SAMDEV DASGUPTA,SOUTH DELHI vs. ITO, WARD 30(1), KOLKATA, KOLKATA

1 The assessee has also raised additional grounds of appeal which are as under: 1) That on the facts and in the circumstances of the case the action of the AO in having issued notice u/s 148 of the act is without juri iction and illegal in law. 2) That on the facts and in the circumstances of the case the action of the AO to have issued notice u/s 148 is without proper approval and the proceedings and the order passed is illegal and bad in law. 3) That on the facts and in the circumstances of the case the action of the AO in having framed the assessment without issue of notice u/s 143(2) renders the entire proceeding as illegal and bad in law. The aforesaid additional grounds of appeal raised are purely legal issue which goes to the root of the matter and the same does not require any fresh investigation into the fact, facts already being on record. Further, the omission to raise the additional grounds is neither willful nor intentional. In view of the above, the aforesaid additional grounds may kindly be admitted and adjudicated while hearing the cross objection filed by the assessee. An opportunity of being heard is prayed for."

Brief facts of the case are that the assessment was framed for the impugned assessment year on the total income of ₹9,48,020/-. The case was reopened on the basis of the information that the payment against credit card was made in cash of ₹12,38,350/-. The assessee had submitted before the Assessing Officer (hereinafter referred to as Ld. 'AO') that the assessee had withdrawn cash from bank amounting to ₹14,94,416/- out of which such payments were made for the credit card in cash and he had also filed the entire bank statement to prove the same. Further, it was submitted that the assessee had received professional income by account payee cheque of ₹18,96,035/- and after incurring expenditure in relation to the income, the net profit was only ₹6,31,874/-. Therefore, there was no tax liability. The Ld. AO estimated 50% of the gross receipts as income and calculated the tax thereon and the income was computed at ₹9,48,020/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who considered the submission and dismissed the appeal as the assessee had not filed the return of income nor had he maintained any books of account nor furnished any proof of the expenses claimed in the profit and loss account.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that the assessee had received a sum of about ₹18 Lakh as consultancy fee from MNCs for setting up their business on which net profit of ₹61,874/- was shown. The issue relates to AY 2011-12 and the assessment was completed on 2018. When asked to inform whether the credit card bills were available, the Ld. AR expressed his inability to produce the same but stated that since the assessee was carrying on consultancy, therefore, the expenditure had to be allowed. In the paper book filed, the assessee has enclosed the copy of the written submission filed before the Ld. CIT(A) and has also submitted that the assessee was having total cash balance of ₹14,94,416/- out of which cash was deposited in the bank on various dates at ₹12,38,250/- against payments made for credit card and entry the cash book had be made as on 31/03/2011. The assessee has also mentioned in the written submission that he has prepared a profit and loss account stating that he was having professional receipts of ₹18.96 Lakh and expenditure incurred was of ₹18.96 Lakh remaining with ITA No(s). 1417/KOL/2026 Assessment Year(s) 2011-12 ₹939/- as profit and as there was no taxable profit, the assessee did not file the return of income.

The Ld. AO, though did not specifically invoke the provision of section 44AD of the Act, however, applied the net profit rate of 50% on the gross receipts and computed the income of the assessee. The assessee has filed the copy of the assessment order of AY 2009-10 in which on similar facts no addition was made and the income from business was accepted at ₹5,31,741/- as shown.

The Ld. DR requested that the assessee does not possess any vouchers, therefore, the addition made may be confirmed and the order of the Ld. CIT(A) may be confirmed.

We have considered the written submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A) as well as the rival submissions made during the course of the hearing before us. Since the assessee could not produce the books of account and the expenses claimed were not supported by proper vouchers, therefore, there were justification for the addition made, however the same is found to be excessive and a reasonable disallowance was called for. The Bench was of the view that on the facts as mentioned, as the assessee claims to be a consultant for MNCs for setting up their business, it would meet the ends of justice to apply a net profit rate of 20% on the gross receipts of ₹18,96,035/- as against the rate of 50% which has been treated as the total income. This is also supported by the fact that for the assessment years 2019, no addition was made and in the assessment year 2008 – 09, only 5% of the expenses claimed under that interest commensurate charges, driver salary, motor car repair and maintenance expenses and depreciation car were disallowed. Therefore, the order of the Ld. CIT(A) is hereby set aside and the Ld. AO is directed to apply a net profit rate of 20% on the gross receipt of ₹18,96,035/-, which works out to ₹3,79,207/- which is rounded off to ₹3,79,210/- as against ₹9,48,020/- assessed by the Ld. AO, with consequent relief of ₹5,68,810/-. Hence, Ground Nos. 1 & 2 are partly allowed. Ground No. 3 being general in nature does not require any separate adjudication. The Ld. AR did not argue on the additional grounds of appeal and had submitted that the matter may be adjudicated on merits. Since we have decided the appeal on the merits of the case, we are not adjudicating the legal issues raised relating to the additional grounds of appeal regarding the e-assessment as relief has been allowed on merits.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 18th August, 2026. [Yogesh Kumar US] [Rakesh Mishra] Judicial Member Accountant Member Dated: 18.08.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order