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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE BEFORE S/SHRI GEORGE MATHAN, JUDICIAL JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.71/CTK/2022 Assessment year: 2017-18 Bichitra Nanda Mallick, Bichitra Nanda Mallick, Vs. Pr. CIT, Bhubaneswar Pr. CIT, Bhubaneswar-1, At: At: Praharajpur, Praharajpur, Gotara, Gotara, Bhubaneswar Bhubaneswar Mahanga, Mahanga, Nischintakoili, Nischintakoili, Cuttack PAN/GIR No PAN/GIR No.APQPM 9746 L (Appellant) ) .. ( Respondent Respondent)
Assessee by : Shri K.K.Bal, AR K.K.Bal, AR Revenue by : Shri M.K.Gautam, CIT , CIT DR Date of Hearing : 19/12 12/2022 Date of Pronouncement : 19/12 12/2022 O R D E R Per Bench
This is an appeal filed by the assessee against the order This is an appeal filed by the assessee against the order This is an appeal filed by the assessee against the order u/s.263 of the Act dated 31.12.2021 u/s.263 of the Act dated 31.12.2021 of the ld of the ld Pr. CIT-1 Bhubaneswar Bhubaneswar in in Appeal Appeal No. No.ITBA/REV/F/ReV /REV/F/ReV-5/2021- 22/1038324889(1) fo 22/1038324889(1) for the assessment year 2017 2017-18. 2. Shri K.K.Bal, ld AR K.K.Bal, ld AR appeared for the assessee and appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. M.K.Gautam, ld CIT DR appeared for the revenue. M.K.Gautam, ld CIT DR appeared for the revenue. 3. The appeal is time barred by 66 days. Ld AR submitted The appeal is time barred by 66 days. Ld AR submitted The appeal is time barred by 66 days. Ld AR submitted that the appeal could that the appeal could not be filed within the stipulated period not be filed within the stipulated period P a g e 1 | 7
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due to COVID 19 and there was delay of 66 days. He prayed that the delay may be condoned and appeal may be decided on merits. After hearing both the sides, we are satisfied that the delay in filing of the appeal is due to reasonable cause. Accordingly, we condone the delay of 66 days and admit the appeal for hearing. 4. It was the submission of ld AR that the assessment in the case of the assessee came to be passed u/s.144 of the Act on 6.12.2019, wherein, on account of non-filing of the return by the assessee, the Assessing Officer had treated the deposits in the assessee’s bank account as the total turnover of the assessee and estimated the income of the assessee at 8%. Similarly, the Assessing Officer had made a further addition of the cash deposit by the assessee during the demonetization period as income from unexplained sources. It was the submission that on both the issues, the assessee is in appeal before the ld CIT(A). It was the further submission that in the meantime, the Pr. CIT has invoked his powers u/s.263 of the Act on two issues, first being that the estimation of 8% by the AO of the total cash deposit was not logical and legally valid opinion and the second issue that the provisions of section 115BBE was to be applied and the tax was to be levied at 60%
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in respect of the unexplained income determined in respect of cash deposit in the bank during the demonetization period. It was the submission that though the Pr. CIT has invoked his powers u/s.263 of the Act to hold that the estimation of income at 8% was wrong, he has not directed the AO as what has to be done thereafter. It was the submission that admittedly, this leads to the conclusion that the estimation of 8% has been deleted by the Pr. CIT. It was the submission that consequently, it cannot be said that the order of the Assessing officer is erroneous and prejudicial to the interest of the revenue insofar as a revision cannot be done for the purpose of reduction of the total income assessed and by the direction of the Pr. CIT, the total income as assessed by the AO, the estimated income at 8% gets reduced. It was the further submission that the cash deposit was part of the amount considered as turnover of the assessee and this would result double addition. It was the submission that the order of the Pr. CIT is liable to be cancelled. 5. In reply, ld CIT DR submitted that the issues being pending before the ld CIT(A), the order of the Pr. CIT passed u/s.263 is liable to be upheld. It was the submission that non- application of provisions of section 115BBE is erroneous
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application of law by the AO and same is erroneous and prejudicial to the interest of the revenue. It was the further submission that to this extent, the order of the Pr. CIT is liable to be upheld. It was further submitted that in respect of estimation of income by the AO at 8%, the Assessing Officer has not examined the activities of the assessee in its entirety. It was the submission that the income of the assessee is liable to be at a much higher figure than 8% as estimated by the AO. It was the submission that the assessee has not filed its return of income and accounts are not audited. It was the submission that the order of the pr. CIT u/s.263 is liable to be upheld. 6. In rejoinder, ld AR submitted that the assessee is a salesman. It was the submission that the assessee takes order from various retail shops, procures the products from wholesalers, supplies to the same retail shops, collect money, deposit in the bank account and pays to the wholesalers. It was the submission that the assessee is in the profit margin range of 1 to 2% before expenses. It was the submission that the estimation of 8% was high and now the claim much more than 8% is in effect trying to prove that the income tax department can draw blood from the stone. It was the prayer that the order of the Pr. CIT be quashed.
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We have considered the rival submissions. Admittedly, a perusal of the assessment order and that of the Pr. CIT shows that the total cash deposits is an extent of Rs.3,87,72,556/-. The assessee is said to be a salesman. This being so, as the assessee is procuring orders from the retailers and service such orders by purchasing from the wholesalers, collecting the amount and paying the wholesalers, obviously, the margin would be lower. However, a perusal of the assessment order shows that these facts have not been considered by the AO. He has taken direct 8% as income of the assessee. On perusal of the order of the Pr. CIT also shows that he is of the view that 8% as estimated by the AO is not on the basis of any logical and legal valid opinion. Admittedly, this deposit in the bank account during demonetization period has also been treated as income from unexplained sources. These deposits are not part of the cash deposits of Rs.3,87,77,556/-. However, these deposits are admittedly claimed to be the part of sale proceeds. This also has connection with the amount of Rs.3,87,77,556/- treated by the AO as gross turnover of the assessee. Admittedly, non-application of the provisions of section 115BBE is a wrong application of the law by the AO and same is
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amenable to revision u/s.263. This being so, in the interest of justice, the order of Pr. CIT is modified as follows: (i) In respect of issue of estimation of income of the assessee from the cash deposits of Rs.3,87,77,556/- in the bank account, Pr. CIT has restored the issue to the file of the AO for denovo assessment, which is upheld. The income of the assessee is not to be estimated at 8%. It is to be determined by considering the deposits and the withdrawals. If such is not determinable, then, admittedly, peak credit may be considered by the AO. (ii) In respect of specified bank notes, this issue has also been rightly restored to the file of the AO by Pr. CIT for the purpose of applying the provisions of section 115BBE. This direction is modified to grant the assessee adequate opportunity to explain the cash deposits of the specified bank notes during demonetization period and to such extent he is not able to explain, same is to be treated as unexplained income of the assessee, to which, the provisions of section 115BE is to be applied.
In the result, the order of the Pr. CIT is modified to the above extent and the appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 19/12/2022.
Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 19/12/2022 B.K.Parida, SPS (OS)
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Copy of the Order forwarded to : 1. The Appellant : Bichitra Nanda Mallick, At: Praharajpur, Gotara, Mahanga, Nischintakoili, Cuttack 2. The respondent: Pr. CIT, Bhubaneswar-1, Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. DR, ITAT, Cuttack 5. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Cuttack
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