RANJEET KUMAR,MUZAFFARPUR V. PR. CIT-1, PATNA

ITA 373/PAT/2022

AI Insights

Ranjeet Kumar, the appellant, is engaged in the supply and distribution of Rail Neer under the business name M/s. Rashmi Enterprises. His income tax return for the assessment year 2017-2018 declared a total income of Rs.4,31,410. The case was selected for limited scrutiny, and the Assessing Officer (AO) applied a presumptive tax rate of 10% on a reported turnover of Rs.99,79,123, treating cash deposits as gross receipts. The PCIT later found this assessment to be erroneous as it did not investigate the sources of these deposits, which were significant during the demonetization period. The Tribunal dismissed the appeal, supporting the PCIT's decision to set aside the assessment for a more thorough examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 27047 (ITAT-PATNA)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 04-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Business income
• Section: 143(3); 263; 43

Judgement Text

" ITA No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA ‘e-COURT’, KOLKATA [Hybrid Court Hearing] Before Shri Rajpal Yadav, Vice-President (KZ) & Dr. Manish Borad, Accountant Member I.T.A. No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar,………………………..…………… Appellant Sheoriama House, Probhat Puri, Maripur Road, Muzaffarpur-842001, Bihar [PAN: ABGPK2125H] -Vs.- Principal Commissioner of Income Tax,....Respondent Patna-1, 2nd Floor, Central Revenue Building, Beerchand Patel Marg, Patna-800001, Bihar Appearances by: N o n e, appeared on behalf of the assessee Smt. Rinku Singh, CIT(D.R.), appeared on behalf of the Revenue Date of concluding the hearing : September 24, 2024 Date of pronouncing the order : October 10, 2024 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Principal Commissioner of Income Tax, ITA No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar 2 Patna-1 dated 23rd March, 2022 passed under section 263 of the Income Tax Act, 1961 in A.Y. 2017-18. 2. The Registry has pointed out that the appeal is time barred by 43 days. In order to explain the delay, the assessee has filed an application, wherein he has submitted that the order of ld. PCIT was handed over to his Tax Consultant Shri Rahul Anand for filing an appeal before the Tribunal, but due to some oversight, he failed to file the appeal well within the limitation. 3. On due consideration of the above application, we deem it appropriate to condone the delay in filing the appeal and proceed to decide it on merit. 4. This appeal was filed in 2022. It is to be decided on priority being an appeal filed against the order passed under section 263. The President of ITAT way back in 2016 has issued guidelines for deciding these appeals on priority because their pendency would lead to passing of fresh assessment order in pursuance of 263 order, that would unnecessarily enhance the multiplicity of the litigation. This appeal was taken up for hearing but right from 25th April, 2023 upto 24th September, 2024, no one has appeared effectively. Two dates were sought by Shri Rakesh Kumar, Advocate, who ultimately submitted that ITA No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar 3 he has no instruction from the assessee for pursuing this appeal. 5. Brief facts of the case are that the assessee derives income from supply and distribution of Rail Neer under the name and style of Proprietor M/s. Rashmi Enterprises. He has filed his return of income on 04.12.2017 declaring total income of Rs.4,31,410/-. His case was selected for a limited scrutiny. The ld. Assessing Officer thereafter passed a scrutiny assessment. He assessed the income of the assessee with the help of section 44AD. This section contemplates that if gross turnover of specified business is less than Rs.1 crore, then, income would be estimated @ 8%. The ld. Assessing Officer was of the view that the assessee does fall in the category of specified business. His turnover is Rs.99,79,123/-. He estimated the income at 10% of the gross receipt and determined the taxable income at Rs.9,97,910/- as against the declared income. 6. The ld. PCIT perused the record and formed an opinion that assessment order is erroneous and has caused a prejudice to the interest of revenue. He issued a show-cause notice on the following issues:- “5. However, while examining the assessment record in the case of instant assessee, it was noticed that the Assessing Officer completed the assessment without making enquiries and verifications with regard to the following issues: (i)During the assessment proceeding the AO had applied presumptive rate of 10% to turnover of ITA No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar 4 Rs.9979123/- reported in P&L Account and determined total net profit from the business at Rs. 997912/-treating the cash deposit s in Bank Accounts as gross receipt of business. While doing so the AO had considered the amount of cash deposits of Rs9979123/- only instead of Rs.4,85,72,413/-( Rs.2,40,38,354+ Rs.2,45,34,059/-) plus amount deposited during post demonetization period. The AO did not examine the source of deposits which was the reason for CASS selection for scrutiny, in Bank Account No. 916020043342862; Bank Account No. 915020030599782 both at Axis Bank, Muzaffarpur and Bank Account No. 2821261000069 at Canara Bank. Muzaffarpur with reference to material/information available on record/SFT data. (ii) Further, the AO has estimated the income @10% of the gross receipts of Rs.99,79123/- from supply and distribution of Rail Neer Water Bottle leaving out the disclosed business receipt/income under the Head “Railway Stand” of Rs. 888295/-; discount and commission of Rs. 7,70,764/- and interest received of Rs.42140/-. Accordingly, the assessment order u/s. 143(3) of the IT Act, 1961 dated 16.12.2019 passed by the AO was found to be erroneous in so far as it was prejudicial to the interests of the revenue within the meaning of section 263 of the Income Tax Act, 1961”. 7. The assessee did not respond to any of the show cause notices, which has been issued by the ld. PCIT repeatedly. The ld. PCIT after examining the record found that ld. Assessing Officer has not made inquiry to the two crucial aspects for which this assessment was selected for scrutiny assessment. Therefore, he set aside the assessment order and relegated the issue to the file of ld. Assessing Officer for fresh examination. ITA No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar 5 8. Dissatisfied with the impugned order, the assessee has come in appeal before the Tribunal. Inspite of repeated notices, no one has come present on behalf of the assessee. The ld. Counsel appeared on behalf of the assessee had sought adjournment in the past but on 24.09.2024, i.e. the date of hearing, he pleaded no instruction. Thus, we took up the proceeding ex-parte. A perusal of the impugned order on Point No. (i) (extracted supra), we find that during demonetization, assessee had made substantial deposits in the account and such aspect was not examined. If all these deposits are being treated as turnover of the assessee, then it will increase threshold limit. There is no examination on this issue at the end of the ld. Assessing Officer, therefore, this had caused a prejudice to the interest of revenue. This assessment order is erroneous as well as prejudicial to the interest of revenue. The ld. PCIT has rightly set aside the assessment order and directed the ld. Assessing Officer to re-examine the issues afresh after hearing the assessee. Therefore, we do not find any merit in this appeal. It is dismissed. 9. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 10.10.2024. Sd/- Sd/- (Manish Borad) (Rajpal Yadav) Accountant Member Vice-President Kolkata, the 10th day of October, 2024 ITA No. 373/PAT/2022 Assessment Year: 2017-2018 Ranjeet Kumar 6 Copies to :(1) Ranjeet Kumar, Sheoriama House, Probhat Puri, Maripur Road, Muzaffarpur-842001, Bihar (2) Principal Commissioner of Income Tax, Patna-1, 2nd Floor, Central Revenue Building, Beerchand Patel Marg, Patna-800001, Bihar (3) The Departmental Representative; (4) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. "