ATULKUMAR VINUBHAI THAKKAR,SABARKANTHA vs. THE ITO, WARD-3, HIMATNAGAR, SABARKANTHA

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ITA 2009/AHD/2024Status: DisposedITAT Ahmedabad12 March 2025AY 2017-18Bench: DR. BRR KUMAR (Vice President), MS SUCHITRA KAMBLE (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the business of selling mobile recharge coupons in cash is a low-margin business. The assessee's submission of a 3% net profit on receipt being justifiable was considered reasonable after hearing arguments.

What were the facts?

The assessee filed an appeal against the order of the CIT(A) that partly confirmed additions to business income, directing computation at 8% of total deposits. The Assessing Officer had identified Rs. 46,25,729/-, 20% of turnover, as unaccounted income from sale of mobile recharge coupons.

What were the issues?

Whether the estimation of profit at 8% on total bank deposits is justified for a business dealing in mobile recharge coupons sold in cash, and whether a lower profit margin of 3% is more appropriate.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: DR. BRR KUMAR & MS SUCHITRA KAMBLE

For Appellant: Shri D.K Parikh AR
For Respondent: Shri Sudhakar Verma, Sr.DR
Hearing: 10.03.2025Pronounced: 12.03.2025

(Assessment Year: 2017-18) Atulkumar Vinubhai Thakkar, Vs. Income Tax Officer, Prop: Maruti Telecom Ward-3, Gambhai, Himatnagar. Post: Gambho Himatnagar, Sabarkantha-383030. [PAN No.AFWPP5467P] (Appellant) (Respondent) .. Appellant by : Shri D.K Parikh AR Respondent by: Shri Sudhakar Verma, Sr.DR Date of Hearing 10.03.2025 Date of Pronouncement 12.03.2025 O R D E R PER: DR. BRR KUMAR, VICE PRESIDENT:

This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Appeal Centre vide order dated 30.09.2024 passed for the Assessment Year 2017-18.

2.

The assessee has raised the following grounds of appeal

1.

The learned CIT(Appeals) / NATIONAL FACELESS APPEAL CENTRE | NFAC] has grievously erred both in law and on facts in PARTLY confirming the addition of business income and directing to compute the same at 8% of total deposits in bank account and thereby directing to assess total income at Rs. 20,13,850/- as against Rs. 3,55,560/- returned by appellant as per accounts. The addition due to retaining the amount as above is unjustified and deserves to be deleted. It be deleted now.

2. The Id CIT(Appeals) / [NFAC) further erred in law and on facts in not appreciating that looking to the submissions made to the Id AO and also as per the nature of business of appellant as retailer in sale of mobile recharge coupons noted by AO, the net income of commission is not exceeding 3 to 4% and hence the estimation of income at 8% and that too of the total deposits in bank account is wholly unjustified and very harsh. It be so held now.

3. The Id CIT(Appeals)/NFAC further erred in law and on facts in not appreciating that the appellant had furnished to the Id AO, the details of cash deposited for earlier Financial Year and the financial year relevant to assessment year under appeal with details of commission which showed that net income could not exceed about on average 3% maximum. The addition therefore retained by Id CIT(appeal) /NFAC deserves to be deleted and returned income be directed to be accepted. It be so held now.

4.

Both the lower authorities erred in not appreciating that there was no question of rejecting books of account and considering net capital and balance sheet, income assessed and addition retained is untenable both on facts and in law. It be so held now and income returned be directed to be accepted in to to or alternatively. reduced.

5.

The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing.

3.

The assessee has not complied before the Assessing Officer. The case of the assessee was selected for scrutiny assessment to verify the large cash deposit. The Assessing Officer has brought an amount of Rs.46,25,729/- being 20% of the turnover of the “business income ” of the assessee. The Ld. CIT(A) determined the profit @ 8%. We find that the assessee is dealing with recharge coupons of mobile service providers and has sold the recharge coupons in cash. Keeping in view the realities of the business of the profit allowed by the principal service provider, the Ld.AR submitted that 3% as the net profit on the receipt can be considered as justifiable, which after hearing the argument of the revenue authorities, we find it as reasonable.

In the result, the appeal filed by the Assessee is partly 4. allowed.

This Order pronounced in Open Court on 12.03.2025

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