ITO, WARD-1, NADIAD vs. PRITESH YOGENDRAKUMAR PATEL, NADIAD

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ITA 643/AHD/2026Status: DisposedITAT Ahmedabad30 October 2026AY 2017-187 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Revenue's appeal should be dismissed. Regarding the addition of Rs. 92,12,400/-, the Tribunal found that the AO made the addition without conducting adequate inquiry into the details submitted by the assessee. The CIT(A) had rightly admitted additional documentary evidence under Rule 46A(1)(a) of the IT Rules, 1962, as the assessee had shown sufficient cause for not submitting them during assessment. Crucially, the AO did not utilize the opportunity provided during the remand proceedings to conduct necessary inquiries or verify the forwarded details. The Tribunal emphasized that substantial justice should prevail over technical considerations. Since the AO did not controvert the nature of the assessee's business activity or the fund transfers to booking agencies, and no material was brought on record to demonstrate unexplained sources of income, the addition could not be sustained. The cash deposits were demonstrably linked to client advances for ticket bookings. Therefore, the deletion of the addition by the CIT(A) was upheld. Consequently, Revenue's grounds of appeal concerning the admission of additional evidence and the lack of a supplementary remand report were rendered infructuous. The assessee's cross-objection, which argued for the non-applicability of Section 68, was dismissed as infructuous because the CIT(A) had already deleted the entire addition, and the Tribunal had upheld this deletion, granting complete relief to the assessee.

What were the facts?

The Revenue filed an appeal and the assessee filed a cross-objection against the order dated 26-12-2025 passed by the CIT(A), NFAC, Delhi, for Assessment Year 2017-18. The Assessing Officer (AO) had made an addition of Rs. 92,12,400/- under Section 68 of the Income Tax Act, 1961, treating bank deposits as unexplained. The assessee, proprietor of M/s. Divyog Travels, claimed these deposits represented advance receipts from clients for ticket bookings. The CIT(A), after admitting additional evidence and calling for a remand report, deleted the addition, holding that advances received in the ordinary course of business constitute liabilities until adjusted, and only the embedded commission is taxable. The AO had not conducted sufficient verification during the remand proceedings. The Revenue is aggrieved by the deletion of the addition.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 92,12,400/- made by the AO on account of unexplained cash deposits, based on partial evidence and without sufficient documentary support for the remaining amount (Revenue's Ground No. i). The Revenue argued that the CIT(A) relied on partial evidence (approximately 29%) without supporting documentary evidence for the remaining 70% of the cash deposits. 2. Whether the CIT(A) erred in adjudicating the appeal by considering additional evidence in post-remand proceedings without affording the AO an effective opportunity to examine and verify it (Revenue's Ground No. ii). The Revenue contended that the additional evidence, comprising partial KYC documents, was considered without giving the AO a proper chance to verify it. 3. Whether the CIT(A) erred in not calling for a supplementary remand report or granting a second opportunity to the AO to verify the additional evidence (Revenue's Ground No. iii). The Revenue argued that the CIT(A) should have sought further verification from the AO regarding the additional evidence. 4. Whether Section 68 of the Act is applicable to the sums in question, which the assessee claimed were ticket prices received from customers in the ordinary course of business and recorded in the regularly maintained cash book (Assessee's CO Ground No. 2). The assessee argued that the deletion of the addition by the CIT(A) was justified based on a correct appreciation of evidence and settled legal principles. The assessee also contended that the CIT(A) rightly admitted additional evidence under Rule 46A, as sufficient cause was shown, and the Revenue had a full opportunity to examine it. Without prejudice, the assessee argued that Section 68 was not applicable as the sums were business receipts, not unexplained credits.

Which sections of the Income-tax Act were involved?

Section 68,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH

Before: Shri Tapas Ram Misra & Shri R. Govindarajan

For Appellant: Shri Gaurav Mehta, A.R
For Respondent: Shri Deependra Kumar, Sr. D.R

Heard together (2 matters)

CO 82/Ahd/2026
ITA No. 643/Ahd/2026

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

आदेश/ORDER

PER R. GOVINDARAJAN, ACCOUNTANT MEMBER:

The Revenue filed the appeal and the CO filed by the assessee are against the order dated 26-12-2025 passed by

I.T.A No. 643/Ahd/2026 & CO 82/Ahd/2026 Pritesh Yogendrakumar Patel, A.Y. 2017-18 Commissioner of Income Tax (Appeals), National Faceless Appeal Centre NFAC, Delhi (in short, referred to as the CIT(A)) u/s. 250 of the Income Tax Act, 1961 (herein referred to as “the Act”) relating to Assessment Year 2017- 18.

2.

The Revenue raised the following grounds of appeal:- “(1) The Ld. CIT(A) erred in deleting the addition of 192, 12,400/- made by the Assessing Officer (AO) on account of unexplained cash deposits, merely on the basis of partial evidence amounting to �26,00,700/- (approximately 29%) pertaining to 41 customers, without there being any supporting documentary evidence in respect of the remaining 264,48,680/- (approximately 70%) of the total cash deposits.

(ii) the Ld. CIT(A) erred in adjudicating the appeal by considering additional evidences in the form of partial KYC documents (such as passport copies, etc.) aggregating to 26,00,700/- submitted by the assessee in post remand proceedings, without affording the Assessing Officer an effective opportunity to examine and verify the said additional evidences.

(iii) The Ld. CIT(A) erred in not calling for a supplementary remand report or granting a second opportunity to the Assessing Officer to verify the additional evidences which formed the sole basis for granting relief to the assessee.

(iv) The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal."

3.

The assessee raised the following grounds of cross objection :- “1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, was fully justified in deleting the addition of Rs. 92,12,400/- made under section 68 of the Act, the deletion being founded upon a correct appreciation of the evidence on record and upon settled

I.T.A No. 643/Ahd/2026 & CO 82/Ahd/2026 Pritesh Yogendrakumar Patel, A.Y. 2017-18 principles of law, and the impugned order dated 26.12.2025 therefore deserves to be upheld and the appeal of the Revenue dismissed.

2.

On the facts and in the circumstances of the case and in law, the learned CIT A rightly admitted the additional evidence under Rule 46A 1 b of the Income tax Rules, 1962, having recorded a specific finding of sufficient cause and having duly forwarded the evidence to the Assessing Officer and obtained a remand report under section 250 4 read with Rule 46A 3 the Revenue having been afforded full and effective opportunity to examine and controvert that evidence and having failed to do so, no grievance under Rule 46A survives to it. Without prejudice to the above, the learned CIT A ought to have further held that section 68 of the Act had no application to the facts at all, inasmuch as the sums in question were the price of tickets received from customers in the ordinary course of the travel agency business, recorded as such in the regularly maintained cash book which has never been rejected, and were not cash credits of an unexplained character within the meaning of that section.”

4.

Brief facts of the case are that assessee, sole proprietor of M/s. Divyog Travels, filed his return of income for A.Y. 2017-18 on 26-10-2017 admitting total income of Rs. 3,50,480/-. During the course of limited scrutiny assessment, AO made an addition of Rs. 92,12,400/- u/s. 68 of the Act treating both bank deposits (Rs. 66,14,800/- pre-demonetization deposit and Rs. 25,97,600/- post demonetization deposit) as not satisfactorily explained with evidence. Assessee claimed that the deposits represented advance receipts from clients for ticket booking and submitted partial evidence namely 1. Chart of customers 2. Assessee’s bank statement 3. Details of transfers to three booking agencies and assessee claimed that he earned commission only in respect of this business activity.

5.

Aggrieved by the addition, assessee filed the appeal. CIT(A), after admitting additional evidence, called for the remand report

I.T.A No. 643/Ahd/2026 & CO 82/Ahd/2026 Pritesh Yogendrakumar Patel, A.Y. 2017-18 and held that the advances received from customers in the ordinary course of business constituted liabilities until adjusted against services rendered and only the income embedded therein, namely the commission is chargeable to tax. He further noticed that the AO did not undertake any verification during remand stage and addition cannot be sustained merely on conjectures and the assessment order must rest on tangible materials. Hence, he allowed the appeal of the assessee.

6.

Aggrieved by this order, Revenue filed the appeal.

7.

We have heard both the parties and perused the materials available on record.

7.1 At the outset, it is pertinent to mention that the assessee is a permanent resident of USA and assessee had furnished the copy of bank statement and names of customers and fund transfer details for travel agencies during the course of assessment proceedings. AO made an addition of Rs. 92,12,400/- as unexplained cash credit u/s. 68 of the Act without causing any inquiry in respect of details submitted by the assessee.

7.2. On appeal, CIT(A) admitted additional documentary evidence which could not be produced by the assessee during assessment proceedings. CIT(A) forwarded the details to the AO and called for a remand report. At this stage also, AO did not make use of the opportunity to cause necessary inquiry in respect of details forwarded to him. AO could have used remand proceedings to obtain complete details of remaining transactions also. But no such attempt was made. Instead, the AO

I.T.A No. 643/Ahd/2026 & CO 82/Ahd/2026 Pritesh Yogendrakumar Patel, A.Y. 2017-18 recommended rejection of additional evidence entertained. The powers of CIT(A) are co-terminus with that of AO. Substantial justice should prevail over technical consideration. CIT(A) after due examination of the reasons adduced by the assessee accepted the additional evidence as there was sufficient cause for assessee for non-submission of details during assessment proceedings. Hence, CIT(A) is justified in exercising power under Rule 46A(1)(a) of the I. T. Rules, 1962.

7.3 AO had not controverted the nature of business activity of assessee nor the fund transferred from bank account of assessee to three ticket booking agencies. AO did not bring on record any material to demonstrate existence of unexplained sources of income. In the absence of any meaningful verification or rebuttal of documentary evidence furnished by the assessee despite opportunity given, addition made by the AO of Rs. 92,12,400/- as unexplained cash credit cannot be sustained. The cash deposits stand demonstrably linked to client advances received for ticket bookings which were subsequently transferred to booking agencies. We do not find any infirmity in the order of the Ld. CIT(A). Hence, addition of Rs. 92,12,400/- is deleted.

7.4 Revenue’s ground of appeal nos. 2 and 3 will not survive since at the time of remand proceedings, no worthwhile inquiry was done in respect of materials forwarded to A.O.

8.

In the result, the appeal filed by the Revenue is dismissed.

I.T.A No. 643/Ahd/2026 & CO 82/Ahd/2026 Pritesh Yogendrakumar Patel, A.Y. 2017-18

CO No. 82/Ahd/2026 A.Y. 2017-18 9. There was a delay of 169 days in filing of the memorandum of cross objection. After perusal of the reasons for delay, in the interest of justice, delay is condoned.

10.

The assessee has filed the present CO contending that the provisions of Section 68 of the Act are not applicable to the transactions under consideration.

10.1 We find that the ld. CIT(A), upon examination of facts and material available on records has deleted the entire addition made by the AO u/s. 68 of the Act, and he concluded that the cash deposits do not represent the unexplained income of the appellant.

10.2 We have, while disposing of the Revenue’s appeal, upheld the order of the Ld. CIT(A) deleting the addition in entirety.

10.3 Thus, the assessee has already obtained complete relief, and no adverse finding on the applicability of section 68 has been recorded by Ld. CIT(A).

10.4 Consequently, no further relief survives for adjudication in the present cross objection.

10.5 Accordingly, the CO filed by the assessee is dismissed as infructuous.

11.

In the result, the cross objection filed by the assessee is dismissed.

I.T.A No. 643/Ahd/2026 & CO 82/Ahd/2026 Pritesh Yogendrakumar Patel, A.Y. 2017-18

12.

In the combined result, appeal filed by Revenue and CO filed by the assessee both are dismissed.

Order pronounced in the open court on 30-10-2026

Sd/- Sd/- (TAPAS RAM MISRA) (R. GOVINDARAJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 30/10/2026 a.k. आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee JEETENDRA 2. Revenue DEVENDRABH 3. Concerned CIT 4. CIT (A) AI UPADHYAY 5. DR, ITAT, Ahmedabad 6. Guard file. Digitally signed by JEETENDRA DEVENDRABHAI UPADHYAY DN: c=IN, o=PERSONAL, title=6087, By order/आदेश से, 2.5.4.20=7e5568a89b633f174b28a80f5e63c638da 40b7313fb47ebaefda841cf59d1703, postalCode=380059, st=Gujarat, serialNumber=816dc56e896211a1a21ccc4abc94d dc94458f4a1b37be8e1854e9399295106d4, cn=JEETENDRA DEVENDRABHAI UPADHYAY उप/सहायक पंजीकार Date: 2026.10.30 17:11:01 +05'30' आयकर अपील�य अ�धकरण, अहमदाबाद

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