ASIF ABBAS KHAN,GUJARAT vs. INCOME TAX OFFICER, WARD - 1 VAPI, VAPI

PDF · subscribers
ITA 1030/SRT/2025Status: DisposedITAT Surat13 May 2026AY 2010-117 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO's approach of treating entire cash deposits as income without considering debit entries was incorrect. The Tribunal directed the AO to re-determine profit on cash deposits and ITS/26AS income by applying a 15% net profit rate.

What were the facts?

The assessee's case was reopened due to unexplained cash deposits in bank accounts. The assessee failed to comply with notices from the AO and CIT(A), leading to ex-parte assessments and penalty. The AO added entire cash deposits and ITS/26AS income, and estimated profit at 15% after rejecting books of accounts.

What were the issues?

Whether the entire cash deposits and ITS/26AS income can be added without considering debit entries and whether the penalty notice was specific enough.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 271(1)(c),Section 148,Section 250,Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, SURAT

Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Respondent: Shri Ajay Uke, SR-DR
Hearing: 20.04.2026Pronounced: 13.05.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

These two appeals are filed by the assessee against separate orders of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] both dated 31.07.2025 for the Assessment Year (A.Y.) 2010-11 in the proceedings u/s 144 r.w.s. 147 and u/s 271(1)(c) of the Income Tax Act.

2.

The brief facts are that the case of the assessee was reopened to examine the cash deposits in the bank accounts. The assessee had made cash deposits of Rs. 24,10,180/- in HDFC bank and Rs.11,36,900/- in Sardar Bhiladwala Pardi Peoples Co-operative Bank during the year under consideration. In the course of reopened proceeding no compliance

ITA No.1030 & 1031/Srt/2025 Asif Abbas Khan vs ITO, Asst.Year 2010-11 2 was made by the assessee. Therefore, the AO had treated the entire cash deposits of Rs. 35,47,080/- as unexplained and added to income. Further the assessee neither filed any return in response to notice u/s. 148 of the Act and nor produced his books of accounts for verification. Therefore, the AO rejected the books of accounts and estimated profit by applying net profit rate of 15%, which worked out to Rs. 3,12,947/-. As the assessee had disclosed profit of Rs.1,59,394/-, the difference of Rs.1,53,553/- was added to income. The AO also noticed that the assessee had earned income of Rs.4,75,958/- as appearing in ITS/26AS, regarding which no explanation was offered. In the absence of any explanation, the AO treated the sum of Rs.4,75,958/- as income of the assessee and accordingly made the addition. The assessment was completed u/s. 144 r.w.s. 147 of the Act on 27.12.2017 at total income of Rs. 41,82,430/-. The AO had also initiated penalty proceeding u/s u/s 271(1)(c) of the Act while completing the assessment. Subsequently, a separate order u/s 271(1)(c) of the Act was passed on 26.06.2018 imposing penalty of Rs.12,23,850/- on the assessee.

3.

Aggrieved with the orders of the AO, the assessee had filed appeals before the first appellate authority, which were decided by the Ld. CIT(A) vide the impugned orders and the appeal of the assessee were dismissed.

ITA No. 1030/SRT/2025 Th

4.

Now the assessee is in second appeal before us in respect of quantum addition. The following grounds have been taken in this appeal:

ITA No.1030 & 1031/Srt/2025 Asif Abbas Khan vs ITO, Asst.Year 2010-11 3 Ground No. 1: 1.1. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre ['the CIT(A)') failed to consider the response submitted on 03th March against notice under section (‘u/s’) 250 of the Income Tax Act, 1961 ('the Act') dated 19th February 2025. 1.2. The Ld. CIT(A) erred in not providing opportunity to the Appellant to make written submission and submit documentary evidences, thereby violating principles of natural justice. 1.3. Therefore, the Appellant humbly prays that the additions amounting to Rs.41,76,591/- be deleted. Ground No. 2: 2.1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the impugned order passed by the Income Tax Officer, Ward 1, Vapi ('the Ld. AO') u/s 144 read with section (‘r.w.s.’) 147 of the Act. 2.2. Thus, the Appellant prays that the additions made by the Ld. AO vide Assessment Order u/s 144 r.w.s. 147 of the Act be deleted. Ground No. 3: 3.1 The Appellant craves leave to add to, alter, and/or amend the foregoing grounds of appeal. 5. In the course of hearing nobody appeared on behalf of the assessee. It is found that the case was first fixed for hearing on 08.12.2025 when the assessee had filed an adjournment application requesting for one-month time to collate the requisite data. The matter was accordingly adjourned to 11.02.2026 and thereafter on 18.03.2026 when the assessee’s Representative once again requested for time and the matter was adjourned to 20.04.2026. In the course of hearing on 20.04.2026 nobody was present on behalf of the assessee. A letter dated 18th April, 2026 was filed requesting for further time on the ground that

ITA No.1030 & 1031/Srt/2025 Asif Abbas Khan vs ITO, Asst.Year 2010-11 4 assessee has filed an application under RTI Act to procure the documents from the Department.

