ITO Vs Zaiullabddin Gousaheb Kochargi (ITAT Mumbai)
Case Summary and ITAT Holding
The assessee, Zaiullabddin Gousaheb Kochargi, filed a return declaring an income of . During the scrutiny assessment, the Assessing Officer (AO) noted cash deposits of in the assessee’s bank account. The assessee claimed the source of the cash deposits was the sale proceeds from his egg trading business.
The AO rejected this explanation, observing a sudden and substantial increase in the assessee’s reported sales, which jumped from lakhs in the preceding year to crores in the relevant year. Crucially, the assessee failed to provide details of his cash customers. Furthermore, notices issued under Section 133(6) of the Income Tax Act to two key suppliers, Karuna Egg Centre and Mohd. Naseeruddin, from whom the assessee claimed to have made huge purchases, were either returned unserved or received no reply. Consequently, the AO treated the entire amount of as unexplained cash deposits and made an addition to the assessee’s income, along with a separate addition for expenses.
Proceedings Before the Commissioner of Income Tax (Appeals)
The assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi (the ld. CIT(A)). Before the CIT(A), the assessee furnished additional evidence, including ledger confirmations from Karuna Egg Centre, and explained that the business shift to wholesale egg trading from Hyderabad in Financial Year 2015-16 accounted for the increased turnover and the resulting drop in gross profit margin from to .
