Case Law Details
Rajendra Gokuldas Parekh Vs ITO (ITAT Mumbai)
Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai recently delivered a crucial decision in the case of Rajendra Gokuldas Parekh vs Income Tax Officer (ITO). The appeals, pertaining to the assessment years 2011-12 and 2012-13, address common issues related to cash deposits in various proprietorship concerns engaged in alleged bogus business activities.
Detailed Analysis: The ITAT considered the appellant’s arguments challenging the addition of Rs. 765,553 (1% of total credit amount) made by the assessing officer. The appellant, denying involvement in bank operations, claimed to be a mere conduit for his employer, Mr. Hitesh G. Shah. Grounds of appeal include contesting the taxation of income not handled by the appellant and challenging the computation of incentives.
The assessing officer, based on information received, reopened the case, suspecting the appellant’s involvement in crediting Rs. 765,55,253 in various accounts. The appellant clarified his role as a dummy for Mr. Shah, asserting no direct dealings in goods or services. The assessing officer, associating the appellant with the employer’s alleged bogus business, estimated 1% of total gross sales as income.
The appellant appealed to the Commissioner of Income-tax (Appeals) – NFAC, Delhi, who upheld the additions. The ITAT, on hearing both sides, restricted the addition to 0.05% of the gross total, acknowledging the employer’s control over the business and the appellant’s earlier declaration of commission income.
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