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Facts
The Revenue appealed against an order partially allowing the assessee's appeal. The assessee declared an income of Rs. 4,70,160, but had deposited Rs. 77,26,06,760 in their bank account. The Assessing Officer estimated 8% profit on the total deposits, while the CIT(A) restricted it to 0.25%.
Held
The Tribunal upheld the CIT(A)'s decision to restrict the profit rate to 0.25% on bank credit entries. The Tribunal found no error in the CIT(A)'s order, noting that a similar profit rate was accepted by the Assessing Officer in preceding years for similar transactions.
Key Issues
Whether the CIT(A) was justified in restricting the profit rate to 0.25% on bank credit entries when the Assessing Officer had estimated it at 8%, considering past assessment orders.
Sections Cited
147, 148A, 148, 143(3)
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2016-17 ITO, Panvel. Vs. Vinayak Lahu Patil, B-2, 1st Floor, Siddheshwar Apartment, Mirchi Galli, Opposite Vaisha Samaj Hall, Panvel, Dist. Raigad- 410206. PAN : AWBPP2307C Appellant Respondent Revenue by : Shri Ajay Kumar Keshari Assessee by : Shri Rajeev Waglay (Virtual) Date of hearing : 04.03.2025 Date of pronouncement : 23.05.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the Revenue is directed against the order dated 16.07.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2016-17.
The Revenue has raised the following grounds of appeal :-
1. On the facts and in circumstance of the case and in law, the Ld. CIT(A) as the first fact finding authority, erred in partly allowed Para 5.3, the CIT(A) has given a categorical remark that during the appellate proceedings, the assessee has not brought forth any details and break up with regard to the receipts and income claimed by the assessee 2. On the facts and in circumstances of the case and in law, the Ld. CIT(A), as the first fact finding authority, erred in not conducting independent enquiry or directing the AO to conduct enquiry, even though in para 5.4, it has been held by the CIT(A) that the aaessee has clearly not been able to counter the AO's finding/conclusion regarding the income disclosed by him during the year not being in tune with the credits in his bank account, and thereby erring in partly allowing the appeal of the assessee.
3. The order of the Ld. CIT(A) may be vacated and that of the assessing officer may be restored.
4. The appellant craves leave to add, amend or alter any ground/grounds, which may be necessary.”
Facts of the case, in brief, are that the assessee is an individual and has furnished its return of income on 27.03.2018 declaring total income of Rs.4,70,160/-. On the basis of information received through Insight Module that the assessee has deposited amounting in all Rs.77,26,06,760/- in the bank account maintained with IDBI Bank and on the other hand declared gross receipt of only Rs.8,61,570/- in his return of income. Accordingly, notice u/s 148A(b) of the IT Act was issued to the assessee and after considering the reply of the assessee order under section 148A(d) was passed. After obtaining prior approval of the competent authority, the case was reopened and notice u/s 148 was issued to the assessee. The assessee in reply submitted that he is involved in providing services to various persons who wants to purchase stamp papers for the purposes of registration of their immovable property either for sale or purchase. It was also explained by the assessee that total credits appearing in his bank account were deposited by various persons for the purpose of purchase of stamp papers from government site and the whole of the amount deposited in his bank account should not be treated as his business turnover since the same was deposited for the purposes of purchase of stamp paper. It was also submitted that whenever there is credit entry a simultaneous entry is also there for purchase of stamp papers from government site. After deducting various expenses he has shown net profit of Rs. 4,70,160/- only. Not being satisfied with the reply of the assessee, the Assessing Officer estimated 8% net profit on the total deposits made in the bank account. Accordingly, on total credit entries of Rs.77,26,06,760/- net profit at the rate of 8% of Rs.6,18,08,540/- was determined as against the income of Rs.4,70,160/- declared by the assessee in his return and the 143(3) of the IT Act on total income of Rs.6,22,78,700/.
After considering the reply of the assessee, Ld. CIT(A)/NFAC partly allowed the appeal of the assessee by observing as under :- “5.5 As mentioned hereinabove, in the appellant's case for the AYs 2015-16 and 2017-18, the AO had applied a rate of 0.25% of total receipts as the appellant's business receipts cum profit which has been held to be reasonable and reflective of the income generated from the services provided by the appellant. 5.6 Thus, against the background of the above discussion, while each year is a separate assessment unit, in view of the similarity in facts of the cases of the appellant and in view of various judicial pronouncements on the subject-matter, to maintain fairness and consistency in the assessments in the appellant's case across different assessment years, the income of the appellant for the year under consideration, estimated at 8% by the AO, is restricted to 0.25%. Accordingly, the Jurisdictional Assessing Officer, while giving appeal effect to this Order, is directed to calculate the business receipts cum profit of the appellant for A.Y. 2016-17 under consideration at 0.25% of the gross receipts (instead of 8%) so as to arrive at the total taxable income of the appellant for the year. This would align with the principle of equitable tax treatment and ensure that the appellant's income is assessed on a reasonable and uniform basis across the years. Therefore, these grounds of appeal
are partly allowed.”
5. Not being satisfied with the above order passed by Ld. CIT(A)/NFAC wherein he directed the Assessing Officer to estimate net profit at the rate of 0.25% of the total bank credit entries instead of at the rate of 8% decided by the Assessing Officer, the Revenue is in appeal before this Tribunal.
6. We have heard the Ld. Counsels from both the sides and perused the material available on record including the written submission furnished by the assessee. In this regard, we find that the assessee was also involved in the similar kind of transactions during assessment year 2015-16 and during assessment year 2016- 17. In both these cases, the assessment orders were passed u/s 143(3) of the IT Act and the Assessing Officer adopted profit rate of 0.25% on total bank credit entries and the assessment was completed accordingly. We further find that Ld. CIT(A)/NFAC also adopted the profit rate of 0.25% on bank credit entries on the basis of these two assessment orders of immediate preceding two years passed by the Assessing Officer in the case of assessee itself for assessment year 2015-16 and assessment year 2016-17 wherein under identical facts and similar circumstances the Assessing Officer was pleased to adopt net profit rate of 0.25% on credit entries appearing in the bank account. Accordingly, in the absence of any adverse material brought on record by the Revenue, we do not find any error in the order passed by Ld. CIT(A)/NFAC wherein he also adopted the profit rate of 0.25% as was accepted by the