GOLDEN EXPRESS PRIVATE LIMITED,MUMBAI vs. ASSESSING OFFICER, MUMBAI

Aggrieved the assessee filed further appeal before the CIT(A). The assessee made similar submissions before the CIT(A). The assessee brought to the attention of the CIT(A) that in the case of M/s A. N. Forex Pvt. Ltd. the AO had himself estimated income at 0.5% of turnover instead of treating the entire turnover as unexplained cash credit. The CIT(A) upheld the rejection of books of accounts by the AO. The CIT(A) however held that it would not be justifiable to treat the entire turnover as income and accordingly restricted the addition to 5% of the turnover & 3089/Mum/2025 Golden Express Pvt. Ltd. thereby sustaining the addition to the tune of Rs. 10,99,23,346/-. Both the assessee and the revenue are in appeal before the Tribunal against the order of the CIT(A).

The ld. AR during the course of hearing submitted the books of account of the assessee and prayed that the assessee has managed to recreate the books of accounts which were destroyed during heavy monsoon in the year 2019. The ld. AR further submitted that the assessee could not submit the books of account within the time provided by the AO and that the same is produced now. The ld. AR also submitted that the assessee is in the business of forex exchange and that the AO without considering the audited financial statements has held the entire sales as bogus. The ld. AR argued that the profit ratio in the line of business of the assessee is in the range of 0.1% to 0.3% and the CIT(A) has charged the net profit ratio at 5% which is not correct. The ld. AR further argued that in the case of M/s A.N.Forex Pvt. Ltd. based on whose investigation the assessee's case is reopened, the AO himself has made an addition by applying 0.5% as net profit. The ld. AR prayed that since the lower authority have not examined the books of accounts and other supporting documents as called for, one more opportunity may be given to the assessee to represent the case properly.

The ld. DR on the other hand submitted that the assessee's case is reopened based on the findings of the Investigation Wing on the alleged bogus transactions by M/s A.N. Forex Pvt. Ltd. with whom the assessee had transactions during the year under consideration. The ld. DR further submitted that there has been a substantial increase in the purchase and the sales of the assessee as compared to the earlier year which supports the allegation that the assessee has entered into bogus transactions. The ld. DR also submitted that the assessee has not submitted the books of accounts and therefore the lower authorities could not verify the claim & 3089/Mum/2025 Golden Express Pvt. Ltd. of the assessee that the transactions entered into were genuine. The ld. DR drew our attention to the findings of the CIT(A) where he has held that there is no infirmity in invoking section 68 and having held so the CIT(A) is not correct in restricting the addition to 5% of the turnover. The ld. DR however fairly conceded that the issue has not been considered by the lower authorities on merits since the assessee did not produce the books of account and other relevant documents the issue may go back to the CIT(A).

We heard the parties and perused the material on record. Assessee's case is reopened based on the search operations conducted in the premises of M/s A.N. Forex Pvt. Ltd. and it was noticed that it was involved in physical transactions in dealing in foreign currency. The AO held that the assessee was also involved in similar transactions and accordingly reopened the assessment after passing order under section 148(A)(d) of the Act. The AO called for various details from time to time with regard to sale and purchase of foreign currency from various parties by the assessee. The assessee submitted the audited financial statements, GST returns etc. before the AO claiming that the transactions entered into by the assessee are genuine and AO however did not accept the submissions of the assessee. From the perusal of the order of the AO, we notice that the transactions of the assessee are held as bogus for the reason that during investigation of Shri Aamil Fruitwala Director of M/s A.N. Forex Pvt. Ltd. it is admitted that 75% of the transactions are only paper transactions. We further notice that the AO held the entire sale consideration as bogus for the reason that the assessee did not produce the books of accounts and accordingly rejected the same under section 145(3) of the Act. It is also noticed that the assessee did not furnish the details pertaining to the parties from whom the assessee had made purchases. Even before the CIT(A), it is noticed that the assessee did not furnish any further details and has reiterated the & 3089/Mum/2025 Golden Express Pvt. Ltd. submissions made before the AO. The CIT(A) has given relief to the assessee on the ground that it is an established practice settled by various Courts / Tribunal that the addition is generally restricted to the profit element embedded in the turnover. However, the CIT(A) while doing so has not recorded any finding on the merits or with regard to the verification of documentary evidences or books of accounts of the assessee. Before us the ld. AR drew our attention to the books of accounts recreated since the books based on which the audit was conducted was destroyed in the monsoon in the year 2019. In view of this discussion and considering the facts peculiar to the assessee's case, we are inclined to give one more opportunity to the assessee in the interest of natural justice and fair play. Accordingly, we remit the appeal back to the CIT(A) for denovo consideration by calling for the relevant details as may be required in order to decide the appeal in accordance with law. The assessee is directed to furnish the books of accounts and other details as may be called for substantiate the claim about the genuineness of the transactions and co-operate the appellate proceeding without seeking unnecessary adjournments. It is ordered accordingly.

In result, appeals filed by assessee and the revenue are allowed for statistical purposes.