SUVASIS PANJA,DURGACHAK HALDIA vs. INCOME TAX OFFICER WARD 27(1) HALDIA, HALDIA

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ITA 915/KOL/2024Status: DisposedITAT Kolkata12 January 2026AY 2017-18Bench: SHRI GEORGE MATHAN (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the lower authorities had not examined the issues properly, including the applicability of Section 44AD, the nature of expenses, and the sources of income. Due to the need for proper factual examination, the issues were restored to the AO.

What were the facts?

The assessee, running a cyber cafe and commission-based business, filed an appeal against an order confirming an addition of Rs. 32,50,000 on account of undisclosed income. The addition was made by the AO who treated a deposit of Rs. 32,50,000 during the demonetization period as income from undisclosed sources.

What were the issues?

Whether the addition of Rs. 32,50,000 on account of income from undisclosed sources is justified, and whether the applicability of Section 44AD was correctly examined by the lower authorities.

Which sections of the Income-tax Act were involved?

Section 44AD,Section 44AD(6)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA

Before: SHRI GEORGE MATHAN

Hearing: 12/01/2026Pronounced: 12/01/2026

आदेश / O R D E R This is an appeal filed by the assessee against the order dated 29.03.2024 passed by the ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-2018. 2. It was submitted by the Ld.AR that the assessee is running a cyber cafe and actual commission basis. This is as per the submissions before the AO as shown in page 7 of the paper book which reads as follows:-

3.

It was submission that the assessee had declared the income u/s.44AD of the Act. The assessee had deposited an amount of Rs.32,50,000/- during the demonetization period which the AO had treated income from undisclosed sources of the assessee. The Ld.AR also drew my attention to pages 12 to 26 of the paper book, which are the copies of the cash statement for the period 01/04/2016 to 31/03/2017. It was submission that this was basically cash in hands which deposited in the bank account of the assessee. It was submission that as the assessee had the cash in hand, the addition is not sustainable.

4.

In reply, the Ld.Sr. DR vehemently supported the orders of the AO and CIT(A).

5.

In respect of specific query as to how the provisions of section 44AD of the Act would apply especially in view of the provision of section 44AD(6)(ii) of the Act, insofar as the assessee is earning commission income, it was submitted by the Ld. AR that this has not been examined by the lower authorities. It was also specifically put to the Ld.AR as to how the assessee has not shown any drawings for any other expenses. It was the submission that these issues have not been considered by the AO. It was also put to the Ld.AR as what is the nature of the expenses shown in the cash statement and what is the nature of the income. It was also submitted this was also not been examined by the AO. It was submission that he has no objection if the issues are restored to the file of the AO for examination. The assessee admittedly has filed a revised grounds of appeal today which reads as follows:-

6.

The Ld.AR submitted that he did not wish to press the ground No.2 for which has also signed to it. Thus, ground No.2 stands dismissed as withdrawn.

7.

In respect of the other issues, as it is noticed that the issues have not been considered in its proper perspective by the Ld.AO and relevant questions have not been asked to extract the corrects facts and as the facts are required to examine this case, the issues of this appeal are restored to the file of the ld. AO for readjudication afresh after granting the assessee adequate opportunity of being heard.

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