VISHAL RAMESHBHAI SORATHIYA,RAJKOT vs. THE ITO WD 1(1)(1), RAJKOT, RAJKOT

PDF · subscribers
ITA 485/RJT/2026Status: DisposedITAT Raipur07 October 2026AY 2020-214 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the issue was similar to a previous decision in Nitaben Kirtikumar Parekh v. ITO, ITA No. 506/Rjt/2026, where the addition was restricted to 10% of the disclosed income. Following this precedent and considering the similarity of facts, the Tribunal decided to restrict the addition to 10% of Rs. 3,98,000/-, amounting to Rs. 39,800/-. The Tribunal further directed that this restricted addition should be taxed under the normal provisions of the Act and not under section 115BBE. The grounds raised by the assessee were accordingly partly allowed.

What were the facts?

The assessee, Vishal Rameshbhai Sorathiya, filed an appeal against the order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2020-21. The NFAC had upheld an order passed by the Assessing Officer (AO) under sections 147 and 144 of the Income-tax Act, 1961. The AO had reopened the assessment based on information from a search and seizure action on RK Group. Seized digital data and accounting software revealed systematic recording of accounted and unaccounted transactions, including cash on-money payments. The assessee was found to have paid Rs. 3,98,000/- as cash on-money for an office unit, which was not recorded in regular books. Despite notices, the assessee failed to provide an explanation. The AO treated this amount as unexplained money under section 69A read with section 115BBE and added it to the total income, assessing it at Rs. 7,17,460/-.

What were the issues?

1. Whether the addition of Rs. 3,98,000/- as unexplained money under section 69A read with section 115BBE of the Income-tax Act, 1961, is justified based on the seized material and the assessee's failure to provide an explanation. Assessee's contention: The assessee argued that the addition made by the AO and sustained by the CIT(A) was not justified in law or on facts and should be deleted. Revenue's contention: The Revenue supported the orders of the lower authorities and submitted that no interference was called for.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 139(4),Section 148,Section 142(1),Section 69A,Section 115BBE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Ms. Devina Patel, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 07/10/2026Pronounced: 07/10/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member

आयकर अपील सं./ITA No. 485/RJT/2026 [ �नधा�रण वष�/Assessment Year: 2020-21 ] Vishal Rameshbhai Sorathiya The ITO, Wd-1(1)(1), Rajkot Sarkari Arogya Kendra, Opp. Chora IT - Office, New Aayakar Bhavan, Vs. Street, Rajkot-360004, Gujarat Vatiaka, Rajkot-360001, Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: HJXPS5573P (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Ms. Devina Patel, Ld. AR Respondent by : Shri Ganesh Iyer, Ld. Sr. DR Date of Hearing : 07/10/2026 Date of Pronouncement : 07/10/2026

:: ORDER :: Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2020-21, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 24.02.2026, which in turn arises out of an order passed by assessing officer u/s. 147 r.w.s. 144 of the Act, dated 15.03.2025.

2.

Brief facts of the case that the assessee filed the original return of income for AY 2020-21 u/s.139(4) of the Income Tax Act, 1961 on 31.03.2021 declaring total income of Rs.3,19,460/-. Subsequently, based on information received pursuant to search and seizure action conducted on 24.08.2021 in the case of RK Group of

ITA No. 485/RJT/2026 Vishal Rameshbhai Sorathiya Rajkot and its associates, the case was reopened u/s. 147 of the Income-tax Act, 1961, after recording reasons and obtaining approval of the Pr. Commissioner of Income Tax-1, Rajkot. Notice u/s.148 of the Income Tax Act, 1961 dated 21.03.2024 was issued and duly served upon the assessee. However, the assessee did not file any return of income in response to the said notice. The reopening was based on incriminating material seized during search proceedings, including digital data and Miracle accounting software files recovered from the premises of Shri. Girish Vanjani, accountant of RK Group. These seized Miracle files contained systematic records of both accounted and unaccounted transactions, including cash receipts and payments relating to sale of units in various projects developed by RK Group. The data was found to be maintained in coded. form, wherein amounts were recorded by inserting decimals before the last two digits and dates were backdated by ten years to conceal actual transactions. On examination of the seized ledger pertaining to the project "RK Prime", it was found that the assessee had purchased office unit No. RKP-817 in the said project and had paid cash on-money of Rs.3,98,000/-, which was not recorded in the regular books. The seized ledger also contained entries corresponding to banking transactions reflected in the registered sale deed, thereby corroborating the authenticity and reliability of the seized data. The statements recorded from Shri. Girish Vanjani and Shri. Sarvanand Sonwani during the search proceedings confirmed that Miracle software was used to record unaccounted cash transactions of the group. During assessment proceedings, notices u/s.142(1) of the Income Tax Act, 1961 and show cause notice dated 06.02.2025 were issued to the assessee, calling for explanation regarding the source of cash payment of Rs.3,98,000/-. However, the assessee failed to furnish any explanation or supporting evidence. Although the assessee denied having paid any cash on-money, the Assessing Officer observed. that the seized ledger, corroborated by registered sale deed and other evidences, clearly established the payment of unaccounted cash by

Page 2 of 4

ITA No. 485/RJT/2026 Vishal Rameshbhai Sorathiya the assessee towards purchase of the office unit. In view of the above facts and failure of the assessee to explain the source of cash payment, the Assessing Officer treated the amount of Rs.3,98,000/- as unexplained money u/s.69A read with section 115BBE of the Income Tax Act, 1961 and added the same to the total income. Accordingly, the total income of the assessee was assessed at Rs.7,17,460/- as against the originally returned income of Rs.3,19,460/-.

3.

Aggrieved by the aforesaid assessment order passed under section 147 r.w.s. 144 of the Act, the assessee went in appeal before the Ld. CIT(A) where the appeal of the assessee was dismissed.

4.

Still, aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this tribunal.

5.

At the time of hearing, the Ld. AR submitted that the impugned addition made by the Assessing Officer and sustained by the Ld. CIT(A) is not justified either in law or on facts and, therefore, the same is liable to be deleted.

6.

On the other hand, the Ld. DR supported the orders of the authorities below and submitted that no interference is called for.

7.

We have heard the rival submissions and perused the material available on record. We find that the issue involved in the present appeal is similar to the issue considered by this tribunal in the case of Nitaben Kirtikumar Parekh v. ITO, in ITA No. 506/Rjt/2026, wherein, on similar facts, the tribunal partly allowed the appeal of the assessee by restricting the addition to 10% of the disclosed income. In the present case also, the Ld. AR fairly submitted that the issue is covered by the aforesaid decision of the tribunal. Respectfully following the same and considering the similarity of the facts and circumstances, we deem it appropriate to restrict the

Page 3 of 4

ITA No. 485/RJT/2026 Vishal Rameshbhai Sorathiya addition to 10% of the amount of Rs.3,98,000/-. Accordingly, the addition is restricted to Rs.39,800/- (10% of Rs.3,98,000/-). Further, considering the nature of the addition, the same shall be taxed under the normal provisions of the Act. Accordingly, the Assessing Officer is directed to restrict the addition to Rs.39,800/- and compute the tax thereon under the normal provisions of the Act and not under section 115BBE of the Act. The grounds raised by the assessee are partly allowed.

8.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on this 7th day of October, 2026.

Sd/- Sd/- [ Dr. Arjun Lal Saini ] [ Shri Sonjoy Sarma ] लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member राजकोट/Rajkot िदनांक/ Date: 07/10/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order //True Copy// Sr. Private Secretary ITAT, Rajkot

Page 4 of 4

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →