ANITA PRAKASH KARDE,RAIGARH, MAHARASHTRA vs. ASSESSING OFFICER, PANVEL

PER ASTHA CHANDRA, JM :

The appeal filed by the assessee is directed against the order dated 09.12.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2020-21. 2. Briefly stated, the facts are that the assessee is an individual. She did not file his the original return of income for AY 2020-21 u/s 139(1) of the Income Tax Act, 1961 (the “Act”). As per the information available with the Income Tax Department, it was found that the assessee had entered into certain financial transactions during the Financial Year 2019- 20 relevant to the AY 2020-21 which included : (i) TDS on interest amounting to Rs.46,880/-; (ii) Cash withdrawals of Rs.500/- and (iii) Cash deposits amounting to Rs.2,84,37,050/- in a current account maintained with the State Bank of India. Based on this information, the case of the assessee was reopened u/s 147 of the Act and accordingly notice u/s 148 of the Act was issued on 22.03.2024 by the Ld. Assessing Officer (“AO”). In response to the said notice, the assessee filed her return of income on 16.04.2024 declaring total income of Rs.5,60,420/-. During the reassessment proceedings, the Ld. AO issued various notices seeking details and explanations in respect of the aforesaid financial transactions. However, the assessee failed to respond to most of the notices, except for the preliminary show cause notice u/s 144 of the Act dated 15.10.2024 which was replied to on 30.10.2024. In the said response, the assessee explained that she was a partner in the firm M/s. Janhvi Filling Point, and the business receipts reflected in her personal current account were duly accounted for in the firm's sales turnover. However, due to practical constraints, the assessee could not furnish the partnership deed, firm's return of income, and bank statements of the firm during the assessment proceedings. In the absence of these documentary evidences, the Ld. AO treated the entire cash deposits of Rs.2,84,37,050/- as personal business receipts of the assessee and applied presumptive taxation u/s 44AD of the Act @ 8%, resulting in an addition of Rs.22,74,964/- to the returned income. Consequently, the Ld. AO passed the impugned assessment order on 10.02.2025 u/s 147 r.w.s. 144 and 144B of the Act, assessing total income at Rs.28,35,384/- after making the addition of Rs.22,74,964/- as business income.

The Learned CIT(A) has failed to apply the well-settled principle that provisions relating to condonation of delay must be construed liberally to advance substantial justice. The Appellant’s explanation regarding family medical exigencies was not mala fide or intentional, and rejection of condonation merely for want of documentary evidence is arbitrary and unjust. GROUND NO. 3: VIOLATION OF PRINCIPLES OF NATURAL JUSTICE The Learned CIT(A) has dismissed the appeal without adjudicating the merits of the case, thereby denying the appellant the right to be heard on the substantive issues raised in the appeal. The Learned CIT(A) has failed to uphold the principles of natural justice by not providing adequate opportunity to the appellant to present her case. GROUND NO. 4: IMPROPER EXERCISE OF JUDICIAL DISCRETION The Learned CIT(A) failed to exercise the discretionary power vested under section 249(3) of the Income-tax Act, 1961, in a judicious manner. The refusal to condone delay, despite sufficient cause being shown, amounts to improper exercise of juri iction and renders the appellate order unsustainable in law. GROUND NO. 5: APPEAL DISMISSED WITHOUT JURI ICTION ON MERITS The learned Commissioner of Income-tax (Appeals) erred in law in dismissing the appeal without adjudicating the substantive grounds raised against the assessment order, thereby defeating the appellant’s statutory right of appeal. The learned CIT(A) further erred in dismissing the appeal “for statistical purposes” without any adjudication on merits, which is not contemplated under section 250 of the Income-tax Act, 1961, particularly when discretion exists to admit the appeal upon showing sufficient cause. Such summary dismissal is contrary to the scheme of the Act and renders the impugned order unsustainable in law. GROUND NO. 6: ASSESSMENT ORDER IS BAD IN LAW AND ON FACTS Without prejudice to the other grounds of appeal, the Appellant submits that the assessment order dated 10.02.2025 passed under section 147 read with section 144 of the Income-tax Act, 1961 is bad in law and on facts, arbitrary, and based on incorrect assumptions. The said order has been passed without due application of mind and in violation of the principles of natural justice and therefore deserves to be quashed. GROUND NO. 7: CONSIDERATION OF COMPLETE FACTUAL CIRCUMSTANCES CONSTITUTING SUFFICIENT CAUSE: On the facts and in the circumstances of the case and in law, the Appellant submits that the delay in pursuing the appellate remedy occurred due to prolonged and serious illness of the appellant’s husband which ultimately culminated in his demise, followed by a period of bereavement, mental distress and unavoidable personal responsibilities. The Appellant therefore prays that the Hon’ble Tribunal may kindly take on record the full and correct facts explaining the delay and adjudicate the matter in the interest of substantial justice. GROUNDS OF APPEAL ON MERITS (AGAINST REASSESSMENT ORDER U/S 147 R.W.S. 144) Without prejudice to the above grounds challenging the dismissal of appeal on limitation, and in the event the Hon'ble Tribunal condones the delay and remands the matter to CIT(Appeals) for decision on merits, or decides to adjudicate on merits itself, the appellant respectfully submits the following grounds on merits: GROUND NO. 8: ERRONEOUS AND INAPPLICABLE INVOCATION OF SECTION 44AD: The Learned Assessing Officer has fundamentally erred in law by applying the provisions of Section 44AD of the Income-tax Act, 1961 to the alleged gross receipts of Rs. 2,84,37,050/-, which exceed the statutory threshold limit prescribed under the said section. For Assessment Year 2020-21, the presumptive taxation scheme under Section 44AD is applicable only to eligible businesses whose total turnover or gross receipts do not exceed Rs. 2 crores during the previous year. Since the alleged receipts of Rs. 2,84,37,050/- clearly exceed this limit, the provisions of Section 44AD are per se inapplicable, rendering the resultant addition of Rs. 22,74,964/- legally untenable and void ab initio. Furthermore, the application of Section 44AD requires the establishment of two fundamental prerequisites: first, that the assessee is actually carrying on an eligible business, and second, that such business falls within the prescribed turnover limits. The Assessing Officer has failed to establish either of these conditions through proper investigation or evidence. The mere existence of cash deposits in a bank account cannot constitute conclusive proof of independent business operations without thorough examination of the nature, source, and commercial purpose of such transactions. The mechanical application of the 8% profit rate under Section 44AD, without establishing the basic foundation of business activity, is contrary to established legal principles and judicial precedents. GROUND NO. 9: INCORRECT ATTRIBUTION OF PARTNERSHIP RECEIPTS TO INDIVIDUAL PARTNER: The Learned Assessing Officer has gravely erred by treating partnership business receipts as individual income of the Appellant, thereby violating fundamental principles of partnership taxation under the Income-tax Act. The Appellant has consistently maintained that the cash deposits of Rs. 2,84,37,050/- represent business transactions of the partnership firm M/s. Janhvi Filling Point, wherein she is a partner. Under the provisions of the Income-tax Act, income from partnership business is taxable in the hands of the firm, and the partner's distributive share of such income is specifically exempted under Section 10(2A) of the Act. The Assessing Officer has acknowledged in the assessment order that these deposits represent the firm's sales receipts, yet paradoxically proceeded to tax the same in the individual partner's hands. This approach is fundamentally flawed and creates an anomalous situation where partnership income is being taxed twice - once in the firm and again in the partner's hands. Only specific receipts such as salary, bonus, commission, or interest received by a partner from the firm are taxable under Section 28(v) in the partner's individual assessment. The wholesale attribution of partnership business receipts to an individual partner, without establishing that such receipts constitute taxable income in the partner's hands, is legally unsustainable and contrary to the scheme of partnership taxation under the Act. GROUND NO. 10: INCORRECT TREATMENT OF CASH DEPOSITS AS BUSINESS INCOME: The treatment of the entire amount of Rs. 2,84,37,050/- as taxable business income in the hands of the appellant is fundamentally flawed and ignores the explanation provided by the appellant. The appellant had specifically explained that these cash deposits represented business transactions of the partnership firm M/s. Janhvi Filling Point, in which she claimed to be a partner. Instead of conducting independent verification or cross-examination of this claim, the Assessing Officer summarily rejected the explanation and treated the entire amount as the appellant's individual income. Such approach is contrary to established principles of income tax assessment which require proper source verification before treating any receipt as taxable income. The Assessing Officer failed to appreciate that partnership business receipts cannot be automatically attributed to individual partners without proper investigation of the partnership arrangement and profit- sharing agreement. GROUND NO.11: RISK OF DOUBLE TAXATION IGNORED: The AO failed to appreciate that the same receipts had already been included in the gross turnover of ₹5.75 crores declared by the firm, M/s. Janhvi Filling Point, in its return of income for A.Y. 2020–21. The turnover credited to the Appellant’s bank account was part of the firm’s declared receipts and duly offered to tax. Consequently, addition of 8% presumptive profit on such receipts in the Appellant’s hands leads to double taxation, which is contrary to the fundamental principles of tax law. GROUND NO. 12: FAILURE TO CONDUCT PROPER INVESTIGATION AND VERIFICATION: The Assessing Officer has grossly failed in his duty to conduct proper and thorough investigation before making the impugned additions. Despite having information about the alleged partnership firm M/s. Janhvi Filling Point, no effort was made to independently verify the existence, operations, or tax compliance status of the said firm. The Assessing Officer did not examine the firm's bank accounts, tax returns, or business records to corroborate or contradict the appellant's claims. Such lack of independent inquiry and over-reliance on presumptions without factual verification renders the assessment order unsustainable in law. GROUND NO.13: VIOLATION OF PRINCIPLES OF NATURAL JUSTICE: The impugned assessment order has been passed in gross violation of the principles of natural justice. The Assessing Officer failed to provide adequate and reasonable opportunity to the appellant to present her case and produce necessary documents. Despite the appellant's explanation in the response dated 30.10.2024 regarding her partnership in M/s. Janhvi Filling Point, no independent inquiry was conducted to verify the same. The Assessing Officer mechanically proceeded to make additions based on presumptions without giving due consideration to the appellant's submissions, wherein it was clearly stated that all business transactions pertain to the firm, and the assessee was acting merely in her capacity as a partner. The final show cause notice dated 17.01.2025 was issued with unreasonably short time for compliance, and the assessment was completed without waiting for a reasonable response period. Such hasty completion of assessment proceedings amounts to denial of fair hearing and violates the fundamental principles of natural justice. GROUND NO. 14: UNJUSTIFIED AND HARSH INITIATION OF MULTIPLE PENALTY PROCEEDINGS: The simultaneous initiation of penalty proceedings under sections 270A(3), 272A(1)(d), 271A, and 271B of the Act is harsh, excessive, and legally unjustified. The appellant had filed return of income in response to section 148 notice and had made genuine attempts to comply with the assessment proceedings by providing response to the show cause notice. The failure to produce certain documents was not willful concealment but arose from practical difficulties in obtaining partnership-related documents. The initiation of multiple penalties for essentially the same set of facts and circumstances amounts to double jeopardy and violates the principle of proportionality in penalty imposition. The penalties under sections 271A and 271B relating to maintenance and audit of accounts are particularly harsh when the very existence of business activity by the appellant is disputed and not conclusively established. GROUND NO. 15: PRAYER FOR ADMISSION OF ADDITIONAL EVIDENCE: The Appellant respectfully prays that the Hon’ble Commissioner (Appeals) may kindly admit the following additional evidence under Rule 46A of the Income-tax Rules, 1962, in the interest of justice:

