RAM NIWAS YADAV,SHAHPURA vs. INCOME TAX OFFICER BEHROR, BEHROR

3. On the facts and in the circumstances of the case, the Id. AO has legally and factually erred in treating total turnover of the appellant as his profit during the relevant year and consequently, making addition of Rs.18,01,600/- as his total income which per se illegal and arbitrary. Thus, the Order passed by the Id. AO deserve to be quashed and set aside. 3.1 On the facts and in the circumstances of the case, Id. AO has grossly erred in charging interest u/s 234A and 234B of the Income Tax Act, 1961 on the total turnover of the assessee i.e Rs. 18,01,600/- as the same is not the profit of the assessee therefore, charging the interest u/s 234A and 134B of the act is completely unwarranted and arbitrary.

4. On the facts and in the circumstances of the case, Id. AO has legally erred in not considering the case of the assessee in light of Section 44AF of the Income Tax Act, 1961 while deciding the case and also erred in treating the total turnover of the assessee as his profit for the relevant period.

5. On the facts and in circumstances of the case, Id. CIT(A) has legally erred in not considering the documents furnished by the assessee during the course of appellate proceedings and went onto pass the order dismissing the appeal of the assessee. Thus, the impugned order passed by the assessee deserve to be quashed and set aside. 5.1 The Id. CIT(A) has grossly erred in upholding the additions made by the Id. AO Ram Niwas Yadav vs. ITO without considering the case on merits and without applying his own mind. Thus, the addition so made deserves to be deleted summarily.

6. On the facts and in the circumstances of the case, the learned CIT(A) has legally and factually erred in upholding the action of Id. AO of initiating penalty proceedings u/s 271(1)(b), 271(1)(c), 274 of the Act against the assessee in a mechanical manner.

7. The appellant craves right to add, amend and alter the grounds on or before the hearing.

3. At the outset of hearing, the Bench observed that there is delay of 636 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an application for condonation of delay with following prayers:

“On behalf of the humble applicant/appellant, it is most humbly submitted as under:

1.

1. That, the instant Application is being filed with the prayer to condone the delay which has occurred in filing the present Income Tax Appeal challenging the Order dated 23.03.2023 passed by the Commissioner of Income Tax (Appeals) – Income Tax Department (NFAC) 2. That, present appeal against the impugned order dated 23.03.2023 was required to be filed within 60 days from the receipt of the Order dated 23.03.2023 i.e. before 23.05.2023. However, it is pertinent to apprise the Hon’ble Tribunal with the fact that, the aforesaid Order dated 23.03.2023 were never delivered to the appellant and moreover, appellant had only received notices physically till the transfer of the appellant’s appeal to the NFAC and it is submitted that, appellant had duly complied with all the notices received pre NFAC regime and after appellant’s appeal got transferred to the NFAC neither of the notices issued during the course of proceedings were ever served upon the appellant physically but was only uploaded on the income tax portal which is not an effective service of notice as per the provisions of Section 282 of the Income Tax Act.

3. That, further it is submitted that, appellant has preferred the appeal u/s 246A of the Income Tax Act, 1961 before the CIT (appeal) on 20.01.2018 under the non-faceless regime and has also submitted written submissions/reply alongwith supporting documents on 16.01.2019 in pursuance to the aforesaid Ram Niwas Yadav vs. ITO appeal and also submitted application under rule 46A of the Income Tax Act, 1961 for bringing additional evidence on record at appellate stage. However, after the transfer of appeal to the NFAC no communication/notice or order were ever served upon the appellant physically but was only uploaded on the portal.

4. That, in terms of Section 144B of the act, notice or order passed by the NFAC is required to be delivered to the assessee, however, in the present case, notices and order issued by the NFAC has only been uploaded on the income tax portal and was not delivered upon the appellant at his registered address or Email. Therefore, due to the aforesaid circumstances appellant had lost track over his appeal pending before the ld. CIT(A), and it is pertinent to point out that, since assessee has already filed the written submissions/reply way back in the year 2019 so he was under the genuine and bonafide belief that compliance on part of the appellant had already been made and now it is the department who is required to decide the appeal by passing an Order.

5. That, since no order or communication was received by the appellant physically from the ld. CIT(A) even after the several years of filing of the written submissions/reply, appellant contacted his authorized representative – CA Sh. Udai Saini for enquiring about the status of the said appeal. Thereafter, authorized representative checked the income tax portal on 15.01.2025 and that is when it came into the knowledge of the authorized representative of appellant that, impugned order dated 23.03.2023 was passed by the ld. CIT(A) and his appeal got dismissed ex parte and the Order passed by the ld. AO was upheld.

6. That, thereafter appellant’s authorized representative CA Sh. Udai Saini advised him to file appeal against the impugned Order before the Hon’ble Tribunal and in order to file the instant appeal, appellant contacted his present counsel i.e Sh. Ranjan Mehta (Adv) on 03.02.2025. Immediately thereafter, Sh. Ranjan Mehta (Adv) prepared the appeal and file the same before this Hon’ble Tribunal. It is important to point out that, the fact of impugned order came into the knowledge of the appellant on 15.01.2025 and the appellant filed the instant appeal on 21.02.2025, therefore, it is submitted that, present appeal has been filed within the limitation period if the same is counted from the date of knowledge of the order and not from the date of passing of the order and it is well settled position of law that, limitation period to file appeal start ticking from the date of knowledge of order and not from the date of passing of order and therefore, view of the above, it is safe to say that, present appeal has been filed within the limitation period as prescribed under the statue.

7. However, without prejudice to the above, it is submitted that, in May 2023, appellant was diagnosed with acute arthritis and since then appellant was on heavy medications and due to the aforesaid medical condition of the appellant which restricted his mobility and physical ability he was not in a position to travel and contact his authorized representative to file appeal against the impugned order and therefore, the delay has occurred in filing the instant appeal.

8. That the delay of 640 days (from 23.05.2023 to 21.02.2025) is neither deliberate nor willful but has occurred due to the genuine reasons mentioned above. The appellant has a strong and meritorious case, and if the delay is not condoned, it would cause irreparable harm and injustice.

10. That, the delay was not deliberate, but occurred due to circumstances which were beyond the control of the appellant. There was no gross negligence or deliberate inaction or lack of bona fides on part of the appellant. Therefore, the delay deserves to be condoned.

11. That, further it is submitted that, as per section 5 of the Act of 1963, delay should be condoned where ‘sufficient cause’ is established by the Applicant. It is settled law that, the term ‘sufficient cause’ should receive a liberal construction so as to advance substantial justice. Unless and until delay is found to be deliberate / intentional/ grossly negligent or aimed at taking undue advantage by creating groundless litigation, the factor or ‘Delay’ should be considered as only a technical defect and should not be allowed to defeat the cause of substantial justice. Wherever, substantial justice and technical considerations are pitted against each other, it is the cause of substantial justice which should be preferred over the other. Meritorious matters should not be thrown away merely on the ground of limitation.

Reliance is placed on following Judgments: (i) Shri Ram Bharose Sharma vs. The ITO Ward- 2(4) Jaipur - – ITAT JAIPUR BENCH (ii) Ratanlal Dangi v/s ITO (1995) 51 TTJ 611 (JP) and CIT v/s Motilal (iii) Padampat Sugar Mills Co. (P) Ltd. (1979) 118 ITR 200 (SC) (iv) Vedbai v/s Shantaram Baburam Patil & Others (2002) 253 ITR 798 (SC) (v) Collector, Land & Acquisition v/s Mst. Katiji & Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach while considering a case for condonation of delay. The following observations of the Hon'ble Court are notable: The legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice-that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted Ram Niwas Yadav vs. ITO in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy. (vi) Rohtak Co-op. Milk Producer Union Ltd. vs. ACIT (2012) 18 ITR 0310 (Del Trib) held as under: “The term "sufficient cause" is quite elastic so as to enable the courts to apply the law in a meaningful manner which sub-serves the ends of justice. Further, a litigant should not ordinarily suffer for the mistake of the counsel. The delay in this case has been explained by way of the affidavit of the advocate. Since there are plausible reasons for delay as it occurred due to omission on the part of the advocate, the delay should be condoned. — Himachal Pradesh Cricket Association, Una, and 111/Ch/2004 dated 8 September 2004 relied; Chief Post Master General & Others v Living Media India Ltd & another 197 Taxman 435 (Del) distinguished” (vii) Anand Shankar Mittal v/s DCIT (2010) 34 DTR 589 (JP Trib) (DPB 9- 19) Therefore, in view of the above, it is humbly prayed that Ld. CIT(A), may be pleased to kindly allow the present application and condone the delay of 640 days occurred in filing the aforesaid Appeal, and direct the listing of the Appeal for hearing. Any other appropriate order which may be found just and expedient in the facts and circumstances of the case may be passed in favour of the applicant assessee.

4. During the course of hearing, the ld. DR not objected to assessee’s application for condonation of delay and prayed that Court may decide the issue as deem fit in the interest of justice as delay is of 636 days.

No compliance made by the assessee. Further notice u/s 142(1) issued on 07.09.2017 fixing the case for hearing on 18.09.2017. No compliance made by the assessee. Thereafter notice u/s 144 of the IT Act, 1961 issued on 27.10.2017 fixing the case for hearing on 06.11.2017. No compliance made by the assessee. As a last opportunity, ld. AO again requested to comply with notice u/s 144 dated 17.11.2017 and for his case and was fixed for compliance on 27.11.2017. Nobody attended on 27.11.2017 nor any written reply has been filed this shows that assessee has no evidence/explanation in his support/defense nor he consider it necessary to furnish explanation for the source of cash deposit of Rs 18,01,600/- received in his saving bank account and nature of such transaction. As the assessment getting time barred and even the assessee after giving sufficient opportunities not submitted the details and therefore, ld. AO consider the cash deposited of Rs. 18,01,600/- in his saving bank account as income of the assessee. appeal before the ld. CIT(A) who also confirmed the addition. The relevant finding of the ld. CIT(A) reads as follows;

As a result, the AO completed the assessment u/s. 147/144 with an assessed income of Rs. 18,01,600/- and initiated penalty proceedings u/s. 271(1)(b) of the IT Act, 1961 separately.

