JAYANTILAL AMULAKHBHAI SHAH,AHMEDABAD vs. THE ITO, WARD-2(1)(2), AHMEDABAD

ITA 1702/AHD/2025Status: DisposedITAT Ahmedabad23 October 2026AY 2017-188 pages
AI SummaryDismissed

What did the Tribunal hold?

Regarding the addition under Section 41(1) (Assessee's appeal), the Tribunal held that in the absence of any confirmation from the creditor, the entry remains unexplained and unsubstantiated. The Tribunal noted that the creditor was not interested in providing details or pursuing recovery, which was sufficient to hold that there was a cessation of liability. Therefore, the Tribunal found no infirmity in the Ld. CIT(A)'s findings and upheld the addition. The Assessee's appeal was dismissed. Regarding the addition under Section 68 (Revenue's appeal), the Tribunal held that the AO merely noticed a surge in cash deposits during the demonetization period but did not bring any material on record to establish that the Assessee's claim of deposits being out of sales proceeds was wrong. The AO had suspicion but did not substantiate it, and suspicion cannot replace evidence. Therefore, the Tribunal found no infirmity in the Ld. CIT(A)'s deletion of the addition under Section 68. The Revenue's appeal was dismissed. Both appeals were dismissed.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, heard two appeals for Assessment Year 2017-18: one by the Assessee, Jayantilal Amulakhbhai Shah, and the other by the Revenue. Both appeals challenged an order dated 19.08.2025 passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi. The Assessee's appeal concerned an addition of Rs. 35,00,000/- made under Section 41(1) of the Income Tax Act, 1961. The Revenue's appeal challenged the deletion of an addition of Rs. 1,10,08,143/- made under Section 68 of the Act. The Assessing Officer (AO) had completed the assessment, making these additions. The Assessee had declared a total income of Rs. 7,76,520/-.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,10,08,143/- made on account of unexplained cash credit under Section 68 of the Act, without appreciating the facts of the case? The Revenue argued that the AO examined the sales pattern and noted abnormal growth in cash deposits during the demonetization period, altering the Assessee's monthly cash trend. The Assessee contended that up to 14.10.2016, he was an operator for Adani Gas Limited, depositing outlet sales proceeds and receiving commission. From 15.10.2016, his status changed to a dealership, and sales were recognized in his books, with corresponding bank deposits. This change was supported by a dealership agreement, VAT details, and bank statements. The Assessee argued the AO did not dispute the dealership but doubted the nexus between cash deposits and sales. 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in disallowing a sum of Rs. 35,00,000/- and making an addition under Section 41(1) of the Income Tax Act, 1961? The Assessee argued that no addition can be made on the mere non-response of the creditor. The AO treated the liability as a cessation of liability due to the creditor's non-response and the Assessee's failure to provide details.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 68,Section 250

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Heard together (2 matters)

ITA 1702/AHD/2025
ITA 1897/AHD/2025

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपील"य अ"धकरण, अहमदाबाद पीठ", अहमदाबाद INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCHES, AHMEDABAD BENCH: D

BEFORE DR. BRR KUMAR, VICE PRESIDENT AND SHRI SANJAY KUMAR, JUDICIAL MEMBER ITA 1702/AHD/2025 (िनधा"रण वष"/Assessment Year: 2017-18) Jayantilal Amulakhbhai Shah The ITO, Ward-2(1)(2) 12, Arauri Society, Nr. Vyasvadi, Income Tax Office, Vejalpur Nava Vadaj, Ahmedabad-380013, Vs. Ahmedabad-380015, Gujarat Gujarat अपीलाथ" Appellant ""थ" Respondent

PAN of Assessee: AEOPS0631K

अपीलाथ" "ारा/Appellant represented by: Shri S N Soparkar, Sr Advocate ""थ" "ारा/Respondent represented by: Shri Prashant Kumar Jain, SR- DR ITA 1897/AHD/2025 (िनधा"रण वष"/Assessment Year: 2017-18) Income Tax Officer Ward- Ahmedabad-380013, Gujarat अपीलाथ" Appellant ""थ" Respondent

PAN of Assessee: AEOPS0631K

अपीलाथ" "ारा/Appellant represented by: Shri Prashant Kumar Jain, SR- DR ""थ" "ारा/Respondent represented by: Shri S N Soparkar, Sr Advocate

सुनवाई की तारीख / Date of conclusion of hearing: 06.0

The order continues below.

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