MAHAVEER PRASAD KUMHAR,NAI PARASOLI vs. ITO WD-1, BHL/, C.R. BUILDING, KAWA KHERA CHOURAHA, SHASTRI NAGAR

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ITA 1072/JODH/2025Status: DisposedITAT Jodhpur01 June 2026AY 2019-207 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the lower authorities had passed ex-parte orders without providing sufficient opportunity to the assessee. It was noted that the addition of total cash deposits instead of profit element was incorrect, and the assessee had a good arguable case.

What were the facts?

The assessee's appeal was against an ex-parte assessment order and ex-parte appellate order. The Assessing Officer (AO) made an addition of Rs. 33,50,942 as unexplained money, treating all cash deposits in the bank account as income, without considering that only the profit element of business sales should be taxed.

What were the issues?

Whether the AO erred in passing an ex-parte assessment order and making additions without proper opportunity to the assessee, and whether the addition of entire cash deposits instead of profit element was justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 69A,Section 139(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

For Appellant: Shri Puneet Soni, Advocate
For Respondent: Shri Bhawani Shankar Mathur, DR (Virtually)

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR

BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 1072/Jodh/2025 (Assessment Year 2019-20) Mahaveer Prasad Kumhar ITO, Wd-1, Bhilwara Nai Parasoli, Asind, Parsoli B.O. Bhilwara-311301 PAN-CRLPK1632C Assessee by Shri Puneet Soni, Advocate (Physically) Revenue by Shri Bhawani Shankar Mathur DCIT-DR (Virtually) Date of Hearing 19 / 05 / 2026. Date of Pronouncement 01 / 06 / 2026.

ORDER PER: DR. MITHA LAL MEENA, A.M.: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the NFAC/CIT(A)] dated 24.09.2025 with respect to assessment year 2019-20.

2.

The appellant assessee has raised the following grounds of appeal as under:-

2 ITA No. 1072/Jodh/2025 (Assessment Year 2019-20) 1. That having regard to the facts and circumstances of the case, the Ld. AO erred in passing the impugned assessment order under the provision of section 147 r.w.s. 144 of the Act which cannot be invoked simultaneously. 2. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds of appeal before the appeal is finally adjudicated upon. 3. That having regard to the facts and circumstances of the case, the Ld. AO has erred in passing the ex-parte order without providing the sufficient opportunity to the assessee to explain the case. 4. That having regard to the facts and circumstances of the case, the Ld. CIT(A) erred in passing the ex-parte order without condoning the delay when there was a reasonable case after serving notice u/s 250 and when complete submission has been made. Hence the impugned assessment order is liable to be quashed and remanded back to the Ld. AO for fresh assessment. 5. That having regard to the facts and circumstances of the case, Ld. A.O. seriously erred in adding the arbitrary and unlawful addition of Rs. 33,50,942 as unexplained money u/s 69A of IT Act without appreciating that section 69A of the Act on account of cash and bank addition cannot be applied to bank statement & sale which makes the addition as bad in law and void ab initio. That Ld. A.O. made addition without appreciating the fact that bank credit including cash deposit is sale & only profit can be taxed. 3. Apropos ground no. 3, assessee has objected to the order passed by Ld. CIT(A) ex-parte qua the assessee arising out of the ex-parte assessment order passed by the AO and without providing opportunity of being heard in violation of principles of natural justice.

3 ITA No. 1072/Jodh/2025 (Assessment Year 2019-20) 4. Having heard both the sides, perusal of the material on record, impugned order and written submissions filed before us, we find that the revenue authorities has passed ex-parte order, qua the assessee. The Ld. AR for the assessee argued that the AO has made addition of all the transactions of cash deposits in the bank account relating to business sales where only profit element can be chargeable to tax. The Ld. AR has explained that assessee has been engaged in the business of purchasing and selling of husk in the name of the Firm “Shree Balaji Khakhla Supplier”. Purchase of husk generally made from the agriculture traders from local farmers. The Ld. AR contended that the appellant did not file return of income under Section 139(1) as the income was below the threshold tax limit for the year under consideration. However, the appellant assessee has filed its return of income duly supported with audited statements of account for subsequent assessment years as under:- Financial year Sale Net Profit NP% Tax Audit FY 21-22 1,31,20,220 4,57,190/- 3.48% Yes FY 22-23 87,04,250 4,48,048 5.15% Yes FY 23-24 1,14,93,440 6,35,430/- 5.53% Yes 5. The Ld. AR has also filed a summary of the bank transactions where total of the debit and credit side is shown at Rs. 32,93,232/- and Rs. 32,96,687/- as per bank statement reproduced hereunder:-

4 ITA No. 1072/Jodh/2025 (Assessment Year 2019-20)

Debit Entires Amount Credit Entires Amount Purchase (Husk from Exempted Husk Sales 12,48,400 14,36,600 Farmers) Bank & (CHARA) - Bank Cash Sale Exempted Husk Sales Petrol and Diesel 1,02,885 6,02,700 (CHARA) - Cash Expense Sale Cash Contra-(Cash Cash Contra-(Cash 72,300 72,300 withdrawn and withdrawn and deposit on same day) deposit on same day) Cheque Bounce and Cheque Bounce and 5,05,470 5,05,470 other Reverse entries other Reverse entries Loan received from Bank Charges 2,697 6,78,600 Shri Ram Finance Wages & Salary 3,30,000 Others Income 549 Other Income reverse 135 Saving Bank Interest 468 Office Expense 145 Drawings & Others 10,31,200 withdrawn Total Debit 32,93,232 Total Credit 32,96,687

6.

The AR has submitted that the appellant had complete documentary evidences to explain all the credit entries in its bank account, provided he is granted one opportunity of being heard by the department. The appellant has a good arguable case on merits and therefore, its case may be restored back to the AO for De Novo assessment with the direction to the AO to examine the matter afresh

5 ITA No. 1072/Jodh/2025 (Assessment Year 2019-20) after granting adequate opportunity of being heard in the light of the principles of natural justice.

7.

The Ld. DR on the other hand relied on the impugned order. He contended that the appellant has not responded to the notices issued by the AO and the Ld. CIT(A) and that he may not responding again. He pleaded that the assessee may be directed to make due compliance to the proceedings before the AO in time and make due compliances. As such he has no objection in remanding the matter back to the AO for fresh examination of the matter.

8.

Admittedly, lower authorities had rejected the appeal ex-parte qua the assessee against the assessment order passed by the AO ex-parte without appreciating the facts of the case, that appellant assessee is engaged in the business of retail trading of husk in the name of firm “Shree Balaji Khakhla Supplier” where purchase of the husk has been claimed to be made from agriculture traders and local farmers. It is noted that the appellant assessee did not file return of income under Section 139(1) for the year under consideration. However, in the subsequent assessment year he has filed the return of income as detailed above.

6 ITA No. 1072/Jodh/2025 (Assessment Year 2019-20) 9. The AR has explained the details of the business activities of trading of husk. However, it needs to be verified at the level of Assessing Officer. The AR has objected to the addition made by the AO of the total of the debits and credits in the bank account as against computing the profit on the cash deposits out of unaccounted business sales deposited in the said bank account of the assessee. The appellant assessee has a good arguable case on merits, as the entire cash deposits in bank account of the assessee out of its business sales cannot be taxable, only profit element can be charged to tax.

10.

In the case of Shri Rama Mepa Odedara, Porbandar Vs. ITO 2023 (7) TMI 133, it was observed that unexplained cash deposits in the bank account, where appellant claimed deposits out of unaccounted sales, only the profit element embedded in any business sales receipts may be taxed in the hands of the assessee.

11.

In view of the principles of natural justice, we consider it deem fit to remand back the matter to the file of the AO to examine the claim of the appellant assessee afresh as regards to the cash deposits in its bank account as being receipt from the business sales and thereby chargeability of profit element to tax after granting adequate

7 ITA No. 1072/Jodh/2025 (Assessment Year 2019-20) opportunity of being heard to the assessee after granting sufficient opportunity of hearing. At the same time the assessee shall cooperate in the fresh proceedings before the AO by furnishing the detail requisite information in compliance to the queries raised by the AO in the fresh assessment proceedings.

12.

Accordingly, the matter is restored back to the file of the AO to pass De novo assessment order in accordance with law.

13.

In the result the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 01 / 06 / 2026 in the open court.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 01 / 06 / 2026. Pritesh Vaishnav PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,

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