RATILAL MANUBHAI DHANANI,AMRELI vs. ITO WD 3(1)(4),AMRELI, AMRELI

ITA 697/RJT/2026Status: DisposedITAT Raipur28 September 2026AY 2015-169 pages
AI SummaryAllowed

What were the facts?

The assessee, Ratilal Manubhai Dhanani, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, for Assessment Year (AY) 2015-16. The appeal was against the order dated 14.10.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi (Ld. CIT(A)), which upheld the assessment order dated 20.12.2017 passed by the Assessing Officer (AO) under section 143(3) of the Income-tax Act, 1961. The assessee had purchased two properties on 02.08.2014, with his share of the cost being Rs. 23,20,940/- and Rs. 12,70,374/-. The AO added Rs. 33,32,677/-, representing the opening cash balance of the assessee as on 01.04.2014, to the assessee's total income. The assessee contended that this amount represented savings from agricultural and other income over previous years and was mistakenly not reflected correctly in the return of income. The appeal was filed belatedly by 124 days, and the delay was condoned by the Tribunal.

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 33,32,677/- as opening cash balance to the assessee's total income for AY 2015-16 was unjustified and should be deleted. The Tribunal reasoned that the opening cash balance represents funds accumulated in previous years and cannot be treated as income of the current assessment year under consideration. The AO had failed to prove that the cash flow statement submitted by the assessee was incorrect, despite the assessee providing supporting documents such as land records, crop details, and crop sales. The Tribunal emphasized that income must be taxed in the correct assessment year, citing the Supreme Court's decision in ITO vs. Ch. Atchaiah, which states that the assessing officer must tax the right person and right income in the right assessment year. An amount representing an opening balance, originating in an earlier previous year and merely carried forward, cannot ordinarily be assessed as income of the current assessment year. Therefore, the addition made by the AO was deleted. The appeal filed by the assessee was allowed.

What were the issues?

1. Whether the addition of Rs. 33,32,677/- as opening cash balance to the assessee's total income for AY 2015-16 is justified, turning on the interpretation of Section 4 and Section 3 of the Income-tax Act, 1961, and the principle of taxing income in the correct assessment year. Assessee's contentions: The assessee argued that the opening cash balance of Rs. 33,32,677/- pertained to previous years and was not income earned in the current assessment year (AY 2015-16). The assessee is an agriculturist with substantial agricultural income and past savings, and this cash was available for prudent investment purposes, including the purchase of agricultural land. The assessee relied on the cash flow statements for three years, including the year under appeal, and submitted documentary evidence like land records and crop sale details. The assessee also argued that the mistake in reflecting the opening cash balance was due to the accountant's error and that the AO failed to prove the cash flow statement was incorrect or to provide evidence to disbelieve it. Revenue's contentions: The Revenue, through the learned DR, primarily reiterated the stand taken by the Assessing Officer, opposing the condonation of delay and supporting the addition made by the AO.

Which sections of the Income-tax Act were involved?

Section 4,Section 3,Section 143(3),Section 250,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Ms. Chaitali Shah. Ld. AR
For Respondent: Shri Shishir Kumar, Ld. SR DR
Hearing: 30/07/2026

Per, Dr. Arjun Lal Saini, AM:

Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2015-16, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 14.10.2025, 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) of the Act, dated 20.12.2017. 2. When the matter

The order continues below.

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