HARMIL HITESHKUMAR JHAVERI ,AHMEDABAD vs. THE INCOME TAX OFFICER WARD 3(3)(1), AHMEDABAD

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ITA 499/AHD/2026Status: DisposedITAT Ahmedabad15 October 2026AY 2023-247 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the matter requires fresh examination by the AO. The Tribunal found that while the CIT(A) confirmed the addition based on the assessee's failure to furnish credible documentary evidence, it is necessary to establish whether the entries relied upon by the AO specifically pertain to the assessee and whether the alleged transactions are supported by reliable and corroborative evidence. The mere existence of entries in the records of a third party, without proper verification of their identity, nature, and connection with the assessee, requires careful examination before an addition can be sustained under Section 69A. The Tribunal also noted the assessee's specific issue regarding denial of cross-examination and non-supply of material. Where statements or third-party material form a material basis for an adverse finding, the assessee must be afforded a reasonable opportunity to examine and rebut such evidence. Therefore, the Tribunal set aside the impugned order of the CIT(A) and restored the matter to the file of the AO for denovo adjudication. The AO is directed to provide the assessee with the relevant seized material, examine the evidentiary nexus, verify the nature of alleged transactions with Tirth Gold, and provide an opportunity for cross-examination where legally warranted.

What were the facts?

The assessee, Harmil Hiteshkumar Jhaveri, filed an appeal against the order dated 01.12.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2023-24. The Assessing Officer (AO) had completed the assessment by determining the total income at Rs.42,86,469, including an addition of Rs.36,73,978 under Section 69A of the Income-tax Act, 1961, on account of unexplained money. The assessee contended that the addition was based on conjectures drawn solely from third-party materials without direct evidentiary nexus and that principles of natural justice were violated. The CIT(A) dismissed the assessee's appeal, holding that the assessee failed to furnish credible evidence to rebut the seized material from Tirth Gold, which clearly reflected unaccounted sales pertaining to the appellant.

What were the issues?

1. Whether the addition of Rs.36,73,978/- made under Section 69A of the Income-tax Act, 1961, on account of alleged unexplained sales to Tirth Gold, can be sustained solely on the basis of material seized from a third party without adequately establishing the nexus with the assessee? Assessee's contentions: The addition is based on surmises, conjectures, and personal presumptions derived from rough notings and digital records found in the possession of a third party (Tirth Gold) without independent corroboration. The AO failed to evaluate the evidence filed by the appellant, and the observations in the assessment order are not relevant. The AO was unsure if the transaction was a sale or purchase. Principles of natural justice were violated as the assessee was not provided with necessary material/evidences and statements of third parties for cross-examination. Revenue's contentions (as reflected in CIT(A)'s order): The assessee failed to furnish credible, verifiable, or contemporaneous documentary evidence to dislodge the findings. The AO relied on specific entries and digital records seized from Tirth Gold, which clearly reflect unaccounted sales pertaining to the appellant. The appellant has not produced any cogent explanation or primary evidence to rebut the seized data. The request for cross-examination was a mere procedural plea devoid of supporting substance.

Which sections of the Income-tax Act were involved?

Section 69A,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Shri MK Patel, A.R
For Respondent: Shri Amit Pratap Singh, Sr.DR
Hearing: 15.09.2026Pronounced: 15.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD

BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT ITA No. 499/AHD/2026 (Assessment Year: 2023-24)

Harmil Hiteshkumar Jhaveri, Vs. The Income Tax Officer, 2, Chokshi Park, Ward-3(3)(1), Jivraj Park, Ahmedabad. Vejalpur, Ahmjedabad-380051. [PAN : AMKPJ2205 Q] (Appellant) .. (Respondent) Appellant represented by : Shri MK Patel, A.R Respondent represented by: Shri Amit Pratap Singh, Sr.DR Date of Hearing 15.09.2026 Date of Pronouncement 15.10.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the Assessee against the order dated 01.12.2025 passed by the National Faceless Appeal Centre(NFAC), Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2023-24.

ITA No. 499/AHD/2026, AY-2023-24 Harmil H Jhaveri - 2– 2. The Assessee has raised the following grounds of Appeal: -

1.

Addition on account of unexplained transaction with Tirth Gold as unexplained money u/s 69A of the Act - Rs.36,73,978/- 1. The learned CIT(A) has grievously erred in confirming the addition of Rs.36,73,978/-made by AO of the NFAC as unexplained money u/s. 69A of the Act being alleged sales made to Tirth Gold and/or consideration paid to the said party for purchase on the basis of observations/findings given in the appellate order and without proper consideration and appreciation of the facts of the case. 2. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs.36,73,978/- However, in view of the facts, explanations and evidences filed during the course of assessment and appellate proceedings, the impugned addition of Rs.36,73,978/- made by the AO and confirmed by the learned CIT(A) is wholly unjustified and bad in law and thus requires to be deleted. 3. The learned CIT(A) has grievously erred in law and on facts in not appreciating the fact that not only the AO failed to evaluate the material/evidences filed by the appellant in support of his case in fair and judicious manner but his observations/finding in the assessment order for making the addition is also not relevant to the facts of the appellant's case. 4. The learned CIT(A) has erred in law and on facts in not appreciating the fact that the impugned addition is merely on surmises, conjectures and personal presumption which is evident from the fact that AO himself is not sure about the transaction in question i.e. Whether it is a sale or purchase by the appellant while making the addition as unexplained money u/s. 69A of the Act. Hence, the addition in question deserves to be deleted. 5. The learned CIT(A) has erred in law and on facts in failing to consider the fact that the AO has solely relied up on the material/records found/seized from a third party being rough noting/jotting without bringing on record any cogent material/evidences in support of the impugned addition. 6. The learned CIT(A) has grievously erred in law and on facts in failing to consider the fact that AO has violated the principle of natural justice and equity by failing to provide necessary material/evidences, statements of third parties recorded by the department and their cross examination for rebuttal before making the addition.

ITA No. 499/AHD/2026, AY-2023-24 Harmil H Jhaveri - 3– In view of the above, the addition of Rs.36,73,978/- on account of alleged transaction with Tirth Gold as unexplained money u/s 69A of the Act requires to be deleted.

3.

The case of the assessee emanates from scrutiny proceedings initiated to selection under CASS. The assessee had furnished his return of income on 31.07.2023, declaring a total income of Rs.6,12,490/-. The assessment was completed by determining the total income at Rs.42,86,469, after making an addition under section 69A on account of unexplained money. the assessee has now preferred the appeal to contest the said addition, asserting that the assessment has proceeded on conjectures drawn solely from third-party materials without any direct evidentiary nexus, and that the principles of natural justice were not adhered to in the course of the proceedings. The Assessing has erred in law and facts in determining the total income of the assessee at Rs.42,86,469/- by making addition of Rs.36,73,978/- being alleged unexplained sales to Tirth Gold u/s.69A of the Act solely on the basis of material/records found and seized from a third party and observations/findings given in the assessment order. In view of facts and submissions filed and available on record, the impugned addition made by the AO deserves to be deleted.

4.

Aggrieved by the Assessment Order, the assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal of the assessee by observing as follows:

“…On careful examination of the assessment record, submissions, and the remand report, it is observed that the appellant has not furnished any credible, verifiable, or contemporaneous documentary evidence to dislodge the findings recorded in the assessment order. The Assessing Officer has relied upon specific entries and digital records seized from Tirth Gold, which

