SURESH CHAND,ALAMDEEKA, KISHANGARHBASS, KHAIRTHAL-TIJARA, ALWAR vs. ITO, WARD - 1(2), ALWAR, RAJASTHAN, ALWAR

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ITA 29/JPR/2026Status: DisposedITAT Jaipur22 July 2026AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the AO's assumption of jurisdiction based on cash withdrawals was invalid. Furthermore, the tribunal found that the AO ignored evidence showing the credits were from the assessee's milk business and lacked basis for estimating profits at 10%.

What were the facts?

The Assessing Officer (AO) reopened the assessee's case and treated the entire credit in the bank account as business turnover, estimating profits at 10%. The AO assumed jurisdiction based on cash withdrawals, which the tribunal found to be an invalid reason.

What were the issues?

Whether the AO validly assumed jurisdiction to reopen the assessment based on cash withdrawals from the bank account. Whether the AO correctly treated bank credits as business income and estimated profits without proper justification.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

For Appellant: CA (Thru V.C.)
Hearing: 08.07.2026Pronounced: 22.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 29/JPR/2026 (Assessment Year:2017-18)

Suresh Chand Vs. ITO Alamdeeka, Ward 1(2) Kishangarhbass, Alwar Khairthal-Tijara, Alwar Rajasthan �थायीलेखासं./जीआइआरसं./PAN/GIR No:ANGPC 4899 Q Appellant .. Respondent Appellant by : Sh. Neeraj Gupta, CA (Thru V.C.) Respondent by : Mrs. Aarti Rawat, Addl. CIT Date of Hearing 08.07.2026 Date of Pronouncement 22.07.2026 O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 04.12.2025 u/s 250 of the Income Tax Act, 1961,(hereinafter referred to as “the Act”).

P a g e | 2 ITA No.29/JPR/2026 Suresh Chand 2. Brief facts are that, the case of the assessee was reopened by issuing notice u/s 148 of the Act, and the entire credit in its bank account of Rs.3,65,82,776/- was treated as its sale or turnover from its business and the profits thereon estimated at the rate of 10%. The assessee had disclosed income in the return filed in response to notice u/s 148 of the Act at Rs.2,99,170/-.The same having been filed after the expiry of period specified in the notice u/s 148 of the Act, therefore, the AO treated it as invalid return in terms of the provisions of Section 148(2) of the Act. However, the income returned therein, was considered for the purpose of assessing the total income of the assessee for the impugned year. Accordingly, the income returned of Rs.2.99 lakhs, and the income estimated by the AOfrom the business carried out, amounting to Rs.36,58,278/- ,were considered for assessing the total income of the assessee, resulting in the total income being assessed at Rs.39,57,450/-.

3.

We have gone through the orders of the Authorities below, and have heard both the parties. We do not find any merit in the addition made by the AO of Rs.36,58,278/-, which is the addition which has been challenged before us in 18 grounds raised before us which are elaborative, descriptive and not as per Rule 18 of the Income Tax Rules, 1962. The reason for the same is that, while the AO had recorded reasons for escapement of income of the assessee, so as to assume jurisdiction to reopen the case of the assessee in terms of Section 147 of the Act, noting the fact that, there were cash deposits of

P a g e | 3 ITA No.29/JPR/2026 Suresh Chand Rs.87,700/- and cash withdrawals of Rs.2,82,42,500/- in the Axis Bank Limited account of the assessee, however, he went on to make addition of the entire credits in the bank account of Rs.3,65,82,776/-.

4.

We fail to understand how the AO could not have formed any belief of escapement of income, merely, on account of cash withdrawal made from the Bank account of the assessee, since the cash withdrawn from the Bank Account of the assessee by no stretch of logic constituted any income of the assessee liable to tax. The cash withdrawals emanate from the credits in the Bank account and therefore, their source is also explained.The assumption of jurisdiction by the AO to frame assessment u/s 147 of the Act, therefore, on account of cash withdrawals made by the assessee to the tune of Rs.2.92 crores, therefore, is invalid, since there can be no reasonable belief of the AO of the income of the assessee having escaped assessment on account of such cash withdrawals. We have no hesitation therefore, in holding that the jurisdiction assumed by the AO for the reason of cash withdrawals made by the assessee from his bank account is invalid, and the assessment framed as a consequence, therefore is without jurisdiction and liable to be quashed.

5.

Besides, we have further noted that, the Axis Bank had provided copy of bank statement. The assessee had submitted its cash book, profit and loss account and balance sheet and had stated that the assessee was in the business of selling milk procured from individual

P a g e | 4 ITA No.29/JPR/2026 Suresh Chand persons to a milk dairy. The copy of the bank statement available with the AO was filed before us at paper book page Nos. 17 to 34. We have perused the same and noted that all the credit entries therein are accompanied with the narration “Shiv Shakti Dairy.” Therefore, the facts on record, we find, corroborate assessee’s explanation that it was in the business of selling of milk to a dairy. The AO, we find, has ignored the facts on record before him, and held that since, the assessee failed to corroborate his explanation being in the dairy business, all the receipts in the bank account were to be treated as his receipts from some other business. He accordingly, applied the estimate rate of 10% to determine the net profits therefrom.

6.

The facts on record, clearly revealing that all the receipts were from his business of purchase and sale of milk to a dairy, there was no reason at all, we hold, for the AO to reject this contention of the assessee, and treat all the receipts as from some other business carried out by the assessee.

7.

Moreover, we find, the AO has given no basis for estimating the profits therefrom at the rate of 10%.

8.

Therefore, in the light of the above, even on merits, we hold that the order passed by the AO making addition of Rs.36,58,278/- to the income of the assessee is not justified, and is not based on facts, which were on record before him. Accordingly, the order passed by the Ld.

P a g e | 5 ITA No.29/JPR/2026 Suresh Chand CIT(A), confirming the addition made by the AO is set aside. The addition made to the income of the assessee of Rs.36,58,278/- is deleted. 9. In effect, appeal of the assessee is accordingly, allowed in above terms. Order pronounced in the open court on 22.07.2026

Sd/- Sd/- (T.R. Senthil Kumar) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 22.07.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur

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