SHRI RAFI AHMAD SOFI,SRINAGAR vs. INCOME TAX OFFICER WARD-1, SRINAGAR
Facts
The Assessing Officer completed an ex-parte assessment under section 144 for AY 2017-18, adding Rs. 11,10,500/- as unexplained cash deposits (u/s 69A) during demonetization and Rs. 3,14,270/- as profit (u/s 28/44AD) on other receipts. The assessee failed to respond to notices from the AO (u/s 142(1), 133(6)) and the CIT(A) (u/s 250), leading to ex-parte orders at both stages. The assessee argued that non-receipt of communication was due to disturbances in the valley and the tax consultant's failure to inform them.
Held
The ITAT acknowledged the assessee's non-appearance before lower authorities but noted that new submissions and additional evidence were filed, requiring factual verification. In the interest of justice, the ITAT set aside the CIT(A)'s order and remanded the matter back to the AO for a de-novo assessment. The assessee was directed to cooperate and provide all necessary documents, and a token cost of Rs. 5,000/- was imposed for the latches in appearing before the CIT(A).
Key Issues
Whether the ex-parte assessment and appellate orders were valid given the assessee's claim of non-receipt of communications; and the correctness of additions for unexplained cash deposits u/s 69A and profit u/s 28/44AD.
Sections Cited
144, 142(1), 133(6), 69A, 115BBE, 28, 44AB, 44AD, 250, Rule-29 of ITAT Rules, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, ‘DB’: AMRITSAR
Before: UDAYAN DAS GUPTA & SHRI BRAJESH KUMAR SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, ‘DB’: AMRITSAR
BEFORE UDAYAN DAS GUPTA, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER
ITA No.330/ASR/2023 [Assessment Year: 2017-18] Rafi Ahmad Sofi, Income Tax Officer, Ward-2 M/s Maharaja Gallery, Raj Bagh Srinagar, Maharaja Bazaar, Srinagar, Vs Srinagar, Jammu & Kashmir-190001 Jammu & Kashmir -190001 PAN-BVWPS1152D Appellant Respondent
Appellant by Shri Bashir Ahmad Lone, CA Revenue by Shri Charan Dass, Sr. DR
Date of Hearing 27.05.2025 Date of Pronouncement 19.08.2025 ORDER PER BRAJESH KUMAR SINGH, AM,
This appeal by the assessee is directed against the order of
National Faceless Appeal Centre (NFAC)/learned Commissioner of
Income Tax (Appeals), Delhi (hereinafter referred to ‘ld. CIT(A)’) dated
23.10.2023 pertaining to Assessment Year 2017-18, arising out of the
assessment order u/s 144 of the Income Tax Act, 1961(hereinafter
referred as ‘the Act’) dated 24.12.2019.
The grounds of appeal read as under:-
The assessment is bad in law, as no real opportunity was granted to appellant during the year assessment proceedings & appellant could not avail the opportunity before CIT(A), as communication was not received by appellant.
2 ITA No.330/ASR/2023
The Ld.AO erred in both facts & laws by confirming additions of Rs 11,10,500.00 u/s 69A of the Act, of entire cash deposits during demonization period, as entire cash deposits is accounted in the books of the appellate & represent sales. 3. The Ld. AO erred in both facts & laws by confirming additions of Rs 11,10,500.00 in an arbitrary manner. 4. The CIT(A) erred in both facts & laws by conforming addition of Rs 3,14,270.00 in an arbitrary manner. 5. That, the assessment is based on mere presumptions and conjectures. 3. Brief facts of the case:-The Assessing Officer noted that the assessee
had not filed his return of income for the present assessment year.
Therefore, a notice u/s 142(1) of the Act was issued on 02.05.2019
alongwith questionnaire to the assessee requesting the assessee to furnish
the details. Further, a detailed letter along notice u/s 142(1) of the Act
dated 29.07.2019 was also issued during the assessment proceedings but
the assessee did not make any response. Further, on verification u/s
133(6) of the Act from bank regarding, it was found by the Assessing Officer
that the cash deposit of SBNs was made by the assessee as under:-
Bank Account No. Nature Amount of Cash/Credits made to Bank Name of Cash Other Total Credits & account Deposits Cash/Credit made to Branch during in F.Y. 2016- Bank in F.Y. 09.11.2016 17 2016-17 to 31.12.2016 JK XXXXXXX0000186 Cash 4,50,000/- 23,72,562/- 28,22,562/- Bank Credit SSI Lal Chowk JK XXXXXXX002405 Current 6,60,500/- 15,55,873/- 22,16,373/- Bank Account SSI Lal Chowk Total 11,10,500/- 39,28,435/- 50,38,935/-
3 ITA No.330/ASR/2023
3.1. The Assessing Officer noted that during the period of demonetization,
the assessee had made cash deposits of Rs.11,10,500/- in SBNs in his
bank account and also had made transactions pertaining to business for
an amount of Rs.39,28,435/- by way of cash/credit entries in the bank
account. In absence of any reply from the assessee, the Assessing Officer
added a sum of Rs.11,10,500/- as unexplained investment liable to be
taxed @60% u/s 115BBE of the Act. Further, the Assessing Officer also
added a sum of Rs.3,14,270/- u/s 28 of the Act on the basis of taking
gross profit @8% as specified 44AB of the Act as the turnover of the
assessee less than Rs.2 Crores.
