SHANTILAL MAFAJI KACHCHHAVA,BANASKANTHA vs. ITO WD 1 PALANPUR, PALANPUR

ITA 2256/AHD/2026Status: DisposedITAT Ahmedabad16 October 2026AY 2023-244 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 3,13,928/- as unexplained expenditure was not sustainable. The Tribunal noted that the assessee had denied the transaction and contended that no documentary evidence or statement regarding the alleged transaction was provided. The AO had neither confronted the assessee with the incriminating evidence nor reproduced it in the assessment order. Furthermore, the Tribunal observed that the assessee had disclosed income under the presumptive scheme of section 44AD, which was accepted by the Revenue. When income under section 44AD is accepted, no addition in respect of expenditure can be made. As there was no evidence of unexplained expenditure in the assessment order, the addition was deleted. The appeal of the assessee was allowed.

What were the facts?

The assessee, Shantilal Mafaji Kachchhava, filed his return of income for Assessment Year 2023-24 declaring Rs. 4,91,150/-. The Assessing Officer (AO) received information from the Investigation Wing regarding cash sales by M/s. Mangalam Micro Devices, including Rs. 3,13,928/- to M/s. S. M. Enterprises, the assessee's proprietorship concern. The assessee denied any such transaction. The AO, relying on seized evidence, treated the Rs. 3,13,928/- as unexplained expenditure and made an addition, completing the assessment under section 143(3) at Rs. 8,05,078/-. The assessee's appeal to the CIT(A) was dismissed. The assessee is now in appeal before the ITAT.

What were the issues?

1. Whether the addition of Rs. 3,13,928/- as unexplained expenditure under section 69C of the Income Tax Act, 1961, is sustainable when the assessee has filed his return under the presumptive taxation scheme of section 44AD and the disclosed gross receipts have not been disputed or rejected by the Revenue. Assessee's contentions: The assessee argued that since the return was filed under section 44AD, income was declared on a presumptive basis, and no addition for unexplained expenditure could be made. The assessee also contended that the transaction with M/s. Mangalam Micro Devices was denied, and the evidence was not confronted. The addition was made on mere presumption. Revenue's contentions: The Senior Departmental Representative (Sr. DR) strongly supported the order of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 69C,Section 44AD,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI NARENDRA PRASAD SINHA & SHRI SANJAY KUMAR

For Appellant: Shri Sunil Maloo, AR
For Respondent: Shri Tapan Kumar Chattergee, Sr. DR
Hearing: 07.10.2026Pronounced: 16.10.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal has been filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 15.04.2026 for the Assessment Year (A.Y.) 2022-23 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 has filed his return of income for A.Y. 2023-24 on 05.10.2023 declaring total income of Shantilal Mafaji Kachchhava Vs ITO, AY- 2023-24 2 Rs.4,91,150/-. The case was selected for complete scrutiny under CASS. The AO had rece

The order continues below.

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