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Income Tax Appellate Tribunal, “SMC” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri SonjoySarma]
आयकर अपील�य अ�धकरण, कोलकाता पीठ ‘‘एसएमसी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA �ी राजेश कुमार, लेखा सद�य एवं �ी संजय शमा� �या�यक सद�यके सम� [Before Shri Rajesh Kumar, Accountant Member & Shri SonjoySarma, Judicial Member] I.T.A. No. 652/Kol/2022 Assessment Year: 2017-18 Mohit Jindal Vs. ITO, Ward-47(2), Kolkata (PAN: ARPPJ 3022 P) Appellant / (अपीलाथ�) Respondent / ( !यथ�)
21.12.2022 Date of Hearing / सुनवाई क$ �त&थ Date of Pronouncement/ 04.01.2023 आदेश उ)घोषणा क$ �त&थ For the Appellant/ Shri Miraj D Shah, A.R �नधा�/रती क$ ओर से For the Respondent/ Shri P. P. Barman, Addl. CIT राज�व क$ ओर से
ORDER / आदेश Per Rajesh Kumar, AM:
This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 15.07.2022 for the AY 2017-18.
The only issue raised by the assessee in the various grounds of appeal is against the order of Ld. CIT(A) sustaining the addition as made by the AO @ 8% of the undisclosed turnover by applying the provisions of Section 44AD of the Act whereas the prevailing margin ranges from 0.75% to 1% of the turnover.
I.T.A. No.652/Kol/2022 Assessment Year: 2017-18 Mohit Jindal 3. At the outset, we notice that there is a delay of 95 days in filing the appeal. The assessee has filed an affidavit dated 19.12.2022 affirming on oath that he was not well and was suffering from jaundice from 07.07.2022 up to 22.08.2022. The affidavit further stated that the assesse joinedon 24.08.2022 and consequently the appeal could not be filed before the tribunal in time which was ultimately late filed by 95 days. The Ld. A.R prayed that delay may kindly be condoned and appeal may be admitted for hearing as the delay is for genuine and bona-fide reasons beyond the control of the assesse and the assesse is not benefitted by late filing of the appeal in any manner whatsoever.
Ld. D.R on the other hand left the issue to the wisdom of the Bench.
After hearing the rival contentions and perusing the material on record, we observe that the delay in filing the appeal is for reasonable and sufficient cause and for the reasons which are beyond the control of the assesse. Accordingly we condone the delay and admit the appeal for adjudication.
Facts in brief are that the case of the assessee was selected for scrutiny under CASS for cash deposits during demonetization period. The statutory notices were duly issued and served on the assessee. During the course of assessment proceedings, the AO observed that cash deposited during demonetization period i.e. 9.11.2016 to 30.12.2016 amounting to Rs. 75,57,000/- in Allahabad Bank in bank account no. 29306 and Rs. 2,00,000/- in account no. 08405 with Union Bank of India. Accordingly the assessee was called upon to explain the source of such cash depositsfailing which why the same should not be added as unexplained money u/s 69A of the Act. The assessee filed necessary details before the AO and replied in response to the said show cause notice. The AO observed on the basis of said reply that during 01.04.2016 to 30.03.2017 the total deposits were Rs. 6,03,54,234/- but as per return of income ,the declared turnover was only Rs. 77,52,796/- u/s 44AD of the Act and the difference of Rs. 5,26,01,438/- was treated as undisclosed turnover and a profit @8% which comes to Rs 42,08,115/- was applied to assess the undisclosed
I.T.A. No.652/Kol/2022 Assessment Year: 2017-18 Mohit Jindal
turnover thereby adding Rs. 42,08,115/- to the income of the assessee in the order passed by the AO u/s 143(3) of the Act dated 30.12.2019.
The Ld. CIT(A) simply affirmed the order of AO by observing and holding as under:
“5. The appellant’s above submission is carefully considered. It is evident from the bank statement submitted that the credits were made by way of both cash/cheque deposits and online transfers. The debits in accounts are all transfer of funds to various parties and no cash withdrawals were made. The appellant never disputed the receipt of Rs. 6,03,54,234/-. In spite of such large number of transactions, the appellant neither maintained any books of accounts nor produced any relevant details of transactions with proper evidences/ supporting materials. Further, no supporting materials for claiming lesser profit was produced. In the absence of the books of account s and such large number of transactions, it was not verifiable for the AO whether the debits in bank account were spent wholly for the purpose of business of the appellant and whether any personal expenditures were involved. Hence, n the absence any of the supporting materials, the appellant’s request was rightly rejected by the AO. I find that the order passed by the AO is in proper order and in accordance with law. Hence, I am not inclined to interfere in the order of the AO and accordingly the addition u/s 44AD of Rs. 42,08,115/- being @ 8% of Rs. 5,26,01,438/ made by the AO is hereby sustained.” 8. After hearing the rival parties and perusing the material on record, we find that there is no dispute about the fact that the AO has accepted the plea of the assessee qua the deposits in the bank accounts of the assessee to be undisclosed turnover which was to the tune of Rs. 5,26,01,438/-. Now the only plea before us as raised by the assessee in the grounds of appeal is against the application of profit rate @8% which was stated to on the higher side as in the trade of assesse, the profit margin varies from 0.75% to 1%. We note that the assessee is doing the business of jute bag trading. We have also examined the Annual Report for 2018-19 of M/S Ludlow Jute & Specialties Ltd wherein the net profit margin was only 0.42% in 31.03.2019 vis-à-vis 0.53% in 31.03.2018. We also note that in the current year, the assessee’s profit margin on sale was also around 1%. Therefore we deem it fit and reasonable to apply the rate of 1.25% on the undisclosed turnover of the assessee. We accordingly set aside the order of Ld. CIT(A) and direct the AO to apply the rate of 1.25% on undisclosed turnover instead of 8%. Accordingly the appeal of the assessee is partly allowed.
I.T.A. No.652/Kol/2022 Assessment Year: 2017-18 Mohit Jindal 9. In the result, the appeal of the assessee is partly allowed.
Order is pronounced in the open court on 4th January, 2023
Sd/- Sd/- (Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 4th January, 2023 SB, Sr. PS
Copy of the order forwarded to: 1. Appellant- Mohit Jindal, 31, Bhairab Dutta Lane, Nandi Bagan, Golabari, Howrah-711106. 2. Respondent – ITO, Ward-47(2), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)