ABDHI JEWELS PRIVATE LIMITED,AHMEDABAD vs. ITO, WARD-1(1)(1), AHMEDABAD

ITA 1518/AHD/2025Status: DisposedITAT Ahmedabad26 March 2026AY 2017-18Bench: SHRI TR SENTHIL KUMAR (Judicial Member), SHRI NARENDRA PRASAD SINHA (Accountant Member)9 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO's premise for treating cash deposits as unexplained was incorrect, as cash sales were a regular feature of the business and the total cash sales in the current year were significantly lower than the previous year. Regarding Section 40A(3), the Tribunal found that individual payments within vouchers were below Rs. 20,000/-, but directed the AO to verify the authenticity and purpose of these expenses.

What were the facts?

The assessee, engaged in the gold and jewelry business, reported cash sales and deposited Rs. 63,00,000/- during the demonetization period. The Assessing Officer (AO) treated these deposits as unexplained. The AO also disallowed Rs. 14,96,530/- under Section 40A(3) for cash payments exceeding Rs. 20,000/- where the vouchers were not sufficiently authenticated.

What were the issues?

Whether cash deposits during demonetization were unexplained, and whether cash payments exceeding Rs. 20,000/- were hit by Section 40A(3) without proper substantiation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 40A(3),Section 68,Section 145(3),Section 115BBE,Section 270A,Section 271AAC,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Parin Shah, AR
For Respondent: Shri Abhijit, SR-DR
Hearing: 23.03.2026Pronounced: 26.03.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 20.06.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act.

2.

The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2017-18 on 15.08.2017 declaring total income of Rs. 7,88,810/-. The case of the assessee was selected for scrutiny under CASS. The AO noticed that the assessee had made cash deposits of Rs.63,00,000/- in his bank account during the demonetisation period from Abdhi

The order continues below.

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