RAKESH JAYANTIBHAI PATEL,AHMEDABAD V. INCOME TAX OFFICER, WARD - 5(3)(2), AHMEDABAD, AHMEDABAD

ITA 1301/AHD/2025

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The case involves Rakesh Jayantibhai Patel, an individual engaged in retail Auto CAD design work, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed an addition of Rs. 1,30,000 to his income under section 68 read with section 115BBE of the Income Tax Act. The addition was initially made by the Assessing Officer following the reopening of the assessee's case based on information that he had introduced share capital and unsecured loans amounting to Rs. 20,00,000 in M/s. Cruso Granito Private Limited. The Tribunal's decision was based on the assessee's successful demonstration of the legitimacy of the loans received from his family members, supported by adequate documentation and banking transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780504 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 05-06-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHAKAR VERMA
• Assessee Lawyers: VIMAL DESAI
• Keywords: Unexplained cash credit
• Section: 147; 144; 68

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.1301/Ahd/2025 (Assessment Year: 2018-19) Rakesh Jayantibhai Patel, C/o Sarda & Salda(CA), Sakru- 1st Floor, Dr. Radha-Klishnan Road, Opp. Rajkumar College, Rajkot-360001. [PAN :AVJPP8340 C] Vs. The Income Tax Officer, Ward-5(3)(2), Ahmedabad. (Appellant) .. (Respondent) Appellant by : Shri Vimal Desai, AR Respondent by: Shri Sudhakar Verma, Sr.DR Date of Hearing 07.10.2025 Date of Pronouncement 10.10.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal 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 13.12.2024 relevant to the Assessment Year 2018-19. 2. The assessee has raised the following grounds of appeal: 1. Order u/s. 147 r.w.s 144 r.w.s 144B of the Act is bad in law. 2. The Ld.AO has erred in law as well as on facts in making the addition of Rs.11,70,000/- under section 58 r.w.s 115BBE of the Income-tax Printed from counselvise.com ITA No. 1301/Ahd/2025 Asst. Year : 2018-19 - 2– Act. The Ld.CIT(A) has further erred in law and on facts in confirming the addition to the extent of Rs.1,30,000/- 3. The brief facts of the case are that the assessee is an individual engaged in retail Auto CAD design work. The assessee e-filed his return of income for the year under consideration on 11.07.2018, declaring a total income of ₹2,91,400/-. The assessee’s case was reopened based on information received that he had introduced share capital and unsecured loans amounting to Rs. 20,00,000/- in M/s. Cruso Granito Private Limited. The Assessing Officer, after partially accepting the assessee’s contentions and evidences, made an addition of Rs.11,70,000/- under section 68 and charged tax under section 115BBE of the Act. 4. Aggrieved against the Assessment Order, the assessee filed appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee by observing as follows: “…Third ground of appeal is against the addition of Rs.11,70,000/- made under section 68 of the Income Tax Act 1961. The facts relating to this addition are that during the year the appellant made an investment of Rs.20 lacs. For this purpose he raised funds from various sources including his own savings and loan from father and two sisters. The assessing officer partially accepted his contentions and evidences. However he held that the appellant was not able to justify the loans given by the various persons as below a. Jayantibhai Bhavji Bhai Patel (father) 4,80,000/- b. Nitaben Patel (sister) 4,40,000/- c. Alpaben Khambalia (sister) 2,50,000/- Accordingly he made addition of Rs. 11,70,000/- in the hands of the appellant and charged tax under section 115BBE of the Income Tax Act 1961. From the assessment order pages 8 and 9 it is observed that the AO rejected the contentions and claims of the appellant without going into the copies of bank accounts in detail. The only major reason cited is non-response to requisition us 133(6), forgetting that these persons are close family members of the appellant and their confirmations etc. have been duly furnished. Printed from counselvise.com ITA No. 1301/Ahd/2025 Asst. Year : 2018-19 - 3– 6.2.1 On going through the copy of bank account of Sh. Jayantibhai Bhavji Bhai Patel it is observed that till August 2017 the banking behavior was normal and the transactions have been made in normal manner. However during the period 15.09.2017 to 11.11.2017 there are 5 items of cash deposit of Rs. 49,500/- each. Out of these deposits, Rs. 2,50,000/- has been advanced to the appellant during this period. Whereas it cannot be denied that Jayantibhai Bhavji Bhai Patel was having agricultural income and must be having past savings also, it can also not be denied that he would be incurring expences on the maintenance and well being of his family.... Moreover till 11.08.2017 also he had deposited cash from time to time. In these circumstances, the justifiable availability of explained cash of Rs. 2,50,000/- at this stage is not acceptable. However he had received cash of Rs. 1,20,000/- as part consideration for land sold, which has been accepted by the AO. After giving credit. for the same, Rs 1,30,000/- still remains unexplained. Accordingly the addition to that extent deserves to be confirmed and the balance Rs. 3,50,000/- is deleted. 6.2.2 From the bank account of Nitaben Patel it is observed that the transactions in her bank account show a normal pattern. No major cash has been deposited before being advanced to the appellant. There is no valid reason not to accept the claim. Her identity and credit worthiness stands established. Hence addition made on account of this too deserves to be deleted. 6.2.3 The loan of Rs. 2,50,000/- from the other sister is too small an amount. The identity has been duly proved and copy of bank account furnished. The bank account does not show any lump-sum cash deposit. As such this addition too is not justified and deserves to be deleted. 6.3 To sum up, the appellant gets relief of Rs.10,40,000/- and addition of Rs, 1,30,000/- stands confirmed. This ground of appeal is partly allowed…” 5. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 6. The Ld. Counsel for the assessee submitted that the assessee had received a total amount of ₹10,80,000/- as an unsecured loan from his father, Shri Jayantibhai Patel. During the course of assessment proceedings, the assessee furnished the following documents in support of the said loan:  PAN and Aadhaar card of Shri Jayantibhai Patel Printed from counselvise.com ITA No. 1301/Ahd/2025 Asst. Year : 2018-19 - 4–  Confirmation letter from the lender  Copy of bank statement of Shri Jayantibhai Patel  Landholding proof (Form 7/12 extract)  Copy of the sale deed of agricultural land The Ld. Counsel further submitted that out of the total loan of Rs.10,80,000/-, a sum of Rs.6,00,000/- was received by Shri Jayantibhai Patel from the sale of agricultural land. This fact was supported by the sale deed, and no adverse inference was drawn by the Assessing Officer regarding this transaction. 7. We have perused the material available on record and considered the submissions of the Ld. Counsel. It is observed that the assessee has duly established the identity, genuineness, and creditworthiness of the lender. The transactions have been routed through banking channels, and the source of the cash credit has been satisfactorily explained. In the absence of any contrary evidence brought on record by the Revenue, we are of the considered opinion that the addition sustained by the Ld. CIT(A) is not justified. Accordingly, we direct to delete the remaining addition made on account of unexplained cash credit under section 68 of the Act. 8. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 10.10.2025. Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 10.10.2025 MV Printed from counselvise.com ITA No. 1301/Ahd/2025 Asst. Year : 2018-19 - 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 "