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Facts
The assessee, engaged in the business of mobiles and electronic goods, did not file income tax returns for AY 2017-18. The AO received information about cash deposits of Rs. 15,60,000/- during the demonetization period and an estimated turnover of Rs. 2,08,59,822/-.
Held
The Tribunal condoned the delay in filing the appeal and restored the case to the AO, directing that the assessee be given one more opportunity to present their case with necessary evidence.
Key Issues
Whether the AO correctly treated cash deposits during demonetization and estimated business turnover as income without proper opportunity to the assessee, and if the CIT(A) erred in confirming these additions.
Sections Cited
133(6), 69A, 144, 115BBE, 271AAC, 271F, 270A, 44AD
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 29.05.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.
2.0 The brief facts of the case are that the assessee was carrying on the business of mobiles, electrical and electronic goods. The assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash deposits of Rs.15,60,000/- during the demonetization period (from 09.11.2016 to 31.12.2016) in his four different bank accounts bearing A/c Nos.20050580560 and 31121736248, maintained with State Bank of India, Chinhat Branch, Lucknow, A/c No.1840210572, maintained with Central Bank of India, Chinhat Branch, Lucknow and A/c No.1211769526, maintained with Kotak Mahindra Bank, Vivek Khand, Gomti Nagar Branch, Lucknow. The Assessing Officer (AO) issued statutory notices to the assessee. However, the assessee did not respond to the notice issued by the AO nor filed any return of income for the year under consideration. The AO, therefore, called for information relating to the bank account details of the assessee from the respective banks under section 133(6) of the Income Tax Act, 1961 (hereinafter called “the Act’). As per the details furnished by the banks, the sum of the cash deposits made by the assessee during the demonetization period, i.e., from 08.11.2016 to 31.12.2016 was Rs.20,11,500/-. Out of the total cash deposits of Rs.20,11,500/-, Rs.12,87,500/- was treated as unexplained income of the assessee and the same was added to the total income of the assessee under section 69A of the Act.
2.1 Further, from the analysis of the all bank accounts of the assessee, the AO found that the assessee had made total sales/turnover of Rs.2,08,59,822/- during the year under consideration. The AO estimated the profit earned by the assessee during the year under consideration @8% of Rs.2,08,59,822/-, which came to Rs.16,68,786/- and the same was treated as the business income and was also added to the total income of the assessee. The AO completed the assessment under section 144 of the Act, assessing the total income of the assessee at Rs.29,56,290/-.
2.2 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC, 271F and 270A of the Act, separately.
2.3 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.
2.4 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC, by raising the following grounds of appeal:
1. Because the order passed by Ld. CIT(A) is contrary to facts & law and circumstances of the case, therefore liable to be revised.
2. Because the Ld. CIT(A) has erred in confirming addition of Rs.1287500/-u/s 69A of the Act in respect of cash deposited in bank account during demonetization period. The cash has been procured from the business turnover of the appellant and therefore part of turnover and not income of the appellant. This cash has been subsequently used by the appellant for the purpose of his business. The addition of Rs.1287500/- u/s 69A is contrary to facts & law of the case, therefore liable to be deleted.
Because the Ld. CIT(A) has also erred in confirming addition on Rs.1668786/- in respect of estimation of turnover
@ 8% relying upon the provisions of section 44AD which is not applicable in the case of the appellant. The assessed net profit of Rs.1668786/- from business is excessive and liable to be revised. 4. Any other ground of appeal raised at the time of hearing of appeal in accordance with the law.
3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 362 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated 28.07.2025 for condonation of delay, duly supported by an Affidavit and Medical Certificate, stating therein that the assessee’s wife, Smt. Ruby Gupta had been suffering from serious Chronic Kidney disease, Hypertension and Anemia and was subjected to Hemodialysis twice a week for a long period and, therefore, the assessee could not give proper attention towards filing the appeal before the Tribunal. The prayer of the Ld. A.R. was that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeal be heard on merits.
4.0 The Ld. Sr. D.R. objected to the delay being condoned.
5.0 In view of the prayer made by the Ld. A.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
6.0 During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the AO had passed the order under section 144 of the Act without affording reasonable opportunity of hearing to the assessee and had made the additions without bringing on record any material in support of the additions which were made on the basis of presumption and surmises only. It was further submitted that the ld. CIT(A) dismissed the appeal of the assessee ex-parte qua the assessee. The Ld. A.R., therefore, prayed that, in the interest of justice, the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of being heard to the assessee. He submitted that the assessee undertakes to produce all the relevant documents in support of his claim before the AO.
7.0 The Ld. Sr. D.R. placed reliance on the orders of the authorities below and submitted that the appeal of the assessee may be dismissed.
8.0 I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves one last opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the assessee to present his case along with the necessary evidences. I also caution the assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
9.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 31/12/2025.