MOHD. AKMAL,MAU vs. NATIONAL FACELESS ASSESSMENT CENTRE, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.161/VNS/2025 A.Y. 2017-18 Mohd Akmal, vs. National Faceless Assessment Jummana Pura, Kopaganj, Mau- Centre (NFAC), Delhi 225305 PAN: AMUPA0225D (Appellant) (Respondent) Assessee by: None Revenue by: Shri. Sudipta Paul, Sr. DR Date of hearing: 06.08.2026 Date of pronouncement: 31.08.2026 O R D E R PER NIKHIL CHOUDHARY, AM: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC dated 17.06.2025 wherein the ld. CIT(A) has dismissed the appeal of the assessee against the orders of the ld. Assessing Officer passed under section 147 r.w.s. 144 for the assessment year 2017-18 on 13.02.2025. The grounds of appeal are as under: - “(1) ld. CIT(A) erred in law and on facts in dismissing the appeal solely for non-prosecution, without adjudicating on merits or considering the detailed grounds and facts already on record, and without allowing effective opportunity of hearing, contrary to the principles of natural justice. (2) in any case, it is a law well settled that any ex-parte order passed without deciding the merits of the objections raised and evidence already on record, is invalid and liable to be quashed. (3) proceedings under section 147 have neither been validly initiated nor concluded in accordance with the provisions of law, which has the effect of rendering the assessment order dated 13.02.2025 as a whole, vitiated.

ITA No. 161/VNS/2025 Mohd Akmal (4) in any case, reassessment proceedings, initiated by issuance of notice under section 148, are void, as the same was deficient, for the reasons that copies of (a) "proposal" submitted by the Id. Assessing Officer for seeking "approval" of the Specified Authority; (b) comments/endorsements if any, by the Approving Authority; (c) "approval", if any, granted by the Specified Authority which was none else that the Principal Commissioner of Income Tax, Gorakhpur had not been provided to the appellant. (5) the assessment order was not preceded by a show cause notice or a draft assessment order u/s 1448, which is mandatory prior to passing any final order, as per statutory requirement and various court rulings. (6) the Id. Assessing Officer/NFAC has erred in law and on facts in not disposing off the objections of the appellant through a speaking order contrary to the principle laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. vs. ITO. (7) the appellant was not provided reasonable and adequate time to respond to the notice under section 148A(b), especially considering intervening public holidays, in violation of prescribed guidelines and judicial directions. WITHOUT PREJUDICE TO THE AFORESAID (8) the addition of Rs.1,34,14,491/- under section 69A on account of unexplained money is unjustified, as the same pertains to regular business transactions, and the AO as well as CIT(A) failed to consider the appellant's business history, audited books, withdrawals/recycling through the bank account. and (9) the authorities below erred in law and on facts in not considering that, at best, only 'peak credit could be added, if at all, and not the entire deposits. (10) the orders ignore the established business of the appellant and accepted returns of past years, making the addition completely arbitrary and erroneous. (11) the order appealed against, is contrary to the facts, law and principles of natural justice.”

ITA No. 161/VNS/2025 Mohd Akmal withdrawals of Rs. 50,54,691/- from Bank of Baroda and Rs. 52,50,530/- from Punjab National Bank during the course of the year. He came to the conclusion that income has escaped assessment and he accordingly issued a notice to the assessee to file a return of income under section 148 of the Income Tax Act. The ld. AO records the fact that the assessee made compliance to the notice under section 148 and filed a return declaring total income of Rs. 2,97,015/-. However, subsequently he did not make response to the various notices issued by the Assessing Officer, which necessitated the issue of show cause notice under section 144 to the assessee. In response to the same, the assessee filed a reply in the form of the return and computation of income. The assessee claimed to have engaged in the business of sales and purchase of Sarees and other clothes from various loans and supplying the same in Mau and other places with his principal place of business at Jumannapura, Kopaganj, Mau. His total turnover was reported at Rs. 1,42,56,500/-. It was further pointed out that the books of accounts had been audited under section 44AB of the Act and copies of cash book, bank book, ITR etc., were also attached to the reply. Copies of the bank account were also furnished. In support of the submission, the assessee filed copies of his purchase register and sales register. However, the ld. Assessing Officer noted that he did not furnish any evidences such purchase bills, addresses/email/PAN/ledger account of the parties from whom purchases had been made, proof of payment against purchases etc., so as to establish that he was indeed involved in the business of sale and purchases of sarees. He could only provide the names of the persons from whom the purchases had been made. The AO thereafter issued a notice under section 133(6) to Punjab National Bank and Bank of Baroda to obtain the bank statements. After obtaining the same, he found that the total credits to these bank accounts stood at Rs. 1,34,14,491/-. The ld. AO came to the conclusion that

