MOHMMEDAYAZ JANMOHMMED SHAIKH,AHMEDABAD vs. THE ITO, WARD-1(3)(1), AHMEDABAD

4. In appeal before CIT(Appeals), the assessee contended that he is the proprietor of M/s Gawara Tours & Travels and that the income in question was earned through organizing Umrah pilgrimages to Saudi Arabia during the relevant financial year. It was further claimed that cash received from various pilgrims was deposited in his bank account and subsequently used to purchase foreign currency from money exchangers for meeting expenses in Saudi Arabia, including air tickets for the pilgrims. The assessee also submitted a request to admit additional evidence in support of these claims Mohmmedayaz Janmohmmed Shaikh vs. ITO Asst.Year –2017-18 - 3– and sought deletion of the addition made by the AO. However, upon examination of the submissions and supporting documents, CIT(Appeals) rejected the assessee’s explanation for several reasons. Firstly, although the assessee claimed to be engaged in organizing Haj and Umrah pilgrimages, he failed to submit any authorization or license from the Government of India permitting him to do so. Secondly, while a list of clients was provided, there was a complete absence of documentary proof to establish the genuineness of the claim - such as agreements, travel itineraries, or communication with the clients - rendering the list unverifiable and unreliable. Thirdly, though the assessee submitted some cash memos from M/s Flora Holidays Pvt. Ltd., supposedly in support of currency purchases made on behalf of clients, however, upon verification, various discrepancies were noted. For instance, in the case of a client named Mr. Shaikh Mohammedayaz (Passport No. Z3519349), Flora Holidays allegedly provided foreign currency equivalent to Rs. 18,26,000/-, whereas the amount received from the client, as per the assessee's own list, was only Rs. 4,88,800/-, indicating clear inconsistencies and implying that the documents may have been fabricated to support the assessee’s claims. Moreover, although the assessee claimed to be providing accommodation and other services in Saudi Arabia, no evidence was furnished to show ownership or rental of any property there, further raising questions on the credibility of the assessee’s claim. In light of these deficiencies and inconsistencies, CIT(Appeals) dismissed the assessee’s appeal and held that the cash deposits and foreign currency transactions remained unexplained.

Mohmmedayaz Janmohmmed Shaikh vs. ITO Asst.Year –2017-18 - 4– 5. The assessee is in appeal before us against the aforesaid order passed by CIT(Appeals) confirming the additions made by the assessing officer. On going to the submissions made by the counsel for the assessee and the Ld. DR, we observe that in the instant case evidently, the assessee had also made withdrawals amounting to Rs. 90,44,526/- from the same SBI Account bearing No. 32188519922, in which the deposits were made by the assessee. While the entire deposits have been confirmed in the hands of the assessee as unexplained income, however corresponding credit for withdrawals made from the same account during the impugned assessment year was not given to the assessee. Further, while CIT(Appeals) had noted certain discrepancies in the details submitted by the assessee, we observe that the assessee had filed substantial additional evidence in the form of ledger copy of Mohamedia Tours and Travels in respect of purchase of tickets for Hajis (tourists) for the impugned year under consideration, ledger of Flora Holidays Private Limited in respect of foreign currency purchased along with bills and receipts, certificate under shops and establishments, certificate from Haj Umrah Private Tour Operators Association has been submitted, list of tourists and payment details have been submitted (in which substantial amount has been received through banking channels) and passport copy of assessee for travelling out of India during the impugned assessment year was submitted. On the basis of considerable evidences produced by the assessee, in our considered view, the assessee has been able to evidently establish that he is engaged the business of providing Umrah services to its customers and looking into the instant facts, we find no justification for adding the entire amount as unexplained income in the hands of the assessee, looking into the evidences filed by the assessee and also taken into consideration the fact that the assessee had also made withdrawals amounting to Rs. 90,44,526/- from the same SBI Account bearing No. 32188519922, in which the deposits were made by the assessee, which as per the Counsel for the assessee were towards meeting the travelling and other expenses related to the assessee’s business. Accordingly, looking into the facts of the assessee’s case and in the interest of justice, a net profit of 5% on total credits/deposits is directed to be taken as the net profits of the assessee, keeping into the consideration the business carried out by the assessee.