INCOME TAX OFFICER, WARD-1, HIMATNAGAR, HIMATNAGAR V. N M & COMPANY, KHEDBRAHMA

ITA 1582/AHD/2025

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, which had allowed the appeal of the assessee, N M & Company, and deleted the additions made by the Assessing Officer for unexplained cash deposits and unsecured loans. The Revenue challenged the admission of additional evidence by the assessee during the appellate proceedings and the deletion of the substantial additions made by the AO. The Tribunal found that the assessee had provided sufficient documentary evidence to substantiate the source of the cash deposits, which were related to the sales of petroleum products, and that the procedural requirements for admitting additional evidence were met.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787147 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Appeal Filed On: 14-08-2025
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B. R. POPAT
• Assessee Lawyers: SHER SINGH
• Keywords: Set aside; Additional evidence; Unexplained cash credit
• Section: 68; 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1582/Ahd/2025 With C.O. No. 74/Ahd/2025 (Assessment Year: 2017-18) Income Tax Officer, Ward-1, Himatnagar, Gujarat-383001 Vs. N M & Company, N. M. & Co, State Highway Road, Station Area, Khedbrahma, Sabarkantha, Gujarat-383255 [PAN : AAEFN1337M] (Appellant/Respondent) .. (Respondent/Cross Objector) Appellant by : Shri B. R. Popat, AR Respondent by: Shri Sher Singh, CIT-DR Date of Hearing 03.11.2025 Date of Pronouncement 17.11.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal has been filed by the Revenue and the Cross Objection has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi vide order dated 25.06.2025 relevant to Assessment Year 2017-18. 2. The Revenue has raised the following grounds of appeal: 1. Whether the learned CIT(A), NFAC erred in admitting additional evidence furnished by the assessee during the appellate proceedings, despite the fact that the assessee’s case did not fall within any of the exceptions prescribed under Rule46A(1) of the Income Tax Rules, 1962, as the explanation offered such as Printed from counselvise.com ITA No. 1582/Ahd/2025 with C.O. No. 74/Ahd/2025 Asst. Year : 2017-18 - 2– renovation of business premises does not constitute sufficient cause within the meaning of the said rule, particularly when adequate opportunities were afforded by the Assessing Officer during the assessment proceedings, and the assessee neither sought any adjournment nor filed any request for additional time to submit the relevant documents at that stage? 2. Whether the learned CIT(A), NFAC, erred in deleting the addition of Rs. 43,82,89,660/- made by the AO under section 68 of the Income Tax Act, 1961, towards unexplained cash deposits, as well as the addition of Rs. 43,033/- towards unexplained unsecured loans, without properly appreciating that the assessee the assessee had grossly failed to explain the nature and source of such substantial transactions through credible and verifiable evidence during the course of assessment proceedings, and that the explanation furnished during the course of appellate proceedings was based solely on self-serving documents, and lacked any independent verification? 3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 4. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored. 3. The assessee has raised the following grounds of appeal in cross objection: 1. The learned CIT(A) erred in law and on fact in confirming the addition of Rs.5,28,744/- originally made by the AO by disallowing part of certain expenses debited to the Profit and Loss Account. He did this without appreciating that part of this, to the extent the same was of personal nature, was already disallowed while filing the return of income under section 139 of the Act, whereas the other part thereof was clearly of revenue nature, incurred for the purpose of business and thus rightly claimed as deduction. 4. The assessee is a partnership firm engaged in the business of retail trading of petroleum products. The assessee filed its return of income for the Assessment Year 2017–18 on 01.11.2017, declaring a total loss of Rs. (-) 27,78,970/–. The Assessing Officer received information regarding cash deposits amounting to Rs.43.82 crores in the assessee’s bank accounts. Due to non-compliance before the Assessing Officer, the entire amount of Rs.43.82 crores was treated as unexplained cash credit and added to the income of the assessee. Printed from counselvise.com ITA No. 1582/Ahd/2025 with C.O. No. 74/Ahd/2025 Asst. Year : 2017-18 - 3– 5. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) allowed the appeal of the assessee. 6. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal. 7. We have heard both the parties and perused the material available on records. It was observed that the assessee had furnished before Ld.CIT(A) a detailed reconciliation statement along with documentary evidence establishing that the total deposits in the bank accounts were to the tune of Rs.24.82 crores and not Rs.43.82 crores as alleged by the Assessing Officer. The Ld. CIT(A) further noted that the amount of Rs.24.82 crores was duly supported by a comparative summary of cash deposits and sales of petrol and other petroleum products. It was also observed that the assessee had reported cash sales of Rs.22.94 crores in the preceding year as against Rs.24.45 crores during the current year, showing consistency in the trading pattern. The Ld. CIT(A) also took note of the RBI and Government guidelines issued during the demonetization period, under which petrol pumps were permitted to accept old currency notes, and banks were directed to accept such cash deposits without restriction till December 2016. Further, the Ld. CIT(A) examined the daily sales register, statutory quantitative records, audited cash book, and ledger accounts of HPCL. The Ld.CIT(A) also verified the records and statutory registers relating to daily stock, purchases, and sales, as well as the reports submitted to the Mamlatdar regarding sales, and cross-checked the same with the quantity of fuel supplied by HPCL. We also find that the assessee had Printed from counselvise.com ITA No. 1582/Ahd/2025 with C.O. No. 74/Ahd/2025 Asst. Year : 2017-18 - 4– sold petrol worth Rs.12.34 crores and diesel worth Rs.15.34 crores during the year, and total purchases from HPCL amounted to Rs.26.28 crores. Considering the above undisputed facts and the detailed verification carried out by the Ld. CIT(A), we find no reason to interfere with the findings of the Ld. CIT(A) treating the cash deposits were rightly held to be related to sales of petroleum products. 8. In the result, the appeal of the Revenue is dismissed. Coming to the C.O No.74/Ahd/2025 in (ITA No.1582/Ahd/2025) 9. Since the Cross Objection filed by the assessee is merely in support of the order passed by the Ld. CIT(A), no separate adjudication is required. Accordingly, the Cross Objection filed by the assessee is dismissed. 10. In the combined result, both the appeal of the Revenue and the Cross Objection of the assessee are hereby dismissed. The order is pronounced in the open Court on 17.11.2025. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 17.11.2025 MV Printed from counselvise.com ITA No. 1582/Ahd/2025 with C.O. No. 74/Ahd/2025 Asst. Year : 2017-18 - 5– 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, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "