DEVEGOWDA SOMANNA, CHAMARAJANAGAR KARNATAKA vs. INCOME TAX OFFICER WARD 1, CHAMARAJANAGA, CHAMARAJANAGAR KARNATAKA

Since the assessee is one and the same and the issue are common, for the sake of convenience all these appeals are heard together and a common order has been passed. The facts involved in the A.Y. 2017-18 was

The assessee is an individual and not filed his return of income. Based on the information that the assessee had made cash deposits and cash withdrawals in his bank account maintained with Indian Bank, Axis Bank and SBI, the assessee’s case was reopened u/s. 147 of the Act. The assessee had not responded to any of the notices and also not filed his return of income pursuant to the notice issued by the AO. The AO had taken the cash deposits as well as the other transfer credits into his bank accounts as the business turnover and consequently estimated the profit margin at 8% of the total deposits and treated the said as his income and made addition u/s. 69A of the Act. Similarly, the interest income received by the assessee has been treated as his income from other sources and finally an assessment u/s. 144 was made by making the above said additions.

As against the said order, the assessee filed appeals before the Ld.CIT(A). unfortunately, the assessee had not appeared to the several hearing notices issued by the Ld.CIT(A) and therefore the Ld.CIT(A) had dismissed the appeal for not submitting the necessary evidences in support of the grounds of appeal filed by him.

As against the said order, the present appeals are filed by the assessee.

At the time of hearing, the Ld.AR submitted that the assessee had not received the notices and therefore they had not appeared before the AO. The Ld.AR further submitted that the assessment proceedings are barred by limitation and against section 151 of the Act. The Ld.AR brought to our notice that in respect of the assessment year 2017-18, the AO himself had estimated the profit at 8% whereas in respect of the other two A.Ys., profit has been estimated at 12.5% and therefore submitted that the assessments

The Ld.AR further submitted that the estimation of income at 8% is arbitrary and also reld on the profit margins earned for the A.Ys. 2020-21 to 2023-24 and therefore prayed to set aside the best judgment assessment order made u/s. 144 of the Act. The Ld.AR undetook to appear before the AO if one more opportunity is granted and would produce the necessary documents in support of his case that the cash deposits quantified by the AO is not correct.

The Ld.DR submitted that the assessee being a non-filer and also not co-operated with the department and therefore the assessing officer had reasonably estimated the profit and made the addition as income. The Ld.DR further submitted that the assessee had also not appeared before the Ld.CIT(A) even though the notices were served by the Ld.CIT(A) through mail and therefore prayed that the order of the lower authorities may be confirmed.

We have heard the arguments of both sides and perused the materials available on record.

As seen from the assessment order, the AO had estimated the profit margin of the assessee at 8% since the assessee had not furnished any details with regard to their profit earned by them in the raw coconut business. The assessee had, before the Ld.CIT(A), had furnished a statement in which the profits declared at 0.99% to 1.49% were accepted by the department and in such circumstances, the profit margin estimated by the AO at 8% seems to be at a higher side. Further for the A.Ys. 2018-19 and 2019-20, the very same assessing officer had estimated the profit at 12.5%. This anomaly shows that the AO had not made the estimations uniformly. Further, it is the case of the assessee that they had not received

The assessment is also an ex-parte assessment and the CIT(A) order is also an ex-parte order and therefore the assessee has no opportunity to explain the details before both the authorities. It is not because of the mistake on the part of the revenue but solely on the part of the assessee. But considering the facts of the present case as well as the different profit margins arrived by the AO and also the profit margin earned by the assessee for the subsequent years, we feel that one more opportunity may be granted to the assessee to appear before the AO. Since the assessee had not appeared before both the forums, we deem it fit that the said concession may be granted to the assessee on condition that the assessee should deposit a sum of Rs. 10,000/- each towards the cost in favour of the Prime Ministers National Relief Fund within a period of 90 days from the date of receipt of this order. We made it clear that that the assessee should deposits Rs. 10,000/- each in the appeals, i.e. Rs. 30,000/- in total. If the assessee had not deposited the said cost amount within the stipulated period, the order granting this concession would automatically go and the order of the lower authorities would restore automatically without any further notice to this Tribunal.

We, therefore set aside the orders of the AO as well as the Ld.CIT(A) and remit these issues to the file of the AO for fresh consideration, in accordance with law and after granting an opportunity of being heard to the assess.