VIKAS ASHOKKUMAR MASAND,AHMEDABAD vs. THE DY. COMMISSIONER OF INCOME TAX CIRCLE3(1)(1), AHMEDABAD, AHMEDABAD

ITA 3130/AHD/2026Status: DisposedITAT Ahmedabad19 October 20267 pages
AI SummaryAllowed

What were the facts?

The assessee, Vikas Ashokkumar Masand, proprietor of Indian Oil Petrol Pump, filed his return of income for Assessment Year 2017-18 on 26.10.2017, declaring a total income of Rs. 32,13,200/-. The case was selected for scrutiny. During assessment, the Assessing Officer noted cash receipts of Rs. 34,40,123/- from debtors during the demonetisation period. Despite the assessee providing party-wise details, the Assessing Officer added this amount under Section 69A, citing lack of debtor confirmations and alleged RBI restrictions on accepting Specified Bank Notes. The assessee's appeal to the CIT(A) was dismissed, confirming the addition. The assessee is now in appeal before the ITAT.

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 34,40,123/- made under Section 69A of the Act and confirmed by the CIT(A) is not sustainable. The Tribunal noted that the assessee consistently contended that the amount was recorded in the regular books of account as cash received from identified debtors against outstanding business dues. The CIT(A) also acknowledged the entries in the books. The Tribunal found that the assessee furnished party-wise details, including PANs and ledger accounts, along with audited financial statements, cash books, sales and purchase registers, stock records, and VAT returns. No specific defects were identified in these records. The Tribunal held that the absence of debtor confirmations, by itself, cannot be treated as conclusive when the assessee has provided identifiable particulars and supporting books of account. The explanation could not be rejected merely on suspicion without considering the documentary material. The Tribunal also found merit in the contention that the acceptance of Specified Bank Notes during demonetisation does not automatically render receipts unexplained under the Act. The lower authorities relied principally on the absence of confirmations and demonetisation circumstances without adequately rebutting the documentary evidence. The Tribunal also observed that the CIT(A) alternatively referred to Section 68, but any change in the statutory provision requires a fair opportunity for the assessee. Since the assessee maintained regular books, furnished party particulars, and produced supporting records, and the AO did not reject the books or identify defects, the addition was sustained without adequately establishing it as unexplained money under Section 69A. Accordingly, the addition was deleted, and Grounds 2 to 7 were allowed.

What were the issues?

1. Whether the addition of Rs. 34,40,123/- made under Section 69A of the Income Tax Act, 1961, is sustainable when the condition precedent of money 'not recorded in the books of account' is admittedly absent, as the receipt was recorded in the appellant's books. 2. Whether the CIT(A) erred in holding that the appellant realised old debt, when the sales were made during the demonetisation period, cash was received from regular customers against sales of petroleum products, and the addition made on accounted cash in books is contrary to Section 69A. 3. Whether the CIT(A) erred in making the absence of debtor confirmations decisive, when the appellant discharged the initial onus by furnishing complete party details and the Revenue did not conduct any enquiry under Section 133(6) or 131. 4. Whether the CIT(A) erred in sustaining the addition under Section 69A or Section 68, exhibiting confusion regarding the applicable section and sustaining the addition mechanically. 5. Whether the CIT(A) erred in applying the test of human probabilities to a case supported by audited books, stock records, VAT returns, and complete identification of payers, without any dislodging material from the Revenue. 6. Whether the CIT(A) erred in upholding the levy of tax under Section 115BBE at the enhanced rate of 60% for AY 2017-18, given that the transactions occurred before the amendment's effective date. Assessee's Contentions: The cash receipts were recorded in audited books of account, represented collections from regular customers against outstanding dues from petroleum product sales, and the demonetisation period or receipt of Specified Bank Notes did not automatically render the income unexplained. The absence of debtor confirmations should not be decisive, especially when the Revenue did not conduct independent inquiries. The enhanced tax rate under Section 115BBE should not apply retrospectively. The addition under Section 69A is unsustainable as the primary condition is not met. Reliance was placed on Naranbhai Samatbhai Bharwad v. ITO and S.M.I.L.E. Microfinance Ltd. v. ACIT. Revenue's Contentions: The Revenue supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 133(6),Section 131,Section 68,Section 271AAC,Section 234A,Section 234B,Section 234C,Section 143(2),Section 142(1),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

For Appellant: Ms Ridhi Masani, CA on behalf of Shri Jaimin Shah, AR
For Respondent: Shri Amit Pratap Singh, Sr. DR
Hearing: 15.10.2026Pronounced: 19.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

- This appeal has been filed by the assessee against the order dated 16.07.2026 passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) [hereinafter referred to as the ‘Ld. CIT(A)’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeal:

1.

That the order passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi dated 16.07.2026 is bad in law, contrary to the facts on record, contrary to the

The order continues below.

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