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Facts
The assessee had deposited Rs. 15,92,500/- during the demonetization period but did not file a return of income. The Assessing Officer (AO) made a best judgment assessment and added this amount as unexplained. The assessee later filed a return belatedly, declaring income from a business conducted as a conduit for vehicle bookings.
Held
The Tribunal condoned the delay in filing the appeal due to the assessee's medical condition. While initially inclined to remand the case, the Tribunal decided to hear the appeal on merits due to peculiar facts. The addition of Rs. 15,92,500/- was deleted as it was included in the total income declared by the assessee and tax had been paid.
Key Issues
Whether the deposit of Rs. 15,92,500/- made during the demonetization period, which was later accounted for in the belatedly filed return of income, could be added as unexplained income separately.
Sections Cited
250, 142(1), 44, 147, 148, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 22.03.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
At the outset, it is observed that there is delay of 257 days in filing of this appeal, on which, Ld. Counsel of the Assessee has contended that the Assessee was suffering from various ailments including female diseases, as it is clearly appearing from the medical certificates starting from March 2023 to October, 2023, attached with the application for condonation of delay. On the Mrs. Sushiladevi Vijaykumar Yadav contrary, the Ld. DR refuted the said factual aspect. Considering the delay based on the medical grounds, as bonafide and un- intentional, this court is inclined to the condone the delay. Thus, the delay is condoned.
Coming to the merits of the case, it is observed that the Assessee during the AY under consideration though deposited the amount of Rs. 15,92,500/- in her bank account maintained with NKGSB Cooperative Bank and Axis Bank, during the demonetization period (09.11.2016 to 30.12.2016) however did not file her return of income and therefore, the case of the Assessee was selected for scrutiny and consequently notice u/s 142(1) of the Act was issued. However, the assessee made no compliance. Therefore, the assessing officer proceeded with the case as “Best Judgment Assessment” and while analyzing the facts and circumstance of the case, depicted the deposit made by the Assessee, in Table No. 3 in Para No. 10 of the Assessment Order, which read as under:
Sr. Period of Deposit Nature Amount No. 1 PRE-DEMONETISATION PERIOD Cash deposit 23,78,000/- (From 1st April, 2016 to 8th November, 2016) 2 DEMONETISATION PERIOD Cash deposit 15,92,500/- (From 9th November, 2016 to 30th December,2016) 3 POST-DEMONETISATION PERIOD Cash deposit 5,000/- (From 31/12/2016 to 31/03/2017) 4 CREDIT ENTRIES RTGS/NEFT/CH 27,77,634/- (01/04/2016 to 31/03/2017) EQUE 67,53,134/-
The assessing officer by considering the aforesaid deposits during the demonetization and post demonetization period and the credit enters during the financial year under consideration, ultimately treated the amount of Rs. 15,92,500/- as unexplained and added the same in the income of the Assessee.
Mrs. Sushiladevi Vijaykumar Yadav 5. The assessing officer considering the rest of the amount of Rs. 51,60,634/- as business income of the Assessee, also computed the net profit at the rate of 10% and added the same in the income of the assessee.
The Assessee being aggrieved challenged the aforesaid addition before the Ld. Commissioner, however due to medical issues, failed to substantiate her claim, which resulted into passing the impugned order as ex-parte and, therefore, this Court is inclined to remand the instant case to the file of the Ld. Commissioner. However, considering the peculiar facts and circumstances, specifically the medical condition of the assessee and peculiar fact that the Ld. Commissioner has also decided the appeal on merit and therefore, this court is inclined to decide this appeal on merits, as an exceptional case.
The Ld. Counsel for the Assessee has demonstrated that assessee was working as conduit between the customers and the dealers of the motor vehicles (Bike) and was used to get deposits from the prospective customers for booking of bikes etc. and thereafter, was used to deposit the requisite amounts in the respective accounts of the respective dealers/traders and for the said work/purpose the Assessee was getting some percentage of commission, varies from model to model of bike etc. The Assessee did not confirm said business/work because of medical exigencies and therefore she has not filed any return of income from the said business started during the A.Y. under consideration only, which ended thereafter immediately, due to health conditions.
Somehow on getting appropriate guidance from other Counsel, the Assessee immediately filed her return of income for the A.Y. under consideration on 25.11.2019 declaring gross total income of Rs.5,77,166/- {being Rs. 26,766 as commission income + Mrs. Sushiladevi Vijaykumar Yadav 5,50,400/- being profit u/s 44 (a)(d) of the Act @ 8% of the gross receipt /income of Rs.68,80,000/-}. Whereas, the Ld. AO made the addition at the rate of 10% of the deposited amount of Rs. 51,60,634/-.
Admittedly, there is negligible difference between the amounts determined by the Assessing Officer and as declared by the Assessee. Though the Assessee has filed her return belatedly, however, it is not the case of the department that the same is rejected and therefore, considering the peculiar facts and circumstance in totality and negligible difference between the amounts determined by the Assessing Officer and as declared by the Assessee, this court is inclined not to interfere in the decision of the AO in making the addition of Rs. 5,16,063/-, as the same is below then the amount of Rs. 5,77,166/- as voluntarily shown by the assessee.
Coming to the deposit of Rs. 15,92,500/-, it is observed that the Assessee has shown the total amount of income/gross receipt of Rs.68,80,000/- which includes the amount of Rs.15,92,500/-. Even the Assessee has already paid requisite tax amount of Rs. 26,580/-, as it clearly appears from the challan dated 25.10.2019 Union Bank of India, which also supports the case of the Assessee.
The Ld. DR though supported the impugned order but not the factual aspect demonstrated above and it is also not the case of the department that the Assessee is doing any other business.
Thus, on the aforesaid analyzations, there is no justification for making the addition of Rs. 15,92,500/- separately, thus, the addition in hand is deleted. It is clarified that this judgment is given under peculiar facts and circumstances of this case and therefore cannot be taken as a precedent.
In the result appeal file by the assessee stands partly allowed.
Order pronounced in the open court on 28.04.2025.