ITA No. 499/AHD/2026, AY-2023-24 Harmil H Jhaveri - 4– clearly reflect unaccounted sales pertaining to the appellant. These entries form part of material gathered during lawful proceedings, and the appellant has not produced any cogent explanation to demonstrate that the said data does not relate to him. The assertion that no such transactions were undertaken is merely a bald denial, unsupported by books of account, supporting bills, stock records, records, or any reconciliatory statement. It is significant that, despite repeated opportunities during both assessment and appellate proceedings, the appellant has failed to produce any primary evidence, such as audited trading records, confirmations, purchase or sale invoices, quantitative details, or any material that would rebut the seized data. The reliance placed on general statements of non-involvement in jewellery business cannot override the specific seized material, which carries presumptive evidentiary weight under the Act when left uncontroverted by substantive proof. The request for cross-examination was also not backed by any material suggesting that the statements relied upon were factually incorrect; it was thus a mere procedural plea devoid of supporting substance. Further, the appellant has not demonstrated that the seized entries were erroneously attributed or that they pertain to any other party. The repeated reproductions of general explanations without documentary support cannot be accepted as satisfactory. The absence of any contemporaneous books, stock ledgers, or financial trail to rebut the transactions recorded in the seized data indicates that the appellant has failed to discharge the burden cast upon him under the statute. In view of these facts, the addition of Rs 36,73,978 under section 69A, representing unexplained money arising from undisclosed sales to Tirth Gold, is found to be fully justified and well within the framework of law, as rightly concluded by the Assessing Officer. The addition is, therefore, confirmed in entirety. With reference to the ground challenging the initiation of penalty proceedings under section 271AAC(1), it is noted that the mere initiation of penalty is not an appealable order under the scheme of the Act. Such proceedings remain at a preliminary stage and the Assessing Officer is yet to pass any final order imposing or dropping the penalty. The ground raised is, therefore, premature, and no adjudication is required at this stage. The appellant will be at liberty to contest the matter, if necessary, in accordance with law as and when a final penalty order is passed. The ground is dismissed.

5.

We have heard the rival contentions and perused the materials available on records. The principal issue for consideration is whether the addition of Rs. 36,73,978/- made under section 69A of the Act on the

ITA No. 499/AHD/2026, AY-2023-24 Harmil H Jhaveri - 5– basis of material seized from a third party can be sustained without adequately establishing the nexus between the seized entries and the assessee. The assessee has contended that he is not engaged in the jewellery or bullion business, that no transactions were undertaken with Tirth Gold, and that no corresponding money was received or recorded in his books of account or bank accounts. It is further contended that the addition is based on rough notings and digital records found in the possession of a third party, without independent corroboration, and that the assessee was not afforded an effective opportunity to cross-examine the persons whose statements were relied upon.

5.1 We find that the Ld. CIT(A) confirmed the addition on the ground that the assessee failed to furnish credible documentary evidence to rebut the seized material. However, considering the nature of the dispute, it is necessary to establish whether the entries relied upon by the AO specifically pertain to the assessee and whether the alleged transactions are supported by reliable and corroborative evidence. The mere existence of entries in the records of a third party, without proper verification of their identity, nature and connection with the assessee, requires careful examination before an addition can be sustained under section 69A of the Act.

5.2 We also note that the assessee has specifically raised the issue of denial of cross-examination and non-supply of the material relied upon by the AO. Where statements or third-party material form a material basis for an adverse finding, the assessee must be afforded a reasonable

ITA No. 499/AHD/2026, AY-2023-24 Harmil H Jhaveri - 6– opportunity to examine and rebut such evidence, in accordance with the principles of natural justice and the applicable law.

5.3 In view of the above facts and circumstances, we are of the considered view that the matter requires fresh examination by the AO. Accordingly, we set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the AO for denovo adjudication. The AO is directed to provide the assessee with the relevant seized material and documents relied upon, examine the evidentiary nexus between the entries and the assessee, and verify the nature of the alleged transactions with Tirth Gold. Where any statement is relied upon against the assessee and cross-examination is legally warranted, an appropriate opportunity shall be provided in accordance with law.

6.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

The order pronounced in the open Court on 15.10.2026 - Sd/- Sd/- Sd/- (DR. B.R.R. KUMAR) VICE-PRESIDENT True Copy) (True Copy) Ahmedabad; Dated 15.10.2026

ITA No. 499/AHD/2026, AY-2023-24 Harmil H Jhaveri - 7– आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��थ�/ The Respondent. 3. संबंिधतआयकरआयु�/ Concerned CIT 4. आयकरआयु�(अपील) /The CIT(A)- 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड�फाईल /Guard file. आदेशानुसार/ BY ORDER,

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