HARIDAS BHAGWAN KOLEKAR,PUNE vs. ITO, WARD-14(5), PUNE

Registry has pointed out that the appeals filed by the assessee are barred by limitation as they are filed before this Tribunal with a delay of 85 days. Asssssee has filed Affidavits explaining the reasons for delay.

There is no dispute that u/s. 253(5) of the Act, the Tribunal may admit an appeal filed beyond the period of limitation where it is assessee for not presenting the appeal within the prescribed time. The explanation of the assessee therefore becomes relevant to determine whether the same reflects sufficient and reasonable cause on its part in not presenting the present appeal within the prescribed time. The purpose of the limitation period is to ensure expeditious disposal of appeal; however, where the delay is shown to be unintentional and caused by reasonable circumstances, it ought to be condoned in the interest of substantial justice.

We have gone through the reasons which led to delay in filing of the appeals before this Tribunal and we are satisfied that the assessee has made out a case of ‘sufficient cause’ warranting exercise of discretion u/s.253(5) of the Act. We therefore condone the delay of 85 days in filing of the appeals and admit the appeals for adjudication placing reliance on the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder No.800/PUN/2026 and 801/PUN/2026 for A.Y. 2010-11 and 2012-13 wherein a common issue has been raised regarding estimation of Net Profit at higher rate.

At the outset, ld. Counsel for the assessee submitted that assessee is into Milk business of collecting milk from local agriculturists and Milkmen and supply them to the diary companies and the Net Profit is only 1%, however, ld. Assessing Officer has estimated the profit at 8% which is on much higher side.

On the other hand, ld. Departmental Representative submitted that assessee is not maintaining books of account and has not filed the income tax returns for the years under consideration therefore ld. Assessing Officer has rightly estimated the Net Profit @8%.

We have heard the rival submissions and perused the record placed before us. We observe that the assessee is an individual and admittedly has not filed regular returns of income u/s.139(1) of the Act. Based on the information about cash deposits in the bank account, assessment proceedings have been carried out for the impugned assessment year years u/s.144 r.w.s.147 of the Act. Ld. Assessing Officer has made the addition for the total cash deposits on account of non compliance by the assessee. Subsequently, assessee preferred appeals before ld.CIT(A) and filed relevant details exhibiting that the assessee is into the business of Milk supply and based on these details ld.CIT(A) was satisfied that the assessee is carrying on the business and accordingly estimated the Net Profit @8% and the alleged cash deposits. Now the assessee is in appeal before this Tribunal contending the Net Profit is only 1%.

At the time of hearing, ld. Counsel for the assessee made reference to various documents filed in the paper book running into 164 pages and specific reference is made to sample Agreement with the Diary companies indicating terms for supply of Milk. We however take note of the submissions filed by the assessee before ld.CIT(A) and in the Remand report dated 06.02.2024 ld. Assessing Officer has referred to the submissions of the assessee during the remand proceedings stating that assessee only gets Rs.1/- per litre indicating gross margin of 8% to 10% out of which he incurs expenses for logistics, staff, electricity etc. Therefore, the assessee himself admitted that gross profit rate is between 8% to 10%. We also take about the income paid to the assessee on per litre basis.

Considering all these facts which are indicating that the Net Profit rate of the assessee is not 8% but certainly not 1% as claimed by the assessee. Therefore, in order to meet the ends of justice, we deem it appropriate to apply Net Profit @4% on the alleged cash deposits as against 8% adopted by ld.CIT(A) and give part relief to the assessee. Accordingly, income of the assessee for the impugned assessment years is to be computed @4% of the alleged cash deposits which works out to Rs.3,63,300/- for A.Y. 2010-11 and Rs.3,02,700/- for A.Y. 2012-13 respectively. Grounds of appeal raised by the assessee are partly allowed.

Now we take up the penalty appeal ITA No.802/PUN/2026 for A.Y. 2012-13 wherein the ld. Assessing Officer has levied penalty u/s.271(1)(c) of the Act at Rs.21,22,250/- for concealing the income of Rs.75,67,500/- representing the alleged unexplained cash deposits.

Ld. Counsel for the assessee has made two fold submissions firstly that ld. Assessing Officer has wrongly calculated the penalty on the concealed income calculated in the assessment order as ld. Assessing Officer is required to calculate the penalty only on the amount of addition sustained by ld.CIT(A) and secondly he submitted that penalty u/s.271(1)(c) of the Act on estimated Net Profit has been held to be unjustified in plethora of decisions. Reliance placed on the decision of this Tribunal in the case of M/s.M.M. Brothers Vs. ITO – ITA No.477/PUN/2025 order dated 10.02.2026. 13. On the other hand, ld. DR supported the orders of ld.CIT(A) but fairly admitted that penalty should be levied only to the extent of the income assessed by the Assessing Officer.

We have heard the rival submissions and perused the record placed before us. So far as the second argument of the asessee that Net Profit is not leviable on the estimated Net Profit, we note that the same comes into effect where the assessee is maintaining regular books of account and filed the Income Tax Return and disclosed certain profit in its books of account as well as Income Tax Return. However, during the course of assessment proceedings, ld. Assessing Officer finds certain defects in the books and rejects the books of account and estimate the profit, then it is a case of estimation of Net Profit which does not attract penalty u/s.271(1)(c) of the Act because the assessee has provided all details but ld. Assessing Officer was not satisfied with those submissions.

However, in the instant case, the facts are different. Assessee has not filed the regular returns of income for the impugned assessment years and is not maintaining books of account. There were huge cash deposits in the bank account of the assessee and for the years under consideration there is cash deposit of Rs.75,67,500/-. Inspite of the fact that huge cash deposits made, assessee has not opted to maintain records nor has filed any Income Tax Return. Ld. Assessing Officer has thereafter completed the assessment proceedings that too exparte because assessee has not made any compliance. There was no option left with the Assessing Officer except to complete the assessment and has made the additions for the total cash deposits. However, ld.CIT(A) has given part relief and estimated the Net Profit @8% which has subsequently been dealt by us in the preceeding paras and finally sustaining the Net Profit @4% on the alleged cash deposits.

Considering all these aspects, we are inclined to hold that penalty u/s.271(1)(c) of the Act is leviable in the hands of assessee only to the extent of tax payable on the income calculated @4% of the alleged cash deposits which works out to Rs.3,02,700/- (4% of the cash deposits of Rs.75,67,500/-). Remaining amount of penalty levied u/s.271(1)(c) of the Act stands deleted. Grounds of appeal raised by the assessee are partly allowed.

In the result, all the three appeals of the assessee are partly allowed.

The Pr. CIT concerned. विभागीय प्रतिनिधि, आयकर अपीलीय अधिकरण, “A” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, Sunil Kumar More More Date: 2026.10.26 17:15:16 +05'30' ////