RAHIL M. AGARBATTIWALA,MUMBAI vs. ITO 13(2)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI "D? BENCH,MUMBAI BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER, AND SHRI RAVISH SOOD , JUDICIAL MEMBER,, ITA. No_ 1683 Mum/2013 (Assessment Year:2008-09) Shri Rahil M. Agarbattiwala 143 , Janjikar Street, Mumbai-400 003 PAN. ADUPA7514Q Appellant Vs. Income Tax Officer 13(2)(1), Aaykar Bhawan, Mumbai Respondent adlaeff & &i ? /By Appellant None Yryeff & &k #/By Respondent Shri Purushottam Kumar. TTR dard/ Date of Hearing 05.01.2017 Hyu &5 ard/ Date of Pronouncement 18.01.2017 ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-24, Mumbai, dated 29.11.2012, which in itself arises from the order passed by the A.O under Sec 143 (3) of the Income Tax Act 1961 (for short 'Act), dated 22.12.2010. The assessee assailing the order of the CIT(A) had carried the matter in appeal before US, raising the following grounds of appeal:- 1. The Ld CIT (A) erred in law and on facts in confirming an addition to the extent of Rs.6,27,117/- as against the amount offered by the assessee of Rs.1,98,221/- during the assessment proceedings without appreciating the 2 facts on records and the submission made by the assessee must be deleted. Thus, the addition 2 The Ld CIT (4) erred in law and on Rs.50,000/- as facts in making an addition of the sales. Thus, Uheccddinied investment by the assessee to make purchases for the addition must be deleted 3. ZOternatively without prejudice to the above, even if it is is not possible to arrive at the considered that it in correct profit from the transactions as entered unaccounted bank account, it is Stated that only the bank account should be considered peak balance in the addition must be deleted for the purpose of addition Thus, the and restricted to only peak amount; 2. The assessee is running a proprietary concern M/s Agarbattiwala Enterprises, which is engaged in the business of trading in various types of gift and cutlery items, both as a retailer and wholesaler, a and is also a partner in a firm by the name Selection of M/s Corner. The assessee filed his return of income' on 02.01.2009 declaring income of Rs.1,09,120/-, which a revised was followed by return' on 31.10.2010. The case of the assessee was taken up for scrutiny proceedings u/s 143/2) of 'Act: That of during the course the assessment proceedings an undisclosed bank 013010004831 account No. of the assessee with Dena Bank, Branch: Nagdevi, Mumbai, having cash deposits of Rs 54,35,485/ - came of the AO. The to the notice assessee on being called upon to explain the nature and source of the aforesaid deposits, therein submitted that the 'debit' and 'credit' entries in the said bank account' pertained to his unaccounted wholesale business of trading in gift and and referring cutlery items, to the profit margin of 2% to 3%, which be earned as per him would from such business, therein computed from at Rs_ the income there 1,98,221/- ie by applying an 3.16%, and average profit offered margin of the same as additional income absence of The A.O in the any evidence being placed on record by the assessee, which could g0 to support his explanation that the debit/credit entries in his undisclosed bank account represented the unaccounted wholesale 3 business transactions, and being of the view that the same were in the nature of the sales of his regular business, thus adopted the Net profit margin of 24.88% shown by the assessee in his regular business, and estimated the undisclosed business income of the assessee at Rs. 15,43,765.18. 3. The assessee assailed the assessment order before the CIT(A); who being of the view that the Net profit rate of 24.88% applied by the A.O as regards the undisclosed business transactions f the assessee, was found to be excessive, therein did not find favor with the view of the A.O. The CIT(A) thereafter summarily going by the contention of the assessee, and taking the aggregate of the withdrawals of Rs. 7,83,893/ from the aforesaid bank a/c' as the ground base for computing the undisclosed income of the assessee, and further reducing the same by 20% of the aggregate of such withdrawals, i.e Rs. 1,56,778/-, thus concluded that the amount of Rs. 6,27,117/ [i.e Rs. 7,83,893/- (-) Rs. 1,56,778/-] could fairly be held to be the profit generated by the assessee from his aforesaid undisclosed business transactions. The CIT(A) further made an addition of Rs. 50,000 /- towards the unaccounted seed money, which as per him would fairly explain the source of the initial capital requirement of the assessee that would have been injected by the assessee at the start of his business during the year under consideration. The CIT(A) thus o the basis of his aforesaid observations substituted the addition of Rs.15,43,765 made by the A.O, by an amount of Rs.6,77,117 [i.e Rs.6,27,117/-(+) Rs. 50,000/-]. 4_ The assessee being aggrieved with the order of the CITA) had carried the matter in appeal before uS. The hearing of the aforesaid appeal was fixed for 05.01.2017, however we find that despite being afforded sufficient opportunity, neither the assessee had put up an appearance, nor any adjournment was sought o his behalf Thus in the backdrop of the aforesaid facts, we are left with no other option but to proceed with as per Rule 24 of the Appellate Tribunal Rules, 1963, and dispose of the appeal after hearing the respondent and perusing the material available on Tecord 5. The Ld. Departmental Representative (for short DR) submitted before u8 that the appeal of the assessee was devoid of any merit; and as such the same was thus liable to be dismissed. 6 We have heard the Ld. DR and perused the records. We are of the considered view that in the backdrop of the Unexplained credits' that had emerged in an undisclosed bank account' of the assessee with Dena Bank, Branch: Nagdevi, Mumbai, a very heavy onus was cast upon the assessee to establish beyond any scope of doubt; both the Nature' and 'Source' of the credits appearing in the said bank a/c. We find that though the A.O accepted the genesis of the source of the aforesaid "Credits', as being in the nature of the undisclosed business transactions of the assessee, as averred the by the latter during course of the assessment proceedings, and accepted the explanation of the assessee to the said extent, but in the absence of any evidence being placed on record by the assessee, therein declined to accept the bald claim of the assessee that the same to a were relatable wholesale business. The A.0 thereafter on the attending basis of the circumstances, therein concluded that the transactions in the undisclosed bank a/c' of the assessee could safely be related his to regular business, and thus by referring to the disclosed profit margin by the assessee in his said regular business, estimated therein the latters income from the said Rs_ unaccounted business at 15,43,765.18. 5 7_ We find, that the CIT(A) however not finding favor with the estimation of income $0 carried out by the A.O, therein dislodged the same, and concluded that eighty percent of the total withdrawals made from the undisclosed bank a/c' of the assessee during the year under consideration, would fairly represent the income of the assessee from his aforesaid Undisclosed business'. The CIT(A) further making an addition of Rs. 50,000/- towards the undisclosed source of the 'seed money' which as per him would have been brought by the assessee to meet the initial capital requirement of his undisclosed business, thus estimated the undisclosed income of the assessee at Rs. 6,77,117/-.