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Facts
The assessee deposited Rs.14,45,000 in his bank account during the demonetization period. The AO treated Rs.9,37,500 of this amount, which was in old Specified Bank Notes, as unexplained income under Section 69A. Additionally, the AO estimated profit at 5% on the total turnover and added interest income, completing the assessment under Section 144.
Held
The Tribunal condoned the delay in filing the appeal and restored the matter to the Assessing Officer. The assessee is granted one more opportunity to present their case and produce evidence regarding the impugned transactions.
Key Issues
Whether the addition made on account of unexplained deposits of old currency notes and estimated profit on turnover is justified, and if the assessee was not given a proper opportunity of being heard.
Sections Cited
69A, 144, 115BBE, 271AAC, 271A, 271B, 271F
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2017-18 Uma Shanker Awasthi v. Income Tax Officer 2(4) House No.76 Unnao Hiran Nagar, Unnao TAN/PAN:AFYPA1750N (Appellant) (Respondent) Appellant by: Shri Akshay Agrawal, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 06 02 2025 Date of pronouncement: 11 02 2025 O R D E R
This appeal has been preferred by the assessee against order dated 12.06.2024, passed by the National Faceless appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.
The brief facts of the case are that the Income Tax Department received information through ITBA-Cash Transaction-2016 that the assessee had deposited cash amounting to Rs.14,45,000/- in his Bank Account No.50040200000054 maintained with Bank of Baorda, Adarsh Nagar Branch, Unnao during the demonetization period (from 09.11.2016 to 30.12.2016). In response to the statutory notices issued by the Assessing Officer (AO), the assessee explained the source of deposits made in his Bank Account as his earlier savings of Rs.81,000/- and out of cash sales and receipts from debtors of Rs.13,64,000/-. The assessee also submitted before the AO that the assessee was engaged in the business of trading of tyres and the same was purely cash business. After considering the reply furnished by the assessee, the AO observed that during the demonetization period, the assessee had deposited in his Bank Account a total amount of Rs.14,45,000/-, out of which Rs.9,37,500/- were in old Specified Bank Notes (SBNs) of Rs.1000/- and Rs.500/- notes, which were to be treated as unexplained and were to be added to the income of the assessee under section 69A of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO also noted from the VAT return of the assessee that the assessee had a total turnover of Rs.2,39,93,300/- during the year under consideration, on which the AO estimated net profit @5%, which came to Rs.11,99,665/- and added the same to the income of the assessee. Moreover, the AO also noted from Form 26AS that the assessee had received interest to the tune of Rs.96,513/- during the year under consideration, which was also added to the income of the assessee. The AO, accordingly, completed the assessment under section 144 of the Act, assessing the total income at Rs.22,33,678/-.
The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC, 271A, 271B and 271F of the Act, separately.
Aggrieved, the assessee preferred an appeal before the NFAC, who dismissed the appeal of the assessee after admitting additional evidences and considering the Remand Report of the AO.
Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the Ld. NFAC by raising the following grounds of appeal:
1. The addition made u/s 69A of Rs.9,37,500/- is invalid as the amount is already been deposited in the bank account and also is being recorded in the books of accounts. Assuming the SBN notes only for the addition u/s 69A and the rest is being treated as the business income. The addition has been made purely on the presumption basis without any evidence on record. That no books of accounts has been rejected. Thus the learned CIT Appeal has erred in confirming the addition u/s 69A.
2. The addition of Rs.11,99,665/- of profit assumed @ 5% on the total turnover of Rs.2,39,93,300/- has been added on adhoc basis and the addition has been made even without verifying the actual figures and facts of the case. The, the addition made is purely on assumption basis without verifying the facts of the case.
3. Even in case of the commission addition the expenses cannot be ignored and the addition has been made even without considering the expenses and payment expenses from the bank account of the appellant. The addition made is against the accounting principles also where the debit and credit transactions were purely ignored by the learned A.O. The Gross profit calculated from the vat order is Rs.12,04,911 and the addition of income has been made of Rs.11,99,665/-, just by making a deduction of Rs.5246 of expenses of showroom which is unrealistic. The addition made is purely without application of mind and the addition deserves to be deleted.
4. That the order passed by the learned CIT (Appeal) & Learned A.O is against the principles of natural justice.
The Ld. Authorized Representative for the assessee submitted that there is a delay of 128 days in filing the appeal before the Tribunal. He submitted that the assessee had filed an application dated 20.12.2024 for condonation of delay, duly supported by Medical Certificate, stating therein that the assessee was ill during the relevant period. Therefore, the appeal could not be filed within the stipulated period. He prayed that the delay be kindly condoned.
The Ld. Sr. D.R. had no objection to the delay being condoned.
In view of the prayer made by the Assessee, duly supported by Medical Certificate and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
The Ld. Authorized Representative for the assessee submitted before me that the assessee could not be represented properly before the AO, resultant to which the AO had passed the order under section 144 of the Act. He prayed that the assessee may be afforded an opportunity of being heard before the AO where the assessee shall place all the documents in support of the transactions entered into by the assessee during the year under consideration.
The Id. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R.
I have heard both the parties and have also perused the material on record. It is seen that although the ld. CIT(A) had admitted additional evidences, he disregarded the same after going through the Remand Report furnished by the AO without assigning any specific reason. Looking into the facts of this case, I am of the considered view that the assessee deserves one more opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the assessee to present his case and produce the necessary evidences in support of the impugned transactions entered into by the assessee during the year under consideration. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer shall 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.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 11/02/2025.