SAJID ARIF MITHANI,MUMBAI vs. ITO WD 4(4), THANE

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ITA 363/MUM/2017Status: DisposedITAT Mumbai31 August 2017AY 2010-112 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the action of the CIT(A) as the assessee failed to appear and produce any evidence. The CIT(A) had previously estimated profit at 50% of the aggregate deposits and initial investment due to undisclosed business activity.

What were the facts?

The assessee declared income from a partnership firm. The Assessing Officer added back Rs. 19,99,700 as unexplained cash credits due to cash deposits in the bank account, which the assessee claimed were withdrawals from the firm for fertilizer purchases. The assessee failed to prove the source of these deposits.

What were the issues?

Whether the cash deposits in the bank account were unexplained cash credits. Whether the estimation of profit by the CIT(A) for undisclosed business activity was justified.

Which sections of the Income-tax Act were involved?

Section 69A,Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI D.T. GARASIA

For Respondent: Smt. N. Hemalatha, D.R
Hearing: 06.06.2017Pronounced: 31.08.2017

Per D.T. Garasia, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 05.10.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11.

2.

Return of income was filed on 16.12.2010 declaring total income of Rs,2.45,.250/-. The assessee’s income is from share of profit, interest and remuneration from partnership firm M/s. Aarif Sattar & Co. During the course of assessment proceedings, the Assessing Officer (hereinafter referred to as the AO) noticed that the assessee had made cash deposits in the saving bank account, and the assessee claimed that it was withdrawn from the account of M/s. Aarif Sattar & Co. for purchase of fertilizers from one Mr. Bodke, Nashik. As the assessee could not prove the source of cash deposit, an amount of Rs.19,99,700/- was added back to the total income of the assessee as unexplained cash credits.

2 Shri Sajid Arif Mithani 3. Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has partly allowed the appeal by observing as under: “In view of the above discussion, I am inclined to accept the claim of the appellant that the same represents business receipts. Since these cash deposits represents sales collections, then the question of estimation of profit has to be worked out. In the instant case, the appellant has failed to show any record and has not furnished any details about the profit earned from this unaccounted business by him. Moreover, these business transactions have not been disclosed to the Department in the income tax return filed by the appellant. Hence, taking into consideration all the facts including extra profit margin by selling illegally to non-farmers and adopting cash payments in violation of section 40(A)(3) of the Act, in my view, the present issue would meet the ends of justice, if the net profit from the illegal business activity is estimated at 50% of the aggregate amount of deposits of Rs.22,62,700/- plus initial unaccounted investment estimated at Rs.2,00,000/-. Therefore, 50% of 22,62,700= Rs.11,31,350/- plus Rs.2,00,000/- = Rs.13,31,350/- is added to the total income of the appellant.”

4.

During the course of hearing, the assessee did not remain present before me. The assessee could not produce any evidence. Therefore, I have no alternative except to endorse the action of the Ld. CIT(A).

5.

In the result, appeal of the assessee is dismissed.

Order pronounced in the open court on 31.08.2017.

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