RASHAD AHMAD WANI,SRINAGAR vs. INCOME TAX OFFICER WARD-2 SRINAGAR, SRINAGAR

ITA 582/ASR/2025Status: DisposedITAT Amritsar24 July 2026AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal considered the rival contentions and materials. It acknowledged that the assessee is engaged in wholesale and retail trading of medicine and pharmacy goods in a remote area of Kashmir. The Tribunal found that estimating the net profit at 8% on total sales of Rs. 1.78 crores was not justified. In the interest of justice, the Tribunal decided to estimate the net profit from the medicine business at a fair rate of 4% of the gross sales of Rs. 1.78 crores. The amount determined at this rate would be charged to tax at normal rates. The assessee is entitled to consequential relief. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Rashid Ahmad Wani, is engaged in the wholesale and retail trading of medicine and pharmaceutical goods. For assessment year 2017-18, the assessee deposited Rs. 17.99 lakhs in cash during the demonetisation period and had total bank credits of Rs. 1.78 crores. As no regular books of account were filed, the Assessing Officer (AO) initiated proceedings under Section 142(1). Due to non-compliance with notices, the AO completed the assessment ex-parte under Section 144, determining total income at Rs. 30.80 lakhs, including an addition of Rs. 17.99 lakhs for SBN deposits and Rs. 12.80 lakhs as business profits estimated at 8% on remaining bank deposits. The CIT(A) NFAC partly allowed the appeal, deleting the addition of Rs. 17.99 lakhs as SBN deposits were covered by a gazette notification. The assessee is now in appeal before the ITAT against the addition of Rs. 12.80 lakhs.

What were the issues?

1. Whether the CIT(A) erred in upholding the AO's arbitrary order passed without application of mind and without providing a reasonable opportunity of being heard, particularly concerning the estimation of business profits? (Mixed question of law and fact, relating to principles of natural justice and assessment proceedings). 2. Whether the estimation of net profit at 8% on total bank deposits of Rs. 1.78 crores by the AO, and upheld by the CIT(A), was without any basis or reasonable ground, and based on mere assumptions and conjectures? (Question of law and fact, relating to Section 69A and estimation of income). Assessee's Contentions: The assessee argued that books of account could not be produced as they were misplaced due to curfews and strikes in Kashmir post-abrogation of Article 370, and continuous shutdowns in 2019. The assessee stated that the profit margin for wholesale and retail trading of pharmaceutical goods is generally 2.5% and prayed for a reduction in the estimated percentage to a fair rate. Revenue's Contentions: The Revenue relied on the order of the CIT(A).

Which sections of the Income-tax Act were involved?

Section 144,Section 142(1),Section 69A,Section 250

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH S RIFAUR RAHIMAN, ACCOUNTANT MEMBER AND SH; UDAYAN DAS GUPTA, JUDICIAL MEMBER LTA_ No.582/Asr/2025 Assessment Year: 2017-18 Rashid Ahmad Wani, Wadwan Vs. ITO, Ward-2, Soibugh Budgam, J & K. Srinagar: [PAN:-AWXPA424SN] Respondent) (Appellant) Appellant by Respondent by None Written Submission Sh. Manek Shah Kapoor, Sr.DR Date of Hearing Date of Pronouncement 20.07.2026 2407.2026 ORDER Per: Udayan Dasgupta_JM: This appeal is filed by the assessee against the order of ld. CIT(A) NFAC, Delhi, passed u/s 250 of the IT Act, 1961_ dated 20.06.2025, which has emanated from the order of the AO, Srinagar, passed u/s 144 of the Act, dated 23.12.2019. 2 Grounds of appeal taken in Form No. 36 are as follows: 1. That the Appeal is within Specified Time. 2 That on the facts & Circumstances of the Case, the Ld. CIT(A) upheld the Order of Assessing Officer in an arbitrary manner which was passed by A.O without application of mind and without giving real opportunity of being heard ET.A. No.582/A9r/2025 Assessment Year: 2017-18 3 The Ld. CIT(A) upheld the addition of Rs.12,80,940.00 by applying Net Profit rate of 8%on total bank

The order continues below.

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