TaxTMI 
TaxTMI 
2026 (9) TMI 989
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....having been passed was not received by the Assessee and his chartered accountant; the Assessee was not well versed with the tax proceedings and appeal procedure and his wife, at the relevant time, was facing medical issues. Taking note of the aforesaid explanation offered by the Assessee, which is supported by duly sworn affidavit, we conclude that the Assessee was prevented by sufficient cause from filing the present appeal within the prescribed time. Accordingly, in view of the judgment of the Hon'ble Supreme Court in the case of the Collector, Land Acquisition Vs. Katiji & Others [167 ITR 471 (SC)], we condone the delay of 97 days in filing the present appeal and proceed to adjudicate the grounds raised: 1. The Ld. CIT(A) has erred in confirming the addition of Rs. 34,10,000/- u/s. 69A of the Act towards cash deposits during the demonetization period, without appreciating that the appellant had furnished the cash book, details of sales, withdrawals, and cash balance as on 08.11.2016. The Ld. CIT(A) has confirmed addition without appreciating the documentary evidences and explanations submitted during assessment and appellate proceedings and sustained merely on assumptio....
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....ssment Year 2017-18, the Assessee filed original Return of Income on 01/11/2017 which was selected for scrutiny for verification of undisclosed cash deposits reported during the demonetization period. 4. During the course of assessment proceedings, the Assessing Officer issued various statutory notices and in response to the same, the Assessee furnished modified audit report under Section 44AB of the Act. It was explained that the original tax audit report filed by the Assessee was made on the basis of account containing clerical errors and omission. According to the Assessing Officer the modified tax audit report revealed substantial changes in turnover, purchase figures, and liabilities, with sales increasing from INR.36,68,258/- to INR.5,34,18,652/- and purchases from INR.34,76,470/- to INR.5,32,26,864/-. The cash-in-hand balance was also revised from INR.1,71,413/- to INR.6,27,413/- In view of the aforesaid, the Assessing Officer rejected the books of accounts of the Assessee invoking provisions of Section 145(3) of the Act reasoning that the assessee altered financial statements multiple times and failed to produce primary supporting vouchers, quantitative details, or bills....
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....owever, the Learned CIT(A) refused to admit or even examine them under Rule 46A of the Income Tax Rules, 1962 [for short 'IT Rules'] noting that the assessee did not make the request for admission of addition evidence in the memorandum of appeal in Form 35 and had also failed to establish sufficient cause for not filing the same before the Assessing Officer. It was further submitted that the change in figures pointed out by the Assessing Officer were on account of recording to transaction of purchase/sale of fruits as commission agent on 'net basis' in the first instance which was subsequently recorded on 'gross basis' (recording the actual sale and purchases instead of net profit/commission). It was further submitted that the Assessing Officer had rejected the books primarily because of the irreconcilable differences between the original audit report and the modified audit report submitted during assessment, and the nonproduction of primary purchase and sales bills, freight and labour vouchers. When the same were furnished before the Learned CIT(A) the same were not admitted and addition made on adhoc basis was confirmed. 11. On the other hand, the Learned Departmental Represen....
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.... overturn the order passed by the CIT(A) in this regard and admit the additional evidence furnished by the Assessee. Consequently, the order passed by the Learned CIT(A) confirming the order of the Assessing Officer rejecting the books of account also set aside. Further, we are of the view that even in the event that books were to be rejected, it is a settled judicial position that the estimation of profit cannot be arbitrary or ad-hoc. The estimation must have a rational, comparative, or historical basis, such as the Net Profit (NP) or Gross Profit (GP) rates of the Assessee in the preceding years. In the present case the Assessing Officer has estimated business profits on an ad-hoc basis at INR.30,00,000/-. Therefore, we are of the view that the addition of INR.22,17,490/- made by the Assessing Officer on the basis of ad-hoc estimation of profits of the Assessee at 30,00,000/- cannot be sustained and the same is also deleted. 13. Thus, Ground No. 3 and 4 raised by the Assessee are allowed. Ground No. 1 14. Ground No. 1 pertains to addition of INR.34,10,000/- made by the Assessing Officer under Section 69A of the Act which was sustained by the Learned CIT(A). We have cons....
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....eposits in multiple installments rather than a on a single day. Perusal of cash book and bank statements shows that regular cash despots were made by the Assessee during the relevant previous year. We are of the view that the subjective view of the Assessing Officer regarding 'ideal' bank deposit pattern during the demonetization period cannot be accepted in the facts and circumstances of the present case. In view of the aforesaid, we hold that the addition of INR. INR.34,10,000/- made by the Assessing Officer under Section 69A of the Act cannot be sustained and is, hereby, deleted. Thus, Ground No. 1 raised by the Assessee is allowed. Ground No. 2 17. Next we will take up Ground No. 2 raised by the Assessee which is directed against the addition of INR.17,00,000/- made by the Assessing Officer under Section 68 of the Act which was sustained by the Learned CIT(A). We have considered the rival submissions and have perused the relevant material pertaining to this issue. 18. During the assessment proceedings, on perusal of the Balance Sheet of the Assessee for the relevant previous year, the Assessing Officer formed a view that 'new unsecured loan' of INR.17,00,000/- were tak....