DHWANI JAYESHKUMAR PATEL,PANCHMAHAL V. THE ITO, WARD-4(1)(2), VADODARA

ITA 1757/AHD/2025

AI Insights

The case revolves around the appeal by Dhwani Jayeshkumar Patel against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs.31,28,66,130 as unexplained cash credits in the assessee's bank account for the Assessment Year 2017-18. The AO had initially added this amount to the assessee's income, suspecting it to be unexplained cash credits. The assessee argued that these were transactions related to his business of discounting and commission, where various businessmen deposited cash in his account and collected it later as per their needs, against commission payments. The Tribunal, after examining the submissions and evidence, including the fact that similar issues were not contested in the previous assessment year, ruled in favor of the assessee.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833449 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 22-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: SAKAR SHARMA
• Keywords: Additional evidence; Unexplained cash credit; Competent authority
• Section: 147; 131; 133(6)

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0012ायपीठ “सी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD \u0016ी संजय गग\u001a, \u0012ाियक सद\u001b एवं \u0016ी मकरंद वसंत महादेवकर, लेखा सद\u001b क े सम!। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member आयकर अपील सं /ITA No.1757/Ahd/2025 िनधा \u000fरण वष\u000f /Assessment Year : 2017-18 Dhwani Jayeshkumar Patel Pro. of Jay Enterprise 19-1, Neeta Nagar Society Kanjari Road Halol, Panchmahal 389 350 (Gujarat) बनाम/ v/s. The ITO Ward-4(1)(2) Vadodara 390 007 \u0013थायी लेखा सं./PAN: BYNPP 3496 D (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Sakar Sharma, AR Revenue by : Shri Rignesh Das, CIT-DR सुनवाई की तारीख/Date of Hearing : 10 /11/2025 घोषणा की तारीख /Date of Pronouncement: 02/02/2026 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 25/07/2025 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017-2018. 2. In this appeal, the assessee is aggrieved by the action of the Ld. CIT(A) in confirming the addition made by the Assessing Officer (AO) of Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 2 Rs.31,28,66,130/- on account of unexplained cash credits in the bank account of the assessee. 3. The brief facts of the case the AO on verification of bank accounts of the assessee found that huge cash of Rs.23,47,41,361/- was deposited in the said bank accounts during the year. He asked the assessee to submit the source of the aforesaid cash deposits in his bank accounts. The assessee explained that the assessee was engaged in the business of discounting and commission carried out in the name of Jay Finance. That the assessee was resident of Halol, Gujarat which was a plastic products manufacturing hub. It was explained that the various business men from all over India come to purchase plastic products at Halol and the transactions were mostly carried out in cash. That those persons belonging to various places deposited different amounts in the bank account of the assessee and collected the same in cash from the assessee at Halol or the assessee could pay the amount to the beneficiaries as instructed by them, for which the assessee got commission. The assessee duly offered the commission income for taxation. The AO asked the assessee to furnish the names, addresses, PAN, ledger, confirmation, etc. of the said parties. The AO noted that the assessee had not furnished the details of all the parties. That even there were incomplete addresses of the persons. The AO, however, issued notices u/s 133(6) of the Act and summons u/s 131 of the Act to those persons whose addresses seem to be complete. The AO noted that notices u/s 133(6) of the Act were issued in 10 cases out of which 8 notices received back with Postal remarks “insufficient address”. Further, summons u/s 131 of the Act were issued to 8 persons, the same were also returned back “unserved”. The AO, therefore, issued show- cause notice to the assessee as to why the said amount of Rs.23,47,41,361/- be Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 3 not added to the income of the assessee. In response to the show-cause notice, the assessee submitted that the assessee had acted only as a commission agent and that the money deposited in the bank account of the assessee belonged to different persons. That all the transactions were recorded in his books of accounts. That the assessee had also obtained registration certificate for carrying out such activities from the competent authority, i.e. Assistant Registrar Co-operative Society (Finance), Godhra, District Panchmahals, Gujarat. He explained that to avoid the risk of carrying the cash with them, these parties deposited the cash in the bank account of the assessee which was handed over to them at Halol against commission receipts. The assessee has also submitted that on identical reasons, the assessment of the assessee was reopened in the immediately preceding assessment year 2016-17, however, no additions were made by the AO on this issue considering the submissions of the assessee. So far as the return of notices “unserved” in many cases was concerned, the assessee explained that the long time had passed and that the assessee had given the names and addresses which were given to him by the parties, but actually they may differ as per their actual names. The assessee submitted that as per the books of accounts maintained by him against each credit entry, there was a debit entry also, which shows that the amount deposited was not the income of the assessee, rather, the amount deposited was handed over to the concerned persons against commission income, which was duly disclosed in the return of income of the assessee. 4. The Ld. AO, however, did not get satisfied with the above explanation given by the assessee. He observed that the assessee submitted confirmations of those parties to whom the notices u/s 133(6) of the Act and Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 4 summons u/s 131 of the Act were issued. That, though, the notices/ summons issued to them were returned back unserved, however, the assessee was able to furnish the confirmations of those parties which was highly improbable. Even they had stated that in actual they are known by different names which the AO noted was also not probable. The AO further observed that even in some cases, the concerned parties had stated that they had not deposited the amount in assessee’s bank account. The AO further noted that the assessee had made cash deposits amounting to Rs.31,28,66,130/- appearing in five bank accounts of the assessee and that the assessee had failed to furnish the source of the said deposits. He, therefore, made the addition of the aforesaid amount into the income of the assessee. 5. Being aggrieved by the said order of the AO, the assessee preferred appeal before1 the Ld. CIT(A). During the appellate proceedings, the assessee furnished the names, addresses, GST Numbers, PAN, Mobile Numbers, etc. of 10 parties to whom the notices u/s 133(6) of the Act were issued and of the 8 parties to whom the notices u/s 131 of the Act were issued by the AO. The assessee also furnished details of all the parties from whom the deposits were received and requested the Ld. CIT(A) to admit the additional evidences and get the further investigation done from the AO. The Ld. CIT(A) admitted the additional evidences and called upon the remand report from the AO for the said evidences. The AO in the remand report noted that the assessee had not provided PAN and full addresses of all the 266 persons who allegedly deposited the amount in the bank accounts of the assessee, but only 18 persons. He simultaneously issued summons u/s 131 of the Act to 15 parties. Some of the parties totally denied of having made any deposits in bank accounts of the assessee, some of them accepted that Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 5 they had deposited the amount in the bank accounts of the assessee, but stated lesser amount than that was mentioned by the assessee. Some of the parties did not respond the summons issued by the AO. The AO, accordingly, sent the remand report to the Ld. CIT(A). In rebuttal to the said remand report, the assessee explained that he was in the activity of discounting and commission since 2014, which was never disputed by the Income-tax Authorities. He further submitted that on similar issue, the assessment of the assessee was reopened for AY 2016-17, however, after verification of the facts, the AO did not make any addition. The assessee also furnished the details of all the 266 persons along with names, amount receipts, commission income and amounts repaid to those parties. He also explained that some of the parties had deposited the amount which was not recorded in their books of accounts and further that some of the parties had recorded lesser amount in their books of accounts and that is why, they either denied the transaction or admitted the lesser amount of transaction. He further submitted that the entire issue was required to be examined in the light of text of human probabilities/preponderance of probabilities. It was submitted that non-appearance of the parties before the AO could not be adversely viewed against the assessee. That the AO had vast powers to enforce the attendance of those parties. 6. The Ld. CIT(A), however, did not agree with the above submissions and observed that the assessee could not prove beyond doubt that the assessee was acting only as a commission agent. That most of the parties had denied the transactions with the assessee. He, therefore, confirmed the addition, so made by the AO. Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 6 7. Before us, the Ld. Counsel for the assessee has submitted that the assessee was a man of meagre resources. That the assessee had furnished the names and details of all the 266 persons from whom the deposits were received. He has also furnished the cash-flow statement for the relevant financial year 2016-17. He has further relied upon the assessment order of the earlier assessment year 2016-17, wherein, on the identical issue, no additions were made by the AO. He has further submitted that the names, other details including PAN, etc. of the different parties furnished by the assessee were correct and that the details of the entire amount along with its break-up were also duly furnished before the AO. It was also explained the modus operandi of the assessee’s business was that various parties located all over the India have to remit cash payments to parties located at Halol, which was one of the major industrial hubs in the State of Gujarat. The concerned parties used to deposit the cash amount in the bank accounts of the assessee, which was further remitted to the concerned beneficiaries. The funds were also given in cash. The depositor would inform the beneficiary through WhatsApp or SMS and then the beneficiary would come to the premises of the assessee and show the proof of the deposits, the assessee whereupon, after verification, would hand over the cash to the beneficiary after retaining his commission. This service was fast and immediate and without any effective loss of time. That the assessee had duly furnished the confirmations of the parties and even the facts were verified by issuing notices u/s 133(6) of the Act and u/s 131 of the Income Tax Act, 1961. He has submitted that though some of the parties had denied the transactions or some of the parties had admitted lesser transaction, due to the circumstances that the entire transactions were not recorded by those parties in their books of accounts, however, an appreciation of overall facts and circumstances of the case Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 7 proves beyond doubt that the assessee was engaged in business of discounting and commission. The Ld. AR has submitted that the addition of the entire deposits ignoring the corresponding withdrawals was not justified. 8. The Ld. DR, however, has relied upon the findings of the lower authorities. 7. We have heard the rival contentions of the Ld. Representatives of the parties and gone through the record. In this case, the assessee has claimed to have been engaged in the activity of discounting and commission. In the earlier assessment year 2016-17, the assessment of the assessee was reopened u/s 147 of the Act, however, after verification of the facts, no addition was made by the AO admitting the contention of the assessee that the alleged deposits in the bank accounts of the assessee were not income of the assessee, rather, the assessee had earned only commission income, which was duly offered for taxation. In the year under consideration also, similar averments have been made by the assessee. The assessee furnished the names and details of all the 266 persons, who had deposited the amount in the bank accounts of the assessee. The AO has also issued summons u/s 133(6) and 133(1) of the Act to some of the parties. The assessee also furnished confirmations from many parties. Though some of the parties totally denied the transactions and some of the parties admitted the transactions of the lesser amount, yet, looking at the overall facts and circumstances of the case, the fact is established on the file that the assessee was in the business of discounting and commission. The assessee has duly maintained his books of accounts and had also offered the commission income for taxation. The assessee has also explained the modus operandi of his activity and has also Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 8 explained the reasons that since the entire activity is based on cash transactions and further that the concerned parties might not have recorded those cash transactions in their books of accounts or recorded lesser amount, therefore, they admitted lesser amount in their statements. Considering the overall facts and circumstances of the case, the preponderance of probabilities suggest that the assessee has acted only as a commission agent and he was not the owner of the amounts deposited in his bank accounts. The assessee has duly shown that each of the credit entry was followed by debit entry. The assessee has duly furnished the names and details of the all 266 persons, who transacted through the bank accounts of the assessee. The assessee has maintained his books of accounts and has also duly offered the commission income earned on the transactions carried out by various parties using his bank accounts. Therefore, we do not find justification on the part of the lower authorities in making/confirming the impugned additions and the same are, accordingly, ordered to be deleted. 8. In the result, the appeal of the assessee stands allowed. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 02/02/2026. Sd/- Sd/- (Makarand V. Mahadeokar) Accountant Member ( Sanjay Garg ) Judicial Member िदनांक/Dated 02/02/2026 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS Printed from counselvise.com ITA No.1757/Ahd/2025 Dhwani Jayeshkumar Patel vs. The ITO Asst4.Year : 2017-18 9 आदेश की ितिलिप अ!ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\" / The Appellant 2. #थ\" / The Respondent. 3. संबंिधत आयकर आयु% / Concerned CIT 4. आयकर आयु% ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स#ािपत ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (dictation direct on H-JM’s computer) : 30.1 2026 2. Date on which the typed draft is placed before the Dictating Member. : 30.1 2026 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 02.02.26 7. Date on which the file goes to the Bench Clerk. : 02.02.26 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 Despatch of the Order : Printed from counselvise.com "