Sanjeev Kumar, New Delhi V. ITO, Ward 51(2), New Delhi

ITA 1006/DEL/2023

AI Insights

The case revolves around an appeal by Shri Sanjeev Kumar against the order of the National Faceless Appeal Centre (NFAC), which confirmed an addition of Rs. 16,79,024 to his income for the Assessment Year 2017-18. This addition was initially made by the Assessing Officer under section 69A of the Income-tax Act, 1961, due to substantial cash deposits during the demonetization period and an abnormal increase in cash deposits compared to the pre-demonetization period. The Assessing Officer also considered the profit margin on sales reported by AMUL to Shri Sanjeev Kumar's proprietary concern, M/s Aflatoon Corner. The Tribunal, after reviewing the evidence and arguments, concluded that the addition was based on illogical assumptions and erroneous facts, particularly noting the violation of natural justice in the process followed by the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301049 (ITAT-DELHI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 05-04-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; Audi alteram partem
• Section: 143(3); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘SMC’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 1006/DEL/2023 [A.Y. 2017-18] Shri Sanjeev Kumar Vs. The Income tax Officer T-589, Baljeet Nagar Ward – 51(2) New Delhi New Delhi PAN: BNHPK 4855 Q (Applicant) (Respondent) Assessee By : Shri P.C. Yadav, Adv Department By : Shri Om Prakash, Sr. DR Date of Hearing : 03.07.2023 Date of Pronouncement : 07.07.2023 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order dated 31.03.2023 by the NFAC pertaining to Assessment Year 2017-18. 2 2. The sum and substance of the grievance of the assessee is that the CIT(A)/NFAC erred in confirming the addition of Rs. 16,79,024/- made by the Assessing Officer u/s 69A of the Income-tax Act, 1961 [the Act, for short]. 3. The representatives of both the sides were heard at length, the case records carefully perused. We have also considered the documentary evidences brought on record in light of Rule 18(6) of the ITAT Rules. 4. The peculiar facts are that the Assessing Officer proceeded to frame assessment u/s 143(3) of the Act by considering the cash deposited during the denomination period on the ground that as per information, there is substantial large cash deposits during the demonetization period and abnormal increase in cash deposited during the denomination period as compared to pre-demonetization period during F.Y. 2016-17 relevant to A.Y 2017-18. 5. The Assessing Officer made several enquiries in respect of the gross amount credited to the account in cash totaling to Rs. 1,21,54,500/-. The Assessing Officer not only made enquiries from 3 banks but also made enquiry from M/s Gujarat Co-operative Milk Marketing Federation Ltd, popularly known as AMUL. 6. It is strange to find that though AMUL confirmed the transaction and submitted copy of ledger account of the assessee from 01.04.2016 to 31.03.2017 showing total sales made to him and payment received thereon, AMUL also furnished item-wise break up of total purchase of M/s Aflatoon Corner [Proprietary concern of the assessee] for F.Y. 2016-17 and made it categorical that it cannot certify actual sale as AMUL has no actual market sales data if M/s Aflatoon Corner and have only its primary sales data. 7. On such information, the Assessing Officer completely changed the track of assessment which started from substantial cash found to be deposited during demonetization period and now went on to consider the profit margin on the sales figure reported by AMUL for the year under consideration at Rs. 9,86,84,085/- and estimating the profit, made addition of Rs. 16,79,024/, which addition was challenged before the ld. CIT(A) but without any success. 4 8. Before us, the ld. counsel for the assessee drew our attention to the ledger account submitted by AMUL and pointed out that AMUL has only made an observation indicative per litre margin of the assessee in respect of products sold by AMUL to the assessee and such indicative margin is at Rs. 16,79,024/-. 9. Basis this, addition has been made by the Assessing Officer. It is the say of the ld. counsel for the assessee that even Form No. 26 AS shows that AMUL has made total payment of Rs. 12,52,788/-, which receipt has been shown by the assessee in its return of income which is at page 34 of the Paper Book. The ld. counsel for the assessee vehemently stated that the entire addition has been made on illogical assumption and erroneous facts. 10. Per contra, the ld. DR supported the findings of the Assessing Officer. 11. The undisputed fact is that as per Form No. 26 AS, total payment made by AMUL is at Rs. 12,52,788/-. It is also an undisputed fact that the same has been shown as sales/gross receipts in the return of income filed by the assessee. It is also not in dispute that the 5 Assessing Officer has proceeded by issuing show cause notice in respect of cash found to be deposited during demonetization period amounting to Rs. 1,21,54,500/-. It is also an undisputed fact that the impugned addition has been made without notice, which is in gross violation of principles of natural justice audi alteram partem. 12. Considering the facts of the case in totality, we do not find any merit/logic in the impugned addition. The Assessing Officer is directed to delete the same. 13. In the result the appeal of the assessee in ITA No. 1006/DEL/2023 is allowed. The order is pronounced in the open court on 07.07.2023. Sd/- Sd/- [ASTHA CHANDRA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07 th JULY, 2023. VL/ 6 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order