IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER Assessment Year: 2017-18

Applicant by: Shri Rakesh Garg, Advocate Respondent by: Shri R.R.N. Shukla, D.R.

O R D E R

This appeal has been preferred by the Assessee against the order dated 27.12.2023, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.

2.0 The brief facts of the case are that the assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had deposited Rs.11,40,000/- during the demonetization period, i.e., from 09.11.2016 to 30.12.2016 in his bank account No.752530110000014 maintained with Bank of India, Subeha Bazar, Haidergarh. Thereafter, the Assessing Officer (AO) issued statutory notices to the assessee, requiring the assessee to explain the source of cash deposits in his bank account. Since there was no compliance from the side of the assessee, the AO issued show cause notice under section 144 of the Act to the assessee proposing to pass an ex-parte assessment order. In response to the show cause notice, the assessee furnished reply, stating therein that the assessee was a trader of manure, seeds, medicines and pesticides during the year under consideration and that the said business was being carried out in the name and style “M/s Maurya Agro Agencies”. The AO also obtained details of assessee’s bank account from the Bank under section 133(6) of the Act, from which it was found that a sum of Rs.11,40,000/- was deposited during the period of demonetization, out of which Rs.10,51,000/- were in Specified Bank notes (SBNs). The AO held that as the sale and purchase were not allowed in SBNs during the demonetization period, the cash deposits of Rs.10,51,000/- cannot be accepted as business receipts. He accordingly added the same to the income of the assessee under section 68 of the Act.

2.1 It was further noticed by the AO that the assessee had made cash deposits, amounting to Rs.39,87,400/- and Rs.9,41,206/-, totaling to Rs.49,28,606/- through banking channels during the year under consideration in addition to cash deposits in SBNs during the demonetization period. Since the assessee failed to furnish the books of account or any other document to verify the nature of business or actual profit earned by the assessee, he estimated 8% of Rs.49,28,606/- (which came to Rs.3,94,288.94) as the business income of the assessee and added Rs.3,94,288/- also to the assessee’s income.

2.2 The AO completed the assessment under section 144 of the Act, assessing the total income of the assessee at Rs.14,45,290/-.

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

2.4 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee as un- admitted for the reasons that ‘(1) Tax on returned income not paid/particulars of payment not mentioned and (2) Form 35 is incomplete/not filled properly especially Column No.8 & 9’ and confirmed the order of the AO.

2.5 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC, by raising the following grounds of appeal:

01. Because the CIT(A) has erred on facts and in law in dismissing the appeal ex-parte for reasons of non-compliance of the provisions of section 249(4) of the Act, in as much as, the tax payable on the income returned having not been deposited, such a conclusion as arrived by the CIT(A) is contrary to facts, bad in law, the order passed be set-aside.

02. Because the CIT(A) has failed to appreciate, that the assessee having no income exceeding the taxable limit, during the year or in the preceding ye