“I Anita Prakash Karde residing at At post Mhasla Raigarh Mhasla 402105 holding PAN AOZPK1228F respectfully submit this application for condonation of delay in fling the appeal against the assessment order dated 10th February 2025 for the Assessment Year 2020 21 The delay in fling the appeal was due to circumstances beyond my control During the relevant period my husband was seriously unwell and undergoing prolonged medical treatment As I am the sole caretaker in the family I was entirely engaged in attending to his health and managing related responsibilities This unforeseen and distressing situation resulted in an unintentional delay in initiating the appellate proceedings within the prescribed time limit I submit that the delay was neither deliberate nor intentional but occurred due to a genuine and bonafde cause I therefore request your kind indulgence to condone the delay in the interest of natural justice and permit the appeal to be admitted and heard on merits I assure you of my sincere cooperation and diligence in all future proceedings and humbly request your sympathetic consideration of this request Thank you"

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Order pronounced in the open court on 25th May, 2026. (Dr. Dipak P. Ripote) ACCOUNTANT MEMBER पुणे / Pune; ददन ांक / Dated : 25th May, 2026. रदि Ravi Kumar Date: 2026.05.27 12:35:10 +05'30'

आदेश की प्रनिनलनप अग्रेनर्ि / Copy of the Order forwarded to : अपील थी / The Appellant. 1. प्रत्यथी / The Respondent.

सहायक पंजीकार/