TaxTMI 
TaxTMI 
2026 (3) TMI 1278
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....he department, it was observed that income amounting to Rs. 2,16,59,470/- had remained unexplained and had escaped assessment. Accordingly, proceedings under section 147 were initiated and notice under section 148 dated 29.03.2024 was issued to the assessee requiring him to file return of income. During the course of assessment proceedings, notices under section 142(1), show cause notice under section 144 and other communications were issued from time to time. 3. In response to the final show cause notice, the assessee submitted that he was working as a Business Correspondent (BC) with Fino Payments Bank Ltd. and was also proprietor of M/s Saraswati Associates. It was contended that the bank account under consideration was a "BC Merchant Account", and the deposits reflected therein represented transactions carried out on behalf of customers and not the assessee's own income. The assessee further submitted that he earned only commission income on such transactions and that the deposits did not belong to him. The assessee also furnished certificates and authorization letters from Fino Payments Bank and other entities to substantiate that the account was used exclusively for busine....
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.... noted that the bank account reflected substantial credits of Rs. 4,63,79,981/-, and the assessee failed to furnish complete and verifiable evidence such as customer-wise details, transaction-wise confirmations and independent supporting material to establish that the deposits belonged to customers. It was held that mere submission of certificates and general explanations without corroborative evidence was insufficient to discharge the burden cast upon the assessee. The CIT(A) further observed that the assessee had declared income at a lower percentage compared to the scale and nature of activities and that the Assessing Officer was justified in estimating income on a reasonable basis. The CIT(A) also observed that the explanation furnished by the assessee was general in nature, self-serving and not supported by credible evidence. Accordingly, the CIT(A) held that the assessment order was factually justified and legally sustainable and upheld the addition of Rs. 2,15,389/-. 8. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: 1. In the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) (....
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.... Faceless Assessment Centre. 5. In the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) failed to appreciate that the Appellant never received any notice during the appellate proceedings, as no physical notice was sent to the residential address. All communications were issued only through Email and the Income Tax Portal and went unnoticed since the Appellant maintains multiple email accounts and does not regularly check digital communication. Therefore, the Appellant had no knowledge of the proceedings, and such electronic service cannot be considered valid. This lapse denied the Appellant a reasonable opportunity of being heard, rendering the order under Section 250 invalid. Once the Appellant received the first physical notice by speed post, a prompt response was submitted. The Ld. Commissioner further erred in sustaining penalty under Section 271(1)(d), as there was no wilful non-compliance. The Appellant seeks an opportunity to submit proof of income sources and prays for waiver. 6. The Appellant craves leave to add, alter, amend, and modify the aforesaid grounds of appeal at any time before the hearing as they may be advised ....
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.... the income declared by the assessee under section 44AD of the Act and in estimating the income by applying a rate of 50% by invoking the logic akin to section 44ADA. 14. At the outset, it is an undisputed fact emerging from the record that the assessee is engaged in the activity of a Business Correspondent (BC) with Fino Payments Bank Ltd. The assessee has consistently maintained that the bank account in question is a BC Merchant Account, wherein transactions are carried out on behalf of customers and only commission income accrues to the assessee. 15. The Assessing Officer has not brought any material on record to demonstrate that the assessee is carrying on a specified profession as contemplated under section 44ADA of the Act. The activity of a Business Correspondent facilitating banking transactions cannot, by any stretch of interpretation, be equated with a profession such as legal, medical, engineering, architectural, accountancy, technical consultancy or other notified professions falling within the ambit of section 44AA and consequently section 44ADA.Therefore, the foundational premise adopted by the Assessing Officer for applying a higher presumptive rate of 50% is i....
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....ion income is earned. The Assessing Officer, despite proposing estimation at 8% of total credits at one stage, ultimately did not adopt that approach and instead confined himself to the turnover declared by the assessee. This itself shows that the Assessing Officer has accepted the assessee's version regarding the nature of receipts to the extent of recognizing only the commission-based turnover. Having accepted the turnover, the Assessing Officer could not have disregarded the statutory framework of section 44AD and substitute it with an altogether different presumptive rate. 22. The Learned CIT(A) has upheld the action of the Assessing Officer primarily on the ground that the assessee failed to substantiate the nature of deposits with complete documentary evidence and that the estimation made by the Assessing Officer was reasonable. 23. However, in our considered view, the Learned CIT(A) has failed to appreciate that: i. the dispute is not with respect to suppression of turnover, but with respect to rate of presumptive income; ii. once section 44AD is invoked, the statutory rate cannot be substituted by an arbitrary higher rate; iii. section 44ADA....