Babjan Alla Bakish Vs ITO (ITAT, Bangalore Bench)
A Late Notice Cannot Spin a Tax Web: Reopening u/s 148 Beyond Six Years Quashed—Silk-Waste Trader’s Appeal Allowed
Summary: The assessee was an individual engaged in the business of purchasing silk waste from local farmers & selling it locally. He had not filed his original return of income u/s 139(1) for AY 2015-16.
Based on information concerning cash deposits of ₹87,34,250 in an Axis Bank account, the case was reopened. Notice u/s 148 was issued, followed by notice u/s 142(1) & a show-cause notice.
The assessee claimed that he had filed his return in response to the notice u/s 148, but the AO alleged that the return was not visible on the Department’s system.
VAT-Free Goods Mistaken for Income-Tax-Free Business
In his reply dated 11.10.2023, the assessee explained that he dealt in silk waste purchased from farmers. Since the commodity was exempt from VAT & GST, he was under a mistaken impression that the resulting income was also not liable to income tax. Consequently, he had not filed his return u/s 139(1).
The assessee maintained that he had subsequently filed the return in response to notice u/s 148 on 11.10.2023 under acknowledgement No. 401610401111023. Business income was declared on a presumptive basis u/s 44AD. Since the assessee had opted for presumptive taxation, he had not maintained pucca books of account.
