Mohammad Amin Ali Mohammad Hingora, Parbhani V. Income-Tax Officer, Ward Hingoli, Parbhani

ITA 822/PUN/2022

AI Insights

The case involves Mohammad Amin Ali Mohammad Hingora, the appellant, who contested the additions made by the Income Tax Officer (ITO) under sections 69 and 144 of the Income-tax Act, 1961, for the assessment year 2017-18. The AO had made an addition of Rs.4,70,000 as unexplained cash deposits during the demonetization period and estimated the profit at 8% of the total turnover of Rs.1.05 crore, rejecting the books of account. The Commissioner of Income Tax (Appeals) upheld these additions. The Tribunal found that the AO and CIT(A) had not adequately considered the assessee's submissions and restored the matter to the AO for a fresh assessment regarding the unexplained cash deposits. Furthermore, the Tribunal adjusted the profit rate from 8% to 6%, noting the turnover exceeded the prescribed limit under section 44AD for the relevant assessment year.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124172 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 15-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 144; 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.822/PUN/2022 नधा रण वष / Assessment Year : 2017-18 Mohammad Amin Ali Mohammad Hingora, Opp. Amol Petrol Pump, Basmath Road, Koregaon, Pharbani, Parbhani – 431 402, Maharashtra Vs. ITO, Ward Hingoli, Parbhani Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 21-09-2022 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2017-18. 2. The first issue raised in this appeal is against the confirmation of addition of Rs.4,70,000/- made by the Assessing Officer (AO) u/s.69 of the Act. 3. Briefly stated, the facts of the case are that the assessee is an individual who did not file his return for the year under consideration. The AO received information about the assessee having deposited Assessee by Shri Kishor B. Phadke Revenue by Shri Piyush Kumar Singh Yadav Date of hearing 05-01-2023 Date of pronouncement 05-01-2023 ITA No. 822/PUN/2022 Mohd. Amin Ali Mohd. Hingora 2 cash with Union Bank of India during demonetization period amounting to Rs.6,90,000/-. On being called upon to explain the source of cash deposited in the bank, the assessee submitted certain details. The AO pointed out certain infirmities and called for further details. However, the assessee did not submit any details. This led to the AO passing of the ex parte order u/s 144 of the Act making addition of Rs.4,70,000/-, by treating the first item of cash deposited on 10-11-2016 amounting to Rs.2,20,000/- as ‘explained’; and the remaining deposits of Rs.1,50,000/- on 11-11-2016, Rs.2.00 lakh on 16-11-2016 and Rs.1.20 lakh on 19-11-2016 as ‘unexplained’. The ld. CIT(A), in para no.3 of the impugned order, recorded that the assessee did not furnish any response to notice sent by him on 13-09-2022 and that the last reply received from the assessee was 12-05-2022 in response to his notice dated 03-05-2022. In the absence of any proper response, the ld. CIT(A) also affirmed the addition. Aggrieved thereby, the assessee has approached the Tribunal. 4. Having heard the rival submissions and perused the relevant material on record, it is seen that the assessment in this case was completed u/s.144 of the Act because of the assessee not having furnished necessary details in support of the claims made. It is undisputed that the assessee deposited cash during demonetization ITA No. 822/PUN/2022 Mohd. Amin Ali Mohd. Hingora 3 period, out of which the AO did not accept the source to the extent of Rs.4,70,000/-. The ld. AR submitted that the necessary details in support of the contention about the genuineness of the source of cash deposited in the bank, were available. In view of the fact that both the lower authorities have passed the orders by considering that either the assessee did not furnish any response or the response was incomplete, I am of the considered opinion that it would be in the fitness of the things if the impugned order is set-aside to this extent and the matter is restored to the file of AO. I order accordingly and direct him to decide this issue afresh as per law. Needless to say, the assessee will be allowed reasonable opportunity of hearing. 5. The other ground raised in this appeal is against the estimation of profit at 8% of total turnover amounting to Rs.1.05 crore. The AO noticed that total turnover of the assessee was Rs.1.05 crore. The assessee was called upon to furnish party-wise details of bills, sales ledger and details of opening and closing stock to substantiate the profit calculated. The assessee failed to submit such details. The AO rejected the books of account and applied 8% profit rate on the total turnover of Rs.1.05 crore by invoking section 44AD of the Act for making an addition of Rs.8,44,851/-. The ld. CIT(A) affirmed the ITA No. 822/PUN/2022 Mohd. Amin Ali Mohd. Hingora 4 addition, against which the assessee has come up in appeal before the Tribunal. 6. Having heard the rival submissions and perused the relevant material on record, it is seen that the AO has invoked section 44AD for making addition towards profit @ 8%. The assessment year under consideration is 2017-18. The limit for the application of section 44AD during such year was Rs.1.00 crore. This shows that the assessee’s turnover recorded by the AO himself at Rs.1.05 crore breaches the threshold as prescribed u/s.44AD. As such, no cognizance can be taken of the prescription of section 44AD for making any addition. It is seen that the assessee declared profit rate at 3.58% which has been enhanced by the AO to 8%. Considering the entirety of the peculiar facts of the case, I am of the considered opinion that the ends of justice would meet adequately if the net profit rate is restricted to 6%. I order accordingly. 7. In the result, the appeal is partly allowed. Order pronounced in the Open Court on 05 th January, 2023. Sd/- (R.S.SYAL) VICE PRESIDENT प ु णे Pune; दनांक Dated : 05 th January, 2023 Satish ITA No. 822/PUN/2022 Mohd. Amin Ali Mohd. Hingora 5 आदेश क त ल प अ े षत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The CIT(A) concerned 4. 5. The Pr.CIT concerned िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, SMC, Pune / DR, ITAT, Pune 6. गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 05-01-2023 Sr.PS 2. Draft placed before author 05-01-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *