SHRI VIKASKUMAR MACWAN,NADIAD vs. DC/ACIT CENTRAL CIRCLE 3, VADODARA

ITA 2022/AHD/2026Status: DisposedITAT Ahmedabad13 October 2026AY 2020-2116 pages
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What were the facts?

The Revenue filed appeals before the ITAT against the orders of the CIT(A) for Assessment Years (AY) 2019-20 and 2020-21. The assessee, Vikaskumar Macwan, operating as RC Enterprise, was subjected to a survey under Section 133A on 09.04.2019, where Rs. 1,08,60,200 in cash was found. The survey was converted into a search under Section 132, leading to proceedings under Section 153A. The Assessing Officer (AO) initiated best judgment assessment under Section 144 as the assessee failed to file a fresh return. The AO noted the assessee was involved in Angadia business. Seized documents (Annexures A/1, A/2, and A/3) indicated unaccounted income and cash transactions amounting to Rs. 1,80,44,950, Rs. 1,64,48,940, Rs. 2,25,33,580, and Rs. 54,90,24,846 respectively. The AO added Rs. 2,25,33,580 and Rs. 54,90,24,846 as unexplained cash receipts/investments under Section 69A, resulting in a total assessed income of Rs. 57,30,97,456.

What did the Tribunal hold?

The Tribunal held that the gross principal amount of cash transactions cannot be added as income in the hands of the assessee. Following the coordinate bench decisions in 'ACIT vs. M/s Patel Madhavlal Maganlal & Co' and 'Dikesh Mehta vs. ITO', the Tribunal found no infirmity in the CIT(A)'s order in holding that the gross principal transactions cannot be assessed as the income of the assessee. The Revenue's appeal on this issue was dismissed. Regarding the commission income, the Tribunal found considerable merit in the assessee's contention that the 2% rate was excessive. Citing the assessee's statement on operational margins (0.035% to 0.10%), judicial guidance in Angadia cases (e.g., 'Dikesh Mehta' at 0.30%, 'Ravi Omprakash Agrawal' at 0.175%), and the principle from 'CIT v. Samir Synthetics Mill' that estimations must have a reasonable nexus with the industry and historical data, the Tribunal modified the CIT(A)'s order. The AO was directed to estimate and restrict the embedded commission income to a realistic rate of 0.30% on the total unaccounted turnover of Rs. 57,12,60,469, to be taxed at normal rates and not under Section 115BBE. The AO was also directed to recompute the final addition after adjusting for commission income already taxed. The assessee's cross objections were allowed.

What were the issues?

1. Whether the gross principal amount of cash transactions, as reflected in seized documents and digital data, can be added as income in the hands of the assessee under Section 69A of the Income Tax Act, 1961, or if only the commission earned on such transactions is taxable. The Revenue contended that the AO correctly added the entire amount as unexplained cash receipts. The assessee argued that the seized documents represented Angadia transactions where the assessee merely facilitated the movement of cash and was not the owner of the funds, thus only commission income should be taxed. The assessee relied on decisions in 'ACIT vs. M/s Patel Madhavlal Maganlal & Co' and 'Dikesh Mehta vs. ITO'. 2. Whether the estimation of commission income at a flat rate of 2% on the aggregate turnover by the AO is justified, or if a lower, more realistic rate should be applied. The Revenue supported the AO's addition. The assessee argued that the 2% rate was excessive and lacked commercial justification, proposing a rate based on their operational margin of 0.035% to 0.10%. The assessee cited 'CIT v. Samir Synthetics Mill' and decisions of the Mumbai ITAT in 'Dikesh Mehta' and 'Ravi Omprakash Agrawal'.

Which sections of the Income-tax Act were involved?

Section 133A,Section 132,Section 153A,Section 144,Section 69A,Section 131,Section 132(4),Section 115BBE,Section 250

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 Vinod V. Mehta & Shri Mehul B, Shri Kiran Unavekar, CIT.DR & Shri
For Respondent: Shri Kiran Unavekar, CIT.DR & Shri
Hearing: 15/07/2026Pronounced: 13/10/2026

Per Sanjay Garg, Judicial

The order continues below.

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