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Facts
The assessee did not file an ITR for AY 2018-19. The case was reopened under sections 147/148 based on information of significant cash withdrawals and deposits. The AO subsequently made additions of 8% of total bank credits as unexplained cash credit (Rs.10,68,105/-) and Rs.38,947/- for unexplained commission/brokerage. The NFAC dismissed the assessee's appeal, refusing to admit additional evidence tendered under Rule 46A of the I.T. Rules.
Held
The Tribunal admitted the additional evidence (Bank Statements, Agreements, Affidavit & Receipts) under Rule 29 of the ITAT Rules, finding it essential for proper determination of the case. Consequently, the matter was restored to the Assessing Officer, directing him to provide the assessee with another opportunity to present their case and produce the admitted additional evidence during fresh proceedings.
Key Issues
Whether additions for unexplained cash credits (8% of turnover) and commission/brokerage were justified; whether the NFAC erred in not admitting additional evidence; and whether adequate opportunity of hearing was provided to the assessee.
Sections Cited
147, 148, 133(6), 143(3), 144B, 271AAC, 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2018-19 Kamaluddin v. Income Tax Officer 5(4) 339, Satbarpur Barabanki Zaminhusainbad, Subeha Barabanki TAN/PAN:DLVPK2157M (Appellant) (Respondent) Appellant by: Ms. Gurneet Kaur, Advocate Respondent by: Shri Sanjeev Krishna Sharma, D.R. Date of hearing: 09 01 2025 Date of pronouncement: 23 01 2025 O R D E R
This appeal has been preferred by the Assessee against the order dated 18.07.2024, passed by the ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi for Assessment Year 2018-19.
The brief facts of the case are that the assessee did not file the return of income for the year under consideration. As per information available with the Income Tax Department, the assessee had made cash withdrawals of Rs.1,11,59,000/- and deposits of Rs.66,700/- in the year under consideration. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) by issuing notice under section 148 of the Act. In response to notice under section 148 of the Act, the assessee filed his return of income on 29.06.2022, declaring a total income of Rs.3,94,090/-. The Assessing Officer (AO) issued statutory notices to the assessee and the assessee responded to the notices issued by the AO. The AO also issued notice under section 133(6) of the Act to Bank of Baroda, which provided the Bank Account Statement of Account No.21820200000277 related to the assessee for the year under consideration. From the Bank Account Statement provided by the Bank of Baroda, the AO noticed that there were total credits of Rs.1,33,51,314/- in the account of the assessee during the year under consideration. After considering the submissions of the assessee and the Bank Account Statement furnished by the Bank of Baroda, the AO held that since the assessee was engaged in the business activity, a margin of 8% is expected to be earned by the assessee. Accordingly, he treated 8% of the total Cash Credits of Rs.1,33,51,314/-, which came to Rs.10,68,105/- as the unexplained cash credit of the assessee and added the same to the income of the assessee.
2.1. The AO also noticed that during the year under consideration, the assessee had received commission/brokerage to the tune of Rs.38,947/- from various entities. Since the assessee had failed to furnish any documentary evidence with regard to the aforesaid commission/brokerage, he added the sum of Rs.38,947/- also to the income of the assessee.
2.2. The AO completed the assessment under section 143(3) read with section 144B of the Act, assessing the total income of the assessee at Rs.15,01,142/-.
2.3. The AO also initiated penalty proceedings under section 271AAC and 270A of the Act.
Aggrieved, the assessee preferred an appeal before the NFAC, who dismissed the appeal of the assessee.
Now, the assessee has approached this Tribunal challenging the order of the NFAC by raising the following grounds of appeal:
1. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law and deserves to be quashed being illegal.
2. Because, on the facts and in the circumstances of the case, the order of Ld. CIT is bad in law in confirming the addition of 8% of turnover on presumptive basis without considering the nature of the business of the assessee wherein the net profits are a meagre .05 to 1%.
3. Because, on the facts and in the circumstances of the case, the order of Ld. CIT is bad in law as unexplained commission/brokerage even when addition of Rs.10,68,105/- on presumptive basis had already been made on total credits in the bank account.
4. Because, on the facts and in the circumstances of the case, the order of Ld. CIT is bad in law as the Assessing Officer has been added the addition of Rs.38,947/- without considering the reply of the assessee therefore the order deserves to be set aside and quashed.
5. Because, on the facts and in the circumstances of the case, the CIT (A) has passed the order without providing the assessee with a due and proper opportunity of hearing therefore the impugned order deserves to be set-aside being bad in law.
6. The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal with permission.
During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) invited my attention to the Application moved by the assessee for admission of additional evidence under Rule 29 of the ITAT Rules. The Ld. A.R. submitted that the additional evidences in the form of Bank Statements, Agreements, Affidavit & Receipts, etc. were filed before the NFAC under Rule 46A of the I.T. Rules. However, the NFAC did not admit the same and dismissed the appeal of the assessee. The Ld. A.R. submitted that the aforesaid documents, contained some very important facts relating to the case of the assessee, but could not be filed before the AO and prayed that the same may be admitted under Rule 29 of the I.T.A.T. Rules.
The Ld. Sr. D.R. had no objection to the admission of the additional evidences.
Having gone through the additional evidences filed before me, I am of the view that these evidences go to the very root of the matter and are germane to proper determination/assessment in the case of the Assessee. Accordingly, I admit the same.
The Ld. A.R. further prayed that the matter may be restored back the file of the AO where all the aforesaid additional evidences shall be produced to prove the transactions entered into by the Assessee during the year under consideration.
The Ld. Senior D.R. had no objection to the restoration of appeal to the AO.
I have heard the ld. Senior Departmental Representative as well as the ld. AR 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 more 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.
I have already admitted the additional evidences filed by the Assessee in the form of Bank Statements, Agreements & Receipts under Rule 29 of the I.T.A.T. Rules. The Assessee shall produce them before the AO during the course of set aside proceedings. 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 shall be at complete liberty to pass the order in accordance with law, based on 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 23/01/2025.