RANI DEVI,PATNA V. INCOME TAX OFFICER, PATNA

ITA 308/PAT/2025

AI Insights

Rani Devi, the appellant, contested the order of the CIT(A) which upheld the additions made by the Assessing Officer (AO) under sections 69A and 44AD of the Income Tax Act, 1961, for the Assessment Year 2017-18. The AO had added Rs.15,50,000 as unexplained cash deposits during the demonetization period and estimated the net profit at 8% of turnover, which was contested by the assessee based on her audited books showing a lower profit margin. The CIT(A) dismissed the appeal due to lack of substantiating evidence from the assessee. The ITAT admitted additional evidence and set aside the CIT(A)'s order, remanding the case for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788138 (ITAT-PATNA)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 30-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Additional evidence; Principle of natural justice
• Section: 143(3); 44AD; 80C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA ‘e-COURT’, KOLKATA [Hybrid Court Hearing] Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi Vs. ITO, Patna (Appellant) (Respondent) PAN: BPHPD6961C Appearances: Assessee represented by : Shri Sudeep Sinha, Advocate Department represented by : Shri Ashwani Kr. Singal, JCIT Date of concluding the hearing : 13-October-2025 Date of pronouncing the order : 25-November-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 04.09.2024. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. For that the impugned order is bad in law as well as on facts and requires to be annulled. 2. For that the Ld. CIT(A) has erred in dismissing the ground related to addition u/s 69A merely for want of specific application regarding the admittance of additional evidence that was submitted during the course of appellate proceeding. In the light of principles of natural justice and provisions of Rule 46A, a remand report could have been procured from the A.O. Printed from counselvise.com Page | 2 ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi 3. For that the Ld. CIT(A) has erred in upholding the addition of Rs.28,91,375/- @ 8% of the total turnover as income u/s 44AD of the Act without appreciating the fact that the A.O. has not given any specific basis for estimating the net profit @ 8%. The appellant, whose books are audited, has shown a net profit of around 1 to 1.5% roughly in the previous FY as well as subsequent FYs. Moreover, the appellant was engaged in the business of trading in edible oils on wholesale basis and as such the A.O. could have referred to the profit ratio as per the market standards prevalent in the industry specific to wholesale and retail trading in edible oils. 4. For that the Ld. CIT(A) has erred in upholding the additions made by the A.O. without acknowledging the fact that the books of account, such as audit report, was not rejected u/s 145(3) of the Act. By accepting the sales/turnover mentioned in the audit report, the assessment order was erroneous in as much as the books of account, such as audit report, being partly accepted and the expenditure portion being completely disallowed. 5. For that net profit cannot be estimated by applying a flat rate without rejecting the books of account u/s 143(3) of the I.T. Act, 1961. 6. For that the impugned order has been passed without adjudicating on substantive merits of the case and therefore, requires to be set aside. 7. For that the disallowance of deduction claimed u/s 80C may be allowed on the basis of documentary evidence available with the appellant”. 3. The Registry has informed that the appeal is time barred by 212 days in filing the appeal by the assessee. However, the assessee filed a petition before the ITAT dated 30th June, 2025 in support of condonation of delay of 212 days mentioning that she has been struggling with health issues that have plagued her mental and physical health for almost the entirety of last financial year and till date along with a copy of prescription, which evidences her health background and current status. She also stated that the delay in filing the appeal was purely unintentional and occurred due to circumstances beyond her Printed from counselvise.com Page | 3 ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi control. She also stated that she was not aware of any notices of hearing and the order passed by the ld. CIT(Appeals) and when she came to know about the order passed by the ld. CIT(Appeals), she approached the ld. A.R. to prefer an appeal, due to that there was a delay of 212 days in filing the appeal before the Tribunal. Therefore, she pleaded to condone the delay. 4. Considering the facts and circumstances of the case, we are of the view that the assessee was prevented from filing the appeal within the stipulated time. Therefore, we are inclined to condone the delay of 212 days. Hence the delay is condoned and the appeal is admitted for hearing. 5. Brief facts of the case are that the assessee is an individual, who is running a wholesale business as her proprietorship concern in the name of M/s. Gwalior Industries. The assessee filed her return of income electronically showing aggregate income of Rs.6,48,570/-. The case was selected for complete scrutiny under CASS for examining cash deposit during demonetization period. During the course of assessment proceeding, the ld. Assessing Officer issued several notices, which were not responded. However, on 07.11.2019, the assessee filed reply in response to the show-cause notice dated 01.11.2019 asking to furnish bank account statement, KYC details, cash deposits made during demonetization period and pre & post-demonetization period along with sources thereof. The Bank informed that only Rs.15,50,000/- was deposited in old currency by the assessee out of total deposit of Rs.68,80,120/- during the demonetization period. The assessee failed to furnish books of account to substantiate the source of said cash Printed from counselvise.com Page | 4 ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi deposit made during the demonetization period. Therefore, the ld. Assessing Officer treated Rs.15,50,000/- as unexplained and added the same to the total income of the assessee under section 69A of the Income Tax Act and further income was determined by applying net profit @ 8% on the total turnover/receipt as shown in the profit & loss account of Rs.4,48,74,289/- as per provision of section 44AD of the Income Tax Act. Thus, the total income from business activity of the assessee was determined at Rs.35,89,943/- (i.e. 8% of Rs.4,48,74,289/- ) and the difference of income as determined under section 44AD and net profit shown by the assessee, which comes to Rs.28,91,375/- was added to the total income of the assessee. The ld. Assessing Officer disallowed the claim of Rs.50,000/- under chapter VIA of the Act on account of non-submission/evidence filed by the assessee. Finally, the ld. Assessing Officer determined the total assessed income of the assessee at Rs.51,39,945/- and initiated penalty proceedings under section 270A of the Act. 6. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who perused the finding of the ld. Assessing Officer, submission of the assessee filed on various dates before CIT(Appeals) and held that the assessee is trading in edible oil in the State of Bihar and the assessee’s business is mainly spread in the local market and though the assessee made cash deposit in her bank account out of day to day business sales and collection from debtors during the year, but the contention of the assessee that the cash deposit of Rs.15,50,000/- in demonetized noted during demonetization period was fully recorded in the books of account and well within the sale shown by the assessee could not be verified as the assessee did not produce any books of account during assessment proceedings nor furnish any Printed from counselvise.com Page | 5 ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi information to the notices issued by the ld. Assessing Officer. Therefore, the authenticity and correctness of the information filed remains unverified. Therefore, the ld. CIT(A) dismissed the appeal of the assessee as the assessee failed to explain the source of cash deposits made during demonetization. 7. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 8. Rival contentions were heard and the submissions made have been examined. Before us, the assessee has filed paper book containing the written submission, order of ld. CIT(Appeals), assessment order, audit report, daily summary of cash during demonetization period, details of deposit of SBNS, VAT return for 3rd quarter FY 2016-17, net profit ratio shown in subsequent year, ledger copy of sale register till start of demonetization period, proof of premium paid to IDBI Federal Life Insurance for the claim under section 80C. The assessee has also filed an application for admission of the additional evidence, which is at page 53 of the paper book. It is stated that the additional document is nothing but a true copy of the VAT return filed by the assessee for the period 01.10.2016 to 31.12.2016, ledger copy of the sale register and proof of payment made to IDBI Federal Life Insurance. It is further stated that the annexed copy of said document may be taken on record. 9. We have considered the submissions made by both the parties. Since the documents are being filed before us in the form of additional evidences, which were neither filed before the ld. Assessing Officer nor even before the ld. CIT(Appeals), therefore, in the interest of justice and fair play and as the same go to the root of the matter, the same are admitted as additional evidences. Further as the same were not filed Printed from counselvise.com Page | 6 ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi either before the ld. Assessing Officer or even before the ld. CIT(Appeals), therefore, we are inclined to set aside the order of the ld. CIT(A) and remit the matter to the file of ld. CIT(Appeals) to decide the matter afresh after providing one more opportunity of being heard to the assessee, to which the ld. Departmental Representative had no serious objection, The assessee shall be at liberty to raise all legal issues raised in the grounds of appeal before us and shall not seek unnecessary adjournments and Rule 46A of the I.T. Rules, 1962 shall also be followed. At the same breath, we also hereby caution the assessee to promptly co-operate with the proceedings before the ld. CIT(Appeals) failing which the ld. CIT(Appeals)shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are partly allowed for statistical purposes. 10. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 25th November, 2025. Sd/- Sd/- Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 25.11.2025 Printed from counselvise.com Page | 7 ITA No.: 308/PAT/2025 Assessment Year: 2017-18 Rani Devi Copy of the order forwarded to: 1. Rani Devi, M/s. Gwlior Industries, Neem Ki Bhatti, Gulzar Bagh, Patna City, Patna-800007, Bihar 2. ITO, Ward-5(1), Lok Nayak Bhawan, Income Tax Department, Patna-800001, Bihar. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Laha Printed from counselvise.com "