3.1 The Hon'ble ITAT in for the A.Y. 2002-03 in the case of M/s Chhabra Land and Housing Ltd. after following the decision of Hon'ble Supreme Court in the case of B.N. Bhattachargee, 118 ITR 461 (SC) held that the appeal does not mean merely filing of the appeal but effectively pursuing it. Keeping in view of the aforesaid factual position, the appeal fiied by the appellant is, therefore, decided on merits.

5. Grounds of the appeal are dismissed.” before the ld. CIT(A) he preferred the present appeal. To support the various grounds raised by the assessee ld. AR of the assessee, has filed the written submissions which is reproduced herein below:

1. That, the assessee is an individual and is engaged as a wholesaler in the supply of vegetables. It is submitted that the assessee purchases the goods i.e., vegetables from farmers and local agents and supplies the same to various nearby mandis.

2. That, for the subject assessment year, the assessee has not filed the ITR- 4, subject to the provisions of Section 44AD, as the total turnover of the assessee did not exceed Rs. 2,00,00,000/- (Two Crores). However, upon the issuance of Notice dated 27/30.03.2017 under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the IT Act), the assessee duly complied with the aforesaid Notice has filed its return on 16.01.2018.

3. That, pursuant to that, the ld. Income Tax Officer, Behror, issued a notice dated 08.06.2017 under Section 142(1), asking the assessee to furnish documents i.e., all source of income with documentary evidence, copy of the ITR, to explain the source of cash deposits in saving bank account and copy of the all the bank accounts with reconciliation statement. 4. That, another notice dated 07.09.2017 under section 142(1) was issued to the assessee to furnish the aforesaid documents to the ld. ITO, Behror, and personal hearing was fixed at 18.09.2017. Thereafter, the ld. ITO, Behror, issued Notice dated 27.10.2017 under Section 144 and fixed the matter for hearing on 06.11.2017. 5. That, the ld. ITO, Behror, proceeded to pass an ex-parte order dated 30.11.2017 under Section 144/147 against the assessee, whereby, the ld. ITO, Behror, grossly erred in considering the total cash deposits amounting to Rs. 18,01,600/- made by the assessee as total income and made additions of the aforesaid amount in the subject assessment year, along with that, the ld. ITO, Behror, charged interest under Section 234A & 234B as per ITNS-150 issued, which was considered to be part of the order dated 30.11.2017. Furthermore, a demand notice under section 156 was issued in pursuance of the aforesaid order raising the demand of Rs. Rs. 12,81,870/- against the assessee. 6. That, the aforesaid order dated 30.11.2017 passed by the ld. ITO, Behror, was challenged by the assessee by filing an appeal under Section 246A of the IT Act, before the ld. CIT, (Appeals) which got transferred to NFAC, Delhi in

9. That, assessee used to receive the Notices issued by the ld. CIT(A) before the assessee’s appeal got transferred to NFAC and it is pertinent to point out that, assessee had duly complied with all the notice received before his appeal got transferred to NFAC. Thereafter, it is submitted that the notice for personal hearing dated 03.02.2021, 06.02.2023, 23.02.2023 & 06.03.2023 as mentioned in the impugned order dated 23.03.2023 were never received either in person or by post or mail notices were only uploaded on the Income tax portal. It is submitted that under section 144B of the IT Act, any notice or order passed by the NFAC is required to be delivered to the assessee, however, the same were uploaded on the income tax portal and were never received either through mail or post. It is further submitted that the despite of furnishing the submissions and documents in the year 2019 itself, ld. CIT(A) while passing the impugned Order dated 23.03.2023 has completely brushed aside and ignored submissions and documents filed by the assessee which were ought to be considered by the CIT(A) while deciding the appeal.

12. That, without any further delay, the assessee filed an appeal on 25.02.2025 before the Hon’ble Tribunal, along with an application for condonation of delay under Section 5 of the Limitation Act, 1963. That the delay of 637 days Ram Niwas Yadav vs. ITO (from 23.05.2023 to 18.02.2025) is neither deliberate nor willful but has occurred due to the genuine and bonafide reasons mentioned above. The assessee has a strong and meritorious case, and if the delay is not condoned, it would cause irreparable harm and loss and injustice.

