IN INCOME TAX APPELLATE TRIBUNAL H, BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ITA No.3312/Mum/2018 (Assessment Year:2014-15) Shri Kishan Gobind Vs. Income Tax Office Wadhwani Ward 2(2), Mohan Plaza Flat No.402, Mathura Park Wayale Nagar Apartment, Gandhi Road Khadakpada Ulhasnagar 421005 Kalyan (W) PAN/GIR No.ABJPW4587G (Appellant) .. (Respondent) Assessee by Shri Gaurav Bansal Revenue by Shri Manoj Kumar Singh Date of Hearing 27/08/2019 Date of Pronouncement 04/09/2019 / ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.3312/Mum/2018 for A.Y.2014-15 arises out of order by ld. Commissioner of Income Tax (Appeals)-3, Thane in appeal No.10701-THN/16-17 dated 28/03/2018 (ld. CIT(A) in short) against order of assessment passed u/s.143(3) of Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/12/2016 by ld. Income Tax Officer, Ward 2(2), Kalyan (hereinafter referred to as ld. AO). 2. only issue involved in this appeal is as to whether ld. CIT(A) was justified in determining profit at 10% of total turn over of deposits in undisclosed bank accounts of assessee. 2 ITA No.3312/Mum/2018 Shri Kishin Gobind Wadhwani 3. brief facts of this issue are that assessee is stated to be engaged in business of trading of textile activity. assessee had filed its return of income for A.Y.2014-15 on 22/11/2014 declaring total income of Rs.5,71,108/-. assessee during year under consideration had declared gross profit of Rs.11,21,136/- which worked out to 4.06% and gross sales of Rs.2,76,33,625/-. assessee had reported business income of Rs.6,81,805/- in return of income filed by him. 3.1. ld. AO observed that during year under consideration, there are aggregate cash and cheque deposits to tune of Rs.10,81,38,204/- in bank account of assessee maintained with ICICI Bank. said bank account remained undisclosed by assessee in its accounts and in return of income filed. ld. AO in absence of satisfactory explanation afforded by assessee with regard to undisclosed bank account, accepted to fact that those deposits represent business receipts of assessee from its regular trading activity and accordingly, proceeded to treat entire deposits as undisclosed turnover of assessee and proceeded to bring to tax gross profit thereon. For this purpose, ld. AO adopted same gross profit rate of 4.06% as declared by assessee in his return of income. In this manner, ld. AO made addition of Rs.43,90,411/- in assessment. Before ld. CIT(A), authorised representative of assessee took different stand stating that assessee was engaged in cheque / bill discounting business also and though transaction in undisclosed bank account with ICICI bank represented only those cheque / bill discounting transactions and that assessee had derived commission income from those transactions at 0.10% of total value of transactions. Accordingly, only commission income at 0.10% could be 3 ITA No.3312/Mum/2018 Shri Kishin Gobind Wadhwani brought to tax in opinion of authorised representative of assessee. This claim was made for first time before ld. CIT(A). In support of contentions of authorised representative of assessee, assessee produced evidences in respect of declaration made under Income Declaration Scheme (IDS) 2016 for A.Yrs.2013-14, 2015-16 and 2016-17 wherein commission income on cheque discounting business was offered in sum of Rs.20 lakhs, 25 lakhs and Rs.15 lakhs respectively. It was pleaded that this declaration itself goes to prove that assessee was indeed engaged in cheque discounting business and that even for A.Y.2014-15, same needs to be taxed at 0.10% which has already been accepted by department under IDC 2016 for preceding and subsequent years. authorised representative of assessee vide letter dated 26/03/2018 had agreed to for gross profit at 6% of total of cash / cheques deposit in said undisclosed bank accounts of Rs.10,81,38,204/-. Accordingly, ld. CIT(A) determined gross profit of assessee at 10% of total deposits with ICICI bank including addition at 4% made by ld AO. In this, ld. CIT(A) also observed that total of cash deposits and cheque deposits worked out to Rs.11,03,20,184/- instead of Rs.10,81,38,204/- considered by ld. AO. Accordingly, ld. CIT(A) determined gross profit at 10% of Rs.11,03,20,184/- and determined profit at Rs.1,10,32,018/- less Rs.43,90,411/- already estimated by ld. AO and made enhanced addition of Rs.66,41,607/- and added same to total income of assessee. 4. Aggrieved, assessee is in appeal before us. 5. We have heard rival submissions. Though assessee has raised several grounds before us, we find ultimately moot issue is that with 4 ITA No.3312/Mum/2018 Shri Kishin Gobind Wadhwani regard to determining gross profit of assessee. ld. AR vehemently argued before us that authorised representative of assessee was not authorised by assessee to file letter accepting for determination of gross profit at 10% before ld. CIT(A). In support of this, ld. AR placed on record affidavit filed by assessee. In said affidavit assessee had specifically pleaded that said concession was given by his authorised representative without his consent and without informing same to him. Considering totality of facts and circumstances, we are inclined to reject concession given by authorised representative of assessee before ld. CIT(A) accepting for determination of gross profit at 10% of total deposits in undisclosed bank account with ICICI Bank. It is not in dispute that assessee in preceding and in subsequent assessment years had indeed filed declaration under IDS 2016 scheme offering commission income from cheque discounting business. This declaration has been accepted by revenue and relevant certificate has been issued by Principal Commissioner of Income Tax in this regard. Hence it is conclusively proved that assessee is indeed engaged in cheque discounting business during year also which is in consonance with declaration made in IDS 2016 for preceding and subsequent assessment years. We find in facts and circumstances of instant case, ld. AO having accepted to fact that transactions in said undisclosed bank account representing regular business transactions carried out by assessee, whereas assessee had claimed that they represent cheque discounting business transactions. Hence it could be concluded that said undisclosed bank account contains both textile business transactions as well as cheque discounting transactions. Considering totality of facts and circumstances of case, we hold that adoption of profit rate of 2% on revised total deposits figure 5 ITA No.3312/Mum/2018 Shri Kishin Gobind Wadhwani of Rs.11,03,20,184/- being total of cash and cheque deposits in undisclosed ICICI Bank account, would meet ends of justice. Accordingly, grounds raised by assessee are partly allowed. 6. In result, appeal of assessee is partly allowed. Order pronounced in open court on this 04/09/2019 Sd/- Sd/- (MAHAVIR SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 04/09/2019 KARUNA, sr.ps Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Asstt. Registrar) ITAT, Mumbai Kishan Gobind Wadhwani v. Income-tax Office Ward 2(2), Kalyan (W)