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Facts
The assessee declared an income of Rs. 2,49,858 for AY 2018-19. The AO observed cash deposits and withdrawals in bank accounts amounting to Rs. 26,59,45,131.74. The AO estimated net profit at 8% of the gross turnover and made an addition.
Held
The Tribunal held that the assessee had sufficient cause for not filing additional evidence before the AO due to the COVID-19 pandemic. The Tribunal directed the CIT(A) to admit the additional evidence and decide the issue on merits after providing an opportunity to the assessee.
Key Issues
Whether the CIT(A) erred in rejecting additional evidence furnished by the assessee, and whether the additions made by the AO based on bank transactions were justified without considering the assessee's explanation and evidence.
Sections Cited
143(3), 144B, 250, 69A, 115BBE, 46A, 271AAC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2018-19 is directed against the order dated 16.01.2025 framed by National Faceless Appeal Centre, Delhi [Ld.CIT(A)] u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) emanating out of Assessment Order dated 20.09.2021 passed u/s.143(3) r.w.s.144B of the Act.
Brief facts of the case are that the assessee is an individual and declared income of Rs.2,49,858/- in the return of income for A.Y. 2018-19 filed on 02.03.2019. Case selected for Limited Scrutiny on the issue of Cash Withdrawals and Sales Turnover/Receipts. As per the information from Insight portal, ld. Assessing Officer (AO) observed that the assessee maintained bank account with SVC Cooperative Bank Ltd., Dhule in the name of Aashu Trading Company and there are cash deposits and subsequent withdrawals of Rs.26,59,45,131.74. During the course of assessment proceedings, assessee once has stated that he has no knowledge about having opened bank account with SVC Cooperative Bank Ltd. Finally, ld. AO concluded the assessment proceedings estimating net profit @8% of the gross turnover of Rs.29,14,24,460/- and calculated the income at Rs.2,33,13,956/- and assessed the income at Rs.2,35,63,810/-. Observation of ld. AO in para 3.2 and 4 of the assessment order reads as under :
“3.2 Assessee's reply is perused but not tenable. Assessee is only stating that he has never opened bank account in SVC Cooperative Bank Ltd. And Corporation Bank and presently has submitted an affidavit by the stating the fact but not submitted any documentary evidences in support of his claim. Mere submission of an affidavit cannot be an evidence of not opening a bank account as on the other the information as received from the bank that assessee has maintained bank account in the financial year 2017-18, transaction made with Aashu Trading Company in the said bank account is also confirmed by the party M/s. Omshree Agro Tech Pvt. Ltd from whom substantial portion amount credited in the account No.116704180000195 (in the name of Aashu Trading Company) in SVC Cooperative Bank Ltd. through RTGS and claimed that the amount was paid for the purpose of purchasing of raw material i.e. soyabean seeds etc. Submitted the ledger copy and Xerox copy of invoices submitted by Asshu Trading Company having GST No.27AJFPD0019E1ZX. Vide communication dated 24.03.2021. Assessee has not submitted any corroborating evidences in support of his claim. In the reply assessee is only stating that he had never opened bank account as mentioned above But not submitted any details in support of his claim. Assessee requested for video conference and the video conference was scheduled on 26.04.2021, but not conducted due to technical reason. Further assessee was provided opportunities of video conference which was scheduled on 27.04.21. On 27.04.2021, on the scheduled time and date this end has joined the meeting of video conference, but assessee has not joined in the same video conference. In the reply, assessee stated that VC is not connecting. Considering assessee reply, assessee was provided further opportunity of video conference which was scheduled on 13.08.2021. On 13.08.2021, on the scheduled time and date, this end had joined in the video conference but assessee did not join in that conference. Further assessee replied that they have not sent the password for the meeting. Assessee was provided several opportunities for video conference but assessee could not join the said video conferences. Considering the assessee's reply regarding non attendance of the said video conferences, to provide opportunities at utmost, a further show cause notice dated 21.08.2021 was issued alongwith the draft assessment order with the request to explain as well as to avail video conference facility as have been availed by the assessee before against the show cause notice vide communication letter dated 17.04.2021. Assessee has not submitted on date of submission was on 26.08.2021 as mentioned vide show cause notice dated 21.08.2021. On 27.08.2021 as received in the ITBA assessee requested for adjournment as long as possible citing the situation of pandemic. But assessee's request is not acceptable because assessee was provided plenty of opportunity to explain the matter for the last several months, as per assessee's request VC was scheduled further rescheduled for the last three months and lastly on scheduled date of video conference on 13.08.2021 assessee was not objected on the scheduled VC as assessee was prepared for explanation, with the view to provide utmost opportunity further assessee was provided time but after elapsing the time assessee requested for adjournment as long as possible which is perfunctory as because assessee was not opted for any video conference which opted for the last three months and also last few day ago and also not submitted any additional evidences, if assessee wanted to submit any additional evidences in support of his claim it can be submitted within the long time which was provided to the asssessee in the manner of several opportunities vide several communication by this end. Assessee was provided several opportunities to submit the evidences in support his claim but not submitted any evidence which can substantiate his claim. So it can be inferred that assessee has no explanation to offer and assessee has failed to explain his claim.
