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Income Tax Appellate Tribunal, ‘VNS‘ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 25/11/2021 passed by NFAC, Delhi for the quantum of assessment passed u/s.144 for the A.Y.2017- 18. 2. At the outset, we find that the appeal of the assessee is barred by limitation of 462 days. The assessee has given the following reasons for the delay in filing of the appeal:
2 M/s. Singhal Agencies “The return filed by the appellant/ assessee firm for the year under consideration i.e 2017-18, on 28.10.2017 was selected for scrutiny and finally assessment was completed ex-parte under section 144 of the Act at an income of Rs.9,15,252/-, Aggrieved by the said assessment order, appellant firm preferred an appeal before the first Appellate Authority under section 246A of the Act. In order to substantiate its stand against addition so made by the ld. Assessing Officer, the appellant firm filed its submission before the first Appellate Authority. The said submissions were taken into consideration by the first Appellate Authority while deciding the said appeal. After taking into consideration the ld. CIT (Appeal) was pleased enough to allow the appeal filed by the appellant partially, vide appellate order dated 25.11.2021. The said appellate order has been uploaded on the e-portal of the Income Tax Department and a copy of the same was forwarded to the email-id of the assessee which was not in regular use. Accordingly, the appellant was wholly unaware of the said appellate order dated 25.11.2021 having been uploaded on the e-portal. Later, when the return for the assessment year 2021- 22 was being uploaded by our counsel we came to know in the month of March, 2022 that appellate order has been passed and even penalty proceedings under section 270A had been completed ex-parte and the order in that case too had been passed on 25.03.2022. 2 After the receipt of the said information, the partner of the firm who is looking after the tax matters had severely fallen ill and was under complete bed rest for more than one month and in such period, he has completely forgotten to inform the outcome of the appellate proceedings as also the penalty proceedings under section 270A for the year under consideration. Later, when the partner of the assessee firm was stabilized, he has rejoined the activities of the firm in the month of July, 2022, then he realized about non-filing of the appeal against the appellate order dated 25.11.2021. Soon thereafter, he contacted our chartered accountant for this purpose and handed over the documents to him.
3. Our chartered accountant in due consultation with Sri Ashish Bansal, Advocate prepared the appeal against the appellate order dated 25.11.2021 and the same is now being filed today. In view of the aforesaid facts there occurred an 3 M/s. Singhal Agencies overall delay of 462 days in filing the present appeal before your honour, the said delay was not at all intentional/ deliberate, and the same was beyond the control of the assessee firm. Looking to the overall facts and circumstances of the case, it is most humbly prayed that your honour be pleased enough to condone the delay in filing the aforesaid appeal and hear the appeal itself on merits, otherwise the assessee firm shall suffer irreparable loss which it is not able to endure the same.”
After hearing both the parties, we find that there was sufficient and reasonable cause for delay in filing the appeal, therefore, the delay in filing of the appeal is condoned and the appeal is admitted for hearing.
In various grounds of appeal
assessee has challenged firstly addition of Rs.2,09,403/- by applying net profit rate of 10% of alleged undisclosed receipts and secondly, upholding the addition of Rs.8,027/- on adhoc disallowance @10% of the overall ‘shop expenses’ claimed by the assessee.
5. The facts in brief are that assessee is a partnership firm engaged in business of selling diesel, petrol & lubricants etc. The return of income was filed declaring income of Rs.2,12,780/- on 28/10/2017. The case was selected for scrutiny through CASS on the ground of abnormal increase in cash deposits during the demonetization period. The ld. AO noted that from the copy of audit report, ITR and audit accounts and from 26AS statement it was found that assessee deposited cash of Rs.30,33,500/-in the current account and the total deposit in the bank account during the year was Rs.11,99,39,550/-. He further noted that assessee disclosed net profit of Rs.2,12,778/- on the gross receipts of 4 M/s. Singhal Agencies Rs.11,78,45,521/- @0.18%. The sale which was done in the books was Rs.11,78,45,521/- whereas, total deposit was Rs.11,99,39,550/- which included Rs.30,33,500/- on account of cash deposits. Accordingly, he applied 10% of net profit rate on the undisclosed receipts of Rs.20,94,029/- which worked out to Rs.2,09,403/-. Apart from that he has noted that assessee has debited Rs.6,84,090/- towards tanker and diesel expenses and shop expenses of Rs.80,270/-. However, supporting vouchers and evidences were not furnished. Accordingly, he made ad-hoc disallowance of 10% which worked out to Rs.76,500/-.
The ld. CIT (A) has confirmed the addition of Rs.2,09,403/-. However, as regards to addition of Rs.76,518/- being 10% of tanker diesel expenses he has deleted the addition. However, with regard to shop expenses he has upheld 10% of expenses and restricted the addition to Rs.8,027/-.
After hearing both the parties and on perusal of the impugned orders and the material placed before us, we find that assessee’s case has been that so called undisclosed receipts were part of diesel and petrol business where net profit rate is 0.18 % only. There cannot be a huge net profit of 10% on this line of business. Thus, if at all net profit on undisclosed receipts should be restricted to 0.18%. Looking to the fact that cash which has been deposited in the bank account is out of business carried out by the assessee which has not been disputed either by the AO or CIT (A), wherein the assessee’s net profit rate has been around 0.18%. This 5 ITA No.27/VNS/2023 M/s. Singhal Agencies fact has also not been denied by the ld. AO, however, he has applied net profit rate of 10% which in line of assessee’s business is too high. As a reasonable estimate and looking to the facts of the case, we estimate net profit rate of 1% on these receipts of Rs.20,94,021/-. Accordingly, assessee gets part relief. In so far as shop expenses are concerned, the ad- hoc disallowance of 10% is reduced to 5%. Accordingly, appeal of the assessee is partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 16th October, 2023.