANKUMAR SURESHCHANDRA SHAH,SURAT vs. ITO WARD 1(5) , BHARUCH

ITA 1431/SRT/2025Status: DisposedITAT Surat24 September 2026AY 2014-157 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the assessee. The Tribunal noted that the assessee declared business income under Section 44AD and was running a retail business of grains, with most customers being farmers who paid in cash. The Tribunal observed that the AO estimated income without considering the actual income declared in the computation of income. It was highlighted that the cash deposit was generated from the said business. Crucially, the Tribunal found that the facts of the present assessment year (2014-15) were identical to AY 2015-16, which had been decided in the assessee's favour by the Tribunal vide an order dated 16.09.2026. The Revenue's representative did not point out any distinguishing facts. Therefore, the addition made by the AO was not sustained. The operative direction was to delete the addition.

What were the facts?

The assessee, Chetankumar Sureshchandra Shah, filed an appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2014-15. The Assessing Officer (AO) made an addition of Rs. 58,35,180/- as unexplained money under Section 69A of the Income Tax Act, 1961, due to cash deposits in the assessee's bank account. The assessee had declared a total taxable income of Rs. 1,79,000/-. Despite notices and opportunities, the assessee failed to provide a satisfactory explanation for the cash deposits. The AO initiated penalty proceedings under Section 271(1)(c). The CIT(A) dismissed the assessee's appeal. The assessee contended that the facts were identical to a previous assessment year (2015-16) where the Tribunal ruled in his favour.

What were the issues?

1. Whether the addition of Rs. 58,35,180/- as unexplained money under Section 69A of the Income Tax Act, 1961, is justified, considering the assessee's explanation of cash withdrawals and business income. Assessee's Contentions: - The facts are identical to AY 2015-16, where the Tribunal ruled in his favour. - The case was selected for limited scrutiny to verify cash deposits. - The assessee maintains regular books of account and filed a cash flow statement demonstrating sufficient cash available from withdrawals and business receipts to explain the deposits. - The authorities below failed to consider the cash book, cash flow statement, and the theory of rotation of funds, ignoring substantial cash withdrawals from the same bank account that explained subsequent deposits. - The addition was made on suspicion without independent verification or adverse material. - The opening cash balance of Rs. 11,74,664/- is duly reflected in the ITR for AY 2013-14. Revenue's Contentions: - Relied on the assessment order and CIT(A)'s order. - The details filed by the assessee were cursory. - The assessee provided a general explanation about dealing with farmers and purchasing agricultural produce, but failed to establish the genuineness of these transactions. - The assessee failed to provide a reasonable explanation for the bank deposits.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 142(1),Section 271(1)(c),Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Respondent: Shri Ashish Kumar, Sr. DR
Pronounced: 24.09.2026

PER : SUCHITRA KAMBLE, J M:

The appeal filed by the assessee is against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) [in short “CIT(A)”] [in short “CIT(A)”] dated 09.10.2025 for the Assessment Year (in short “AY”) 2014-15. 2. The assessee has raised the following grounds of appeal: “1) The learned Commissioner of Income Tax (Appeals) NFAC has erred in law and on facts in confirming additions made by Ld. AO as per order passed u/s 143(3) of the Act; CHETANKUMAR SURESHCHAND

The order continues below.

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