MANISH H SHAH HUF ,MUMBAI vs. NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI
What did the Tribunal hold?
The Tribunal held that the credit entries alone could not be considered for computing profit without examining the debit entries. Since the Departmental Authorities failed to examine the debit entries, the issue was restored to the AO for fresh adjudication.
What were the facts?
The assessee, a HUF, did not file its return of income for AY 2019-20. The assessment was reopened, and the AO added Rs.64,18,160/- as business income by applying an 8% net profit rate on the total turnover derived from credit entries in the bank account.
What were the issues?
Whether the addition made by the AO solely on the basis of credit entries in the bank account, without considering debit entries, is sustainable?
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, V.P. & SHRI GIRISH AGRAWAL, A.M.
This is an appeal by the assessee against order dated 23.08.2024 passed by National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year (AY) 2019-20.
The dispute in the present appeal is confined to the addition made of Rs.64,18,160/- as business income.
Briefly, the facts are, the assessee is a resident Hindu Undivided Family (HUF). As observed by the Assessing Officer (AO) in the assessment order, data available with the department revealed that in the previous year relating to the assessment year under dispute, the assessee’s Bank account revealed certain transaction. Whereas, it was found that for the assessment year under dispute, assessee had not filed any return of income. Thus, based on such information, the assessment was reopened u/s. 147 of the Act. After initiating the assessment proceeding as aforesaid, the AO called upon the assessee to furnish information/details relating to the bank transactions.
However, as observed by the AO, though the assessee filed the return of income in response to notice u/s. 148 of the Act, however, compliance to various queries raised from time to time was catchy and partial. Thus, ultimately, the AO concluded that the credit entries appearing in the bank account represents the total turnover of the assessee. He observed, since the assessee has declared net profit of 2.77 percent on the turnover of Rs.4,00,73,136/-, no profit has been offered on the remaining credit entries of Rs.5,15,24,495/-. Thus, he was of the view that profit has to be computed on such credit entries. Having held, so he rejected the net profit rate applied by the assessee and computed net profit by applying the rate of 8% on the entire turnover of Rs.9,15,97,631/-. After giving credit to the profit declared by the assessee, the AO added back profit computed at Rs.64,18,160/-.
Though, the assessee contested the aforesaid addition by filing an appeal before the First Appellate Authority, however, the addition was sustained.
Before us, learned counsel appearing for the assessee submitted that the AO has considered only the credit entries appearing in the bank account for computing the profit without considering the debit entries. Thus, he submitted, the addition made by the AO by considering only the credit entries is unsustainable. Further, he submitted the debit entries and expenditure incurred by the assessee having not been considered at all by the Departmental authorities, the issue may be restored back for re- examination by the AO.
The learned DR, though, relied upon the observations of the Departmental Authority, however, he submitted that the issue can be re- examine by the AO.
We have considered rival submissions and perused the materials on record. It appears, the assessee is in the business of importing accessories of shoes. It is the specific case of the assessee before us that while computing profit, the AO has only considered the credit entries without taking note of the debit entries in the Bank account. On a perusal of the impugned assessment order, we find merit in the aforesaid submission of learned counsel for the assessee. It is observed, while the assessee has computed the profit at Rs.4,00,73,136/-, the AO has taken the total turnover at Rs.9,15,97,631/- by aggregating the credit entries appearing in the bank account. In our view, credit entries cannot be considered for computing the profit without examining the debit entries. The Departmental Authorities having failed to examine the debit entries appearing in the bank account, we are inclined to restore the issue to the AO for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee.
Grounds are allowed for statistical purposes.
In the result, appeal is allowed for statistical purposes.
More judgments on Section 147
- ACIT Central Bilaspur, Bilaspur vs Arun Kumar Agrawal, SaktiITSSA 26/RPR/2025[2018-19]Status: Disposed21 Oct 2026AY 2018-19
- Vinod Agrawal, Kawardha vs Assisstant Commissioner of Income Tax…ITA 666/RPR/2026[2019-20]Status: Heard21 Oct 2026AY 2019-20
- Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), RaipurITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
- Tarunaben Maganlal Bhut, Navagam vs ITO Ward 2(2)(1), RajkotITA 673/RJT/2026[2024-25]Status: Disposed21 Oct 2026AY 2024-25
- Neo Incorporation, Rajkot vs DCIT Circle- 1(2), RajkotITA 471/RJT/2026[2012-2013]Status: Disposed21 Oct 2026AY 2012-2013
Recent GST High Court judgments
Search GST case law →- Santosh Das And Anr. vs. Union Of INDIACalcutta · 30 Oct 2026
- M/S Rama Krishna Industries vs. State Of Hp And OthersHimachal Pradesh · 30 Oct 2026
- Smt Usha W/O Shri Tarun vs. Union Of INDIARajasthan · 29 Oct 2026
- M/S Maruti Nandan Minetech Private Limited vs. The Joint CommissionerRajasthan · 29 Oct 2026
- M/S Rentex Polymers Private Limited vs. Assistant Commissioner Of Central Goods And Services TaxDelhi · 29 Oct 2026
