HIMAN JAYANTBHAI PARIKH,AHMEDABAD vs. THE ITO, WARD-3(3)(2), AHMEDABAD

ITA 420/AHD/2026Status: DisposedITAT Chandigarh23 September 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO's treatment of the entire cash deposit of Rs. 37,63,000/- as unexplained solely because it occurred during demonetization was not justified. The Tribunal noted the assessee's disclosed cash sales and an opening cash balance of Rs. 8,89,319/-, suggesting that the availability of cash needed to be examined in the overall context of transactions and regular cash sales. The AO had not provided cogent reasons for rejecting the books of account, nor was there material to establish their unreliability. Similarly, the basis for applying an 8% net profit rate was not substantiated, as the AO neither examined prior years' profits nor provided comparable cases. Regarding unsecured loans, the assessee had placed additional evidence requiring examination. Therefore, all three issues were set aside to the Assessing Officer for fresh adjudication. The assessee was to be given an opportunity to substantiate its claims with evidence, and the AO was directed to examine the books of account, cash availability, cash sales, additional evidence for loans, and other relevant material, passing a speaking order. The AO was cautioned not to be influenced by the Tribunal's observations.

What were the facts?

The assessee, Himan Jayantbhai Parikh, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2017-18. The Assessing Officer (AO) treated cash deposits of Rs. 37,63,000/- made during the demonetization period as unexplained. The AO also rejected the assessee's books of accounts, estimated income by applying an 8% net profit rate on the balance turnover after reducing cash deposits, resulting in an addition of Rs. 1,41,59,920/-. Furthermore, unsecured loans of Rs. 40,81,000/- were treated as unexplained and added to income. The assessment was completed under section 143(3) at a total income of Rs. 2,30,95,900/-. The CIT(A) dismissed the assessee's appeal.

What were the issues?

1. Whether the addition of Rs. 37,63,000/- on account of cash deposits made during the demonetization period is justified under Section 68 of the Income Tax Act, 1961, considering the assessee's submissions and evidence? 2. Whether the rejection of the assessee's books of accounts and the consequent addition of Rs. 1,41,59,920/- by estimating income at an 8% net profit rate is legally sustainable? 3. Whether the addition of Rs. 40,81,000/- on account of unexplained unsecured loans is justified under Section 68 of the Act, especially in light of the assessee's request for admission of additional evidence? Assessee's Contentions: - The cash deposits represent sale proceeds, supported by the cash book and sale register. - The books of accounts were audited and supported by various documents; no defects were pointed out by the AO for rejection. - The estimated net profit rate of 8% is incorrect given the nominal profit margin in the business and the assessee's disclosed profit rate of 0.70%. - For unsecured loans, most lenders are close relatives, and although complete details were not filed initially, confirmations, ITRs, and bank statements of creditors have been collected and are sought to be admitted as additional evidence. - The matter should be set aside to the AO for verification of additional evidence and re-adjudication. Revenue's Contentions: - The AO rightly treated cash deposits during demonetization as unexplained as the assessee did not make cash deposits in the bank account during the year except during that period. - No objection if the matter is set aside to the AO for allowing another opportunity to the assessee on all issues.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 270A,Section 271AAC,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Parin Shah, AR
For Respondent: Shri Amit Pratap Singh, SR-DR
Hearing: 15.07.2026Pronounced: 23.09.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 24.12.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “The Act”].

2.

The brief facts of the case are that the assessee had filed his return of income for A.Y 2017-18 on 30.10.2017 declaring total income of Rs. 10,91,980/-. The case was selected for complete scrutiny under CASS. In Himan Jayantbhai Parikh Vs ITO, AY- 2017-18 2 the course of assessment, the AO had noticed that the assessee had made cash

The order continues below.

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