DINESHKUMAR NEMICHAND JAIN,AHMEDABAD vs. ITO WARD 3(2)(6), AHMEDABAD, AHMEDABAD

This is an appeal filed against the order dated 14-02- 2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18.

The grounds of appeal are as under:- “1.1 The order passed u/s 250 on 14.02.2025 for A.Y. 2017-18 by CIT(A)- NFAC, Delhi upholding the addition of Rs.26,57,500/- made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned addition. 1.3 The Ld. CITIA) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act Dineshkumar Nemichand Jain, A.Y. 2017-18 and thereby violated the principle of natural justice Therefore the appellant shall be granted opportunity to produce additional evidences.

Notice u/s. 142(1) dated 22-12-2017 was issued to the assessee thereby calling upon to file the return of income for the assessment year 2017-18. The assessee failed to furnish the Dineshkumar Nemichand Jain, A.Y. 2017-18 return of income either u/s. 139 or in response to notice issued u/s. 142(1) of the Act. On the basis of data analytics and information gathered during the phase of online verification, the Income Tax Department found that during demonetization period, the assessee deposited cash of Rs. 26,57,500/- in his bank accounts during demonetization period. Statutory notices were issued to the assessee and after receiving the same, the assessee filed copy of computation of total income, copy of audit report dated 15-06-2019, balance sheet and profit and loss account. In the profit and loss account, the assessee has shown total sales of Rs. 1,42,92,427/- and opening stock of Rs. 13,25,250/- as well as closing stock of Rs. 2,50,432/- thereby showing gross profit of Rs. 6,70,450/-, net profit of Rs. 3,51,167/- i.e. 2.46%. The assessee filed cash book showing opening cash as on 01-04-2016 of Rs. 1,85,250/- with monthly balance of cash as incorporated in para 7 of the assessment order. The Assessing Officer further issued the show cause notice dated 25-09-2019 which was responded by the assessee on 01-10-2019. The assessee again has given the month-wise sales and purchase details and after taking cognizance of the same, the Assessing Officer held that since the assessee has not filed ITR, the deposit of cash of Rs. 26,57,500/- during demonetization period remains unexplained. Thus, the Assessing Officer made addition to that extent as unexplained money u/s. 69A of the Act. The Assessing Officer also made addition to the extent of Rs. 11,11,800/- as NP of the assessee estimating the same at 8%.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the addition made by the Assessing Officer at Rs. 26,57,500/- u/s. 69A is properly adjudicated by the CIT(A). The CIT(A) categorically held that out of total cash deposited that of Rs. 1,20,58,600/- shown in the table as mentioned in para 6.2 of the order, Rs. 26,57,500/- was added u/s 69A as unexplained Dineshkumar Nemichand Jain, A.Y. 2017-18 cash in the hands of the assessee. The CIT(A) further held that the remaining amount of cash then stands at Rs. 94,01,100/- and further the non cash credits in the table has shown at Rs. 94,01,100/-. This finding does not require any interference. But the findings of the CIT(A) that tax cash deposits in the bank account as reduced by Rs. 26,57,500/- @ 8% and tax the credits other than cash @ 6% as per provisions of Section 44AD of the Act is without any basis. As regards estimating of NP i.e. net profit at 6% is not justified by the CIT(A) and the same should have been taxed as business income and has to be verified as per earlier years net profit percentage. The profits estimation @ 6% is on the higher side after looking the assessee’s business profits and therefore, it will be appropriate to estimate the profit at 4% subject to the verification of the figures in Table 1 incorporated in para 6.2 of CIT(A)’s order. Thus, the appeal of the assessee is allowed for statistical purpose.

In the result, the appeal of the assessee is allowed for statistical purpose.