NIKUNJKUMAR NARBHERAM THAKKAR,TALUKA-RADHANPUR, DIS-PATAN, GUJARAT V. WARD 3, PATAN (PRESENT JURIS. ITO WARD 1 PATAN), INCOME TAX DEPARTMENT

ITA 547/AHD/2025

AI Insights

The case involves Nikunjkumar Narbheram Thakkar, a businessman engaged in the wholesale and retail trading of charcoal, who appealed against the order of the Income Tax Officer (ITO), Ward 3, Patan, and the subsequent confirmation by the CIT(A). The primary contention was the addition of Rs 12,52,589 to the assessee's income, which was treated as undisclosed sales/receipts based on a discrepancy between reported sales and bank deposits. The Tribunal noted that the case was selected for Limited Scrutiny specifically to verify cash deposits, and any expansion beyond this scope required prior approval from the PCIT, which was not obtained.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771855 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATEEK SHARMA
• Assessee Lawyers: SULABH PADSHAH
• Keywords: Business income; Assessment record; Competent authority

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.547/Ahd/2025 (Assessment Year: 2017-18) Nikunjkumar Narbheram Thakkar, 53, Nandanvan Bungalows, Besides Bhabhar Tran Rasta, Radhanpur, Tal. Radhanpur, Radhanpur Dist. Patan [PAN :AGJPT 8348 K] Vs. The Income Tax Officer, Ward 3, Patan (Present jurisdiction ITO, Ward 1, Patan) (Appellant) .. (Respondent) Appellant by : Shri Sulabh Padshah, AR Respondent by: Shri Prateek Sharma, Sr DR Date of Hearing 06.08.2025 Date of Pronouncement 25.08.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the Assessee against the order passed by the Ld. ADDL/JCIT(A), Panchkula (hereinafter referred to as \"CIT(A)\" for short) dated 10.01.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2017-18. 2. The assessee has raised the following grounds of appeal:- “1. The Ld. AO has erred in making addition of Rs 12,52,589/- determining income @ 8% of Rs. 1,56,57,359/- considering it as Undisclosed sales/receipt of Appellant. It is submitted that the case was selected for Limited Scrutiny Assessment on issue of verification of cash deposits and therefore the addition made on some different footing is completely out of scope and beyond jurisdiction of Limited Scrutiny Assessment. On facts circumstances of the case, the order passed by AO is incorrect and deserves to be quashed and addition made of Rs 12,52,589/-be deleted in interest of justice. The same please be held accordingly. Printed from counselvise.com ITA No. 547/Ahd/2025 Nikunjkumar Narbheram Thakkar Vs. ITO Asst. Year : 2017-18 - 2– 2. The Learned CIT (Appeals) has erred in confirming addition of Rs 12,52,589/-ignoring facts and circumstances of case. It is submitted that the necessary details and explanations were filed during assessment proceeding, could not be filed before CIT(A) because of ex-parte order passed. In view of this, it is prayed before your honour that Learned CIT (Appeals) may please be directed to hear the appellant again along with all the details and evidences available and the addition made of Rs 12,52,589/- be deleted. The same be held accordingly. 3. The lower authorities has erred in considering Rs. 1,56,57,359/- as Undisclosed sales/receipt of Appellant for the year completely ignoring the submission filed by the Appellant during assessment proceeding. It is respectfully submitted that the amount of Rs.1,56,57,359/- is not at all undisclosed sales/receipt of the Appellant. Thus the entire addition made considering Rs.1,56,57,359/- as Undisclosed sales/receipt of Appellant for the year is completely illegal and unjustifiable and the same be deleted accordingly. 4. The Ld. Assessing Officer has erred in charging interest u/s 234A/234B/234C of the I.T. Act. It is submitted that looking to the facts and circumstances of the case, no interest is chargeable and therefore the incorrect interest charged u/s 234A/234B/234C of the I.T. Act be deleted.” 3. In this case, the assessee is engaged in the wholesale & retail trading business of Charcoal at Radhanpur. The assessee has filed his return of income for the year under consideration on 28.10.2017, declaring total income at Rs.2,96,940/-. The case of the assessee was selected under CASS as Limited Scrutiny with reason to verify cash deposit during the year. During the course of assessment proceedings, on verification of the bank book of the assessee, it was noticed by the Assessing Officer that the assessee has shown total credit of Rs.2,22,07,784/- in his bank account maintained with Bank of Baroda, whereas as per Trading Account, his total sales during the year was Rs.65,50,425/-; hence, there is a difference of Rs.1,54,57,359/- between assessee’s bank book and sales/turnover during the year under consideration. Accordingly, the Assessing Officer treated the said amount as undisclosed turnover and computed income @ 8% thereon, resulting in an addition of Rs.12,52,589/-. Printed from counselvise.com ITA No. 547/Ahd/2025 Nikunjkumar Narbheram Thakkar Vs. ITO Asst. Year : 2017-18 - 3– 4. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) and the Ld. CIT(A), in an ex-parte order, upheld the addition. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 6. We have heard the rival contentions and perused the material available on record. The total cash deposits were to the tune of Rs.43.72 lakhs. Further, we find that the assessee had filed an explanation regarding the cash deposits during the assessment proceedings. There is no finding in the assessment order that such explanation was found to be incorrect or false. The sources have been proved and Assessing Officer made no addition on account of cash deposits. It is evident from the assessment records that the case was selected for Limited Scrutiny, specifically for the purpose of verifying cash deposits; therefore, the Assessing Officer was not empowered to travel beyond the limited scope of scrutiny unless prior approval was obtained from the competent authority to convert the case into Complete Scrutiny. No such approval has been brought on record. Since the Assessing Officer travelled beyond the issue of Limited Scrutiny without the much- needed approval of the PCIT, we hold that the addition made in the assessment order cannot be sustained. 7. In the result, appeal of the assessee is allowed. The order is pronounced in the open Court on 25.08.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 25.08.2025 *btk Printed from counselvise.com ITA No. 547/Ahd/2025 Nikunjkumar Narbheram Thakkar Vs. ITO Asst. Year : 2017-18 - 4– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 01.08.2025 2. Date on which the typed draft is placed before the Dictating Member 22 .08.2025 3. Other Member 22 .08.2025 4. Date on which the approved draft comes to the Sr.P.S./P.S 22 .08.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 25 . 08.25 6. Date on which the fair order comes back to the Sr.P.S./P.S 25 .08.25 7. Date on which the file goes to the Bench Clerk 25.08.25 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 "