MOHAMMED JAVED BHATI,SIKAR vs. INCOME TAX OFFICER, WARD 1, SIKAR, SIKAR

ITA 994/JPR/2025Status: DisposedITAT Jaipur21 October 2026AY 2018-196 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, Mohammed Javed Bhati, filed an appeal against the order of the National Faceless Appeal Centre-Delhi (NFAC) for Assessment Year 2018-19. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 based on information of high cash withdrawals of ₹1,89,70,000 from the assessee's bank account. The assessee explained he was a commission agent for selling 'billy goats' on behalf of farmers, with deposits and withdrawals representing sale proceeds. The AO estimated income at 8% of withdrawals under Section 44AD, adding ₹15,17,600. The CIT(A) accepted the commission agent explanation, determined commission income at ₹8,06,600, and directed deletion of the balance addition. However, the CIT(A) disallowed business expenses of ₹3,80,861.65 (fodder, feeding, salary, wages, staff welfare) for lack of evidence.

What did the Tribunal hold?

The Tribunal noted that the Revenue had not challenged the CIT(A)'s finding regarding the commission income of ₹8,06,600. The dispute was confined to the allowability of business expenditure. The CIT(A) had disallowed these expenses for want of supporting evidence. Since the assessee expressed willingness to furnish the requisite evidence, the Tribunal restored this limited issue to the file of the Assessing Officer for verification. The AO is to examine the supporting evidence and determine the allowability of the expenditure in accordance with law, after providing the assessee an opportunity of being heard. The commission income determined by the CIT(A) is to remain undisturbed. The other grounds raised by the assessee were not pressed and were dismissed as not pressed. The appeal was allowed partly for statistical purposes.

What were the issues?

1. Whether the reassessment proceedings initiated on the basis of alleged high-volume cash withdrawals are vitiated, given that no addition was made on that account and the sustained addition pertained to disallowance of business expenses, which was not part of the recorded reasons for reopening, as per CIT v. Ram Singh [2008] 306 ITR 343 (Raj)? (Question of law and fact, turns on Section 147). 2. Whether the Learned CIT(A) erred in disallowing the entire business expenditure of ₹3,80,861.65 (Chara & Feeding, Salary & Wages, Staff Welfare), which are intrinsically linked to business operations, instead of making a reasonable estimation? (Question of law and fact, turns on Section 37). 3. Whether the Learned Assessing Officer erred in not accepting the return of income filed in response to the Section 148 notice? (Question of fact, turns on Section 148). 4. Whether the Learned Assessing Officer erred in not issuing a mandatory notice under Section 143(2) after the assessee filed a return in response to the Section 148 notice, rendering the assessment order without jurisdiction? (Question of law, turns on Section 143(2) and Section 148). 5. Whether the Learned CIT(A) erred in disallowing expenses when turnover and commission were accepted? (Question of fact, turns on Section 37). 6. Whether the Learned Assessing Officer erred in initiating reassessment proceedings under Section 147 without satisfying jurisdictional conditions? (Question of law, turns on Section 147). 7. Whether the notice under Section 148 dated 30.03.2022 is invalid, having been issued by the Jurisdictional AO instead of the Faceless AO, in violation of the Faceless Assessment Scheme and CBDT Notification No. 18/2022? (Question of law, turns on Section 148 and Section 144B). Assessee's Contentions: The assessee argued that reassessment proceedings were vitiated as the addition sustained was not based on the reasons for reopening. The entire business expenditure should not have been disallowed wholesale; estimation could have been made. The notice under Section 148 was invalid as it was issued by the jurisdictional AO instead of the designated Faceless AO. The assessee was willing to furnish documentary evidence for the disallowed expenses. Revenue's Contentions: The judgment records no specific contentions for the revenue on the grounds argued by the assessee, other than the CIT(A)'s disallowance of expenses for want of evidence.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 44AD,Section 37,Section 143(2),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

For Appellant: Shri Vedant Agarwal, Adv
Hearing: 14.10.2026Pronounced: 21.10.2026

Per Shri Om Prakash Kant, AM :- This appeal by the assessee is directed against order dated 08.04.2025, passed by the Ld. National Faceless Appeal Center- Delhi (hereinafter referred to as “Ld. CIT(A)”) for assessment year 2018-19, raising following grounds:-

1.

Whether on the facts and in the circumstances of the case and in law, the reassessment proceedings initiated on the basis of alleged high- volume cash withdrawals are vitiated in view of the fact that no addition whatsoever has been made on that account, and the 2 Asst. Year: 2018-19 only addition sustained pertains to disallowance of business expenses, which was never part of the recorded reasons for reopening. As held

The order continues below.

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