Muzafar Ahmad Shah Vs ITO (ITAT Amritsar)
893-Day Delay Condoned; Cash Deposits Can’t Be Split Arbitrarily – Profit Estimated at 6%
Amritsar ITAT condoned an extraordinary delay of 893 days in filing appeal and granted substantive relief on merits by rationalising profit estimation and deleting separate cash addition.
The appeal arose from a best judgment assessment u/s 144, where AO treated bank deposits of ₹171.36 lakh as business receipts, applied 8% profit rate on non-cash deposits, and separately added cash deposits of ₹10.03 lakh as unexplained. CIT(A) partly reduced the addition by bifurcating cash deposits—treating half as unexplained and estimating profit on the balance.
ITAT, relying on Collector, Land Acquisition vs. Mst. Katiji (SC), held that medical hardships constitute sufficient cause and condoned the long delay. On merits, Tribunal observed that Assessee was engaged in cement & iron trading, a highly competitive, low-margin business, and that there was no justification to split cash deposits into two parts when entire receipts were from business activity.
Accordingly, ITAT directed AO to apply a uniform profit rate of 6% on total receipts of ₹171.36 lakh, and held that separate addition for unexplained cash deposits was unjustified. Appeal was partly allowed, granting substantial relief to the Assessee.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
