DHANESHWAR MANDAL,ADITYAPUR vs. ITO WARD 3(1), OFFICE ROAD

ITA 131/RAN/2026Status: DisposedITAT Ranchi29 September 2026AY 2018-195 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that while Section 44AD is a presumptive taxation scheme where books of account are not required, the assessee must still provide evidence to establish the genuineness of transactions. The assessee had failed to produce any evidence before the AO, CIT(A), or the Tribunal to substantiate the genuineness of the transactions amounting to ₹11,44,624. The Tribunal found that the assessee was used for routing accommodation entries. Therefore, the Tribunal found no reason to interfere with the detailed examination and confirmation of the addition by the CIT(A) and upheld the order. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Dhaneshwar Mandal, filed an income tax return for AY 2018-19 under Section 44AD, declaring a total income of ₹4,40,348 on a gross turnover of ₹48,50,992. The Assessing Officer (AO) reopened the assessment under Section 147 upon receiving information about GST evasion by M/s Sidhi Vinayak Enterprises, which issued bogus entries. The assessee was identified as a beneficiary of accommodation entries amounting to ₹11,44,624. Despite notices, the assessee failed to provide satisfactory explanations. The AO added ₹11,44,624 as unexplained expenditure under Section 69C read with Section 115BBE, noting that transportation challans indicated motorcycle registration numbers, suggesting no genuine purchases. The CIT(A) upheld the AO's addition. The assessee appealed to the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 for AY 2018-19 are bad in law because the expenditure in question is not part of clause (b) of Section 149(1) before its amendment by the Finance Act, 2022, effective from 01-04-2022, and the amendment is not retrospective. 2. Whether the approval under Section 148A(d) and the notice under Section 148 were issued without proper jurisdiction, rendering the consequential proceedings liable to be quashed. 3. Whether the addition of ₹11,44,624 under Section 69C is beyond jurisdiction, given that Section 44AD(1) starts with 'notwithstanding anything to the contrary', implying such expenses should be allowed. Assessee's contentions: The assessee argued that having declared income under Section 44AD substantially higher than the presumptive threshold (more than 9% of turnover), the addition under Section 69C is bad in law and liable for deletion. Reliance was placed on ITAT Mumbai in Manoj Rajaram Sharma v. ITO and ITAT Bengaluru in Shri Kokkarne Prabhakara vs. ITO, which held that income declared under Section 44AD substantially higher than the threshold should be accepted and that once assessment is completed under Section 44AD, Section 69C cannot be applied. Revenue's contentions: The Revenue supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 149(1),Section 148A(d),Section 148,Section 44AD,Section 69C,Section 115BBE,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI RATNESH NANDAN SAHAY & SMT. RAJANI GUDURI

For Respondent: Shri Sandipan Khan, Sr.DR
Hearing: 23/09/2026Pronounced: 29/09/2026

PER: BENCH

1.

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, [in short, the ld. CIT(A)] dated 13/02/2026 for the Assessment Year (AY) 2018-19 wherein the assessee has raised following grounds of appeal:

"

1.

That the expenditure is not part of clause (b) of section 149(1) before 01- 04-2022.It was inserted finance Act, 2022 w-e-f from 01-04-2022. The case of the assessee pertains to A.Y- 2018-19. This amendment will not have any retrospective effect and re- assessment on that basis is bad in law and fit to be quashed.

2.

Approval u/s148A(

The order continues below.

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