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Facts
The assessee filed a return of income declaring Rs. 5,01,440 under section 44AD. The case was selected for scrutiny due to abnormal cash deposits during demonetization and Form 26 data exceeding gross turnover. The Assessing Officer made additions of Rs. 1,11,11,550 (cash deposits) and Rs. 72,05,547 (estimated profit).
Held
The Tribunal held that the NFAC allowed the appeal without calling for a remand report or verifying documents. The Assessing Officer correctly added the profit and cash deposits as the assessee failed to provide documentary evidence. Therefore, the grounds raised by the revenue are allowed.
Key Issues
Whether the NFAC erred in allowing the appeal without a remand report and whether the additions made by the AO for cash deposits and estimated profit were justified.
Sections Cited
143(3), 44AD, 143(2), 142(1), 69A, 68, 194C, 194J
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI
Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL
Date of hearing: 27/08/2025 Date of Pronouncement: 17/09/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the revenue is directed against the order of the National Faceless Appeal Centre Delhi [hereinafter referred to as “NFAC”] vide order dated 10.07.2024 pertaining to A.Y. 2017-18 arising out the assessment order dated 27-12-2019 u/s.143(3) of the Income-tax Act, 1961, (in short ‘the Act’). 2. The revenue raised the following grounds in appeal: 1
Whether on facts and circumstances of the case and law, the Ld. CIT(A) has restricted the addition of Rs. 1,83,17,097/-made by the AO on account of profit of Rs. 72,05,547/- @8% on total turnover Rs. 9,00,69,342/- and addition made u/s 68 of the Act as cash deposits of Rs.1,11,11,550/- by the assessee during the F.Y. 2016-17, that it is the unexplained income of the assessee as he was not offered the above mentioned income for tax during the F.Y. 2016-17.
Whether on facts and circumstances of the case and law, the Ld. CIT(A) has restricted the addition of Rs. 1,83,17,097/-. In this regard, it is the fact that the assessee did not furnish any documentary evidences regarding the cash deposits and credits in bank account of the assessee during the A.Y. 2017-18.
The appellant reverse the right to add, amend or alter the grounds of appeal
on or before the date the appeal finally heard for disposal.
3. The brief facts of the case are that the assessee filed return of income declaring total income of Rs. 5,01,440/- on 16-01-2018 under section 44AD of the Act. The case was selected for complete scrutiny for the reason:- (i) Abnormal increase in cash deposits during demonetization period as compared to demonetization period (ii) Amount paid /credited as per Form 26 as (section 194C and 194J) is more than the gross turnover or gross receipts shown in return of income. The statutory notice u/s 143(2) of the Act was issued. Again notice u/s 142(1) of the Act with questionnaire was issued. The Assessing Officer completed the assessment after considering the submission 2 ITO Ward -34 vs..Kaushal Kishore Mishra furnished by the assessee and made the addition of Rs. 1,11,11,550/- u/s 69A and Rs. 72,05,547/- estimated profit at the rate of 8% under section 69A of the Act.
4. Aggrieved by the order of the AO, the assessee filed the appeal before the Ld. CIT(A), the Ld. CIT(A) vide his order dated 10-07-2024 partly allowed the appeal of the assessee. Being aggrieved the order of the Ld. CIT(A) the revenue is in appeal before the tribunal.
Learned authorized representative for Department of Revenue submitted that the, without calling the remand report, the Ld. NFAC allowed the appeal. The Ld. NFAC should called out the remand report from the AO. None is present for the assessee.
We have heard the Ld. Departmental Representative and perused the material available on record. The Ld. NFAC relied the documents furnished by the assessee without calling the remand report from the AO. Ld. NFAS has observed in his order that the assessee had carried out his business activities under the two proprietorship concerns i.e M/s Kuber Enterprises and M/s Image Promotion and Branding and the assessee had earned profit from one of his proprietorship concerns and loss from the other. The Ld. 3 ITO Ward -34 vs..Kaushal Kishore Mishra NFAC allowed the appeal without calling the remand report and without verifying the documents. The Assessing Officer rightly added the profit of Rs. 72,05,547/- @ of 8% on total turnover. The assessee also failed to furnish the documentary evidence in respect of the source of cash deposit of Rs. 1,11,11,550/- made in the bank account during the demonization period. The addition was rightly made by the Assessing Officer. The grounds raised
by revenue are allowed.
7. In the result, the appeal of the revenue is allowed. Order pronounced in the open court on 17.09.2025.