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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 23.09.2022 for assessment year 2017-18, which in turn arises from the addition made by the Income Tax Officer, Ward-Silvassa / Assessing Officer in assessment order passed under section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 20.12.2019. The assessee has raised the following grounds of appeal:-
(A.Y 17-18) Sh. Majid Ajit Shaikh “1. Ld. CIT(A), NFAC, Delhi has erred in law and on facts to upheld A.O’s u/s 69A addition of Rs.4,90,000/- of the Act; as well as to charge tax u/s 115BBE of the Act only on the ground that M/s Diamond Trading Co. has not complied A.O’s notice u/s 1133[6] of the Act.”
On perusal of record, shows that NFAC/Ld. CIT(A) passed the impugned order on 23.09.2022, however, present appeal was filed on 03.01.2023, thus, there is delay of forty-two days in filing appeal before Tribunal. The assessee has filed an application for condonation of delay which is supported by affidavit of assessee. The Ld. Authorized Representative (Ld.AR) for the assessee submits that delay in filing appeal was neither intentional nor deliberate on the part of assessee but due to bona fide reason. The assessee engaged tax consultant, Jayeshbhai Rohit, Silvassa who was handling tax matter before First Appellate Authority and received the order of NFAC/Ld. CIT(A) but he has not timely guided the assessee to take further step for filing second appeal before the Tribunal. The assessee repeatedly persuading him (tax consultant) to take step for taking further course of action to file appeal before higher authority. The tax consultant started taking step for filing appeal before Tribunal and deposited appeal fees of (A.Y 17-18) Sh. Majid Ajit Shaikh Rs.9,410/- on 20.12.2022. The Ld. AR for the assessee further submits that in the month of December, 2022, the tax practitioner was very much engaged in preparing income-tax return filing of their clients and other statutory compliances. The delay in filing appeal is not attributable on the part of assessee rather, due to the fact of not guiding him to file appeal within sixty days on receipt of the order of NFAC/Ld. CIT(A). The Ld. AR for the assessee submits that non-filing appeal is not intentional, though assessee has a good case on merit and will prejudice, if delay in filing appeal is not condoned. The Ld. AR for the assessee submits that there is a sufficient ground for condoning the delay as the assessee has shown his bona fide reason in depositing appeal fees in the month of December, 2022 itself.
On the other hand, Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue submits that the assessee has not disclosed the genuine reason for condoning the delay and assessee’s tax consultant was engaging in making compliance is not a proper explanation.
(A.Y 17-18) Sh. Majid Ajit Shaikh 4. I have considered the submission of both the parties and gone through the order of lower authorities carefully. I find that there is delay of 42 days and assessee has already deposited appeal fees in the month of December, 2022 and the appeal was instituted on 03.01.2023, therefore I find bona fide in the conduct of assessee, even if it is considered that assessee tax consultant has not guided him timely, the conduct of assessee is otherwise bonafide. To support his conduct and the actions in filing appeal the assessee has filed his affidavit. Therefore, I have no reason to disbelieve the submission of ld. AR for the assessee that there is no intentional or deliberate delay on the part of the assessee and that he himself was persuading tax consultant to take further steps of filing appeal before Tribunal. Considering the fact that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice must be preferred. Hence, the facts of delay of 42 days in filing of appeal is condoned. Now adverting the merit of the case.
I have heard the rival submissions of the parties on the main grounds of appeal raised by the assessee. The Ld. AR (A.Y 17-18) Sh. Majid Ajit Shaikh for the assessee submits that assessee engaged in scrap business in his proprietary concern M/s AGN Steel. The assessee is maintaining two bank accounts in Vijaya Bank (now merged with Bank of Baroda). The assessee made deposit of Rs.10.30 lakh in cash during demonetization period in Vijaya Bank. During assessment, the assessee fully co-operated during assessment and made timely compliance. During assessment the assessing officer considered total turnover of assessee at Rs.45,02,510/- and estimated profit @ 10%. Besides that, the Assessing Officer also made addition under section 69A of Rs.4.90 lakh on account of credit entry in the account of assessee. The credit entry was added for the reasons that no confirmation or response was made by proprietary, M/s Diamond Trading Co. who has given this cheque against trade liability in response to the notice issued under section 133(6). Though, the notice was duly served. The assessee furnished complete details of such cheque credit. The Ld. AR of the assessee submits that before NFAC/Ld. CIT(A) the assessee challenged both the additions and made request that on cash turnover the percentage profit may be taken @ 8% and (A.Y 17-18) Sh. Majid Ajit Shaikh on the cheque transactions the profit may be take @ 6% respectively. The NFAC/Ld. CIT(A) accepted the plea of assessee and thereby made additions of Rs.1,01,670/-being @ 6% of Rs.16,94,510/- on account of cheque turnover and Rs.2,24,640/- @ being 8 % of cash turnover of Rs.28,08,000-. The Ld. AR for the assessee submits that once, the books of account of assessee is rejected and the profit is estimated no further addition can be made either under section 68 or 69 of the Act in respect of trade liability. To support such submission, Ld. AR for the ae relied upon the decision of Punjab & Haryana High Court in CIT Vs Surinder Pal Anand (2010) 192 Taxman 0264 (P&H). On the issue that the creditor has not responded to the notice under section 133(6) the ld AR for the assessee relied on the decision of Delhi Tribunal in Phool Singh Vs ACIT ( ITA no 2901/Del/2017).
6. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities and submits that no confirmation or response was made by M/s Diamond Trading Co. therefore the transaction of Rs.4.90 lakh remained unverifiable and addition may be sustained. In the (A.Y 17-18) Sh. Majid Ajit Shaikh alternative and without prejudice submissions, the ld. Sr- DR for the Revenue prayed that at least 8% of such addition may be sustained.
7. I have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. I find that during assessment the Assessing Officer made addition first addition of Rs.4,50,251/- being 10% profit on the total turnover of Rs.45,02,510/-, second addition of Rs.4.90 lakh by taking view that no response to the notice under section 133(6) was made by the person who issued such cheque. I find that before NFAC/Ld. CIT(A) the assessee filed detailed written submission. On considering such Ld. NFAC/Ld. CIT(A) restricted the addition of total turnover @ 8% on cash transaction and @ 6% on cheque transaction (banking channel) thereby restricted said addition to the extent of Rs.3,26,310/-, however, other addition of Rs.4.90 lakh was upheld. There is no dispute that profit of the assessee was estimated on the total turnover.
The Hon’ble Punjab High Court in CIT Vs Surinder Pal Anand (supra) on similar issue held that once under the