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Facts
The assessee, an individual, did not file an income tax return for AY 2012-13. Information revealed cash deposits of ₹49,91,470 in a bank account. Consequently, a notice under Section 148 was issued, which was eventually served by affixture. The Assessing Officer made an addition of the entire amount as unexplained cash under Section 69A.
Held
The Tribunal held that while the assessee claimed to be engaged in the business of trading grey cloth with a low profit margin, books of account were not maintained. However, considering the facts and circumstances, to meet the interest of justice, it would be fair to estimate the profit at 4% of the annual turnover. The Assessing Officer was directed to determine the net profit on this basis.
Key Issues
Whether the addition of unexplained cash deposit is sustainable and if so, on what basis the profit should be estimated in the absence of proper books of accounts.
Sections Cited
144, 147, 148, 69A, 271(1)(c), 133(6), 44AD, 44AE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Mr. Virendra M Gaur (assessee / appellant) against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)], wherein the appeal filed by the assessee against the assessment order passed under Section 144 read with section 147 of the Income-tax Act, 1961 (the Act) passed by the Income Tax Officer, Ward 23(3)(7), Mumbai dated 9th December, 2018, for A.Y. 2012-13, was dismissed.
The assessee has raised following grounds of appeal:-
“1. The learned AO has erred by issuing notice u/s 271(1) (c) for inaccurate particulars of income by
2. On the facts and circumstances of the case and in law the learned Assessing Officer erred in passing the order on the addition of Rs.49,91,470/-by treating entire deposit as unexplained income.
The learned AO has erred by passing the order u/s 144 r.w.s 147 without serving any Notice upon the 'appellant' u/s 148 of the Act and also without going in to the merits of the case.
The learned AO has erred by not considering the Hon'ble ITAT's decision in the case of M/s K.P. Cold Storage Vs ITO (ITAT Agra) as well as various judgment of various higher authorities in connection with service of notice u/s 148 of the Act and provisions of CPC in this regards.
The appellant craves leave to add, to amend, alter/ delete and/or modify the above grounds of appeal
on or before the final hearing.”
03. The brief facts of the shows that the assessee is an individual who did not file return of income for the impugned assessment year. Information is available in non-filers data that assessee has deposited ₹49,91,470/- in bank account in cash. Therefore, notice under Section 148 of the Act was issued on 13th March, 2019. Such notice remain unserved by postal authorities and therefore, same was served by affixture on the last known address of the assessee on 17th June, 2019. From the
4. The learned Assessing Officer passed an assessment order under Section 144 read with section 147 of the Act making an addition of ₹49,91,470/- as unexplained cash money under Section 69A of the Act by order dated 9th December, 2019. 05. Assessee aggrieved with the same preferred an appeal before the learned CIT (A), which was delayed by 65 days and the reason of delay was explained about domestic and health issues. The learned CIT (A) condoned the delay. 06. On the merits the assessee submitted that the case was reopened under Section 147 of the Act and notice under Section 148 of the Act was not served to the assessee at all. The learned CIT (A) has held that the notice has been served on the assessee by affixture at the last known address and therefore, the validity of the notice cannot be questioned.
On the merits of the addition, assessee submitted that he was carrying on the business or profession of trading of
Before us, the learned Authorized Representative submitted a paper book containing 29 pages, wherein the submissions before the learned CIT (A) are also placed at page no.26 to 29. It was the claim of the assessee that looking to the bank statement of the assessee it clearly shows that assessee is engaged into the business in very small level. Therefore, reasonable profit may be ascertained. He also demonstrated by submitting the copies of the bank statement and also reconciliation of cash deposit in the bank account of the assessee.Therefore, he submitted that the addition made by the learned Assessing Officer and confirmed by the
Assessee also remained present in hearing and explained how he carried business. He has now closed the business and is now working as a godown keeper in small company.
The learned Departmental Representative vehemently supported the order of the learned lower authorities. He submits that it is for assessee to prove that he is carrying a business and in possession of cash to deposit the same in the bank account. Therefore, orders of the lower authorities are correct. He submits that the addition is made under Section 69A of the Act needs to be sustained.
We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly, the assessee has deposited cash in bank account with Union bank of India and Syndicate Bank for the impugned year amounting to ₹49,91,470/-. Before the learned CIT (A), assessee has submitted that assessee was carrying on business at very small level trading in grey cloth in the individual name. From the bank statements also it is seen that he has sold goods at various places where from cash is deposited in his bank account. The cash is deposited from Bhagalpur, Panipat, Delhi, Muhul, Laitur, Erode, Noida, etc. The bank statement of Union Bank of India and Syndicate bank shows these deposits. The assessee has also given a summary of his day to day transactions in the bank account. The payment also shows that assessee has
No other grounds are pressed before us.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 27.06. 2024.