ANEES BEGUM,HYDERABAD vs. ACIT., CENTRAL CIRCLE-2(3), HYDERABAD

Ground Nos. 1 to 4.2 are general in nature and does not require any specific adjudication.

Ground Nos. 4.3 to 4.10: At the time of hearing, the learned Counsel for the assessee has stated at Bar that the assessee does not press these grounds and the same may be dismissed as not pressed. The learned DR has raised no objection, if the Ground Nos.4.3 to 4.10 are dismissed as not pressed. Accordingly, Ground Nos.4.3 to 4.10 are being dismissed as not pressed.

Ground Nos. 5 to 9 are regarding the addition made by the Assessing Officer by estimating the net profit @ 8% which was restricted by the learned CIT (A) @ 5% on gross receipts. Brief facts of the case are that, the assessee is an individual and filed her return of income on 30/11/2020 declaring total income of Rs.32,56,970/-. There was a search & seizure operation u/s 132 of the I.T. Act, 1961 conducted on 22/11/2018 in case of Shri Mohd. Abdul Sattar & others, wherein certain incriminating material relating to the assessee were found and seized. Accordingly, the Assessing Officer issued notice u/s 143(2) to scrutinize the return of income filed by the assessee. Since the assessee did not respond to the notice issued u/s 142(1), therefore, the Assessing Officer proceeded to complete the assessment u/s 144 of the I.T. Act, 1961. The Assessing Officer noted that the assessee is an individual and proprietrix of M/s. Malik Trading and Demolition which is in the business of providing services of demolition and excavation. The assessee has shown gross receipts of Rs.5,32,17,887/- and after claiming various expenditure, has offered net profit of Rs.34,16,968/-. The Assessing Officer observed that the assessee has not furnished any evidence for the claim of expenditure. Further, on perusal of the bank account statement of current account of the assessee with SBI, the Assessing Officer found that there are total credits of Rs.9,41,86,524/- during the financial year 2018-19 relevant to the A.Y under consideration. Since there was no submissions on behalf of the assessee, the Assessing Officer proceeded to treat the entire credit in the bank account as turnover of the assessee and ITA No 971 of 2024 Anees Begum Page 6 of 14

Aggrieved by the assessment order passed by the Assessing Officer, the assessee filed an appeal before the learned CIT (A). The learned CIT (A) restricted the addition by estimating income @ 8% instead of 12% adopted by the Assessing Officer.

Before the Tribunal, the learned Counsel for the assessee submitted that the Assessing Officer has treated the total credits in the bank account as business turnover of the assessee and estimated the income @ 12% of the gross receipts. He has further submitted that the assessement proceedings were going on during the Covid 2019 pandemic and therefore, the assessee could not respond to the notice issued by the Assessing Officer u/s 142(1) of the I.T. Act, 1961. Thus, he has contended that the Assessing Officer has not given proper opportunity to the assessee before passing the assessment order. The learned Counsel for the assessee has further contended that the total bank credits cannot be considered as business turnover of the assessee for the purpose of estimation of profits. Further, it amounts to double taxation when the entire credits in the bank account is treated as turnover, as some of the credits were already taxed in the previous year. The Assessing Officer has also not taken into consideration the withdrawals from the bank account during the year. Thus, he has submitted that the addition made by the Assessing Officer is not justified and liable to be deleted.

On the other hand, the learned DR has submitted that the Assessing Officer issued notice u/s 142(1) of the Act, but there was no response on behalf of the assessee, therefore, the Assessing Officer was having no option, but to frame the assessment u/s 144 of the I.T. Act, 1961, as best judgment estimation, by considering the information and material available before the Assessing Officer. He has relied upon the orders of the authorities below and submitted that the assessee has produced no material in support of the claim that the entire credits in the bank account does not represent the turnover of the assessee. The learned CIT (A) has taken a reasonable view while estimating the net profit @ 8% as the assessee is a main contractor, whereas the decisions relied upon by the assessee are in respect of a sub- contractor.

We have considered the rival submissions as well as the relevant material available on record. So far as the entire credits in the bank account is taken as turnover of the assessee is concerned, we find that, though the assessee has disputed the decision of the Assessing Officer in this regard, however, no details or record has been filed by the assessee either before the authorities below or before us to show that, part of the credit in the bank account does not relate to the turnover of the year under consideration. The learned Counsel for the assessee has just submitted that some of the credits in the bank account during the year has already offered to tax in the earlier year as turnover, however, no details or record has been filed in support of this contention. Therefore, in the absence of any material to show that part of the credits in the bank account do not relate to the turnover of the assessee for the year under consideration, we do not find any reason to interfere with the orders of the authorities below to that extent.

As regards the estimation of income by taking net profit @ 12% of gross receipts, the Assessing Officer has not given any basis for adopting the net profit @ 12% of the gross receipts/total credits in the bank account. Though the learned CIT (A) has restricted the net profit @ 8%, however, again no basis has been given by the learned CIT (A) for adopting the net profit @ 8%. It is pertinent to note that the past history of the net profit declared by the assessee and attained finality is a proper and reasonable guidance for estimation of the profit, in case the books of account of the assessee are rejected or turnover is found out of ITA No 971 of 2024 Anees Begum Page 9 of 14

Having regard to the facts and circumstances of the case and following earlier decision of this Tribunal cited (Supra), we estimate the income of the assessee by taking net profit @ 5%

Ground Nos. 10 & 11 are regarding the addition made by the Assessing Officer towards unexplained investment of Rs.1.5 crores. During the course of search & seizure operation in the case of Shri Mohd. Abdul Sattar & Others, an agreement of sale was found and seized entered into between the assessee and Shri Mohd. Abdul Sattar & Shri Mohd. Basheer Khan for purchase and sale of agricultural land measuring 5 acres and 12½ guntas for a total consideration of Rs.10 crores, out of which an amount of Rs.3 crores was said to be received in cash, as advance from the assessee and her family. On the basis of the said agreement, the Assessing Officer has made an addition of unexplained investment of Rs.1.50 crores being 1½ share of the assessee in payment of Rs.3 crores in cash for purchase of land.

The assessee challenged the action of the Assessing Officer before the learned CIT (A), but could not succeed.

Before the Tribunal, the learned Counsel for the assessee submitted that the contents of the agreement to sell and the sale deed, vide which the land was purchased by the assessee are not same. When the sale deed executed between the parties is not in pursuant to the alleged agreement found during the search and seizure action, then the addition made by the Assessing Officer on the basis of the said agreement is invalid and not sustainable. He has further contended that the parties in this ITA No 971 of 2024 Anees Begum Page 11 of 14

In the rejoinder, the learned Counsel for the assessee has submitted that the agreement was signed only by Shri Mohd. Abdul Sattar and not by Shri Gulam Rehman. Further, the assessee is also not a signatory to the agreement. Shri Mohd. Abdul Sattar was having only 1/6th share in the land sold as per the sale deed; therefore, the addition cannot be made on the basis of the agreement, without considering the subsequent sale deed. The learned Counsel for the assessee has pointed out that during the appellate proceedings, the learned CIT (A) called for a remand report, however, the Assessing Officer has not issued notice in the remand proceedings or confronted the alleged incriminating material to the assessee. He has also submitted that the assessee was not given an opportunity to cross examine the person whose statement is relied upon by the learned CIT (A).

We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has made addition on the basis of the agreement to sell found during the search & seizure operation in the case of Shri Mohd. Abdul Sattar and others. Since the assessee did not participate in the assessement proceedings due to covid pandemic period, the Assessing Officer has framed the assessment u/s 144 of the I.T. Act, 1961. Thus, it is clear that the assessee was not confronted with the alleged agreement or the statement, as relied upon by the Assessing Officer. During the appellate proceedings, the learned CIT (A) called for a remand report wherein the Assessing Officer has also referred the statement of Shri Mohd. Abdul Sattar recorded u/s 131 of the I.T. Act, 1961 which was also not confronted to the assessee as no notice was given by the Assessing Officer. We further note that in the assessement proceedings, the Assessing Officer has given only one notice u/s 142(1) of the I.T. Act, 1961 and that too during the covid 2019 pandemic period. Therefore, in the facts and circumstances of the case, we are of the considered view that, this issue requires a re- examination at the level of the Assessing Officer after giving an opportunity of hearing to the assessee, to respond to the alleged agreement to sell as well as statement of Shri Mohd. Abdul Sattar made the basis of the addition as well as confirmed by the learned CIT (A). Accordingly, this issue is remanded to the record of the Assessing Officer for re-adjudication of the same in the above terms.

In the result, appeal filed by the assessee is partly allowed.