Therefore, aggrieved by the order of Ld. CIT(A), the assessee has preferred this appeal before this Hon’ble Bench. Written submissions In elaboration to and in support of the Grounds of Appeal already taken, detailed submission (groundwise) is made as under:- GROUND OF APPEAL NO. 1 & 1.1: The ld. ITO, Behror and the CIT(A) have committed a significant procedural error in deciding the case of the assessee on an ex-parte basis, thereby denying the assessee a fundamental right of being heard. The principle of audi alteram partem, which forms the cornerstone of natural justice, was blatantly overlooked as no adequate opportunity was provided to the assessee to present his/her case or rebut the findings. This unjustified haste in passing the order has resulted in a gross miscarriage of justice and has caused irreparable harm to the assessee’s legal rights and interests. Furthermore, the Learned ITO and CIT(A), acting in a hasty and cursory manner, concluded the case of the assessee without adhering to the principles of equity and fairness. The order was passed in violation of the established norms that require due diligence, proper notice, and reasonable time for preparation before adjudication. Such conduct is not only arbitrary but also contrary to the principles enshrined in the judicial ethos of natural justice, which demand an unbiased and fair hearing to all parties involved. On this sole ground of procedural impropriety Ram Niwas Yadav vs. ITO and denial of natural justice, the order passed by the Learned AO and CIT(A) is liable to be set aside and quashed to safeguard the sanctity of due process and prevent further detriment to the assessee. Furthermore, notwithstanding hereinabove, the assesee has duly gave its written submissions and documentary evidence which were not considered and even were not taken on record while passing of the impugned ex-parte order dated 23.03.2023. Reliance is placed upon the following judgements passed by the Hon’ble Supreme Court and Hon’ble High Courts :–

1. Commissioner of Income Tax Madras v. Chenniyappa Mudiliar (1969 1 SCC 591) The Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. There is no escape from the conclusion that under the said provision, the appellate tribunal had to dispose off the appeal on merits which could not have been done by dismissing the appeal summarily for default of appearance. The principles laid down in the said decision would squarely apply to the facts and circumstances of the present case, in as much as the petitioner was neither heard nor were his written submissions placed before the ITAT, considered.

3. Kusham Versus ITO, Ward-2, Rewari (ITA No. 599/DEL/2024) (ITAT New Delhi) We have heard rival submissions and perused the material available on record. The stand of the assessee is that in reassessment proceedings, in response to notice u/s 142(1) of the Act, she had appeared and produced relevant documents but the same were refused to entertain by the Assessing Authority. In appeal before the learned First Appellate Authority physical notice of hearing was ever received by the assessee. The learned CIT(A) dismissed the appeal of the Ram Niwas Yadav vs. ITO assessee, ex parte, without adverting on merit of the case. Considering the totality of facts of the present case, in order to sub serve the interests of natural justice, we hereby set aside the order of learned CTT(A) and restore the matter to the file of learned First Appellate Authority for fresh decision, after affording adequate opportunity of being heard to the assessee. Grounds are allowed for statistical purposes. Therefore, in light of the above referred judgements, it is humbly prayed that the impugned order dated 23.03.2023 may please be held bad in law and be quashed. GROUND OF APPEAL NO. 2: The conduct of ex-parte proceedings by the CIT(A) in the present case constitutes a fundamental breach of procedural fairness and justice. Ex-parte decisions are intended to be resorted to only in cases where the party concerned has been given adequate and reasonable notice to appear but has failed to do so without valid justification. However, in the instant case, the appellant was not afforded proper service of notice as mandated under Section 282 of the Income Tax Act, 1961. The failure to ensure appropriate notice deprived the appellant of the opportunity to present arguments, provide evidence, or challenge the claims made against them. The hasty progression of proceedings in an ex-parte manner also raises serious concerns about the impartiality and diligence exercised by the adjudicating authority. Consequently, the resultant order is procedurally flawed and unsustainable in law, requiring intervention to uphold the sanctity of justice and fairness. The CIT(A) have further erred in failing to adhere to the prescribed provisions of Section 282 of the Income Tax Act, 1961, which lays down the specific methods for service of notices, summons, requisitions, or other communications under the Act. Section 282 mandates that such communications must be served in one of the approved manners, which include delivery by post or authorized courier services, service as per the Code of Civil Procedure, 1908, transmission as an electronic record under the Information Technology Act, 2000, or by other means specified by rules formulated by the Central Board of Direct Taxes (CBDT). No notice for hearing or copy of the order was provided to the assessee through registered post or via email, contravening statutory requirements, renders the service of the aforesaid notices invalid in law. This procedural lapse not only violates the express provisions of Section 282 but also undermines the transparency and procedural integrity expected from the tax authorities, thereby invalidating the basis of the ex-parte order passed against the Petitioner. It is pertinent to bring to the attention of the Hon’ble Tribunal that the order dated 23.03.2023 was never received or duly served upon the assessee. The assessee had only received physical notices prior to the transfer of the appeal to the National Faceless Appeal Centre (NFAC). It is submitted that the assessee duly complied with all the notices received during the pre-NFAC regime. However, after the transfer of the assessee’s appeal to the NFAC, none of the notices Ram Niwas Yadav vs. ITO issued during the proceedings were ever physically served upon the assessee. Instead, these notices were merely uploaded onto the Income Tax Portal, which does not constitute effective service of notice as per the mandatory provisions of Section 282 of the Income Tax Act, 1961. This procedural lapse has resulted in a failure of justice and violated the assessee’s right to a fair opportunity to respond. Furthermore, notwithstanding hereinabove, the assessee has duly filed its written submissions and documentary evidence which were not considered and even were not taken on record while passing of the impugned ex-parte order dated 23.03.2023. Reliance is placed upon the following judgements:

1.

