GITANJALI SAHOO,KHURDA V. INCOME TAX OFFICER, WARD, KHURDA, KHURDA

ITA 417/CTK/2024

AI Insights

This case involves an appeal by Gitanjali Sahoo against the order of the CIT(A), NFAC, Delhi, which confirmed the additions made by the Assessing Officer for the assessment year 2017-18. The primary grievances included the dismissal of the appeal without sufficient opportunity for the assessee to be heard, the ad-hoc estimation of net profit at 5% on estimated sales, and the treatment of certain deposits as unexplained investments under section 69 of the Income Tax Act. The Tribunal noted that despite multiple notices, the assessee did not respond, leading to an ex parte assessment under section 144. However, due to the procedural lapses in providing adequate hearing opportunities, the matter was remanded back to the Assessing Officer.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25946 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 10-10-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.C.MOHANTY
• Assessee Lawyers: P.K.MISHRA
• Keywords: Opportunity of being heard; Unexplained investment; Principle of natural justice
• Section: 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE MANISH AGARWAL Gitanjali Sahoo, C/O Sahoo, At: jagannathpur, PS: Banapur, Dist: Khurda PAN/GIR No. (Appellant Per Bench This is an CIT(A), NFAC, Delhi dated 28.8.2024 in Appeal No.CIT(A),Bhubaneswar 1/14542/2019-20 2. Shri P.K.Mishra, S.C.Mohanty, Sr. 2. The assessee has raised IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.417/CTK/2024 Assessment Year : 2017-18 Gitanjali Sahoo, C/O- Ajay Sahoo, At: jagannathpur, PS: Banapur, Dist: Khurda Vs. Income Tax Officer, Ward Khurda, Khurda No.EUPPS 4067 A (Appellant) .. ( Respondent Assessee by : Shri P.K.Mishra, Adv Revenue by : Shri S.C.Mohanty, Sr DR Date of Hearing : 25/11/20 Date of Pronouncement : 25/11/20 O R D E R This is an appeal filed by the assessee against the order of the A), NFAC, Delhi dated 28.8.2024 in Appeal No.CIT(A),Bhubaneswar 20 for the assessment year 2017-18. P.K.Mishra, ld AR appeared for the assessee and Shri , Sr. DR appeared for the revenue. The assessee has raised following grounds: P a g e 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, MEMBER , ACCOUNTANT MEMBER Income Tax Officer, Ward Khurda, Khurda Respondent) : Shri S.C.Mohanty, Sr DR 2024 024 appeal filed by the assessee against the order of the ld A), NFAC, Delhi dated 28.8.2024 in Appeal No.CIT(A),Bhubaneswar- the assessee and Shri ITA No.417/CTK/2024 Assessment Year : 2017-18 P a g e 2 | 5 “1. For that, the learned CIT(A) has committed gross error of law as well as of fact, in dismissing the appeal of the appellant and in confirming the additions made by the learned A.D, without providing sufficient effective opportunity of being heard to the Appellant, as such, the appeal order, being passed on gross violation of principles of natural Justice is not sustainable in the eye of law, hence needs to be quashed in the interest of justice. 2. For that, the learned CIT(A) has committed gross error of law as well as of fact in confirming the ad-hoc estimation of net profit 5% to the tune of Rs.28,00,000.00 on the estimated sales determined by the learned A.O., ignoring the past business history and the declared profit percentage accepted in the previous and subsequent years. The Impugned determination of sales turnover and ad-hoc estimation of net profit, being highly excessive, Illegal is not sustainable in the eye of law. hence needs to be reduced in the interest of justice. 3. For that, when the learned A.D. himself has observed and given a finding in the order of assessment that, in the similar line of business, in the same locality, the net profit has been disclosed ranging from 1.2% to 1.5%, he should not have estimated the net profit 5% on the estimated sales and the learned CIT(A) should not have confirmed the same without applying his judicious mind. The impugned estimation of net profit and addition of the same to the total income of the Assessee, being, illegal is not sustainable in the eye of law, hence needs to be deleted in the interest of justice. 4. For that, the learned CIT(A) has committed gross error of law as well as of fact in confirming the addition made by the learned A.O. of Rs.6,74,500.00 by applying provisions of section 69 of the Act, treating it as unexplained investment of the Appellant, particularly when, the SBNs deposited during demonetization period relates to the sales turnover of the Appellant. The impugned addition, thus being not sustainable in the eye of law is liable to be deleted in the interest of justice. 5 For that, section 69 of the Act has no application under the facts and in the circumstances of the case, as such, the addition of Rs.6,74,000.00 made by the learned A.O. and confirmed by the learned CIT(A) by applying section 69 of the ITA No.417/CTK/2024 Assessment Year : 2017-18 P a g e 3 | 5 Act, being illegal, arbitrary and contrary to the facts on record is not sustainable in the eye of law, hence needs to be deleted in the interest of justice. 6. For that, the Appellant craves leave of this Hon'ble Tribunal to add, alter, modify or to urge other grounds of appeal, if any, at the time of hearing in the interest of justice.” 4. Reiterating the grounds of appeal, ld AR submitted that the ld CIT(A) has dismissed the appeal of the assessee without providing sufficient opportunity of being heard to the assessee, which is against the principles of natural justice. It was the submission that the Assessing Officer made adhoc estimation of net profit @ 5% on the estimated sales ignoring the declared profit percentage accepted in the previous and subsequent years and the ld CIT(A) is not justified in confirming the same. It was also the submission that even if the AO has observed in the assessment order that in the similar line of business in the same locality, the net profit has been disclosed ranging from 1.2% to 1.5%, in assessee’s case he has estimated 5%, which is not proper and acceptable. Ld AR also submitted that the assessee has declared net profit @ 0.74% in the previous year, which has been accepted by the Assessing officer. Ld AR further submitted that the AO is not justified in treating the amount of Rs.6,74,500/- as unexplained investment particularly when the SBNs deposited during demonetization period relates to the sales turnover of the assessee prior to 2.12.2016 arising out of cash book balance. It was the submission that the business carried on by the assessee being in the retail of petrol, demonetized currency was allowed upto 2nd December, 2016. He prayed that the addition ITA No.417/CTK/2024 Assessment Year : 2017-18 P a g e 4 | 5 made by the AO and confirmed by the ld CIT(A) deserves to be deleted. In alternate, he prayed that as the assessee has not been provided sufficient opportunity before the AO and ld CIT(A) to represent her case, the matter may be restored back to the file of the AO and the assessee undertakes to represent the case with documentary evidences. 5. In reply, ld Sr DR submitted that sufficient opportunities have been provided by the AO and ld CIT(A) but the assessee has failed to comply with the notices. 6. We have considered the rival submissions. A perusal of the impugned order clearly shows that six notices have been sent to the assessee but there was no response from the side of the assessee. It is also observed that the assessment order has been passed u/s.144 of the Act as the assessee did not furnish any documentary evidences and as the assessee was not maintaining books of account, the AO made the estimated disallowance. It was the contention of ld AR that the Assessing Officer has also not taken into consideration the past history of the assessee for estimating the net profit. Be as it may, as the assessee has not been provided proper opportunities to represent her case, in the interest of justice, the issues in this appeal are restored to the file of the Assessing Officer for fresh adjudication after affording adequate opportunity of hearing to the assessee. It is also directed that the assessee should furnish ITA No.417/CTK/2024 Assessment Year : 2017-18 P a g e 5 | 5 all the required documents as deem proper in support of her case before the Assessing officer. 7. In the result, appeal of the assessee stands partly allowed for statistical purposes. Order dictated and pronounced in the open court on 25/11/2024. Sd/- sd/- (Manish Agarwal) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 25/11/2024 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.Secretary ITAT, Cuttack 1. The Appellant : Gitanjali Sahoo, C/O- Ajay Sahoo, At: Jagannathpur, PS: Banapur, Dist: Khurda 2. The Respondent: Income Tax Officer, Ward Khurda, Khurda 3. The CIT(A)- NFAC, Delhi 4. Pr.CIT, Bhubaneswar-1 5. DR, ITAT, 6. Guard file. //True Copy// "