The Tribunal restored the case to the Assessing Officer for a fair hearing, emphasizing the importance of natural justice in tax assessments.

ORDER

This appeal has been preferred by the assessee against order dated 12.06.2024, passed by the National Faceless appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.

2. The brief facts of the case are that the Income Tax Department received information through ITBA-Cash Transaction-2016 that the assessee had deposited cash amounting to Rs.14,45,000/- in his Bank Account No.50040200000054 maintained with Bank of Baorda, Adarsh Nagar Branch, Unnao during the demonetization period (from 09.11.2016 to 30.12.2016). In response to the statutory notices issued by the Assessing Officer (AO), the assessee explained the source of deposits made in his Bank Account as his earlier savings of Rs.81,000/- and out of cash sales and receipts from debtors of Rs.13,64,000/-. The assessee also submitted before the AO that the assessee was engaged in the business of trading of tyres and the same was purely cash business. After considering the reply furnished by the assessee, the AO observed that during the demonetization period, the assessee had deposited in his Bank Account a total amount of Rs.14,45,000/-, out of which Rs.9,37,500/- were in old Specified Bank Notes (SBNs) of Rs.1000/- and Rs.500/- notes, which were to be treated as unexplained and were to be added to the income of the assessee under section 69A of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO also noted from the VAT return of the assessee that the assessee had a total turnover of Rs.2,39,93,300/- during the year under consideration, on which the AO estimated net profit @5%, which came to Rs.11,99,665/- and added the same to the income of the assessee. Moreover, the AO also noted from Form 26AS that the assessee had received interest to the tune of Rs.96,513/- during the year under consideration, which was also added to the income of the assessee. The AO, accordingly, completed the assessment under section 144 of the Act, assessing the total income at Rs.22,33,678/-.

3. The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC, 271A, 271B and 271F of the Act, separately.

4. Aggrieved, the assessee preferred an appeal before the NFAC, who dismissed the appeal of the assessee after admitting additional evidences and considering the Remand Report of the AO.

5. Now, the assessee has approached this Tribunal challenging the dismissal of its appeal by the Ld. NFAC by raising the following grounds of appeal:

1. The addition made u/s 69A of Rs.9,37,500/- is invalid as the amount is already been deposited in the bank account and also is being recorded in the books of accounts. Assuming the SBN notes only for the addition u/s 69A and the rest is being treated as the business income. The addition has been made purely on the presumption basis without any evidence on record. That no books of accounts has been rejected. Thus the learned CIT Appeal has erred in confirming the addition u/s 69A.

2. The addition of Rs.11,99,665/- of profit assumed @ 5% on the total turnover of Rs.2,39,93,300/- has been added on adhoc basis and the addition has been made even without verifying the actual figures and facts of the case. The, the addition made is purely on assumption basis without verifying the facts of the case.

3. Even in case of the commission addition the expenses cannot be ignored and the addition has been made even without considering the expenses and payment expenses from the bank account of the appellant. The addition made is against the accounting principles also where the debit and credit transactions were purely ignored by the learned A.O. The Gross profit calculated from the vat order is Rs.12,04,911 and the addition of income has been made of Rs.11,99,665/-, just by making a deduction of Rs.5246 of expenses of showroom which is unrealistic. The addition made is purely without application of mind and the addition deserves to be deleted.

4. That the order passed by the learned CIT (Appeal) & Learned A.O is agains