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

ITA 131/RAN/2026Status: DisposedITAT Surat29 September 2026AY 2018-195 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the orders of the lower authorities and dismissed the assessee's appeal. Regarding the first two grounds, the judgment does not explicitly record any arguments from the revenue or a specific finding by the Tribunal on these procedural aspects. However, the Tribunal focused on the substantive issue. On the third issue, the Tribunal noted that while Section 44AD is a presumptive scheme where books of account are not required, the assessee failed to produce any evidence before the AO, CIT(A), or the Tribunal to establish the genuineness of the transaction. The Tribunal found that merely stating income was returned under Section 44AD at a higher rate was insufficient. The assessee was required to provide evidence to support the business activity. The Tribunal concluded that the assessee was used for routing accommodation entries and found no reason to interfere with the CIT(A)'s order, which had confirmed the AO's addition. The ratio decidendi is that the benefit of presumptive taxation under Section 44AD does not absolve the assessee of the obligation to provide evidence of genuine transactions, especially when accommodation entries are suspected.

What were the facts?

The assessee, Dhaneshwar Mandal, filed an income tax return for Assessment Year 2018-19 on July 2, 2018, declaring a total income of ₹4,40,348/- computed under Section 44AD on a gross turnover of ₹48,50,992/-. The Assessing Officer (AO) received information about GST evasion by M/s Sidhi Vinayak Enterprises, which issued bogus sales and purchases. The assessee was identified as a beneficiary of accommodation entries amounting to ₹11,44,624/-. The AO reopened the assessment under Section 147. Despite notices, the assessee did not provide explanations. The AO issued a show cause notice regarding the addition of ₹11,44,624/- as unexplained expenditure under Section 69C read with Section 115BBE. The AO found that the transportation challan bore a motorcycle registration number, indicating no genuine purchases. The AO added ₹11,44,624/- under Section 69C. The assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi (CIT(A)), which dismissed the appeal, confirming the addition. The assessee is now appealing to the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147, based on the insertion of clause (b) to Section 149(1) by the Finance Act, 2022, effective from April 1, 2022, are bad in law for Assessment Year 2018-19, as the amendment is not retrospective. - Assessee's contention: The amendment to Section 149(1)(b) by the Finance Act, 2022, is not retrospective and therefore cannot apply to AY 2018-19. - Revenue's contention: Not recorded. 2. Whether the approval under Section 148A(d) and the notice under Section 148 were issued with the same jurisdiction, and if not, whether the consequential proceedings are liable to be quashed. - Assessee's contention: The approval and notice were treated as without proper approval jurisdiction, rendering the proceedings liable to be quashed. - Revenue's contention: Not recorded. 3. Whether, given that Section 44AD(1) starts with 'notwithstanding anything to the contrary contained in any other section', expenditure under Section 69C should be allowed, and therefore, the addition of ₹11,44,624/- is beyond jurisdiction and liable to be deleted. - Assessee's contention: Since income was declared under Section 44AD at a rate higher than the presumptive threshold, any addition under Section 69C is bad in law and should be deleted. Reliance placed on ITAT Mumbai in Manoj Rajaram Sharma v. ITO and ITAT Bengaluru in Shri Kokkarne Prabhakara vs. ITO. - Revenue's contention: Supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 149,Section 148A,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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