MOHD SALEEM RATHER,SRINAGAR V. ITO, WARD 2, SRINAGAR, SRINAGAR

ITA 97/ASR/2025

AI Insights

The case involves Shri Mohd. Saleem Rather, a wholesale trader of mobile phones, who appealed against the order of the Commissioner of Income Tax (Appeals), NFAC, which upheld the best judgment assessment made by the AO under section 144 of the Income Tax Act. The AO had estimated the income at 8% on bank credits totaling Rs.186.89 Lacs and added Rs.13.96 Lacs as unexplained investments, which were cash deposits during the demonetization period. The Tribunal found that the assessee had provided sufficient evidence to establish that all bank credits were business receipts and not unexplained investments. Consequently, the Tribunal reduced the income estimation rate from 8% to 4%.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833490 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 06-02-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHARAN DASS LD.
• Assessee Lawyers: ABHINAV VIJH; SUMIT LALCHANDANI
• Keywords: Business income; Unexplained investment
• Section: 144

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AMRITSAR VIRTUAL HEARING BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND SHRI UDAYANDASGUPTA, JM आयकर अपील सं. / ITA No.97/ASR/2025 (िनधाŊरण वषŊ / Assessment Year: 2017-18) Shri Mohd. Saleem Rather Court Road Entrance, Lal Chowk Srinagar, J&K - 190001 बनाम/ Vs. ITO Ward-2 Aaykar Bhawan, The Chinars, Govt. Silk Factory Road, Rajbagh (Srinagar) - 190008 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. ANVPR-2023-E (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Abhinav Vijh (CA) & Shri Sumit Lalchandani (Advocate) – Ld. ARs ŮȑथŎकीओरसे/Respondent by : Sh. Charan Dass (Addl. CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 02-02-2026 घोषणाकीतारीख /Date of Pronouncement : 03-02-2026 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017- 18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC dated 24-12-2024 in the matter of an assessment framed by Ld. AO on best judgment basis u/s 144 on 29-12-2019. Having heard rival submissions, the appeal is disposed-off as under. Printed from counselvise.com 2 2. During assessment proceedings, the assessee was required to explain sources of its bank credits. It transpired that the assessee deposited cash of Rs.13.96 during demonetization period whereas other credits in whole of the year were Rs.186.89 Lacs. The assessee admittedly carried on business during this year. On other bank credits of Rs.186.89 Lacs, Ld. AO estimated income @8%. The cash deposit of Rs.13.96 Lacs was separately added as unexplained investments. 3. The Ld. CIT(A) noted that the assessee was wholesale trader of mobile phones. However, the assessee did not file return of income and the books were not audited in this year. The cash was stated to be sourced out of business receipts. The assessee furnished relevant registration certificate and financial statements including cash book, purchases and sales ledger. However, it was observed by Ld. CIT(A) that the contra entries as passed by the assessee in the cash book was not commensurate with the cash sales as shown by the assessee. Therefore, the assessment was upheld against which the assessee is in further appeal before us. 4. From the facts, it clear emerges that the assessee has carried out business activities during this year since Ld. AO has applied presumptive rate of 8% on other bank credits. In our considered opinion, when the assessee is not shown to have any other source of income, the artificial bifurcation of deposits as done by Ld. AO was not justified. The assessee has filed sufficient documentary evidences to establish the factum of carrying out of wholesale business of mobile phones. Therefore, the whole of credits are to be considered as Printed from counselvise.com 3 business receipts only. Proceeding further, the assessee is engaged in wholesale trading of mobile phones which is thin-margin commodity and the rate of 8% is on a very higher side. Considering totality of facts, we direct Ld. AO to estimate the income of the assessee at 4% of total bank credits including deposits during demonetization period. The income thus computed would be assessable as business income only. No other ground has been urged in the appeal. 5. The appeal stands partly allowed. Order pronounced on 03rd February, 2026. -Sd- -Sd- (UDAYAN DAS GUPTA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03-02-2026 AB आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AMRITSAR Printed from counselvise.com "