SHATRUGHAN SINGH,JAUNPUR vs. INCOME TAX OFFICER - 2, JAUNPUR - NEW

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.190/VNS/2024 Assessment Year: 2017-18 Shatrughan Singh v. The Income Tax Officer 2 M/s S.S. Filling Station Jaunpur - New Thanagaddi, Kerakat Jaunpur (U.P) TAN/PAN:CAEPS9919Q (Applicant) (Respondent) Applicant by: Shri Pankaj Shukla, Advocate Respondent by: Shri Sabayasachi Chakraborty, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 12.09.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.

2.0 The brief facts of the case are that during the captioned assessment year, the assessee ran a petrol pump in the name and style “M/s S.S. filling Station at Thana Gaddi Kerakat, Jaunpur and was the proprietor of the said firm. The assessee filed his return of income for the year under consideration on 07.11.2017 declaring a total income of Rs.6,54,820/-. The case of the assessee was selected for scrutiny under Computer-Assisted Scrutiny Selection (CASS) for the reason of “Cash deposit during demonetization period”. During the course of assessment proceedings, the assessee produced the books of account for the

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year under consideration along with requisite details and documents and purchase and sale Ledger Accounts. The Assessing Officer (AO) also called for information pertaining to assessee’s Bank accounts from Kashi Gomti Samyut Gramin Bank under Section 133(6) of the Income Tax Act, 1961 (hereinafter called 'the Act’). As per the Bank Account statements provided by the Bank, the assessee had closing balances of Rs.7,11,268/- in his Bank Account No.41434201004216 and of Rs.2,40,279/- in his Bank Account No.414343030000057, totaling to Rs.9,51,547/-, at the end of the year under consideration. The AO issued statutory notice under section 142(1) of the Act dated 09.11.2019, requiring the assessee to explain the nature and source of the closing balances of Rs.9,51,547/-. In response, the assessee vide reply dated 01.12.2019 submitted that "In the due time the statements could not be arranged with the bank, however we will submit the explanation regarding the nature and source of these bank accounts as soon as we get the Bank statements from the bank.” The AO again issued a notice under section 142(1) of the Act dated 08.12.2019, requiring the assessee to explain the nature and source of the amount of Rs.9,51,547/-. However, there was no reply from the side of the assessee. Since the assessee did not filed any reply, the AO held that the assessee could not submit

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anything substantial to explain the nature and source of Rs.9,51,547/- found in the Bank Accounts of the assessee which were not disclosed in the books of account of the assessee. He, accordingly, treated Rs.9,51,547/- as the undisclosed money and added the same to the income of the assessee under section 69A of the Act.

2.1 The AO further noticed from the Trading and Profit and Loss Account of the assessee that the assessee had debited expenses under various heads which were not fully verifiable. The assessee had produced certain bills and vouchers. Since the assessee could not produce some bills and vouchers to substantiate the genuineness of the expenses claimed under various heads, he disallowed 10% of the claim of Rs.74,630/- under the head “Car running & Commission” which came to Rs.7,463/-, 5% of the claim of Rs.2,87,663/- under the head “Generator R/M expenses”, which came to Rs.14,383/- and 5% of the claim of Rs.4,19,829/- under the head “Tanker running & maintenance & office expenses” which came to Rs.20,991/-. Thus, in all Rs.42,991/- were disallowed and added to the total income of the assessee.

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2.2 The AO completed the assessment under section 143(3) of the Act, assessing the total income of the assessee at Rs.16,49,204/-.

2.3 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271AAC of the Act, separately.

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

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

“BECAUSE; (1) the ld. CIT(A) has erred in law and on facts, in upholding the regular assessment order dated 12.12.2019, as had earlier been passed by the Assessing Officer, designated as ITO-2, Jaunpur-New (which was a scrutiny assessment) wherein following additions/disallowances stood incorporated:-

(a) Rs.9,51,547/-: : on account of closing balance in Bank account no.414343030000057 and in bank account with Baroda U.P. Bank, Jaunpur; (b) Rs.14,383/- : worked out on adhoc basis,

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on total claim aggregating Rs.2,87,663/-;

(c) Rs.20,991/- : worked out on adhoc basis, by applying a rate of 5% at Rs.4,19,829/-

(2) such disallowances/additions were beyond the scope of limited scrutiny assessment, as requisite approval had neither been sought (nor given by such authority); (3) in any case, additions on account of deposits in two bank accounts, aggregating Rs.9,51,547/- had wrongly been made in the hands of the appellant, as the same represented the money belonging to his only son Sri Prashant Singh, in whose favour the same had been given by way of bequeathal (of his mother Smt. Asha Devi who had died on 26.01.2024); (4) the bequeathal had been made by Smt. Asha Devi (mother of Sri Prashant Singh) the testator (during her life time), was well documented, as per law and custom and no addition on that score, could have been made in the hands of the appellant, namely 'Sri Shatrughan Singh', in his individual capacity (Brief Synopsis made in Annexure -I to the Grounds of appeal accompanying the 'Memo of appeal'); (5) source of bequeathal (as made by Smt. Asha Devi, mother of Sri Prashant Singh) stood fully proved from sale of household jewellery (by Smt. Asha Devi, during her life time), and the same could not have been treated to have

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remained unexplained, much less in the case of the appellant who has been the husband of Smt. Asha Devi; (6) in any case, the sums aggregating Rs.9,51,547/- (as a whole) could not have been treated as unexplained income for the assessment year 2017-18 (year under appeal) as the same included opening balances also, as had been brought forward from still earlier year(s); (7) no adhoc disallowance could have been made out of "generator repairs and maintenance expenses", as stood debited to the related Profit and Loss Account, which has been subjected to Tax Audit also, under section 44AB of the Income Tax Act, 1961; (8) similarly, no disallowance much less, adhoc disallowance, for sums aggregating Rs.21,981/- (calculated @ 5% of sums aggregating Rs.4,19,829/-) as had been claimed as expenditure under the broad head 'Tanker running expenses and office expenses;' (9) all these expenditure (outgoings) stoodfully entered in the books of account that had been kept and maintained (by the appellant), in regular course of business, about which there was no qualification in the audit report, and even the Id. Assessing Officer had not rejected such books of account and other records; (10) in any case, no adhoc disallowances could have been made, without pointing out any expenditure of 'unverifiable nature' and adhoc disallowances so made in the scrutiny assessment, could not have been sustained by the ld. CIT(A);

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(11) deposits in bank accounts represented the credits of sums, which had been made out of well defined sources, and no addition could have been made under section 69 of the Act, read with the provisions of section 115BBE of the Act; (12) the order appealed against, is contrary to the facts, law and principles of natural justice. 2.6 The Ld. A.R. submitted that the assessee could not furnish the requisite details to explain the source of cash deposits in his Bank Accounts before the lower authorities. However, to explain the source of cash deposits, the Ld. A.R. has filed the Affidavits of the assessee as well his son in the form of additional evidences. The Affidavits are to the effect that the money found deposited in the two Bank Accounts of the assessee during the relevant assessment year represented the money belonging to assessee’s son, Shri Prashant Singh. The Ld. A.R. prayed that these may be admitted as additional evidences and the matter may be restored to the file of the AO since the lower authorities had no occasion to verify the same.

3.0 The Ld. Sr. D.R. opposed the admission of the additional evidences and, placing reliance on the orders of the authorities below, submitted that the appeal of the assessee may be dismissed.

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4.0 I have heard the rival submissions and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the Assessee to present his case. I have already admitted the additional evidences filed by the Assessee in the form of Affidavits 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. I 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.

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

Order pronounced in the open Court on 23/07/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:23/07/2026 JJ:

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