FAKHRUL ISLAM,KARIMGANJ vs. CENTRL CIRCLE-2 GUWAHATI, GUWAHATI

IN THE INCOME TAX APPELLATE TRIBUNAL – GUWAHATI BENCH VIRTUAL BENCH AT KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Rakesh Mishra, Accountant Member ITA Nos. 45 & 46/GTY/2026 Assessment Years: 2020-21 & 2023-24 Fakhrul Islam…………………..……..………………….………...Appellant Gandhrajbari, Ratabari Karimganj, Assam-788735 [PAN: AFTPH7119D] vs. DCIT, Central Circle-2, Guwahati…..………………..……...…..…..Respondent Assam-781005 Appearances by: Shri Kishor Jain, FCA, appeared on behalf of the Appellant. Mrs. I. Gyaneshori Devi, JCIT, appeared on behalf of the Respondent. Date of concluding the hearing : May 15, 2026 Date of pronouncing the order : May 19, 2026 ORDER Per Sonjoy Sarma, Judicial Member: These two appeals are filed by the same assessee against the separate orders of Commissioner of Income Tax (Appeal) [hereinafter referred to as “the ld. CIT(A)”)] both dated 13.11.2025 pertaining to the assessment year 2020-21 & 2023-24, passed u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”]. The details of the appeals are as under: - ITA No. 45/GTY/2026 for the assessment year 2020-21, arising out of the assessment order dated 20.02.2025, passed u/s 147 of the Act & ITA No. 46/GTY/2026 for the assessment year 2023-24, arising out of the assessment order dated 20.02.2025, passed u/s 143(3) of the Act. Since both the appeals pertain to the same assessee and involve interconnected issues, therefore, they were heard together and are being disposed of by this common order.

ITA Nos. 45 & 46/GTY/2026 Assessment Years: 2020-21 & 2023-24; Fakhrul Islam However, for the sake of convenience, first we take up the ITA No. 45/GTY/2026 for the assessment year 2020-21 as a lead case. 2. Brief facts of the case are that information was received by the Deputy Director of Income Tax (Investigation), Guwahati, from the Officer-in-Charge, Ramnathpur Police Station, that a vehicle travelling from Mizoram to Hailakandi was intercepted carrying cash amounting to Rs.55,00,000/-, which was being driven by Shri Basir Ahmed. Based on the said information, notice u/s 131(1A) of the Act was issued to Basir Ahmed to explain the source of the cash along with supporting evidence, and his statement was recorded u/s 131(1A) of the Act. During the course of the statement, he stated that the cash recovered belonged to the present assessee, namely Shri Fakhrul Islam, who is engaged in contractual business under the name and style of M/s S T Enterprise and is also the brother-in-law of Shri Basir Ahmed. Accordingly, notice u/s 131(1A) of the Act was issued to the assessee requiring him to explain the source of cash amounting to Rs.55,00,000/- along with supporting documentary evidence. The assessee appeared before the Investigation Wing and stated that the said amount belonged to him and formed part of the cash withdrawn from his HDFC Bank account. Consequently, authorisation u/s 132A of the Act was executed and the cash amounting to Rs.55,00,000/- was requisitioned by the Income Tax Department. Subsequently, during the course of investigation, the assessee produced certain documentary evidence regarding the source of cash in his statement recorded u/s 131(1A) of the Act. The assessee admitted that out of the total cash of Rs.55,00,000/-, an amount of Rs.25,00,000/- represented cash withdrawals from bank accounts, whereas the remaining amount of Rs.30,00,000/- would be offered for taxation in order to avoid prolonged litigation. The assessee had originally filed the return of income u/s 139(1) of the Act for the assessment year 2021-22 declaring total income of Rs.11,72,750/-.

