ACIT Vs Rajendra Shinde (ITAT Panaji Bench)
Unaccounted Sales Are Not 100% Profit—But 1% Was Too Shiny: ITAT Estimates 8% & Keeps Business Income Outside Section 115BBE: ITAT Panaji
₹1.09 crore cash intercepted on the road
On 16.06.2020, Kagwad Police intercepted three persons carrying cash of ₹1,08,54,150. They stated that the cash belonged to the assessee, a gold-bullion trader, & was being transported for purchasing bullion.
In his statement u/s 131(1A), the assessee initially explained that ₹60 lakh represented business-sale proceeds, while approximately ₹50 lakh was borrowed from two friends.
As no supporting evidence for the alleged loans was produced, the assessee stated that the cash could be treated as his unaccounted income.
During enquiries at the assessee’s business premises, diaries marked RBS/1 to RBS/5 were impounded. They contained details of cash purchases, sales, expenses & profits relating to bullion transactions undertaken during the COVID-19 lockdown.
AO taxes almost everything that moves
Based upon the diaries, the AO worked out aggregate unaccounted sales of ₹45,31,54,319. Instead of bringing only the embedded profit to tax, he treated the entire turnover as business income.
The AO also made a separate disallowance of ₹17,59,34,820 u/s 40A(3) for alleged cash purchases & expenses.
Further additions included:
- ₹1,08,54,150 u/s 69A for the seized cash; &
- ₹1,04,01,710 u/s 68 for alleged unexplained bank credits.
The assessee maintained that the seized cash represented circulation of unaccounted business-sale proceeds & that he earned only about 1% commission or margin from the bullion transactions.