6.

We have carefully considered the request of the assessee. The assessment year involved in this case is A.Y. 2010-11. The assessee had all along remained non-compliant before the lower authorities. It is found that no compliance was made by the assessee either before the AO or before the Ld. CIT(A). As per assessment order, the AO had allowed four opportunities to the assessee but no compliance was made on any of the occasions, which had resulted in ex-parte order u/s 144 of the Act. On the other hand, the Ld. CIT(A) had allowed as many as nine opportunities but no compliance was ever made before him, apart from seeking adjournment on one occasion. Thus, when the assessee didn’t make any compliance before the lower authorities and no documents were filed before them, we fail to understand as to what documents the assessee intends to collect by filing the RTI application with the Department. The evidences for cash deposits were available with the assessee. Further, the data in ITS/26AS was also accessible to him on the portal. Thus, the present adjournment application is another ruse for avoiding compliance with a deliberate intent to delay the proceedings. Before us also, the assessee has not made any compliance other than seeking adjournments on one pretext or another. Under the circumstances, we are constrained to decide the present appeal ex-parte, on the basis of materials on record.

7.

We have considered the materials available on record. From the assessment order, it is found that the assessee had made total cash deposits of Rs. 35,47,080/- in his two bank accounts during the period from 01.04.2009 to 31.03.2010. The AO had treated the entire cash

ITA No.1030 & 1031/Srt/2025 Asif Abbas Khan vs ITO, Asst.Year 2010-11 5 deposits/credits in the bank account as income of the assessee without considering the debit entries appearing in the bank account. The approach of the AO to consider the cash deposits as income without taking into account the debit entries cannot be held as correct. The assessee was engaged in the business of trading in chemicals and he had filed his return of income on 13.05.2011 declaring total income of Rs.1,59,393/-. Considering the business activity carried on by the assessee, the AO should have considered the transactions in the bank account in a holistic manner and determined the income on a reasonable basis by taking into account the credit as well as debit entries appearing in the bank account. Since the AO had already rejected the books of accounts and estimated the profit at the rate of 15%, we deem it proper to work out the profit out of cash/credits entries appearing in the bank accounts by applying net profit rate of 15%. Accordingly, the AO is directed to determine the profit out of cash/credit entries in the bank accounts by applying net profit rate of 15%.

8.

As regarding transaction of Rs.4,75,958/- appearing in ITS/26AS, the entire amount could not have been considered as income of the assessee. The AO was required to only work out the profit derived by the assessee out of the transaction reported in ITS. Therefore, the AO is directed to determine the profit out of the transaction of Rs. 4,75,958/- appearing in ITS/26AS by applying net profit rate of 15%.

9.

The action of the AO in rejecting the books of accounts and working out profit by applying net profit rate of 15% in respect of reported transactions is upheld.

ITA No.1030 & 1031/Srt/2025 Asif Abbas Khan vs ITO, Asst.Year 2010-11 6

10.

The grounds taken by the assessee are partly allowed.

11.

In the result, the appeal of the assessee is partly allowed.

ITA No. 1031/SRT/2025

12.

The grounds taken by the assessee in this appeal are as under:

Ground No. 1: 1.1. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre ['the CIT(A)') erred in upholding the order passed by the Income Tax Officer, Ward 1, Vapi ('the AO') u/s 271(1)(c) of Income Tax Act, 1961 ('the Act'). 1.2. The Ld. CIT(A) failed to consider the fact that the notice u/s 274 r.w.s. 271(1)(c) of the Act dated 27th December 2017 issued by the Ld. AO did not specify the limb under which the penalty was leviable le. concealment of particulars of income or furnishing inaccurate particulars of income. 1.3. Therefore, the Appellant humbly prays that the Ld. AO be directed to delete the penalty levied u/s 271(1)(c) of the Act. Ground No. 2:

2.1. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to consider the response submitted on 03th March 2025 against notice u/s 250 of the Act dated 19 February 2025. 2.2. The Ld. CIT(A) erred in not providing opportunity to the Appellant to make written submission and submit the documentary evidences, thereby violating principles of natural justice. 2.3. Therefore, the Appellant humbly prays that the additions amounting to Rs. 41,76,591/-be deleted. Ground No. 3: 3.1 The Appellant craves leave to add to, alter, and/or amend the foregoing grounds of appeal.

ITA No.1030 & 1031/Srt/2025 Asif Abbas Khan vs ITO, Asst.Year 2010-11 7

13.

In view of the decisions as taken by us in ITA No. 1030/SRT/2025, the AO is directed to rework the quantum of penalty u/s 271(1)(c) of the Act.

14.

The appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Court on 13/05/2026 at Ahmedabad.

Sd/- Sd/- (TR SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 13th May, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →