AHMAD ABDUL AZIZ KHANANI,KACHCHH vs. INCOME TAX OFFICER, WARD- 4 , VERAVAL

ITA 421/RJT/2026Status: DisposedITAT Raipur06 October 2026AY 2022-236 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the identity of the loan creditors (parents) and the fact that transactions were routed through banking channels were accepted by the AO, the documents and evidence submitted by the assessee were self-serving. Therefore, full relief could not be granted. Considering the smallness of the amount and to protect the interest of revenue, an ad-hoc estimated addition was deemed appropriate. The Tribunal directed the AO to make an addition of Rs. 1,00,000/- (10% of Rs. 10,00,000/-) at the normal rate of income tax, not under section 115BBE. This decision was made considering the specific facts and the amount involved and was explicitly stated not to be treated as a precedent. The Tribunal found merit in the assessee's contention for some relief but not entire relief.

What were the facts?

The assessee, Ahmad Abdul Aziz Khanani, filed a return for AY 2022-23 declaring an income of Rs. 6,14,510. The case was selected for scrutiny due to 'Low income from TCS receipts - Timber not obtained from forest lease'. During assessment, the Assessing Officer (AO) issued notices under sections 143(2) and 142(1). The assessee disclosed receiving unsecured loans of Rs. 5,00,000 from his father, Abdul Aziz Khanani, and Rs. 5,00,000 from his mother, Bayabai Aziz Khanani. The AO rejected these as unexplained cash credits under section 68, adding Rs. 10,00,000 to the total income and proposing taxation under section 115BBE. The National Faceless Appeal Centre (NFAC), Delhi, confirmed the AO's order. The assessee appealed to the ITAT.

What were the issues?

1. Whether the assessment order passed under section 143(3) of the Income-tax Act, 1961, is bad in law? 2. Whether the addition of Rs. 10,00,000/- as fresh unsecured loans, treated as unexplained cash credits under section 68 of the Act, is justified, and whether the Ld. CIT(A) erred in confirming the same? Assessee's contentions: - The loans were between family members, so their identity is not in doubt. - The transactions were routed through banking channels, explaining their genuineness. - Alternatively, an ad hoc estimated addition may be made. Revenue's contentions: - The Ld. DR reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 68,Section 115BBE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Vimal Desai. Ld. AR
For Respondent: Shri Shishir Kumar, Ld. SR DR
Hearing: 29/07/2026

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2022-23, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.01.2026 by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) read with section 144B of the Act dated 29.01

The order continues below.

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