GADDEPPA SANTHOSH ,BANGALORE vs. INCOME TAX OFFICER, WARD-6(1)(1), BANGALORE

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 18.11.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1082742161(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2016-17.

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It was further verified from the e-filing portal that the assessee had not filed his return of income for the AY 2016-17 despite having such high value transactions and accordingly the notice u/s. 148A(b) of the Act was issued on 09/02/2023 directing the assessee to show cause as to why notice u/s. 148 of the Act should not be issued? However, despite issuing two nos. of notices, the assessee did not respond to any of the notices. Therefore, the AO in the absence of any reply and considering the fact that the assessee

ITA No.2863/Bang/2025 Gaddeppa Santhosh, Bengaluru Page 3 of 7 had deposited cash amounting to Rs. 76,11,900/- in his bank account, held the entire amount of Rs.76,11,900/- has escaped assessment for the AY 2016-17 and passed an order u/s. 148A(d) of the Act on 08/03/2023 with the prior approval of Principal Chief Commissioner of Income Tax u/s. 151 of the Act. The AO, thereafter issued notice u/s. 148 of the Act on 11/03/2023. In response to notice u/s. 148 of the Act, the assessee filed his return of income on 11/08/2023 vide e-filing acknowledgment no: 181018360110823 by declaring total income of Rs.6,08,950/- and paid the due taxes of Rs.89,100/- by way of self assessment tax. While filing the return of income, the assessee opted for the presumptive taxation u/s. 44AD of the Act by declaring total business receipts of Rs.76,11,900/- and applied @ 8% to determine profit which comes to Rs.6,08,952/-. Thereafter, the AO issued notice u/s.143(2) as well as notices u/s. 142(1) of the Act along with the show cause notice dated 19/01/2024 calling for various details of business, copy of GST return, computation of income, details of gross turnover/ gross receipts along with statement of affairs, bank account maintained by the assessee during FY 2015- 16 with narration of each debit and credit entries. The assessee in his reply submitted that the total cash deposits were Rs.76,11,900/- which were received on the package basis to perform traditional rituals such as Homas, Havanas, Yagas, Yagnyas and the vocation relating to Astrological predictions to various clients in all parts of India. The assessee had undergone the Astrological courses certified by M/s. Bharathiya Jyothishya Vidya Kendra vide certificate dated 30/06/2013 as well as other certificate issued by Mahalasa Astro Research Centre. The assessee also submitted that the receipts on package basis is also subjected to incurring all relevant expenditures including purchase of pooja materials and payment to other team mates who involved collectively for performance of traditional rituals.

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3.1 The AO accepted the contentions of the assessee, however on examination of bank account statement found that the assessee had actually made total cash deposit of Rs.78,16,400/- however the assessee claimed to have deposited the cash of Rs.76,11,900/- in his bank account maintained with Bank of India and accordingly, the assessee had filed ITR u/s. 44AD of the Act and computed his income @ 8% of Rs.76,11,900/- and therefore there is difference of Rs.2,04,500/-. Therefore, the AO proceeded to calculate 8% of the difference amount of Rs.2,04,500/- which comes to Rs.16,360/- & held the same to be unexplained as per the provisions of section 69A r.w.s 115BB of the Act. Therefore, the AO added back only Rs.16,360/- to the total taxable income of the assessee and assessed on a total income of Rs.16,360/- u/s. 147 of the Act instead of Rs.6,08,952/- as declared by the assessee while filing the return of income u/s. 148 of the Act.

ITA No.2863/Bang/2025 Gaddeppa Santhosh, Bengaluru Page 5 of 7 Rs.2,04,500/- as Gross business receipts/turnover of the assessee and also applied 8% on the same as per provisions contained in section 44AD of the Act to arrive at the figure of Rs.16,360/- should have treated the same as business profit and not as unexplained income u/s. 69A of the Act and also should not have applied the provisions of section 115BBE of the Act. Further, the ld. A.R. did not press any legal ground raised before us.

ITA No.2863/Bang/2025 Gaddeppa Santhosh, Bengaluru Page 6 of 7 of pooja materials and payment to other team mates who involved collectively for performance of traditional rituals. Therefore, in our considered view the AO had not disputed the source of income of the assessee & in fact accepted the same. The only dispute in the present case is that the assessee while filing the return of income had declared turnover of Rs.76,11,900/- and applied net profit @ 8% under the presumptive taxation u/s.44AD of the Act and declared net profit of Rs.6,08,952/-. The AO however on perusal of the bank statements found that the assessee had made total cash deposits of Rs.78,16,400/-. Thus, the AO was of the opinion that there is a difference of Rs.2,04,500/- which remains unexplained however, came to the conclusion that as the assessee had filed the ITR u/s. 44AD and computed his income @ 8% of Rs.76,11,900/-, accordingly Rs.16,360/- i.e. by applying the same rate of 8% on the difference amount of Rs.2,04,500/- held to be only remained unexplained. We could not understand when there is a difference of Rs.2,04,500/- in depositing the cash into the bank then how only Rs.16,360/- remains unexplained. This in our opinion clearly show that the AO had accepted the difference of Rs.2,04,500/- as business receipts of the assessee and accordingly applied 8% as per provisions of section 44AD of the Act to arrived at the profit of Rs.16,360/-. Therefore, once the AO has accepted the difference of Rs.2,04,500/- as business receipts/turnover of the assessee, then the question of treating the net profit of Rs.16,360/- as unexplained income u/s. 69A of the Act does not arise at all. We are of the considered opinion that when the sources of income is not disputed and the AO has also not brought on any adverse material on record, had rightly treated the difference of Rs.2,04,500/- as business receipts/turnover of the assessee and applied the same rate of 8% as declared by the assessee in his return of income to arrive at the profit of Rs.16,360/-. Therefore, in our considered opinion the profit of Rs.16,360/- as determined by the AO shall be undoubtedly be

ITA No.2863/Bang/2025 Gaddeppa Santhosh, Bengaluru Page 7 of 7 business profit of the assessee and not the unexplained income u/s. 69A of the Act. Accordingly, we allow the appeal of the assessee by directing the AO to compute Rs.16,360/- as business income of the assessee and recompute the total assessed income accordingly.

Order pronounced in the open court on 30th Apr, 2026

Sd/- Sd/- (Waseem Ahmed) (Keshav Dubey) Accountant Member Judicial Member

Bangalore, Dated 30th Apr, 2026. VG/SPS

Copy to:

Asst. Registrar, ITAT, Bangalore.