INCOME TAX OFFICER, INCOME TAX DEPARTMENT vs. NAVINCHANDRA VELJIBHAI SHAHQ, JAMNAGAR

Grounds of appeal raised by the revenue, are as followed: (1) The Ld. CIT(A) has erred in deleting the addition of Rs. 1,49,27,628/- made u/s 69A ws 115BBE of the Income tax Act, 1961 as without giving opportunity to AO as the Id. CITIA) has not been called for remand report. (2) The Ld. CIT(A) has erred in deleting the addition of Rs. 1.49.27.628/- and treated business receipts to cash deposited by the assessee & income

Brief facts of the case that information was available with the A.O. that the appellant had made total cash deposits amounting to Rs. 1,65,03,900/- in his bank account. The appellant had not filed return of income for A.Y. 2018-19. The order u/s 148A(d) of the Act was passed by the AO on 26/03/2022 regarding income chargeable to tax has escaping assessment within the meaning of section 147. Thereafter notice u/s 148 of the Act was issued and served upon the appellant. In response to the notice issued, the appellant failed to file his return of income. During the assessment proceedings, multiple notices u/s 142(1) were issued which all remain non-complied. Finally a show cause notice u/s 144B was also issued by the A.O. requesting the appellant to explain the sources of cash deposits.

That the revenue filed an appeal against the order of the Ld.AO, dated 17.02.2023 before the Ld. CIT(A). that the Ld. CIT(A) partly allowed the appeal of the assessee with following remarks; “6.3 However, the facts on available on the record merit of the case have been considered. During the appellate proceedings the appellant has not filed any written submission The appellant in the statement of facts submitted with Form no 35 contended that he worked as a trader of food grains during the year and the cash deposited were proceeds of his business. The appellant submitted that the cash deposited in the account no 009000200000012 held with The Nawanagar Co-operative Bank Ltd was only Rs 86,11.500/- and not Rs 1.65.03.900/- as held by the AO. The appellant enclosed a copy of the bank account statement in support of the same alongwith the appeal set. On perusal of the bank statement, it is noted that the deposits are in peacemeal manner and on a single date there are multiple entries of deposits/credits and debits/transfers. Further, it is also found that the adoption of the figure of Rs. 165.03 900/- was not correct. However, the contention that the figures of Rs. 86.11.500/- as claimed as cash deposited by the appellant was also not correct. Though the total figure of "cash received entries in the bank account statement come at Rs. 86.11,500/-, however apart from these cash deposits there were also multiple entries of cash deposited by cash machine. The appellant has not submitted any explanation of these entries. Apart from these there are also other credit entries. The total of such credit entries found in the account no 009000200000012 held with The Nawanagar Co-operative Bank Ltd comes to Rs. 98,82 649/- The appellant also submitted that he has made cash deposits time to time, received on sale of goods/food grain, in three bank accounts which include two CC accounts held with Bank of Baroda, in a/c no 18940400006851 of Rs. 73,80,650/- and in a/c no. 18940400006860 of Rs. 24.40.100/-. The appellant however has not submitted bank statement of these accounts. The name of the branch has also not been provided either. The A.O. has not mentioned these accounts in the assessment order and the appellant has suo moto disclosed these accounts in the statement of facts. Now the question is whether these cash deposits were to be treated as business receipts. As mentioned earlier that the appellant had not responded to the notices of hearing. The only form of document available is the bank account statement of Nawanagar Co-operative Bank Ltd and SOF. On perusal of the same it was found that the bank account is in the name of 'Ramesh Stores and the PAN reflected in the bank statements belongs to the appellant. The account also is in nature of current account, which apparently is meant for business purposes. The other two accounts are also admittedly CC (cash credit) account which are also business accounts. The assessment order also denotes "Ramesh Stores" in the address of the appellant. The debit entries in the bank statement appear to be business payments. Therefore, the contention of the appellant that cash deposited were out of appellant's business receipts, merit consideration. However the appellant has not filed return of income. Therefore, profit is required to be estimated in absence of books of accounts. The total credit entry in the accounts held with Nawanagar Co-operative Bank Ltd and Bank of Baroda comes at Rs 1.97.03.399/-(Rs 98.82.649/- Rs 73.80.650/- Rs. 24.40. 100/-) which is less than the limit provided in section 44AD. Under the circumstances of available facts and documents the total of such credit entries is considered as the total turnover of the appellant for the year. Since, the appellant have failed to submit any document to show his actual profit from the business, in my considered opinion 8% of gross receipts as profit of the appellant would be fair and reasonable as per provisions of section 44AD of the Act. Accordingly, profit is determined at Rs. 15,76.272/- (1,97,03,399 x 8%). The A.O. is directed to consider Rs. 15,76,272/- as business income and delete the balance addition of Rs. 1,49,27,628/-. The Ground Nos. 1 & 2 are hereby partly allowed. 7 In the result, the appellant's appeal is partly allowed.”

The revenue filed an appeal before us, against the impugned order passed by the Ld. CIT(A) dated 25.04.2024.

During the course of hearing, the Ld. Sr. DR relied on the order of the AO stating that due opportunities were given to the assessee, but assessee did not file complete details before the AO.

On the contrary, neither the Ld. AR of the assessee nor the assessee himself appeared to present his case, before this Tribunal, therefore, we have heard Ld. DR for the revenue.

We have heard Ld. DR for the revenue and perused the documents available on record. We note that various notices have been issued by the Ld. CIT(A), but there was no response by the assessee. We note that the order of the Ld.CIT(A) talk about the issue of notices to the assessee but does not talk about the service of notice to the assessee. We note that the assessee has not gave due care and attention to the case and negligent in pursuing the case and the assessee has also a non- cooperative attitude in pursuing the case for A.Y. 2018-19. The order of Ld.AO is passed u/s. 147 r.w.s. 144 of the Act. Thereafter, we are of the view that in the interest of justice, and considered the fact and circumstances of the case, we consider that an opportunity should be given to the assessee to present his case before the Lower Authority. We set aside the order of Ld.CIT(A) and remand the matter back to the file of Ld. AO for fresh adjudication on merit after giving due opportunity to the assessee of being heard.

In the result, the appeal of the revenue is allowed, for statistical purposes.