Ratabhai Rambhai Sodhiya Vs ITO (ITAT Rajkot)
Summary: The Rajkot ITAT condoned the 192-day delay in filing the assessee’s appeal for AY 2017-18 and admitted the appeal for adjudication on merits. The Assessing Officer had completed the assessment ex parte under Section 144 pursuant to reassessment proceedings, treating cash payment of ₹1,76,000 towards purchase of a vehicle from M/s Kiran Motors Limited as unexplained investment under Section 69. The assessee challenged the validity of the notice issued under Section 148 and the assessment order and, without prejudice, contended that the assessed income was below the basic exemption limit and that the entire addition could not be subjected to the special rate under Section 115BBE. Alternatively, the assessee agreed to accept 10% of the disputed amount as taxable income, relying upon the Tribunal’s decision in ITA No. 506/RJT/2026 involving similar facts. Following that decision, the Tribunal directed the Assessing Officer to restrict the addition to ₹17,600, being 10% of ₹1,76,000, and further directed that the said amount be taxed under the normal provisions of the Income-tax Act and not under Section 115BBE. The appeal was accordingly partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 18.08.2025, which in turn arises out of an order passed by assessing officer u/s. 147 r.w.s. 144 of the Act, dated 28.03.2022.
02. Brief facts of the case are that the assessee filed the present appeal against the assessment order passed for A.Y. 2017-18. Where, information was received from the DDIT (Investigation) that the assessee had made cash payment of Rs.1,76,000/- towards the purchase of a vehicle from M/s Kiran Motors Limited. Accordingly, proceedings under section 147 of the Income-tax Act were initiated after obtaining the requisite approval from the Additional Commissioner of Income Tax, and notice under section 148 of the Act was issued. In response to the notice under section 148, the assessee did not file any return of income. Subsequently, notices under section 142(1) of the Act were also issued, but the assessee failed to comply with the same. Consequently, the assessment was completed ex parte under section 144 of the Act, wherein the Assessing Officer treated the payment of Rs.1,76,000/- made towards purchase of the vehicle as unexplained investment under section 69 of the Act and added the same to the total income of the assessee. The total income was accordingly assessed at Rs.1,76,000/-.
03. Dissatisfied with the order of the Assessing Officer assessee went in appeal before the Ld. CIT(A) where the appeal was dismissed by sustain the order of the AO.
04. Aggrieved by the order of the Ld. CIT(A) assessee is in appeal before this tribunal.
05. At the time of hearing, the Ld. Counsel for the assessee submitted that there was a delay of 192 days in filing the appeal. In this regard, a petition for condonation of delay was filed, explaining the reasons for the delay. After considering the reasons stated therein and being satisfied with the same, we hereby condone the delay of 192 days in filing the appeal and admit the appeal for adjudication on merits.
06. The Ld. counsel for the assessee challenged the validity of the notice issued under section 148 of the Act and contended that the assessment order was bad in law. It was further submitted that, without prejudice to the legal grounds, even if the addition of Rs.1,76,000/- was sustained, the assessed income was below the basic exemption limit applicable to the assessee for the relevant assessment year. It was therefore contended that the Assessing Officer was not justified in subjecting the entire amount to tax at the special rate of 60% under section 115BBE of the Act. Alternatively, the learned counsel submitted that, in order to buy peace and avoid further litigation, the assessee was willing to accept 10% of the disputed amount ofRs.1,76,000/-, i.e. Rs.17,600/-, as taxable income. Reliance was placed on the decision of the tribunal in ITA No. 506/RJT/2026, wherein, on similar facts, the tribunal had restricted the addition to 10% of the undisclosed amount.
07. We have considered the rival submissions and perused the material available on record. Having regard to the facts and circumstances of the case and following the aforesaid decision of the tribunal, we direct the Assessing Officer to restrict the addition to Rs.17,600/-, being 10% of Rs.1,76,000/-. We further direct that the said amount be brought to tax under the normal provisions of the Income-tax Act and not under the provisions of section 115BBE of the Act.
08. Accordingly, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on this 25th day of August, 2026.
