SAI MOTORS,INDORE (M.P.) V. THE INCOME-TAX OFFICER, KHARGONE, KHARGONE

ITA 177/IND/2025

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The case involves Sai Motors, a partnership firm engaged in the business of selling vehicles, which appealed against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2017-18. The appeal was initially dismissed by the CIT(A) due to a delay in filing, which the Tribunal later condoned. The primary issues in the appeal included the addition of Rs. 13,50,000 as unexplained money due to cash deposits during the demonetization period, and the estimation of profits under section 44AD of the Income Tax Act. The Tribunal found merit in the assessee's request to remit the issues back to the Assessing Officer for a detailed examination, considering the circumstances of the COVID-19 pandemic and the subsequent lockdowns which affected the timely filing of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771835 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Inder Singh V/s State of M.P
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHISH PORWAL
• Assessee Lawyers: S.N. AGRAWAL
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 144; 131; 133(6); 44AD

Judgement Text

"आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.177/Ind/2025 (Assessment Year: 2017-18) Sai Motors, C/o SV Agrawal & Associates, 25, Joy Builders Colony, Near Rafeal Tower, Old Palasia, Indore Vs. Income Tax Officer, Khargone (Appellant / Assessee) (Respondent/ Revenue) PAN: ACYFS6381E Assessee by Shri S.N. Agrawal, AR Revenue by Shri Ashish Porwal, Sr.DR Date of Hearing 25.08.2025 Date of Pronouncement 26.08.2025 O R D E R This appeal by the assesse is directed against the order dated 26.12.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for A.Y.2017-18 which is arising from the assessment order u/s 144 of the Act dated 30.11.2019 framed by Assessing Officer, Khargone. 2. Assessee has raised following grounds of appeal: Printed from counselvise.com ITA No. 177/Ind/2025 Sai Motors– A.Y 2017-18 2 1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in not condoning delay in filing of appeal even when the appellant was having sufficient cause for not present appeal before due date of filing of appeal and therefore, the appeal was required to be admitted as per section 249(3) of the Act. 2. That on the facts and in the circumstances of the case and in law, the Ld Assessing Officer erred in adding an amount of Rs. 13,50,000/- to the total income of the appellant on account of cash deposited in the bank account during the demonetization period in old notes (SBNs) by treating it as unexplained money R under section 69A of the Income-Tax Act, 1961 and consequently charged tax at the rates prescribed under section 115BBE of the Income-Tax Act, 1961 without properly appreciating the facts of the case 3.That on the facts and in the circumstances of the case and in law, the Ld Assessing Officer erred in computing the amount of tax liability by invoking the amended provisions of section 115BBE of the Income-Tax Act, 1961 even in respect of cash deposited 3 in the bank account of the appellant which were prior to 15-12- R 2016 i.e. prior to the date of obtaining assent from the President of India and hence, in any case, amended provisions of section 115BBE of the Income-Tax Act, 1961 would not be applicable in the facts of the present case 4 That on the facts and in the circumstances of the case and in law, the Ld Assessing Officer erred in estimating the net profit of the appellant under section 44AD of the Act at the rate of 8 percent of total credits in the bank account of Rs. 1,43,59,412/- which as 4 calculated comes to Rs. 11,48,752/- and consequentially added R an amount of Rs. 11,16,852/- to the total income of the appellant after allowing credit of income of Rs. 31,900/- already declared by the appellant without properly appreciating the facts of the case 5. That on the facts and in the circumstances of the case and in law, the Ld Assessing Officer erred in estimating the net profit of the appellant under section 44AD of the Act at the rate of 8 percent of total credits in the bank account of Rs. 1,43,59,412/- which 5 also included the amount of cash deposited in the bank account during the demonetization period in old notes (SBNs) of Rs. 13,50,000/- in respect of which separate addition had already been made by the Assessing Officer himself thereby leading to double taxation of the same amount. Printed from counselvise.com ITA No. 177/Ind/2025 Sai Motors– A.Y 2017-18 3 6. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it” 3. At the outset Ld. Counsel for the assessee prayed for restoring the issues raised on merits in the instant appeal to the file of Ld. Jurisdictional Assessing Officer. He submitted that Ld. A.O has passed an order u/s 144 of the Act as best judgment assessment and before Ld. CIT(A) assessee failed to succeed because Ld. CIT(A) has dismissed the appeal in limine by not condoning the delay, 4. On the other hand Ld. Departmental Representative supported the order of the Ld. CIT(A) but do not oppose the request of Ld. Counsel for the assessee of relegating the issues to the file of Jurisdictional Assessing Officer. 5. I have heard rival contentions and perused the records placed before me. I observe that the assessee is a partnership firm and carries on business as authorized centre of vehicles sold by M/s Nimar Motors. Income of Rs.31,900/- declared in the Income Tax Return for Assessment Year 2017-18 e-filed on 19.01.2018. Case selected for scrutiny through CASS followed by serving valid notices u/s 143(1) and 143(2) of the Act. During the course of assessment Printed from counselvise.com ITA No. 177/Ind/2025 Sai Motors– A.Y 2017-18 4 proceedings assessee failed to respond to the notices on hearing. Even the summons u/s 131 of the Act were not attended. The Ld. Assessing Officer during the course of best assessment proceedings has taken a note of the information about the cash deposited during the demonetization period as well as source of credits in the bank account received in response to the notices issued u/s 133(6) of the Act to State Bank of India wherein the assessee maintained its bank account. In absence of any reply from the assessee the Ld. Assessing Officer on one hand made addition for unexplained cash deposit of Rs.13,50,000/- and further estimated the profits at Rs.11,16,852/- on the gross receipts. Income assed at Rs.24,98,752/-. 6. When the assessee preferred appeal before Ld. CIt(A) there was a delay in filing the appeal. Ld. CIT(A) dismissed the appeal in limine by not adjudicating the grounds raised on merits. Before me the Ld. Counsel for the assessee referring to the submissions made in Form No.35 at column 15 stated that soon after receiving the assessment order dated 30.11.2019 the assessee has deposited appeal fee of Rs.1000/- on 26.03.2020. Immediately thereafter due Printed from counselvise.com ITA No. 177/Ind/2025 Sai Motors– A.Y 2017-18 5 to covid pandemic the entire country went into lock down and finally the assessee has been able to file the appeal before Ld. CIT(A) on 10.01.2022. I find that the assessee has successfully demonstrated the reason arisen for filing appeal before Ld. CIT(A). I therefore taking a liberal and justice oriented approach and in the larger interest of justice condone the delay in filing the appeal before Ld. CIT(A) and for this I place reliance on the judgment of Hon’ble Supreme Court in the case of Inder Siingh V/s State of M.P judgment dated 21.03.2025 (2025) INSC 382. 7. Further since the Ld. CIT(A) has not adjudicated the issue in merits and also Ld. A.O has passed the best judgment assessment it would be appropriate to remit back all the issues on merits in the in instant appeal to the file of Jurisdictional Assessing Officer for necessary adjudication. I further direct the Jurisdictional Assessing Officer to examine the documents including the financial statements of the assessee placed before me where it has been contended that the cash deposit in the bank are of the customers and they have been utilized for making payment to M/s Nimar Motors and the same is duly supported by ledger account of M/s Printed from counselvise.com ITA No. 177/Ind/2025 Sai Motors– A.Y 2017-18 6 Nimar Motors and bank statement. Needless to mention that the assessee should be provided reasonable opportunity of being heard. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause. The effective grounds raised in this appeal are allowed for statistical purpose. 8. In the result appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 26.08.2025. Sd/- (MANISH BORAD) Accountant Member Indore, 26.08.2025 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Printed from counselvise.com "