1. Sohum Charitable Trust, Faridabad vs Cit Exemption, Chandigarh (ITA No. 1487/Del/2023) (ITAT, Delhi) At the outset, there is a delay in filing the appeal by the assessee before us by 175 days. The ld. AR pleaded that the order passed by the ld. CIT(E) have been uploaded only in the e-filing portal and not served in the email of the assessee. Accordingly, the same does not constitute valid service of notice or communication in terms of section 282 of the Act. The assessee on coming to know that the order has been uploaded in the e-filing portal rejecting the claim of the Sohum Charitable Trust assessee, had come forward to file this appeal with a delay condonation petition. We find that the assessee is having sufficient cause for not filing appeal before us in time and hence, the delay is hereby condoned and appeal of the assessee is admitted for adjudication.

2. Sant Kabir Mahasabha Versus The CIT (Exemption) Chandigarh (ITA No. 84/CHD/2023) (ITAT, Chandigarh) Merely uploading of information about the date of hearing on the Income Tax Portal is not an effective service of notice as per the provisions of Section 282 of the Income Tax Act. The impugned order of the ld.CIT(E) is, therefore, not sustainable in the eyes of law. The same is hereby set aside with a direction to the ld.CIT(E) to decide the appeal of the assessee afresh after giving proper and adequate opportunity to the assessee to present its case. The ld. CIT (E) will serve notice of hearing through physical mode as well as through electronic mode upon the assessee.

3. Munjal BCU Centre Of Innovation and Entrepreneurship, Ludhiana Versus Commissioner of Income Tax Exemptions, Chandigarh (CWP-21028-2023) (High Court of Punjab and Haryana at Chandigarh) In view of the above, it is essential that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated hereinabove. The provisions do not mention of communication to be “presumed” by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e- Ram Niwas Yadav vs. ITO portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of natural justice are inherent in the income tax provisions and the same are required to be necessarily followed Therefore, in light of the aforesaid judgements it is humbly prayed that the impugned order dated 23.03.2023 may please be held bad in law and be quashed. GROUND OF APPEAL NO. 3 & 3.1: The ld. ITO, Behror and the ld. CIT(A) has committed a grave legal and factual error by equating the total turnover of the assessee with his profit for the relevant assessment year. It is a well-settled principle that turnover merely represents the gross receipts of a business entity and cannot be construed as net profit without considering the associated expenditures, deductions, and operational costs incurred during the course of business. The arbitrary and erroneous addition of �18,01,600/- to the assessee’s total income, solely based on turnover, disregards the foundational principles of income determination as per the provisions of the Income Tax Act, 1961. Such an approach is not only illegal but also contrary to the established norms of assessing taxable income. It is settled law that entire receipt cannot be treated as income. In light of this gross misapplication of the law, the impugned order passed by the Learned AO deserves to be quashed and set aside as it is unsustainable in law and equity. Further, the CIT(A) has grossly erred by charging interest under Sections 234A and 234B of the Income Tax Act, 1961, on the entirety of the total turnover, i.e., �18,01,600/-, without any basis for such calculation. It is pertinent to highlight that the provisions of Sections 234A and 234B pertain to the levy of interest for defaults in furnishing returns or payment of advance tax, respectively, based on the assessed income or tax liability. Interest under Section 234A of the Income Tax Act, which pertains to the levy of interest for the delay in filing the return of income, is not applicable in this case. The assessee's income falls below the mandatory filing threshold as prescribed by the law, and the assessee has declared their income as NIL. Since there is no obligation for the assessee to file a return, the provision for penalizing a delay in filing cannot be invoked. Therefore, the interest under Section 234A lacks legal grounds in this scenario. Similarly, interest under Section 234B, imposed for delay or default in the payment of advance tax, is also inapplicable in the case at hand. The obligation to pay advance tax arises only when the total tax liability exceeds �10,000, and the assessee has declared a liability of less than �10,000. Consequently, the assessee is not liable to pay advance tax, making the provision for interest under Section 234B irrelevant. In view of these facts, the application of Sections 234A and 234B against the assessee is both legally and factually untenable. This unwarranted levy of interest not only imposes an undue financial burden on the appellant but also reflects a lack of diligence in the application of the statutory Ram Niwas Yadav vs. ITO provisions. Consequently, the charges levied under Sections 234A and 234B are arbitrary and deserve to be set aside as the same has been levied on arbitrary findings. Reliance is placed upon the following judgements:

1. 1. Commissioner of Income-tax- XII vs. Subodh Gupta [2015] 54 taxmann.com 343 (Del) In absence of material to show net profit rate, presumptive net profit rate of 8% as stipulated in section 44AD could be taken for estimation of income.

2. Commissioner of Income Tax Vs. Balchand Ajitkumar 263 ITR 610 (2003) The Hon’ble Madhya Pradesh Court held after considering the relevant facts and law and held that the total sale cannot be regarded as the profit of the assessee.

