IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER And SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 1132/Ahd/2017 (Assessment Year : 2008-09) Jatinkumar Ganeshbhai Patel ITO Senmavas Baji patel Ni Vs. Patan Ward-5 Voharvad Mehsna Visnagar Mehsana 384 315 / PAN/GIR No. : ARRPP8029J (Appellant) .. (Respondent) Appellant by : Shri S.N. Divatia, AR Respondent by: Shri Anand Kumar, Sr.DR Date of Hearing 26/08/2019 Date of Pronounce me nt 01/10/2019 ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: captioned appeal has been filed at instance of Assessee against order of Commissioner of Income Tax (Appeals) Gandhinagar, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)/GNR/335/2015-16 dated 10/03/2017 arising in assessment order passed under s.144 r.w.s.147 of Income Tax Act, 1961(hereinafter referred to as "the Act") dated 31/12/2015 relevant to Assessment Year (AY) 2008-09. assessee has raised following grounds of appeal:- ITA No.1132/Ahd/2017 Jatinkumar Ganeshbhai Patel vs. ITO Asst.Year - 2008-09 -2- 1.1. order passed u/s.250 on 10.03.2017 for A.Y. 2008-09 by CIT(A)- GNR, Abad confirming addition to extent of Rs.4,25,421/- is wholly illegal, unlawful and against principles of natural justice. 1.2. Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly submissions made by appellant. 2.1. Ld.CIT(A) has grievously erred in law and or on facts in upholding addition to extent of Rs.4,25,421/- consisting of Rs.1,14,183/- being profit in respect of business of recharge of SIM, mobile etc., Rs.2,21,238/- being opening cash balance and Rs.90,000/- being cash loan received from two parties. 2.2. That in facts and circumstances of case as well as in law, ld. CIT(A) has grievously erred in upholding addition to extent of Rs.4,25,421/- consisting of Rs.1,14,183/- being profit in respect of business of recharge of SIM, mobile etc., Rs.2,21,238/- being opening cash balance and Rs.90,000/- being cash loan received from two parties. 3.1. Since, appellant has not been issued notice u/s.143(2) within statutory period, impugned asst. Is illegal and unlawful. 3.1. Without prejudice to above and in alternative, impugned addition of Rs.4,25,421/- confirmed by CIT(A) is highly excessive and calls for reduction as well as telescoping with net profit during year. assessee has raised as many as 3 grounds of appeal but issues raised in all grounds of appeal are interconnected. Therefore we have clubbed all of them together for purpose of adjudication and brevity. interconnected issue raised by assessee in this appeal is that learned CIT (A) erred in partly confirming order of AO to extent of Rs. 4,25,421/- only on account of various addition. 2. Briefly stated facts are that assessee in present case is individual and claimed to be engaged in business of selling ITA No.1132/Ahd/2017 Jatinkumar Ganeshbhai Patel vs. ITO Asst.Year - 2008-09 -3- Recharge Coupons- SIM Cards etc. assessee in year under consideration has deposited cash of Rs. 21,82,000/- in his saving bank account but failed to justify source of such deposit during assessment proceedings. Therefore entire amount was treated as unaccounted/undisclosed income of assessee and added to total income of assessee. Aggrieved assessee preferred appeal to learned CIT (A). 3. assessee before learned CIT(A) submitted that he has deposited sale proceeds in bank account for issuing cheques to company namely Airtel and other communication companies. assessee also claimed to have made profit of Rs. 74,782/- out of its business transactions which is below taxable limit. Therefore return was not filed. assessee in support of his claim also filed copies of annual accounts. 3.1 details filed by assessee were forwarded by learned CIT-A to AO for his remand report. AO in turn submitted that assessee failed to justify opening cash balance of Rs. 2,21,238/- and loan taken from 2 parties namely Kanubhai Govindbhai Patel and Ganeshbhai Nathalal Patel for Rs. 45,000 each. AO also submitted that such loan was taken in cash in contravention to provisions of section 269SS of Act. ITA No.1132/Ahd/2017 Jatinkumar Ganeshbhai Patel vs. ITO Asst.Year - 2008-09 -4- 4. learned CIT (A) after considering submission of assessee and remand report of AO worked out profit at rate of 5% of cash deposited in bank amounting to Rs. 1,10,884/- 4.1 learned CIT (A) also confirmed addition on account of opening cash balance of Rs. 2,21,238/- and loan taken from parties for Rs. 90,000/- in absence of sufficient documentary evidence. Being Aggrieved by order of learned CIT (A), assessee is in appeal before us. 5. learned AR before us submitted as under: 1. As per annual account, net profit from telecommunication business was Rs.74,782/-. It cannot be said to be retail business wherein NP would be 5%. 2. Assessing Officer has disputed quantum of opening cash balance in his remand report but in view of nature of business, family status etc. opg balance of Rs.221,238/- was reasonable. 3. It cannot be case that there was no opening cash with him. 4. books for current year are not rejected by Assessing Officer. ITA No.1132/Ahd/2017 Jatinkumar Ganeshbhai Patel vs. ITO Asst.Year - 2008-09 -5- 5. Rs.90,000/- is gift received from two parties of Rs.45,000/- each. Their confirmation, PAN, ITR and 7/12 are produced as additional evidence. 6. On other hand learned DR vehemently supported order of authorities below. 7. We have heard rival contentions of both parties and perused materials available on record. At outset, we note that business activity of assessee has not been doubted and therefore in our considered view learned CIT (A) has correctly worked out profit of assessee at rate of 5% on cash deposited with bank. However, it is pertinent to note that amount of opening cash balance of Rs. 2,21,238/- and loan taken from parties for Rs. 90,000/- to be excluded while determining profit at rate of 5% on cash deposits. It is because; such amount has already been added independently by authorities below. 7.1 Regarding gift taken from parties for Rs. 90,000, we note that assessee has filed confirmation from both parties before us which is additional evidence. Therefore in interest of justice and fair play we are inclined to set aside this issue to file of AO for fresh adjudication as per provisions of law and in light of documents filed by assessee. ITA No.1132/Ahd/2017 Jatinkumar Ganeshbhai Patel vs. ITO Asst.Year - 2008-09 -6- 7.2 Regarding addition of opening cash balance, we set aside this issue to file of AO with direction that assessee shall furnish cash flow statement and thereafter AO will adjudicat same afresh as per provisions of law. 8. In view of above, appeal of assessee is partly allowed for statistical purposes. This Order pronounced in Open Court on 01/10/2019 -Sd- -Sd- ( KUL BHARAT) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 01/10/2019 T.C. NAIR, Sr. PS Jatinkumar Ganeshbhai Patel v. ITO, Patan Ward-5, Mehsna