Karam Veer vs Income Tax Officer, Ward-2(3)

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 2470/Del/2026for Assessment Year: 2012-13 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in Short “Act”) , dated 08.01.2026 in DIN & Order No: ITBA/NFAC/S/250/2025-26/ 1084565389(1), which in turn has arisen from the re-assessment order dated 16.12.2019 passed by the AO u/s 147 r.w.s. 144 of the 1961 Act( Letter No. ITBA/COM/F/17/2019-20/1022454576(1).

Brief facts of the case are that the assessee has not filed return of income u/s 139 of the 1961 Act. As per the information available with the AO/AST, it was observed by the AO that the assessee has made cash deposits of Rs.19,88,450/- in his bank account maintained with Oriental Bank of Commerce (OBC) during the Financial Year 2011-12. The data available with ITD system was analyzed , and it was observed that sources of investment made by the assessee with Mutual Fund, Time Deposits (FD) and interest income remains unsubstantiated especially in the absence of the return of income for the year under consideration The AO issued notice u/s 133(6) to the assessee which was also emailed by the AO to the assessee requiring assesssee to furnish response with respect to alleged escapement of income, but there was no response from the assessee. The reasons for reopening were recorded by the AO which are reproduced by the AO in the assessment order at page 2 and 3, and after obtaining the approval from competent authority, the assessment of the assessee was reopened by the AO by invoking provisions of section 147/148 of the 1961 Act. Notice u/s 148 of the Act dated 25.03.2019 was issued by the AO to the assessee. The AO issued statutory notices to the assessee u/s 142(1) of the Act, dated 03.05.2019 , 09.07.2019 and 31.07.2019. The assessee did not made any compliance to the aforesaid notices. A show cause notice dated 13.09.2019 was also issued by the AO to the assessee, but there was again no compliance on the part of the assessee. The assessee filed letter dated 04.10.2019 requesting for time to review his system and books of accounts .During reassessment proceedings, the AO also issued notice u/s 143(2) to the assessee asking ssessee to file reply by 22.10.2019, there was no reply filed by the assessee. The AO passed reassessment order wherein the AO made additions to the income of the assessee with respect to cash deposits to the tune of Rs. 19,88,450/- in bank account of the assessee with OBC as undisclosed income of the assessee from undisclosed sources. The AO also observed that apart from cash deposit in bank account, there are credit entries in the bank account to the tune of Rs. 14,98,774/- , and there is no explanation submitted by the assessee with respect to these credit entries, thus, the AO made addition of Rs.14,98,774/- to the income of the assessee as the assessee has not furnished any source of credit entries with documentary evidences and hence the said amount was treated as undisclosed income from undisclosed sources. . The AO disallowed the deduction of Rs.1,00,000/- claimed by the assessee in his ITR as deduction under chapter VIA, as no documentary evidences in support of deductions were filed by the assessee.

Aggrieved , the assessee filed first appeal with Ld. CIT(A). The assessee claimed that the assessee filed return of income on 25.09.2019 in response to notice dated 25.03.2019 issued by the AO u/s 148, availing presumptive scheme of taxation u/s 44AE of the 1961 Act. The assessee filed additional evidences before ld. CIT(A) to substantiate its stance. The ld. CIT(A) called for the remand report from the AO, but the AO submitted before ld. CIT(A) that the file is not opening. The ld. CIT(A) did not admit the additional evidences filed by the assessee. The Ld. CIT(A) dismissed the appeal of the assessee because the assessee has not filed any supporting documents, books of account and there was no explanation forthcoming from the assessee as to why the assessee did not filed evidences before the AO . The ld. CIT(A) observed that the assessee has deliberately withheld evidences , and thus appeal filed by the assessee was dismissed by ld. CIT(A) with respect to all the three additions made by the AO , and all the three additions were upheld by ld. CIT(A).

Aggrieved, the assessee has now filed second appeal with the Tribunal. At the outset, the Ld. Counsel for the assessee submitted that there was a bonafide mistake by the assessee in filing return of income u/s 44AE of the Act, while return of income ought to have been filed by the assessee u/s 44AD. It was submitted that assessee has also filed return of income for subsequent years by declaring income u/s 44AD of the Act , which has been accepted by the department. It was submitted that the assessee was not having taxable income and hence the assessee did not filed any return of income u/s 139 for the impugned assessment year. It was submitted that the assessee was not having taxable income for the earlier years also , and hence no return of income was filed for earlier years. It was submitted that the assessee is in the business of transportation and is plying trucks and there are more than 10 trucks operated by the assessee, and hence presumptive scheme of taxation under Section 44AD is applicable and not u/s 44AE. It was prayed that principle of consistency is applicable in the income tax proceedings, and since department has accepted return of income for subsequent years u/s 44AD, the return of income filed in response to notice u/s 44AE should be treated as return of income u/s 44AD instead of return filed u/s 44AE, keeping in view, the judgment and order of Hon’ble Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC). It was submitted by ld. Counsel for the assessee that the entire amount of bank deposits in the bank account of the assessee are the receipt from transportation business of plying of trucks and, accordingly, presumptive scheme of taxation u/s 44AD should be applied.

