SUNILKUMAR PURSHOTTAMDAS THAKKAR,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-2(1)(2) (PREVIOUSLY ITO, WARD-2(2)(5), AHMEDABAD

आदेश/ORDER Per Suchitra Kamble, Judicial Member:

are as under:-

1. The Ld. AO has erred in law and on facts of the case reopening the assessment u/s. 147 of the Act. Under the facts and circumstances of the case, the action of reopening is without jurisdiction and in not permissible either in law or on facts.

2. The Ld. CIT(A) has erred in law and on facts of the case in confirming an addition of Rs. 43,19,771/- made by the Ld. AO by estimating profit at the rate of 9.29%.

4. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 5. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s 234A/B/C/D of the Act. 6. The Appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. Total tax effect Rs. 12,95,931/-”

3. Notice u/s. 148 of the Act was issued on 21-03-2018 and served upon the assessee after having prior approval of Pr. CIT u/s. 151(1). In response to notice u/s. 148 of the Act, the assessee filed return of income declaring total income at Rs. 5,00,070/- on 22-02-2012. Notice u/s. 142(1) r.w.s. 129 of the Income Tax Act dated 13-07-2018 along with detailed questionnaire was issued and duly served. Again, notice u/s. 142(1) of the Act dated 09-08- 2018 was issued and served upon the assessee. In response to the notices, the assessee vide letter dated 12- 08-2018 made submissions to the Assessing Officer. The Assessing Officer issued show cause notice u/s. 143(2) dated 27-11-2018 thereby asking the assessee as to why the expenditure of Rs. 04,80,493/- should not be disallowed and added to the income of the assessee in respect of cash payments to the person in a day exceeding Rs. 20,000/-. The daughter of the assessee attended the proceedings and submitted written submissions along with statement of bank account, copy of cash book and copy of audit report for assessment year 2011-12. Subsequently, a summon to the assessee u/s. 131 was issued and served upon to the assessee’s daughter. In response to the summons, the assessee attended on 14-12-2018 and statement u/s. 131 of the Act was recorded. While recording the statement, the assessee replied for question no. 14 regarding sales bills and purchase bills for the year under consideration that sales and purchase bills are flown in river and further reply that he was not aware that books of accounts i.e. sales and purchase bills are to be kept for records. The Assessing Officer observed from the purchase register submitted by the assessee, all the purchase of the assessee was in cash purchase and are more than Rs. 20,000/-. Therefore, the Assessing Officer held that there is contravention to section 40A(3) of the Income Tax Act, 1961 and rejected the reply of the assessee that all the purchase is from villagers. Thus, the Assessing Officer disallowed Rs. 4,58,48,365/- which was claimed to be expenditure for purchase which are more than 20,000/- and added the same to the total income of the assessee.

3.1 The Assessing Officer further noticed that while filing return of income in response to the notice u/s. 148 of the Income Tax Act, the assessee filed sales turnover as Rs.54,99,148/-. Therefore, the books of accounts of the assessee was rejected u/s. 145(3) of the Act as the reply of question no. 17 of the assessee was on sales turnover as per audit report is Rs. 4,64,94,148/-. As the assessee has shown net profit of Rs. 5,10,844/- on sales of Rs. 54,99,148/- i.e. 9.29% of sales turnover, the estimated net profit of the assessee was considered to be Rs. 43,19,771/- i.e. 9.29% of the total sales as per audit report. Since the complete purchase of the assessee was disallowed in contravention to section 40A(3) of the Act, therefore, addition on estimated net profit (NP) of Rs. 43,19,771/- is not made separately to their total income of the assessee.

The ld. A.R pointed out page 68 of the paper book wherein the sales/gross receipts of business or profession was recorded as 54,99,148/- and page no. 92 where the net profit/turnover is recorded at Rs. 51,09,444/- and the same is coming in rate of 1.10%.

Order pronounced in the open court on 04-06-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 04/06/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद