PRAGJIBHAI PARSHOTAMBHAI PATEL,NA vs. ARIVS.INCOME TAX OFFICER, WARD-4, NAVSARI

- This appeal has been filed by the assessee against the order dated 12.06.2024 passed by the Ld. Addl/JCIT(A)-1, Delhi (hereinafter referred to as the “Ld. CIT(A)”), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Year 2014-15.

The assessee has raised multiple grounds of appeal challenging … (i) addition of Rs.10,00,000/- on account of alleged difference in opening cash balance, (ii) addition of Rs.6,58,538/- treated as unexplained cash credit received from sundry debtors, and (iii) addition of Rs.2,08,293/- made by invoking section 50C/43CA of the Act.

We have heard the rival submissions and perused the material available on record.

As regards the addition of Rs.10,00,000/- on account of difference in opening cash balance, we find that the assessee had explained that the difference arose due to a clerical/typographical error while filing the return of income for the preceding year. The cash balance was sought to be supported by past agricultural and business income. It is also an undisputed fact that the assessee has declared income under section 44AD and was not maintaining regular books of account. No material has been brought on record before us by the Revenue to establish that the impugned amount represented unexplained money of the assessee. Therefore, the addition of Rs.10,00,000/- is unsustainable and is directed to be deleted.

With regard to the addition of Rs.6,58,538/- treated as unexplained cash credit, we observe that the amount represents recovery from sundry debtors arising out of business transactions. It was submitted that these amounts also form part of the receipts for computation of profits u/s 44AD of the Act during the year. The explanation of the assessee has not been disproved by the Assessing Officer with any cogent evidence. Accordingly, the addition of Rs.6,58,538/- is also directed to be deleted.

As regards the addition of Rs.2,08,293/- made by the Assessing Officer by applying section 50C/43CA of the Act, we note that the property sold was held as Pragjibhai Parshotambhai Patel Vs. ITO Asst. Year : 2014-15 - 3– stock-in-trade and the assessee had already declared income on presumptive basis. Further, the addition has been made merely on the basis of stamp duty valuation without bringing any material on record to show that the assessee had received consideration over and above the stated sale consideration. In such circumstances, the addition is not justified. Hence, the same is directed to be deleted.

In view of the above discussion, all the additions made by the Assessing Officer and confirmed by the Ld. CIT(A) are deleted. Accordingly, all the grounds raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed. This order is pronounced in the open Court on 23.01.2026