AHAMMAD ALI,MANGALDOI vs. INCOME TAX OFFICER, WARD- MANGALDOI, MANGALDOI

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

Both these appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 31.07.2025. Since the issues in both the appeals are related, they were heard together and are being decided vide this common order for the sake of convenience and brevity.

“1. For that on the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in refusing to condone the ITA No(s). 288 & 289/GTY/2025 Assessment Year(s) 2017-18 delay in filing the appeal ignoring the genuine and sufficient cause for the delay, and in dismissing the appeal in limine.

“1. For that on the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in refusing to condone the delay in filing the appeal ignoring the genuine and sufficient cause for the delay, and in dismissing the appeal in limine.

Brief facts of the case are that the assessee is an individual who was involved in substantial cash deposits/credits of ₹20.10 Lakh during the period of demonetization as applicable to AY 2017-18 and the return of income had been selected for scrutiny. Accordingly, the Assessing Officer (hereinafter referred to as Ld. 'AO') issued notices u/s 133(6) as well as 142(1) of the Act seeking the assessee’s explanation for such cash deposits/credits but the assessee did not file any response/submission. In absence of the same and on perusal of the information as received by the Department and attributable to the appellant’s bank accounts, the Ld. AO noticed that the assessee was involved in making total cash deposits/credits of ₹2.09 Crore in the ITA No(s). 288 & 289/GTY/2025 Assessment Year(s) 2017-18 three bank accounts of the assessee. In the absence of any response from the assessee, the Ld. AO treated the entire cash deposits as business receipts/transactions and accordingly, estimated such attributable business income of the assessee at ₹16.73 Lakh being 8% of the total receipts of ₹2.09 Crore and accordingly concluded the assessment proceedings by assessing the total income of ₹16.73 Lakh. The Ld. AO also initiated penalty proceedings u/s 270A of the Act. During the penalty proceedings as well, the Ld. AO issued several notices for hearing/SCN notices to the assessee seeking explanation on the penalty proceedings as applicable for mis-reporting of income on the additions made in the assessment order. However, the assessee did not file any reply as required to explain that penalty was not attracted. In view of the same, the Ld. AO levied penalty u/s 270A of the Act of ₹6.53 Lakh. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who dismissed the appeal of the assessee as per his findings as under: “In the light of above facts of the case, on perusal of appellant various multiple/overlapping GOA as advanced against the assessment order appeal of AY 2017-18, it is noticeable that, appellant is contending the order of AO as bad in law as the AO has erred in treating the entire cash deposits/credits in appellant bank account as appellant business receipts without appreciating appellant facts of case as involved in the earning of mere commission income from these transactions and thereby contended such order of AO in estimating profit as at 8% of such total cash deposits/credits by invoking provision u/s 44AD as bad in law and requested to delete the same. Further, on the same analogy, appellant further contended that such estimation of profit as per section 44AD as not applicable to appellant facts of case as appellant is a mere service provider to the customers of SBI as a business correspondent of SBI for mere commission income, and thereby claimed such findings of AO as not maintainable as reasoned in the assessment order and accordingly, pleaded to delete such order of AO. Further, in these GOA, appellant is contending that the order of AO is bad in law and against the natural principle of justice as the AO did not provide sufficient/effective opportunity to the appellant and thereby pleaded to delete such order of AO. Precisely, in all these GOA, appellant is contending that the order of AO as bad in law as AO has erred in treating cash deposits/credits as appellant business receipts and consequentially estimating profit on the same as per provisions u/s 44AD as not maintainable as such deposits are attributable to transactions of customers of SBI and appellant having earned only commission income on such deposits and thereby claimed the order of AO as bad in law as it also fails to provide sufficient opportunities to the appellant and thereby pleaded to delete such order of AO. However, on perusal of facts on record as brought out by AO in the assessment order, it is clearly noticeable that, appellant is a non-filer at original instance inspite of having made substantial cash deposits that too during the period of demonetization and could not respond to the notices and SCN as issued by AO from time to time seeking explanation on these cash deposits with consequent filing of such ROI as per law. In the light of these facts, appellant mere contentions to hold that AO erred in assessing total income as at Rs. 16.73 lacs neither has a basis nor has any justification as appellant is a non-filer in the eyes of law even after issue of various statutory notices as explained by AO in the assessment order. Further, appellant did not explain entire gamut of facts as attributable to all these credits/cash deposits as involving explainable transactions to AO with such supporting evidences/documents such as relevant ledger extracts/regular books of account/confirmations from parties/customers involved in these transactions as involving explainable transactions of such parties as per law as indeed took place through appellant as a service provider. Accordingly, appellant failed to explain these transactions as appearing in appellant bank accounts as observed by AO during assessment proceedings for its verification by AO as per law so as to consider the same as contended by the appellant as involving mere earning of commission income inspite of availing sufficient time and opportunities. Considering all these finer facts of case, apparently there exists no reconcilable evidences as needed to justify appellant contentions to explain the sources of these cash deposits/credits as involving/attributable to other customers of SBI and thereby as only routed through appellant bank accounts with its supporting justifications/confirmations from these customers/parties as per law. In the absence of the same only, AO has treated such cash deposits as involving appellant business receipts/transactions and assessed the applicable income on the same on a reasonable basis as applicable as per law. Further, on perusal of appellant contentions/GOA/submissions as advanced during the appeal proceedings etc., it is noticeable that appellant is apparently, claiming entire transactions as appearing in appellant bank accounts as made by appellant on account of various customers of SBI as a service provider to them being a business correspondent of SBI as per the working agreement with SBI. In support of the same appellant did not adduce any such evidences involving such maintenance of relevant ledger extracts/cash book/fund flow statement/statement of affairs etc., as the case may be as applicable to appellant facts of case as contended. Further, appellant did not adduce any such supporting confirmations/reconciliations as attributable to these transactions as involving such SBI customers with their explainable sources as per law so as to consider these transactions as explainable in the hands of appellant as contended. In the absence of the same apparently, there exists no infirmity in treating the entire transaction as appellant business transactions with applicable reasonable profit as at Rs. 16.73 lacs as reasoned and estimated by AO in the assessment order. Further, appellant contentions that there exists no sufficient time and opportunity to provide all these details as contended neither has a basis nor has any justification as AO has issued original 142(1) notice way back on 26.12.2017 followed with 133(6) notice and subsequent SCN on 26.08.2019 as explained by AO in assessment order. Considering all these apparent facts of case involving appellant failures in explaining the transactions with relevant supporting proofs etc., appellant mere claims to hold the order of AO as bad in law neither has a basis nor has any justification and thereby appellant various contentions/GOA as advanced are to be treated as not maintainable. In the result appellant all GOA as advanced against this assessment order of AY 2017-18 is to be treated as not maintainable and thereby appellant appeal against this assessment order stands dismissed as per facts/submissions available on record on merits as well not withstanding its dismissal in limine. Further, on perusal of appellant various/multiple overlapping grounds of appeal as advanced against the penalty order of AO, it is noticeable that, appellant is contending the order of AO in levying penalty as erroneous and bad in law as it fails to appreciate appellant facts/circumstances of case in initiating and levying such penalty and thereby contended such order of AO as not maintainable and requested to delete the same. On the same analogy appellant further contended that AO erred in passing such penalty order without providing sufficient opportunities to the appellant and thereby pleaded to delete such penalty as levied by AO as not maintainable. Further in these GOA, appellant is contending that AO erred in initiating penalty without adducing relevant under-reporting or misreporting as applicable to appellant for such initiation and thereby contended such initiation and levy of penalty as not maintainable. Precisely, in all these GOA, appellant is contending that AO erred in initiating and levy of such penalty without proper reasoning of relevant penalty as applicable to appellant facts of case and thereby contended such levy of penalty as bad in law and requested to delete the same. However, on perusal of facts on record as brought out by AO in the ITA No(s). 288 & 289/GTY/2025 Assessment Year(s) 2017-18 penalty order, it is clearly noticeable that appellant is indeed involved in making substantial cash deposits/transactions during the year for Rs.2.09 crores for which appellant could not explain the applicable sources as attributable to these deposits/transactions as per law before AO. In the absence of the same AO treated such cash deposits/credits as attributable to appellant business receipts as reasoned in the assessment order and assessed the applicable profit as at 8% of gross receipts as reasoned in the assessment order along with initiation of consequent penalty proceedings for misreporting of income as applicable as per law as referred in the assessment order. Accordingly, AO pursued these penalty proceedings seeking appellant explanation for the same and as appellant failed to substantiate the same, AO reasoned the entire estimated income as involving misreporting of income to that extent and as attracted by the relevant penalty proceedings as per law. Accordingly, AO treated appellant as involved in misreporting of income as per the provisions u/s 270A of IT Act and thereby levied such applicable penalty. In the light of these facts and on perusal of appellant contentions/GOA/submissions as filed during appeal proceedings, it is noticeable that appellant is contending that such initiation and levy of penalty as not maintainable as the income assessed by AO in assessment order is erroneous and thereby contended the consequent penalty order of AO as not maintainable applicable to appellant facts of case involving mere earning of commissions income. However, appellant could not establish the correctness of claims as made on the issue of various business transactions as claimed as attributable to SBI customer’s transactions as done by appellant as a service provider as contended as already reasoned and analysed as discussed supra as pertains to assessment appeal. As appellant failed to substantiate such earning of commission income as attributable to these business transactions with supporting proofs of such confirmations from these customers of SBI etc., the entire transactions are treated as unexplained resulting in assessing the income as reasoned by AO in assessment order with consequent initiation of penalty for under-reporting of income to that extent as reasoned in the penalty order read with related assessment order. In the light of these facts as reasoned by AO in the penalty order, the addition as made in the assessment order involving appellant business income as at Rs. 16.73 lacs is apparently squarely attracted by the relevant penalty proceedings and thereby there exists no infirmity in the order of AO in levying such penalty as per this order dated 18.09.2021 of AY 2017-18. Further, appellant has placed reliance on various citations as per the submissions to hold the same as allowable and on perusal of facts of case/ratios of adjudication of the citations as applicable to appellant facts of case, the same are neither comparable nor equitable in its facts of case and ratios of adjudication apparently as per law. Further, appellant did not ITA No(s). 288 & 289/GTY/2025 Assessment Year(s) 2017-18 bring out such comparative analysis as applicable to appellant facts of case and ratios of adjudication as attributable to the citations as needed to adduce and thereby appellant mere contentions on this analogy to hold the penalty order as not maintainable is to be treated as not maintainable as per the facts of case and circumstances as explained above. Considering these finer facts of the case, appellant mere contentions as advanced to hold the penalty order of AO as not maintainable without any substantiation is to be treated as not justifiable and thereby penalty order of AO is sustainable as the substantive addition as made in assessment order of AY 2017-18 stands sustained as reasoned supra as involving misreporting of income u/s 270A of IT Act to attract these penalty proceedings as per law.

In the result appellant all GOA as advanced against this penalty order of AY 2017-18 is to be treated as not maintainable and thereby appellant appeal against this penalty order stands dismissed as per facts/submissions available on record on merits as well not withstanding its dismissal in limine.

In view of the above overall facts of case of appellant contentions as advanced in various inter-related/over-lapping grounds of appeal, holding to treat the assessment order u/s 144 of IT Act of AY 2017-18 dated 22.11.2019 as not maintainable are dismissed along with appellant appeal against penalty order u/s 270A of IT Act dated 18.09.2021 of AY 2017-18 as not maintainable as per law. Thereby appellant two appeals are dismissed as per facts available on merits and law, as reasoned and discussed supra. In the result appellant both the appeals as filed against the assessment order and related penalty order of AY 2017-18 are treated as dismissed.

Copy of the order forwarded to: