INCOME TAX OFFICER, WARD 2(1), VARANASI, VARANASI vs. NASIR JAMAL, VARANASI

PER SUDHANSHU SRIVASTAVA, J.M.:

The captioned appeal has been preferred by the Revenue against the order dated 29.12.2023, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017- 18. The assessee has filed Cross Objection bearing C.O. No.01/VNS/2024.

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2.0 The brief facts of the case are that the assessee runs a Travel Agency in the name and style “M/s Madani Travels” and was carrying on the business of Tourism, especially for Haj pilgrims from India to Makka as well as for Umrah. The assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that, during the year under consideration, the assessee had made cash deposits aggregating to Rs.1,61,45,000/- in his Bank Account No.0237010100000622 maintained with J&K Bank Limited. Accordingly, the case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act. During the course of assessment proceedings, the assessee furnished detailed replies dated 01.03.2022, 17.03.2022, etc., enclosing therewith all relevant details/documents and another submission of the assessee was also that the assessee had two PANs bearing No. ‘AABHN0826N’ and ‘AAVPJ6810C’ and that he had been filing the return of income regularly using PAN ‘AAVPJ6810C’. The AO noted that as per Audited Profit and Loss Account prepared on 29.08.2016, the assessee had disclosed net profit of Rs.17,28,855/- on total receipts of Rs.3,01,48,000/-. The assessee had provided the details of deposits made in various bank accounts, as per which

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the total deposits made by the assessee after 29.08.2016 were to the tune of Rs.89,69,497/-. On the basis of these details furnished by the assessee, the Assessing Officer (AO) observed that subsequent to the date of preparation and audit of the profit and loss account, the assessee had made total deposits of Rs.89,69,497/-, which was treated as the deemed income of the assessee and was added to the income of the assessee under section 69A of the Act.

2.1 The AO further noted that as per the Balance Sheet, the assessee had shown total cash and bank balance at Rs.37,64,886/- and after taking into account the figure of bank balance as per return for the year under consideration at Rs.32,80,429/-, the difference of Rs.10,11,378/- (32,80,429 – 22,69,051) was also added to the total income of the assessee. The AO completed the assessment under section 147/144 of the Act, computing the income of the assessee as under:

Income disclosed (vide PAN AAVPJ6810C) : Rs.17,78,770/-

Addition u/s 69A of the Act : Rs.89,69,497/-

Addition on a/c difference in bank : Rs.10,11,378/- Balance as per return and balance sheet

Total Income (rounded off) : Rs.1,17,59,650/-

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2.2 The AO also initiated penalty proceedings under sections 271AAC(1), 270A and 272B of the Act, separately.

2.3 Aggrieved, the Assessee preferred an appeal before the NFAC, which deleted the additions made by the AO and allowed the appeal of the assessee.

2.4 Now the Revenue has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

2.5 The assessee has filed Cross Objection, challenging the validity of reopening, raising the following grounds of appeal:

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Rs.17,78,770/- and the same has been accepted u/s 143(1)(a) of the Income Tax Act, 1961. The Ld. Assessing Officer has erred and acted illegally in adding back the returned income on the PAN-AAVPJ6810C with the assessment made u/s 147/144 on the PAN- ΑΑΒΗΝ0826Ν. 2. Because it is fully explained that the PAN-AABHN0826N pertains to some HUF whereas the assessee is a Muslim and the department has erred and acted illegally in treating the PAN of any HUF pertaining to the assessee. 3. Because the assessment of Rs.17,78,770/- returned on the PAN-AAVPJ6810C and addition of the same for the assessed income on PAN-AABHN0826N is bad both on facts and in law and not maintainable. 3.0 During the course of hearing before us, the Ld. Sr. D.R. submitted that the Ld. First Appellate Authority has given relief to the assessee by accepting the Affidavit of the Auditor, bank reconciliation drawn up by the assessee and other documentary evidences without calling for Remand Report from the AO and, therefore, the order of the Ld. First Appellate Authority was not sustainable in law. The Ld. Sr. D.R., therefore, prayed that the order of the Ld. First Appellate Authority may be set aside and that of the AO may be restored.

4.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the Ld. First Appellate Authority has co-

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terminus power to that of the AO to call for and examine the documents and, therefore, the action of the Ld. First Appellate Authority was justified and, therefore, no interference was called for in the order of the Ld. First Appellate Authority.

5.0 We have heard the rival submissions and have also perused the material on record. A perusal of the order of the Ld. First Appellate Authority shows that the assessee has submitted the following documents for the first time before the Ld. First Appellate Authority:

(i) Reconciliation of Cash Book, Ledger, Bank account and receipts in the form of Chart.

(ii) Copy of Agreement with Ministry of Foreign Affairs mentioning the Haj quota allotted to the assessee.

(iii) Copy of list of documents submitted before Haj Cell of Ministry of External Affairs.

(iv) Copy of list submitted before Consulate General of India, Jeddah containing the names and addresses and other details of pilgrims.

5.1 It is seen that the Ld. First Appellate Authority has taken these documents on record without considering the provisions of Rule 46A of the Income Tax Rules and has not even called for a Remand Report from the AO but has relied on these

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documents to delete the additions. A perusal of the AO’s order shows that all the above stated documents were not before the AO. In such circumstances, we hold that the order of the Ld. First Appellate Authority was passed without giving the AO any opportunity to examine these additional evidences and, therefore, the same is held to be bad in law. In fact, there is not even a whisper in the Ld. First Appellate Authority’s order regarding any application received from the assessee for admitting fresh evidence. Therefore, the relief given by the Ld. First Appellate Authority cannot be upheld and the order of the Ld. First Appellate Authority is set aside. The file is restored to the AO with a direction to the assessee to produce these evidences before him and also direction is given to the AO to give opportunity to the assessee to explain his case.

5.2 Accordingly, the appeal of the Department is allowed for statistical purposes.

5.3 Since the Department’s appeal is restored to the AO, the Cross Objection of the assessee challenging the validity of reopening is also restored to the AO and the AO is directed to address the assessee’s challenge to reopening before framing the assessment de novo and after duly giving proper opportunity to the assessee to make his arguments against re-opening.

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6.0 In the final result, the appeal of the Department and the Cross Objection of the assessee, both are allowed for statistical purposes.

Order pronounced in the open Court on 16/04/2026.

Sd/- Sd/- [NIKHIL CHOUDHARY] [SUDHANSHU SRIVASTAVA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:16/04/2026 JJ: