Case Law Details
Surendra Kumar Rajmani Mishra Vs ITO (ITAT Mumbai)
ITAT Rules in Favor of Auto-Rickshaw Driver, Rejects ₹103.33 Crore Addition for Insufficient Investigation – However declares the decision not to be a precedent.
In the case of Surendra Kumar Rajmani Mishra Vs ITO (ITAT Mumbai), the Income Tax Appellate Tribunal (ITAT) ruled in favor of an auto-rickshaw driver, rejecting a substantial ₹103.33 Crore addition to his income. The assessment was based on the findings of the Assessing Officer (AO), who noted large fund transactions among three companies, including M/s. Aqua Trading Company, which held a bank account with significant deposits. The AO believed that the funds transferred were commission income of the assessee and added the entire amount to his taxable income. However, the assessee, a driver by profession, clarified that he did not operate the business associated with these funds. He explained that the business was run by Shri Raju Bhimrajka in his name, and that he had only received a nominal commission of ₹2,000 per month.
The ITAT found that the AO failed to conduct any thorough investigation into the actual perpetrators of the transactions and instead erroneously attributed the entire amount to the assessee. Despite having complete information about the involved companies and their transactions, the AO did not take further action to trace the real culprits behind the business. Given the unique nature of the case, with the assessee being an auto-rickshaw driver, the ITAT deemed the addition unjustifiable and directed the deletion of the ₹103.33 Crore addition. The decision emphasized that it should not serve as a precedent for other cases, as the specific circumstances were peculiar. The ITAT highlighted the need for proper investigation to identify the true parties responsible for the transactions. Thus, the appeal of the assessee was allowed, providing relief against the erroneous tax addition.
In conclusion, the ruling emphasized the importance of thorough investigations by the tax authorities and cautioned against making unjust additions based solely on incomplete or insufficient information.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is preferred against the order dated 07/11/2023 by NFAC, Delhi, pertaining to AY 2012-13.
2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 10,33,38,610/- as commission income.
3. Briefly stated the facts of the case are that on the basis of the information, the AO came to know that M/s. S5 Trading Pvt. Ltd., Crystal Corporation and M/s. Aqua Trading Company, were having CD accounts with Dhanlaxmi Bank Ltd., Fort Branch, Mumbai. The accounts were opened during June, 2010 and closed on 14/07/2011. The AO found that large volume of funds was transacted inter-se among these three accounts. The AO found that RTGS transfer of Rs. 2 Crores each is seen credited in these accounts from M/s. Ravi Kumar Distilleries Ltd..
4. The bank account in the name of M/s. Aqua Trading Company had huge credit transactions amounting to Rs.1,03,33,86,100/- in the bank account held with Dhanlaxmi Bank Ltd., Fort Mumbai.
4.1. Assessee was asked to explain the details in the aforementioned bank account. In his reply, the assessee stated that the said bank account was not operated by him but by Shri Raju Bhimrajka and he was given only Rs.2,000/- per month i.e., Rs.24,000/- per annum as commission and the same has been offered for taxation by him in his return of income.
4.1.1. The assessee was summoned u/s 131 of the Act and his statement was recorded by the AO and in his statement, the assessee categorically stated that M/s. Aqua Trading Company was carried on by Shri Raju Bhimrajka in his name. On receiving no supportive evidence, the AO treated the transactions of Rs. 1,03,33,86,100/- and made addition of the same to the returned income of the assessee.
5. The assessee carried the matter before the ld. CIT(A) but without any success.
6. We have given a thoughtful consideration to the orders of the authorities below.
7. The peculiar facts and circumstances of the case are that the assessee is an auto-rickshaw driver, who was lured by Shri Raju Bhimrajka to carry on the business in the name of M/s. Aqua Trading Company. The assessee was offered Rs.2,000/- per month for his name. It is beyond one’s imagination as to how an auto-rickshaw driver can do transactions of Rs.103,33,86,100/-.
7.1. The AO was in possession of the complete information of all the three companies mentioned elsewhere. The AO was also in possession of the transactions done through RTGS inter-se bank transfers by the three companies but the AO did not make any verifications from the real culprits and taxed the entire amount in the hands of the auto-rickshaw driver i.e., the assessee.
8. We are of the considered view that the AO ought to have considered the transactions, once the assessee has stated on oath that he is not doing any business but the entire business is done by Shri Raju Bhimrajka, there is no evidence on record that the AO made any effort to trace the real business behind the alleged transactions and instead chose to make addition in the hands of the assessee.
9. We are of the considered view that such action of the AO cannot be justified on any count. Therefore, considering the peculiarity of the case, being that of an auto-rickshaw driver, the impugned addition cannot be sustained in his hands and is accordingly directed to be deleted.
10. It is made clear that considering the peculiarity of the case and considering that the assessee is an auto-rickshaw driver, our decision should not be considered as precedence in any other case. The AO is free to take action against real culprits and bring them to tax-net. In the interest of justice and fairplay, appeal of the assessee is allowed.
11. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 21st April, 2025 at Mumbai.
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