MADDIPATLA CHANDRASEKAR VIJAYAKUMAR,,CHENNAI vs. ITO, WARD-1(1), , THIRUVALLUR

Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 14-12-2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] on best judgment basis u/s. 144 of the Act on 23- 12-2019.

Upon perusal of assessment order, it could be seen that the assessee deposited cash in bank accounts but did not file any return of income which led Ld. AO to estimate the income on best judgment basis. The assessee filed return only on 30-08-2019 offering income u/s 44AD on gross receipts of Rs.131.92 Lacs. The return was held to be invalid return. It was noted by Ld. AO that total deposit and credit entries aggregated to Rs.120.04 Lacs out of which amount of Rs.15.71 Lacs was deposited during demonetization period. The Ld. AO treated the sum of Rs.15.71 Lacs as unexplained money u/s 69A. On the balance turnover, Ld. AO estimated income @8%. Finally, the income was determined at Rs.25 Lacs. The Ld. CIT(A) confirmed the same since the assessee failed to appear during first appellate proceedings. Aggrieved, the assessee is in further appeal before us.

The registry has noted a delay of 840 days in the appeal, the condonation of which has been sought by the assessee. The assessee appeared before the bench and submitted that he being small trader, was not well versed with Income tax provisions and fully dependent on consultant for Income Tax matters. An affidavit to that effect has been placed on record. The Ld. AR pleaded for condonation of delay and also pleaded for acceptance of estimation of 8% as offered by him. The Ld. Sr. DR vehemently opposed condonation of delay and pleaded for dismissal of the appeal.

Considering the background of the assessee and the pleadings made before us, the substantial justice demand that the appeal be admitted. Therefore, we accept the prayer of the assessee. At the same time, we find that artificial bifurcation of sales turnover for pre- demonetization and post-demonetization period was without any logic or reasoning. The assessee has deposited regular cash throughout the year. In such a case, it would be reasonable to estimate the income of the assessee @10% of admitted turnover of Rs.131.92 Lacs. The same would be assessed as business income only. We order so. The Ld. AO is directed to re-compute the income of the assessee. 5. The appeal stand partly allowed.