NAYANKUMAR AMBUBHAI PATEL,NA vs. ARIVS.ITO, WARD-4, NAVSARI

The grounds of appeal are as under:-

The assessee filed return of income for assessment year 2020-21 on 29-12-2020 declaring income at Rs. 1,78,700/-. The search and survey action was conducted on Ambika Fireworks Group on 16-11-2023. As per the information, the assessee is one of the purchasers who had made unaccounted purchases from Ambika Ashish Tradelink LLP in cash amounting to Rs. 10,71,600/- during assessment year 2020-21. Notice u/s. 148 of the Act was issued on 30-03-2024 and in response to the same, the assessee filed return of income on 17-06-2024 declaring income of Rs. 2,30,250/-. the Assessing Officer observed that during the search proceedings at the premises of Ambika Fireworks Group some material were seized and inventories as 1 to 37. The digitalized material/documents revealed that the assessee is one of the purchasers who has made unaccounted purchase in cash from M/s. Ambika Ashish Tradelink, its associates amounting to Rs. 10,71,600/- during assessment year 2020-21. The assessee filed submission including copy of computation, copy of 2 Form 26AS, bank account statement for assessment year 2020-21, ledger of M/s. Ambika Ashish Tradelink for A.Y. 2020-21, copy of the business license or shop or establishment licenses and temporary cracker sale licencse and copy of confirmation, ledger for the period of 01-04- 2019 to 31-03-2020 Ambika Ashish Tradelink LLP. The Assessing Officer observed that as per the statement of Tejas Vikrambhai Modi, there are two types of discounts provided in the bills but are not actual discounts and are the cash collected from the customers. Various statement of other parties were also taken during search action. The Assessing Officer further held that the assessee made unaccounted cash purchases of Rs. 10,71,600/- from M/s. Ambika Ashish Tradelink LLP and failed to offer full explanation of all documentary evidences in respect of source of unaccounted cash purchases of Rs. 10,71,600/-. Thus, the Assessing Officer made addition of Rs. 10,71,600/- u/s. 69C read with section 115BBEE as unexplained expenditure.

The assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that at the time of furnishing the return of income u/s. 148, the hand written Rozmels were not provided to assessee. In such circumstances, the assessee was not aware of any kind of such documents. The ld. A.R. further submitted that during the year under consideration, the assessee made total purchased of Rs. 3 4,29,603/- as well of Rs. 5,15,541/- only. Since, the provisions of section 44AA would not attract, the assessee has not maintained books of accounts including cash book. The assessee relied on computerized ledger account provided by M/s. Ambika Ashish Tradelink LLP, the major difference found in both accounts provided M/s. Ambika Ashish Tradelink LLP at different point of time was the authenticity of the same is under question. The ld. A.R. further submitted that the Assessing Officer should have taken into account the computerized ledger account instead of hand written Rozmels. In fact, clause 11(b) of Form No. 3CD of it is required list of books of accounts maintained by assessee. In case of books of account are maintaining in computerized system, mentioning of such books of account generated by such computerized system is required then whether these in Rozmel were confirmed part of audited books of account. Thus, the ld. A.R. submitted that the assessee has explained all the details and the addition is not sustainable.

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee was called upon to explain the source of the purchase made from M/s. Ambika Ashish Tradelink LLP in cash. Since the assessee is not maintaining books of accounts but only the computerized ledger account, the 4 assessee was not in a position to make the statements that the Rozmels cannot be taken into account when the assessee was very well aware that the assessee is not keeping books of accounts. Since the unaccounted purchases were to the tune of Rs. 10,71,600/-, Keeping in view, the trade practice and specific facts of the instant case, we direct that the Assessee be taxed @ 5% being the profit earned on undisclosed business turnover.

In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 22-04-2026