LATE HARSHADRAI DALICHAND DIORA THROUGH HIS LEGAL HEIR AND WIDOW SMT. MALVIKABEN HARSHADRAI DIORA,BHAVNAGAR vs. THE ITO, WARD-1(9), BHAVNAGAR
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD “SMC” BENCH
Before: DR. BRR Kumar, Vice President
And Shri T. R. Senthil Kumar, Judicial Member
Late Harshdrai
Dalichand Diora
Through his legal heir and widow Smt.
Malavikaben Harshadrai
Diora
Main Bazar, Palitana,
Bhavnagar-364270,
Gujarat
PAN: ABRPD5197P
(Appellant)
Vs
The ITO
Ward-1(9),
Bhavnagar
(Respondent)
Assessee Represented: Shri B.R. Popat, A.R.
Revenue Represented: Shri Rohit Aasudani, Sr. D.R.
Date of hearing
: 12-11-2025
Date of pronouncement : 17-11-2025
आदेश/ORDER
PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the appellate order dated 16.07.2025 passed by the Commissioner of Income Tax
(Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the reassessment order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18. ITA No: 1735/Ahd/2025
Assessment Year: 2017-18
I.T.A No. 1735/Ahd/2025 A.Y. 2017-18 Page No Late Harshadrai Dalichand Diora Through His Legal Heir and widow Smt. Malviaben harshadrai Diora vs. ITO
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2. The Grounds of Appeal raised by the assessee are as follows:
1. The learned CIT(A) erred in law and on facts in confirming the addition to the extent of Rs.20,00,000/- originally made by the AO. Considering the totality of the facts and the provisions of law, as interpreted by the Judicial and Constitutional
Authorities, he ought to have deleted even this part of the addition
The learned CIT(A) erred in law and on facts in confirming the action of the AO in invoking the provisions of section 68 of the Act, which was in respect of the money found deposited in the Bank Account
The learned CIT(A) erred in law and on facts in passing the appellate order in the name of the deceased, wherein the name of his legal heir was already registered on the portal of the department
Brief facts of the case is that the assessee is an individual engaged in the business of trading in agricultural commodities from a small town of Palitana, Bhavnagar District of Gujarat. Major portion of the sales in cash due to sale of agricultural commodity to farmers. For the Asst. Year 2017-18, assessee filed his Return of Income which was accepted. Thereafter it came to the notice of the Department that assessee made cash deposits of Rs. 39,95,000/- in his bank account during demonetization period.
In response, the assessee filed Return of Income and also explained the cash deposits made during demonetization with the Specified Banking Notes (SBN) of Rs. 20,00,000/- on 12-11-2016 and balance amount by regular currency (Non-Specified Banking Notes). The assessee also explained that the cash deposit made on 12-11-2016 is the trading of agricultural commodities which was realized in cash. However the assessing officer has not accepted the above submissions of the assessee and made addition of Rs.39,95,000/- as unexplained income in the hands of the assessee u/s. 68 of the Act and demanded tax thereon.
I.T.A No. 1735/Ahd/2025 A.Y. 2017-18 Page No Late Harshadrai Dalichand Diora Through His Legal Heir and widow Smt. Malviaben harshadrai Diora vs. ITO
Aggrieved against the re assessment order, assessee filed appeal before Ld. CIT(A) who has partly confirmed the addition of Rs.20,00,000/- by a detailed appellate order.
We have heard rival submissions and perused the materials available on record. Ld. Counsel submitted before us a comparative chart of cash deposits in bank accounts during the current Asst. Year and immediately preceding two assessment years and demonstrated cash deposit is being made in the bank accounts is the regular system of followed by the assessee:
Month
A.Y.15-16 A.Y. 16-17
A.Y. 17-18
April
2718500
2660000
3714150
May 3207000
1820000
2313430
June
1650000
2120800
2422530
July
2651000
1855000
2601200
August
952000
790540
1877065
September 1591295
1550000
1960925
October
1257560
1535700
2420000
November
1660000
1555170
3273830
December
2134225
2120000
2085595
January
2750000
1931120
2930434
February
1802270
2196125
2357995
March
1523375
1850000
2866383
Total
23897225
21984455
30823537
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5.1. Further perusal of the cash flow statement filed in the Paper
Book out of the total sales of Rs.3.47 crores, a sum of Rs.3.23
crores was realized in cash which is constituting 93.09% of the total sales by the assessee. The Department also is not in dispute that there is any other source except the cash sales by the assessee and realization from debtors. Further the cash sales effected is cross verifiable from the annual VAT returns furnished by the assessee which was accepted by the Commercial Tax Department of the State Government. All this clearly proves that deposit of cash in the banking account regularly has been the normal practice adopted by the assessee considering the nature of business activities carried out by the assessee not only for the present Asst.
Year but also in the earlier Asst. Years. Without verifying the above submissions of the assessee, Ld. CIT(A) confirmed the addition of Rs.20,00,000/- being cash deposit in Specified Banking Notes on 12-11-2016 which is liable to be deleted.
In the result, the appeal filed by the Assessee is hereby allowed.
Order pronounced in the open court on 17 -11-2025 (DR. BRR KUMAR) (T.R. SENTHIL KUMAR)
VICE PRESIDENT JUDICIAL MEMBER
Ahmedabad : Dated 17/11/2025
आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:-
1. Assessee
Revenue 3. Concerned CIT 4. CIT (A)
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5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदेश से,
उप/सहायक पंजीकार
आयकर अपीलȣय अͬधकरण,
अहमदाबाद