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Facts
The assessee, proprietor of M/s Shree Dhanlaxmi Traders, filed an original return of income. The case was reopened under Section 148 of the Act. The Assessing Officer (AO) completed the assessment ex-parte, noting the assessee's business turnover was not disclosed and applying a net profit of 21.67%, adding Rs. 8,99,852/-. Additionally, Rs. 74,76,720/- was added as unexplained money under Section 69A of the Act.
Held
The Tribunal held that the net profit rate applied by the AO was not based on comparable cases or past trends. The reasoning of the CIT(A) for not admitting additional evidence was also found unsatisfactory. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A).
Key Issues
The primary issues were the applicability of the net profit rate of 21.67% and the taxability of Rs. 74,76,720/- as unexplained money under Section 69A of the Income Tax Act, 1961.
Sections Cited
147, 148, 131, 69A, 250
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI AVDHESH KUMAR MISHRA, AM
आदेश / O R D E R Per Avdhesh Kumar Mishra, AM:
This appeal for Assessment Year (‘AY’) 2012-13 filed by the assessee is directed against the order dated 31.10.2025 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (‘NFAC’), Delhi [‘CIT(A)’] passed under section 250 of the Income Tax Act, 1961 (‘Act’).
The assessee has challenged the impugned order on the following grounds of appeal:
Rajesh Kumar Tiwari, Raipur vs. ITO, Ward-2(2), Raipur “1. For that on the facts and in the circumstances of the case, neither any approval is taken by the Learned Assessing Officer as mandated under section 151 of the Income Tax Act, 1961 nor is any such approval provided to the Appellant.
2. For that on the facts and in the circumstances of the case, the Learned Commissioner of Income-tax (Appeals) has erred in confirming the order of Learned Assessing Officer by treating, merely on presumptions, that the Appellant has business turnover of Rs. 41,52,525/- in the relevant AY, by relying on information supplied by a third party and applying excessive deemed profit @ 21.67% on this turnover and erred in adding Rs. 8,99,852/-to the total income of the Appellant.
For that on the facts and in the circumstances of the case, the Learned Assessing Officer has erred in making addition of Rs. 15,00,000/- on account of credit entry reflecting in bank account of the Appellant for the relevant AY, by ignoring the corresponding debit side entry(s), therefore, the impugned addition of Rs 15,00,000/- is unjustified and bad in law.
For that on the facts and in the circumstances of the case, the Learned Assessing Officer, while issuing the final show cause notice during assessment proceeding, has erred in stating that -"you are required to show cause as to why should the undisclosed income from business for Rs. 7,25,322/- and credit entry of Rs. Rs. 74,76,720/-from M/s Hind Energy and Coal Benefication (1) Ltd (on protective basis) not be added in total income for the year in absence of any submission/satisfactory explanation". This amount of Rs. 74,76,720/- was proposed to be added in the income of M/s Hind Energy And Coal Benefication (1) Ltd on substantive basis whereas the same has been added in the hands of the Appellant U/s. 69A of the Income Tax Act, 1961 which is unjustified and bad in law.
5. For that on the facts and in the circumstances of the case, the Learned Commissioner of Income-tax (Appeals) has erred in completely ignoring the Appellant's statement dated 18-04-2013 recorded on oath u/s. 131 of the Rajesh Kumar Tiwari, Raipur vs. ITO, Ward-2(2), Raipur Income Tax Act, 1961 before the Investigation Officer, Raipur, wherein the Appellant has categorically and emphatically denied his indulgence in any transaction with M/s. Hind Energy And Coal Beneficiation (1) Limited. This statement recorded on oath has also been relied upon by the Appellant in the assessment proceedings before the Learned Assessing Officer.
6. For that on the facts and in the circumstances of the case, the Learned Commissioner of Income-tax (Appeals) has also erred in confirming addition made by the Learned Assessing Officer towards amounts credited in HDFC Bank A/c of the Appellant in the name of M/s. Hind Energy and Coal Beneficiation (1) Limited - Rs. 15,00,000/- on 18.01.2012 (relating to FY 2011- 12) and Rs. 59,76,720/- credited on 31.05.2012 (relating to FY 2012-13). The entire sum of Rs. 74,76,720/- has been considered as income of the Appellant for relevant AY 2012-13 and added to his total income as unexplained money u/s. 69A of the Income Tax Act, 1961, whereas Rs. 59,76,720/- credited in Appellant's bank account in FY 2012-13 and relates to AY 2013-14, therefore, the impugned addition of Rs. 59,76,720/- is also not sustainable in law.
7. For that the Appellant craves leave to add, modify or alter any grounds of appeal on or before the date of hearing.”
3. The relevant facts for adjudication of this case are that the assessee, proprietor of M/s Shree Dhanlaxmi Traders, filed his original Income Tax Return (‘ITR’) for the relevant year declaring income of Rs.1,78,770/-. Later, the case of the assessee was re-opened under section 148 of the Act. however, the assessee did not ensure any compliance during the assessment proceedings. Therefore, the Ld. Assessing Officer (‘AO’) had no option except to complete the assessment ex-parte. As per the information available with the Ld. AO, the assessee’s turnover of his business was Rs.41,52,525/-, which the assessee had not disclosed in his ITR. The Ld. AO applied net profit @21.67% to work out the income on turnover of Rajesh Kumar Tiwari, Raipur vs. ITO, Ward-2(2), Raipur Rs.41,52,525/- and added back in the returned income. Further, the Ld. AO also made an addition of Rs.74,76,720/- under section 69A of the Act as unexplained money as under: “7. In respect of other issues regarding the payments receipt from Hind Energy and Coal Benefication (1) Ltd., for Rs. 74,76,720/-, it is found that the assessee has claimed that he did not know anything about the said transaction as the transaction was utilized by Sh. Santosh Soni. However, as discussed above that he could not discharge his onus by submitting any evidence. Merely giving statement that Sh. Santosh Soni will be knowing about the same is not sufficient for discharging his primary onus. Even neither any confirmation of Sh. Santosh Soni was filed by the assessee nor he present that person phycially so as to confront the issue. Further, the address given by him was also not found. In all, it is conclusively said that the assessee has not discharge his onus in respect of the said entry in his bank account by filing satisfactorily reply with evidence. Further, out of the said credit entries of Rs. 74,76,720/-, an amount of Rs. 15 lakh was transferred through bank and the rest amounts were withdrawn by cash in the limit of Rs. 9 lakh each on next day of credit entry. This shows abnormal pattern of the assessee because whatever other entries were found in the bank account is related to his purchase or sale but this entry is not falling in the same pattern because most of the receipts were withdrawn by the cash which otherwise proves that this is the unaccounted money of the assessee in absence of any reply. Further, a credit entry of Rs. 15 lakh received from Hind Energy und Coal Benefication Ltd has been further transferred to other parties. But the assessee could not prove the rationale of transaction made with this account. Hence it is clear that such transactions especially made with this party is not in the tune of the other transactions pertaining to the account of assesse. Since, the assessee did not explain the nature and source of the said entry and therefore it is held that this is unaccounted money of the assessee as per the provision of section 69A of the Act.
In light of the above mentioned discussion, it is held that said amount of Rs. 74,76,720/- is his unexplained money as per the provision of section 69A of the Act because he could never justify the said entry to the extent of Rs. 74,76,720/- by producing concrete evidence.
9. …………………………………………. Rajesh Kumar Tiwari, Raipur vs. ITO, Ward-2(2), Raipur
In the present case, the assessee had received that amount of Rs. 74,76,720/- by way of transfer followed by cash withdrawal and further transfers is treated as unexplained money. Moreover, the assessee found to be the owner of the Money appearing in her bank accounts, established through KYC of the Bank. The assessee was found owner of the Money but has not offered any acceptable and cogent explanation regarding the genuine source of such Money found in his bank accounts.
The scheme of Section 69A of the Income-tax Act, 1961, would show that in cases where the nature and source of acquisition of money, bullion, etc., owned by the assessee is not explained at all, or not satisfactorily explained, then, the value of such investments and money or value of articles not recorded in the books of accounts, if any, may be deemed to be the income of such assessee. The provisions of section 69A of the Act treat unexplained money, bullion, etc., as deemed income where the nature and source of money, acquisition as the case may be, have not been explained or satisfactorily explained. Therefore, in this case, the source not being explained satisfactorily, such deemed income covered under the provisions of Section 69A of the Act in view of the scheme of this provision.
It is worthwhile to mention here the expression "nature and source" used in this section should be understood to mean requirement of identification of source and its genuineness supported with proper documentation. Mere narration regarding nature and source cannot be, ipso facto, said to have been explained.
In light of the above discussion, it is clear that the assessee has no any proper or satisfactory explanation along with corroborative evidence to offer regarding nature and source of above amount credited in the assessee’s own bank account. Therefore, the above amount of Rs. 74,76,720/- credited into assessee's bank account, is herewith treated as unexplained money under section 69A of the Income Tax Act, 1961 for the year under consideration and accordingly added in the total income of the assessee.”
4. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who decided the appeal without considering the additional evidences filed by the assessee. For not admitting the additional evidences, Ld. CIT(A) has observed as under: “The reply filed by the appellant is considered. The claim made by the appellant before me is very vague and contradictory. For example, the appellant claims that ‘Further, the above said credit amount was not withdrawn in cash, its immediately transferred in other accounts either on same date or in next date’ while in next sentence he argues that, ‘Both debit and credit parties in bank account are not related to the assessee. It is important to note that, the appellant had not filed any explanation before the AO during the course of assessment proceedings despite the fact that several opportunities were given to him by the AO. For the reasons mentioned above, additional evidences filed before me cannot be accepted and relied upon.” [Emphasis supplied] Further, Ld. CIT(A) did not give any relief on the applicability of net profit @21.67% on sale of Rs.41,52,525/-.
Before us, the assessee had filed adjournment application, which was not entertained by us. Therefore, we heard Dr. Priyanka Patel, Ld. Sr. DR, who argued the case vehemently and prayed for dismissal of the appeal.
We have heard the Ld. Sr. DR at length and have perused the material available on the record. Before us, the first issue is the applicability of net profit @21.67% on sale of Rs.41,52,525/-. We do find that the net profit rate applied by Rajesh Kumar Tiwari, Raipur vs. ITO, Ward-2(2), Raipur the Ld. AO is neither based on any comparable case of the similar business nor with the assessee’s net profit rate of preceding years. We do not find any justification for the applicability of net profit @21.67% in the orders of the Authorities below. Thus, it cannot be ruled out that the applicability of net profit @21.67% is not very high. The Finding of the Ld. CIT(A) in this regard is also not speaking and well- reasoned.
As far as the second issue; i.e. the taxability of Rs.74,76,720/- under section 69A of the Act is concerned, the reasoning given by the Ld. CIT(A) for not admitting the additional evidences furnished by the assessee on is not found satisfactory by us.
8. After thoughtful consideration of the facts of the case in entirety on both issues and in the interest of justice, we set-aside the impugned order and remand the matter back to the file of Ld. CIT(A) with the direction to admit the additional evidences and decide the issue of taxability of Rs.74,76,720/- under section 69A of the Act. The assessee, if required, should be heard afresh on the issue of taxability of Rs.74,76,720/-. We further direct the Ld. CIT(A) to decide the issue of applicability of net profit rate after hearing the assessee in accordance with the law. Needless to say that the assessee should be provided reasonable opportunities of being heard. The assessee is also directed to co-operate in the appellate proceedings and ensure compliance within the time provided by the Ld. CIT(A).
In the result, the appeal of assessee is allowed for statistical purposes as above. Order pronounced in the open court on 20/03/2026.