JITENDRAKUMAR PREMJIBHAI LADOLA,RAJKOT vs. THE ITO WD 1(1)(1), RKT, RAJKOT

ITA 4/RJT/2026Status: DisposedITAT Rajkot16 October 2026AY 2017-187 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that the assessee had submitted various documents and evidences, including bank statements, cash books, and balance sheets. However, it noted that some of these were self-serving and the books of accounts were not subject to audit. Therefore, the Tribunal found that the assessee was not entitled to full relief. Citing the Supreme Court's decision in CIT v. Williamson Financial Services, the Tribunal emphasized that tax is levied on income, not gross receipts. To protect the revenue's interest and considering the amount in dispute, the Tribunal directed an ad-hoc estimated addition. It determined that a net profit rate of 10% on Rs. 12,03,500/-, amounting to Rs. 1,20,350/-, would address the inconsistencies in the submitted documents and evidence. This addition was to be made at the normal rate of income tax, not under Section 115BBE. The Tribunal explicitly stated that this adjudication would not serve as a precedent for any other assessment year.

What were the facts?

The assessee, Jitendrakumar Premjibhai Ladola, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2017-18. The NFAC had confirmed the addition of Rs. 12,03,500/- made by the Assessing Officer (AO) under Section 69A of the Income-tax Act, 1961, treating cash deposits during the demonetization period as unexplained money. The AO had initially assessed the cash-in-hand balance as of April 1, 2016, at Rs. 10,80,000/-, after considering the assessee's claim of opening cash balance and subsequent withdrawals and expenses. The assessee contended that the deposits were out of an opening cash balance of Rs. 26,73,348/- as on April 1, 2016, which included carried forward amounts and withdrawals from loans. The AO and the CIT(A) rejected this explanation due to inconsistencies and lack of contemporaneous evidence.

What were the issues?

1. Whether the addition of Rs. 12,03,500/- by treating cash deposits made during the demonetization period as unexplained money under Section 69A of the Income-tax Act, 1961, and levying tax at the rates prescribed under Section 115BBE, is justified? - Assessee's contention: The addition is erroneous as the cash deposits were explained by the opening cash balance. The AO erred in not giving credit for the entire opening cash balance and in estimating the cash-in-hand without any basis. - Revenue's contention: The AO had already given credit for the opening cash balance, and the assessee does not deserve further relief. The appeal should be dismissed. 2. Alternatively, whether the AO's calculation of estimating the opening cash on hand and treating Rs. 12,03,500/- as unexplained money was without any basis? - Assessee's contention: The AO's estimation of opening cash on hand was arbitrary and lacked justification. - Revenue's contention: The AO's assessment was based on a holistic view of the facts and circumstances, and the assessee's explanation was inconsistent and lacked corroborative evidence.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri D.M. Rindani, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 15/10/2026Pronounced: 16/10/2026

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2017-18, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 15.11.2025 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 18.12.2019. 2. Grounds of appea

The order continues below.

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