On the other hand, the Ld. Sr. DR relied upon the orders of authorities below , and submitted that assessee has not filed any details with respect to the return of income filed even for the subsequent years .

I have considered rival submissions and perused the materials available on record. I have observed that the assesse has not filed return of income u/s 139 of the Act. The assessee has claimed that his income was below taxable limit and hence, the assessee has not filed return of income for the impugned assessment year. It is an admitted position that the assessee did not file any return of income even for earlier years. The case of the assessee was reopened by the Revenue by invoking provisions of section 147/148 of the Act based on the information that there were cash deposits to the tune of Rs.19,88,450/-with the bank account of OBC and the assessee has not filed return of income. Analysis of the data was done by Revenue, and it was observed that the assessee has investments in Mutual Funds, Time deposits(FD) and interest income , while the sources of such investments remained unexplained. The AO issued notice u/s 133(6) to the assessee to explain, but there was no response from the assessee. The reason for reopening of the assessment were recorded by the AO as the AO has reasons to believe that income of the assessee has escaped assessment . After taking approval from the competent authority , notice u/s 148 was issued by AO, dated 25.03.2019 to the assessee. The assessee did not file any return of income in response to aforesaid notice u/s 148 within the stipulated time, but later filed belated return of income on 25.09.2019 . The AO has not taken cognizance of the said return of income. The AO also issued statutory notices u/s 142 and 143(2) of the Act , but there was no compliance on the part of the assessee. It is claimed that the said return of income filed on 25.09.2019 was filed by availing presumptive scheme of taxation u/s 44AE of the 1961 Act. The assessee has claimed that the assessee has filed return of income for the subsequent years under presumptive scheme of taxation u/s 44AD, and it is claimed that the said return of income stood accepted by Revenue. The assessee has also claimed that the assessee never filed any return of income for earlier assessment years as the income was below taxable limits. During reassessment proceedings before the AO, the assessee did not filed any evidences to substantiate its claim . The AO made three additions which are detailed in preceding para’s of this order. The assessee came forward and filed additional evidences before the Ld. CIT(A). The ld. CIT(A) called for remand report ,but the AO has not given any comments to the additional evidences as the file was not opening.. The ld CIT(A) also rejected the additional evidences as ld. CIT(A) observed that the assessee deliberately withheld the evidences . The ld. CIT(A) dismissed the appeal of the assessee and upheld the additions. Thus, the contentions of the assessee as well evidences filed have not been scrutinized by the authorities below. The assessee is also now changing its stance and submitting before the Bench, that return of income filed u/s 44AE be treated as return of income u/s 44AD , as the assessee is plying more than 10 trucks. The assessee has never filed details of trucks even before ld. CIT(A) as also even not before me. Thus, keeping in view in the entire factual matrix of the case, it will be fair and just to both parties and keeping in view principles of natural justice, the orders of both the authorities below are set aside , and the matter is remanded back to the file of AO for framing denovo assessment after giving opportunity to the assessee in accordance with principles of natural justice. The AO shall admit evidences filed by the assessee in his support and adjudicate the same on merits in accordance with law. It is also directed that the assessee be permitted to avail presumptive scheme of taxation u/s 44AD if the assessee satisfies the ingredients / requirements for availing said presumptive scheme of taxation under Section 44AD, despite assessee’s claim that he filed his return of income by availing presumptive scheme of taxation u/s 44AE of the 1961 Act. So far as invoking of principles of consistency is concerned that subsequent years return filed under 44AD were accepted by Revenue is concerned, firstly it is not specified by the assessee whether the same were accepted under scrutiny u/s 143(3) or were intimation u/s 143(1). Secondly, the presumptive scheme of taxation u/s 44AD or 44AE can be availed if the stipulated conditions are met, and the facts may vary from year to year, and accordingly, eligibility of the assessee to avail the scheme is worked out. I order accordingly.

In the result, the appeal filed by the assessee is allowed for statistical purposes.