LKPS Forex Private Limited Vs ACIT (ITAT Kolkata)
Summary: The Kolkata ITAT partly allowed the assessee’s appeal for AY 2023-24, holding that although the books of account were rightly rejected under Section 145(3) because the sales documentation contained discrepancies, including fabricated KYC documents and travel records, the entire cash deposits of ₹90,84,45,712 could not be treated as unexplained money under Section 69A. The Tribunal noted that the assessee was an RBI-licensed Full-Fledged Money Changer, that purchases of foreign currency through banking channels were not disputed, and that no excess foreign-currency stock was found during the survey. It held that the discrepancies indicated that the foreign exchange was not sold to the persons shown in the records, but did not justify treating the entire deposits as unexplained money; the books were nevertheless rightly rejected and a reasonable business profit had to be estimated. Referring to Kachwala Gems, Joint Commissioner of Income-tax, Jaipur [2007] 158 Taxman 71 (SC), the Tribunal observed that best-judgment assessment involves estimation but must be fair and reasonable. Considering the turnover of ₹93,15,48,134, the disclosed loss of ₹18,181 and the absence of a profit rate determined by the AO or CIT(A), it directed the AO to apply a net profit rate of 1.5% on the total turnover, recompute total income and grant consequential relief. The appeal was accordingly partly allowed and the order was pronounced in open Court on 25th August 2026.
