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Facts
The assessee, an individual, failed to file an Income Tax Return for A.Y. 2017-18, despite substantial cash deposits in her bank account. The Assessing Officer initiated reassessment proceedings under Section 147/148, determining total income at Rs. 43,87,750/-. The Ld. CIT(A)/NFAC partly allowed the appeal, reducing the income to Rs. 20,38,788/- by applying Section 44AD, acknowledging that some receipts were pass-through amounts for stamp duty.
Held
The Tribunal set aside the order of the Ld. CIT(A)/NFAC and remanded the matter back for fresh consideration. It directed the CIT(A) to decide the appeal afresh, taking into account the assessee's arguments, including the department's acceptance of her returns for subsequent years involving similar transactions.
Key Issues
Whether the estimation of income under Section 44AD was appropriate for the assessee's business as a facilitator of stamp duty and documentation, considering alleged pass-through amounts and the acceptance of similar transactions in subsequent assessment years.
Sections Cited
147, 148, 144, 144B, 44AD, 271D, 269SS
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2017-18 Dhanashree Sandeep Shete, Vs. ITO, Ward-1, Sangli. Willingdon College, Sangli, Vidyanagar Vishrambag, Sangli- 416415. PAN : ENAPS0908E Appellant Respondent Assessee by : Shri Narendra Joshi (Virtual) Revenue by : Shri Bharat Andhale Date of hearing : 09.10.2025 Date of pronouncement : 24.11.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 11.03.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18.
There is delay in filing of the present appeal. We are satisfied with the reasons mentioned in the application for condonation of delay duly supported by an affidavit that the applicant was prevented by sufficient cause for not filing the appeal within the prescribed time limit. After hearing Ld. DR, we condone the delay and proceed to adjudicate the appeal.
The appellant has raised the following grounds of appeal :- “Ground 1: Sec 44AD The learned CIT(A) erred in applying the provisions of Section 44AD of the Income-tax Act, 1961, to the entire gross receipts of Rs.2,54,84,850/-, without appreciating that a substantial portion of these receipts pertains to government charges such as stamp duty and document handling fees collected on behalf of clients and remitted to the Government of Maharashtra. These pass-through amounts do not form part of the appellant's income and hence should have been excluded for the purpose of income computation. Ground 2: The learned CIT(A) failed to appreciate that the appellant operates purely as a facilitator in property-related documentation services and online stamp duty payment processing, and not as a trader or contractor earning gross revenue. The determination of income at 8% on the full bank credits has resulted in an excessive and unjustified assessment. Ground 3: The Ld. CIT(A) does not considered documentary evidence submitted, including bank statements, party-wise receipts, and government challans, clearly demonstrating the segregated nature of client funds and actual business income. The estimation of income without dissecting the actual inflows leads to an inflated tax liability. Ground 4: The Assessing Officer's original addition of Rs. 41,46,405/- based solely on credit entries in the bank account was mechanical and without a proper inquiry into the nature of those transactions. While partial relief was granted by the CIT(A), the substituted income estimation under presumptive taxation is still arbitrary and disproportionate.
Ground 5: The appellant craves to leave, add/amend or alter any of the above grounds of appeal
.”
4. Facts of the case, in brief, are that the assessee is an individual and as per the information available with the Department that cash amount of Rs.2,31,14,300/- was deposited in her current account, however the return of income has not been furnished the Assessing Officer was of the view that there is an escapement of income from assessment of tax accordingly proceedings u/s 147/148 were initiated and notice u/s 148 was issued to the assessee on 29.03.2021. After considering the replies, documents, bank accounts and other details, the Assessing Officer vide order dated 16.03.2022 completed the assessment proceedings u/s 147 r.w.s. 144 r.w.s. 144B of the Act and determined total income at Rs.43,87,750/- as against no return filed by the assessee.
5. Being aggrieved with the above assessment order, assessee preferred an appeal before the Ld. CIT(A)/NFAC. After considering the reply of the assessee, Ld. CIT(A)/NFAC partly allowed the appeal by observing as under wherein Ld.
CIT(A)/NFAC reduced the income to Rs.20,38,788/- which was earlier determined by the Assessing Officer at Rs.43,87,745/- :- “6.4 In the absence of books of accounts, it is unclear as to how the appellant arrived at the turnover of Rs.4,54,780. The only objective information with the department is the details of credits in bank accounts amounting to Rs. 2,54,84,850. We may concede that this amount includes stamp duty and registration charges collected from customers. However when stamp duty and registration charges are routed through the account of the appellant, the appellant is entitled to some charges. Further the number of credit entries are far more than 17 customers admitted by the appellant. Therefore in my view a fairer way of estimating income is to take 8% of the cash deposits as the appellant's income following the thumb rule provided in section 44AD. Therefore the income of the appellant may be estimated at Rs.20,38,788 instead of Rs.43,87,745 adopted in assessment. Grounds 1,2 and 3 are partly allowed. Ground 4 is general and this ground is not separately adjudicated.”
Being aggrieved with the above order passed by Ld. CIT(A)/NFAC, the assessee is in appeal before this Tribunal.
Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is not justified. Ld. AR submitted that the assessee and her husband both are involved in the same line of activities and doing the work as documents righter for the purposes of registration of sale and purchase agreements and are facilitating others for purchase of the stamps etc and the case of the husband of the assessee was also selected for scrutiny and the return income was accepted as it is.
Apart from above, it was also submitted that right from assessment year 2018-19 and up to assessment year 2025-26 the returns of the assessee were accepted by the Department as it is and no variation or addition was made. Ld. AR also made it clear that Ld. CIT(A)/NFAC has also accepted the fact that the receipts appearing in the bank accounts of the assessee pertains to the amount deposited by others for the purposes of purchases of stamps etc. Apart from above, it was also submitted that in the case of the assessee penalty u/s 271D was also imposed for violation of provisions of section 269SS of the Act and the same was already deleted by Ld. CIT(A)/NFAC. Accordingly, it was contended by Ld. AR of the assessee that since under identical facts and similar circumstances the income has already been accepted by the Department for subsequent 8 years i.e. starting from assessment year 2018-19 to assessment year 2025-26 the income declared by the assessee at the time of assessment for assessment year 2017-18 may kindly be accepted.
Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same, however could not controvert the fact of Department of subsequent returns filed by the assessee.
We have heard Ld. counsel from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that admittedly the return of income was not furnished by the assessee even the return in response to notice u/s 148 of the Act also could not be filed due to technical glitches as claimed by the assessee, however the computation of income for the period under consideration was furnished by the assessee. We also find that the assessee is engaged in the activity of documents writing i.e. agreement of sale and purchase and also engaged in providing facility to others – for purchasing stamps etc and during the course of all these activities substantial cash was deposited in the bank account of the assessee and since the return of income was not furnished the case of the assessee was reopened u/s 147 of the Act and an amount of Rs.43,87,750/- was treated as income of the assessee, however Ld. CIT(A)/NFAC partly allowed the appeal of the assessee by accepting the contention of the assessee that most of the amount was deposited by others for the purposes of purchases of stamps etc.
However, Ld. CIT(A)/NFAC applied the provisions of section 44AD of the Act and calculated net income of Rs.20,38,788/- instead of Rs.43,87,745/- as earlier calculated by the Assessing Officer. Before us, it was the contention of Ld. counsel of the assessee that in subsequent years also the Department has already accepted the returns furnished by the assessee wherein similar kind of transactions took place and the income declared by the assessee has been accepted. Considering the totality of the facts of the case, we find some force in the arguments of Ld. counsel of the assessee since the returns furnished by the assessee for subsequent years have been accepted by the Department. Accordingly, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and remand the matter back to the file of Ld. CIT(A)/NFAC to decide the appeal afresh as per fact and law after providing reasonable opportunity of hearing to the assessee in the light of subsequent returns and other documents filed by the assessee before this Tribunal. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A)/NFAC in this regard and to produce relevant documents, evidences, copy of subsequent years returns and other relevant material and information to support its