ITA Nos. 45 & 46/GTY/2026 Assessment Years: 2020-21 & 2023-24; Fakhrul Islam Consequent to the requisition proceedings u/s 132A of the Act, proceedings u/s 147 were initiated. During the course of assessment proceedings, the Assessing Officer observed from the trading and profit and loss account that the assessee had shown business turnover of Rs.6,01,25,780/- and claimed purchases and other expenses amounting to Rs.5,79,03,710/-. Notices u/s 142(1) of the Act were issued calling for details of sales, purchases, and supporting documents. However, according to the Assessing Officer, the assessee failed to furnish complete supporting documents and vouchers in support of the expenses claimed. The Assessing Officer observed that the correctness of the books of account and financial statements could not be verified in the absence of proper supporting evidence and accordingly rejected the books of account and estimated the profit at the rate of 8% of the turnover by applying the provisions of section 44AD of the Act. Accordingly, 8% of the turnover of Rs.6,01,25,780/- was computed at Rs.48,10,062/-. Since the assessee had already disclosed net profit of Rs.13,22,750/-, the balance amount of Rs.34,87,312/- was added to the total income of the assessee. 3. Dissatisfied with the above order, the assessee preferred an appeal before the Ld. CIT(A), where the Ld. CIT(A), considering the submissions of the assessee, restricted the estimated profit from 8% to 6%, observing that the transactions were through banking channels and, therefore, the lower rate would meet the ends of justice. Accordingly, the Ld. CIT(A) sustained the addition to the extent of Rs. 22,84,797/- (Rs.36,07,547/- - 13,22,750/-) and deleted the balance addition of Rs. 12,02,515/-. 4. Still aggrieved by the above order, the assessee is in appeal before this Tribunal. At the time of hearing, the Ld. AR submitted that the assessee is engaged in contractual business and that estimation of profit at 6% is still excessive. Considering the nature of business and past history of the assessee, it was submitted that the profit disclosed by the 3

ITA Nos. 45 & 46/GTY/2026 Assessment Years: 2020-21 & 2023-24; Fakhrul Islam assessee in the earlier assessment years ranged between 2% to 4%. Therefore, estimation of 4% of the turnover would be reasonable and justified. 5. We, after hearing the rival submissions and perusing the material available on record, find that the assessee is engaged in contractual business and the profit declared by the assessee in the earlier year was comparatively low. Considering the facts and circumstances of the case, estimation of net profit at 6% appears to be on the higher side. In our considered view, estimation of 4% of the turnover of Rs. 6,01,25,780/- comes to Rs. 24,05,031/-. Since the assessee had already disclosed net profit of Rs. 13,22,750/-, the balance addition is worked out to Rs. 10,82,281/-(Rs.24,05,031/- - 13,22,750/-). Accordingly, the addition restricted to Rs.10,82,281/- sustaind to that extent. The remaining addition of Rs.12,02,516/- (Rs.22,84,797/- - 10,82,281/-) sustained by the Ld. CIT(A) stand deleted. Accordingly, ITA No.45/GTY/2026 is partly allowed. Now, coming to ITA No.46/GTY/2026 for the assessment year 2023-24, the facts and issues involved are interconnected with ITA No.45/GTY/2026. During the course of hearing, the Ld. AR submitted that, while framing the assessment order, the Assessing Officer failed to consider the contention of the assessee regarding withdrawal of Rs.25,00,000/- from his HDFC bank account, which was withdrawn on 21.05.2022 from Guwahati. It was submitted that cash amounting to Rs.55,00,000/- was seized on 26.05.2022, out of which Rs.30,00,000/- had already been offered for taxation by the assessee, and the remaining Rs.25,00,000/- represented explained cash withdrawal from the said bank account, which was duly reflected in the bank statement, and the extract of the same has been reproduced by the Assessing Officer while passing the assessment order. It was further submitted that the assessee was engaged in contractual business and the cash was intended to be

ITA Nos. 45 & 46/GTY/2026 Assessment Years: 2020-21 & 2023-24; Fakhrul Islam utilized for labour payment and construction-related business activities. However, due to labour-related issues and refusal to accept the payment, the cash remained unutilized and was being carried back when it was intercepted. The Ld. DR relied upon the order of the authorities below. 6. We, after hearing the rival submissions and perusing the material available on record. We find that the assessee had withdrawn Rs.25,00,000/- from his HDFC bank account on 21.05.2022, and the resultant seizure took place on 26.05.2022. The bank withdrawal entry is stated to be reflected in the bank statement extract, which was produced in the assessment order also. However, while framing the assessment order, the Assessing Officer failed to verify and grant credit for the said withdrawal. Considering the facts and circumstances of the case, we deem it appropriate to restore this limited issue to the file of the Assessing Officer with a direction to verify the bank statement and cash withdrawal of Rs.25,00,000/- made on 21.05.2022. If the same is found to be genuine and duly reflected in the bank record, the aforesaid credit shall be granted to the assessee, and the addition to that extent shall be deleted in accordance with law. Accordingly, ITA No.46/GTY/2026 is allowed for statistical purposes. 7. In the result, ITA No.45/GTY/2026 is partly allowed and ITA No.46/GTY/2026 is allowed for statistical purposes.

Kolkata, the 19th May, 2026.

Sd/- Sd/- [Rakesh Mishra] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 19.05.2026. DP, PS

ITA Nos. 45 & 46/GTY/2026 Assessment Years: 2020-21 & 2023-24; Fakhrul Islam Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches