SHYAMAL KUMAR GHOSH,KOLKATA vs. I.T.O., WARD - 33(5), KOLKATA

The present appeal is filed by the assessee against the order dated 12.12.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

At the outset, the ld. AR raised issue of a delay of 198 days in filing the instant appeal. The assessee has submitted an application for condonation of delay citing valid and proper reasons. After considering the averments made in the application, we condone the delay.

Brief facts of the case are that the assessee filed his return of income for the assessment year 2017-18 by declaring gross total income of Rs.14,15,352/- and total income of Rs.12,49,520/- after deduction under chapter VI-A of the Act. The case of the assessee was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued. In response, the assessee submitted Profit & Loss A/c, balance sheet and Assessment Year: 2017-18 Shyamal Kumar Ghosh cash flow statement electronically, however, no supporting documents were provided for cash deposits made during the period of demonetization from 09.11.2016 to 30.12.2016. The Assessing Officer has issued further notices seeking details of purchase, unsecured loans and sundry creditors and nature of cash deposits. The assessee did not comply and subsequently the Assessing Officer issued notice u/s 133(6) of the Act to the bank and bank statements were received. Based on the statements provided by the bank, total cash deposits of Rs.32,88,500/- during the demonetization period remained unexplained. Howeover, the assessee furnished a statement on 24.12.2019 stating that M/s S. K. Acharya is a partnership firm. Accordingly, the Assessing Officer in the absence of any fruitful explanation offered by the assessee, the amount of Rs.15,88,500/- (Rs.50,000/- + Rs.9,38,500/- + Rs.6,00,000/-) deposited in bank account nos. as per Table No.1 of the assessment order was treated as unexplained money u/s 69A of the act and added to the total income of the assessee. Additionally, the Assessing Officer found that fresh capital of Rs.5,50,000/- and unsecured loan totalling to Rs.32,00,000/- as unsecured cash credit u/s 68 of the Act. The assessee has failed to provide details and evidences regarding the same, therefore, the Assessing Officer added the entire amount of Rs.32,00,000/- u/s 68 of the Act and also added this to the income of the assessee. The Assessing Officer also noticed that the turnover of the assessee’s proprietorship M/s S. P. Enterprise and M/s G. M. Internation does not match with the credit deposits in the bank accounts and directed the assessee to explain the mismatch of sales turnover and credits into the bank account. However, the assessee did not comply with the notices and accordingly, the Assessing Officer invoked the provisions of section 145(3) of the act by rejecting the books of account furnished by the assessee and the total credits during the financial year 2016-17 accepted cash deposits during the demonetization period was treated as turnover Assessment Year: 2017-18 Shyamal Kumar Ghosh of the assessee. Hence, the turnover of M/s G. M. International and M/s S. P Enterprise was assumed as Rs.92,02,443/- and Rs.8,75,05,020/- respectively. The income from M/s G. M. International and M/s S. P Enterprise was computed at 8% of the total turnover of Rs.92,02,443/- i.e. Rs.7,36,195/- and Rs.70,00,401/- against the turnover of Rs.8,75,05,020/- and added the entire amount of Rs.77,36,596/- in the hands of the assessee by invoking section 44AD of the Act.

Dissatisfied with the above order, the assessee went in appeal to the ld. CIT(A) but the appal of the assessee was also dismissed.

Aggrieved, the assessee is in appeal before us raising multiple grounds. However, the main contention of the assessee is that the assessee is an individual and operates as a cleaning and forwarding agent by paying custom duty on behalf of the clients to earn commission and also engaged in wholesale trade in medical equipment. The ld. AR submitted that profit margin of the assessee across various years was constant ranging from 5.37% to 5.72% by producing a detailed chart before the Bench and argued that the additions were made arbitrarily without considering the evidences properly. The ld. AR submitted that the amounts were duly taxed by the department and further direction will tantamount to double taxation, which is not permissible in law. Therefore, the ld. AR urged that the orders passed by the authorities below may be set aside and the matter may be sent to the file of the Assessing Officer with a direction to reexamine the issues after affording reasonable opportunity of being heard to the assessee.

The ld. DR, on the other hand, stated that sufficient opportunities were given to the assessee, however, the assessee did not comply to the various notices issued by the Assessing Officer during assessment proceedings. It is, therefore, prayed that no such prayer of the ld. AR may be allowed at this stage. 3 Assessment Year: 2017-18 Shyamal Kumar Ghosh

We, after hearing the rival submissions of the parties and perusing the materials available on record, find that it will be appropriate to remand the issue back to the file of the Assessing Officer. We note that the assessment order was framed u/s 144 of the Act and especially the application of profit ratio of 8% was without proper adjustment and the assessee did not able to furnish the supporting documents in order to substantiate his claim before the Assessing Officer although sufficient opportunities were given to the assessee. Therefore, we deem it necessary to remand the whole issue to the file of the Assessing Officer with a direction to reexamine the issue after affording a reasonable opportunity of being heard to the assessee to furnish relevant documents in order to substantiate his claim. The assessee is also directed to comply with the notices as and when will be served in connection with this case from the ends of the Assessing Officer without any fail.

In the result, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 9th December, 2024.