ITO Vs Ashok Amritlal Nayak (ITAT Mumbai)
The Income Tax Appellate Tribunal, Mumbai, adjudicated an appeal by the Revenue and a cross-objection by the assessee arising from an order of the Commissioner of Income Tax (Appeals) for Assessment Year 2019-20. The assessee, engaged in wholesale trading of FMCG goods, had originally filed its return which was processed under Section 143(1). Subsequently, the assessment was reopened under Section 147 based on information from the Investigation Wing alleging that the assessee had obtained accommodation entries amounting to ₹55,11,843 in the form of fictitious sales.
During reassessment, the Assessing Officer treated the entire amount as unexplained cash credit under Section 68 and added it to the total income. Before the CIT(A), the assessee argued that the transactions represented genuine sales recorded in the books of account, credited to the Profit and Loss account, subjected to GST, and supported by payments received through banking channels. It was also contended that the books were audited and not rejected.
The CIT(A) held that the turnover could not be disturbed and the sales could not be treated as entirely non-genuine. However, considering surrounding circumstances, profit was estimated at 4.5% on the impugned transactions. Since the assessee had already declared gross profit of 1.77%, an addition of 2.73% was sustained, and the balance addition was deleted. The Revenue challenged the relief granted, while the assessee contested both reopening and profit estimation.