3. Commissioner of Income Tax Vs. President Industries (2002) 258 ITR 0654 The Hon'ble Gujarat High Court held that it cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. Therefore, it is humbly prayed that the impugned order dated 23.03.2023 may please be held bad in law and be quashed. GROUND OF APPEAL

NO. 4: The ld. CIT(A) has legally erred in failing to consider the specific provisions of Section 44AF of the Income Tax Act, 1961, while adjudicating the case of the assessee. Section 44AF provides a presumptive taxation scheme applicable to small businesses, wherein the income is presumed to be a percentage (5%) of the total turnover or gross receipts, subject to certain conditions. This provision is designed to simplify the process of income computation and provide relief to small-scale assessees from the burden of maintaining exhaustive records. By entirely overlooking the applicability of Section 44AF in the case of the assessee—whose business qualifies within its ambit—the ld. CIT(A) has deviated from the legislative intent and subjected the assessee to an incorrect and arbitrary mode of assessment. Further, the CIT(A) has erred in law and on facts by treating the total turnover of the assessee as his net profit for the relevant period. Such an approach ignores the fundamental distinction between turnover and income, as turnover merely reflects gross receipts without accounting for allowable expenses, operational costs, or deductions incurred in the regular course of business. The failure to assess the income in light of Section 44AF, coupled with the erroneous Ram Niwas Yadav vs. ITO assumption equating turnover to profit, has led to an excessive and unjustified tax liability. The impugned order, being in direct contravention of statutory provisions and established principles of income computation, deserves to be quashed and set aside to uphold the fairness and consistency envisaged under the Income Tax Act. Section 44AD of the Income Tax Act, 1961, provides a simplified method for computing profits and gains of eligible businesses on a presumptive basis, aiming to ease the compliance burden for small taxpayers. It stipulates that resident individuals, HUFs, and partnership firms (excluding LLPs) engaged in eligible businesses with turnover not exceeding �2 crore in a financial year can declare profits at 8% of turnover. The assessee in this case falls squarely within this framework, having a turnover of Rs. 18,01,600/-, a figure well below the prescribed limit. By declaring profits at 8% of this turnover, the taxable income of the assessee amounts to Rs. 1,44,128/-, as per Section 44AD’s statutory provisions. This scheme not only simplifies tax compliance by eliminating the need for maintaining detailed books of accounts but also explicitly precludes the arbitrary treatment of the entire turnover as profit. Despite the clear applicability of Section 44AD, the Income Tax Officer (ITO), Behror, and the CIT(A) have unlawfully disregarded its provisions by treating Rs. 18,01,600/- —the entire declared turnover—as the assessee’s total profit for the assessment year. Such an arbitrary computation is not only contrary to the legislative intent but also amounts to a serious overreach that undermines the taxpayer’s statutory rights. The presumptive taxation scheme was introduced to simplify taxation and foster compliance among small businesses. The authorities' actions in this instance represent a flagrant violation of these principles, necessitating judicial intervention to uphold the statutory framework and protect the assessee’s rights under the Income Tax Act. Therefore, light of the above, assessee ought to have been subjected to tax @8% of his total turnover in terms of Section 44AD of the act and thus, the action of ld. AO in treating his total turnover is completely baseless, unreasonable and devoid of any merits and thus, impugned Order whereby, ld. CIT(A) has confirmed the ld. AO Order dated 30.11.2017 without applying his own independent mind deserve to be set aside and quashed. Reliance is placed upon the following judgements:

1. Swaran Singh v. Income-tax Officer {[2024] 159 taxmann.com 777 (Amritsar - Trib.)} Admittedly, the assesse was carrying on the business of sale of milk. He had not been filing his returns of income since his income was below the taxable limit; and that this fact stands verified by the department during the course of his proceedings for Assessment Year 2010-11. In that year, its case was also reopened u/s 148 of the Act for verification of cash deposits Rs. 20,96,973/- in its bank from his business of supplying of Milk where the addition made for Asstt.

Ram Niwas Yadav vs. ITO Year 2010-2011, by the AO, has been deleted by the Worthy CIT(A), on the basis of report of the Inspector that the assessee had been carrying on the business of sale of Milk by restricting to only 6% profit on the total bank deposits of Rs. 20,96,973/- being treated as Milk Business Turn Over under the provisions of Section 44AD of the Act In view of the above, the department cannot be permitted to raise an issue in isolation only for immediately succeeding on identical facts in the case of the same assesse. Thus, the source of amount of credit in the assessee's bank account stands explained as milk sale Turn Over for the Assessment Year under consideration. However, as per provisions of section 44AD of the Act, the AO is directed to apply 8% Net profit on the total milk sale of worth Rs. 18,80,000/-.

2. Mansukh K. Vaghasia v. Income-tax Officer [2022] 139 taxmann.com 84 (Surat-Trib.) Assessee an individual filed his return of income on 15-3-2011, declaring total income of Rs.1.54 lakhs which was accepted - Later on, assessee`s case was reopened under section 147, on basis of information received from AIR that assessee had deposited cash of Rs.13.87 lakhs in bank - Assessee appeared before Assessing Officer and replied that income of Rs. 13.87 lakhs was from proceeds of retail job work - However, ld. Assessing Officer rejected contention of assessee and made addition to tune of Rs. 13.87 lakhs. It was found that assessee was a small trader, having turnover of Rs.16.02 lakhs only, therefore he filed his return of income under section 44AD. Whether Assessing Officer having just brushed aside these evidences without even a word on why they were not acceptable and how these were fabricated documents, impugned additions were to be deleted - Held, yes Therefore, it is humbly prayed that the impugned order dated 23.03.2023 may please be held bad in law and be quashed. GROUND OF APPEAL NO. 5 & 5.1: The CIT(A) has legally erred in dismissing the appeal of the assessee without due consideration of the evidence and documents furnished during the appellate proceedings. The assessee had diligently submitted written submissions on 16.01.2019, accompanied by supporting documents, in response to the issues raised in the appeal. Furthermore, the assessee filed an application dated 09.02.2019 under Rule 46A of the Income Tax Rules, 1962, to bring additional evidence on record. The documents and evidence submitted were not only relevant but also material to the proper adjudication of the appeal. Despite this, the CIT(A), to the utter prejudice of the assessee, failed to take these documents on record or evaluate them in the context of the case. This procedural omission violates the principles of natural justice, as it deprived the assessee of a fair opportunity to have the appeal decided on the merits of the case. Consequently, Ram Niwas Yadav vs. ITO the impugned order, dated 23.03.2023, passed in disregard of the submissions and evidence provided, deserves to be quashed and set aside. The CIT(A) has grossly erred in upholding the additions made by the ld. ITO, Behror without considering the merits of the case or exercising independent judgment. The additions upheld were based on an erroneous surmise and premise and without proper scrutiny of the facts or evidence provided by the assessee. The appellate authority, being a quasi-judicial body, is mandated to apply its own mind and conduct an impartial review of the assessment order. However, the CIT(A) summarily dismissed the submissions of the assessee and even not taken on record and upheld the arbitrary additions made by the ITO, Behror, amounting to Rs. 18,01,600/-. Such dismissal, without a reasoned assessment or due application of law, is both legally unsustainable and procedurally flawed. Hence, the arbitrary addition made and upheld in the impugned order deserves to be deleted summarily to rectify the miscarriage of justice caused to the assessee. Reliance is placed upon the following judgements:

1.

2. Amitkumar Dhirajlal Joshi v. Income-tax Officer [2024] 166 taxmann.com 310 (Rajkot - Trib.) That is, Ld. CIT(A) did not pass order on merit based on the entire material available on record. Hence, we are of the view that one more opportunity should be granted to the assessee to plead his case before the Ld. CIT(A). We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Ld. CIT(A) for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand Ram Niwas Yadav vs. ITO forthwith. Therefore, we deem it fit and proper to set aside the order of the Ld. CIT(A) and remit the matter back to the file of the Ld. CIT(A) to adjudicate the issue afresh on merits. For statistical purposes, the appeal of the assessee is treated as allowed. GROUND OF APPEAL

NO. 6: It is submitted that the proceedings conducted by the ITO, Behror, were arbitrary, bad in law, and in blatant disregard of the principles of natural justice. Consequently, the upholding of the action of the ITO in initiating penalty proceedings under Sections 271(1)(b), 271(1)(c), and 274 of the Income Tax Act, 1961, against the assessee in a mechanical and predetermined manner, is also legally unsustainable. The initiation of penalty proceedings, being a separate punitive action, requires the tax authority to exercise due diligence and apply an independent mind in evaluating whether there has been a deliberate default or concealment of income by the assessee. However, in the present case, the penalty proceedings were initiated as a matter of routine, without examining the merits of the case or substantiating the requisite conditions for invoking such penalties. It is further submitted that penalty proceedings under Sections 271(1)(b), 271(1)(c), and 274 cannot be mechanically appended to an arbitrary and procedurally flawed assessment order. Since the main proceedings conducted by the ITO lack legal and factual sanctity, the consequent penalty proceedings are also rendered invalid and untenable in law. Such mechanical initiation of penalty proceedings not only violates the statutory provisions but also imposes undue hardship on the assessee. Therefore, it is prayed that the Hon’ble Tribunal may kindly hold the penalty proceedings to be bad in law and direct that the same be dropped in the interest of justice and equity. Reliance is placed upon the following judgement:

1. M/s. Aagam Shares & Commodities Pvt. Ltd. Versus DCIT (/I.T.A. No. 2082/Ahd/2018) (ITAT AHMEDABAD) It is also well settled that penalty under s. 271(1)(c) of the Act will not be imposed in every case merely because it is lawful to do so. The penalty will not ordinarily to be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of contumacious conduct or dishonest act. We thus find merit in the plea of the assessee for deletion of penalty on both counts. PRAYER Thus, in light of the facts & circumstances of the case, submission made and the case-laws cited it is humbly prayed that Assessment order dated 30.11.2017 and CIT Order dated 23.03.2023 be quashed and the addition of Rs. 18,01,600/- and consequential levy of interest and penalty charges be directed to be deleted.

Ram Niwas Yadav vs. ITO All of which is submitted respectfully. Judgements referred to: 1. Commissioner of Income Tax Madras v. Chenniyappa Mudiliar (1969 1 SCC 591) 2. Vijay Shrinivasrao Kulkarni Versus ITAT, Pune Bench & Ors. (CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 17572 OF 2024) (Bombay High Court) 3. Kusham Versus ITO, Ward-2, Rewari (ITA No. 599/DEL/2024) (ITAT New Delhi) 4. Sohum Charitable Trust, Faridabad vs Cit Exemption, Chandigarh (ITA No. 1487/Del/2023) (ITAT, Delhi) 5. Sant Kabir Mahasabha Versus The CIT (Exemption) Chandigarh (ITA No. 84/CHD/2023) (ITAT, Chandigarh) 6. Munjal BCU Centre Of Innovation and Entrepreneurship, Ludhiana Versus Commissioner of Income Tax Exemptions, Chandigarh (CWP-21028-2023) (High Court of Punjab and Haryana at Chandigarh) 7. Commissioner of Income-tax- XII vs. Subodh Gupta [2015] 54 taxmann.com 343 (Del) Commissioner of Income Tax Vs. Balchand Ajitkumar 263 ITR 610 (2003) 8. Commissioner of Income Tax Vs. President Industries (2002) 258 ITR 0654 9. Swaran Singh v. Income-tax Officer {[2024] 159 taxmann.com 777 (Amritsar - Trib.)} 10. Mansukh K. Vaghasia v. Income-tax Officer [2022] 139 taxmann.com 84 (Surat-Trib.) 11. Emco Cables (India) (P.) Ltd. v. Union of India [2024] 160 taxmann.com 145 (Delhi) 12. Amitkumar Dhirajlal Joshi v. Income-tax Officer [2024] 166 taxmann.com 310 (Rajkot - Trib.) 13. M/s. Aagam Shares & Commodities Pvt. Ltd. Versus DCIT (/I.T.A. No. 2082/Ahd/2018) (ITAT AHMEDABAD)

9. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions:

S. No. Particulars Page No. 1 Written submissions 01-21 2 Medical Prescription 22-32 3 Reply along with supporting documents dated 16.01.2019 submitted by 33-97 the assessee to ld. CIT(A), Alwar 4 Additional Evidence dated 09.02.2019 under Rule 46A of Income Tax 98 Act, 1961, submitted by the assessee to Ld. CIT(A), Alwar 5 Commissioner of Income Tax Madras v. Chenniyappa Mudiliar (1969) 1 99-104 SCC 591) 6 Vijay Shrinivasrao Kulkarni vs. ITAT, Pune Bench & Ors. (Civil Appellate 105-110 Jurisdiction Writ Petition no. 17572 of 2024) (Bombay High Court) 7 Kusham vs. ITO, Ward-2, Rewari (ITA No. 599/Del/2024) (ITAT New 111-114 Delhi) 8 Sohum Charitable Trust, Faridabad v. CIT Exemption, Chandigarh (ITA 115-118 No. 1487/Del/2023) (ITAT, Delhi) 9 Sant Kabir Mahasabha vs. The CIT (Exemption) Chandigarh (ITA No. 119-121 84/CHD/2023) (ITAT, Chandigarh) 10 Munjal BCU Centre of Innovation and Entrepreneurship, Ludhiana vs. 122-128 CIT, Commissioner of Income Tax Exemptions, Chandigarh (CWP- 21028-2023) (High Court of Punjab and Haryana at Chandigarh 11 Commissioner of Income Tax – XII vs. Subodh Gupta [2015] 54 129-132 taxmann.com 343 (Del) 12 Commissioner of Income Tax vs. Balchand Ajit Kuamr 263 ITR 610 133-137 (2003) 13 Commissioner of Income Tax vs. President Industries (2002) 258 ITR 138-139 0654 14 Swaran Singh vs. Income tax Officer [2024] 159 taxmann.com 777 140-144 (Amritsar-Trib.) 15 Mansukh K. Vaghasia vs. Income Tax Officer [2022] 139 taxmann.com 145-148 84 (Surat-Trib.) 16 Emco Calbes (India) (P.) Ltd. vs. Union of Income [2024] 160 149-150 taxmann.com 145 (Delhi) 17 Amitkumar Dhirajlal Joshi v. Income-tax Officer [2024] 166 taxmann.com 151-152 310 (Rajkot-Trib.) 18 M/s Aagam Shares & Commodities Pvt. Ltd. vs. DCIT (ITA No. 153-158 2082/Ahd/2018) (ITAT Ahmedabad)

10. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee is small contractor and this being the mercy prayer of the assessee that his case be case before the ld. AO and before the ld. CIT(A) he supported the reasons as advanced in the petition for condonation which resulted the sufficient cause for not attending the proceeding before the ld. CIT(A).

11. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). But at the same time he has not objected to the prayer of the assessee for setting aside the matter to the file of the ld. AO.

Thus, we are also of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Thus, the bench noted that considering the overall facts of the case the assessee given a chance to represent their case before the ld. AO as the order passed in both ground to allow one more chance. Considering that peculiar aspect of the matter we deem it fit to remand the matter to the file of the ld. AO who will consider the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee if so to be taxed in accordance with law after affording due opportunity to the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO.

13. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 08/05/2025.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Ram Niwas Yadav vs. ITO Tk;iqj@Jaipur fnukad@Dated:-08/05/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Ram Niwas Yadav, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Behror 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 275/JP/2025) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत