SHRI GHULAM NABI LONE,ANANTNAG vs. INCOME TAX OFFICER WARD, ANANTNAG

Brief facts emerging are that the assessee is a retail trader of shawl and small handicraft items and functions on door to door selling of goods (without any fixed address or shop room). 5.1 On account of Cash deposit and other credits during FY 2016-17 amounting to Rs. 41.93 lakhs in his bank account (including SBN deposit of Rs. 10.43 lakhs), coupled with non-filing of regular return , followed by non-compliance to notices u/s 142(1) issued by the AO, assessment has been completed exparte, on a total income of Rs.12.95 lakhs (which includes addition of SBN u/s 69A plus business profits estimated @ 8% of remaining credits in bank). 6. The matter carried in first appeal has been dismissed in absence of adequate response to notices issued by the Ld. CIT(A), even though initially response has been filed explaining that on account of curfew and lack of transport and net disturbances in the valley in year 2019, when assessment proceedings were ongoing no proper representation could be made before AO and the nature of business of the assessee, is just a small time shawl trader, who deposited his sale proceeds received from his customers against sales of shawls and handicrafts during the FY 2016-17 and deposited the same in bank account including the cash during demo period which also is out of his realisation from his customers. 7. The Ld. DR relied on the order of the Ld. CIT(A) and prayed for upholding the appellate order.

We have considered the written submissions and the facts on record. We find that the AO has examined all the bank accounts of the assessee (both current and savings) and has already accepted the fact that the assessee is a trader and has applied 8% rate on total bank credits (excluding SBN), for determination of business profits. 9. The total credits in bank during FY 2016-17 considering all the bank accounts of the assessee (including SBN deposits) is Rs. 41.93 lakhs (page – 3 of assessment order) and it is admitted fact that the assessee is a trader and transactions in bank accounts throughout the year also suggests the same and as admitted by the assessee, no books of accounts are existing. 10. The business of trading in shawl and handicrafts, falls under the category of “eligible business”, and is covered by the presumptive section of 44AD of the Act 61. 10.1 As such instead of remanding the matter back to the Ld. first appellate authority, we determine the net profit from the business at eight percentage (8%) on total estimated sales of Rs. 42 lakhs (approx.) including SBN deposits which in our opinion, has flown out of regular sales of trading business activity (considering the total of bank credits being Rs. 41.93 lakhs), and the assessee shall be charged to tax at normal rates (following the decision of the Hon’ble Madras High court in the case of SMILE Microfinance Ltd dated 19/11/2024 WP(MD) No 2020 and WMP (MD) No 1742 of 2020. I.T.A. No. 624/Asr/2024 Assessment Year: 2017-18

The assessee will get consequential relief. 12. In the result, the appeal of the assessee is partly allowed. Order pronounced on 12.03.2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963. (MANOJ KUMAR AGGARWAL) Judicial Member