MAHENDRA PARSHOTTAMDAS PATEL,AHMEDABAD V. ITO WARD 3(2)(3) AHMEDABAD, AHMEDABAD

ITA 2068/AHD/2025

AI Insights

The case involves Mahendra Parshottamdas Patel, an individual engaged in plywood trading, who appealed against the addition of Rs. 31,15,814 to his income for the Assessment Year 2016-17, which was deemed unexplained by the Assessing Officer. The addition was based on the presumption that the cash withdrawals made by the assessee were used for business purposes and not properly accounted for. The assessee contested this in the Income Tax Appellate Tribunal after the Commissioner of Income Tax (Appeals) upheld the addition. The Tribunal examined the detailed cash flow statement, bank statements, and cash book submitted by the assessee and found them satisfactory, leading to the allowance of the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837544 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 31-10-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEERBADRAM VISLAVATH
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT Ms SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No.2068/Ahd/2025 (Assessment Year: 2016-17) Mahendra Parshottamdas Patel, Bari Balo Vas, Village Shilaj, Ahmedabad-380058. [PAN :AGMPP7103 M] Vs. The Income Tax Officer, Ward-3(2)(3), Ahmedabad. (Appellant) .. (Respondent) Appellant by : Shri S N Divetia, with Shri Samir Vora, ARs Respondent by: Shri Veerbadram Vislavath, Sr. DR Date of Hearing 13.01.2026 Date of Pronouncement 19.02.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal is filed by the Assessee against the appellate order dated 30.08.2025 passed by the Commissioner of Income Tax (Appeal) Panaji, relating to the Assessment Year 2016-17. 2. The assessee has raised the following grounds of appeal: 1.1 The order passed by U/s.250 passed on 30.08.2025 for A.Y. 2016-17 by Addl. /JCIT(A), Panjim [ for short CIT(A)\"] upholding the addition of Rs. 31,15,814/-made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. CTT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions/explanations/evidence produced to explain the source of impugned cash and upheld the addition on vague, general and presumptive reasons. Printed from counselvise.com ITA No. 2068/Ahd/2025 Asst. Year : 2016-17 - 2– 3.1 The Id.CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs. 31,15,814/- made by A.O. as unexplained source of income. 3.2 That the in the facts and circumstances of the Id. CIT(A), ought not to have upheld the addition of Rs. 31,15,814/- made by A.O. as unexplained source of income. 3. The brief facts of the case are that the appellant is an individual engaged in the business of trading in plywood under the name “Neelgiri Enterprise.” The appellant filed his return of income for A.Y. 2016-17 on 12.01.2017 declaring total income of Rs.5,50,480/-. The case was selected for limited scrutiny under CASS for the reason “whether cash in hand shown in the return of income is correct.” During the assessment proceedings, the appellant was asked to explain the large cash in hand shown as on 31.03.2016 in the balance sheet. The appellant explained that he had withdrawn Rs.56,43,810/- from various bank accounts and redeposited Rs.21,77,500/-. The appellant also filed bank statements and cash book to prove the source of cash. However, the Assessing Officer rejected the explanation and made an addition of Rs.31,15,814/- as unexplained income. 4. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the learned CIT(A), who dismissed the appeal based on written submissions and documentary evidences filed by the assessee. 5. Aggrieved by the order of the learned CIT(A), the assessee is in further appeal before this Hon’ble Tribunal. 6. The learned Counsel for the assessee submitted that written submissions, bank statements, and cash book were duly uploaded before the lower authorities. It was explained that the assessee had made total Printed from counselvise.com ITA No. 2068/Ahd/2025 Asst. Year : 2016-17 - 3– withdrawals from three banks amounting to ₹56,43,810/- and redeposited cash of Rs.21,77,500/- during F.Y. 2015-16, leaving a balance cash on hand of Rs.34,66,310/-. However, the Assessing Officer made an addition of Rs.31,15,814/-, which represents the closing cash balance as on 31.03.2016, duly reflected in the books of account. The books of account were neither rejected nor any discrepancy was found therein. The CIT(A) has reproduced the cash flow statement, cash book, and bank statements in the impugned order itself, yet confirmed the addition merely on the presumption that the cash withdrawals were utilized for business purposes. It is submitted that asking for documentary evidence for cash flow and confirmations from third parties for cash transactions is unreasonable and beyond comprehension, and the addition is purely based on presumptions and surmises. 7. On perusal of the record, we find that cash flow statement has been by the assessee before both the Revenue authorities, the same is reproduced as under: Cash Flow Statement for the Year 2015-16 Cash Inflow Amount Cash Outflow Amount To Opening Balance 126301 To Withdrawal from HDFC Bank 5591900 By depositing in HDFC Bank 2169500 To Withdrawal From Bank of India 2910 By Payment to Vikas Motors 103621 To Withdrawal From Dena Gujarat Gramin Bank 49000 By Depositing to Dena Gujarat Gramin Bank 8000 To Rent Income 348350 By Mahendra Patel House hold withdrawal 120000 By Petrol Expenses 51650 By Officer Expenses 18650 By Tea & Refresh Exps. 21370 By Mobile Bill Expenses 19685 By Salary Expenses 423000 Printed from counselvise.com ITA No. 2068/Ahd/2025 Asst. Year : 2016-17 - 4– By Printing & Stationery 3545 By HDFC Bank Vehicle loan 11875 By V.V Patel & Co 30210 By HDFC Bank PL 21541 By Closing Balance 3115814 Total 6118461 Total 6118461 Since the deposits are duly explained and even the cash expenses are duly reflected, we hold that no addition is called for on this ground. 8. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 19.02.2026. Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Copy) (True Copy) Ahmedabad; Dated 19.02.2026 MV 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 "