AMBALAL HARIDAS PATEL,AHMEDABAD V. THE ITO, WARD-2(2)(1), AHMEDABAD

ITA 2607/AHD/2025

AI Insights

The case involves Ambalal Haridas Patel, who appealed against the order of the Commissioner of Income-tax (Appeals) concerning the assessment year 2017-18. The primary issues revolved around the rejection of books of accounts, additions made under section 68 and section 115BBE of the Income Tax Act, 1961, and the estimation of net profit by the Assessing Officer. The Tribunal noted the assessee's repeated non-compliance during the appellate proceedings but decided to grant another opportunity for the assessee to present his case, emphasizing the need for a fair hearing and proper examination of facts.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839064 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 26-12-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KETAKI DESAI
• Assessee Lawyers: ASEEM L THAKKAR
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences; Principle of natural justice; Tangible material
• Section: 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No.2607/Ahd/2025 (Assessment Year: 2017-18) Ambalal Haridas Patel, Sahdev Industries, Plot No. 3004/5, Phase-III, Nr. Capital Char Rasta, Chhatral-382721 Vs. Income Tax Officer, Ward-2(2)(1), Ahmedabad [PAN No.ACNPP1834E] (Appellant) .. (Respondent) Appellant by : Shri Aseem L Thakkar, AR Respondent by: Ms. Ketaki Desai, Sr. DR Date of Hearing 12.02.2026 Date of Pronouncement 18.02.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 26.11.2025 passed for A.Y. 2017-18. 2. The assessee has taken the following grounds of appeal: “1. The Ld. CIT(A), NFAC, Delhi has erred in passing an ex Parte order dismissing the appeal filed by the assesse without providing reasonable opportunity of being heard to the appellant and without rejecting the adjournment application filed on 07.03.2025. Hence the same being against the principles of natural justice and law requires to be quashed. 2. The Ld. CIT(A), NFAC, Delhi has erred in confirming the action of the Assessing Officer in rejecting the books of accounts u/s.145(3) of the I.T. Act, 1961 without pointing out any specific defect or discrepancy in the books of accounts maintained. Printed from counselvise.com ITA No. 2607/Ahd/2025 Ambalal Haridas Patel vs. ITO Asst. Year –2017-18 - 2– 3. The Ld. CIT(A), NFAC, Delhi has erred in confirming the addition of Rs.32,01,000/-made by the Assessing officer u/s. 68 r.w.s. 115BBE of the I.T. Act, 1961. 4. The Ld. CIT(A), NFAC. Delhi has erred in confirming the action of the Assessing Officer in making additions of cash deposited in bank account out of available cash on hand in the books of accounts by making comparisons of cash sales / cash deposited in bank accounts in the earlier years with the year under appeal and thereby making additions on surmises and conjectures and not on tangible material. 5. The Ld. CIT(A), NFAC, Delhi has erred in confirming the action of the Assessing Officer in making additions u/s.68 of the I.T. Act, 1961 by not accepting the cash sales made as genuine irrespective of the fact that the stock availability is not under challenge. 6. The Ld. CIT(A), NFAC, Delhi has erred in confirming the action of the Assessing Officer in making assessment on assumptions, conjectures and surmises without bringing any material or evidence on record to establish that the source of cash deposited in the bank accounts is not genuine. 7. The Ld. CIT(A), NFAC, Delhi has erred in confirming the addition of Rs. 3,98,312/- made by the Assessing Officer by applying average net profit at 2.01 percent and estimating the net profit at Rs.12,89,743/- as against Rs.8,91,431/- declared by the appellant. 8. The Ld. CIT(A), NFAC, Delhi has erred in confirming the action of the Assessing Officer in wrongly applying the provisions of section 115BBE of the I.T. Act, 1961 which is illegal and bad in law. 9. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.” 3. The brief facts of the case are that the assessee, an individual, filed his return of income for Assessment Year 2017-18 declaring a total income of Rs. 8,73,310/-. Based on information available with the Income-tax Department, the Assessing Officer observed that the assessee had deposited cash amounting to Rs. 32,01,000/- in his bank account during the demonetisation period. Accordingly, the Assessing Officer selected the case for scrutiny under CASS. During the course of assessment proceedings, the Assessing Officer issued notices asking the assessee to produce various details and explanations. The assessee furnished certain Printed from counselvise.com ITA No. 2607/Ahd/2025 Ambalal Haridas Patel vs. ITO Asst. Year –2017-18 - 3– details and explained that the cash deposits were out of business cash sales. On examination of the records, the Assessing Officer noted that the assessee had declared a total turnover of Rs. 16,74,63,626/-, which included the impugned cash deposits, but the assessee had disclosed a net profit of Rs. 8,91,431/-. The Assessing Officer, however, excluded the cash deposits from the turnover and recomputed the turnover at Rs. 6,42,62,626/-. By applying an average net profit rate of 2.01%, the Assessing Officer estimated the profit at Rs. 12,89,743/-. After reducing the profit already disclosed by the assessee, an addition of Rs. 3,98,312/- was made on account of estimated net profit. Further, the Assessing Officer rejected the explanation of the assessee regarding the source of cash deposits and treated the sum of Rs. 32,01,000/- as unexplained income under section 68 of the Income-tax Act, 1961 (“the Act”), by invoking section 115BBE of the Act. Accordingly, the Assessing Officer completed the assessment was under section 143(3) of the Act by making additions of Rs. 3,98,312/- and Rs. 32,01,000/-, resulting in an assessed income of Rs. 44,72,620/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). Before the CIT(Appeals), the assessee raised several grounds challenging the computation of total income, rejection of books of account under section 145(3) of the Act, addition of cash deposits under section 68 of the Act, estimation of net profit by applying an average rate, and application of section 115BBE of the Act. During the appellate proceedings, before Printed from counselvise.com ITA No. 2607/Ahd/2025 Ambalal Haridas Patel vs. ITO Asst. Year –2017-18 - 4– CIT(Appeals), he issued multiple notices of hearing under section 250 of the Act to the assessee on various dates. However, despite repeated opportunities, the assessee did not file any written submissions or documentary evidence in support of the grounds of appeal and only sought adjournments from time to time. In view of the continued non- compliance, the CIT(Appeals) proceeded to decide the appeal on the basis of material available on record. 5. While adjudicating the appeal, the CIT(Appeals) observed that the assessee had failed to pursue the appeal and had not discharged the onus cast upon him to substantiate the grounds raised. Relying on various judicial precedents, the CIT(Appeals) held that filing of an appeal alone is not sufficient and that the appellant must effectively pursue the same. The CIT(Appeals) further observed that the assessee had not produced any evidence to controvert the findings of the Assessing Officer either at the assessment stage or during appellate proceedings. On merits also, in the absence of any rebuttal or material placed on record by the assessee, the CIT(Appeals) concurred with the findings of the Assessing Officer and confirmed the additions made in the assessment order. Accordingly, all the grounds of appeal were dismissed and the appeal was rejected. 6. The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee. 7. We have heard the rival contentions and perused the material available on record. It is an undisputed fact that the CIT(Appeals) has Printed from counselvise.com ITA No. 2607/Ahd/2025 Ambalal Haridas Patel vs. ITO Asst. Year –2017-18 - 5– dismissed the appeal primarily on account of non-compliance and non- prosecution by the assessee, as no written submissions or documentary evidence were filed despite several opportunities. At the same time, it is also evident from the record that the additions made by the Assessing Officer involve substantial issues relating to estimation of business profits and treatment of cash deposits during the demonetisation period, which require proper examination of facts and supporting evidence. 8. In our considered view, while the assessee cannot be absolved of responsibility for repeated non-compliance before the CIT(Appeals), the ends of justice would be met if one more opportunity is granted to the assessee to substantiate his case on merits. We are of the view that the matter requires fresh adjudication after giving the assessee one more opportunity of being heard and to place on record the necessary evidences in support of his explanations. At the same time, the conduct of the assessee in not complying with the notices issued during appellate proceedings cannot be ignored and deserves to be suitably addressed. 9. Accordingly, in the interest of justice, we set aside the order passed by the CIT(Appeals) and restore the matter to the file of the CIT(Appeals) for de-novo consideration on merits. The CIT(Appeals) shall adjudicate the grounds of appeal afresh in accordance with law after affording a reasonable opportunity of being heard to the assessee. The assessee is directed to fully cooperate in the appellate proceedings and to file all relevant written submissions and documentary evidence in support of his case. Considering the repeated non-compliance on the part of the Printed from counselvise.com ITA No. 2607/Ahd/2025 Ambalal Haridas Patel vs. ITO Asst. Year –2017-18 - 6– assessee, we impose a cost of Rs. 5,000/- on the assessee, which shall be paid to the credit of the Prime Minister’s National Relief Fund before the commencement of the proceedings before the CIT(Appeals), and proof thereof shall be furnished before the CIT(Appeals). 10. With the above directions, the appeal of the assessee is allowed for statistical purposes. 11. In the result, the appeal of the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 18/02/2026 Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 18/02/2026 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 17.02.2026 (Dictated on dragon software) 2. Date on which the typed draft is placed before the Dictating Member 17.02.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .02.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 18.02.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 18.02.2026 7. Date on which the file goes to the Bench Clerk 18.02.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "