LINA MOHANTY,KORAPUT V. INCOME TAX OFFICER, JEYPORE WARD, JEYPORE

ITA 152/CTK/2025

AI Insights

The case involves Lina Mohanty, the appellant, who faced an assessment order from the Income Tax Officer (ITO) for the Assessment Year 2017-18, which included unexplained cash deposits during the demonetization period and applied a net profit rate of 8% on her business turnover. The Commissioner of Income Tax (Appeals) (CIT(A)) partially relieved the appellant by reclassifying some deposits as business receipts but upheld the 8% net profit rate. Aggrieved by this, the appellant approached the ITAT, which found the 8% rate excessive and reduced it to 6%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360763 (ITAT-CUTTACK)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “CUTTACK BENCH”, CUTTACK (VIRTUAL HEARING AT KOLKATA) SHRI DUVVURU RL REDDY, VICE PRESIDENT SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 152/CTK/2025 (Assessment Year 2017-18) Lina Mohanty, Balimela, Malkangiri, Odisha - 764051 ……..…...…………….... Appellant [PAN: CHPPM3534B] vs. ITO, Jeypore, Nabaragpur Road, Jeypore, Dist- Koraput, Odisha - 764001 ........................... Respondent Appearances by: Assessee represented by : N. Anand Rao, CA Department represented by : S.C. Mohanty, Sr. DR Date of concluding the hearing : 29.04.2025 Date of pronouncing the order : 21.05.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER 1. In this case, there is a delay of 22 days in filing of the said delay, the appellant has filed an affidavit seeking condonation of the said delay as under: “I, Lina Mohanty, aged about 52 years W/O- Sri Gajendra Mohanty of village/ Post- Balimela (Driver Line), P.S- Orkel, Dist- Malkangiri do hereby solemnly affirm and state on oath as under:- 1. That, I am the deponent and well acquainted with the facts of this affidavit. 2. That, I was suffering from Post menopausal bleeding for a period from 25-01-2025 to 24-02-2025. 3. That, as per the advice of the concerned Doctor I was in complete bed rest for the above period. That, the medical certificate is enclosed herewith for proof of my health condition. 2 ITA No. 152/CTK/2025 Lina Mohanty 4. That, I swear this affidavit in order to produce before the Hon'ble Income Tax Appellate Tribunal in connection with Income Tax matters. 5. That, the facts stated above are true to the best of my knowledge and believe and I conceal nothing.” 1.1 Considering the reasons given in the said affidavit, the delay is hereby condoned and the appeal is admitted for adjudication. 2. The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereinafter “the Act”), passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)”] vide order dated 30.11.2024 for AY 2017-18. 2.1 In this case, the Ld. AO is seen to have asked the assessee to produce books of accounts etc. but the same was not produced. The Ld. AO has recorded a finding that there was cash deposit of Rs. 35,71,500/- during demonetisation period but during the assessment proceedings, the source of such cash deposit was not explained and thereafter the Ld.AO invoked the provision of section 68 of the Act on this amount. Regarding the remaining amount of deposits (comprising of both cash and cheques) of Rs. 4,03,69,879/-, they were subjected to a net profit rate of 8% leading to an addition of Rs. 32,29,590/-. 2.2 The Ld. CIT(A) is seen to have called for a remand report and given some relief to the assessee with respect to the addition made of Rs. 35,71,500/- u/s 68 of the Act by holding that this amount also represents the business receipts of the assessee. However, on the consolidated turn over of Rs. 4,39,41,379/- the Ld. CIT(A) directed that a net profit rate of 8% should be applied. 2.3 Aggrieved with this action of the Ld. CIT(A), the assessee approached the ITAT challenging this action of Ld. CIT(A) in applying 8% for computing the net profit. 3. Before us, the Ld. AR stated that all the facts were before the Ld. CIT(A) to enable him to take a reasoned view on the issue of computing the 3 ITA No. 152/CTK/2025 Lina Mohanty net profit. The Ld. AR stated that 8% net profit was on the higher side and the assessee deserves some relief on this account. 3.1 The Ld. DR, on the other hand, relied on the orders of authorities below and stated that in the absence of books of accounts and other documents before the Ld. AO, the estimation of net profit is justified. 4. We have considered the rival submissions and we find that in the absence of books of accounts and other related documents there is a justification in principle for applying a net profit rate. However, we find that the net profit percentage of 8% is on the higher side and we restrict it to 6% of the total turnover of Rs. 4,39,41,379/-. The assessee gets consequential relief. It may be mentioned that both the Ld. AR and DR were aggregable to the application of 6% on the turn over for estimating the net profit in this case. 5. In result, appeal of the assessee is partly allowed. Order pronounced on 21.05.2025 Sd/- Sd/- (Duvvuru RL Reddy) (Sanjay Awasthi) Vice President Accountant Member Dated: 21.05.2025 AK, Sr. P.S. Copy of the order forwarded to: 1. Lina Mohanty 2. ITO, Jeypore 3. CIT(A)- 4. CIT- 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches "