Loading judgment…
Facts
The assessee deposited a sum of Rs.72,16,487/- in her bank account during the relevant assessment year, which she claimed was sourced from business income and profits from a partnership firm. However, the Assessing Officer (AO) was not satisfied with the evidence provided by the assessee and taxed the entire amount as unexplained income.
Held
The Tribunal held that neither the Assessing Officer nor the CIT(A) had properly examined the existence of the partnership firm and the genuineness of the transactions. The additional evidence submitted by the assessee was also not properly examined. Therefore, the case was fit to be remanded back to the AO.
Key Issues
Whether the authorities below properly examined the source of the cash deposits and the existence of the partnership firm, and whether the rejection of Rule 46A application was justified.
Sections Cited
142(1), 139, 44AD, 69A, 144, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRA
A.Y. 2017-18 Jasmine Kaur Bhatia, Income Tax Officer D-26, G.F., Naraina Vihar, Ward-50(5), New Delhi- 110028 Vs. Civic Centre, Minto Road, PAN: ALPPB1499J New Delhi (Appellant) (Respondent) Appellant by None Respondent by Sh. Om Prakash, Sr. DR Date of Hearing 21/07/2025 Date of Pronouncement 21/07/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal of the assessee for the Assessment Year (‘AY’) 2017-18 is directed against the order dated 25.01.2025 of the Ld. Commissioner of Income Tax(Appeals), NFAC, New Delhi [‘CIT(A)’].
The assessee has raised following grounds of appeal:
1. (i) The learned CIT (Appeal) was not justified in confirming an assessment framed on income of Rs.72,55,881/- against the declared income of Rs.3,59,420/-. (ii) The learned A.O. was not justified in rejecting the ITR as belated where the assessed income deserves to be reduced by declared income.
Jasmine Kaur Bhatia 2. (i) The learned CIT(Appeal) was not justified in accepting the contents of "Remand Report" which were merely confined to stand with Asstt. order and did not make any efforts to the contents of the submission made in an application under Rule 46A. The learned CIT (Appeal) did not gone through the documents placed on the record along with an Application under Rule 46A. (ii) That neither the appellant was intimated by A.O. for such report nor provided its copy forwarded to CIT (Appeal). 3. (i) That though all the relevant documents were placed on the record during the course of assessment proceedings yet an application under Rule 46A was filed in precautionary measures keeping in view that since it was the initial year of submission online there could have omission on any part. (ii) The rejection of application under rule 46A is not justified and is against the law of natural justice. 4. (i) The return of income could not filed on portal within time as it was remained closed all the time and the learned A.O. refused to accept ITR manually. (ii) That since it was the initial period of the submission online, the partly submission was given online and partly manually on closure of portal on account of glitches. 5 (i) An addition held u/s 69A is unlawful, thus, its application is incurable omission on the part of the A.O. (ii) The cases cited by Learned CIT (Appeal) are quite different and contrary to the factual of the appellant's case.
6. That keeping in view the circumstances and facts of the case and past history on the record, the denial of 44AD is not justified. 7. (i) The learned CIT (Appeal) has not given any contention or verdict in not accepting the share profit of Rs.13,80,366/- derived from the firm M/s.R.J.Attire which forms the part of total deposits of Rs.72,55,881/-, (ii) The learned CIT (Appeal) has only reproduced the words of A.O. In this respect. 8. (i) The learned CIT(Appeal) had failed to given any verdict to an additional “grounds of appeal” that an application of proviso 115BBE is not justified in the appellant’s case. (ii) That the provision 115BBE was inserted w.e.f. 01/04/2017, thus, was to effected w.e.f Asstt. Year 2018-19.
3. The relevant facts giving rise to this appeal are that the assessee was served a notice under section 142(1) of the Income Tax act, 1961 (‘Act’) dated 11.12.2017 for filing her Income Tax Return (‘ITR’) of the relevant year on the reasoning that she deposited cash of Rs.72,16,487/- during the relevant year (including the deposits of Rs.9,67,500/- during the demonetization period) though she had never filed any ITR so far. However, the same was not complied with during the specified time. Later, the assessee filed her ITR on 12.06.2019, which was held invalid by the Assessing Officer (‘AO’). The AO show caused the assessee to explain the source of deposits aggregating to Rs.72,16,487/- in bank during the relevant year. The assessee, vide her reply dated 20.11.2019, submitted that she had income of Rs.4,75,206/- from business and interest income of Rs. 39,394/-. During the assessment proceedings, the assessee submitted that the bank deposits were sourced from the business income and profit derived from the partnership firm. However, the AO was not satisfied with the explanation of the assessee on the reasoning that the assessee had failed to establish the existence of the said business concern with any corroboratory evidence. Therefore, the deposits aggregating to Rs.72,16,487/- in bank account of the assessee was held unexplained and the same was taxed accordingly. Further, the AO also held that the assessee had not carried out any business activities in the relevant year.