Aggrieved with the said order, the assessee preferred an appeal
before the ld. CIT(A). The Ld. CIT(A) noted in para-4 of his order that
notices of hearing u/s 250 of the Act dated 20.01.2021, 06.09.2023 and
06.10.2023 were issued to the assessee but the assessee did not file any
submission in response to the notices issued. The ld. CIT(A) after
considering the facts of the addition of Rs.11,10,500/- u/s 69A of the Act
as brought out by the Assessing Officer in the assessment order dismissed
the appeal of the assessee for the reason that the assessee could not
controvert the finding given by the Assessing Officer on the merits of the
issue. Further, with respect to the addition of Rs.3,14,270/- being 8% of
other receipts of Rs.39,28,435/-, the ld. CIT(A) again dismissed the appeal
of the assessee by holding that no books of accounts were furnished so as
to establish that the profits out of retail business was less than the
prescribed profits u/s 44AD of the Act.
Aggrieved with the said order, the assessee is in appeal before us.
4 ITA No.330/ASR/2023
In appeal before us, the assessee has filed application for revised
grounds of appeal in respect of ground no.1. Further, the assessee has also
filed an application for admission of the additional evidences under Rule-29
of the ITAT Rules, 1963 and the assessee also filed a written submission
dated 11.03.2024. The AR further submitted that the notice u/s 142(1) of
the Act issued to the assessee to file his ITR was not received by the
assessee in view of the fact that during the assessment period (August,
2019 to March, 2020) the valley was disturbed and all lines of
communications were generally not available. As per the grounds of appeal
before us, it is submitted that the assessee could not appear before the ld.
CIT(A) in view of the fact that notice sent by ld. CIT(A) were through email
of the tax consultant, (who had filed the appeal) but the tax consultant did
not intimate the same to the assessee, resulting in non-availing of
opportunity before the Ld. CIT(A). It was further submitted that the
assessee was engaged in the business of trading of Kitchen Items and the
cash deposits in the bank accounts represent sales made in ordinary
course of business and simultaneously withdrawn and the said fact is
apparent from the record. Further, regarding the addition of net profit 8%
of the balance bank credits, it was submitted that the assessee had
maintained complete books of account. It was also submitted that in the
case of the assessee the assessment for AY 2016-17 was also assessed u/s
147 of the Act and net profit rate @2.94% offered by the assessee was
accepted. In view of these facts, it was submitted that since, the assessee
could not appear before the Assessing Officer as well as ld. CIT(A), the
matter may be remanded to the Assessing Officer to pass de novo
5 ITA No.330/ASR/2023
assessment as the additional evidences filed by him required factual
verification by the Assessing Officer.
The ld. Sr. DR supported the orders of the authorities below.
We have heard both the parties and perused the material available
on record. The assessee has filed written submission and additional
evidences on the merits of its submission, which requires factual
verification. Further, the assessee has requested to set-aside the
proceedings back to the Assessing Officer as the case was decided ex-parte
at every stage and neither any submissions were made on merits of the
case nor the same were examined at any stage. We, therefore, in the
interest of justice, set-aside the order of the Ld. CIT(A) and remand the
matter back to the file of the ld. AO for de-novo assessment on the subject
matter of the dispute in the present appal, after taking into consideration
all documentary evidences and the books of account to be produced by the
assessee for proper explanation of his case.
8.1 Before concluding we find that in the instant case, the ld. CIT(A)
issued the notice in ITBA portal and also in the e-mail ID provided in form
35, as confirmed by the ld. DR, and the present counsel also admitted to
the same. As such, we observe that there were some latches on the part of
the assessee in not appearing before the Ld. CIT(A) and as such, we impose
a token cost of Rs.5,000/- (Rs. Five thousand) on the assessee to be
deposited to the credit of the Prime Minister National Relief Fund, within 30
days, (thirty) from the receipt of this order, evidence to be produced before
the jurisdictional AO.
6 ITA No.330/ASR/2023
8.2 With the above observation, we remand this case back to the file of the Assessing Officer for de novo assessment as directed above and we also direct the assessee to file all necessary papers and documents in support of his case before the AO, and to fully cooperate in fresh assessment proceedings.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 19th August, 2025
Sd/- Sd/- [UDAYAN DAS GUPTA] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 19.08.2025. f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ
