ARAV TELECOM, PIMPRI,PUNE vs. THE INCOME TAX OFFICER, WARD-8(5), AKURDI

This appeal by the assessee against the order dated 07-08-2023 passed by the National Faceless Appeal Centre (“NFAC”), Delhi for assessment year 2017-18.

The assessee raised five grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in confirming the additions made by the AO on account of unexplained money u/s. 69A of the Act and estimating the net income at 15% of gross business receipt in the facts and circumstances of the case.

Brief facts relating to the case, as it is observed from Form No. 35 are that the assessee is a partnership firm carrying on business as dealer of Vodafone recharge voucher and agent of Fino Fintech Foundation Limited. According to the AO that the assessee deposited substantial cash of Rs.75,45,210/- in Vijaya Bank, Pimpri during the demonetization period i.e. 09-11-2016 to 30-12-2016. Further, no valid return filed by the assessee for A.Y. 2017-18, the AO categorized the assessee’s case as a case “involving risk of tax evasion”, issued notice u/s. 142(1) of the Act to furnish return of income. No valid return was furnished by the assessee even within the time allowed as per the provisions of section 139 of the Act i.e. on or before 31-03-2018.

The AO proceeded to complete the assessment to his best judgment u/s. 144 of the Act. The AO sought details from the concerned bank u/s. 133(6) of the Act, having received and analyzing the same, the AO treated the cash deposits in Vijaya Bank, Pimpri as unexplained money and added the said amount to the total income of the assessee u/s. 69A of the Act and charged the same to tax u/s. 115BBE of the Act. Further, the AO by following information on AIMS Module of ITBA, found total credits from 01- 04-2016 to 31-03-2017 to an extent of Rs.11,39,39,797/-, treating the same as gross business receipt, by adopting net income at 15% of such receipt estimated profits at Rs.1,70,90,969/-. Thus, the AO inter alia made two additions on account of unexplained money and profit on estimation vide its order dated 18-12-2019 u/s. 144 of the Act. Having aggrieved by the said order, the assessee preferred an appeal before the First Appellate Authority.

As it is noted from the impugned order, the NFAC, Delhi issued three notices, but no compliance made by the assessee. For not having documentary evidences supporting the grounds raised in Form No. 35, the NFAC, Delhi confirmed both the additions made by the AO.

Now, before us, the ld. AR prayed to remand the matter to the file of AO as the assessee could not submit any evidences supporting its contentions. The ld. AR drew our attention to written submissions and explained the reasons for non-compliance before both the authorities below. On perusal of the said written submissions, we note that the assessee was prosecuting a matrimonial dispute on the file of Sessions Court of Hissar (Haryana) which resulted to two days custody, thereby, he could not comply the notices, in our opinion, the reasons explained are bonafide which really prevented the assessee to comply with the notices issued by both the authorities below. Be that as it may, the ld. AR drew our attention to the application seeking admission of additional evidence and submitted that the assessee filed paper book containing 1 to 237 pages which are the relevant documents in support of grounds raised. Further, he submits that the said evidence could not be filed before both the authorities below, prayed to treat as additional evidence and remand the matter to the file of AO for its fresh consideration. The ld. AR has undertaken that the assessee is ready to comply with the notices and attend the proceeding before the AO without fail. The ld. DR reported no objection. On perusal of the said paper book, we note that the assessee filed copy of sales voucher and corresponding copy of sale invoice as per the ledger in the books of accounts, copy of invoice received from Vodafone Mobile Services Limited and corresponding copy of the purchase invoice as per the ledger in the books of accounts, copy of welcome letter of Fino Fintech Foundation Limited, copy of mail attached mentioning the details of amount of pay-out in the respective month, copy of bank statement and copy of mail received from Vodafone Mobile Services Limited and the ledger of assessee in the books of Vodafone Mobile services Limited. We find all the above documents are necessary for fair adjudication as the additions made u/s. 69A of the Act and estimation of net profit, therefore, taking into consideration the submissions of ld. AR and ld. DR, facts of the case and in the interest of justice, we deem it proper to remand the matter to the file of AO for its fresh adjudication. The AO shall examine the same by giving sufficient opportunity to the assessee. The assessee is liberty to file evidences, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose.

In the result, the appeal of assessee is allowed for statistical purpose.