Jasmine Kaur Bhatia Aggrieved, the assessee filed appeal before the Ld. CIT(A) who vide impugned order dismissed the appeal as under: “4.3.1 Apart from the observations made above, the contention of the assessee that the assessee cooperated from time to time is out rightly denied as is evident from the start of the proceedings in her case. The assessee was given two opportunities to file to prepare a true and correct return of income of which the assessee is assessable under the Income Tax Act, 1961. The first opportunity was given on 11.12.2017 and second was given on 18.04.2019. Still the assessee decided not to file her return until 12.06.2019. During the course of proceedings, the assessee failed to prove the existence of the business activity for which the benefit of Section 44AD of the IT Act was denied to the assessee as is discussed in the para 2.2.1 and 2.2.2 of the Assessment Order. Secondly, the AO, as is discussed in para 2.2.3 of the Assessment Order, had examined the ITR of the firm M/s RJ Attire which had declared net profit at Rs. 13,80,366/- and the assessee's contention that she received Rs. 31,12,456/- were out of profits of the partnership firm is not acceptable. Hence the addition was rightly made by the AO u/s 69A of the IT Act, 1961 by passing order u/s 144 of the IT Act, 1961. In the light of provisions of rule 46A, the additional evidence can be produced at the first appellate stage when conditions stipulate in the Rule 46A are satisfied and a finding is recorded. As per directions of the CIT (A), I have examined the case record and additional evidences produced during the first appellate authority. It is found that case of the assessee is not covered in any condition specified in rule 46A because AO has provided ample opportunities of being heard to the assessee during the assessment proceedings and appellant was not prevented by sufficient cause from producing evidences before the Assessing during the assessment proceedings.
4.3.2 During the course of appellate proceedings, it is submitted by the appellant that during the course of assessment proceedings, the breakup of total deposits of Rs.70,23,510/- was given vide letter dated 25.1.2021. The break up is as under: Proceeds from RJ Attire where the assessee is partner: Rs.31,04,456 Business receipts and out of self-withdrawals Rs. 39,19,054
4.3.3 During the course of appellate proceedings, the onus is primarily on the appellant to bring on record material evidences 4 Jasmine Kaur Bhatia in support of the contentions. The appellant could have filed the confirmation from the partnership firm, copy of the ledger account in support of the drawings or the capital account in support of her share of profits or of any nature.
4.3.4 Department detected cash deposit in the bank account and gave notice. Assessee filed ROI claiming the amount as business receipts and offered income as per section 44AD of the Act. Application of presumptive taxation requires that the assessee should be doing business. Assuming the assessee was doing business, what prevented her filing ROI voluntarily before the due date u/s 139 of the Act. During the scrutiny assessment, if she is taking a plea that she is doing business, she has to file nature of business, sufficient evidence of purchases and sales, vouchers thereof, trading/business license issued by local authority, place of business etc. to substantiate her claim. In the absence of some basic proof of doing business, it is not possible to accept the cash deposits in bank as business receipts and benefit of section 44AD. Appellant not filed any such evidence to prove that she was actually doing some business during the assessment. She has not filed any such evidence either as part of SOF or written submissions during the appeal proceedings.” [Emphasis supplied] 4. Before us, the assessee was not represented by anyone. Therefore, we heard the Sr. Departmental Representative (‘Sr. DR’) who placed emphasis on orders of the Authorities below.
We have heard Sr. DR and perused the material available on the record. We take note of the fact that neither the Authorities below has properly examined the existence of the partnership firm; namely, R J Attire from where the assessee has claimed to have received the sum of Rs.31,04,456/- nor the assessee has provided any confirmation of the said and her ledger account in the books of accounts of R J Attire as evident
Keeping in view the facts in totality, material available on the record and in the interest of justice, we are of the considered opinion that this case is fit to be remand back to the file of the AO, after setting aside the impugned order, to decide the case de-novo. In view thereof, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the AO to decide the case a fresh.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in open Court on 21st July, 2025.