SH. MANISH SHARMA,NEW DELHI vs. ITO, NEW DELHI

The brief facts of the case is that the assessee is an individual engaged in the trading of electronic goods and contractor. He filed his return of income on 30.07.2011 showing income of Rs. 1,62,600/-. During the course of assessment proceedings it was found that AIR information showing that assessee has deposited Rs. 8393299/- in his bank accounts with Punjab National bank and State Bank of India. Before the ld AO there was no compliance therefore, the ld AO passed assessment u/s 144 of the Act and made the above addition. The assessee preferred an appeal before the ld CIT(A) who allowed 80% as expenditure and remaining 20% of the gross receipt as income of the assessee. Against this order the assessee is in appeal before us.

The ld AR submitted that the ld AO framed assessment u/s 144 of the Act, however, no notice has been served on the assessee. Therefore, it was stated that assessment order passed is bad in law. To support his contention the assessee has submitted an affidavit dated 21.01.2014. The ld CIT(A) also dealt with the above issue wherein, it has been held by him that there is complete justification in issue of order by the ld AO u/s 144 of the Act. 5. The ld AR submitted that as there is change in address notices could not be served. On the merits he submitted that all the receipts deposited in the bank account are out of his regular income and none of it is unaccounted income. 6. The ld DR supported the order of the ld AO and ld CIT(A). 7. We have carefully considered the rival contentions. In the present case the assessment is framed u/s 144 of the Act and the ld AR of the assessee did not appear before the ld AO. The assessee submitted that the has shifted from New Delhi to Mumbai many years ago and now stationed at Mumbai. The assessee has also given the complete residential address in Mumbai. Therefore, it is apparent that though the ld AO issued the notices to the Page | 2 Manish Sharma Vs. ITO (Assessment Year: 2011-12) assessee at the last known address, however, the assessee could not represent his case before the ld AO. In absence of any information forthcoming from the assessee the ld AO added the total sum deposited in the bank account. The ld CIT(A) restricted the same at 20%. Before the ld CIT(A) the assessee also contested that credit in those bank accounts is approximately Rs. 2.33 lacs only. Therefore, the addition made of total credit is not tenable. He further submitted that in past years the assessee has filed his return of income as retail trader and offering income u/s 44AF and 44AD. The assessee also submitted that the above amount has been received on account of deposits from various customers. As the ld CIT(A) has accepted that the amount deposited by the assessee is the gross receipt of the business income and revenue has not filed any appeal wherein he has deleted the addition to the extent of Rs. 80% of the amount deposited in the bank account, we are of the opinion that there is no dispute remained between the parties that the sum deposited of Rs. 83,83,299/- is business receipt. However, as the gross receipt of the assessee exceeds the specified amount u/s 44AF and 44AD the assessee cannot be take the benefit of presumptive tax rate prescribed under those section. As it is apparent that no proper opportunity of hearing before the ld AO is availed by the assessee the addition of the total sum deposited is made by the ld AO. The ld CIT(A) also gives the relief of 80% of such sum deducted as expenditure. The assessee has also stated that in past also he is assessed to income tax. However, in the present case before us the assessee did not file any details of the gross receipt earned by the assessee. It is not the case that when the assessee taxability u/s 44AD or 44AF he is not supposed to maintain any details. According to explanation (f) to section 139 the assessee is supposed to maintain the basis of his turn over, gross profit, expenses and net profit of the business. He is also supposed to disclose the amount of sundry debtors, creditors, stock in trade and cash balance at the end of the previous year. Before the lower authorities the assessee has not submitted these details. Further, the ld