SHANKARBHAI VIRABHAI PATEL,DAHOD vs. ITO WARD-1, DAHOD

O R D E R

PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:

Assessee had provided sub - contractor service against which computation of! income “1. was prepared but since reply window was closed computation was sent via email to the Commissioner of Income Tax (Appeals) i.e. CIT(Appeals). The Appellate Authority rejected the appeal without considering our genuine considerations. Considering the first year of business assessee has indeed incurred a loss but opted for section 44AD for filing of return showing 6% of the total gross receipts since all receipts had been received through RTGS.

6. The Assessee has not received a proper opportunity of being heard from the First Appellate Authority. The Documents including Statement of Facts and grounds of appeal

were filed with the CIT (Appeals) but the appeal was rejected. We plead you to accept our appeal and please decide the case on merits considering our submissions.”

3. The brief facts of the case are that the assessment was reopened under section 147 of the Income Tax Act (Act) in the case of the assessee on the basis of information received during the assessment of Shri Harishkumar Ramjibhai Patel, who submitted that he had made payments amounting to ₹1,33,65,195/- to the assessee for contract work, with corresponding TDS having been deducted under section 194C of the Act. Despite these payments, the assessee had not filed a return of income for the relevant year. The Assessing Officer issued various notices of hearing, but the assessee filed no response to the same. The Assessing Officer noted that the assessee continued to remain non-compliant and failed to respond to the notices issued or participate in the proceedings. Accordingly, based on the documents submitted by Shri Harishkumar Patel, which included various bills, bank statements, and a letter of confirmation, the Assessing Officer observed that while payments were made to the assessee on which TDS had also been deducted, the assessee failed to provide any supporting documentation such &2219/Ahd/2024 Shankarbhai Virabhai Patel vs. ITO Asst. Year –2018-19 - 3– as work details, expenditure incurred, or material purchases to substantiate the contract income received by him. Further, the Assessing Officer noted that the assessee had invested a sum of ₹1.42 crore in two fixed deposits and received ₹17 lakh as maturity proceeds, yet the assessee provided no explanation or source of these funds. Accordingly, since the assessee failed to furnish any response, this amount, along with the ₹1.33 crore which was received from Shri Harishkumar Patel, amounting to ₹2,92,65,195/-, was treated as unexplained money under section 69A of the Act. Further, interest income of ₹4,948/- reflected in Form 26AS was also taxed as “income from other sources” in the hands of the assessee. The assessment was completed ex-parte due to non-compliance on part of the assessee.

4. In appeal, CIT(Appeals) noted that the appeal was filed belatedly on 06.08.2024, whereas the assessment order was served on the appellant on 26.03.2023. As per section 249(2) of the Act, the appellant was required to file the appeal within 30 days from the date of service of the order. In Form 35, the appellant acknowledged the delay and sought condonation on the grounds that he was unaware of the proceedings at the time and only came to know about the assessment after the initiation of tax recovery proceedings. The assessee contended that the delay was unintentional and due to a lack of knowledge, particularly since the business had just commenced during the relevant assessment year 2018–19, and that returns were duly filed in subsequent years. The CIT(Appeals), however, found no merit in this explanation and held that the appellant failed to demonstrate sufficient cause for the inordinate delay in filing the appeal. Since the appeal was not filed within the time limit prescribed under section 249(2) of the Act, and the &2219/Ahd/2024 Shankarbhai Virabhai Patel vs. ITO Asst. Year –2018-19 - 4– conditions for condonation under section 249(3) of the Act were not met, the delay was not condoned. Accordingly, the appeal was not admitted by CIT(Appeals) and was dismissed for statistical purposes without going into the merits of the case.

5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee submitted that the assessee is a civil contractor and this was the first year of the assessee’s business. The assessee received certain amounts on account of its business activities, which were deposited by the assessee in his bank account and the same were converted into fixed deposits due to auto sweep facility in the bank account. Further, the ld. counsel for the assessee submitted that that the Assessing Officer made the entire addition of total deposits in the bank account of the assessee without appreciating / giving credit of withdrawals made by the assessee from the same bank account. Accordingly, the ld. counsel for the assessee submitted that that the same amount was added twice in the hands of the assessee while farming the assessment order.

(A.Y. 2018-19) 8. The assessee’s appeal in relates to appeal against levy of penalty under section 271AAC(1) of the Act. In this case, the Assessing Officer held that in view of the additions made under Section 69A r.w.s. 115BBE of the Act, amounting to Rs. 2,92,65,195/-, the assessee is liable to pay penalty computed @ 10% of the tax so levied on the assessee.

&2219/Ahd/2024 Shankarbhai Virabhai Patel vs. ITO Asst. Year –2018-19 - 6– Accordingly, the assessee was directed to pay a sum of Rs. 71,25,912/- under Section 115BBE(1) of the Act.

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,