SACHIN KUMAR DIXIT,FARRUKHABAD vs. INCOME TAX OFFICER, WARD-4(2)(2), FARRUKHABAD, FARRUKHABAD

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 203/Agr/2024 for the assessment year

2017-18 has arisen from the appellate order dated 16.04.2024 [DIN &

Order No. ITBA/NFAC/S/250/2024-25/1064124640(1)], passed by

learned Commissioner of Income-tax (Appeals), NFAC, Delhi, which

appeal before ld. CIT(A) in turn has arisen from the assessment order

ITA No.203/Agr/2024

dated 19.11.2019 passed by Assessing Officer u/s. 144 of the Income-

tax Act, 1961.

filed with Income Tax Appellate Tribunal, Agra Bench, Agra, reads as

under :

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Amendment) Act, 2016 which received the assent of 16th December, 2016 prior to which the charging rate was 30 percent. 5. That the appellant craves the leave to add, amend, modify, delete any grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other.”

of information that during the demonetization period, the assessee has

deposited cash of Rs.8,90,000/- and Rs.1,48,000/- in bank account No.

86659910000061 and 86652010022428 respectively , maintained with

Syndicate Bank, Farrukhabad. Assessing Officer obtained the bank

statements directly from the bank. Assessing Officer observed that bank

account No. 86659910000061 was a loan account opened on

27.05.2016 with debit balance of Rs.10 lakhs, wherein total credit was to

the tune of Rs.10,35,000/-, out of which loan advance payment to the

tune of Rs.3,50,000/- and Rs.5,40,000/- was made by the assessee in

cash on 01.12.2016 and 14.12.2016 respectively , and the said bank

account stood closed on 07.02.2017. Assessing Officer observed that in

the other bank account no. 86652010022428, the assessee has

deposited Rs.2,59,978.91, out of which Rs.1,48,000/- was deposited in

cash during demonetization period and Rs. 70,000/- by way of credits,

and further an amount of Rs. 978.91 was credited by way of interest. The

AO observed that pattern of cash deposits during demonetization period

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as well post demonetization period was different. The AO further

observed that the assessee did not file his return of income with

department. The Assessing Officer issued notices u/s. 142(1), but there

were no compliance by the assessee. Show cause notice u/s. 144

werealso issued by the AO to the assessee. The assessee did not

comply with the notices and the Assessing Officer made addition of

Rs.12,94,000/- ( Rs. 8,90,000/- and Rs. 1,89,000/- being cash deposited

in the two bank accounts and Rs. 1,45,000/- and Rs. 70,000/- by credit

other than cash deposits in the above two accounts) in the hands of the

assessee u/s. 69A read with section 115BBE of the Act with respect to

the cash deposits in the bank account as well as other credit entries in

the said bank accounts vide best judgment assessment order passed by

the AO u/s. 144.

The CIT(Appeals) dismissed the appeal of the assessee as the assessee

had not participated in the assessment proceedings as well in the

appellate proceedings , and as the assessee could not submit

satisfactory explanations with regard to the nature and source of cash

deposits , the learned CIT(A) dismissed the appeal filed by the assessee.

and the ld. Counsel for the assessee submitted that it is an ex-parte best 4 | P a g e

ITA No.203/Agr/2024

judgment assessment order passed by the Assessing Officer, and even

the ld. CIT(Appeals) has passed an ex-parte appellate order. It is

submitted that the assessee was in the business of retail trade of daily

needs. The assessee has filed return of income for the assessment year

2015-16 and 2016-17, declaring income under presumptive scheme of

taxation u/s 44AD. It was submitted that income for the impugned

assessment year was below taxable limits, and hence return of income

was not filed. Thus, for the impugned assessment year, no return of

income was filed u/s 139 by the assessee. Our attention was drawn to

the return of income filed for the assessment year 2015-16 , wherein the

assessee has shown his business as retailer and the assessee has

invoked presumptive scheme of taxation u/s. 44AD of the Act. It was

submitted that both the authorities below have brought to tax the entire

credits in the bank account for the year under consideration , which is not

appropriate. Our attention was drawn to proviso to section 251(1)(a) of

the Act which was introduced by Finance Act, 2024 wef 01.10.2024, and

it was submitted that now even the ld. CIT(Appeals) has been given

powers to set aside the matter back to the file of Assessing Officer for

making de-novo assessment in case an assessment order is passed u/s.

