TaxTMI 
TaxTMI 
2025 (12) TMI 209
X X X X Extracts X X X X
X X X X Extracts X X X X
....are being disposed by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.515/Rjt/2025 for Assessment Year 2015-16, have been taken into consideration for deciding these appeals em-masse. 3. Grounds of appeal raised by the assessee in lead case i.e. ITA No.515/Rjt/2025 for A.Y. 2015-16 are as follows: "1. The Ld. CIT(A) erred in law as well as on fact in adopting profit rate of 10% without any basis and disregarding comparative cases. 2. The Ld. CIT(A) erred in law as well as on fact in upholding an addition of Rs. 15,86,480/- out of Rs. 1,58,64,799/- made by Ld. AO u/s 69A of the Act." 4. The brief facts qua the issue, as per lead case in ITA No.515/Rjt/2025 for A.Y. 2015-16 are as follows: The assessee, before us, is an individual and did not file his original return of income. As per the information available with the Jurisdictional Assessing officer (JAO), the assessee, during the year had credits of Rs. 1,58,64,799/- in his various bank accounts, with the assessee being nonfiler credits in his bank accounts remained unexplained. The relevant part of the information received by the Jurisdictional Asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....balance sheet, and sample bills/invoice for sales/purchase made during the year have been submitted. Further, assessee has not submitted any books of account which further indicates that the assessee has not maintained the books of account as per section 44AA of the Income Tax Act, 1961. In the absence of the books of account, assessee contention to calculate net profit at 2% of credits/deposits in bank account, is immaterial. In view of the above discussion, the credits/deposits in the bank accounts of Rs. 1,58,64,799/- remains unexplained. Therefore, another show-cause notice, proposing to add the same as unexplained money u/s 69A of the Income Tax Act, 1961 was issued to assessee. In response, the assessee submitted its reply before the assessing officer. However, the assessing officer, rejected the reply and contention of the assessee and observed that in the absence of any satisfactory explanation in relation to credits/deposits in the bank account of the assessee, the credits of Rs. 1,58,64,799/- remains unexplained and the same was added back, as the income of the assessee u/s 69A of the Income Tax Act, 1961, as unexplained money. The assessing officer also clarified that ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one such huge business transactions, but did not bother to maintain books of accounts / audit the books of accounts / file Return of Income which shows grave negligence. Even though, substantial cash deposits/credits in the bank accounts of ICICI Bank were from business transactions, it is not possible to make one-to-one correlation at this juncture. Therefore, to safeguard the interests of revenue, 10% of cash deposits/credits appearing in the bank accounts of the assessee were treated as from undisclosed sources and thereby treated as unexplained money u/s.69A of the Income Tax Act, 1961. Accordingly, addition to this extent of 10% of cash deposits/credits which comes to Rs.15,86,480/- was confirmed by ld.CIT(A) and balance addition was deleted. 9. During the appellate proceedings, before learned CIT(A), the assessee has raised additional technical/legal grounds, such as notice under section 147/148 of the Act, was not valid, and DIN number was not incorporated in the body of the notice. The learned CIT(A) dismissed these technical grounds of the assessee. Before this Tribunal also, the assessee has raised same technical grounds, which we have admitted. 10. The learned CIT(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he notice issued by the assessing officer under section 148 of the Act dated 21.04.2021, as follows: 15. We have gone through the above notice issued by the assessing officer under section 148 of the Act and noticed that the date of issuance of the notice is 21.04.2021. The assessment year, involved in the assessee's case, under consideration is the assessment year 2015-16. For the assessment year (A.Y.) 2015-16, the notice under section 148 of the Act, should have been issued, by the assessing officer, on or before 31st March, 2019. After amendment in the Act, ( for assessment year 2015-16), the notice issued after 1st April, 2021 would be time barred and invalid therefore, the assessment order itself should be quashed. For that reliance is placed on the judgment of the Jurisdictional High Court of Gujarat in the case of Gordhanbhai Devjibhai Kapadia vs. ITO, [2025] 177 taxmann.com 714 (Gujarat), wherein it was held as follows "2. The petitioner has challenged notices issued under section 148 of the Income Tax Act, 1961 (for short "the Act") for the Assessment Year 2015-2016 under the old regime in view of TOLA without issuing notice under section 148A(b) as requir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as Assessment Year 2015-2016 is concerned, Revenue could not have issued the notices under section 3(1) of TOLA as considering the time period as prescribed under section 149 of the Act with effect from 01.04.2021, three years would be over on 31.03.2019 which is prior to coming into force of TOLA and six years would be completed on 31.03.2022 which is after operation of TOLA. In such circumstances, notices for Assessment Year 2015-2016 are held to be invalid by Hon'ble Apex Court in case of Rajeev Bansal(supra). 10. The Hon'ble Apex Court followed the decision of Rajeev Bansal(supra) in case of Deepak Steel and Power Ltd v. Central Board of Direct Taxes [2025] 174 taxmann.com 144/305 Taxman 169/476 ITR 369 (SC) and after recording the concession of the learned advocate for the department and in view of the concession given before the Apex Court by learned advocate appearing for the Revenue as recorded in para 19(f) of the judgment in case of Rajeev Bansal (supra), has quashed and set aside the notice issued after 31.03.2021 under TOLA for A.Y. 2015-16 as under: "1. Leave granted. 2. These appeals arise from the order passed by the High Court of O....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed. 7. The impugned notice therein stands quashed and set aside. 8. The relief in terms of prayer (a) is granted. 9. The appeals stand disposed of in the above terms. 10. Pending application(s), if any, stand disposed of." 11. Similar orders are also passed by the Apex Court in the following cases: 1) Asstt. CIT v. Nehal Ashit Shah [SLP(Civil) Diary No. 57209 of 2024, dated 4-4-2025]; 2) ITO v. R.K.Build Creations Private Limited [SLP (Civil) Diary No. 59625 OF 2024, dated 17-1-2025]. 12. The Delhi High Court has also passed the similar order in following cases: 1) Bhagwan Sahai Sharma v. Dy. CIT [2025] 174 taxmann.com 14 (Delhi) 2) Lalit Gulati v. Asstt. CIT [2025] 174 taxmann.com 273/305 Taxman 11 (Delhi); 13. The Punjab and Haryana High Court has taken similar decision in case of Jay Jay Agro Industries v. ITO [CWP 7405 of 2025, dated 19-3-2025] 14. Rajasthan ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dgment of the Jurisdictional High Court in the case of Gordhanbhai Devjibhai Kapadia (supra). Therefore, we hold that impugned notice issued by the assessing officer, u/s 148 of the Act for A.Y. 2015-16, after 31st March, 2021, is invalid. Since the notice u/s 148 of the Act was issued on 21st April 2021, which is time barred and invalid and hence, the assessment order passed by the assessing officer under section 147 r.w.s. 144B of the Act dated 27.05.2023, should be quashed and accordingly, we quash the same, being void, ab-initio. 17. As the reassessment order of assessing officer framed under section 147 r.w.s. 144B of the Act dated 27.05.2023, itself is quashed, therefore all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous. 18. In the result, the appeal filed by the assessee, in ITA No.515/RJT/2025, for assessment year 2015-16, is allowed. 19. Since the order of the Assessing Officer has been quashed by us in ITA No.515/RJT/2025, for assessment year 2015-16, therefore, various penalties imposed by the assessing officer on the assessee for assessment year 2015-16, such as, under section 271(1)(c) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e lead case in ITA No.525/RJT/2025, to advert the facts of the assessee's case. Brief facts of the case are that the assessee had not filed his Return of Income for the assessment year (AY.) 2016-17. The assessing officer had information that there were a total credits of Rs. 1,95,82,197/-, during the FY.2015-16, in the bank accounts of assessee, Sri. Vallabhbhai Bhagvanjibhai Kathiriya held with ICICI bank that is, accounts nos. 072605000749, 072601504936 & 072605500333. Further, during the course of investigation conducted by ADIT(Inv.), Jamnagar, even after multiple opportunities provided to the assessee, the assessee failed to respond. Thereby, the assessee's case for the assessment year (AY.) 2016-17 was reopened by issue of notice u/s 148 of the Income Tax Act, 1961 dated 26.07.2022. During the assessment proceedings, notice u/s. 143(2) of the Income Tax Act, 1961 dated 25.01.2023, notices u/s.142(1) of the Income Tax Act, 1961 dated 15.02.20238 26.04.2023 and show- cause notice dated 01.05.2023 were issued to the assessee. In response, the assessee filed a Return of Income for the assessment year (AY) 2016-17, declaring an income of Rs.3,91,640/-, on 18.10.2022, that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ident from bank statement itself that amount deposited in the said bank account was from various location in India, viz. Bareilly, Kanpur, Ferozpur, Lucknow, Rohini, Dehradun, Delhi Kandivali, Ranchi, Hissar, Bhopal, Agra, Meerut, Malad, Garegaun, Coimbotar, Tinsukhia, Soalpur, Jaipur, New Bombay, Surat and many other such places and has made sales to all these places and all amount was withdrawn at Jamnagar for making purchases. Along with sample bills for sales made during the year under consideration and detailed explanation of each and every deposit entry in bank statement having complete name of customers were submitted before assessing officer's verification. The assessing officer himself made estimated addition, and on appeal, by the assessee, the learned CIT(A) has further reduced the estimated addition. The learned Counsel also submitted that assessee has suo-moto offered margin at the rate of 2% on turnover in the return of income filed by the assessee, therefore, the same may be upheld. 26. On the other hand, learned DR for the revenue submitted that since the assessing officer and learned CIT(A) had estimated the profit of the assessee, therefore, estimation made....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpense, the deposits cannot be treated as income on standalone basis without considering the withdrawal. Therefore, the assessee, has computed his profit @2% of deposits, which should be accepted. 28. Therefore, we note that neither the assessing officer nor the learned CIT(A) have accepted the genuine facts, submission of the assessee and also ignored average rate of net profit declared by similar entities engaged in the similar business. We are of the view that gross credits in bank accounts in any business cannot be considered as income and that too after giving all genuine explanation and submission up to the best endeavour of an assessee. From the assessee's facts, it is understood that the assessee had been doing business of trading in brass items on commission basis. The assessee operated bank accounts nos. 072605000749, 072601504936 and 072605500333 in ICICI Bank for his business purposes. In the above bank accounts, the assessee has been getting cash deposits/credits from various locations across India such as Bareilly, Kanpur, Delhi, Coimbatore, Solapur, Surat etc. and immediately withdrawing cash for the purchase of brass items and selling the same. In response to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount the trading activities of the assessee and the industry norms. Considering the above facts, we find that assessing officer has not denied this fact that assessee is not a commission agent. The assessing officer, as well as learned CIT(A) both accepted that assessee is a commission agent and doing business on commission basis. We note that assessee has raised factual objections before the lower authorities, that credit entries in the bank account, represents, sale proceeds in respect of his business, which were received from purchasers, and deposited at various stations/cities and all such amounts were withdrawn at Jamnagar for making payment of purchases. The assessee also submitted the relevant documents and evidences to demonstrate that these facts were correct. The assessee also argued before the learned CIT(A) that in similar cases, the learned CIT(A) himself estimated profit at the rate of 5% and Hon'ble ITAT has estimated income at the rate of 2% to 5% of all such bank credits. The learned CIT(A) accepted the above submissions of the assessee and therefore sustained the estimated addition at the rate of 5% in some years and at the rate of 10% of cash deposit/ credit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on turnover/ deposits in bank account, and on appeal by the assessee, the learned CIT(A) has further re-estimated the addition sustained by the assessing officer, at the rate of 5% and 10%. Therefore, there is no definite charge on account of concealment of income, on the part of the assessee, therefore, penalty under section 271 (1) (C) of the Act should not be imposed on the assessee, and the same should be deleted. On the other hand, learned DR for the revenue submitted that even on estimated addition, the penalty should be sustained under section 271 (1) (c) of the Act. 34. We have considered submissions of both the parties. The necessary facts of the assessee's case have already been narrated by us in this order, therefore, we do not repeat them for the sake of brevity. We find merit, in the submissions of learned Counsel for the assessee to the effect that penalty on estimated addition under section 271 (1) (c) of the Act should not be levied. For that we rely on the judgment of the Co-ordinate Bench of ITAT Surat in the case of Gipilon Texturising Pvt. Ltd, ITA No. 293 & 294/AHD/2005, order dated 13.04.2021, wherein it was held as follows: "On second appeal ....