SURESH S. GUPTA,MUMBAI vs. ITO WD 4, PALGHAR

Order under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal under section 253 of the Act (‘Act’) is directed by the assessee against the order of Ld. Commissioner of Income-tax (Appeals) (for short ‘the CIT(A)-II, Thane, dated 20.01.2014 for Assessment Year (AY)-2009-10. The assessee has raised the following grounds of appeal: 1. a) The Learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in facts and law in making the addition of Rs. 70,00,000/- u/s.68 as unexplained investments in purchases. b) The Ld. CIT(A) erred in making addition u/s.69B vis-à-vis section 68 applied by the Assessing Officer without granting any opportunity of being heard.

2. The Ld. CIT(A) erred in upholding the estimation of gross profit by the ld. AO at Rs. 32,88,744/- as against Rs. 4,25,843/-, declared by the appellant for the year under consideration without bringing on record any evidences/facts in that regard.

3. The learned CIT(A) erred in confirming the action of the Assessing Officer in treating the cash of Rs. 2,48,270/- deposited in bank as unexplained u/s.69A.

2. Brief facts of the case are that the assessee is of M/s Modern Plastic Industries and engaged in the business of trading of plastics/PE/PP/Ropes & allied products, filed 2 Shri Suresh S. Gupta return of income for relevant AY on 30.09.2009 declaring total income of Rs. 4,25,840/-. The assessment was completed u/s 143(3) of the Act on 29.12.2011. While making assessment, the Assessing Officer (AO) made the addition of unexplained cash deposit of Rs. 2,48,270/- u/s 69A, unexplained receipt of Rs. 70,00,000/- u/s 68 and further addition on account of profit from business at the estimated GP rate at .25% which worked out to Rs. 32,88,744/-. On first appeal before the CIT(A), no relief was granted to the assessee. Thus, aggrieved by the order of ld. CIT(A), the assessee filed present appeal before us.

3. None appeared on behalf of the assessee. We have noticed that this appeal was listed on 26.10.2016 when adjournment was sought on behalf of the assessee and the case was adjourned and fixed for hearing for 17.11.2016. On 17.11.2015, when the case came up for hearing none appeared this time too. Hence, we have no option except to proceed further and to hear the submission of ld. DR for Revenue. Against Ground No.1, the ld. DR for the Revenue argued that the assessee during the assessment AO, noticed during the year under consideration, Rs. 70,00,000/- was received from third party. The assessee was required to explain the source of this receipt. The assessee failed to prove the identity and creditworthiness of person, source etc. Resultantly, AO treated such amount as explained cash credit. Regarding the Ground No.2, it was argued by the ld DR that the assessee in his P&L A/c was recording mere accommodation entries the assessee was executing sale of Rs. 131.55 Crore. Such business required various expenses like maintenance of business premises, electricity, telephone, loading and unloading of goods and other allied expenses. However, no such expenses are claimed, thus the net profit was correctly calculated by the AO and upheld by the ld. CIT(A). Regarding Ground No.3, ld DR for Revenue that the assessee failed to explain the source of cash deposit of Rs. 2,48,270/- in his bank account. Therefore, the same was added u/s 69A of the Act. The assessee further failed to substantiate before the FAA, hence, the addition was confirmed.