Golden Express Pvt. Ltd. Vs ITO (ITAT Mumbai)
ITAT Mumbai restores case for fresh adjudication – 100% turnover cannot be taxed without examining books; even 5% estimation unjustified without verification
Golden Express Pvt. Ltd., a Full Fledged Money Changer (FFMC) licensed by RBI, filed its return for AY 2018-19 declaring ₹3.82 lakh income. Original assessment u/s 143(3) was completed accepting the return. Later, based on Investigation Wing inputs relating to M/s A.N. Forex Pvt. Ltd. (a company allegedly involved in bogus forex transactions), AO reopened the case u/s 148A, alleging that Assessee was indulging in similar diversion of foreign currency.
During reassessment, AO noted that Assessee’s turnover was ₹219.84 crore, supported by audited financials, GST returns, quantitative details of stock, sales, purchases, Form 9 & 9C under GST law. Assessee also explained that the increased turnover was due to business expansion & even produced comparative data of other forex companies showing similar trends. Profit margins were also shown to be in line with industry norms.
However, since certain physical documents/books were destroyed in 2019 monsoon rains & Assessee could not produce original books, AO rejected the books u/s 145(3). Relying on the revocation of Assessee’s money-changing licence by RBI & the admission of Shri Aamil Fruitwala (Director of A.N. Forex) that 75% of transactions were “paper transactions”, AO treated the entire turnover of ₹219.84 crore as unexplained cash credit u/s 68, effectively taxing 100% of turnover as income, which is absurd for an FFMC business where margins are barely 0.1%–0.3%.
