MAHENDRA PARSHOTTAMDAS PATEL,AHMEDABAD vs. ITO WARD 3(2)(3) AHMEDABAD, AHMEDABAD

PDF · subscribers

ITA 2068/AHD/2025Status: DisposedITAT Ahmedabad19 February 2026AY 2016-17Bench: the learned CIT(A), who dismissed the appeal based on written submissions and documentary evidences filed by the assessee.4 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the assessee's books of account were not rejected, and no discrepancy was found. The cash flow statement, bank statements, and cash book were presented, and the Tribunal found the deposits explained and cash expenses reflected. Therefore, the Tribunal held that no addition was warranted as the source was adequately explained.

What were the facts?

The appellant, Mahendra Parshottamdas Patel, a plywood trader, declared an income of Rs. 5,50,480/- for AY 2016-17. His case was selected for scrutiny regarding cash in hand. He explained withdrawals of Rs. 56,43,810/- and redeposits of Rs. 21,77,500/-, resulting in a closing cash balance of Rs. 34,66,310/-, but the AO added Rs. 31,15,814/- as unexplained income, which was upheld by the CIT(A).

What were the issues?

Whether the addition made by the Assessing Officer for unexplained cash in hand, subsequently upheld by the CIT(A), was justified.

Which sections of the Income-tax Act were involved?

Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-Ms SUCHITRA KAMBLE

For Appellant: Shri S N Divetia, with Shri Samir Vora, ARs

For Respondent: Shri Veerbadram Vislavath, Sr. DR

Hearing: 13.01.2026Pronounced: 19.02.2026

(Assessment Year: 2016-17) Mahendra Parshottamdas Patel, The Income Tax Officer, Vs. Bari Balo Vas, Ward-3(2)(3), Village Shilaj, Ahmedabad. Ahmedabad-380058. [PAN :AGMPP7103 M] (Appellant) .. (Respondent) Appellant by : Shri S N Divetia, with Shri Samir Vora, ARs Respondent by: Shri Veerbadram Vislavath, Sr. DR Date of Hearing 13.01.2026 Date of Pronouncement 19.02.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal is filed by the Assessee against the appellate order dated 30.08.2025 passed by the Commissioner of Income Tax (Appeal) Panaji, relating to the Assessment Year 2016-17. 2. The assessee has raised the following grounds of appeal:

1.1 The order passed by U/s.250 passed on 30.08.2025 for A.Y. 2016-17 by Addl. /JCIT(A), Panjim [ for short CIT(A)"] upholding the addition of Rs. 31,15,814/-made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. CTT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions/explanations/evidence produced to explain the source of impugned cash and upheld the addition on vague, general and presumptive reasons. Asst. Year : 2016-17 - 2– 3.1 The Id.CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs. 31,15,814/- made by A.O. as unexplained source of income. 3.2 That the in the facts and circumstances of the Id. CIT(A), ought not to have upheld the addition of Rs. 31,15,814/- made by A.O. as unexplained source of income.

The brief facts of the case are that the appellant is an individual engaged in the business of trading in plywood under the name “Neelgiri Enterprise.” The appellant filed his return of income for A.Y. 2016-17 on 12.01.2017 declaring total income of Rs.5,50,480/-. The case was selected for limited scrutiny under CASS for the reason “whether cash in hand shown in the return of income is correct.” During the assessment proceedings, the appellant was asked to explain the large cash in hand shown as on 31.03.2016 in the balance sheet. The appellant explained that he had withdrawn Rs.56,43,810/- from various bank accounts and redeposited Rs.21,77,500/-. The appellant also filed bank statements and cash book to prove the source of cash. However, the Assessing Officer rejected the explanation and made an addition of Rs.31,15,814/- as unexplained income.

Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the learned CIT(A), who dismissed the appeal based on written submissions and documentary evidences filed by the assessee.

Aggrieved by the order of the learned CIT(A), the assessee is in further appeal before this Hon’ble Tribunal.

The learned Counsel for the assessee submitted that written submissions, bank statements, and cash book were duly uploaded before the lower authorities. It was explained that the assessee had made total Asst. Year : 2016-17 - 3– withdrawals from three banks amounting to ₹56,43,810/- and redeposited cash of Rs.21,77,500/- during F.Y. 2015-16, leaving a balance cash on hand of Rs.34,66,310/-. However, the Assessing Officer made an addition of Rs.31,15,814/-, which represents the closing cash balance as on 31.03.2016, duly reflected in the books of account. The books of account were neither rejected nor any discrepancy was found therein. The CIT(A) has reproduced the cash flow statement, cash book, and bank statements in the impugned order itself, yet confirmed the addition merely on the presumption that the cash withdrawals were utilized for business purposes. It is submitted that asking for documentary evidence for cash flow and confirmations from third parties for cash transactions is unreasonable and beyond comprehension, and the addition is purely based on presumptions and surmises.

On perusal of the record, we find that cash flow statement has been by the assessee before both the Revenue authorities, the same is reproduced as under:

Cash Flow Statement for the Year 2015-16 Cash Inflow Amount Cash Outflow Amount To Opening Balance 126301 To Withdrawal from 5591900 By depositing in HDFC Bank 2169500 HDFC Bank To Withdrawal 2910 By Payment to Vikas Motors 103621 From Bank of India To Withdrawal 49000 By Depositing to Dena 8000 From Dena Gujarat Gujarat Gramin Bank Gramin Bank To Rent Income 348350 By Mahendra Patel House 120000 hold withdrawal By Petrol Expenses 51650 By Officer Expenses 18650 By Tea & Refresh Exps. 21370 By Mobile Bill Expenses 19685 By Salary Expenses 423000 Asst. Year : 2016-17 - 4– By Printing & Stationery 3545 By HDFC Bank Vehicle loan 11875 By V.V Patel & Co 30210 By HDFC Bank PL 21541 By Closing Balance 3115814 Total 6118461 Total 6118461 Since the deposits are duly explained and even the cash expenses are duly reflected, we hold that no addition is called for on this ground.

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

The order is pronounced in the open Court on 19.02.2026. (SUCHITRA KAMBLE) VICE-PRESIDENT () Copy) () Ahmedabad; Dated 19.02.2026 MV

Recent GST High Court judgments

Search GST case law →