HASMUKHBHAI RAVJIBHAI CHAUDHARI,MANDVI vs. INCOME TAX OFFICER, WARD - 2, BARDOLI

िनधा�रती की ओर से /Assessee by Shri Sapnesh R Sheth, CA राज� की ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 30.08.2023 उद्घोषणा की तारीख/Date of 30.08.2023 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC/Ld.CIT(A)”] dated 06.09.2022 for assessment year 2011-12, which in turn arises from the addition made by the Income Tax Officer, Ward-2, Bardoli /Assessing Officer in assessment order dated 24.12.2018. The assessee has raised the following ground of appeal:- “1. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A), NFAC has erred in confirming the action of Assessing Officer of reopening assessment by issuing notice u/s 148 of the I.T. Act, 1961.

2. On the facts and in the circumstances of the case as well as law, on the subject, the learned CIT(A), NFAC has erred in confirming the action of Assessing Officer of passing ex-parte order u/s 144 of the I.T. Act, 1961.

3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer by making addition of Rs.14,29,763/- as unexplained income u/s 68 of the I.T. Act, 1961.

(A.Y 11-12) Hasmukhbhai R Chaudhari 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer by making addition of Rs.8,064/- as 8% of Contract income u/s 44AD of the I.T. Act, 1961

, assessee challenged the validity of re-opening as well as additions on merit.

4. The NFAC/Ld. CIT(A) after considering the submission of assessee upheld the validity of re-opening as well as additions on merit. While upholding the validity of re-opening, Ld. CIT(A) held that neither assessee disputed the issuance of notices nor filed return of income for the impugned assessment year. At the stage of reopening, only a reasonable belief is required that income has escaped assessment. The reopening is based on basic and valid information of cash deposit. The Ld. CIT(A) also rejected the contention of assessee that assessment order was passed beyond the limitation. The Ld. CIT(A) held that 3 (A.Y 11-12) Hasmukhbhai R Chaudhari assessment order was passed within nine months from the end of financial year, in which notice under section 148 was served upon assessee.

5. On merit, the Ld. CIT(A) held that assessee failed to explain the nature and source of such credit and deposited in his bank account. The Assessing Officer has computed contract income @ 8%, however, as no return of income was filed by assessee and assessee has explained the nature of source of such credit. Thus, remaining addition of Rs.13,27,000/- was upheld. Further aggrieved the assessee has filed present appeal before the Tribunal.

6. I have heard the submission of Ld. Authorized Representative (Ld. AR) for the assessee and Ld. Senior Departmental Representative (Ld. Sr- DR) for the Revenue. The Ld. AR for the assessee submits that he has a very limited prayer before the Bench that assessee has explained before Ld. CIT(A) that he could not contest the assessment proceedings as notice was served at the address mentioned in PAN of assessee. However, Ld. AR for the assessee submits that credit in the bank account are from the contract receipt, carting income and interest earned on savings bank account and he has filed copy of bank statement, which was admittedly available before Assessing Officer also. The patterns of deposits as well as withdrawals in the bank account of assessee clearly showed that assessee’s bank account was used for small business of contract and carting income. The assessee has incurred expenses which is duly reflected and can be ascertained from various debit entries in assessee’s bank account. The Ld. AR for 4 (A.Y 11-12) Hasmukhbhai R Chaudhari the assessee submits that Hon'ble jurisdictional High Court in the case of Commissioner of Income-tax- Vs. Pradeep Shantilal Patel (2014) 42 tamann.com 2 (Guj)/[2014] 221 Taxman 436 (Guj)[19-11- 2013] held that where assessee admitted that cash deposits pertained to his retail business but details and nature of business were not forthcoming from record, considering total turnover of assessee, net income had to be determined under section 44AF. The Ld. AR for the assessee submits that Assessing Officer has already taxed @ 8% of contract receipt, therefor on reasonable estimation of income may be upheld and not the entire transaction. The Ld. AR for the assessee further submits that even if the assessee was unable to discharge his onus, hence, the entire transactions on deposits / credit in the bank account of assessee can never be held as income though only a reasonable estimation addition income on account of estimation of addition can be made.

7. On the other hand, Ld. Sr-DR for the Revenue submits that assessee has not furnished any details before Assessing Officer and now come to before Bench with the plea that only a reasonable estimation may be made. The Ld. Sr-DR for the Revenue submits that assessee is not eligible for getting any relief as assessee has not filed any corroborative evidence to substantiate his nature of business. In alternative, Ld. Sr- DR for the Revenue submits that without prejudice the matter may be restored back to the file of Assessing Officer to examine afresh the issues with a direction that assessee to substantiate his plea before Assessing Officer. 5 (A.Y 11-12) Hasmukhbhai R Chaudhari 8. In short rejoinder submission, Ld. AR for the assessee submits that Assessing Officer was having complete details of bank statement as well as Form 26AS and as per details in Form-26AS, the assessee has received about Rs.1.00 lakh on account of contract receipt which has already been taxed. The Ld. AR for the assessee submits that under the provision of Income Tax file of income of the citizen is to be taxed and not entire asset or total turnover of business. On the prayer of restoration by ld SR DR for the revenue, the ld AR for the assessee submits that this case relates to AY 2011-12 and no useful purpose will be served in sending the matter back to the assessing officer, if reasonable estimation of income is made by the Tribunal.

regarding validity of re-opening, however, no submission was made against such ground of appeal before me. Therefore, Ground Nos. 1 & 2 are treated as not pressed and thereby dismissed.

10. Ground No.3 relates to addition of Rs.14,29,763/-. I find that Assessing Officer made addition of entire credit in the bank account of assessee by taking view that no response or explanation was furnished by assessee despite services of various notices. I further find though before Ld. CIT(A) assessee has categorically contended that he has in the business in contract and carting. The Ld. CIT(A) upheld the addition by taking view that assessee has failed to explain his source 6 (A.Y 11-12) Hasmukhbhai R Chaudhari of income. I find that the Assessing Officer has made addition @ 8% on contract receipts of Rs.1,00,800/-. The Hon'ble jurisdictional High Court in the case of Pradeep Shantilal Patel (supra) while considering the issue of cash credit / deposits in savings bank account when the nature of business was not forthcoming from the record, held that when the assessee admitted the cash deposits pertaining to his retail business and nature of business was not forthcoming on record, the net income has to be determined on the basis of turnover of assessee. Thus, keeping in view the binding precedent of Hon'ble jurisdictional High Court and further keeping in view that the total deposits in bank account of assessee, therefore I deem it fit and proper to estimate the income of assessee @ 10% of credit / deposits in assessee’s bank account. With this observation, the ground of assessee’s appeal is partly allowed. The assessing officer is directed accordingly. In the result, this ground of appeal is allowed.

11. In the result, the appeal of the assessee is partly allowed.

Order pronounced in the court at the close of the hearing on Wednesday, 30th August, 2023.