SRI LAKSHMI DURGA DISTRIBUTORS,VIJAYAWADA (URBAN) vs. INCOME TAX OFFICER, WARD 3(1), , VIJAYAWADA

Briefly stated the facts of the case as culled out from the records are that the assessee, being a partnership firm, was trading in Fast Moving Consumer Goods(FMCG). The assessee did not file its return of income for the AY: 2017-18, but the learned Assessing Officer [“learned AO”] found certain deposits in the bank accounts held by the assessee. According to the learned AO, the total deposits were to the tune of Rs. 1,42,90,855/- out of which a sum of Rs. 9,47,000/- was in Specified Bank Notes [“SBNs”]. The learned Assessing Officer issued no�ce U/s. 142(1) of the Income Tax Act, 1961 [“the Act”] and stated that the assessee did not respond to any of the no�ces and therefore, the learned Assessing Officer proceeded to assess the income of the assessee ex-parte. In the order dated 28/12/2019 passed U/s. 144 of the Act, the learned Assessing Officer noted that the total turnover of the assessee as per the VAT returns was Rs. 1,38,10,152/- of which the learned Assessing Officer es�mated the income @ 8% and thereby reached a sum of Rs. 11,04,812/- and added the same to the total income of the assessee. So also, the learned Assessing Officer added a sum of Rs. 9,47,000/- which was deposited in SBNs.

Aggrieved, the assessee preferred an appeal before the learned CIT(A)-NFAC. But, according to the learned CIT(A)-NFAC, there were no reasons to interfere with the order passed by the learned Assessing Officer inasmuch as the assessee failed to appear and put forth its case, and the material on record holds good to support the findings of the learned Assessing Officer only. The learned CIT(A)-NFAC accordingly confirmed the addi�on made by the learned Assessing Officer U/s. 69A of the Act and dismissed the appeal.

Therefore, the assessee preferred this appeal sta�ng that es�ma�on @ 8% on the turnover was huge and trea�ng the cash of Rs. 9,47,000/- as unexplained money is also unreasonable.

Before me, it is the submission of the Revenue that the assessee failed to appear and put forth its case before both the learned Revenue Authori�es and also the assessee failed to conduct its appeal diligently. Therefore, the learned DR prayed to dismiss the appeal of the assessee.

I have gone through the record in the light of the submissions made on either side. In the Assessment Order, the learned Assessing Officer noted that the total deposits made in the bank accounts of the assessee were to the tune of Rs. 1,42,90,855/- and the VAT returns show that the total turnover of the assessee @ Rs. 1,38,10,152/-. While es�ma�ng the income @ 8% on Rs. 1,38,10,152/-, the learned Assessing Officer failed to consider the cash deposits subsumed in the turnover of Rs. 1,38,43,855/- . If I go by the logic of the learned Assessing Officer and es�mate has to be made on the total turnover, what is le� a�er reducing the total deposits by the turnover is only Rs. 4,80,703/- and not Rs. 9,47,000/- because the learned Assessing Officer accepted the turnover of the assessee @ Rs. 1,38,10,152/-. I, therefore, direct the learned Assessing Officer to delete a sum of Rs. 4,66,297/- which is included in the turnover. 7. Coming to the es�mate @ 8%, there is no material on record to support the same and the learned Assessing Officer did not refer to any figures to show that in the line of business of the assessee, the income is @ 8%. Taking judicial no�ce of the ma�er, I am of the considered view that es�mate @ 4% will meet the ends of jus�ce. I, therefore, direct the learned Assessing Officer to es�mate the income of the assessee @ 4% on Rs. 1,38,10,152/-. Grounds are answered accordingly.

In the result, appeal of the assessee is allowed in part in the above terms. Pronounced in the open Court on 12th November, 2024. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Dated :12/11/2024 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Sri Lakshmi Durga Distributors, 23-10-