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Facts
The assessee did not file an income tax return and was non-compliant during assessment. The AO made a best judgment assessment under Section 144, adding Rs. 13.31 lakhs under Section 69A for demonetization deposits and estimating business income at 8% on the remaining Rs. 302.76 lakhs of bank deposits. The CIT(A) confirmed the assessment.
Held
The Tribunal found substance in the assessee's arguments that the 8% profit margin was too high for a sim card and recharge coupon seller and that the demonetization deposit was part of business receipts. The case was set aside and remanded to the CIT(A) for fresh adjudication, directing the assessee to provide proof.
Key Issues
The key legal issues were the estimation of business income at 8% and the separate addition for post-demonetization deposits, which the assessee claimed were part of regular business receipts.
Sections Cited
Section 144, Section 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “DB” BENCH, AMRITSAR
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & SHRI UDAYAN DAS GUPTA, JM
(निर्धारण वर्ा / Assessment Year: 2017-18) Shri Aashaq Hussain Khan ITO बिधम/ Wagoora, Darahu Frasta Ward-1 Wari, Baramulla Srinagar - 192301 Vs. J & K – 193201 स्थायीलेखासं./जीआइआरसं./PAN/GIR No. BGHPK-0549-L (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : Written submissions अपीलाथीकीओरसे/ Appellant by : प्रत्यथीकीओरसे/Respondent by : Sh. Charan Dass (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 20-01-2026 घोषणाकीतारीख /Date of Pronouncement 20-01-2026 : आदेश / O R D E R
Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC dated 02-08-2024 in the matter of an assessment framed by Ld. AO on best judgment basis u/s 144 on 06-12-2019. The registry has noted delay of 44 days in the appeal which stand condoned. The assessee has filed written submissions along with its grounds of appeal. The Ld. Sr. DR pleaded for dismissal of the appeal. After due consideration, the appeal is disposed-off as under.
2. The assessee did not file return of income and remained non- compliant during assessment proceedings. It transpired that the assessee deposited Rs.316.07 Lacs in its bank account out of which Rs.13.31 Lacs were deposited during demonetization period. The amount of Rs.13.31 Lacs was accordingly added u/s 69A. On the remaining deposits of Rs.302.76 Lacs, Ld. AO estimated business income @8% and framed the assessment. The Ld. CIT(A) confirmed the assessment for want of any reply from the assessee. Aggrieved, the assessee is in further appeal before us.
3. From assessee’s submissions, it appears that the assessee has acted as seller of sim cards and recharge coupons. The ledger from Bharti Airtel Ltd. has been placed on record. It has been submitted that the profit margin in this line of business is very low and therefore, the estimation of 8% is on the higher side. The assessee has also assailed separate addition for post-demonetization deposits on the ground that it is only an artifical bifurcation whereas the despoits represent business receipts only. Finding substance in these pleadings, we set aside the impugend order and restore the appeal back to the file of Ld. CIT(A) for fresh adjudication by considering these documents with a direction to the assessee to plead and prove its case forthwith.