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Facts
The AO made an addition for cash deposits of Rs. 345.13 Lacs to the assessee's returned income of Rs. 3.86 Lacs, as the assessee could not provide adequate representation. The assessee, M/s Surkum Enterprises, claimed to be an agent selling recharge coupons on commission, depositing collected cash and transferring it to the company. The CIT(A) sustained an addition based on an estimated profit rate of 5% on a turnover of Rs.197.43 Lacs for unexplained investments and business income, as the assessee could not fully substantiate its income and investments.
Held
The Tribunal found that certain unexplained investments aggregating to Rs.15.75 Lacs were either inter-bank transfers or transfers from friends and family, whose sources were not doubtful. To resolve the dispute, the Tribunal held that an estimated addition of 4% on the turnover of Rs.197.43 Lacs would meet the ends of justice. The assessee would be granted credit for the returned income of Rs.3.86 Lacs, and the AO was directed to re-compute the income accordingly.
Key Issues
The key legal issues revolved around the substantiation of business income, the source of cash deposits and various investments, and the appropriate rate for estimating business profits for an agent selling recharge coupons.
Sections Cited
144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2017-18) Shri Prince Tyagi ITO # 87 Ward No 1, Near Petrol Pump Ward-6(4) बनाम/ Vs. Mandi Kharar SAS Nagar, Mohali 140301 Chandigarh 160062 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ANGPT-5979-E (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ� की ओर से/ Appellant by : Sh. Rahul Bhanot( Advocate) and Shri Puneet Singla (Advocate) – Ld. ARs ��थ� की ओर से / Respondent by : Dr. Ranjit Kaur (Addl.CIT) – Ld. Sr.DR सुनवाईकीतारीख/Date of Hearing : 23-07-2025 घोषणाकीतारीख /Date of Pronouncement : 04-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 05-06-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] on best judgement basis u/s 144 of the Act on 19-12-2019. The registry has noted delay of 40 days in the appeal which stand condoned. Having heard rival submissions, the appeal is adjudicated as under.
In the assessment order, Ld. AO made addition of cash deposit for Rs.345.13 Lacs to the returned income of Rs.3.86 Lacs for want of any representation from the assessee. The deposits were made in Bank of Baroda Account No.50530400000068 held in the name of M/s Surkum Enterprises. During first appeal, the assessee contended that it was engaged in selling recharge coupons of idea cellular Ltd. and working as an agent for the company on commission basis. During business, the cash is collected from customers which is deposited and transferred to the company. The commission so earned was stated to be reflected in the return of income. In support, the assessee furnished copy of agreement with Idea cellular Ltd. and ledger of Surkum Enterprise with Idea Cellular Ltd. The same were subjected to remand proceedings which could not be furnished by Ld. AO which led Ld. CIT(A) appeal to adjudicate the appeal on the basis of material as available on record.
It was noted by Ld. CIT(A) that there was deposit of Rs.213.18 Lacs. The perusal of bank statement would substantiate the stand that the assessee was involved in sale of SIM card and data recharge of idea cellular Ltd. However, the assessee did not furnish any evidence to prove the quantum of income from such business. Further, there were payments made to various entities which aggregated to Rs.5.72 Lacs (tabulated at para 6.8 of the impugned order). Further, the assessee introduced funds on various dates, the source of which could not be proved by the assessee. These investments aggregated to Rs.15.75 Lacs (tabulated at para 6.9). On these facts, Ld. CIT(A) estimated profit rate of 5% on turnover of Rs.197.43 Lacs. To account for other transactions / unexplained investment, Ld. CIT(A) directed Ld. AO to estimate overall business income of Rs.18 Lacs subject to grant of credit of returned income of Rs.3.86 Lacs. Still aggrieved, the assessee is in further appeal before us.
We find that issue to be in a narrow compass. From perusal of adjudication of Ld. CIT(A), it could be seen that the assessee is not fully able to substantiate the quantum of business income. However, Ld. AR has tabulated source of each of the unexplained investment aggregating to Rs.15.75 Lacs in the paper-book. Upon perusal of the same, it could be seen that the entries of Rs.9 Lacs, Rs.2.85 Lacs and Rs.1.50 Lacs represent cash withdrawal from one bank account and deposit thereof in another bank account. The other transactions of Rs.2.40 Lacs represent bank transfer from friends and family of the assessee. Therefore, the source of these investments could not be doubted. On these facts, with a view to settle the dispute, we hold that overall estimated addition of 4% on turnover of Rs.197.43 Lacs would meet the end of justice. The credit of returned income of Rs.3.86 Lacs would be granted to the assessee. The Ld. AO is directed to re- compute the income of the assessee accordingly. No other ground has been urged in the appeal.