Income Tax Appellate Tribunal - Kolkata
Rudra Prosad Paul,Bongaon vs Ito, Ward 49(1),, Kolkata on 11 May, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA 'SMC' BENCH AT KOLKATA
Before
SHRI SONJOY SARMA, JUDICIAL MEMBER
&
SHRI RAKESH MISHRA, ACCOUNTANT MEMBER
ITA No(s). 355/KOL/2026
Assessment Year(s) 2019-20
Rudra Prosad Paul ITO, Ward-49(1), Kolkata
Vs.
(Appellant) (Respondent)
PAN: AJLPP4264H
Appearances:
Assessee represented by : Subrata Sinha, AR.
Department represented by : Monalisa Pal Mukherjee, Sr. DR.
Date of concluding the hearing : 27-April-2026
Date of pronouncing the order : 11-May-2026
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2019-20 dated 11.12.2025.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
"1. THAT during the year under consideration the appellant's turnover of the business was Rs. 1,72,10,650/- which was below the quantum of Rs. 2.00 crores and the appellant opted to declare his business income under the scheme of presumptive profit as provided under the section 44AD of the I.T.Act 1961. The appellant declared net business profit of Rs.13,76,900/- which was a little more than 8% of turnover. The appellant by declaring the said net profit fulfilled all the criteria as provided under the section 44AD of the I.T.Act. The assessing officer had not pointed out any shortfall of criteria under section 44AD of the I.T.Act. as evident in the assessment order.
2. THAT during assessment, the Ld. assessing officer had failed to consider or had not applied his mind that the appellant had already declared his net business profit as Rs. 13,76,900/- out of Rs. 20,76,855/- as ascertained by Page | 2 ITA No(s). 355/KOL/2026 Assessment Year(s) 2019-20 Rudra Prosad Paul.
the survey team. Moreover, the assessment order is silent about the reasons of fixing up of estimated profit of 11.18% of turnover which was higher than the net profit/turnover ratio of the previous years.
3. THAT during assessment, the Ld. assessing officer had not disallowed any quantum of sales, purchase and expenditure but he added profit of Rs. 20,76,855/- with the Returned income on estimated basis which was higher than the appellant's early year's average income records.
4. THAT the presumptive taxation scheme under Section 44AD has specific eligibility criteria (e.g., turnover limit, nature of business, resident status). A survey does not automatically disqualify a person from using the section if the assessee maintains all condition and criteria of section 44AD of the Income Tax Act. In the instant appeal the department or survey team had ascertained the income based on estimation which was evident less, higher than the average of last few year's income of the appellant and also more higher than the 8% which allows an eligible taxpayer to declare income at a minimum rate of 6% (for digital receipts) or 8% (for cash receipts) of the turnover as per presumptive scheme under section 44AD of the Income Tax Act.
5. THAT the assessing officer had failed to consider that every business entity has their year ending closing entries which would only charge at the end of the year. Instead, the assessing officer had so closed his eyes during assessment that he failed to consider that after completion of the year the profit cannot be ascertained based on estimated turnover.
6. THAT the assessing officer added Rs. 20,76,855/- with declared income of the appellant under section 69A of the I.T.Act 1961.In the said assessment order he never commented that why the said amount of Rs 20,76,855/- was declared as unexplained money of the appellant.
7. THAT the provision of section 69A of I.T.Act 1961 states that "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. That from the reading of above provision of the Act it is cleared that the assessing officer can implement the said section where:
i. He unearthed any money or valuable articles under the possession of Assessee. And Page | 3 ITA No(s). 355/KOL/2026 Assessment Year(s) 2019-20 Rudra Prosad Paul.
ii. There is evidence of ownership of money or valuable article which existence of investment, expenditure, etc. must be conclusively established by material on record/ evidence.
But in the concerned assessment order the assessing officer could not explain the nature and type of possession of unexplained money and how it was termed as unexplained.
8. THAT the appellant filed his ROI under section 44AD of the Act and did not maintained books of accounts. Thus, it was cleared that the Ld. AO had not pointed out any money recorded in the books of accounts which were 'Unexplained'. Once the income of the assessee was accepted u/s. 44AD, whether the Assessing Officer could make any further additions from business transactions without rejecting the provision of section 44AD of the Act?
9. The appellant relies on the pronouncement in the income tax appellate tribunal cochin bench, cochin before s/shri chandra poojari, am & george george k., jm [TS-8499-ITAT-2019(Cochin)-O] - Section 44AD exempts the assessee from maintenance of books of accounts, and asking assessee to prove to the AO's satisfaction expenditure to the extent of 92% of gross receipts/ deposit would defeat the purpose of presumptive taxation u/s 44AD or other such provision; ITAT rules in assessee's favour, notes the contradiction: if the income is estimated, how could the expenditure component on the basis of said income be considered to have been 'actually incurred'? It is only presumption that 92% of gross receipts was incurred as expenditure; ITAT holds that section 69A of the Act cannot be applied as neither AO nor CIT(A) have given any reason as to why Section 44AD is not applicable;
10. The appellant craves leave to amend, alter or delete any of the above grounds of appeal."
3. Brief facts of the case are that the assessee had filed his return of income for AY 2019-20 showing total income of ₹12,13,730/-. A survey action u/s 133A of the Act was carried out in the business premises of the assessee, Shri Rudra Prasad Paul and it was noticed that the assessee was having high turnover and gross and net profit percentage found were much higher than the previous years. The assessee agreed to pay the tax on projected net profit of ₹20,72,855/- and after deducting deduction allowable under Chapter VI-A of ₹1,65,804/-, the total income was worked out to ₹19,07,051/- and the tax liability to ₹4 Page | 4 ITA No(s). 355/KOL/2026 Assessment Year(s) 2019-20 Rudra Prosad Paul.
Lakh. The return was accordingly selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Act were issued to the assessee and another show cause notice was also issued in response to which the assessee did not submit any reply. The Assessing Officer (hereinafter referred to as the Ld. 'AO') determined the total income of the assessee at ₹35,86,585/- u/s 143(3) r.w.s. 144B of the Act after making certain additions. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who held that as the assessee had not given any submission in regard to the survey findings and also during the survey operations the assessee had accepted the income and had accepted to pay the tax on this amount, the assessment proceeding was completed on the basis of the material available on record after making an addition of ₹20,72,855/- to the total income of the assessee, treating it as unexplained money u/s 69A of the Act. The Ld. CIT(A) accordingly confirmed the addition made by the Ld. AO and dismissed the appeal of the assessee.
4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
5. Rival contentions were heard and the submissions made have been examined.
6. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). It was stated by the Ld. AR that there was a survey. The assessee does not maintain any books of account. The Ld. AR submitted that the Ld. AO has not mentioned as to which article was detected during the survey. The assessee had disclosed income u/s 44AD of the Act. The assessee had not responded to the draft order therefore, addition was Page | 5 ITA No(s). 355/KOL/2026 Assessment Year(s) 2019-20 Rudra Prosad Paul.
made. The assessee is a retailer of marble and tiles and while the turnover during the survey was detected at ₹1.52 Crore, the actual turnover was ₹1.72 Crore on which the assessee had computed the total income @ 8%. Our attention was also drawn to the statement recorded at the time of survey as per paper book page 32 which is extracted as under and in which the authorized officer had computed the total income of the assessee as under on the basis of the statement recorded:
Page | 6 ITA No(s). 355/KOL/2026 Assessment Year(s) 2019-20 Rudra Prosad Paul.
7. The Ld. DR supported the order of the Ld. CIT(A). However, no satisfactory response could be filed by the Ld. DR as to why the addition was made u/s 69A of the Act when in the course of the survey, the net profit of ₹19,00,117/- was worked out on the turnover of ₹1,69,94,598/- from 01.04.2018 to 04.03.2019 while in the return of income the Page | 7 ITA No(s). 355/KOL/2026 Assessment Year(s) 2019-20 Rudra Prosad Paul.
assessee has himself shown business profit of ₹13,76,900/- under the provisions of presumptive taxation u/s 44AD of the Act on the total turnover of ₹1,72,10,650/- to which no satisfactory answer could be made by the Ld. DR except for relying upon the order of the Ld. AO.
8. Since there is no justification for the addition u/s 69A of the Act and this amount is added over and above the income disclosed as per the profit computed u/s 44AD of the Act at ₹13,76,900/- for the whole year and the Ld. CIT(A) has merely confirmed the order of the Ld. AO without discussing the basic facts that the business income computed at the time of survey on a lesser turnover had been shown in the return of income on a higher turnover as per the provisions of section 44AD and has not given any finding as to how section 44AD was not applicable to the facts of the assessee and why the business profit should have been further added u/s 69A resulting in double addition of the same business profit; therefore, there is no justification for upholding this addition confirmed by the Ld. CIT(A). The orders of the Ld. CIT(A) as well as the Ld. AO are set aside and the addition of ₹ 20,72,855/- made u/s 69A which is confirmed by the Ld. CIT(A) is hereby deleted.
9. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 11th May, 2026.
Sd/- Sd/-
[Sonjoy Sarma] [Rakesh Mishra]
Judicial Member Accountant Member
Dated: 11.05.2026
Bidhan (Sr. P.S.)
Page | 8
ITA No(s). 355/KOL/2026
Assessment Year(s) 2019-20
Rudra Prosad Paul.
Copy of the order forwarded to:
1. Rudra Prosad Paul, Gr. Floor, Paschimpara, Pallybarta Road, Bongaon, North 24 Parganas, West Bengal, 743235.
2. ITO, Ward-49(1), Kolkata.
3. CIT(A)-NFAC, Delhi.
4. CIT-
5. CIT(DR), Kolkata Benches, Kolkata.
6. Guard File.
//True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata