Rajeev Attar vs Income Tax Officer

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 2336/Del/2026 for Assessment Year: 2017-18 has arisen form the learned CIT(A)’s appellate order dated 09.01.2026 u/s 250 of the Income-tax Act, 1961(hereinafter called “the Act”) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1084598951(1), which in turn has arisen from the assessment order dated 27.12.2019 passed by the learned ITO, Ward-45(8), Delhi u/s 143(3) of the 1961 Act(DIN & Order No. ITBA/AST/S/143(3)/2019-20/1023264777(1)).

Brief facts of the case are that the assessee filed return of income declaring income of Rs.6,70,640/- , on 31.03.2018. The case of the assessee was selected for framing complete scrutiny through CASS on the following main reasons:

The assesse being aggrieved by the assessment framed by the AO, filed first appeal with Ld. CIT(A) . The assessee submitted before ld. CIT(A) that the part time accountant of the assessee Mr. Deepak failed to file replies before the AO, despite the fact that notices received by the assessee from the AO were forwarded to the said accountant. The assessee filed affidavit before ld. CIT(A) to that effect. The assessee also filed additional evidences before the Ld. CIT(A) under Rule 46A of the Income-tax Rules, 1962. The assessee contended that cash deposits in the bank had arisen from sales proceeds of his regular business of trading, servicing and repair of AC and allied products carried on by the assessee in the name and style of Mannat Aircon. It was contended proper books of accounts were maintained including sales register , purchase register , stock register and cash book. It was submitted that the return of income was filed u/s 44AD. The assessee enclosed as an additional evidences before ld. CIT(A) u/r 46A, the copies of purchase and sales ledger , sample invoices, cash flow statement , quantitative details of purchase and sales , stock summary, copy of DVAT return, and prayed that the appeal be adjudicated on merits based on the additional evidences so filed for the first time before ld. CIT(A). The assessee claimed that bank statement and income tax return were duly filed before the AO , and these additional evidences now filed for the first time before ld. CIT(A) u/r 46A may be corroborated with the bank statement and return of income. But the ld. CIT(A) did not admit the additional evidences. The assessee also sought personal hearing though Video Conferencing before ld. CIT(A) which was denied by ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee and upheld the assessment order passed by the AO..

Still aggrieved, the assessee has now filed second appeal with the Tribunal. At the outset, Ld. Counsel for the assessee submitted that the assessee is doing business of sale, service and repair of airconditioner and allied products under the name and style of M/s Mannat Aircon. It was submitted that the assessee has deposited Rs.40,00,000/- in cash in his bank account with Axis Bank which were receipts earned from the business of sale, service and repairs of air conditioners and allied products carried on by the assessee under the name and style of Mannat Aircon. On being asked, the Ld. Counsel for the assessee submitted that this is second year of operation of M/s Mannat Aircon. It was submitted that the accountant of the assessee did not file replies before the AO, and the assessee should not be penalized for the same. It was submitted that affidavit to that effect was filed before ld. CIT(A), and the same is placed in paper book now filed before the Tribunal(page 26-27). It was submitted that the assessee has filed all relevant supporting evidences such as the copies of purchase and sales ledger , sample invoices, cash flow statement , quantitative details of purchase and sales , stock summary, copy of DVAT return, before ld. CIT(A) as an additional evidences u/r 46A to substantiate that the cash deposits in the bank to the tune of Rs. 40,00,000/- is from the business of sale, service and repairs of air conditioners and allied products carried on by the assessee . It was submitted but ,however, ld. CIT(A) did not admitted the additional evidences filed by the assessee under Rule 46A, and hence great prejudice has been caused to the assessee by non-admission of the additional evidences by ld. CIT(A). It was further submitted that the assessee has declared income of Rs.40,34,878/- u/s 44AD by applying profit rate of 8%. My attention was drawn to the various evidences which has been placed by the assessee in the PB /Page 26-186, and prayer were made to admit these additional evidences and to adjudicate the appeal of the assessee on merits.

I have heard both the parties and perused the materials available on record. I have culled out facts in brief and contentions of both the parties in the preceding para’s of this order, and the same are not repeated again. Briefly, genesis of this appeal has arisen from additions made by the AO and as confirmed by ld. CIT(A) wrt cash deposits to the tune of Rs. 40,00,000/- by the assessee in his bank account maintained with Axis Bank during demonetization period, the sources of which could not be explained by the assessee, leading to the additions to the tune of Rs. 40,00,000/- made u/s 68 r.w.s. 115BBE of the 1961 Act. The case of the assessee was selected under CASS for framing complete scrutiny assessment mainly on account of large cash deposits during demonetization period. Statutory notices were issued by the AO from time to time during assessment proceedings, but there was no compliance by the assessee during assessment proceedings. Before ld. CIT(A), the assessee filed affidavit that part time accountant Mr. Deepak were given the notices received from the AO, but he did not comply with the said notices. The assessee also filed additional evidences before ld. CIT(A) u/r 46A, which were in the form of the copies of purchase and sales ledger , sample invoices, cash flow statement , quantitative details of purchase and sales , stock summary, copy of DVAT return,and It was contended that the assessee is into the business of trading, service and repairs of air conditioners and allied products under the name and style of Mannat Aircon, and the sources of these cash deposits in the bank account were from the regular sales proceeds of the said business. The ld. CIT(A) did not admit the additional evidences filed by the assessee u/r 46A , and dismissed the appeal of the assessee by upholding the assessment order. Proceedings before ld. CIT(A) are extension of assessment proceedings. The objective being to assess the correct income in the hands of the correct assessee for the correct assessment year. The powers of ld. CIT(A) are co-terminus with powers of the AO which include power of enhancement. In my view, prejudice has been caused to the assessee by non admission of additional evidences filed by the assessee u/r 46A before ld. CIT(A) . It is true that the assessee is equally responsible for its woes. In the interest of justice, I admit these additional evidences filed by the assessee in the form of Paper Book (page 26-186), as they are cardinal for adjudicating dispute between rival parties. These additional evidences, however, required verification and examination by the authorities below. Thus, keeping in view entire facts and circumstances of the case and in the interest of justice and fairness to both the parties, I am setting aside the orders of the authorities below and remitting the matter back to the file of the AO for denovo assessment on merits in accordance with law after affording proper and adequate opportunities to the assessee. On its part , the assessee is directed to co-operate in denovo assessment proceedings, and submit all the required information/documents/ evidences as may be required by the AO for framing denovo assessment. The AO is directed to admit all the evidences submitted by the assessee in its support. All contentions are kept open. I clarify that I have not commented on the merits of the issue. The appeal of the assessee is allowed for statistical purposes. I order accordingly.

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