DEEPAK,BALLIA vs. A.O. ASSESSMENT UNIT, INCOME TAX DEPARTMENT, NEW DELHI

PER SUDHANSHU SRIVASTAVA, J.M.: This appeal has been preferred by the Assessee against the order dated 05.07.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2022-23.

2.0 The brief facts of the case are that the assessee was the sole proprietor of M/s Shivam Traders, Belthra Road, Ballia, U.P. and was engaged in the business of wholesale Liquor Depot under the Licence issued by the Excise Department, Government of Uttar Pradesh and was also engaged in trading of Wheat, Rice and other Kirana items. The assessee had filed his return of income for the year under consideration on 04.10.2022 declaring a total income of Rs.19,11,130/-. The case of the assessee was

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selected for scrutiny under Computer-Assisted Scrutiny Selection (CASS) for the reason “The assessee has disclosed low income from receipts (liquor) on which TCS has been deducted.” The Assessing Officer (AO) issued statutory notices to the assessee, requiring the assessee to submit the supporting evidence/explanation with regard to the transactions shown in the ITR for the year under consideration. During the course of assessment proceedings, the assessee submitted replies dated 10.10.2023 and 09.11.2023 along with copies of ITR, Bank Statement, Form No.26AS, Computation of Income, Registration Certificate of Liquor, License, Sales Ledger and Statement of Tax Collected at Source (TCS) for four quarters. On a perusal of the Form 26AS filed by the assessee, it was noticed by the AO that the total sale of liquors during the year under consideration amounted to Rs.45,97,86,794/- and the net profit declared by the assessee was @ 0.43% which worked out to Rs.19,72,439/-. The AO noted that during the assessment proceedings, the assessee failed to produce the books of accounts and the bills/vouchers for verification. In absence of books of accounts and bills/vouchers, the AO estimated the profit rate @ 3% on the total sales made by the assessee, which came to Rs.1,37,93,604/- (Rs.45,97,86,794/- X 3/100), which was treated as the income of the assessee during the year under

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consideration and was added to the total income of the assessee. The AO completed the assessment under section 143(3) read with section 144B of the Act, assessing the total income of the assessee at Rs.1,37,93,604/- .

2.1 The AO also initiated penalty proceedings under section 271A of the Act, separately.

2.2 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.

2.3 Now the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

“Assessee is in Business of Wholesale Liquor Depot with CL2 License and having Trading of Wheat Rice and Other Kirana Items and was having turnover of Rs.47,01,94,879.70 from Liquor Business and Rs.3,22,052.28 from other Business as mentioned and the Cash deposit and Withdrawals was also Related to Same and earned Rs.19,72,639.31 from business and accordingly conducted Audit and filled Audit and ITR within time limit and discharge his tax liability. Assessee was regular in Supporting with all required documents from AO and regular in reply of Seven notice issue U/s 144B, 142 and 143 with in time limit and with all document as required by AO but due to some third party documents required by AO in 8th notice Issued on 19 Feb 2024 and some health issues,

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Assessee was not able to provide required documents within time limit, for which Assessee also had made adjournment request, by Ignoring all as on 06.03.2023 it comes to notice that on 27.02.2024 AO has already made Order by Addition of income of Rs.1,37,93,604/- and imposed ingenuine tax liability of Rs.47,93,463 aggrieved by this unnecessary way of Order whereas time limit for this case was 31.03.2024 which is more than enough time to give me an chance to Provide documents the Learned AO has Made incorrect addition and Resultant in to Huge Unnecessary Demand of Rs.47,93,463 hence Appeal has been on this reasonable Ground that Proper Opportunity of being heard has not been provided to Assessee, as required documents to be uploaded like books of Accounts, Bill Voucres and Other Documents for Support has been Uploaded on test basis, it was not possible to upload all documents due to Uploading Restriction. Hence being aggrieved this appeal is contested on factual as well as legal ground. Whereas in the Order passed U/s 250 r.w.s 143(3) by honourable CIT, the appeal of the Appellant is treated as Dismissed. Whereas in Actual Assesee is having All Books of Accounts, and All Relevant Documents in this regard. 2.0 During the course of hearing before us, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted before us that the NFAC has passed an order ex-parte qua the assessee, arbitrarily upholding the order passed by the AO. The Ld. A.R. further submitted that the AO had not allowed adequate

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opportunity of being heard to the assessee and had passed the impugned assessment order under section 143(3) read with section 144B of the Act, without bringing on record any material in support of the addition, which was made on estimate basis. Inviting our attention to copy of the U.P. State Liquor Excise Policy for financial year 2021-22, which is placed at pages 11 to 20 of the paper book, the Ld. A.R. submitted that the Net Margin was fixed by the U.P. Government. The assessee has also moved an application for admission of the additional evidences under Rule 29 of the ITAT Rules in the form of books of account, bills and vouchers. The Ld. A.R. prayed that the additional evidences may be admitted and, in the interest of justice, the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of being heard to the assessee. He submitted that the assessee undertakes to produce all the relevant documents in support of the transactions entered into by the assessee, before the AO.

3.0 The Ld. Sr. D.R. objected to the admission of additional evidences and restoration of appeal to the file of the Assessing Officer and submitted that the appeal of the assessee be dismissed.

4.0 We have heard the rival submissions and have also perused the material on record. Looking into the facts of this

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case, we are of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, in the interest of substantial justice, we restore this file to the Office of the AO with the direction to provide one more opportunity to the Assessee to present his case. We have already permitted the additional evidences to be filed by the Assessee in the form of bills, vouchers and accounts book under Rule 29 of the I.T.A.T. Rules. The Assessee shall produce them before the AO during the course of set aside proceedings. We also caution the Assessee to fully comply with the directions of the AO in the set- aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex- parte qua the Assessee.

3.0 In the result, the appeal of the Assessee stands allowed for statistical purposes.

Order pronounced in the open Court on 27/07/2026.

Sd/- Sd/- [NIKHIL CHOUDHARY] [SUDHANSHU SRIVASTAVA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:27/07/2026 JJ:

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