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Facts
The assessee, engaged in business, deposited Rs. 11.75 lakhs in SBNs during the demonetization period and had total bank credits of Rs. 1,00,66,804. Due to non-filing of return and non-response to notices, the AO completed the assessment ex-parte, adding the SBN deposit under Section 69A and estimating business income at 8% of gross sales. The CIT(A) dismissed the appeal due to the assessee's non-appearance, who was hospitalized.
Held
The tribunal condoned the delay in filing the appeal due to the assessee's medical condition. It held that the provisions of Section 44AD were applicable, and the net profit from eligible business should be estimated at 8% of the gross sales of Rs. 1.21 crores, which includes the SBN deposits, thereby disallowing a separate addition under Section 69A.
Key Issues
The key legal issues were the condonation of delay in filing the appeal due to medical reasons, the applicability of Section 44AD for estimating business income, and whether SBN deposits should be separately added under Section 69A when business income is estimated under Section 44AD.
Sections Cited
Section 69A, Section 144, Section 142(1), Section 250, Section 44AD
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘DB’ AMRITSAR
Before: SHRI MANOJ KUMAR AGGARWAL & SHRI UDAYAN DASGUPTA
O R D E R Per Udayan Dasgupta, J.M.:
This appeal is filed by the assessee against the order of the ld. CIT (A) NFAC, Delhi dated 28.12.2023, passed u/s 250 of the Income Tax Act, 1961(henceforth the Act) which has emanated from the order of the AO (ward – 2, Srinagar) dated 22/12/2019 for AY 2017-18 passed u/s 144 of the Act.
Condonation of Delay : It is pointed out by the registry that the appeal is belatedly filed by 397 days and the assessee has filed an application explaining the delay that he is medically ill and has undergone four surgical A.Y. 2017-18 2 procedures including two for his heart and was in hospital when the order of the Ld first appellate authority was passed in the year December, 2023. He has been certified as “hypersensitive by doctors” and terminally ill (in support of which medical papers from Khyber Medical Institute, Srinagar, and also from Government SMHS Hospital, Srinagar has been filed along with an affidavit explaining the reasons for delay.
The Ld DR has no objection.
Considering the medical issues, we are satisfied that there has not been any intentional neglect on the part of the assessee and as such we condone the delay and admit the same for hearing on merits.
Brief facts are that the assessee is engaged in business and during the demo period an amount of Rs. 11.75 lakhs has been deposit in cash (being SBN) and the total credits in his two bank accounts for the year (excluding the demo period) was Rs. 1,00,66,804/- (as per para – 6 of the assessment order), and in absence of any return being filed, coupled with no representation to notices issued u/s 142(1) of the Act, the assessment was completed on a total income of Rs. 19.80 lakhs (which includes Rs.8.05 lakhs being 8% of gross sale proceeds as evident from bank statements plus Rs. 11.75 lakhs being the SBN deposit u/s 69A of the Act ) A.Y. 2017-18 3 6. The matter carried before the Ld CIT (A) has been dismissed in absence of any submission or response to various notices issued from the office of the Ld first appellate authority (the assessee being hospitalised).
Now the assessee is before the tribunal on various grounds contained in form 36, and the Ld AR submits that the assessee is agitated mainly due to non-availability of the opportunity of hearing because of medical reasons as stated above and the grievance of non consideration of the merits of the case under the prevailing circumstances and the AR prayed for adequate relief.
The Ld DR submitted that the AO has categorically stated that the assessee is in business as evident from various transactions recorded in the bank statement and the total receipts from business is also determined at Rs. One crore (approx.) as per para – 6 of order and net profit has been rightly estimated u/s 44AD @ 8% of gross in absence of any books of accounts being produced and the deposits of SBN has been added separately u/s 69A.
We have considered the materials on record and we find that under the prevailing medical circumstances which the assessee is facing, no purpose will be served if the matter is remanded back. We also note that the receipts in bank account has arisen out of eligible business as pointed out by the AO himself and in absence of regular books and total turnover being less than two crores, provisions of section 44AD are applicable in the instant case, and we direct that the Net profit from eligible business be estimated @ 8% on gross sales of Rs. 1.21 crores (as per para – 3 of assessment order) which also A.Y. 2017-18 4 includes the deposits of SBN during the demo period, and the assessee shall get consequential relief (without any separate additions u/s 69A).
In the result the appeal of the assessee is partly allowed.