PRAKASHKUMAR AMRATJI THAKOR,AHMEDABAD vs. THE ITO, WARD 2(1)(2), AHMEDABAD

There was delay of 103 days in filing of this appeal. The assesse has filed a condonation application explaining the reason for delay. It is submitted that the order of the Ld. CIT(A) was received by the assessee

The brief facts of the case are that the assessee had filed his return of income for A.Y. 2018-19 on 30.08.2018 declaring total income of Rs.2,96,250/-. The case was selected for scrutiny under CASS. The assessee had admitted before the AO that he had done business of bogus billing with the help of one Shri Babulal Patel under the name and style of Siddhi Trading Co. However, he could not furnish the details of the said Shri Babulal Patel, for whom he had claimed to have worked. According to the AO, the credits were appearing in the bank accounts of the assessee out of which he has made cash withdrawals. In the absence of any explanation for the source of the credits, the entire credit of Rs.31,74,50,788/- in the bank account was treated as unexplained and added to income. The assessment was completed u/s. 143(3) r.w.s. 144B of the Act on 19.04.2021 at total income of Rs. 31,77,47,038/-.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

Shri Vishnubhai Patel, the Ld. AR of the assessee submitted that the assessee was only a name-lender, acting at the instance and under guidance of Shri Babulal Patel and Shri Mahendra Patel. He was only receiving salary of Rs. 25,000/- per month and all the transactions in the four bank accounts in the name of the assessee were carried out by Shri Babulal Patel and Shri Mahendra Patel. The Ld. AR submitted that the AO was not correct in treating all the credit entries in the bank accounts as unexplained income of the assessee, without taking into account the debit entries appearing in the bank accounts. He submitted that at the best only nominal commission earned by the assessee could have been added to the income of the assessee. The Ld. AR further submitted that the Ld. CIT(A) had dismissed the appeal of the assessee due to non-compliance. He, therefore, requested that the assessee may be allowed another opportunity of being heard by setting aside the matter to the file of Ld. CIT(A).

We have considered the rival submissions. It is found that the Ld. CIT(A) had allowed five opportunities to the assessee but no compliance was made on any occasion. There was delay in filing of the appeal before the Ld. CIT(A) as well. Though the Ld. CIT(A) had given a finding that the delay was not condoned, still he had confirmed the addition of Rs.31,74,50,788/- on account of cash deposits/credits for the reason that the details called for during appellate proceedings were not furnished. The AO had treated the entire credits appearing in the bank accounts of the assessee as unexplained income of the assessee without considering the debit entries appearing in the bank accounts. The AO had acknowledged the fact, in the assessment order, that the assessee was engaged in business of bogus billing only. Under the circumstances, the AO should have worked out the profit out of the business of bogus billing rather than treating the entire credit entries in the bank account as income of the assessee. It is a settled position of law that only the profit arising from the business can be subjected to tax. Even if it is held that the assessee was carrying on the business on his own, still only the profit derived from such business could have been subjected to tax. Under the circumstances, the addition of entire credit of Rs.31,74,50,788/- to the income of the assessee was not justified.

In the result, the appeal of the assessee is allowed for statistical purpose.