ITO Vs Mahipalsinh Manharsinh Gohil (ITAT Ahmedabad)
ITAT Upholds CIT(A) Order on Cash Deposits During Demonetization; ITAT Taxes Only 0.7% Margin on Vodafone Top-up Receipts; ITAT Upholds Limited Tax Addition on Vodafone E-Top-up Receipts
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, dismissed an appeal filed by the Income Tax Department, challenging the decision of the Commissioner of Income-tax (Appeals) (CIT(A)) to limit the addition of unexplained income for Assessment Year (AY) 2017-18. The case involved an individual assessee, Mahipalsinh Manharsinh Gohil, who failed to file a return of income. The original dispute arose when the Assessing Officer (AO) discovered cash deposits, including deposits made during the demonetization period, totaling ₹1,04,79,807 across the assessee’s bank accounts.
The AO initially treated the entire amount as unexplained money under Section 69A of the Income-tax Act, 1961, and completed the assessment ex-parte under Section 143(3) read with Section 144, taxing the entire sum.
CIT(A) Modifies Addition Based on Business Nature
Aggrieved by the full addition, the assessee appealed to the CIT(A). During the appellate proceedings, the assessee submitted a letter from Vodafone, claiming that the deposits represented receipts from E-top-up sales and that the entire sales proceeds were subsequently transferred to Vodafone West Ltd. The assessee claimed a profit margin of 0.7% on these sales for the period 2013 to 2017 and argued that this margin constituted his only income source.