ITA No. 161/VNS/2025 Mohd Akmal since the assessee had failed to provide purchase bills/address/PAN/email/ledger account of the parties from whom purchases were made or the proof of payment against purchases, the replies given by the assessee had failed to prove the nature of credits reflecting in the bank account. Accordingly, he show caused the assessee as to why the same should not be added back under section 69A of the Income Tax Act. In response, the assessee submitted that he was submitting the purchase bills received from suppliers but no sales vouchers/bills could be procured as the same had been made to various hawkers which was the usual business practice in the area. The ld. AO perused the purchase bills and notice from the same that all the bills had the same pattern, same column widths, same number of rows and in all the bills, the address/PAN/GST/VAT/Service Tax number of the persons selling the goods was missing. From the same, he came to the conclusion that the bills submitted by the assessee were not genuine and had been manufactured to give colour to his unexplained cash deposits by showing it as business receipt. Since he noted that while the assessee claimed to have sold sarees in an around Mau (U.P.), his bank account showed cash deposits from various places such as Mumbai, Pune, Bangalore, Kannoor, Jhansi, Bongaigaon (Assam), Baghpat, Bhopal, Gurgaon etc,. From this he concluded that the entire story regarding doing a saree business was incorrect and he therefore, concluded that the entire credits of Rs. 1,34,14,491/- was nothing but the unaccounted and unexplained money of the assessee which was liable to be added back under section 69A of the Income Tax Act. Accordingly, he made the said addition and brought it to tax under section 69A r.w.s. 115 BBE of the Income Tax Act. 3. Aggrieved with the said assessment order, the assessee filed an appeal before the ld. CIT(A), NFAC. The ld. CIT(A) records the fact that he issued five opportunities to the assessee to substantiate his grounds of 4

ITA No. 161/VNS/2025 Mohd Akmal appeal and also detailed the various email IDs to which these notices had been sent. However, he notes that the assessee did not make any compliance to the notices under section 250. Therefore, the ld. CIT(A) came to the conclusion that the assessee was not interest in pursuing the appeal and he further observed that he did not see any reason to differ with the findings of the ld. Assessing Officer since no attempts had been made by the assessee to disprove such findings. Therefore, he dismissed the appeals of the assessee. 4. The assessee is aggrieved at this dismissal of his appeal by the ld. CIT(A) and accordingly has come before us. On the appointed date of hearing, nobody was present on behalf of the assessee. However, on going through the grounds of appeal, it is seen that the assessee has raised various technical grounds regarding the reopening of the case and lack of opportunities provided to the assessee during the course of assessment proceedings. The assessee has also contended that both the ld. Assessing Officer and the ld. CIT(A) had failed to consider the assessee’s business history, audited books and withdrawals/recycling through the bank account. It has been argued that at best, only “peak credit” could have been added and not the entire deposits because the orders that had been passed ignored the established business of the assessee and the accepted returns of past years making the addition completely arbitrary and erroneous. 5. On the other hand, Sh. Sudipto Paul, ld. Sr. DR (hereinafter referred to as the ld. DR) pointed out that the assessee had not furnished any evidence with regard to the carrying out of a business that were verifiable. Even the bills that had been purchased did not exhibit any address PAN or VAT/GST number. Thus, there was absolutely no proof of the assessee carrying out a business and the same was a ruse to cover up the unexplained deposit of cash. He, therefore, prayed that the orders may be confirmed.

ITA No. 161/VNS/2025 Mohd Akmal 6. We have duly considered the facts and circumstances of the case and the arguments advanced by both the parties. We noticed that before the ld. CIT(A), the assessee had submitted that in the concerned assessment year, the assessee had not filed its return of income because he was under a bonafide belief that since his total income was well below the threshold limit of basic exemption, he was not required to file any return. However, he had been maintaining books of accounts and other records on a day to day basis and for the reason that the overall, “turnover” of the firm exceeded the monetary limit, “turnover” as prescribed under section 44AB of the Income Tax Act, his books had been subjected to tax audit. Furthermore, such audited books of account had been produced before the authorities below on 18.11.2024. The assessee has also submitted that a copy of the approval accorded by the ld. CIT(A), should have been provided by the assessee alongwith the notice under section 148, as had been held by the Hon’ble Allahabad High Court in the case of Deepak Gupta vs. ACIT (2020) 422 ITR 92. It was also submitted that the reasons recorded by the ld. Assessing Officer on the basis of which reassessment proceedings were provided had not been provided by the ld. Assessing Officer which was in violation of the order of the Hon’ble Allahabad High Court in the case of Manmohan Singh vs. ACIT (1993) 203 ITR 74. The assessee has also submitted that objections had been raised to the notice under section 148 but the same had not been disposed of through a speaking order prior to the passing of assessment as per the decision of the Hon’ble Supreme Court in the case of GKN Driveshafts (India) vs. ITO (2003) 125 Taxman 963 (SC) and since no such order had been passed in the case of the assessee. The order passed subsequently was invalid. Furthermore, it has been submitted that the assessee was not provided with adequate time to reply to the notice under section 148A(b) in violation of the decision of the Hon’ble Jharkhand High Court in the case of

ITA No. 161/VNS/2025 Mohd Akmal Satish Kumar vs. PCIT (2023) 459 ITR 67 (Jharkhand HC). Furthermore, the ld. Assessing Officer had not provided the assessee with a draft assessment order, which was mandated under section 144B(1)(XXI) and was also in violation of the CBDT Notification SO 741(E)(NO6 /2021/F No.370149/154/2019-TPL and the decision of the Hon’ble Gujarat High Court in the case of Gandhi Reality (India) (P.) Ltd. vs. Asstt./Jt./Dy. Commissioner of Income Tax (2022) 441 ITR 316. Assessee has further alleged that the assessment order is vitiated as per the judgment of the Hon’ble Supreme Court in the case of CIT vs. Central India Industries reported in (1971) 82 ITR 555. On the merits of the case, the assessee has submitted he had been filing returns of income showing the same business since 2011-12 and the same had been accepted by the Department continuously therefore, it could not be said that he had not run the business which he claimed to be running. Our perusal of the order of the ld. CIT(A) does not reveal that the ld. CIT(A) addressed any of these issues before dismissing the appeal of the assessee. Even if the assessee chose not to make further compliance in furtherance of his statement of facts and grounds of appeal, the appeal had not been withdrawn and the ld. CIT(A) was obligated to decide the issues that were raised before him before dismissing the appeal on account of non-pursuit. We, therefore, deem it appropriate in the interest of justice to restore the matter back to the file of the ld. CIT(A) so that the ld. CIT(A) may consider these grounds that have been raised before him and also, after affording the assessee an opportunity to substantiate his contentions, considered such other material which the assessee may furnish during the course of the appeal. Accordingly, the matter stands restored to the file of the ld. CIT(A) for a fresh decision in accordance with law after considering the various issues raised by the assessee before him.

ITA No. 161/VNS/2025 Mohd Akmal 7. In the result, the appeal of the assessee is held to be allowed for statistical purpose. Orders pronounced on 31.08.2026 in the open Court.

Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2026 sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR, ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S.