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Facts
The assessee, operating a country liquor business, filed an appeal against the CIT(A)'s order. The case involved limited scrutiny for cash deposits, leading the Assessing Officer to reject the books of account and estimate income at 8% of credit entries (Rs.12,25,980/-) without deducting the assessee's declared income. The CIT(A) partly allowed the appeal, confirming the estimation but reducing the addition after deducting some portion of the declared income, resulting in an addition of Rs.8,28,470/-. The appeal was filed with a 200-day delay, which the Tribunal condoned.
Held
The Tribunal condoned the delay in filing the appeal. It ruled that the declared income of Rs.3,97,510/- must be deducted from the estimated income of Rs.12,25,980/-. The Assessing Officer was directed to make this deduction, thereby allowing the assessee's grounds of appeal.
Key Issues
Whether the 200-day delay in filing the appeal should be condoned. Whether the Assessing Officer correctly estimated business income by rejecting books of account and if the assessee's already declared income should be deducted from the estimated income.
Sections Cited
143(3), 143(2), 142(1), 145(3), 270A(1), 144
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2017-2018 Ashok Prasad Gupta,………………………….…Appellant C/o. Daspara C.S. Shop, Daspara B.O., Chopra, North Dinajpur-733207, W.B. [PAN:BFEPG3955G] -Vs.- Income Tax Officer,……………………………..Respondent Ward-2(4), Raiganj, Income Tax Office, Karnajora, Rajganj-733130, West Bengal Appearances by: Shri Sujit Basu, Advocate and Shri Rajib Mukherjee, Advocate, appeared on behalf of the assessee Shri Kallol Mistry, JCIT, appeared on behalf of the Revenue Date of concluding the hearing: December 08, 2025 Date of pronouncing the order: December 31, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Additional/Joint Commissioner of Income Tax (Appeals)-4, Chennai dated 18.11.2024 passed for Assessment Year 2017-2018.
The appeal is time barred by 200 days in filing the appeal by the assessee before the Tribunal. However, the assessee filed an (A.Y. 2017-2018) Ashok Prasad Gupta affidavit dated 18.08.2025 as well as petition dated 19.08.2025 before the ITAT in support of condonation of delay of 200 days mentioning that he has no knowledge about the e-filing portal of the income tax department and was not aware of any notices of hearing and the order passed by the ld. CIT(Appeals) and became aware of the impugned order in August, 2025 receiving a phone call from the Income Tax Department on 12.08.2025. When the assessee came to know about the order passed by the ld. CIT(Appeals), the assessee approached the ld. A.R. to prefer an appeal, due to that there was a delay of 200 days in filing the appeal before the Tribunal and there was no fault or in action on his part in filing the appeal in time. Therefore, he pleaded to condone the delay.
Considering the facts and circumstances of the case, I am of the view that the assessee was prevented in filing the appeal within the stipulated time. Therefore, I am inclined to condone the delay of 200 days. Hence the delay is condoned.
Facts in brief are that the assessee is an individual, who runs a country liquor business. The assessee filed his return of income on 04.01.2017 showing income of Rs.3,97,510/-. The case was selected for limited scrutiny assessment under section 143(3) under CASS during the financial year 2018-19 on the issue of cash deposits. Statutory notice under section 143(2) was issued and served upon the assessee on 27.09.2018. Subsequently notice under section 142(1) of the Act along with questionnaire was issued and served upon the assessee on 27.04.2019. From the (A.Y. 2017-2018) Ashok Prasad Gupta record, it is seen that there were credit entries of Rs.2,02,93,665/- and debit entries of Rs.2,03,12,645/- whereas in his trading account, the assessee showed the purchases of Rs.86,15,513/- and sales of Rs.90,64,292/-. While examining the debit entries in his bank account, it is found that the assessee had made purchases from some other vendors which were not shown in his 26AS details and there no credibility of assessee’s books of account. Getting no satisfactory reply from the assessee, the assessee was requested through show cause notice dated 28.11.2019 to explain why the above said books of account should not be rejected under section 145(3) of the Act and why his income should not be computed on estimated basis. The assessee could not offer any explanation in this regard. The ld. Assessing Officer calculated on estimate basis @8% of credit entries i.e. Rs.2,02,93,665/- in his bank account and income assessed at Rs.16,23,490/- and initiated penalty proceedings under section 270A(1) for undisclosed income of Rs.12,25,980/-.
On being aggrieved, the assesese preferred an appeal before the ld. CIT(Appeals). The ld. Addl./JCIT(Appeals) partly allowed the appeal of the assessee by saying that “the ld. Assessing Officer was right in rejecting the books of account of the assessee and estimating the business income at 8% of total credits of Rs.2,02,93,665/- at Rs.12,25,980/-. These credit entries also included the total sales reported in profit & loss account on which net profit was declared at Rs.3,97,510/- and shown as business income which filed in the return of income, therefore, the same needs to be deducted from (A.Y. 2017-2018) Ashok Prasad Gupta Rs.12,25,980/- and only the difference amount of Rs.8,28,470/- is to be added to the total returned income of the assessee”.
On being aggrieved, the assessee preferred an appeal before the Tribunal. The main contention of the ld. Counsel for the assessee is that the ld. Assessing Officer wrongly estimated the business income at 8% of total credits of Rs.2,02,93,665/- at Rs.12,25,980/-. The ld. Counsel for the assessee further submitted that these credit entries also included the total sales reported in profit & loss account on which Net Profit was declared at Rs.3,97,510/- and shown as business income of the assessee and filed the return of income. The ld. Counsel for the assessee pleaded before the Bench that sales of the assessee as per return was Rs.90,64,292/- and his purchase was Rs.86,15,513/-. The ld. Assessing Officer found that the sales of the assessee were Rs.2,02,93,665/- as per assessee’s Bank account and the sale of Rs.1,12,29,373/- was not recorded in the books of the assessee and estimated the profit of assessee at Rs.16,23,490/- by applying profit rate of 8% on the total sales of Rs.2,02,93,665/- including undisclosed sales of Rs.1,12,29,373/- under section 143(3) of the Act and not under section 144 of the Act. The ld. Addl./JCIT(Appeals) in his appellate order held that the addition made by the ld. Assessing Officer needs to be deducted from Rs.12,25,980/- and only the difference amount of Rs.8,28,470/- is to be added to the total returned income of the assessee. Therefore, the ld. Counsel pleaded before the Bench that as the assessee declared the sale of Rs.90,64,292/- in his return, the ld. CIT(Appeals) ought to have considered the additional profit of (A.Y. 2017-2018) Ashok Prasad Gupta Rs.4,92,970/- on the remaining sales of Rs.1,12,29,373/- by applying profit rate of 4.39% instead of 8%. The ld. Counsel for the assessee prayed before the Bench to deduct the amount of Rs.3,97,510/- from the estimated amount of Rs.12,25,980/-.
On the other hand, ld. Departmental Representative relied on the orders passed by the revenue authorities.
I have heard both the sides and perused the material available on record. It is an admitted fact that the assessee filed his return of income declaring total income at Rs.3,97,510/-, but the ld. Assessing Officer estimated the income at Rs.12,25,980/- without deducting the declared income by the assessee. Therefore, I find force in the argument of the ld. Counsel for the assessee that the assessee is entitled for deduction for an amount of Rs.3,97,510/- from the estimated amount of Rs.12,25,980/-. By considering the totality of the facts and circumstances of the case, I direct the ld. Assessing Officer to deduct an amount of Rs.3,97,510/-. Resultantly the grounds of appeal raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 31/12/2025.