RUPA PAL,AGRADWIP V. ITO, WARD - 2(1), , BURDWAN

ITA 1667/KOL/2024

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The case involves Rupa Pal, the proprietor of Maa Jagadamba Enterprise, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which sustained a partial addition of Rs. 10,00,000 to her income. This addition was part of a larger sum of Rs. 23,29,000, which was added to her income under section 69A of the Income-tax Act, 1961, due to unexplained cash deposits during the demonetization period. The Tribunal noted that the assessee had not provided sufficient evidence to fully explain the source of these deposits, although she maintained that they were from cash sales. The Tribunal, considering the regular business activities and the nature of the deposits, estimated a net profit rate of 4% on the unsubstantiated cash sales and sustained an addition of Rs. 40,000, thus partly allowing the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474482 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MADHUMITA DAS
• Assessee Lawyers: BIMLENDU SEKHAR CHANDRA
• Keywords: Principle of natural justice
• Section: 147; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES “SMC”, KOLKATA BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1667/KOL/2024 Assessment Year : 2017-18 Rupa Pal, Prop. of Maa Jagadamba Enterprise, Village Goragacha, Agradwip - 713 502 West Bengal PAN : AXDPP4954E V/s CIT(A), NFAC, Delhi Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2017-18 at the instance of assessee is directed against the order dated 14.06.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) which in turn is arising out of Assessment Order dated 18.03.2022 passed u/s. 147 r.w.s.144B of the Act. 2. Ground of appeal raised by the assessee reads as under : “Assessee has been deprived from natural justice for confirming the partially addition sustained by CIT(A) to the extent of Rs.10,00,000/- without considering the facts & materials on record, for the cash deposited into Bank from cash sales and/or payments to Suppliers/Creditors directly from Bank and no amount was Assessee by : Shri Bimlendu Sekhar Chandra, FCA Revenue by : Smt. Madhumita Das, Addl. CIT Date of hearing : 27.11.2024 Date of pronouncement : 03.02.2025 ITA No.1667/Kol/2024 Rupa Pal withdrawn in cash from Bank. Therefore the addition made is liable to be deleted in full.” 3. Brief facts of the case are that the assessee is an individual running sole proprietorship concern namely M/s. Jagadamba Enterprise and return of income for the A.Y. 2017- 18 was filed declaring income of Rs.4,20,480/-. Thereafter, based on the information about cash deposits, assessee was served with notice u/s.148 of the Act followed by validly serving of notices u/s.143(2)/142(1) of the Act. The assessee did not file any return in compliance to notice u/s.148 of the Act. In the course of assessment proceedings, ld. AO noticed that during the demonetization period cash of Rs.23,29,000/- was deposited in the bank account. Since the assessee failed to make proper response alleged sum was added in the hands of assessee invoking section 69A of the Act and assessed the income at Rs.27,49,480/-. 4. Aggrieved assessee preferred appeal before the ld.CIT(A) who partly allowed the appeal observing as under : “5.2 I have carefully considered the above contention of the appellant, findings of the AO in the assessment order, nature of the appellant business, etc. and noticed that the AO has added the entire cash of Rs.23,29,000/-, without bringing the clear cut findings about the fact that the same was actually totally unexplained one and not out of sale proceed of the appellant’s business. On the other hand it is noticed that the appellant had also not brought any material evidence on record to establish the facts that the same was actually generated out of sale proceed of the appellant’s business. Considering the facts in entirety, in my considered opinion, addition to the extent of Rs. 10,00,000/-, will be reasonable to meet the ends of justice and balance amount of Rs.13,29,000/-, is deleted. All the grounds of appeals are decided accordingly.” 5. Now the assessee is in appeal before the Tribunal against the part relief granted by the ld.CIT(A). ITA No.1667/Kol/2024 Rupa Pal 6. Ld. Counsel for the assessee submitted that the alleged cash deposit is on account of cash sales which are reflected in the books of account. It was his alternation contention that even in case that it is unrecorded only profit element should have been added and not total sales. 7. On the other hand, ld. Departmental Representative heavily relied on the orders of the authorities below. 8. I have heard the rival contentions and perused the record placed before me. The assessee is aggrieved with the finding of the ld.CIT(A) sustaining the addition of Rs.10.00 lakh as against the addition of Rs.23,29,000/- made by the AO invoking section 69A of the Act. I notice that the assessee is carrying out the regular business activity in a Rural area. Turnover for the year declared in the audited financial statement is Rs.1,70,25,516/-. Audit report u/s.44AB of the Act stands uploaded and regular return was furnished on 04.11.2017. Ld. AO has not disputed the cash deposits other than those during the demonetization period. Alleged cash has been deposited in the bank account and books are regularly maintained for its business purposes. Only on account of reason that it could not furnish the details, the impugned addition was made. Ld.CIT(A) has also accepted that the alleged sum if on account of cash sales but for want of necessary details he has partly sustained the addition. Ld. DR failed to controvert this fact that the alleged sum is on account of cash sales. It has been consistently held that in case of unrecorded sales only the profit element embedded in the sales has to be added in the hands of the assessee as there is corresponding purchases for making such sales. Various High ITA No.1667/Kol/2024 Rupa Pal Courts have rendered umpteen numbers of decisions laying down this ratio. I therefore considering the fact that the assessee has disclosed net profit rate of 2.35%, however, since relevant details are not furnished, in the interest of justice, bring fair to both the parties and without setting as an precedence, I estimate the net profit rate of 4% on the alleged cash sales and sustain the addition of Rs.40,000/- and give part relief to the assessee. This addition of Rs.40,000/- is in addition to the income declared by the assessee in her income- tax return. Ground of appeal raised by the assessee is accordingly partly allowed. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 03rd day of February, 2025. - Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/Pune; \u0001दनांक / Dated : 03rd February, 2025 Satish आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “(SMC)” ब\u0014च, Kolkata/ DR, ITAT, “(SMC)” Bench, Kolkata. 5. गाड\u0018 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar, ITAT, Kolkata "