Considering amount credited in the bank account through RTGS/NEFT followed by withdrawn as well as assessee's business pattern and purchase mode for the financial year 2017-18 amount of Rs.2.33,13,956/- (8% of Rs.29,14,24,460/Rs.265945131/- + Rs.2,54,79,329/-) being the amount of withdrawal following to the substantial amount credited through RTGS/NEFT) is considered assessee's undisclosed business income u/s.69A of the I.T.Act, 1961 read with section 115BBE of the I.T.Act, 1961 and added to the total income of the assessee for the financial year 2017-18 relevant to assessment year 2018-19. As additions made u/s.69A of the I.T.Act, 1961, penalty proceedings u/s.271AAC of the I.T. Act, 1961 is being initiated separately for concealment of income in consequence of misrepresentation of material facts and concealment of income.”
Aggrieved with the additions assessee filed appeal before ld.CIT(A) and further various additional evidences including Audited Financial Statements of his sole proprietary concern M/s. Aashu Trading Company and along with other details he submitted that net profit of the assessee from Aashu Trading Company on the gross turnover of Rs.24,69,15,357/- Soyabean sales is only Rs.1,70,733.62 (0.07%) whereas the ld. AO has calculated an exorbitant amount of net profit @8%. Certain other details were also filed but ld.CIT(A) did not accept these details u/s.46A of the Act and without considering these details he has concluded the appellate proceedings by confirming the action of the AO.
4. Dissatisfied assessee is now in appeal before this Tribunal by raising the following grounds of appeal :
“1) In the facts, circumstances and position of law learned CIT (A), NFAC erred in rejecting the additional evidences furnished during the course of appellate proceedings, which were relevant and crucial to the grounds in appeal.
2) In the facts, circumstances and position of law learned CIT (A), NFAC erred in, while confirming the additions made by Assessment Unit, Income Tax Department, on one hand admitting that the bank accounts with SVC Co-op Bank Ltd. Dhule and Corporation Bank, Dhule does not belongs to appellant and on the other hand admitting and estimating income on the basis of said bank accounts. 3) In the facts, circumstances and position of law learned CIT (A). NFAC erred in confirming additions u/s.69A i.e. estimated undisclosed business income without considering detailed written submissions filed, especially in view of decision of Hon. Supreme Court in the case of D.N. Singh V/s. CIT reported in (2023) 226 DTR (SC) 17. 4) In the facts, circumstances and position of law learned CIT (A), NFAC erred in confirming addition of Rs.2,33,13,956/- made by Assessment Unit, Income Tax Department by estimating net profit @8% on cash withdrawals of Rs.29,14,24,460/- from SVC Co-op Bank Dhule and Corporation Bank, Dhule of Rs.26,59,45,131/- and Rs.2,54,79,329/- respectively aggregating to Rs.29,14,24,460/-.
5) In the facts, circumstances and position of law learned CIT (A), NFAC erred in confirming charging of tax as per provisions of section 115BBE by invoking section 69A by treating the cash withdrawals from the banks as turnover and estimating the business income at Rs.2,33,13,956/- and treating so estimated income as unexplained investment u/s.69A.
6) In the facts, circumstances and position of law learned CIT (A), NFAC erred in confirming the findings of Assessment Unit, Income Tax Department to the effect that 8% of withdrawals from bank as undisclosed income u/s.69A r.w.s. 115BBE of Income Tax Act, 1961.
7) In the facts, circumstances and position of law learned CIT (A), NFAC erred in giving findings in Para No.4 under the head brief facts of the case, which is contrary to the facts which reads as under :-
"It was noted from the information available with the Department that the assessee had maintained the bank account in SVC Co-operative Bank Ltd., Dhule account No.116704180000195 (in the name of Aashu Trading Company) in the financial year 2017-18 in which there were cash deposits and subsequent withdrawals of Rs.26,59,45,131.74. Further as per the information available with the department, the assessee had also maintained bank account No.510101003507171 with Corporation Bank, Dhule branch during the financial year 2017-18 wherein there were cash deposits and subsequent withdrawals in cash of Rs.2,54,79,329/-.".
The above findings are repeated by CIT (A) in Para No.6.1.6 of appellate order.
8) In the facts, circumstances and position of law learned CIT (A), NFAC, confirmed the order of Assessment Unit, Income Tax Department, NFAC without application of mind to the facts of the case.
9) Appellant craves leave to add, alter, amend or substitute to the above grounds of appeal either before or at the time of hearing.”
5. Ld. Counsel for the assessee referring to the additional evidences submitted that all these details goes to the root of the additions made in the hands of assessee and therefore the same needs to be accepted for determination of correct income of the assessee for the year under consideration and the issues may please be restored to the file of ld.CIT(A) for dealing with these additional evidences and then decide on merits of the case.
6. On the other hand, ld. Departmental Representative supported the order of ld.CIT(A).
We have heard the rival contentions and perused the record placed before us. We observe that the assessee is carrying on the business of sale of Soyabean and the gross turnover of the assessee in its sole proprietary concern M/s. Aashu Trading Company is Rs.24,69,15,357/- and the assessee also runs another proprietary concern at Sriganganagar District in Rajasthan. Regular books of account are not maintained for the retail business and only the books of account are maintained for the wholesale business of Soyabean. Assessee has also furnished details of the gross sales including registration certificate under GST, details of turnover carried out through Corporation Bank and SVC Cooperative Bank Ltd. and also the Tax Audit Report of M/s. Aashu Trading Company. We also observe that ld.CIT(A) has not admitted these additional evidences eventhough remand report was called from the ld. JAO on 12.12.2024. Rule 46A of the Income Tax Rules has a direct bearing on the facts of the instant case and the same reads as under :
“Production of additional evidence before the [Joint Commissioner] (Appeals) and Commissioner (Appeals).
46A. (1) The appellant shall not be entitled to produce before the [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :—
(a) where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
(2) No evidence shall be admitted under sub-rule (1) unless the [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.
(3) The [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity— (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4) Nothing contained in this rule shall affect the power of the [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.”
From going through the above rules, we notice that Rule 46A(1)(c) of the Act provides that the additional evidences can be produced before ld.CIT(A) where the appellant was prevented by ‘sufficient cause’ from producing the evidence before the AO which is relevant to any grounds of appeal. In the instant case, notices of hearing given by ld. AO on 24.01.2020, 13.12.2020, 24.01.2021, 15.02.2021 and 23.03.2021 and the assessment order has been framed on 20.09.2021 all fall during covid-19 pandemic outbreak prevailed across the country. There were restrictions on movement of general public and considering the difficulties faced by the litigants, the period of almost two years have been excluded by the Hon’ble Apex Court in the case of Cognizance for Extension of Limitation In re (2022) 441 ITR 722 (SC). We find that there is ‘sufficient cause’ which prevented the assessee from filing the additional evidences before ld. AO and therefore the additional evidences and the details filed by the assessee ought to have been admitted by ld.CIT(A) and should have adjudicated the issue on merits after providing reasonable opportunity to the assessee. We therefore are of the considered view that issue on merits deserves to be set aside to the file of ld.CIT(A). Thus, we direct the ld.CIT(A) to carry out the appellate proceedings after admitting the additional evidences placed before this Tribunal, our observation referred above and decide the issues raised in the instant appeal as contemplated u/s.250(6) of the Act and pass a speaking order. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause. Effective grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 30th day of October, 2025.