144 of the Act. Thus, prayers were made to restore the matter back to

the file of Assessing Officer. 5 | P a g e

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compliance by the assessee before the Assessing Officer as well as ld.

CIT(Appeals). There were cash deposits in the bank accounts and the

assessee could not offer any explanation. The assessee is referring to

the Income-tax Returns for the assessment year 2015-16 and 2016-17,

but the same were filed on 21.05.2016, which is just 4-5 days prior to

disbursement of loan of Rs.10,00,000/-, on 27.05.2014. It was submitted

that these return of income were filed only for the purpose of taking loan

from the bank. The assessee could not prove that the assessee is in

retail business. Prayers were made to confirm the order of ld.

CIT(Appeals).

for the assessment years 2015-16 and 2016-17 , and the assessee was

engaged in small retail business. The assessee invoked the presumptive

taxation scheme u/s. 44AD. There were no taxable income for

assessment year 2015-16 and 2016-17. Similarly, it was submitted that

there is no taxable income for the year under consideration. It was

submitted that the authorities below have added the entire credits

including cash deposits in the bank account as the income of the

assessee.

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record. We have observed that the assessee has not filed return of

income for the impugned assessment year. The Revenue was having

information that during the demonetization period, the assessee has

deposited cash of Rs.8,90,000/- and Rs.1,48,000/- in the two bank

accounts maintained by the assessee with Syndicate Bank,

Farrukhabad.. Assessing Officer obtained bank statements directly from

the bank. Statutory notices were issued by the AI to the assessee u/s.

142(1) and 144 of the Act from time to time during the course of

assessment proceedings.Assessee did not submit any reply during the

course of assessment proceedings and best judgment assessment u/s.

144 was framed, wherein total credits to the tune of Rs.12,94,000/- in the

two bank accounts of the assessee with Syndicate Bank, Farrukhabad

were added to the income of the assessee and were brought to tax by

the AO u/s. 69A read with section 115BBE of the Act, being unexplained

money. Learned CIT(Appeals) dismissed the appeal of the assessee ex-

parte because no of non prosecution of the appeal by the assessee. The

assessee during the course of proceedings before the Bench has

submitted that the assessee is in the small retail trade. The assessee has

submitted that there was no taxable income, hence, no ITR was filed for

the year under consideration. The assessee has produced before the 7 | P a g e

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Bench , ITRs for the assessment years 2015-16 and 2016-17, in which

the assessee has claimed to be in retail business. Returns were filed on

21.05.2016, and in the said return of income presumptive scheme of

taxation u/s 44AD was stated to be invoked by the assessee. The

assessee has claimed that for the year under consideration , the turnover

being from retail trade is covered u/s 44AD, and there will be no tax

payable by the assessee. Plea of the assessee needs verification. The

assessee has also relied upon the decision of Hon’ble Gujrat High Court

in the case of CIT v. Pradeep Shantilal Patel (2014) 42 taxmann.com 2

(Gujrat) and order of ITAT, Surat in the case of Smt. Kiran Vallabhai Ahir

v. ITO (ITA No. 65/SRT/2017) dated 10.02.2020 . The assessee has

claimed that the assesseeis liable to tax u/s. 44AD of the Act since the

turnover is around Rs.12,94,000/- , and the assessee’s income comes to

Rs.99,220/-, which is below the threshold limit , and hence it is claimed

the assessee is not liable to file income tax return and pay taxes. This

plea of the assessee requires verification. Both the orders passed by the

authorities below are ex parte orders. Now, the assessee has come

forward to explain its case. The additional evidences filed for the first time

before the ITAT needs verification. Onus is on the assessee to prove and

substantiate that the assessee is in retail business, and is eligible to

claim presumptive scheme of taxation u/s 44AD. Thus, in the interest of 8 | P a g e

ITA No.203/Agr/2024

justice and fairness to both the parties, the orders of the authorities below

are set side and the matter is restored back to the file of Assessing

Officer for framing de novo assessment. The assessee is also directed to

cooperate in de novo assessment proceedings before the Assessing

Officer and in default, the Assessing Officer shall be free to pass the

order in accordance with law after giving proper opportunity of hearing to

the assessee. We clarify that we have not commented upon the merits of

the issues. We order accordingly.

purposes.

Order pronounced in the open court on19.02.2025.

Sd/- Sd/- (SUDHIR KUMAR) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:19.02.2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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