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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
These appeals are filed by the assessee against the order of CIT(A)-16,, Mumbai dated 15/09/2017 for A.Y.2007-08, 2008-09 & 2009- 10 in the matter of order passed u/s.144 r.w.Section 147 of the IT Act. 2. Common grievance of assessee in all the years pertains to computing the profit from business of tour and travels at 50% of the gross receipts. 3. Rival contentions have been heard and record perused.
1083 & 1084/Mum/2018 M/s. Changers Forex Pvt. Ltd., 4. The brief facts of the case are that the assessee company did not file its return of income for A.Y.2007-08. As per individual transaction statement of AIR & CIB information about financial activities, the assessee had earned Rs.10,31,670/- as commission / professional income in A.Y.2007-08. As per AIR report of the assessee, the total transactions recorded were Rs.10,31,676/-. Since the assessee did not file any return of income and also failed to substantiate the said transactions, the AO treated the said receipts as undisclosed income of the assessee and assessed the same to tax.
Before the CIT(A) it was contended that AO was not justified in taking entire receipts as its income. However, after making enquiry CIT(A) found that the assessee company is engaged in the business of money changers and related activities. In the bank accounts various payments received from its customers on account of management of their tours and travels and hotel payments were credited. Details regarding receipts and expenses were collected. From the details collected it was revealed that the gross receipts of the assessee tor the year under consideration were Rs.38,15,771/-. The receipts were determined after giving credit for all expenses which were incurred by the assessee through banking channels. The assessee claimed that the assessee company had incurred many expenses in cash also. But assessee could not produce necessary evidences.
1083 & 1084/Mum/2018 M/s. Changers Forex Pvt. Ltd., 6. Vide order sheet noting dated 24.08.2017 the assessee was informed by CIT(A) that from the details of bank accounts collected it was seen that after giving credit of all outgoing payments the gross receipts of the assessee was Rs.38,15,771/-. In support of its claim it could not produce the copy of the bills and vouchers. The assessee had not maintained regular books of account. It was claimed that for carrying the business some of the expenses have to be incurred by the assessee.
In view of the above discussion and in absence of any document indicating incurring of expenditure, the CIT(A) estimated net income of 50% of the gross receipts as business income against which assessee is in further appeal before us. Learned AR appearing on behalf of the assessee cited various judicial pronouncements in support of the contention that 10% of the gross receipts is reasonable even while rejecting the books of accounts and estimating profit.
Learned AR also placed before us net profit rate for the A.Y.2007- 08, 2008-09 and 2009-10 which ranges from 3.01% to 25.10%. Copy of profit and loss account was also placed before us which indicate various expenditure incurred by the assessee, wherein during the year ending on 31/03/2007 assessee had shown net earning of Rs.1,14,891/- out of gross receipts of Rs.38,15,771/-.
1083 & 1084/Mum/2018 M/s. Changers Forex Pvt. Ltd., 9. On the other hand, it was contended by learned DR that a clear finding has been recorded by CIT(A) to the effect that gross receipts of Rs.38,15,771/- was after giving credit for all outgoing payments. She contended that no further relief should be given and the CIT(A) is very reasonably estimated profit at 50% of the gross receipts.
We have considered rival contentions and carefully gone through the orders of the authorities below. From the record we found that assessee company was engaged in the business of tours and travels including booking of train / flight tickets, hotel booking, etc. It was having an office in the residential area of Lokhandwala, Andheri West, wherein various customers walk-in directly to the shop, book the ticket / hotel, make payment (mostly by cash / card) and return with confirmed ticket / hotel booking. Assessee was having Card Swiping Machines from Centurian Bank, ICICI Bank and HDFC Bank. Since the nature of business is such that 100% of the amount is taken as Advance, Assessee used to accept payments either by cash or card (though swipe-machine). Further, assessee was also required to make the payments to Vendors immediately viz. Shree Sati Travels Private Ltd, Riya Travel & Tours (I) Pvt. Ltd., etc. within 3-7 days for the booking done. It is also a matter of record that assessee did not appear before the AO, therefore, assessment was framed u/s.144 of the IT Act. We also observe that a clear finding has been recorded by CIT(A) at para 6.3 to the effect that after giving