LATE HARSHADRAI DALICHAND DIORA THROUGH HIS LEGAL HEIR AND WIDOW SMT. MALVIKABEN HARSHADRAI DIORA,BHAVNAGAR V. THE ITO, WARD-1(9), BHAVNAGAR

ITA 1735/AHD/2025

AI Insights

The case revolves around the appeal by Smt. Malavikaben Harshadrai Diora, the legal heir of Late Harshadrai Dalichand Diora, against the order of the Commissioner of Income Tax (Appeals) which confirmed an addition of Rs. 20,00,000 to the assessee's income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer under section 68 of the Income Tax Act, 1961, due to unexplained cash deposits in the assessee's bank account during the demonetization period. The Tribunal examined the nature of the cash deposits, the business activities of the assessee, and the documentation provided, including VAT returns and previous years' assessments, which supported the regularity of such deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787154 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 12-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: DR. BRR Kumar, Vice President And Shri T. R. Senthil Kumar, Judicial Member Late Harshdrai Dalichand Diora Through his legal heir and widow Smt. Malavikaben Harshadrai Diora Main Bazar, Palitana, Bhavnagar-364270, Gujarat PAN: ABRPD5197P (Appellant) Vs The ITO Ward-1(9), Bhavnagar (Respondent) Assessee Represented: Shri B.R. Popat, A.R. Revenue Represented: Shri Rohit Aasudani, Sr. D.R. Date of hearing : 12-11-2025 Date of pronouncement : 17-11-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 16.07.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the reassessment order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18. ITA No: 1735/Ahd/2025 Assessment Year: 2017-18 Printed from counselvise.com I.T.A No. 1735/Ahd/2025 A.Y. 2017-18 Page No Late Harshadrai Dalichand Diora Through His Legal Heir and widow Smt. Malviaben harshadrai Diora vs. ITO 2 2. The Grounds of Appeal raised by the assessee are as follows: 1. The learned CIT(A) erred in law and on facts in confirming the addition to the extent of Rs.20,00,000/- originally made by the AO. Considering the totality of the facts and the provisions of law, as interpreted by the Judicial and Constitutional Authorities, he ought to have deleted even this part of the addition 2. The learned CIT(A) erred in law and on facts in confirming the action of the AO in invoking the provisions of section 68 of the Act, which was in respect of the money found deposited in the Bank Account 3. The learned CIT(A) erred in law and on facts in passing the appellate order in the name of the deceased, wherein the name of his legal heir was already registered on the portal of the department 3. Brief facts of the case is that the assessee is an individual engaged in the business of trading in agricultural commodities from a small town of Palitana, Bhavnagar District of Gujarat. Major portion of the sales in cash due to sale of agricultural commodity to farmers. For the Asst. Year 2017-18, assessee filed his Return of Income which was accepted. Thereafter it came to the notice of the Department that assessee made cash deposits of Rs. 39,95,000/- in his bank account during demonetization period. 4. In response, the assessee filed Return of Income and also explained the cash deposits made during demonetization with the Specified Banking Notes (SBN) of Rs. 20,00,000/- on 12-11-2016 and balance amount by regular currency (Non-Specified Banking Notes). The assessee also explained that the cash deposit made on 12-11-2016 is the trading of agricultural commodities which was realized in cash. However the assessing officer has not accepted the above submissions of the assessee and made addition of Rs.39,95,000/- as unexplained income in the hands of the assessee u/s. 68 of the Act and demanded tax thereon. Printed from counselvise.com I.T.A No. 1735/Ahd/2025 A.Y. 2017-18 Page No Late Harshadrai Dalichand Diora Through His Legal Heir and widow Smt. Malviaben harshadrai Diora vs. ITO 3 4. Aggrieved against the re assessment order, assessee filed appeal before Ld. CIT(A) who has partly confirmed the addition of Rs.20,00,000/- by a detailed appellate order. 5. We have heard rival submissions and perused the materials available on record. Ld. Counsel submitted before us a comparative chart of cash deposits in bank accounts during the current Asst. Year and immediately preceding two assessment years and demonstrated cash deposit is being made in the bank accounts is the regular system of followed by the assessee: Month A.Y.15-16 A.Y. 16-17 A.Y. 17-18 April 2718500 2660000 3714150 May 3207000 1820000 2313430 June 1650000 2120800 2422530 July 2651000 1855000 2601200 August 952000 790540 1877065 September 1591295 1550000 1960925 October 1257560 1535700 2420000 November 1660000 1555170 3273830 December 2134225 2120000 2085595 January 2750000 1931120 2930434 February 1802270 2196125 2357995 March 1523375 1850000 2866383 Total 23897225 21984455 30823537 Printed from counselvise.com I.T.A No. 1735/Ahd/2025 A.Y. 2017-18 Page No Late Harshadrai Dalichand Diora Through His Legal Heir and widow Smt. Malviaben harshadrai Diora vs. ITO 4 5.1. Further perusal of the cash flow statement filed in the Paper Book out of the total sales of Rs.3.47 crores, a sum of Rs.3.23 crores was realized in cash which is constituting 93.09% of the total sales by the assessee. The Department also is not in dispute that there is any other source except the cash sales by the assessee and realization from debtors. Further the cash sales effected is cross verifiable from the annual VAT returns furnished by the assessee which was accepted by the Commercial Tax Department of the State Government. All this clearly proves that deposit of cash in the banking account regularly has been the normal practice adopted by the assessee considering the nature of business activities carried out by the assessee not only for the present Asst. Year but also in the earlier Asst. Years. Without verifying the above submissions of the assessee, Ld. CIT(A) confirmed the addition of Rs.20,00,000/- being cash deposit in Specified Banking Notes on 12-11-2016 which is liable to be deleted. 6. In the result, the appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 17 -11-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 17/11/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) Printed from counselvise.com I.T.A No. 1735/Ahd/2025 A.Y. 2017-18 Page No Late Harshadrai Dalichand Diora Through His Legal Heir and widow Smt. Malviaben harshadrai Diora vs. ITO 5 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "