VIJAYBHAI BABULAL PUJARA,RAJKOT vs. THE ITO WARD 2 (2) (1), RAJKOT, RAJKOT

The solitary grievance of the assessee in this appeal is that on the facts and in the circumstances of the case as well as law, on the subject, the learned Assessing Officer has grievously erred by making addition of alleged unaccounted purchase Rs.1,84,990/-,as unexplained expenditure u/s 69C r.w.s. 115BBE of the Income Tax Act 1961.It is therefore prayed that addition made by the assessing officer may please be deleted.

At the outset, learned Counsel for the assessee, informs the Bench that assessee does not wish to press ground pertaining to challenging the reopening of assessment under section 147 of the Act and ground pertaining to opportunity of cross examination.

Succinctly, the factual panorama of the case is that assessee before me is an Individual.The assessee filed his return of income for the year under consideration on 06.12.2020, declaring total income to the turn of Rs.3,59,620/-. Subsequently, based on information received from the Investigation Wing, Rajkot, consequent to the search and seizure operation conducted on 16.11.2023 in the case of Ambica Fatakda Group (also known as Ambica Fireworks Group), it came to light that the said group had been engaged in large-scale unaccounted business transactions, involving ‘on-money’ receipts and cash-based purchases and sales outside the regular books of account. In the course of post-search investigation, the name of the assessee surfaced, as one of the beneficiaries who had made unaccounted purchases, from M/s Ambica Ashish Tradelink LLP, one of the entities of the searched group, amounting to Rs. 1,84,990/- in cash. Based on this tangible material, proceedings under Section 147 of the Income Tax Act, 1961, were initiated. Accordingly, notice under section 148 was issued to the assessee on 31.03.2024. The assessee filed return in response on 19.04.2024, declaring the same income as originally declared. The assessee has failed to prove the genuineness of the transaction, therefore, assessing officer made an addition of Rs. 1,84,990/-, as unexplained expenditure u/s 69C of the Act, being the amount of unaccounted purchases made from M/s Ambica Ashish Tradelink LLP as established from the incriminating materials seized during the search proceedings in the Ambica Group cases.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the action of the assessing officer. The Ld. CIT(A) noticed that the factual matrix emerging from the assessment records clearly shows that the Assessing Officer has based his conclusion on specific incriminating material seized during the search conducted in the case of Ambica Fatakda Group. The seized materials include rojmels (cash books) and ledgers maintained by the group entities which recorded day-to-day cash transactions outside the regular accounts. Detailed investigation carried out by the Investigation Wing established that the group was engaged in unaccounted sales and purchases and that several customers and traders across Gujarat were involved in cash transactions with M/s Ambica Ashish Tradelink LLP. A separate beneficiary list was prepared on the basis of seized documents, which categorically contained the name of the assessee, showing unaccounted purchases of Rs. 1,84,990/-. The seized document carried reference to "Chandni Season Store" operated by the assessee, which matched with his business identity. Therefore, the addition of Rs. 1,84,990/- made under section 69C of the Act, being unexplained expenditure incurred by the assessee in making unaccounted purchase from M/s Ambica Ashish Tradelink LLP, was found to be correct and justified by ld. CIT(A). Based on these facts, the learned CIT (A) confirmed the addition made by the assessing officer.

Aggrieved by the order of the Ld. CIT(A), the assessee is in further appeal before this Tribunal.

I have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel for the assessee submitted that assessee does not wish to press technical grounds of reopening of assessment under section 147 of the Act. The ld. Counsel also argued that the addition made by the assessing officer in the hands of the assessee, is only Rs.1,84,990/-, which is very small amount. Considering smallness, of the amount, the assessee does not want to press the legal grounds and therefore, an ad hoc estimated addition may be made in the hands of the assessee to meet the end of justice. On the other hand, Ld. DR for the Revenue submitted that to plug the leakage of the Revenue, at least, the estimated addition @ 10% may be made in the hands of the assessee. I have considered, submissions of both the parties and noticed that assessee has raised technical grounds, challenging the reopening of assessment, however, the assessee does not wish to press this ground and submitted that considering the smallness of the amount, the ad hoc estimated addition @ 10% may be made, on the “on-money” amount in the hands of the assessee, to which, Ld. DR for the Revenue did not have any objection. Therefore, taking into account the smallness of the amount and taking into account the fact that both the parties, that is, the Ld. Counsel for the assessee and Ld. DR for the Revenue have agreed that considering the smallness of the amount an ad hoc, estimated addition @ 10% may be made in the hands of the assessee. Hence, to meet the end of justice, I find that an ad hoc estimated addition @ 10% should be made in the hands of the assessee, which would cover the inconsistency in the documents and evidences submitted by the assessee, which comes to Rs.18,499/- . Therefore, I direct the assessing officer to make the addition in the hands of the assessee to the tune of Rs.18,499/-, by following the normal rate of Income Tax.